What makes a SaaS successful?
Anyone with Claude credits can build a SaaS (whether it’s bug-free is a different story). Today, the competitive advantage goes to those who understand distribution.
Social media is full of wannabe founders trying to vibe-code the next billion-dollar app. These budding entrepreneurs are getting SaaS creation the wrong way around. They build first and then hope users will just magically arrive. Terrible idea.
You must know how you are going to get your first 10 customers before you write a single line of code. Better yet, have 10 customers who are interested in your app before building it - either via a waitlist or people that you know. So many people are building an app and just launching it into the void.
But how to do the dreaded marketing, I hear you ask. And I’m with you. I understand first-hand how difficult it is to market a SaaS. Building an app isn’t the hard part anymore - it’s getting users.
Early-stage growth
Over the past year, I’ve been deeply invested in SaaS products and what makes them successful. After learning to code, I launched several apps in different markets.
I built a garage rental app in Brazil. To get my first users, I reached out to people already renting their garages on Facebook Marketplace, onboarding my first users over Zoom. This accounted for my first 20 or so users. Classic startup advice is to do things that don’t scale at first. While that’s true, it’s also important to think about how the app will grow long term.
In an attempt to get more traction, I handed out flyers on busy high streets, used referral schemes, and social media marketing. Much of this was useless. The first users need to be people deeply invested in the idea. In my case, it had to be people already renting out their garage. Convincing people to rent out their garage on a new platform with few listings is an extremely difficult task. My biggest mistake was thinking users would naturally trust the app.
Getting your first 100 users manually is often the best strategy for early growth. From there, you can get testimonials and referrals to grow the app.
Once you start to grow your app, there are various bootstrapping methods to consider. Mike Hill, a SaaS founder doing over $200,000 in MRR, talks about offering lifetime deals on AppSumo to fund further marketing. He talks more about this in the below Starter Story podcast.
The money raised can be used for high-ROI marketing strategies. This does not mean throwing your money down the drain with Google Ads. Test ad strategies with small amounts until you have a positive ROI strategy. Only then start funnelling money in, constantly tweaking it for maximum return. If paid ads aren’t working for your model, experiment with other strategies such as paid referral schemes.
More than ever, talking to customers is incredibly important. There are so many apps available, but people aren’t always building what users want. There is an advantage in building in a niche you understand, as it drives credibility with users. For example, I was recently speaking with a former fixed-income trader who had built a SaaS platform that solves many of the laborious and manual processes he faced when he was trading. Now, he is better able to sell that product as he has been where his customers are.
Find what your customers need most and then build an MVP. Talk to them about their workflow, what they like, and what they don’t. Then you’ll have a better picture of what features to build out next.
A problem many people face is that they start talking to friends and family about an app idea they have. Naturally, their friends and family are supportive and tell them it’s a great idea and that they’d definitely sign up. However, in reality, they were just being polite friends. Always probe about people’s problems and whether they’d pay for a solution without telling them that you are building an app. That way, you get a better idea of whether it is worth building. To learn more about this thinking, read The Mom Test by Rob Fitzpatrick.
If you find that people would actually pay for a solution and be willing to join a waitlist, then great, build the app. If not, don’t waste months building another SaaS nobody wants.
Some successful SaaS businesses
Angus Cheng built and scaled Bank Statement Converter to $40K MRR. Like the trader I mentioned who built a SaaS, Angus worked for Credit Suisse and regularly had to manually input data from PDF bank statements into a CSV file. Bank Statement Converter does this automatically. He knew a problem existed in his industry and worked on solving it. That’s how you find a lucrative business idea.
Go Online Tools is an extremely simple tool suite. The founder built things that he wanted to use in his daily life and made them public. Over several years, that app grew and now has over 600,000 monthly users. The founder created a Reddit post discussing what worked for growth. He found that page speed and targeted keyword research mattered more than paid ads and social media.
Founders today continue to focus on building an app before thinking about how they will get users. For your next idea, have a solid distribution plan first. Then, and only then, build the product.