Dear SaaStr: How Do I Actually Start a Successful SaaS Company?

Dear SaaStr: How Do I Start a Successful SaaS Company?

I think there are approximately 2 ways to get a new SaaS app off the ground:

Option 1: Hustle into The Enterprise.

In almost every category of software, there are gaps. Painful gaps. Generally, several gaps that any buyer has and would pay, say, $5k a month to solve. For example, an integration that doesn’t work well. Or a specific type of workflow that is missing in the standard app stack for that buyer. Or, in some less served industries, software at all to serve certain functions.

Go out and talk to 30+ Target Buyers and ask what their biggest problem is. Ask them if they would pay $5k a month to solve it. See if 1 will agree in writing.

Then go build that.

Far more enterprise-focused SaaS start-ups have started with a variant of this to get off the ground than you might think.

Here’s one example, Veeva, now worth $15 billion:

When I was a VP in a Fortune 500 tech company, I had a $500k budget to solve the problems in my business unit. I could use, say, $50k of that to solve a big gap in my tech stack. If that was you.

Option 2: Build a lot of slick stuff for SMBs, see what sticks.

This is riskier in some ways because, unlike the Hustle strategy, the initial go-to-market is murkier. But the general idea here is you build something you think the market wants. You build as many features as you can. And you try to convince people to try it. Usually free or freemium style.

This can work. But it often takes longer to get to first material revenues. It took the Mailchimp founders 2+ years of this before they quit their day jobs. It took the Notion founder years of iteration before it became the Notion we love today at an $800m valuation.

It’s risky because you don’t know what will stick, and what people really will value enough to pay for. It may take you 2 years to get to any material revenue, even if your product is awesome.

But if you can stick it out, figure out a way to get PR and attention, and ship a lot of software, this approach can get a product off the ground, too.

And the toughest one, because it’s niche, but:

Option 3:  Be One of the Top 5-10 Partners on a Key Platforn

Klaviyo rocketed to almost $1B in ARR by being the #1 app on the Shopify ecosystem.  This is a niche play, and a risky one.  But all the top platforms can mint a unicorn or two.