Dan Martell - How to Start a SaaS Business From Scratch

00:00:00.080 in this video i'm going to share with you the simple seven steps to build a sas business even

00:00:04.640 if you're just starting out for those that are new here i've personally built and sold three

00:00:08.480 software companies spent tens of millions of dollars on developers and invested in over 60

00:00:13.040 plus software companies i fell in love with sas because of the recurring nature of the business

00:00:18.320 model every month people keep paying you as long as they're getting value over and over and over

00:00:23.600 it's a beautiful way to build a business but if i lost all my money followers and network this is

00:00:28.720 how I would build a SaaS company from scratch in seven steps. The first step is kind of obvious,

00:00:33.120 but it's to start with the problem. Back in the day, I was trying to figure out the idea. What

00:00:38.000 do I build? You know, I want to make money in the software world, but I don't want to build something

00:00:41.920 that nobody's going to use. And what happened is I just started consulting. It's actually a really

00:00:46.020 cool strategy. The more I was helping people build things for their businesses, I would learn what

00:00:51.480 was broken and where there was a gap in the software world. So in many ways, learning how

00:00:56.000 to build custom software for other people showed me where the opportunities are. So this is the

00:01:00.560 big hack. See, most people try to come out with a big idea. I'd rather find out what the customers

00:01:04.860 are already dealing with. So if you know what industry you want to solve a problem for, go talk

00:01:08.840 to the technology companies already consulting in that industry and ask them, what do customers

00:01:13.600 in that industry, in the law firms or dental or Cairo or AI, what are you building over and over

00:01:22.020 and over for them many of the biggest companies out there like shopify like freshbooks like 37

00:01:27.540 signals they all started by being consultants first building a tool either for themselves or

00:01:32.420 for their clients and then productize that for other people see the biggest challenge in building

00:01:37.780 a software business is avoiding building something nobody wants it's the most expensive thing you

00:01:42.100 could do the best way to do this is to get really familiar with people's frustrations even in your

00:01:47.700 home i would encourage you to just go around and add to what i call your frustration list make a

00:01:52.500 list of all the things in your home that frustrates you even if it's not software focused because what

00:01:56.660 it'll teach you is how to identify problems in the world pain that you're having or listen to

00:02:02.900 the words other people say to you so that you can find those opportunities to solve their problems

00:02:06.980 one of my favorite things to do is ask people to show me their spreadsheets the head of marketing

00:02:11.940 the head of finance the head of operations they all have these crazy spreadsheets they've created

00:02:16.180 make their job easier and those are perfect places to look to find software solutions to build the

00:02:21.860 other strategy that i look at is where is there already a tailwind in the market so understanding

00:02:27.460 what are some of the up-and-coming technologies the industry trends that are growing in nature

00:02:33.300 things like ai drone technology 3d printing find these markets that on their own are growing and

00:02:40.500 see if there's a software solution to be made to help those markets expand there might be

00:02:46.260 inventory management challenges billing challenges logistic issues manufacturing issues there's all

00:02:52.420 these new problems that are going to occur as something grows really quick and finding those

00:02:57.300 technologies that are already growing 30 40 year over year compounded that's going to get you the

00:03:02.420 biggest bang for your buck in regards to solving a real problem that doesn't have a solution for

00:03:07.220 the cool part about getting involved in a market that's growing is that even if you're good you'll

00:03:11.380 be great because high tides rise all boats if you're not doing good you'll do decent because

00:03:17.700 the whole market's growing so you just got to get into it think about facebook ads in 2013 versus

00:03:22.660 the newspaper ads of today there are literally tailwinds in the current market that you can jump

00:03:28.420 into and grow and build your software into versus getting into something that's a headwind like the

00:03:33.460 newspaper ads of yesterday so don't tell me your business idea tell me what problem it solves

00:03:38.660 i don't think you find a huge problem in the market you find a customer that has a huge pain

00:03:43.620 point oftentimes software starts off as almost like a feature but it gets a toehold into the

00:03:49.620 market for you then to build a complete solution but you just want to find that one place where

00:03:54.660 there's a gap it might be for somebody copy and paste something from a spreadsheet and paste it

00:03:58.980 into some other tool so it could be a connector solution it could be some kind of configuration

00:04:03.700 tool a translation tool but you just want to find something that's got an acute pain that's

00:04:09.060 frustrating enough for the user to want to pay to solve it so they never have to do it again

00:04:14.420 once you're in then you can expand the feature set to create a complete solution and that's where

00:04:18.260 people get it wrong they're like what's a big enough problem to build a billion dollar company

00:04:22.740 No billion-dollar company started when it started

00:04:25.220 as a billion-dollar solution.

