SAAS Execution, Dane Maxwell style

[piesandak47]

Really...your god?

A bit extreme, don't ya think?

 

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[MartinH]

I'm in two minds about this. Thousands in pre-sales is going to take MONTHS

Agreed, if I was to develop an all-in-one accounting+CRM solution it would take many months to get pre-sales because big companies don't just switch to a new software product just because it looks promising.

But for what I want to develop - an MVP with few but powerful features that solve one specific problem - it might just work!

Development is gonna cost more than just a couple thousand dollars so getting $1-2k in pre-sales is a necessity.
500 bucks is not enough (IMO) to prove that there is strong demand for what I want to develop - no foundation for a sustainable business.

I've noticed mixed responses with that "software" word as well. But it kind of feels dodgy because you're going to need to mention it at some point. From memory Dane Maxwell has said a couple of times that he likes to be honest and actually does mention software pretty early. To be honest I've mentioned it a lot and haven't had TOO many problems.

I'm trying different approaches all the time. When I'm cold calling I always introduce myself as a college student (and almost always get to the CEO). Today a female CEO even told me that when a "software developer" calls they immediately hang up because they can't be bothered because they don't have enough time to discuss software on the phone. Having said that, she still somehow found the time to talk with me for 30 min. about software. I call .

But when I'm sending out personal messages on Xing I introduce myself as a software developer and several CEO's already wrote back (I sent them a message yesterday evening)
So I guess it matters in what context I introduce myself.

 

[MarkOB]

Kudos on the amount of action-taking

Following along helped me revive my progress too as I realised I'd been putting off getting on the phone for some cold calls - I've found a pretty low response rate to emails in my industry too

You're bound to find a decent problem if you can sustain this level of action+reflection

 

[MartinH]

Day 16:

After cold calling several companies I had two long IE calls today.
Both were really positive and interesting and there was no shortage of problems to attack ^^ It was actually hard to pick just one.
I especially liked how one CEO was really patient with me and took her time to explain a specific problem properly and in great detail.
It reminded me of that IE call Dane had with this Pool Cleaning Company Owner:
I could let her talk and would just occasionally interject "how does that work exactly" or "what happens then" or even "that sounds painful" and it would keep the conversation going. Took some valuable information about the industry out of that call.

I concentrated on one problem (the most painful one) and asked if a software solution would be helpful and she said "Hell yeah, we'd need that. It could save us a lot of time."

My problem is:
Out of all the IE interviews I conducted I have yet to find two companies with similar top problems.
Every CEO seems to have different problems and they all put different emphasis on their problems.
It's because some problems only occur in companies with >100 employees and others mostly occur in small businesses and it's not
always easy to distinguish those two types as all companies try to look big on the internet ^^

Until now I was getting more and more familiar with the industry.
In my future calls I'll ask CEO's directly if the painful problems I've found so far are also an issue in their company.
Only if those problems don't occur in that company I'll keep asking for different problems.

Tomorrow I'll have an interview with a CEO who wanted to talk about opportunities and also I'll have a job interview.

 

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[MartinH]

Day 17:
Had 3 good IE calls today. Turned out that the companies that best fit my criteria (>100 employees, several millions in revenue) were the ones most willing to talk to a student doing research. Win Win - for me ;-)

I heard about many different new problems today but most importantly I found out that 3 CEO's I've interviewed so far are having the same problem.
I have no concrete idea how to solve that problem with software but at least I found an unsolved painful problem that occurs more than once.
It's not a problem that is costing them a lot of money (like lost revenue) but it does take up a lot of time. It's a major nuisance.
Of course I'm still far away from creating mockups and pre-selling my solution but it was a huge step in the right direction.

In the afternoon I phoned a CEO who replied to my message on XING and he said we should grab lunch some time and talk about what Software I could develop for their company. Sounds promising and it would be my first in-person meeting. Really excited about this.
It's the first CEO who will get to know me as a "developer" instead of just a student.

Later that day I met up with a freelance developer who's looking for a colleague.
I'm not a programmer myself, a beginner at best, but somehow I felt the need to apply.
During our conversation he said that he doesn't need a Web Designer, not even a Javascript Programmer (those are my only two skills).
He's mainly developing in RoR so he suggested I should learn Rails and then in 1 month come work for him as a freelancer.
First I wasn't too sure but he also offered his assistance and guidance - he basically said he'd be my mentor.
Since I want to do SaaS for a living and web development is what I'm really excited about I consented.

