To share our experience (we sell SAAS in financial services): our first solution took us 6+ months of development (one person) to get our MVP launched and another year to get people to use it actively without active outbound selling (that is to say it was sold but we had to hold your hand the whole way through).
Some thoughts: internally we consider the "V" in MVP to encompass not just what is the minimum you need to do to solve a problem but the minimum to solve a problem (worth solving) at a level someone is willing to pay you for the solution. That often is more extensive than a traditional MVP which is why SAAS solutions require so much up front development. Consumers are not fond of subscribing to services and businesses don't like beta products.
A couple additional thoughts as we now actively sell 4 SAAS services:
- to be successful in SAAS you need to build something people need. They say there are two types of businesses: painkillers and vitamins. If you're a vitamin you are 20x more likely to fail than a pain killer. The value prop is just too hard to communicate and people's attention spans are too limited
- the more you understand the user / workflow / domain the better. I realize this may sound obvious but I do my best to pay forward the mentorship I received and I am shocked at how often I come across people trying to solve other people's problems as an outsider.
- with the exception of notable billion dollar startups we all love and read about daily, I believe the dream of "build it and they will come (register, put in their credit card and bam you're done) is just that, a dream. Yes organic growth is real but all my buddies who have successful SAAS companies spent a ton of time and effort selling them before that organic growth kicked off. This could be an east coast vs west coast thing as my network is hitting niche workflows but worth sharing regardless.
Thanks for sharing this. I'm by no means successful in SaaS, but I've been running a niche healthcare SaaS for a few years, and our experience is similar. Especially when you're talking about higher-priced SaaS offerings - the buyer sophistication goes up and ability to bullshit goes down.
On vitamins vs painkillers: conversely, do you think if you are able to build a vitamin product that does make your worklife better/easier, wouldn't it be a harder barrier to entry for newcomers? i.e., greater entrenchment?
I'm currently doing customer development on such a product. I've burned my fingers previously building nice-to-have products and don't intend to repeat my mistake. With this one, I'm validating the market before I build anything.
There are ways people do this thing (inefficiently and poorly IMO) today. Their business isn't likely to suffer if they don't adopt my product but I'm hoping to prove a factor of efficiency improvement if they adopt it.
What would your advice to me be (aside from don't do it)?
First let's level set: the benefit of taking vitamins is that if you take them regularly, at some point in the future you will be better off than you are now (in other words there is no immediate perceived benefit - it requires an investment). Alternatively, a painkiller has immediate physiological benefits.
Assessing a service as a painkiller vs a vitamin is not totally black and white - generally I would say a service qualifies as a vitamin if there is no immediate perceived benefit to its use (ie it doesn't meaningfully save me time in aggregate, does not enable me to do something else that I can directly ascribe value to, doesn't reduce a painpoint I feel at this moment). A mental test I use is if someone goes from using my service for two months to immediately not using my service, how will their workflow change? If it doesn't change meaningfully, you are likely a vitamin. Note that I recognize that by this definition Facebook is a vitamin. Vitamins can make money.
So back to you. If your service does improve work/life or actually provide a "factor of efficiency improvement" over whatever their alternative is (e.g. Doing nothing) you may have a painkiller on your hands instead of a vitamin. The problem is you aren't the ultimate judge of what is a painkiller or a vitamin (you are operating on a hunch) until you go out there and try to sell it. The market will tell you.
So my advice is to spend as much time thinking about how you will package and sell this service as you are designing the service. Create a few marketing materials, hone the pitch and sit down face-to-face with as many people as makes sense and pitch them. In fact, I am 100% happy to genuinely consider purchasing this from you so you can try it on me. At the end of the day, the customer decides if you are adding value by voting with their time and dollars so developing a sales strategy early is important. You may discover you have a great service for a specific type of buyer profile but finding that buyer profile is too expensive. It happens.
I often remind myself of Ali-G's pitch to Donald Trump of a glove to prevent ice cream from getting on your hands (if you haven't seen it please watch - hilarious). Anyone who loves ice cream has this problem and the potential market of people who eat ice cream is huge. You could probably find someone willing to pay $1 for it but there is no way anyone can build a real business off this. Of course, you never know.
> Note that I recognize that by this definition Facebook is a vitamin.
Facebook started its life as an immediate painkiller. They solved several problems for the most hyper-active of social groups: college students. The facebook-equivalent products at colleges at the time were either non-existent at most schools or atrocious. Then to amplify the Facebook benefit, the connectivity between the primitive school products was basically non-existent (that is, to the extent they existed, there tended to be no wider connection school to school). Circa ~2004-2007, Once students acquired the benefits of having Facebook as a social booster, leaving it would have left them worse off.
Some thoughts: internally we consider the "V" in MVP to encompass not just what is the minimum you need to do to solve a problem but the minimum to solve a problem (worth solving) at a level someone is willing to pay you for the solution. That often is more extensive than a traditional MVP which is why SAAS solutions require so much up front development. Consumers are not fond of subscribing to services and businesses don't like beta products.
A couple additional thoughts as we now actively sell 4 SAAS services:
- to be successful in SAAS you need to build something people need. They say there are two types of businesses: painkillers and vitamins. If you're a vitamin you are 20x more likely to fail than a pain killer. The value prop is just too hard to communicate and people's attention spans are too limited - the more you understand the user / workflow / domain the better. I realize this may sound obvious but I do my best to pay forward the mentorship I received and I am shocked at how often I come across people trying to solve other people's problems as an outsider.
- with the exception of notable billion dollar startups we all love and read about daily, I believe the dream of "build it and they will come (register, put in their credit card and bam you're done) is just that, a dream. Yes organic growth is real but all my buddies who have successful SAAS companies spent a ton of time and effort selling them before that organic growth kicked off. This could be an east coast vs west coast thing as my network is hitting niche workflows but worth sharing regardless.