00:04:27.220 It started as a $50-a-month tool.

00:04:30.200 Which brings us to number two,

00:04:31.780 which is to build a prototype.

00:04:33.640 One of my favorite things to create

00:04:35.680 is a clickable prototype,

00:04:37.460 a wireframe of the solution that you wanna build.

00:04:41.040 Why do we do this?

00:04:41.880 So that you don't end up building the solution

00:04:44.160 in a way that the user would never use.

00:04:46.660 See, most people think, well, there's a problem here

00:04:48.940 and I'll just build it this way.

00:04:50.300 It's not, can it be solved?

00:04:51.860 it shouldn't be solved. My youngest brother, he had a property management software idea. And he

00:04:56.580 was like, I think people need software to manage the properties. And we had tenants using it and

00:05:01.560 they interacted with their landlords. It'd be a great solution. I'm like, cool. Wireframe it.

00:05:06.020 Sharpies. And we just wireframe it. And then we went to the mall and we said, hey, do you rent

00:05:09.720 or do you own? And they're like, I rent. Cool. Here's the solution we're thinking of creating

00:05:12.960 where the tenant gets to interact with the landlord through this solution. And it was cool.

00:05:17.040 A lot of questions came up about like, well, does this work on my phone? And can I text message?

00:05:21.260 It was fascinating to see him want to build a solution

00:05:24.660 that the end user actually didn't want it solved that way.

00:05:28.720 They wanted to be able to just text their landlord

00:05:30.940 the way they do it today.

00:05:32.260 Now, as a landlord, I wanna be able to organize

00:05:34.980 and route all these different job orders

00:05:37.160 and manage the relationship with my tenants

00:05:40.140 in a more efficient way,

00:05:41.380 but the tenant themselves, they didn't want the solution.

00:05:44.200 Learning that when it was in a paper stage

00:05:46.180 saved him tens of thousands of dollars

00:05:48.180 in building a solution that nobody was gonna ever use.

00:05:50.260 that's why clickable prototype is so important having the example of how the screens are going

00:05:55.620 to work and how the information is going to be requested and can i remove as much information

00:06:00.740 request from the user and literally make it click click value can they connect this system connect

00:06:06.100 that system two button clicks boom and then get value from my software the faster i can go from

00:06:11.140 sign up to receiving value the faster i'm going to activate them and that's why we want to design

00:06:16.180 those flows using the clickable prototype, prototyping the solution before we ever go

00:06:20.780 and pay an engineer to build it because that's the most expensive thing. Having somebody change

00:06:24.700 code is way more expensive than just deleting a line on an interface or removing a screen

00:06:29.460 in a software. There's two parts though that you need to understand to be able to build a

00:06:33.360 clickable prototype. Number one is the function. The second one is the flow. The function comes

00:06:37.920 down to are there APIs, application program interfaces, data sources that allow you to

00:06:44.660 actually make the solution work? That's just functionality speaking. Can you actually

00:06:48.960 technically solve the problem the way you envision? So those are the APIs you're going

00:06:53.620 to integrate with a Facebook or a Salesforce or CRM solution, like a go high level, go look at

00:06:59.460 their documentation to see if they expose that data or that information or that function so that

00:07:04.960 you can actually build it. That's the first part. And the second part is the flow, the user

00:07:09.080 experience the ux it's called how would that solution be presented to a user even if the

00:07:14.880 function exists but if i'm confusing and how i prompt it or explain to people how the software

00:07:19.080 works i'm not going to get them to use it and those are both areas you want to solve up front

00:07:23.580 before you ever pay somebody to code anything so there's different ways to prototype software you

00:07:28.240 can start with pen and paper that's an easy one every piece of paper is a flow a screen and you

00:07:34.280 just kind of put them out and lay them out in a sequence of how somebody would sign up for the

00:07:38.380 software and enter the information and use it and what kind of report would they get you want to be

00:07:41.960 more advanced than paper and pen although I would encourage you start there then you could go to a

00:07:46.320 product like a balsamic which kind of simulates a digital version of a paper and pen and kind of