No idea how hard it's gonna be to learn a new language + a new framework - but it's something that just feels right at the moment.

If I want to succeed in this industry I need to learn from the best and this guy has 15+ years experience and I'm sure I can learn a lot.
Also knowing how to code and going to meet-ups and hackathons will definitely help me find competent programmers for future projects. Or even for my current project.

 

[throttleforward]

My only recommendation is to keep pushing on calling more folks. My regret when I went after SaaS was that when I got my first tastes of success and started identifying pain points, I kinda stopped calling folks and just focused on the few companies that I got a positive response from. What I should have done was got 10+ additional companies interested, because as the project moved along my initial companies lost interest, and I lost momentum.

Great work!

 

[MartinH]

My only recommendation is to keep pushing on calling more folks. My regret when I went after SaaS was that when I got my first tastes of success and started identifying pain points, I kinda stopped calling folks and just focused on the few companies that I got a positive response from

Thanks for your comment! Good to get feedback from more experienced entrepreneurs.
I'll definitely keep calling companies and looking for problems.
Although I identified a possible problem I won't rest until I have nice green €uro bills in my hands. There's still so much to do!
My goal is to get >5 companies to fund a part of my development.
Cash is king

 

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[throttleforward]

I think Dane talks about a 3-3 rule, where 3 companies have to independently indicate that they have a particular pain point, then you go pitch to other companies until you find 3 additional companies that are willing to pay for it (as indicated via presales). You would pitch the problem/solution directly, as opposed to idea extraction to find the additional three.

 

[JimmyRose]

Development is gonna cost more than just a couple thousand dollars so getting $1-2k in pre-sales is a necessity.
500 bucks is not enough (IMO) to prove that there is strong demand for what I want to develop - no foundation for a sustainable business.

May as well aim big I guess. The foundation guys only look for around 5 pre sales. They can be between say 100-2000 each. Getting five people to pay money before the product exists is proof enough for me.

Day 17:
Had 3 good IE calls today. Turned out that the companies that best fit my criteria (>100 employees, several millions in revenue) were the ones most willing to talk to a student doing research. Win Win - for me ;-)

He's mainly developing in RoR so he suggested I should learn Rails and then in 1 month come work for him as a freelancer.
First I wasn't too sure but he also offered his assistance and guidance - he basically said he'd be my mentor.
Since I want to do SaaS for a living and web development is what I'm really excited about I consented.

No idea how hard it's gonna be to learn a new language + a new framework - but it's something that just feels right at the moment.

Wow that's interesting... maybe I should aim bigger too

And dude, that is AWESOME. Having someone to mentor you in Rails will be great. I'm halfway through the Pickaxe Rails book and have been through the Pickaxe Ruby book. Rails and Ajax are tearing my brain apart but it'll be good in the long run.

Some people discourage learning to code though, on the premise that business owners don't code. Development can be a lot of fun though so this is something I can't make my mind up about

 

[MartinH]

Some people discourage learning to code though, on the premise that business owners don't code

I totally agree that learning to code by itself doesn't get anyone closer to creating a sustainable business. Extensive market research and acquiring customers do.
So if I were to choose between doing my cold calls OR learning to code, I'd choose the cold calls.
Luckily I don't have to choose - my day has 16 hours so I can do market research during the first half and then concentrate on coding.

Development can be a lot of fun though

I totally agree, creating something is always fun.
I love building stuff with my hands and I equally love creating websites and apps.
But that doesn't mean I can't sit back and let a team of more competent programmers do the hard work
It was through Dane that I realized I don't have to do everything on my own to get this feeling of accomplishment.

 

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[tafy]

I just want to add to the discussion about the need to get pre sales.

I believe in a market where SaaS applications already exist and companies are already using it would be totally waste of time to get any pre sales (why would they give you money to develop something that already exists), the demand is already proven and theres competition from the start which means theres a need thats already been met.

This is personally the kind of market I would enter as you are guaranteed to have paying customers interested, the work will come to differentiate yourself from the established providers already in the space.

 

[MartinH]

I believe in a market where SaaS applications already exist and companies are already using it would be totally waste of time to get any pre sales (why would they give you money to develop something that already exists), the demand is already proven and theres competition from the start which means theres a need thats already been met.

