Why SaaS Ideas Don't Matter
Summary
TLDRIn this insightful video, Tob O'Quinn, a former Google software engineer turned entrepreneur, challenges the notion that unique SaaS ideas are paramount for success. He shares his journey through various business niches, highlighting the importance of addressing real, scalable problems with a viable business model. O'Quinn emphasizes the value of customer conversations over chasing perfection and suggests that founders should focus on opportunities that serve paying customers. He also provides practical advice on recognizing viable opportunities and learning by doing, recommending resources to help entrepreneurs transition from makers to business owners.
Takeaways
- 🚀 **Embrace Failure**: Tobi Oqu believes that failure is a great teacher, offering personalized lessons and should not be feared but embraced.
- 🛠️ **Technical Founders' Bias**: Technical founders often choose ideas based on how enjoyable they are to build rather than the business model's viability.
- 💡 **Idea vs. Reality**: Ideas live in fantasy, while real businesses require hard work and time to build, with no instant success.
- 🤔 **Question the Idea**: The speaker suggests ideas are often overvalued and that competition is inevitable, so uniqueness is not the key.
- 💼 **B2B Over B2C**: For profitable SaaS businesses, B2B models are generally more lucrative than B2C, focusing on businesses' needs rather than consumers.
- 📊 **Scale Matters**: SaaS businesses should address problems that involve scale, making software a valuable asset in a business context.
- 💬 **Talk to People**: Engage in conversations with potential customers to understand their needs and find opportunities for viable SaaS solutions.
- 🔍 **Research and Opportunities**: Conduct research and look for business problems that people are willing to pay to solve, rather than just nice-to-have features.
- 🛑 **Avoid Analysis Paralysis**: Instead of endlessly searching for the perfect idea, commit to learning by doing and building an MVP to test the market.
- 📈 **Revenue and Retention**: Focus on solving recurring problems that help businesses save time, money, or make more of it, contributing to customer retention.
- 📚 **Recommended Resources**: The script suggests books like 'Deploy Empathy', 'The Mom Test', 'Start Small, Stay Small', and 'The E-Myth Revisited', and a YouTube channel for further learning.
Q & A
What is the main argument presented by the speaker in the video?
-The speaker argues that as a solo founder, the idea for a SaaS (Software as a Service) business is less important than the execution and the actual need for the product in the market.
Why did the speaker quit his job at Google to start a SaaS business?
-The speaker, Tob O'Quinn, quit his job as a software engineer at Google in January 2023 to embark on an entrepreneurial journey, seeking to build and grow a SaaS business.
What were the challenges Tob faced before finding a profitable niche for his SaaS business?
-Tob went through four different niches, including software for vocal teachers, e-commerce merchants on Wix, businesses using Airtable, and finally landing on Shopify apps, with the first one making $0 and the second hitting $10K MRR in a few weeks.
Why does the speaker believe that ideas operate in fantasy rather than reality?
-The speaker believes ideas operate in fantasy because they often don't account for the hard work, time, and effort required to build a successful business in reality.
What is the common mistake that technical founders make when choosing ideas for their businesses, according to the speaker?
-Technical founders often choose ideas based on how enjoyable they would be to build, rather than focusing on the viability of the business model and whether there is a real market need for the product.
Why does the speaker advise against the 'scratch your own itch' approach for beginners in business?
-The speaker advises against this approach because beginners often lack the experience to understand the real problems that business owners face, and thus may create products based on their own minor inconveniences rather than significant business needs.
What is the smarter approach the speaker suggests for finding business ideas?
-The smarter approach is to 'scratch other people's itches' by engaging with potential customers, researching niches, and understanding the problems they are willing to pay to solve.
What is the importance of talking to people and conducting customer conversations in the early stages of a business, as suggested by the speaker?
-Talking to people and conducting customer conversations is crucial for gathering qualitative data, understanding real problems, and identifying opportunities that can lead to the creation of a viable product.
What are the characteristics of a viable SaaS business according to the video?