00:07:51.380 like wireframes the next step above from there would be like a figma where it's very close to

00:07:55.840 like simulation where it's got like flows and you click around and it's got potentially even fake

00:08:00.580 data to make it look like it's working the next level above that the highest level which is almost

00:08:04.560 like pixel perfect software but it's still kind of a simulation is an envision app it all depends on

00:08:10.320 how realistic you want to make the software so that you could show it to a user to be able to

00:08:15.920 get feedback and some of them are like you install the app on your phone and it looks like working

00:08:20.640 software but again it's a simulation a lot cheaper to change that than to change the code from

00:08:25.280 software developers that you've paid which brings us to number three which is to validate your

00:08:29.920 product one of my favorite things to do is to validate if there's a need for my solution based

00:08:36.640 on if people are going to pay me money see the crowdfunding industry when people say this

00:08:41.360 nobody's going to pay me for my software until i build it and give it to them and i go that's

00:08:45.680 not true there's an industry called crowdfunding it's a 18 billion dollar a year industry where

00:08:51.120 people show examples of what they're gonna build once you give them the money and they crowdfund

00:08:56.560 the development to me this is no different you want to validate it by getting somebody to pay

00:09:01.840 you for your software i mean the other day i was actually working with a bunch of teenagers i run

00:09:06.080 a program called king's club which is for youth and we were talking about the idea when is a

00:09:10.560 business birth the consensus was is the moment somebody pays you for the solution or product

00:09:16.640 that you offered most people don't want to go validate because they don't want to find out that

00:09:20.800 nobody wants their thing that is actually the highest risk building something for somebody they

00:09:25.680 They never wanted to buy in the first place.

00:09:27.420 The truth is, they'll be nice to you.

00:09:29.460 They'll tell you, great idea, go build it.

00:09:31.680 So you go borrow 100,000 from your parents,

00:09:33.980 you quit your job, you go all in.

00:09:35.640 And then when you circle back and say,

00:09:36.980 you told me it was a good idea,

00:09:38.260 I've got the software done, do you wanna buy it?

00:09:40.040 They're like, ah, not really, we're kinda busy.

00:09:42.780 And then you go, what the heck?

00:09:44.380 Like you said that this was a good idea.

00:09:46.660 It's like, yeah, it's a great idea, good luck with it.

00:09:49.400 What happened?

00:09:50.280 You didn't ask for money.

00:09:52.320 Nothing survives first contact with the customer

00:09:54.580 and the best way to validate is to get them to pay you dollars.

00:09:58.160 So here's the strategy.

00:09:59.660 I call it creating an early adopter program

00:10:02.100 where you show people the prototype to get feedback.

00:10:05.140 And then at the end, when they tell you how great it is,

00:10:07.340 then you ask them to get involved

00:10:08.680 in your early adopter program,

00:10:09.940 which is you get them to invest

00:10:11.700 in buying a license of your software.

00:10:14.280 Typically, it's whatever you're gonna charge for the year,

00:10:17.280 give them 50% off for that year,

00:10:19.260 but get them to pay up front for the whole year

00:10:21.620 so that you can collect some money.

00:10:23.140 Many people do this on the back end of a webinar.

00:10:25.480 We'll invite a bunch of people and they'll teach.

00:10:27.500 And then they'll say, you know, when I teach this thing, most people get stuck here because

00:10:31.000 we know they get stuck here.

00:10:32.000 We've got this vision of creating this software.

00:10:34.140 If you want to be part of the early adopter program, here's how we're doing it for those

00:10:37.600 people.

00:10:38.160 We're calling it the inner circle.

00:10:39.760 And you can invest by buying a year license up front for 50% off.

00:10:43.920 And then there's benefits of that.

00:10:45.160 You might have your name on the website.

00:10:46.660 You might allow them to be part of the product roadmap feedback system so they can give you

00:10:51.600 feedback on what you build. Some people even give equity, depending if the person has a large

00:10:56.200 audience where they can promote your product into their customer base, you might do that as well.

00:11:00.620 I mean, this is literally something that's been going on for decades where people crowdfund ideas

00:11:05.940 to validate the idea, then build it. I've used this strategy to launch and pre-sell every service,

00:11:12.640 coaching product I've ever built. Even back in the day when I started my company Flowtown,

00:11:17.220 The way we validated this idea to give you social data on top of your email addresses

00:11:21.720 is we created three fake landing pages.

