How to Build SaaS from Scratch in 8 Simplified Steps

0:00In this video, I'm going to talk about how to build your SAS from scratch in eight simplified steps. If you stick around till the end, I'll give you the next step of what to do after you've built your SAS. I'm Rob Walling. I've started six companies, invested in more than 125 startups, and I've written four books about entrepreneurship, one of

0:18which is coming out later this year. Notice in the title I said simplified steps. These are simple, but perhaps not easy. So, let's dive right into the first one. Step one is to ask yourself if you have an unfair advantage. There are really only three unfair advantages in SAS. And I'm going to list these in the order of importance with the most

0:38important first. First is a network. Network trumps audience with SAS. So if you have a network of amazing founders or of influencers and people on those lists might use the software you have, it's a pretty powerful advantage. Often times a network can take years if not decades to build. And so this is the importance of going to in-person events, being on social media, as much as I hate to say it, or being part of groups of other founders or other people doing interesting things and contributing to the world in your own way. Whether that's essays, books, podcasts, blogs, YouTube channel, whatever it may be, getting out there and building your

1:16network is important. The second unfair advantage is an audience. And as I said above, a network is more important than an audience. In fact, of the 125ish companies that I have backed, less than 5% had an audience before they launched. And the handful that did did not have massive audiences. It was a minor advantage. I'll say it was it was unfair if you didn't have any type of advantage. But realistically, having a network of people who can either invest in you if you need investment, who can give you advice, who can help you promote, who can just be around and be along for the journey is more important

1:52in SAS specifically than an audience. And there are a lot of people out there who are saying build an audience and then make something for them. And if you're doing info products or courses or other information, absolutely do that because building up the no- like and trust factor is incredibly important when you're selling information. But it's much less important when launching a SAS app. If you do have an audience, be aware of what I call the curse of the audience. And this is where you have people telling you, yes, they would pay for the thing that you're proposing you would build, but they're doing it because they want to curry favor with

2:24you or because they like you. They don't want to disappoint you. And then you launch an MVP that really doesn't solve the problem. And you kind of burn through your audience because they say, "Oh, that didn't solve the problem." and you can't then go back to them in the future because it's solidified in their mind that your product doesn't solve the problem. I've seen it done over and over and I've seen it, you know, before you have product market fit, launching to your audience and then having people just churn out is a pretty common occurrence. And the third unfair advantage is being early to a space. So,

2:54there's a lot of luck involved in this, but this is like being early to WordPress. Launching a WordPress host 10 or 15 years ago, someone told me the other day, you know, you were early to bootstrapping. And I would say, "Yeah, but I've been talking about it for 18 years, 17 years, it's less about being early than just doing something for a long time." In my case, remember that doing things in public creates opportunity. So that's goes back to what I said above putting things out into the world, whether it's video, audio, or written. But the people who I've seen be early to a space, have tended to have

3:23some luck involved. And I personally don't necessarily like counting on luck. For every founder I've seen who's gotten there at the right time, I have seen many founders make a bet on a space because it's early and the space never pans out, right? It doesn't get big enough to support them and so they have to pull the plug. So being early is great if you can do it. It's often hard to repeat. Step two is to start with a

3:45problem or in fact many problems. Nowadays when I'm talking to an earlystage founder I say don't tell me your idea, tell me what problem it solves. And the way I've done this for years is I keep a notebook of problems with potentially some proposed solutions, although that is step three. And keeping that around over the course of months or years allows you to look back and see kind of this diary of problems you've encountered. And at some point in the future, if you're going to start that next software product, it can be nice to refer back to. I have an upcoming video with seven different ways

4:16to find problems worth solving. And of all these startups where I know the origin story, I can find seven different approaches for finding problems we're solving. So I'll be outlining that in a future video. And that's in addition to our video that comes out every month or two where I list new SAS ideas that you can steal. Step three is to move from the problem or problems to potential solutions, realizing that every solution is not necessarily software. So imagine that your problem is that podcast