-A viable SaaS business should solve a real, recurring problem, preferably one that involves scale, and there should be customers willing to invest resources to solve it.
What are some examples of viable SaaS businesses mentioned in the video?
-Examples include a Shopify app for recovering sales from abandoned carts, a monitoring platform for software businesses to resolve critical bugs, bookkeeping software for tracking spending and tax reporting, a social media management tool, and a firewall to prevent DDoS attacks.
What resources does the speaker recommend for someone starting a SaaS business?
-The speaker recommends books like 'Deploy Empathy' by Michelle Hansen, 'The Mom Test' by Rob Fitzpatrick, 'Start Small, Stay Small' by Rob Walling, 'The E-Myth Revisited' by Michael Gerber, and a YouTube channel by Dr. Tammer Shaheen called 'CEO Entrepreneur'.
Outlines
🚀 Starting a SAS Business: The Journey and Pitfalls
In this opening paragraph, Tob introduces his entrepreneurial journey, emphasizing the futility of focusing solely on SAS ideas. He shares his background as a software engineer at Google and his transition to entrepreneurship in January 2023. After experimenting with various niches, Tob found success with Shopify apps, highlighting the importance of understanding that ideas operate in fantasy while businesses require hard work. He warns against the common mistake of prioritizing enjoyable projects over viable business models and stresses the need to serve customers who are willing to pay for a solution.
💡 Idea Validation and the Search for Business Opportunities
This paragraph delves into the fallacy of seeking unique ideas and the importance of recognizing that every good idea faces competition. Tob argues that ideas alone are worthless without understanding the market and customer needs. He criticizes the 'scratch your own itch' approach, especially for beginners, and suggests instead to 'scratch other people's itches' by engaging with potential customers and identifying their pain points. The focus should be on opportunities rather than just ideas, and Tob encourages building an MVP and following the Lean Startup methodology to validate the business concept.
🛠 Embracing Failure and Committing to Learning by Doing
In the third paragraph, Tob discusses the importance of embracing failure as a learning opportunity rather than fearing it. He advises against the pursuit of perfection, which he sees as a form of procrastination and a barrier to progress. Tob emphasizes the need to transition from a maker mindset to a business owner mindset, focusing on solving real problems and delivering value to customers. He outlines the characteristics of a viable SAS business, including solving a recurring problem, the need for scalability, and customers' willingness to invest in a solution.
📚 Resources for Building a Successful SAS Business
The final paragraph provides a list of resources, including books and a YouTube channel, to help entrepreneurs build a successful SAS business. Tob recommends 'Deploy Empathy' and 'The Mom Test' for understanding customer conversations, 'Start Small, Stay Small' for early-stage marketing strategies, and 'The E-Myth Revisited' for a mindset shift towards building a business as an asset. He also suggests watching Dr. Tammer Shaheen's channel for insights on systematizing a business. Tob concludes by encouraging viewers to subscribe and like the video for more content.
Mindmap
Keywords
💡SaaS
💡Solo Founder
💡Viability
💡First Mover Advantage
💡B2B
💡MVP (Minimum Viable Product)
💡Lean Startup
💡Product-Market Fit
💡Customer Conversations
💡Resource Investment
💡Scale
💡Maker
💡Analysis Paralysis
💡Churn
Highlights
Controversial statement that as a solo founder, SAS ideas don't matter.
Introduction of Tob O'Quinn, a former software engineer at Google, who quit to start a SAS business.
Tob's journey through four different niches before finding a profitable one with Shopify apps.
Emphasis on the harsh truth that businesses take time to build and ideas operate in fantasy, not reality.
Technical founders often choose ideas based on enjoyment rather than business viability.
The fallacy of the 'scratch your own itch' advice for beginners in business.
The smarter approach of 'scratching other people's itches' by engaging with niche communities.
The importance of talking to people to find out what problems have business value.
Building an MVP and following the Lean Startup method as a key strategy.
The myth of the 'first mover advantage' and the reality of competition in good ideas.