00:11:24.300 And on the last page, when we collected the credit card to actually verify you're willing

00:11:28.400 to pay on the thank you page, we didn't charge a credit card.

00:11:31.580 And we just said, oh, sorry, our servers were over capacity.

00:11:34.340 Let us circle back once we get things fixed, just to test if they would put a credit card

00:11:39.560 in and pay.

00:11:40.680 So there's many ways to crowdfund or to validate your idea.

00:11:43.780 but getting people to pay is mandatory

00:11:46.180 because if they don't pay, they won't pay attention.

00:11:48.540 If they don't pay, they won't invest.

00:11:50.180 And when you go to launch,

00:11:51.140 they're just gonna tell you it's nice,

00:11:52.500 but they're not gonna actually use the product.

00:11:54.800 Most people think they validated

00:11:56.380 because they got three people that paid the money

00:11:58.160 when all they did is they were just really good at selling.

00:12:00.540 My co-founder used to call me Sel Martel

00:12:02.180 because I thought I was doing validation

00:12:03.840 and all I was doing is selling people on the vision.

00:12:06.640 But what I would do is whatever the person has an objection,

00:12:09.580 I would just say, yeah,

00:12:10.380 we're gonna put that into the product

00:12:11.740 and then get their money.

00:12:12.840 So if you do that, what you end up is even if you pre-sold 10 people, you're essentially a very

00:12:17.500 low cost custom development shop because every person had a different request for a feature.

00:12:22.540 And you said, yeah, we're going to build that. Give me your money. Yeah, we're going to build

00:12:24.920 that. Give me your money. Yeah, we're going to build that. Give me your money. And then you've

00:12:27.460 got 10 different specs of your product to get those customers, which actually doesn't make

00:12:32.340 for great business. So you got to make sure that when you pre-sell and validate your prototype,

00:12:36.620 you stick and stay to the same thing that you're going to build for all 10 people.

00:12:40.920 you cannot deviate each conversation.

00:12:43.480 Which brings us to number four,

00:12:44.740 which is to build your MVP or a minimum viable product.

00:12:49.080 The key there is to constrain your features.

00:12:52.080 I remember a long time ago,

00:12:53.160 me and my co-founder were arguing with each other

00:12:55.000 around the future strategy for growing the business.

00:12:58.460 And we had two different,

00:12:59.440 completely different ideas for this product.

00:13:01.580 And the way we resolved it is we each took the prototypes

00:13:04.640 and went to the market, pre-sold them

00:13:07.180 and figured out who could sell it the best.

00:13:09.060 Now, the constraint we put on ourselves was that they had to be things that we could build in the next three months max.

00:13:15.020 So right off the bat, when you go to build this, make sure that the features are things you could put together with the development team within three months.

00:13:22.600 So whatever amount of money you raise by validating it, that's your budget to hire contractors or a team to build it.

00:13:29.780 Just constrain it to three months to launch the first version.

00:13:33.300 If not, you will go months and months and months.

00:13:35.920 I had a friend of mine reach out to me.

00:13:37.460 They were $5 million three years into the prototype

00:13:41.660 and they had yet to launch.

00:13:43.560 And they asked me for advice.

00:13:44.860 My advice is you should have called me three years ago.

00:13:46.920 My advice is you should have created some constraints

00:13:48.680 around how much time you spend on the software.

00:13:50.780 Five million is way too much money.

00:13:52.660 I mean, most people that I work with,

00:13:54.380 they can get a working prototype in the market

00:13:56.960 with paying customers for less than $100,000,

00:13:59.380 sometimes $50,000, right?

00:14:01.380 It all depends on how much you can kind of connect

00:14:03.640 into other software to do some of the heavy lifting

00:14:06.280 so you don't have to write that code yourself.

00:14:08.240 So the key is, if you're trying to hire a dev team,

00:14:11.000 do this.

00:14:11.840 Go on Upwork, find developers that are good reviews

00:14:15.260 that are relatively inexpensive for their experience.

00:14:18.580 Give them all a test project,

00:14:20.480 which could be one feature in the software

00:14:22.840 that you wanna build and see how they all code it.

00:14:25.380 You wanna pay them for it.

00:14:26.740 But the key is, is you wanna give them the wireframes

00:14:29.540 that you created to pre-sell your software.

00:14:32.040 That's why it's important to do that work upfront.

00:14:33.700 That way you don't have developers designing your software.

