The first day of our start-up was kind of weird. First, because there’s not really a first day, but a sequence of late evenings, week-end hackathons and scattered meetings. But if I had to pick one, that would be the day after my last day at Redbooth.
I looked around and I saw Pau and Bernat — my co-founders — and César — our product designer and first brave man to join us. I also saw a broken alpha version of our product and a bunch of spreadsheets and investor decks that weren’t yet very convincing.
Thinking that we were to make a business out of that was both exciting and terrifying. There was not much to grab onto. Very ethereal.
By the way, if you have no idea what I’m talking about, maybe read the previous post:
Setting sails for a new startup journey
I’ve always loved reading other startup’s stories and their founders confessions. Now it’s my turn to feed the curious…
Founder Market Fit
Like a good inspirational poster will tell you, you can do anything.
This freedom is great and all, but I believe knowing what you’re good at (and what you’re terrible at) is a big advantage I didn’t want to give up.
During the last few years, especially the last one, there have been different business ideas I considered pursuing. Mostly in tech, but that’s just because of being constantly focused on and surrounded by technology and its opportunities. Pau and I got carried away and even hacked some prototypes together, but never took them anywhere.
Later on I discovered that it was because there was no Founder Market Fit.
It turns out there are many great opportunities in online marketplaces or consumer mobile apps. Like, a lot. But I know SaaS. And doing something else felt like giving up an advantage, almost a waste of time.
So getting back to our beginnings, it turned out that with Pau, Bernat and me doing just what we knew had to be done, Factorial started taking shape.
Selling SaaS to small companies is hard
The fact is that SME’s are pretty much used to not paying for software, the same way consumers are. There are so many freemium solutions that kind of get the job done for $0 that getting the credit card out takes a tremendous effort. I saw this at Redbooth, where competitors like Asana and Trello gave a good enough solution for free, and a superior product was sometimes not enough to win deals.
So when we knew we were starting a SaaS company, we didn’t want to make people pay for the software itself, at least to get started, but find a revenue source that came from a well established service that nobody questions paying for.
It turned out that there was a huge market next to HR for small and medium companies, and that is everything related to compensation and benefits. Companies around the world spend a ton of money taking care of their employees, and Factorial can make it easy for them while being able to generate revenue from this business.
We built a business plan, a product roadmap, a marketing plan, and then I started talking with our potential customers, in other words trying to validate our idea.
During the first couple of months of Factorial, even before we had much to demo (and we love to demo), I talked to over 100 companies. All in or around our target market, but purposely diverse. There were startups, of course, but also 4th-generation-owner traditional businesses, multi-national branches, consulting firms, stores, industrial companies, you name it.
The amazing thing was that since I didn’t have much to sell yet, I mostly listened. I was honestly curious about their businesses, their challenges, their organization and how they do HR. How much do these companies pay their employees, how much would they spend in benefits or perks, how much flexibility did they want to allow their employees to have regarding their salaries.
All these customer interviews had something in common: they were willing to tell me everything I wanted to know. It shocked me how much people would tell a stranger meeting them to learn about their company.
Well, to be 100% accurate, there was one company I talked to that made it very clear that they were not willing to change absolutely anything. If things worked for his great-grandfather, grandfather and father, why in hell would they change anything?! I guess you need to know when to walk away.
With all the insights from these interviews, the product started taking shape in our minds. We started seeing great ways to add value.
Finding our early adopters
Once our product started taking shape, we needed evangelizers. These customers will give you the required feedback, bring new customer through word of mouth and motivate you to keep improving the product and service.
I always find it sad when a restaurant is completely empty, so we invited the first guests to our SaaS.
We started by getting some innovators to get their hands dirty and start playing around with our alpha version. That was fairly easy, we just asked out startup friends to sign-up and start using Factorial.
We had the benefit of working within itnig, as all the startups were willing to use Factorial, even before we had a beta. It was especially useful to work with Camaloon, that has over 100 employees, and served as a real life mid-size company and pushed us to grow and improve the product.
There’s a big advantage in working within an eco-system of startups, a venture builder like itnig, or a co-working space, incubator or something similar that gives you a network of innovators and early adopters willing to use your product.
Now we need to keep getting more and more early adopters as we get ready for the early majority.
Today, when I came into that same office, I saw a talented team all working hard, a functioning product, and customers signing up every day.
This process of going from zero to one (or to 0.001, if you will) takes both faith and hard work. But mostly faith. And having been through it in the past (even if it was from the passenger seat) can help give you that last push.
Next week I'll be writing about how to choose and find a co-founder.