The necessity of committing to learning by doing to avoid analysis paralysis.
Recognizing viable opportunities through research and conversations.
The characteristics of a viable SAS business: solving a real, recurring problem at scale.
The importance of people being willing to invest resources to solve the problem.
Examples of viable SAS businesses, such as a Shopify app for recovering sales from abandoned carts.
Book recommendations for understanding customer conversations and early-stage SAS marketing.
The mindset shift from a maker to a business owner who solves problems and builds systems.
YouTube channel recommendation for learning about auditing time and systematizing business.
Encouragement to subscribe and like the video for more content on the topic.
Transcripts
in this video I'm hopefully going to
save you six months to a year or more of
wasted time I'm starting off with a
pretty controversial statement and that
is that as a solo founder SAS ideas just
don't
matter so before we get into that who am
I and why should you even listen to me
my name is Tob
oqu um before starting my SAS business I
was a software engineer Google I
actually quit to go on this
entrepreneurship journey in January
2023 I went through four different
niches before finding one that actually
brought in profit I tried making
software for vocal teachers I tried
making software for e-commerce merchants
on Wix I tried making software for
businesses using air table and then
finally I landed on Shopify apps first
Shopify app made $0 and the second will
hit 10K Mr in just a few weeks I debated
whether to share that number at all but
I feel that it demonstrates how much
I've learned and that's a bit of
credibility so what's the problem with
ideas if there's one thing I want you to
take away from this talk is that ideas
operate in fantasy not reality the harsh
truth is that in reality businesses take
a lot of time to work and build there's
no such thing as just shipping it
and then Happy Ending honestly there's a
lot of Blood Sweat and Tears between the
start and your first dollar Founders
especially technical Founders tend to
choose um ideas based on how fun they
would be to build rather than how viable
the business model is great example
almost every coder can relate it's a
social media app in 2019 I created an
app called real it was basically
supposed to replace Twitter as you can
imagine it didn't take off I approached
it as oh this would be a really cool app
to build I'd have a lot of fun sharing
it with my friends but the reality of a
social media app is that you're actually
trying to build up an advertising
Network which is a totally different
goal ideas place a lot of pressure on us
to be unique when in reality every good
idea has come competition you know sure
there's a first mover Advantage but if
you're the first mover there's typically
going to be a second and third mover if
the idea actually has legs I think part
of the reason for this is that the ideas
themselves are kind of just worthless in
a vacuum so to make them sound like they
have value we try to say oh no one else
is doing it it just doesn't matter man
it just doesn't matter the most
important thing is are you serving
people who can can pay you do they want
to pay you and do you actually know what
to do to build a good product and put it
in their hands some common terrible
advice on the Internet is to scratch
your own itch man I could go on for a
long time about everything that's wrong
with it but really if I had to sum it up
it's really bad advice for beginners
because if you've never run a business
before you don't know what problems
business owners have the only thing you
could do is start a consumer business
from your POV for example you can start
an e-commerce you can launch an info
product you can do a consumer app if
it's based on your own problem but the
thing about you know most viable SAS
ideas that are realistic to make money
you kind of want to be looking at B2B
instead of B Toc for the most part a lot
of time if you just look at a problem
you have it's going to end up being
something really nice to have but not
necessary a smarter approach is to
scratch other people's
itches really you just want to talk to
people find some niche of businesses
that you can
reach um honestly if they have an online
community like if there's like Shopify
they have forums communities people are
on Twitter Etc um you know there are
companies that sell things they maybe
they use HubSpot or another CRM you can
find them just by making a LinkedIn
profile and they'll appear in your DMs
all sorts of niches of businesses you
can reach online just pick one and start
talking to people do a little research
and figure out what are people actually
paying to solve it gives you an idea of
what problems have business value in
their eyes and when you talk to people
that's when you're going to find out the
issues that the current Solutions have
and that's where actually
ideas will come from at that point it's
not really about ideas it's more about
opportunities and that's kind of the
point here that's when you'll build an
MVP Follow The Lean Startup method and
do everything that you've heard in YC