00:14:36.840 That's very bad. 0.97

00:14:38.120 Developer design software usually sucks. 0.98

00:14:40.700 It's ugly. 0.99

00:14:41.580 It's weird.

00:14:42.620 You can tell when a developer designs software

00:14:44.620 versus a professional designer,

00:14:47.020 or even better yourself, using the right tools.

00:14:49.940 So don't let a developer create the design.

00:14:52.440 Give them the product specs.

00:14:54.120 You could also use a no-code solution

00:14:55.700 like Bubble, Make.com, Go High Level

00:14:58.160 for a lot of people recently, Rapid API.

00:15:00.380 And these are great.

00:15:01.280 The only challenge is that if you prototype something

00:15:04.060 that's actually working software with it,

00:15:05.920 it's not built on your own stack.

00:15:07.760 So if you do have an aspiration

00:15:08.960 to exit the business someday,

00:15:10.300 you might have to rewrite the software in your own code

00:15:13.340 so that an acquirer could actually maintain

00:15:15.820 and modify the software

00:15:17.020 without you being held prisoner or hostage to a platform.

00:15:20.860 See, the reason you never wanna build

00:15:22.080 on somebody else's platform

00:15:23.100 is that at any point they could get bought,

00:15:25.500 they could change their pricing,

00:15:26.800 and all of a sudden make your whole business model

00:15:29.100 not work anymore.

00:15:29.920 I ran into that when I built my company, Flowtown.

00:15:32.200 We built our whole platform

00:15:33.220 on somebody else's data and APIs.

00:15:35.620 All of a sudden, they changed things

00:15:37.160 and made our whole product stop working

00:15:38.840 when we could have made that decision earlier and upfront

00:15:41.120 before we had 50,000 customers on our platform.

00:15:44.540 So understanding that there's trade-offs on speed,

00:15:47.540 you could go a lot faster using a no-code solution,

00:15:49.660 but you might butt up around feature constraints

00:15:52.220 where you can't build certain things

00:15:53.660 and or somebody changing their pricing or their API,

00:15:56.500 making your whole solution not viable anymore.

00:15:58.520 which brings us to number five which is to collect customer feedback now here's the deal i want you

00:16:02.900 to be maniacal about getting feedback from customers not just looking if they're using it

00:16:07.940 see too many people want to lie to themselves and they're like oh yeah people are using it they're

00:16:11.680 loving it i'm hearing all about it i've had people say to my face lie to me say oh man i love that

00:16:17.540 company i love that tool i love that product and then i go look behind the scenes and they haven't

00:16:21.780 even signed up for it or used it people are weird so you could take these as false positives that

00:16:27.080 built something that's great instead what i want you to do is actually talk to customers get on the

00:16:31.960 phone i used to call this smile and dial every thursday i would sit down for 90 minutes and i

00:16:36.920 would call new customers that signed up figure out what they thought how they heard about me what we

00:16:40.840 could do to improve it to really understand where the opportunity is to improve the product see

00:16:46.360 most people building software will hide behind the scenes looking at the data and the reports

00:16:51.720 and the analytics that's like having a retail store and hiding in the back room looking at

00:16:56.440 everybody shop in your store through the closed circuit television instead of getting out of that

00:17:01.240 back room and just talking to them in person they're literally in your store and they're not

00:17:05.880 buying you might as well find out why do you not have the size is it the color is not working for

00:17:10.680 them is it were they looking for something completely different that you didn't carry

00:17:13.960 understanding why people that don't use your software are not using it doesn't mean you got

00:17:18.600 to fix anything but it's at least going to tell you where the opportunities are to improve your

00:17:22.680 activation how quickly people get value from your product and your retention how often people stick

00:17:27.960 around and keep paying you month over month so one of the key areas is to always work backwards

00:17:32.440 from the customer understand what they're trying to accomplish and where they got stuck or it wasn't

00:17:37.480 easy for them to complete often i'll ask the customer what do you do three minutes before you

00:17:41.960 use our product and three minutes after you use our product because that is also a huge opportunity

00:17:46.600 to figure out where your solution could expand and create more value for them because if they're

00:17:50.920 are getting ready to use your product or going somewhere else with the information that you

00:17:54.440 produce for them, that could be an opportunity for you to expand the value that they're going

00:17:58.380 to get from your solution. See, most people confuse a customer by not asking them the right