4:46editing in production takes too long. You could try to build software to do this or you could start a productized service like Craig Huitt did when he started Casto's Productions which is done for you production services. Or if the problem that you're seeing is that people want more email subscribers from their existing traffic. You could look at a number of solutions. First one would be an email pop-up widget. Maybe you can build AI into it to autosuggest text based on the page it's installed on. Or you could build split testing software to improve conversion rates on the page. You could build a service to create lead magnets for all of this

5:20company's popular blog posts. Or you could start a CRO productized service that's conversion rate optimization where you go in and do the work yourself. Off the top of my head, these are four ideas solving the same problem, right? Four different solutions and I'm sure we could come up with five more. So don't get attached to your solution too soon. So once you have some solutions in mind, you're trying to figure out which one is the best way to solve the problem. And for that, we go to step four, which is to evaluate your solution

5:49using my 5pm idea evaluation framework. I've outlined it in a Startups for the Rest of Us podcast episode, so I won't belabor it here. The 5PM framework has six different elements. There's the problem you're solving, the purchaser, the pricing model, the market, product founder fit, and the pain to validate the product. Step five is to consider how your solution is going to solve this problem in a different way than it's currently being solved. So, for example, if you want to build social media scheduling software, there are already a lot of those that exist. So, how are you going to be different? I'm not saying

6:24there can't be competition out there. What I'm saying is how are you different? Because if you build a commodity, you're not going to grow very fast and you're going to basically be in a race to the bottom. If you're selling nails and I'm selling the same nails, someone's going to just look for them cheaper because there's no reason to buy the nails from me if they're more

6:42expensive. That's called a commodity. Realistically, the more you can think in advance of how you're going to do it differently, what the value ad is, what the feature difference is, what the positioning difference is, the more attention you can grab, and the higher you can charge, and the more attention that you can garner by having that unique feature or features that people care about it or by positioning it in a way that makes you seem different than the competition. Step six is to have conversations with potential customers, whether in person, via email, or Zoom, to find out if the problem you're solving and your solution is something

7:17that businesses want and are willing to pay for. If you haven't read the book, The Mom Test, I suggest that you buy it and read it before taking part in this step. Mom test gives you a bunch of really good questions to ask because if you do this on your own, you're going to ask questions that lead people to the conclusion that you want, which is for them to say, "Of course, I would buy this. This is the best thing since sliced bread." And you don't want false positives, right? You don't want to talk to people and get 10 pre- purchases or 10 yeses, 20 yeses, but have them not

7:48pan out when it actually comes time to launch a product. Or frankly, if it's a cheap product, something that you can get to market quickly in a few weeks or a month, I'm going to say it. You can skip this step. I hate to say that because I'm guessing you're a builder and you don't want to do this step, right? And most of the things that I am telling to makers and builders and creators and developers and product people is slow down on the building cuz that's what you want to do. But do the hard things. Do the sales, the marketing, the pre-sales, the evaluation, the validation. talk to

8:20customers and that's usually the right answer. But if you're building a step one business, for example, in my stairstep method of entrepreneurship, I could see skipping this step. If I can just sit down and code for 2 to 4 weeks, why would I have a bunch of conversations with people for 2 to 4 weeks if I can just get this out in the

8:37wild? But I'll add a caveat to that. Skip this step at your own peril. Step seven is to start marketing before you start coding by setting up a landing page and capturing email addresses of interested people. I've done this now with multiple books. You can go to sasplaybook.com right now to see my fourth book and the landing page that currently embodies it. I did this with a conference called Micro Comp. Did this

8:59with my accelerator called Tiny Seed. Did it with multiple SAS apps. The most recent one was Drip. They start as a landing page and as I talk on podcasts, as I speak from stage, as I run ads, as I do any marketing, send people to that landing page. And you're trying to figure out a are people interested? how many people are interested is perhaps the wording on the page, you know, leading to high signup rates or low signup rates. And then you have that amazing launch list that you can launch

9:26to when you're done with your product. The eighth and final step before I talk about the special bonus step you should do after you launch is to build that MVP, the minimum viable product. I've also heard this called an MLP, a minimum lovable product. Basically, it's the smallest thing that you have to build to provide value to your customer and to hopefully solve some or all of the