videos all the other videos on every
other
channel if you really think about it SAS
ideas are just and they're an excuse to
not actually make any progress that's
why at the beginning of this video
I mentioned that I was trying to save
you 6 months to a year of wasted time a
lot of people will spend that time just
constantly searching for the perfect
opportunity I mean in the four niches I
explored I could have started businesses
in any of them honestly every single
Niche had its flaws part of the reason
that I was able to make Shopify apps
work is because I just told myself I'm
just gonna see this through to the end
even if it fails just stop looking for
perfection Perfection is not real and it
comes from your fear of
failure instead lean into that failure
failure is going to be your best teacher
because it teaches you personalized
lessons
procrastination in the form of SAS ideas
really it's just an excuse to stay in
your comfort zone if you're a technical
founder you probably identify with the
maker label I mean you love to make
things you know you express your
creativity through software or building
projects and I got to be honest with you
there's nothing wrong with that but you
kind of have to understand that when you
cross the line from Hobby to business it
becomes less about building something
cool and more about meeting customers
where they're at solving a pain Point
delivering a solution to a real problem
and helping other people reach their
goals so we've spent enough time bashing
ideas let's talk about what you should
do instead if there are three things
three pieces of advice that I can give
you the first is learn to recognize
viable
opportunities honestly as long as you
put in the time to do a little research
and actually have conversations it's
going to be relatively straightforward
to recognize viable opportunities and
then you can assess am I the right
person to build the the solution to this
problem instead of being in a place
where you're like I don't even know what
problem I could possibly solve you need
to have conversations and draw
conclusions based on qualitative data at
least in the early stages let's be
honest if you have no customers you just
don't have enough data points to be able
to say oh this happens because of this
you can't really figure out cause and
effect relationships if you don't have a
lot of data
so instead that's where talking to
people and making educated guesses comes
in trying to overly rely on quantitative
data is usually what happens when you
want to avoid talking to people which is
also the same sort of lastly you should
commit to learning by doing instead of
staying trapped in analysis
paralysis let's look at what makes a
viable SAS business and then I'll give
you a couple of
examples it needs to solve a real
problem the whole thing about scratcher
onit that I hate is that it makes people
think that minor inconveniences are
viable businesses it just doesn't really
work that way this is why a lot of the
time people say I'm going to make XA but
with a better UI or a better ux and then
it doesn't sell any copies because
that's not usually the actual problem
it's mainly
nice to have right ideally it's a
recurring problem you know there are
other business models that are not
recurring that are perfectly valid I see
this happen a lot in the Indie hacker
space there are lots of people who make
you know sass boiler plates there's
nothing wrong with making a sass
boilerplate but if you think about the
nature of the problem it's solving it's
about enabling you to like start a
project quickly and that's something
that only really happens once unless
you're somehow launching like multiple
businesses in a short time frame which
usually means that those businesses are
not very
successful um the problem should involve
some level of scale this might be a
controversial opinion but honestly
software without scale it just creates
more problems than it solves a great
example is a productivity tracker you
know like a to-do list app or whatever
people usually use those to try to make
themselves more productive
and for the first couple of days it
seems like it has some results but over
time you realize that it creates a new
problem for you you have to establish a
habit of using the app and you have to
learn the app in the first place so for
an individual you'd probably just be
better with pen and paper or just you
know getting help with whatever
obstacles are in the way of your
organization but in the context of a
business maybe you have a thousand
employees and there are all sorts of
tasks and action items to pay attention
to now a productivity Tracker app could
have some value because it could help
you measure how productive are our
employees you know for the investment
we're putting to payroll what are we
getting out where are the inefficiencies
in our operational
structure that's why scale makes a
difference and lastly people need to be
willing to invest resources into solving
this problem there are a couple books
written about this and I'll mention them
at the end of the video but a common
trap people fall into is they get a
bunch of people who say yeah I would