00:18:02.820 question, and it's an art form. If the wrong question will get you the wrong solution, which

00:18:07.340 could cost you tens of thousands of dollars building a feature that they didn't actually

00:18:10.900 want because you didn't ask the question right. Most people get stuck building software for a

00:18:15.280 customer or two customers or the most paying customer or the loudest customer. They don't

00:18:20.760 actually look at it is like my job is to be an investigator to look at all my users and figure

00:18:25.900 out what are they all facing and where can I innovate based on what exists in the market

00:18:31.060 there's actually an opportunity to differentiate to create something sticky to look at features

00:18:37.120 that are going to have high retention if you just keep doing what people tell you to build

00:18:41.020 you're going to run into being a low-cost customer development shop you want to be an innovator and

00:18:45.800 to do that you need to ask the right questions and come up with the best solutions to solve the

00:18:49.740 problem that they're telling you about. So the three steps is once you're getting feedback,

00:18:53.600 step one is to collect all the feedback from all the customers. Then you want to analyze it and

00:18:57.900 put them into like grouping of problems and how they're giving you that feedback and what they

00:19:02.680 think you could do. Fix the product and then deploy the rollout. So those three steps, collect,

00:19:08.000 analyze, and deploy the rollout is how you iterate on the product. Here's where most people mess it

00:19:12.480 up. Most people ask customers that aren't even using the product for feedback on how they can

00:19:16.560 make it better. What I want to find out is who's kind of using the software, but not like a power

00:19:21.260 user and figure out from those users, what's the one or two features if I added would make them all

00:19:26.920 power users? Because it's a lot easier to have somebody that's kind of a yellow usage and turn 0.99

00:19:31.560 them into a green than to go from a red, not using it to a green. Most people spend too much time on

00:19:37.000 the reds. They were never going to use your solution in the first place because they probably 1.00

00:19:40.120 didn't have your problem as big as these customers in the middle. Because a loud minority, if you 0.98

00:19:45.040 solve for them, you solve for a very small group of customers compared to the rest. If you have

00:19:49.200 100 customers and there's only two people that are being loud about a specific area of your product

00:19:53.660 that isn't working for them and you spend any time on those two customers, you're ignoring 98 of the

00:19:59.140 other ones where you could get 40% of the people really using your product to retain 40%, not just

00:20:05.100 the 2% of people that are being loud in the support emails. You actually want my list of

00:20:09.920 questions for problem identification and solution identification and innovation i actually have a

00:20:15.280 google doc where i've collected my favorite hundred questions to ask customers depending

00:20:19.360 on what you're trying to learn just go on instagram click the link in the description below

00:20:23.680 and message me custdev for customer development and i'll send you a direct link to that google

00:20:28.560 doc to help you with your questions which brings us to number six which is to generate demand

00:20:33.280 there's only four ways to create demand for your software product the first one is publish content

00:20:38.480 second one is paid through paid acquisition so ads third is partners people that have the existing

00:20:44.720 customers and trying to get in front of their groups or the fourth is through press having

00:20:49.280 people write about you so that it drives attention and eventually people might sign off your solution

00:20:54.480 the one that most startups use when they're building their software is partnerships and

00:20:59.440 the reason why is it's so fast for me to get in front of an audience of perfect fit customers that

00:21:06.160 that I know have the problem

00:21:07.800 and present my solution to all of them at once,

00:21:10.440 pay the partner an affiliate fee,

00:21:12.760 20, 30, 40% of monthly lifetime value of the customer

00:21:16.440 for the perfect partner, I might give that much,

00:21:18.500 40% of the monthly fee that I get,

00:21:20.660 they get as a promotional partner.

00:21:22.660 And that way I just have to find one partner

00:21:24.780 that gets me in front of thousands of potential customers

00:21:27.960 and trying to go one after one after one

00:21:30.800 for a $50 a month subscription.

00:21:33.020 I remember one of my clients, Matt at Review Wave,

00:21:35.040 He did this brilliantly with events

00:21:37.320 where he figured out a rhythm to get in front of the people

00:21:40.900 that attended certain events for his industry

00:21:43.000 and would present on stage in five minutes

00:21:45.700 this quick little pitch

00:21:46.800 that would get everybody running to his booth

00:21:48.500 for him to have a conversation, collect business cards,

00:21:51.160 and many times close those customers at the events

00:21:54.200 to help fund all of the costs of travel and sponsorship.

