SAAS Startup, $100K+/mo, $1M+/valuation (ASK AWAY!)

[MJ DeMarco]

I am happy to welcome Dan C (@DanC ) to Fastlane who is the founder of the SAAS startup, FollowUpBoss, a CRM tool for real estate agents.



Here is a little bio:

In 2008 Dan realised he'd been scammed by society after having completed 4 years at university (college) in Australia studying business and getting a job in finance. When the financial crisis hit his department went from 11 people down to 1 (Dan). After about 2 years at that job he realised he had to get out of the mind numbing boredom and started building websites for small businesses.

In 2011 he teamed up with a developer to start a SAAS business (the original idea was a simple but powerful CRM for small businesses), but 6 months in there were no customers and just a very basic product that no-one would ever pay for. He realised he needed to learn a lot more about marketing, sales and product creation and found Dane Maxwells Foundation course through Mixergy.com.

After going through the foundation course and finding out specific problems from real estate teams, he created www.followupboss.com a real estate lead management system. The business was created completely remotely from the USA with no outside funding while baselining in Europe, Turkey and Germany. The business now employs 8 people, is doing 6 figures a month revenue and is growing quickly.

He’s now living in Sydney, Australia.

Here's a photo of his "baselining" (everything he owned!) inventory.



Feel free to ask away. And if you're out there Dan, please say hello.

You can also find a detailed interview here on how Dan got started from scratch.

https://thefoundation.com/podcast/episode81

And yes, Dan is/was as student of the Foundation. http://www.thefoundation.io

 

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[DanC]

Hey guys great to be here (Fastlane fan here!)

Great question Enaeka.

Because we work remotely, thats a huge benefit for people looking for more flexibility and work/life balance.

We had some good success with the website https://weworkremotely.com (found 2 great developers and 2 CS people there), its was run by the guys from 37 signals so it attracts a lot of people already familiar with SAAS and working remotely.

We've got fulltime people because we want to train them up and grow the business with them, as opposed to just getting todays work done or a one off project. If you know you will need people ongoing and cashflow supports it might be time to bring some people on full-time.

I think we need to put in place better systems for hiring and filtering people out (so we probably aren't the best company to model there), right now it's basically filtering people based on their initial email (looking for clear communicator, understands what we need done etc) and an interview then trial.

Upto this point we've being hiring most people based on job ads, but the best way to hire people is through strong referrals. This is a good post with more specific tactics. https://zapier.com/blog/how-to-hire-remote-team/

As for people wasting time, you need to make sure you have accountability in place for what you need them to do. Have weekly 1 on 1 calls and daily updates (this goes for contractors as well). We use a tool called idonethis.com

I plan to spend a lot more of my time on hiring this year.

btw we're currently looking for strong designers, developers and customer service people with SAAS experience.

 

[DanC]

Welcome Dan, and thanks for doing this!

What steps did you take to validate that there was a need in the real estate marketplace for this type of service?
What strategy did you use to acquire new clients in the Real Estate space?

The process in the foundation is called Idea Extraction, in the startup world its called customer development.

Essentially you begin by talking to a niche, by cold emailing them, setting up phone calls.

Then you dig deep on the phone calls, by asking them things like "what is the biggest problem in your business?", you ideally want to find something they are losing sleep over. Then ask them why it's such a problem, how much money its costing them, why haven't they solved it already etc. You want to understand everything deeply, better than they even understand it.

Then you find more people and if you start hearing the same problem over and over you probably have an opportunity.

Here is a live example
Listen to Dane Maxwell call a prospect, and hear ... - Mixergy

We did a lot of social media work on Facebook early on and get a lot of word of mouth referrals (by having a good product and providing good customer service).

Welcome Dan, and thanks for doing this!
How did you figure out the exact things people were looking for in the niche, when you're coming from the outside and unaware of their painpoints?

Lots of people ask me if I used to work in real estate, or my family does. I'm not even from the USA, but the reason I understood better than everyone else what they needed is using the idea extraction process above. If you spend time understanding a problem and building a solution for it, your going to understand it better than 99% of people that have never spent any focussed time on the problem.

Listening to people is the key, try to go into every conversation without any bias.

