Why SaaS Ideas Don't Matter

Summary

In 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

00:00

🚀 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.

05:00

💡 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.

10:02

🛠 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.

15:03

📚 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.

Keywords

💡SaaS

SaaS stands for Software as a Service, which is a software licensing and delivery model in which software is provided to customers on a subscription basis. In the video's context, SaaS is the type of business model the speaker is focusing on, emphasizing the challenges and misconceptions solo founders may have when starting a SaaS business.

💡Solo Founder

A solo founder is an individual who starts a business venture without any co-founders. The script mentions that SaaS ideas may not matter as much for solo founders, highlighting the importance of focusing on viable business opportunities rather than just the appeal of the idea.

💡Viability

Viability in the context of the video refers to the potential for success or effectiveness of a business idea. The speaker stresses that technical founders often overlook the viability of their ideas, choosing them based on personal interest rather than market demand and business potential.

💡First Mover Advantage

The first mover advantage is a term used to describe the benefits that the first company to enter a new market can achieve over its competitors. The video mentions this concept to illustrate that even if an idea is unique, competition will likely follow, and thus, the idea itself is not enough for success.

💡B2B

B2B stands for Business-to-Business, which is a model where one business provides products or services to another business. The speaker suggests that B2B SaaS ideas are more likely to be profitable because they address the needs of businesses that are willing to pay for solutions to their problems.

💡MVP (Minimum Viable Product)

An MVP is a version of a product with just enough features to satisfy early customers and provide feedback for future product development. The video script encourages the creation of an MVP to test the market and validate the business idea, following the Lean Startup methodology.

💡Lean Startup

The Lean Startup is a methodology for developing businesses and products, which emphasizes rapid iteration in response to customer feedback. The video script refers to this approach as a way to validate ideas and build products that meet real customer needs.

💡Product-Market Fit

Product-market fit is a term used to describe a situation where a product meets the wants and needs of its target market. The video discusses the importance of finding product-market fit, suggesting that it is more important than the uniqueness of the idea itself.

💡Customer Conversations

Customer conversations refer to the process of interacting with potential or existing customers to understand their needs, preferences, and pain points. The speaker in the video underscores the importance of these conversations for validating business ideas and discovering opportunities.

💡Resource Investment

Resource investment in the video refers to the willingness of customers to allocate time, money, or other resources to solve a problem. The speaker argues that a viable SaaS business should address a problem for which customers are ready to invest resources.

💡Scale

Scale in the context of the video means the ability of a business to grow and expand, often by serving a larger number of customers or handling a greater volume of transactions. The speaker suggests that a problem worth solving with a SaaS product should have the potential for scale, making it more valuable for businesses.

💡Maker

A maker is someone who enjoys creating and building things, often associated with a hands-on approach to crafting products or projects. The video script contrasts the maker mindset with that of a business owner, emphasizing the need to shift focus from creating cool things to solving real problems and building sustainable businesses.

💡Analysis Paralysis

Analysis paralysis is a state of indecision caused by over-analyzing or over-thinking a situation. The video warns against this state, suggesting that it can prevent progress and learning, and encourages taking action and learning by doing instead.

💡Churn

Churn refers to the loss of customers or subscribers over time, often measured as a percentage of the total. In the video, the speaker mentions the importance of understanding and preventing churn as part of the business growth strategy, especially in the context of SaaS businesses.

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