00:21:58.420 So events, webinars, emails, Facebook groups,

00:22:02.880 all of these are examples of places

00:22:04.840 where your potential customers are aggregating

00:22:07.240 and whoever owns those will allow you,

00:22:09.560 if you pay them, to get in front of them.

00:22:11.240 You could do a lot of stuff around paid acquisition.

00:22:13.560 The problem is, is that you gotta put your money out first

00:22:15.500 to eventually get a customer.

00:22:16.880 You could publish like SEO.

00:22:18.740 Challenge there is you gotta spend a lot of time

00:22:20.220 trying to create that traffic, social media, et cetera,

00:22:22.660 before you ever get a customer.

00:22:24.180 And then you could do the outreach to press,

00:22:26.120 which can work.

00:22:26.940 It worked a lot better back in the day

00:22:28.360 for the right types of press.

00:22:29.680 Think about podcasts.

00:22:30.840 Those are great potential channels

00:22:32.360 for you to get the awareness out there

00:22:34.160 in your market for your solution.

00:22:36.220 I mean, at the end of the day,

00:22:37.280 do the thing you're gonna keep doing

00:22:38.420 for a long period of time.

00:22:39.500 If you're good at blogging, do that.

00:22:41.060 If you're good at short form content, do that.

00:22:43.120 If you're good at building your personal brand, do that.

00:22:45.520 You can even partner with somebody

00:22:47.280 that has a massive personal brand

00:22:48.880 that already has an audience of people

00:22:50.980 that you wanna sell to.

00:22:52.240 Here's where most people mess it up.

00:22:53.480 You got a cool software solution

00:22:54.940 and you've got this person that tells you

00:22:56.660 they're gonna bring you thousands of customers

00:22:58.540 if you give them 10% equity, 40% equity in your business

00:23:01.600 and then they don't do the thing.

00:23:03.520 I would just rather not give them equity at first,

00:23:06.680 have them promote your product to their customers,

00:23:09.780 see how many people buy.

00:23:11.020 And if they want, they can convert the amount of money

00:23:13.280 you gave them every month

00:23:14.480 for the amount of customers that pay

00:23:15.660 because they could send you a thousand customers,

00:23:17.560 but if they only stay for a month and then cancel,

00:23:19.500 then that's not gonna help you.

00:23:20.760 You wanna pay them when you get paid.

00:23:22.500 And then if they make enough doing that,

00:23:24.400 you can always give them the opportunity

00:23:25.980 to convert that dollar amount into equity,

00:23:28.380 into your business, into shares, into your business.

00:23:30.720 They're like, hey, man, I could sell a lot of your product to my audience.

00:23:34.500 You should give me equity.

00:23:35.520 I'll do some shout outs in my content.

00:23:37.320 It's like, how about we just make you an affiliate?

00:23:39.420 I'll give you 40% every month of what people from your audience sign up for and pay me.

00:23:44.540 And then if that's a large amount of money, let's say 50,000 a month,

00:23:47.800 they could always convert that royalty into equity in your business as an agreed upon valuation.

00:23:53.460 Equity is the most valuable thing you have in your software business.

00:23:56.580 It's not about the 10%.

00:23:57.720 percent it's about what does that 10 mean in the future if you sell your business for 100 million

00:24:02.760 and some guy helped you get 100 customers at the beginning 10 years later you sell for 100 million

00:24:07.400 are you gonna be happy giving him a check for 10 million dollars when all he got you is the first

00:24:11.000 hundred customers and most of those people didn't even stick around very long like you better off

00:24:14.600 just pay him the affiliate fee the dollar amount of what that was worth and keep your equity to

00:24:19.160 yourself because you want to use that for top employees potential investors and honestly maybe

00:24:23.800 to sell some shares for yourself down the road so you can get some money early and not have to go

00:24:27.960 and exit right away and just create some options for yourself which brings us to number seven

00:24:32.120 which is to find a growth hack see most people think growth hacks are marketing they're not

00:24:37.400 a growth hack is a unique channel for you to acquire customers that most people don't know

00:24:42.120 about for example there's this crazy story of a canadian airline called west jet when they were

00:24:46.920 starting off and they were trying to figure out what are the new routes that they open up between

00:24:50.600 which cities they actually had internal data through an old employee that had their number

00:24:55.840 one competitor air canada where they could log in as this employee scrape the information from