The point of pre sales is to verify if there's demand. I want potential customers to put their money where their mouth is.
Getting pre sales may be hard but it's never a waste of time.
Besides, customers are not paying for development, they are basically paying for the first >3 months of use. Most SaaS companies charge their fees annually so paying for 3 months in advance shouldn't be too much to ask.
Personally I wouldn't consider the demand 'proven' if companies are paying for similar products - only if they consent to using my product and at the same time take their money and put it in my hands

No seriously, I don't have enough time or money to fail this time so I better make sure there is demand.

And even for what you're trying to do it would be awesome if you could get pre sales. Doesn't need to be much, just a symbolic amount. In russia they say "a small rubel is worth more than a big 'thank you' " I guess that is valid even outside of russia

 

[throttleforward]

I believe in a market where SaaS applications already exist and companies are already using it would be totally waste of time to get any pre sales (why would they give you money to develop something that already exists), the demand is already proven and theres competition from the start which means theres a need thats already been met.

It's also a way to get a leg up on the competition. Let's say he makes a copy cat SaaS (or something very similar to an existing solution), one of his primary differentiations might be that they are getting an "early adopter deal" with him. A lifetime discount plus the ability to influence the development and feature-add process is a pretty strong reason to switch from an existing solution to his (assuming his is equally functional as the existing solutions).

 

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[MartinH]

Day 18:

Today was public holiday so I couldn't phone companies.
Sent out a few messages on Xing, that's all.
I was happy that I had some free time today and so I focused on improving my Ruby skills.
I completed 60% of Codecademy's Ruby course and finished CodeSchools free course "Rails for Zombies". Then I skimmed through several books (among them "RoR Tutorial" by Michael Hartl and "Agile Web Development" by David Hansson).
My first impressions are very positive: I like Ruby's syntax and I'm pretty amazed at what Rails is capable of.
My previous knowledge of Javascript is helping a lot but still Ruby is very different.
I believe that if I keep using the best tutorials (like CodeCademy & CodeSchool for starters, later books) and try to develop my own applications I'll at least become proficient soon.
Although my Mac has Ruby pre-installed I'm using Nitrous for development. It just seems "cleaner" to me and it will allow me to develop in the cloud and collaborate with my mentor.

 

[donny123]

wow, awesome progress thread. keep it up!

 

[JimmyRose]

I just want to add to the discussion about the need to get pre sales.

I believe in a market where SaaS applications already exist and companies are already using it would be totally waste of time to get any pre sales (why would they give you money to develop something that already exists), the demand is already proven and theres competition from the start which means theres a need thats already been met.

This is personally the kind of market I would enter as you are guaranteed to have paying customers interested, the work will come to differentiate yourself from the established providers already in the space.

That's a pretty valid point. It's kind of pre-done market validation. That said, finding out what they like and don't like about what is already out there is important, so you can find a good point of differentiation

 

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[tafy]

That's a pretty valid point. It's kind of pre-done market validation. That said, finding out what they like and don't like about what is already out there is important, so you can find a good point of differentiation

Exactly, like your never going to get someone to pre pay for a car your planning to build as cars have been validated and in use already. if you still want to build a new car then you still need market research in what people would like in a car (price, quality, design etc)

I think Dane has cool points about pre selling but thats only for software where none already exists to do the job, nobody will pay you if theres software out already doing the job for them.

Thats whats great about going into a market where theres already solutions built for them and they are using it already and paying for it. You need competitive analysis to determine where they fall short

1. They might be using very old complicated UI
2. They might have programmed it badly to start and cant add features easily or fast enough
3. Their price may be sky high and you can come in half what they are
4. They may be doing everything for everyone and you want to specialize in one section and cut the other stuff out

I think theres a ton of talking about finding the need and extraction calls etc when there hundreds of applications thats already been validated and all you have to do is build a better version.

etc

 

[MartinH]

Day 19:
Although technically it wasn't public holiday today most companies were using this friday as a bridge day.
I still called a few companies and scheduled follow up calls for next week but honestly I did this just to feel busy.
No real conversation with any CEO today.
At least it gave me some free time to do the stuff that I've been missing.

I used this friday for an excessive gym session and subsequently spend hours learning Ruby ^^
I finally finished Codecademy's Ruby course and then created flash cards in Anki to practice Ruby syntax.
Programming itself is not something that can be learned by rote memorization, but syntax is
So far I really love Ruby. As a matter of fact: If I could start over, I wouldn't start with Javascript, but rather with Ruby.
It's so beginner friendly, it makes writing code a joy.