 

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[DanC]

Any techniques that worked for you for cold calling business owners without feeling like you're wasting their time?

Email them first.

Here's some templates
Email Copy for Idea Extraction - Geordie Wardman
http://www.carlmattiola.com/connect-with-your-market/

 

[DanC]

a lot of people get stuck on trying to perfect their product before release, how refined was your product before you started selling?

Yes that is a trap, because there is no way your product will be perfect before you get customers (our product is still not perfect). What you think people want and what they actually need and want will be different.

Thats why you should presell the solution, I think in the new foundation classes you are actually banned from coding until you have presold some people. This eliminates all the risk and chance you will spend 6 months building something no-one wants to pay for. Focussing on coding or design when you have no customers is a form of procrastination (I've being there).

Our product wasn't very refined, as I mentioned we'd just did a lot of things manually. In startup terms they call it a Minimum viable product, think along the lines of minimum sellable product.

 

[Andy Black]

I updated the thread to include an interview that details some of his starting processes via the Foundation.

https://thefoundation.com/podcast/episode81

Awesome interview. Thanks Dan, Dane, Misha. Thanks MJ for sharing.

My takeaways:

• Talk to people.
• Find out what they want and need.
• Only then, start thinking of "building/coding" something.
• Build a great product to satisfy discovered needs.
• Funnily enough, said product should now sell very well.
• Provide legendary service.
• Grow naturally (in your case with no paid advertising so far) - because of the great product and legendary service.
• Selling is not sleazy, it's helping people to solve their problems.
• If you can't solve their problems, then direct them elsewhere where they can solve their problems.
• If you listen closely, and understand WHY someone wants what they want, you'll understand them and their problems better.
• Personal development is crucial to business development.
• Our limiting beliefs hold us back.
• Get out of your own way.

Sound familiar?


Rep+

 

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[RHL]

Hey Dan, thanks for taking the time to talk to us!

As a guy who makes money without regular employees (ex: Contracting out jobs rather than having people on the payroll), but who recognizes that almost all big businesses have employees, can you talk a bit about how you identified that you were in a situation where you needed to hire vs. using contractors, how you went about finding your people, and what methods you use to ensure you get hungry, relentless staff rather than clock punchers who will be browsing Reddit or playing Plants vs. Zombies on their phones whenever they're not being watched?

Having worked in a white collar office, when looking at my co-workers, I was constantly bothered by the thought, "Man, I'm glad its not my money paying for this 'work' day."

How do you get past that problem?

 

[DanC]

When did you realise your plan was going to work out? Right after cold emailing and facebook? Is your plan even working out and/or do you have other plans?

After selling the first few people the solution. I had a strong notion it would work before that because of the idea extraction and all the research I had done on the market, but after the first few sales I knew we could get more.

Once you sell a few people your solution you will also know how hard it is to sell, find leads etc.

Ideally you should presell the solution (ask people to pay before you create the product, like kickstarter), this removes all of the risk that you won't be able to sell the product. We didn't do this, but if I did it again I would.

 

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[DanC]

I would be interested in knowing how you got your first clients, and did your first clients test the product for you?

Cold emailing, Facebook (interacting in groups), forums, webinar with someone already in space, referrals.

Yes clients must be the ones testing the product, feedback from anyone else is irrelevant. When we initially launched we just did a whole bunch of things manually for them as we hadn't built out those features, this is easy when you have just a few clients and lets you understand the problem even better before coding up a solution.

 

[randomnumber314]

We did it in the US. The US is good because its a big market and people already use software. 50% of all software bought is in the USA.

I have an Australian accent so I look at that as an advantage, people will remember me better.

Note to self, feign foreign accent.

 

[DanC]

Hi Dan,

Thanks for doing this AMA!

Regarding The Foundation, is it likely you would have started a SAAS without going through the program? I've been interested in their program for a while and think the community is the strongest piece of their model. Thoughts?

Your welcome!

We tried to start one before going through the program, we got 0 customers as we had no idea what we were doing. Of course it's possible to start a SAAS without doing their program but your going to need to pick up the marketing, sales, product creation skills from somewhere. Learning from someone else who's done it before is a shortcut to that.