00:25:01.520 their internal portal and figure out where there was the most demand for certain flights and that

00:25:06.260 was the sequence when they got new jets added to the fleet that they would open up new routes to

00:25:11.080 help finance their growth now this is completely illegal they got sued for it and they settled so

00:25:16.160 don't do that, but the concept is brilliant. Where does your customer spend time? Is there a way to

00:25:22.240 get in front of them? When I was starting Clarity, we were trying to get experts on our platform,

00:25:26.500 people that were willing to take phone calls. And it occurred to me that most experts, speakers,

00:25:31.940 creators, folks that were out there, thought leaders, they spent a lot of time creating

00:25:35.840 slides that they would share on a site called SlideShare. So what we did is we actually took

00:25:40.180 all the demand for people seeking advice and then had people that would manually go through SlideShare,

00:25:45.720 find the top three experts based on the popularity of their slides go to the last slide on slide

00:25:51.560 share which was their contact information and then email them asking them if they're willing

00:25:55.080 to take a phone call for a price to help the person looking for advice now we did that manually

00:26:00.200 at first and eventually automated through some software we called that feature bonjour which is

00:26:05.400 french for hello because it created liquidity in our marketplace for experts to get paid for their

00:26:11.480 advice i've done this several times for example when i help hr software in asia try to find their

00:26:17.560 early adopter customers we realized back in the day that if a customer was using google apps for

00:26:22.760 domains which is google's suite of business tools they were more likely to buy their software so how

00:26:27.480 did we find them we took all the domains of the businesses all the email addresses ran them through

00:26:32.760 a domain lookup to see if they were using google apps as their mail record for their email if they

00:26:38.440 were then those got scored higher from a lead score opportunity and called on first that tripled

00:26:44.040 their ability to generate outbound sales productivity these are examples of growth

00:26:48.520 hacks uber did this they'd enter in a new city they would partner with all the event organizers

00:26:53.480 at an event venue and give gift cards for uber to put in the attendees gift bag so that when they

00:27:00.040 would show up and they got their gift bag they would have a credit for an uber drive they never

00:27:04.040 used uber they had to install the app they'd use the 20 gift certificate and then they would go

00:27:07.720 go like oh i need to use this to get back to the airport at the end of this event and that's how

00:27:11.920 they would activate new cities amongst many other things and many of them got them in trouble but

00:27:16.320 that's the big idea a growth hack is only a growth hack if nobody else knows about it and gives you

00:27:21.040 an unfair and unique advantage in your market so think about who has your data so real growth hacks

00:27:28.400 require creativity the question i like to ask is this who's got my list who's got my data who's got

00:27:34.380 my customers? Who's already done all the heavy lifting to identify the perfect fit customers for

00:27:39.960 me? The more I understand who buys my software, who has the biggest budgets, quickest to buy,

00:27:44.620 has the highest need. If I can look in the market and identify those people, get in front of them,

00:27:49.640 reach out to them, just make them aware that I exist. That's a great opportunity. Another

00:27:54.060 example, I had a friend that paid somebody to run ads on top of their pixel on their website

00:28:00.180 because they knew people that bought their product would buy their customer. So they paid

00:28:04.040 them to borrow their Facebook pixel to run ads to get in front of that customer in a way that that

00:28:09.300 person didn't even have to affiliate for them. Really smart strategy. Again, does that violate

00:28:14.160 the terms of service? I don't know. But those are ideas where you got to kind of go on the edge to

00:28:18.860 figure out who's got my customer, who's got my data, who's got my list, and then work backwards

00:28:23.080 to find ways that are obviously not illegal to get in front of these customers. It's all about

00:28:27.620 creativity. It's called a growth hack because it is a hack. Most people mess this up because they're

00:28:32.340 just doing marketing instead of trying to figure out a unique opportunity. Either it's cheaper

00:28:36.880 traffic, it's cheaper attention, a really hard thing to scale, but you've built a system and

00:28:41.820 process around scaling it. Or you can create a playbook that nobody else would do because it

00:28:45.720 just seems so complicated. They would just rather do something that costs more to do it. And by

00:28:50.180 building these growth hacks, you create unique demand marketing channels for your software that

00:28:55.540 nobody else has. If you want to learn about the best businesses you could start in 2024, click

00:29:00.460 the link and I'll see you on the other side.

Dan Martell - July 14, 2024

How to Start a SaaS Business From Scratch

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