This could be a very short article.
There is one common thread I’ve seen woven through every failed early-stage SaaS startup founder’s mindset. Before I go on, though I am talking about failure, I want you to know the purpose of this article is to shed light on a major pitfall when launching a new software platform. I want you to succeed, not fail, as a SaaS founder. How do I know the things I’m about to tell you? Quick summary of my experience: I’ve built several platforms for other companies, acting as their development shop, consulted software startups, and I’ve built three software platforms: two of which I’ve successfully exited, and, I’m currently scaling my third. After nearly two decades of experience in SaaS, I’ve seen this common thread among early-stage SaaS startups that don’t make it.
The one thing every single early-stage founder believes (and they are always wrong)
In my experience, every single failed SaaS startup has a founder who believes their platform is so great and so needed in the world that as soon as it is launched, people will be running after it in droves to sign up and give them money. They are always wrong. Yep, I said it. Always. Wrong. Simply put, having this mindset is both unrealistic and overconfident and sets anyone up for failure. As with any new venture, you have to have realistic expectations. Often if you are unrealistic about your startup, you are also overconfident. I get it. You’re excited. And, you should be! What’s more fun than coming up with an idea that you believe is going to be a game-changer for the world? As an entrepreneur who thrives off of turning ideas that often spark in the middle of the night, or are scribbled down on a paper napkin over a lunch date, into full-blown revenue-producing businesses, I get it. There’s nothing more fun. So, of all people, I agree that when it comes to launching a new platform, you need to be confident in your platform, but it’s overconfidence that can be your Achilles heel. And trust me, there is a difference.
When talking to new SaaS founders who have both these traits, they usually agree with your advice on a call, but are only pacifying you as deep down inside they truly believe their idea is different. I’ve experienced this time and time again. You’ll know this to be true because, on the next call, they bring up again how great their idea is and how they know everyone will be signing up.
In their minds, their biggest problem is: they just need to get their software out into the world.
Their biggest worries are: how fast can I get my MVP built, how in the world am I going to support all of the users coming on so fast, and how am I going to know which investors to go with because all of them are going to want a piece of this software?
One of my clients actually asked, “Do you think we’ll have 1,000 signups in the first month, or do you think it will be more?”
This was a B2B platform with no previously acquired customers to sell to. They closed their doors 10 months after launching their MVP because they had no more resources, had only a few paying customers, and had no more motivation to keep trying to find their traction channel. They had spent hundreds of thousands of dollars getting to the point of closing their doors. This is not a special circumstance. I. SEE. IT. ALL. THE. TIME.
If you fall into the above, please read on…
If you are a SaaS startup founder who thinks your software is going to have people bursting at the seams to signup, you may have been bitten by the unrealistic/overconfident bug. As the founder, you may be tempted to spend all of your money building your MVP only to find yourself with no budget to keep your company operating in order actually identify your traction channel(s). Your MVP is not meant to be everything you ever wanted in your platform. If you do pack everything in too early on, it is difficult to course-correct. Development is expensive, and every add you make to development is going to cost you a lot. Don’t compare yourself to the platforms you use every day; remember, those are mature platforms. Your MVP has to be the most barebones development needed to start getting user feedback on it. Sometimes it may be thrown together using Webflow and Memberstack. You need a proof of concept before blowing your budget. Most likely, what you think you need for your MVP is very inflated, and you could remove 90% of what you think you need in there. The one thing you will learn as you get your product out into the world is how many things you got wrong on your product and need to adjust. Again, if you do this too early on, it is difficult to make needed adjustments when spending every penny counts.
This isn’t meant to crush your ego, only to keep things real
I once heard that a true friend is someone who tells you the truth. Consider me your friend when I tell you what I’m about to tell you. You aren’t special and your product isn’t special, until you and your product actually do become special and, in reality, that can take years of fight to get to. You have to be willing to be humble, accept corrections, do the hard work, and persevere. You just aren’t going to make it if your ego and your expectations are unrealistic. Your software platform will never be the field of dreams. It take months, more often years, of testing and tirelessly figuring out your traction channels. If you listen to NPR’s How I Built This or read books by successful founders, you will hear the pain they went through to get where they are today. None of them say it was an instant success! Even the software greats like Google have had major failures. For example, remember Google+? It was Google’s social network competing against Facebook. If you are young, you may not remember it because it only lasted a few years. Even millions of dollars in development, marketing, and down-right bullying to use the platform couldn’t get the user engagement needed to make it a lasting platform.
So to sum up, if you want to succeed (and not fail) as a SaaS founder, be realistic. Truly build the most viable product and not the product of your dreams straight out the door. Be confident, but not overconfident. Remember, there’s a difference. Keep it simple at first: don’t blow your budget right out of the gate. Test and keep testing to find your traction channel(s). Reading Traction: How Any Startup Can Achieve Explosive Customer Growth is awesome at dissecting what successful startups have done to find their early adopters and grow into the unicorns they are.
Meet The Author: Alane Boyd is a Nashville-based founder and President of Arvo, a documentation tool designed to help teams effectively create and share essential information. Learn how Arvo can help you build everything from SOPs, team playbooks, to visually-stunning client portals here.