9:48problem you're trying to solve. Sometimes an MVP is you with an email inbox and a swarm of VAS, virtual assistants that are doing human automation to perform the task and it requires no software. Or you might use Air Table or Bubble or Softer where you add human automation behind that. So there's a little bit of software. It's mostly no code, low code. Or maybe if you're doing, let's say you're doing a podcast production workflow, the best solution is probably not custom software. It's more likely a Trello board plus Zapier or Google sheet plusmake make.com. Try to think about this in the simplest way possible. It might be code. You know, building the

10:23simplest version in code that will provide value is another way to do it. What you're trying to do is validate, can I solve this problem and will people pay for it? and you're trying to do that in the shortest amount of time possible, realizing you won't get to 100% certainty until you're in the market and selling and having conversations and people are paying you. And that's why it pains me when I hear someone saying, "Well, validation doesn't work because I validated it and then the idea didn't work." But the problem is you never get to 100%. So if you start with a problem or a solution for that matter, maybe

10:54what you at 10% certainty it's going to work, 90% that it won't, but the more validation you do, the higher that number rises. So you run it through the 5pm framework. Maybe that gets you to 15 or 20%. You start talking to customers. Maybe that gets you to 30 35 40%. The further along you get, the higher that number can rise and it peaks at 50 60% certainty that something's going to work. You just never get above that. If you want certainty, stick with the day job cuz being an entrepreneur is making hard decisions with incomplete information. And this is one of the harder ones you'll do. Trying to find

11:27product market fit is extremely uncertain and you can't get to 100% validation. So don't expect it. But realize that each of these steps gets you a little more certainty as you're going along without spending a year in your basement writing a bunch of code. In a second, I'm going to tell you essentially step nine, what I would do after I built my product. But before I do that, I've mentioned my new book a couple times in this video. It's at

11:50sasplaybook.com. I'm going to be running a Kickstarter here in the next couple months. I'd love it if you would enter your email to be notified when the book Kickstarter is available. I'm really excited about this one. It contains tons of knowledge, all the stuff that I've learned over the past decade plus building, advising, and investing in bootstrapped and mostly bootstrap SAS founders. So, the bonus step is to do what I call a phased launch. And this used to be called a slow launch, but I like the idea of calling it phased because it is done in phases. The idea with this phased launch is, let's say you had two or three

12:27thousand people on your launch list. You did a really good job. If you invite them all into the product, the odds are the product's too early. You're going to churn most of them out and you're going to get too much feedback all at once. And by the time you build all of that, no one will be left. So the idea is to start showing it to people first who you had conversations with or with subsets of your launch list. And then you get feedback from them and you iterate. And so with Drip, I believe it took us 5 months to roll out to 3,400 people cuz

12:56we rolled out a few hundred at a time. And they would get in and say, "Oh, I need this feature to stick around. Oh, I'd like to see this." And we would build frantically. And then when that calmed down, people stuck around. And then we invite the next three or 400. I think every 2 weeks we invited between 3 and 500 people. And this is a phased launch. Couple tips on this. Only call it a beta if it has bugs. If it doesn't and it's complete software, but it's just simple, call it early access and charge for it. Charge the moment that people are getting enough value that

13:24they're willing to pay for it. In addition, don't do these huge discounts. Don't give lifetime comps. I know someone who kind of burned through most of their launch list by saying, "Oh, I'll just comp it for life if you get in and use it and give me feedback." And it's like, no, these are the people that are most likely willing to pay you for

13:40it. And I see paying as kind of a test. Do you want to see if they're willing to pay? Cuz if they stick around cuz it's free, you haven't actually validated that much. So maybe you can give a small discount or give a month free or something, but I like to see folks start paying because that means that you have validated that you've built something

13:56people want and are willing to pay for. So, I hope you enjoyed this video on how to build your SAS from scratch in eight simplified steps. I hope you'll hit the like button, subscribe to the channel, and I'll see you in the next one.

14:23Heat. Heat.