ContentFly launched at the beginning of the year and very quickly scaled up. We’re now a team of 12 and growing strong.
It’s the absolute best time to start a SaaS company. Demand is booming, margins are enormous, and the barriers to entry are getting lower and lower. You can build a profitable SaaS company in 1 weekend, without writing a line of code.
I’ll tell you how we did it for ContentFly.
There’s a lot of hoopla around starting the next big social network or consumer app, but I really believe that SaaS is the greatest industry in the world right now to start a company. Here are a few reasons why:
- Predictable revenue. I know exactly how much money I’m going to make next month, to certain error bars. The best part of SaaS is that you know exactly what to expect — you don’t have the stressful variability of other industries. Sure, you might have a few weeks here and there of plateaud growth, but by and large you’ll have predictable revenues.
- Profitability. There’s a trope among startup folks that profit is a luxury, but that’s really not the case with SaaS. If you structure your pricing model correctly you should be profitable pretty much from day 1, and your profits should scale. The average SaaS profit margin is in the 99th percentile of most industries. I love having calls with investors because my profit margins give me leverage that other founders don’t have.
- It’s fun. I know this might be controversial — “Really? Fun? Time tracking, content planning, and project management tools are fun?” To which I reply, “why, yes!” Look I know it sounds dorky, but helping people find real value in their professional and business lives is so rewarding. At ContentFly, we’ve played a MAJOR role in growing a few very early stage companies — that’s so god damn cool.
How to do it?
The blueprint I used to launch ContentFly is one I’ve honed (and used) on a few other tools which I’ve since sold. It’s a pretty simple Blueprint, which you can more or less repeat for any idea.
Here’s the jist of it:
Validate your idea!
OK, this is honestly THE MOST IMPORTANT PART. This part is literally all that matters. For me the golden number is 10 users — if you can find 10 users relatively easily who will pay you at least $50 to use your service, you have a good idea. Once you’ve done that you’ve proven product market fit.
If you can find 10 people to pay you money without a lot of effort, you can find 100, and 1000, and so on. Then it’s all about controlling churn, which isn’t as hard as people make it seem.
So, how do you actually validate?
- Build it. Quickly. Build an MVP. This shouldn’t take you more than a weekend or two. I know people say “just make a landing page and get traffic to it” but that’s pointless — sure you might get emails, but unless you have real $$ in your bank account, it means nothing. Getting money from a waiting list can be pretty difficult. BTW — I built the first prototype of ContentFly almost entirely codelessly. You’d be surprised what you can do with Zapier, Typeform, Airtable, Jotform, Stripe, and more.
- Run FB/Google ads. OK so you’ve hacked together some crappy product and you want to see if you can get customers. Now, run some ads — don’t worry about the costs, you won’t make money on it. You just want to see if you can get at least a couple of customers — if it costs more than $100 to get a customer (assuming your prices aren’t super high) you might not be on to something.
- Bonus: Find customers manually. For one of my products, before I built anything I just posted to different places on Reddit saying “I will give you x for $5”. Got my first 10 customers that way.
Finding product market fit
OK, so you’ve gotten 10 paying customers. You’ve proven there’s a pain point in the market and you have addressed it for a few people. This does not mean you have a business. It means you have a good idea — that’s not the same thing. Napster was a great idea — it certainly wasn’t a great business.
The next step is to find “product market fit” — this means, the exact channel in the market where your product sells for a profitable price. Preferably, that market is pretty big. How do you get there?
- Start growing. OK I know this sounds silly, but right now you just need eyes on your product. ProductHunt, FB groups, Reddit, Paid Ads, whatever you can, to just get eyes on your project and start getting more customers.
- Churn. Churn. Churn. All you care about at this stage is your Churn rate. Product market fit is all about churn. You need your churn rate to be reasonable. What’s reasonable? No more than 1 standard deviation higher than the average for your type of product
Haul ass to get your churn rate normal. Churn rate is an even reflection of how useful your product is — once you have a good churn rate (without doing sneaky shit like not sending invoices to people), you’ve found product market fit (for now).
Here’s the Side Project Marketing checklist. Great place to start. Make sure you have analytics set up and are tracking EVERYTHING. Once you do that, you’ll know which channels work and which ones don’t. When you find a channel that’s worth the time and effort, go all in on it — you have product market fit now, so you just need to blast it.
I hope this is useful to you guys and not overly simplistic. It really is simple — idea, validate, get 10 customers, grow manually to 50 (this number depends heavily on your ARPU, but it’s a rough measure). Once you’ve done that, start blasting on some marketing channels trying to find the right one.
It’s all rinse and repeat after that. Every time you move to a new tier of customers, you have to find product market fit again — your 1000th customer is going to be completely different from your 10th.
Hope that helps.