I also accomplished a first assignment for my mentor today. And was paid for it.
Not much, it was more a symbolic gesture - but it established a connection between us.

 

[MartinH]

I think theres a ton of talking about finding the need and extraction calls etc when there hundreds of applications thats already been validated and all you have to do is build a better version.
etc

You got a point there. I will contemplate on this.
I have no idea if the problems I identified so far are painful enough for those companies to pay "big bucks" for a solution.
On the other hand several CEO's complained to me about their deprecated and overpriced software.

My options are:
1. Solve an unsolved problem (found two unsolved - but solvable - problems)
2. Improve existing software (found three CEO's who want better/cheaper software than the one they've got)

Both approaches have their advantages and disadvantages.
But thanks for reminding me that there's more than just one way to do this SaaS project

 

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[MartinH]

Day 20:
Finished CodeSchool's Ruby Bits Course, read "Learn to Program" (a little bit too basic) and read about typical Ruby concepts on StackOverflow.

 

[JimmyRose]

If you're looking for more stuff for learning rails, Google "agile web development with rails 4". This is considered one of the best starting points by a lot of developers. Did a lot of research and talked to a bunch of devs who recommended it.

 

[MartinH]

Day 21:

If you're looking for more stuff for learning rails, Google "agile web development with rails 4".

Read the first 4 chapters of Agile Web Development with Rails. Thanks for the hint Jimmy, my mentor also recommended that book.
Worked through the tutorial "Getting started with Rails" and then just tweaked that app on Nitrous.io.
I really like how Rails encourages (enforces?!) Convention over Configuration. I found it immensely helpful, especially at the beginning.

 

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[MartinH]

Day 22:

It's been 3 weeks already, time really flies
Time for some reflection.

I really concentrated on getting through to the CEO's and having long IE interviews with them. I was unexperienced and shy and my main goal was to actually talk with as many CEO's as possible. I succeeded.
Out of the ~100 cold calls I made, 14 of them led to IE interviews of >45 min. each.

But in order to get past the gatekeepers and get the CEO's to open up about their problems to a complete stranger I introduced myself as a college student and not as a software entrepreneur. This enabled me to have a >45min. conversation right after cold-calling some company. But still I'm not happy with the results.

I wasted precious time talking to companies that
-weren't even profitable or that
-were too small or
-didn't even use software (except for bookkeeping)

Also I basically stopped sending out emails because the cold calls were really successful.
So now I'm stuck with a bunch of different problems, not sure which one to solve (if at all) and I don't even know if companies would actually pay for a service like that. Plus I'm only known as a student - so revealing that I'm also a software entrepreneur might come as a shock/unpleasant surprise.

I got 8 days left until my (self-imposed) deadline and I really want to find an expensive problem to base my SaaS service on.


Dane said that he needed 6 months to find and validate his idea for Paperless Pipeline.
(although he had a background in RE and a relative working there, too)
I heard he found the problem that he based his software on at the end of those 6 months by questioning ONE very successful CEO (who then gave him the idea for Paperless Pipeline)

The way I see it, I should go for quality (over quantity) of IE calls.
I guess having a 2 hour in-person conversation with a "friend" who's working in a managing position in some company easily beats having 20+ 30min. phone calls with random CEO's. It just takes so much time to get through to someone and establish a level of trust to get him to reveal level 4 problems.

So during the next days I will send out MANY personal messages on XING, try other industries and see where people are most eager to get back to me as a developer. I will try to get them to meet in person or at least reserve an hours for a conversation.
I won't introduce myself as a college student anymore but only as a software entrepreneur. I'm sure I will get more rejections this way but the people who do get back to me are gonna be on the same page.
So much to do, so little time....

The good thing is I got used to doing cold calls, I improved my interviewing technique and I grew much more confident. So I consider the past few weeks "practice" for the more decisive conversations that I am going to conduct in the next weeks.

Update: (later that evening)

Sent out 60 messages on Xing. 4 CEO's already accepted me as a contact within minutes. Let's see how many of those 60 people will get back to me within one week!

I also created my first commit with Git and then deployed a small To-Do App I built in Rails to Heroku. Great success!

 

[MartinH]

Day 23:

Again I didn't cold call anyone today. The only call I made was with a CEO I had spoken with last week in order to schedule an in person meeting for tuesday next week.
I also replied so some CEOs on Xing that wanted me to call them back.