The community is a very strong part of the course. Learning and doing something with other people increases your chance of success and keeps you motivated. Before this business I used to sit at home coming up with "great" ideas and schemes, trying to do everything alone and figure everything out by yourself can make things harder than they need to be.

 

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[DanC]

Thanks for the AMA @DanC

My question is, was your idea extracting process done in your country or in the US?

If in the US, how was it like calling prospective customers from another country and gaining their trust.

In all honesty, I'm around the path of idea extraction but the market base in my country of stay seem not be conversant with SAAS and I intend taking it over to a place with a good market base.

What would be your opinion/advice due to your experience and coming from a likely situation?

We did it in the US. The US is good because its a big market and people already use software. 50% of all software bought is in the USA.

I have an Australian accent so I look at that as an advantage, people will remember me better.

 

[DanC]

Dan one of my favorite things about what you did was joining the Facebook groups of Realtors and getting them to buy your product from there. Can you talk a bit about the process you used to grow to over 1,000 customers without any marketing expense? It blows my mind

When you asked me what we do for CS in the interview I was drawing a blank, here's some things we do I suspect most companies don't:
1. Refund anyone for any reason if they ask
2. Refund people proactively if they aren't happy / not getting value
3. Instead of just sending people links on how to setup their account, we encourage them to let us do it for them.
4. Ditto for answering support questions we don't just send templates / links, we try to help people out as much as possible.
5. When answering support answer their question, but also suggest extra ways to get value in their account relevant to them.
6. Make people a personal video to walk them through anything complex

By providing good support people naturally want to refer us and we are often mentioned on Facebook etc.

Early on <100 customers I would participate a lot on Facebook to learn more about Real Estate and help people out by answering their questions. The key rule with Facebook groups is don't be a douche and promote your own stuff, add value and people will naturally find out about what you do.

 

[DanC]

Dan,

How long did it take to get through your idea exaction?

I have a 4 month runway (living on savings) till I need to be producing $2,500 a month to support my wife and kids.

Should I go straight into Saas / idea extraction or is the level of difficulty and time to build a Saas bus. great enough that I should first find a simpler way of generating cash to extend my runway.

It took us over a year from starting to get a paying customer (counting before we joined the foundation and after).

I'm not in the situation of needing to support a wife or kids, but if my runway was that short I would want immediate income in the form of a job (ideally where you will learn new relevant skills) or some consulting clients.

 

[csalvato]

I'm curious about your initial email response rate. I know it's going to be different for every circumstance. I have emailed 147 prospect this afternoon, just wondering what sort of response rate I can expect. If I don't get a good response to that I'm going to just visit a bunch of offices. Hopefully I don't come off too strong, I know that I can make their work lives easier.

On cold shotgun emails, depending on how good the copy is, a 0% to 0.5% response rate is typical in my experience.

I had good copy and was a little more targeted on other emails, and have gotten as high as a 2% response rate on cold emails.

If you are going to cold email, 147 is probably too small of a number imho.

 

[Silverhawk851]

Welcome Dan, and thanks for doing this!

What steps did you take to validate that there was a need in the real estate marketplace for this type of service?
What strategy did you use to acquire new clients in the Real Estate space?
How did you figure out the exact things people were looking for in the niche, when you're coming from the outside and unaware of their painpoints?

 

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[DanC]

This is 12 hours late, but how did you deal with spam filters when cold emailing people?

You just email them from your Google account one at a time.

You can use a freemium tool like yesware.com to track who opens and clicks.

There are also some other tools for cold emailing like https://toutapp.com but I prefer just sending from Google as learning a new tool and setting it up is a barrier to actually taking action and sending the emails.

 

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[DanC]

Hey @DanC, can you elaborate on some communication tips that helped you weed out real problems--or that helped entice the conversation to a genuine problem?

Thanks!

Ask people why or how does that work like 4 or 5 times to really understand something. Dane has some videos on idea extraction on Mixergy check them out.

People usually know what their problems are but are bad at expressing them. In a way its like if you went to a therapist they are going to ask you a bunch of questions till they get down to the root of your problems being your parents letting you wear a bathing suit instead of underwear You want to avoid surface level answers and go deeper, your the therapist helping them to see things clearer (and also getting clearer yourself).

 

[tafy]

I would be interested in knowing how you got your first clients, and did your first clients test the product for you?

