I've got an idea for a SaaS business - how can I tell if it's good?
What's validation look like if your bootstrapping?
Every boy and his dog has written about how to validate whether your business idea is any good, and there’s so many frameworks for validation floating about.
Like 99% of business guru advice, the meat of how to validate is actually common sense.
Before I go through how I’d validate a new idea though - there’s something to get out of the way. What even is “validation”?
Here’s my definition of validation for bootstrapped SaaS.
Validation is doing whatever it takes to build your conviction that you will be able to take this idea and turn it into a successful business.
There’s a bit to unpack here;
It’s about YOUR conviction. If you intend to bootstrap, then you’re not building a case for investors, the media, or anyone else. You’re building a case for you. There’s nothing wrong with validating for others, and in and of itself it can be a helpful exercise to figure out how you would communicate and validate the risks that others may see in your idea, but at the end of the day, it’s going to be your time, energy and focus that’s at stake, so the only person you have to prove it to is yourself.
Validating an idea requires work up front, introspection, and to be as objective as you can about your freshly baked idea. You’ve probably got a good read on whether you’re naturally pessimistic or optimistic with this kind of thing, so try and temper your nature if you can.
OK so how do we practically go about validating a new idea?
Define the business
Well an idea isn’t a business, and a product isn’t a business either! To figure out what to validate, you’ve got to have an understanding of how the business could function.
I whole heartedly recommend using a process like the Lean Canvas to create a simple, but holistic overview of what the idea looks like in action.
Alternatively, you can just run through these questions, and see if you’re happy with your answers;
What’s the “problem”?
What existing solutions are there to this problem (e.g. competitors)?
What’s your solution?
How is your solution different?
Will customers care about the difference?
How can you quickly communicate what makes your solution unique (i.e. your Unique Value Proposition)?
What do possible customer segments look like (who has this problem, that could pay you, or that you could make money off of)?
How are you going to find customers?
If there are established competitors, how will you compete? What advantages do you have they they do not?
Is the proposed solution possible to build - can you build a v1?
How much is it going to cost to run? What ongoing costs will there be?
How is it going to make money?
Vote of least confidence
Now that you’ve got an outline of the shape of what the business could be, where are you least confident in your answers?
Write it out.
Write out why you’re not quite buying what your selling!
If you don’t have any doubts, then congratulations - your either blindly over-confident or you’ve got a strong plan, and you should go make it happen.
For the rest of us mortals the highest “risks” in a new business often look something like these;
Is this a genuine, big enough problem?
I don’t know how to find customers
I don’t know if anyone will pay me for this
Is my solution viable?
I don’t know if I can build this (or afford to pay someone else to build it)
I don’t know if I can compete with big established players
But context matters! If you’re entering into an established market then you probably won’t be as worried about #1, #2,# 3 but you’d better have a good answer for #6.
On the other hand, if it’s a completely green market, then competition isn’t as big a risk as #1, #2, #3…
Go figure out how to test your answers so that you can be confident that it’s going to work.
Learn, adjust, pivot, re-evaluate
An new idea rarely comes out perfectly complete, or ready to go execute on. The whole reason to go through a validation process is to refine the idea to something you feel comfortable betting your time and energy on.
If you run through this process repeatedly, you’ll find that the idea will shift - perhaps you’ll focus on a different customer segment, or the problem will turn out to be symptomatic of some larger underlying issue, or there will be a new technology breakthrough that will let you build a 10x better solution.
Eventually you’ve got to make the decision to take the leap and start executing. In fact - it’s really hard to really validate an idea until you start trying to make it a reality.
The reality is that validation doesn’t really ever stop, because your business isn’t a static thing.
The market changes, new competitors turn up, new technology comes up, customer acquisition channels stop working － being a founder is largely understanding how the engine works, and the environment it’s running in. Most of the time, you just tweak and optimise - but sometimes you’ve got to go build a whole new engine.
Theory applied －validating Dubble
Here’s my answers.
What’s the “problem”?
Communicating how to use software is difficult, time consuming, and often requires doing all over again when processes change.What existing solutions are there to this problem (e.g. competitors)
Manual screenshots and word docs (classic SOP)
Automated documentation tools → Iorad, Tango, Scribe, several smaller players
Video screen recording software → Loom, built OS screen recording tools
What’s your solution?
Dubble provides an automated recording tool that rapidly speeds up the process of creating step-by-step guides that are both easy to create, and optimised for consumption in multiple ways (video, screenshots, text description).How is your solution different?
Dubble is a screen recorder AND a documentation tool. This solution wedges between two separate approaches in the market:Loom optimises for video consumption above all, but video isn’t a one size fits all solution for documentation.
Other documentation tools focus on speed above all else, and so don’t support screen recording.
Will customers care about the difference?
This was the biggest risk of Dubble - that no one would care enough about video in their documentation software. A lot of the market still used Loom as a solution for this problem. This was where I was happy to place my bet.
How can you quickly communicate what makes your solution unique (i.e. your Unique Value Proposition)?
Dubble watches how you work and translates your actions into written step-by-step guides, screen recordings and screenshots - so you don’t have to.What do possible customer segments look like (who has this problem, that could pay you, or that you could make money off of)?
In the long run Dubble could be quite a horizontal product, at the end of the day it’s an async communication tool. There are some obvious target segments though;Customer success for SaaS businesses - communicating with customers and maintaining documentation
HR/Ops departments - new employee onboarding and training
Agencies - creating SOPs for outsourced or remote employees
How are you going to find customers?
Thankfully this isn’t my first rodeo, we also run Paperform which we have grown through PLG, SEO and word of mouth/referral. Dubble is positioned to target a similar sized customer base, so the initial bets are that similar acquisition channels would work. Also, as a collaborative communication tool, there is opportunity for Dubble to have some built-in virality.
If there are established competitors, how will you compete? What advantages do you have they they do not?
Price: we’re bootstrapped, and already running a larger profitable business - so we don’t need Dubble to make big money fast. As most direct competitors have serious funding backing, the clock is on for them to make a return.
Functionality: The addition of screen recording was the initial differentiator - but I fully expect as we learn from the customer base, there is room to continue differentiating in unique ways.
Experience: We’ve built a similar business before - we have strong intuitions on where our time is best spent when building and growing Dubble.
Is the proposed solution possible to build - can you build a v1?
I reckon so.
How much is it going to cost to run? What ongoing costs will there be?
Bootstrapped, build and launch solo. The only fixed overheads are server costs, which are very reasonable, and could be optimised if needed.
How is it going to make money?
Self-serve subscriptions, ideally seat based pricing. Later there is room to enter into larger Enterprise contracts. We want to see customers naturally increase their spend as they use the product more.
So how did I validate these answers? Well tbh - I didn’t really. The biggest risks in the idea to me were that no one would actually care about the solution, or that it’d be super difficult to build.
So validating meant getting started!
What are you waiting for?
A small aside on “MVP”s
I don’t believe Minimum Viable Products work unless you’re inventing a completely new category. If your entering an existing market, then you need to build an offering that is polished, and competitive. It doesn’t need to be “feature complete” - you don’t have to have all the bells and whistles competitors have, but it needs to be functional, beautiful and ready.