I compiled all the problems I found so far and altogether I found over 18 different problems - in the property cleaning / facility management industry alone. Many days ago I set a deadline. I committed to finding a real, painful problem to solve by may 12th - while this date is getting closer I already found many problems and I have to decide which problem to focus on. Not all problems I found can be solved by software and some simply can't be solved in a simple way. I have some ideas for possible solutions but only my customers can tell me if they'd like them.

So I decided to stick to my industry and concentrate on the problems that many companies share. I'll try to have several in person meetings and build a relationship with my potential customers.
And then - once I will have validated a specific problem - I will get those pre-sales!

There's still so much work to be done but I'm confident that the path I'm following will lead me to a successful business.
I'm starting with my customer's problems in mind and I will do everything to provide a valuable solution.

 

[MartinH]

Day 24:

I did several cold calls today and introduced myself as a developer - the CEO's were not so excited.
One of the CEO's told me about software they're using which solved basically all the problems they had.
I checked it out and it turned out there's a software company in Germany that has been developing software exclusively for the property cleaning industry for 20 years now and now they're offering a huge variety of applications specifically designed for property cleaners.
I'm talking SaaS, mobile apps, hardware, accounting, etc. Three of the bigger property cleaning companies I called are using their software and they called it the "Rolls Royce" of software.
I'm not intimidated but still it's something to keep in mind.

I also called a CEO I met on XING and this conversation was great. I even found a "new" problem that would actually be very easy to solve.
XING really seems to open doors for me. I can send CEOs personal messages and add them as a "contact" and then do a follow-up call - easy. And a much more classy approach to get past the gatekeeper.

Later that day I read in the "Rails Tutorial" by Michael Hartl.

 

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[tafy]

This german software, see what the price is, try to test it out yourself with a demo account. See if it fits small companies and if you can do a cut down version for small businesses

 

[MartinH]

This german software, see what the price is, try to test it out yourself with a demo account. See if it fits small companies and if you can do a cut down version for small businesses

Thanks for the advice man! That would definitely be something to think about. They don't offer any trial accounts, though. And you have to prove you're really a property cleaning company to even get a demonstration of their software. And they don't reveal their pricing anywhere either but from what I heard from several companies (w/ >100 employees) who're using their software "it ain't cheap". For the mobile (iPhone) app I know that for a company with about 100 employees the monthly fee would be about 1.000€

And the problem is even if I wanted to imitate one of their software products and strip away features and make it more affordable for SMBs it would still take a huge effort to replicate the basic features that customers expect.

GOLDEN RULE: If it's not simple it's too complicated

Simple is gold, simple is everything that works. Anything complicated was something simple with a bunch of other simple things stacked onto it. Complicated breaks, fails, sucks. Don't do it.

'Nuff said.

I'm really unsure about which problem to concentrate on because the more expensive problems would require a very sophisticated solution and I don't want to risk screwing up my first SaaS business because I focused on a very complex solution that ended up costing more time & money than I guesstimated. (I did that mistake once and I don't intend to repeat my mistakes)

The hard thing about finding an appropriate problem to solve with SaaS is that it should be expensive, yet simple.
The solution should be easy to do - like connecting two APIs to save hours of migration-work, automating a bureaucratic process, an app that automates a tedious task, etc.

 

[tafy]

Ok so lets see why you think its too complicated for the main feature?

Im guessing its time management right? like a diary for each cleaner with time slots for each job?

Can you break down this too big to program problem into small pieces?

You dont have to solve an expensive problem per se, but something that makes life way easier is good too. Time saving = cash.

Im sure if you think about it its not that hard to program

 

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[MartinH]

Im guessing its time management right? like a diary for each cleaner with time slots for each job?

That would be one of the possible solutions, yeah. This one would be fairly easy to do but not many companies described this a "painful" problem. Not to say - none of them. They're all doing this time management on PAPER - the sad thing is it's working for them. The cleaners don't always speak German and most don't even have mobile phones so naturally a mobile solution - despite being technically possible - wouldn't be desirable.

But like I said I found over 18 different problems, so I'm not sure if I'll choose this one.

Can you break down this too big to program problem into small pieces?

Very good question!
Yeah, definitely, I can break every problem down into small chunks. That's the only way, i guess. But then again I don't know if companies would be willing to pay for such a small solution. Would have to verify this...

But breaking big problems into small problems and then solving one of those small problems would definitely be the right approach!

 

[tafy]

You need to cut the pains down to the top 3 and really look at each one closely, can you combine the top 3 into 1 software?