totally pay for that that word would is
like a massive red flag because you know
they're not actually paying for anything
that solves their problem in actuality
today and people will be like oh great
that's validation I'm going to spend six
months building this app and then at the
end the person's like sorry I'm not
going to pay for
this so honestly usually you're looking
for a
B2B problem that you can solve with
software so as a bonus for staying this
long here are some examples a viable SAS
businesses I think I wrote out five so a
Shopify app that helps Merchants recover
sales from abandoned carts there are
tons of these and it's pretty easy to
see why this is a good idea it a it's
aimed at a spe specific niche of
business owners Shopify Merchants right
it solves a recurring problem these
brands are investing hundreds thousands
of dollars into ads every day to get
visitors to their site and a non-trivial
percentage of those people don't pay and
some of those people actually do make it
to the cart page or the checkout page
and for some reason or another they
don't buy but an app that helps you get
some of those people across the finish
line is going to help that Merchant make
a bigger return a monitoring platform
that helps software businesses quickly
respond to and resolve critical bugs I
use
Sentry I can tell you from firsthand
experience Sentry has saved me money by
catching bugs early if you don't catch
bugs early you're probably going to lose
customers both new customers and
existing customers and bugs are just a
natural aspect of software development
it's a recurring problem a bookkeeping
software that helps businesses track
spending streamline tax reporting
produce Financial forecasts great
example QuickBooks or zero again it it
solves a problem for businesses how do
we spend our money are we going to go
bankrupt in three months can we make
payroll all these questions it's a
software that helps you answer these
questions you know if you only had one
or two transactions a month you wouldn't
need software but if you're a bigger
business where you have thousands of
transactions per month if not per day
you've got the scale aspect that comes
in and makes software very
useful a social media management tool
that enables businesses to grow their
presence on multiple Channels with less
manual effort again it solves the
problem growing on social media takes a
ton of time it just does especially if
you're on like Twitter or LinkedIn where
you have to comment on a bunch of
people's posts I mean I've seen some
apps that come out that let you write
comments using AI again it's solving the
problem of it takes so much time you
know you've probably heard you want to
help a business save time save money or
make money pretty simple right last
example a firewall that allows
businesses to prevent being dosed I put
cloud Flur as an example I know they do
a million and a half other things but
for a while that's what they were most
known for if you were a big business at
that time time even today you're going
to have people trying to take your
business down and charge you a ransom to
bring it back up so lastly let's talk
about some resources if you want to get
started on the right
foot um so there are four books here
that I've read and one YouTube channel
that I recommend watching if you want to
learn about customer conversations I
recommend reading deploy empathy by
Michelle Hansen and the mom test by Rob
Fitzpatrick um you can can choose either
one if you only have time to read one I
recommend that you don't lose the
emphasis on customer conversations ever
I mean right now I have almost a
thousand people using my app and almost
600 customers and I still have customer
conversations almost every day you know
I had a call just yesterday um I'm
involved in text chats and that helps me
keep my finger on the pulse of what do
people want where are the opportunities
to improve the business how can I
prevent churn Etc um for early stage
sass marketing I would recommend the
book start small stay small by Rob
Walling there's also a YouTube video
that I recommend I didn't list it here
but it's by Asia arangio um the title if
I remember correctly is how to get your
first 100 SAS customers great video make
sure you watch it at least twice and
then as far as mindset shifts as an
entrepreneur to help you shift from
building cool things I'm a maker who
makes cool things to I'm a business
owner who solves problems and builds
systems I recommend the book The emyth
Revisited by Michael Gerber it's pretty
long um probably just get the audio book
I would listen to it on walks listen to
it while doing other things um lastly
there's a YouTube channel by Dr Tammer
Shaheen called CEO entrepreneur just
look it up he has really great videos
about auditing your time systematizing
your business really gets you in that
mindset of someone who's growing their
business as an asset so if you found
this video helpful help me out by
subscribing and liking it lets YouTube
know that you're interested in seeing
more content like this I'll probably be
making more videos in the future sure
have a good day
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