 

[DanC]

I was just looking at the Foundation and listening to a few of the podcasts. Obviously you found the course beneficial. Was there a broad spectrum of ideas for different niches/markets or did you find that real estate featured prominently?
Did you have any issues picking up a phone and making those initial calls? Like, nerves, confidence, etc?

The techniques apply to any niche, there are some guidelines to help you choose a niche e.g. it should be easy to reach the decision maker by phone and email, >1000 customers in the niche, they use software already in their business, >100k revenue per year. Theres a few more which I can't recall right now, but essentially your looking for an attractive niche where you can reach people.

Yes re confidence and nerves, you get over this with practice.

 

[MJ DeMarco]

Guys don't forget to REP @DanC for taking time to answer.

 

[MJ DeMarco]

I updated the thread to include an interview that details some of his starting processes via the Foundation.

https://thefoundation.com/podcast/episode81

 

[DanC]

Thanks for doing this AMA Dan. Regarding actual software, when you encountered problems you didn't know how to solve in the software itself, where was the first place you went to for answers?

Do you mean hard technical questions? Google research and asking developers are the way to solve those.

 

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[DanC]

Hi Daniel,
What are some tips for scaling your growth? We're increasing our customer base by about 10-30 customers per month but I feel like the growth rate is not very Fastlane.

MJ is in my head in a good way

If thats recurring thats still nice your growing. I'd try aim for a percentage growth e.g. between 10 - 20% customer growth per month things will start to compound if you can maintain that kind of rate.

Do more of whats working + try some new things like paid advertising, webinars, outbound sales, write a 7 part course, research how your competitors get sales etc. I would just try one new thing at a time.

 

[DanC]

Hello @DanC, thanks a lot for this AMA and congratulations on your success. Before I saw this thread btw, I am in the middle of something and actually pre-sold(not much though).. so after I saw this thread, I re-thought and send out a bunch of e-mails and called. If not ignored, most of the responses are negative, I might be reading between the lines but I'm almost quite sure they are a little bit scared I might accidentally disclose their ideas and losing their competitive advantage. How do I erase those fears and doubts right from the start? or do I?

I did miss this one.

I'm not really sure what the issue is, it could be timing e.g. this would be a terrible time of year to email accountants.

Or it could be subject line, phrasing in the email etc. Post some examples here and people can probably help out with some suggestions.

Remember your expecting to be ignored by most people, it's the people that reply and want to talk to you, that your going to help and learn from.

 

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[csalvato]

did your presells cover the entire first run of the development?

Ideally you should presell the solution (ask people to pay before you create the product, like kickstarter), this removes all of the risk that you won't be able to sell the product. We didn't do this, but if I did it again I would.

how did you find reliable developers? (I think dane provides a list of good ones?)

We had some good success with the website https://weworkremotely.com (found 2 great developers and 2 CS people there), its was run by the guys from 37 signals so it attracts a lot of people already familiar with SAAS and working remotely.

There's some good info here...you should read the whole thread if you are skimming...

 

[DanC]

Where do you see your business at in the next year, 3 years, 5 years?

I try not to think too far ahead, technology/software changes very fast. We are a small part of our market so just working on expanding.

 

[D. Maxwell]

Dan one of my favorite things about what you did was joining the Facebook groups of Realtors and getting them to buy your product from there. Can you talk a bit about the process you used to grow to over 1,000 customers without any marketing expense? It blows my mind

 

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[DanC]

Great to have you here Dan!

I also have some idea for CRM. I just have to get some money to pay a developer to write it for me (Windows only at the beginning).

My questions for you- how did you choose your developer? Did you have the money needed to start or you had to get some funding?

Thank you in advance for your precious time,

Michał

Get some presales first before getting a developer, then it will give you much more of an idea of how much you can or should spend. Once you have some sales it will also be more interesting for a developer to work on as developers want to know what they are creating will be used by lots of people.

I'd worked with my developer before. We've never raised any funding.

 

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[eliquid]

not wanting to crash this thread, but I thought it was relevant.

I have a skype SaaS group. About 18 other guys that own SaaS companies. If you currently own a SaaS or are building one and its nearly done, PM me to see if you are a good fit to join.