A Simple Guide To Validate SaaS Ideas

Congratulations 🥳. If you are here you are here figuring out how to validate your SaaS idea you are already ahead of the majority of founders I have worked with and I have worked with a lot of them.

Building a SaaS without first validating your SaaS idea is an expensive long-term commitment. You want to make sure that what you are building is something that people want and are willing to pay for.

Hi 👋. My name is Siddharth Verma. I am a SaaS consultant who has worked with over 65+ early stage SaaS founders in the last 5 years helping them avoid pitfalls and launch successfully. Grab a cup of coffee and let's walk you through the process

A framework is useless if you don't implement it. I have created a document for you to fill in your findings for the best results 👇 👇👇👇

Understanding Your Idea

Congratulations on your idea. At this point, you have a vague idea of what you want to build. But do you truly understand it?

This section will help you articulate your idea more clearly. So you are well-prepared for the next steps.

We are gonna take the example of "An AI Writing Tool For Writing Blogs"

Define Your Idea In One Sentence

Sounds easy right? You'll be surprised how many founders struggle with this. Do you know why? It's the way how our brain works. Things are far more clearer in our heads than it is. Also, it takes the next level of clarity to summarize that thought in a single sentence

This exercise will help you throughout your journey of validating your SaaS idea. For Eg:

• Writing copy for your pitch deck, website, etc.
• It will streamline communication when you are pitching your idea to people you just met.
• It will declutter the junk and help you focus on what is important and have a clear value proposition.

Eg:
An AI writing tool that helps people write better content

What Is Your USP?

USP is called a Unique Selling Proposition. It's what differentiates you from your competitors if you have any(If you don't know, don't worry we will cover it later).

This is where your personal experience comes into the picture. What unique insight do you have in that industry? What gap have you observed? Why anyone should buy your tool?

At the start of the journey, it's completely fine to be confused. You can write more than 1 USP. If you are not able to come up with a Unique angle, you might wanna reconsider this idea.

A very common USP people come up with is. We will be cheaper. This is fine to get started but you better come up with something else, really soon.

Eg:

• Our AI tool writes well research articles
• Our AI tool can copy and mimic your writing style.
• Our AI tool can automate the whole lifecycle of content generation.

Keyphrases For Your Idea

Now that we have a clear idea & a USP. Let's come up with 10-something phrases that define your startup. This can be a little tricky.

These phrases could be

• Industry Keywords that people generally use to find solutions like yours
• Problems that your tool is solving and the solutions
• Your unique selling points

Try it yourself. If you are not able to come up with these phrases use the prompt from the Google Doc SOP in ChatGPT

The key phrase will help you

• Enhance your vocabulary to talk to your customers
• Find Competitors
• Find Your Ideal Customers

This is how the output will look. Note it down in the doc

Understanding Your Competitors

Now that we better understand our idea, let’s validate our SaaS idea by identifying our competitors. This will help you get a better insight into the industry.

If you already know this. I would still recommend glazing through the section few advance topics will give you a better understanding.

Google the phrases that we found above to look for competitors and then classify them between direct or indirect competitors. Remember to keep updating your doc.

Direct Competitors

These are products that offer the same or very similar products. They will have the same audience as you and you will be competing against each other for customer acquisition.

You will come to learn a lot from these competitors like

• What features to build?
• How to price your product?
• What are the common customer acquisition channels?
• What people are complaining about?

And the list goes on and on

In our example
writesonic.com can be a direct competitor as it tailors to the exact same market

Indirect Competitors

In a rare case, you don't find your direct competitors. We look for products offering similar services to ours. They may tackle a broader or similar target audience and may impact your customers. Luring them by giving a broader or different set of features.

In our example
Quillbot can be an indirect competitor as it server a similar market to ours

Understanding Your Market

This is a super important step in validating your SaaS idea. Now that we know who are competitors are we could gain more insights about the market.

Use direct competitors wherever possible. For example, we are gonna use byword.ai, writesonic.com, and writehuman.ai

Go to Semrush's Market Explorer. Create a free account.

You will be greeted by the below screen and enter 3 competitors.

A Voila 🎉🎉🎉 now you have more details about your target market. How cool, Right?

The first fold explains your TAM and SAM. This is super crucial. This helps evaluate the opportunity size and comes up a lot when you are talking to investors

Now if you scroll down you can also see how these competitors are acquiring their users(this will come in handy later) and especially what demographics their users are from. This will help you create an Ideal Customer Persona later

Towards the end of the page, two graphs show which countries are visiting these websites(this helps with ICP too) and the trend of traffic. This will help you understand whether the demand for your idea is increasing or decreasing.

There is a lot of information in this tool. Feel free to explore. You can also opt-in for a 7-day free trial if some features you want are blocked

Reaching Out To Potential Customers

Now that we’ve somewhat validated that our SaaS idea has enough potential based on our research, it's time to reach out to people and determine whether they are willing to pay for our product.

But where to find these people? Also, Who are these people ?

Defining Your ICP

Making an Ideal Customer Persona is a complex process but for the sake of this problem. I am gonna reduce it to essentials and give you one approach that always works.

• Pick one of your 5 direct competitors
• Go to their LinkedIn and Twitter Profile(Company Page) and go through their followers
• Make a note of common patterns in their followers. You want to notice these 5 things
  • Job Title
  • The industry they work in
  • Type of company(Startups, Medium Businesses, Enterprise or Self Employed)
  • Their seniority/decision-making authority
  • Tech Savviness
• Come up with at least 3-4 personas

Note these personas in your document. These will come in super handy when you start building your product to make key decisions.

Another thing to keep in mind is followers don't always mean customers but it's a good start. Building an ICP is a continuous process and it will evolve over time 😄

Reaching Out In Your Network

Common sense would dictate to start pitching them, right?
Hold on. Unless you are a sales or marketing person. Talking to people can be tricky, especially when validating a SaaS idea. So let's start with people you know.

You can start with LinkedIn or Twitter whatever you see fit. For this example, we are starting with LinkedIn.

Go to its search page and click "All Filters".

Start with 1st degree connections. If you are not able to find any then move to the second degree connections.

Find at least 10-20 people who are willing to talk to you. This is the minimum.

Keep on doing that until you feel confident. That people will buy your tool.

Taking Feedback Through Social Media

These one-on-ones are super important but so is community feedback. Let's see how can we get feedback from users instantly.

• Post on your social media profiles. Duh 🙄. Don't be afraid to share your ideas and be embarrassed about trying new things. This would be your first baby step
• Ask people on Reddit but don't be salesy and make sure to customize your post for each subreddit.
  Here are a few subreddits to get you started.
  • r/SaaS
  • r/startups
  • r/SideProject
  • r/validate
  • r/ideation
  • r/SaaSIdeas
• Find Facebook groups. An easy way to find these groups is to Google this 👇
  
  'site:https://www.facebook.com/groups/ <keyword>'
• You can also explore X Communities to seek feedback on your ideas. This is a good place to start. Also, Look into Build In Public Communities. Those are pretty supportive

Whatever you choose. Just make sure not to spam. Take time to personalize each post according to the community and don't sell

Crafting Your Pitch

Now that we have a list of communities and people. The question arises what the hell we are gonna post to validate our SaaS Idea😅.

Let's start by making a base pitch which we will customize later according to platform, community, or the people we are sending it to. (Make sure to update this in your doc).

This is the basic structure of a base pitch

• The problem you faced that made you decide to build this
• What are you building
• Why you are the correct person to build this
• How your solution is different than existing market solutions(USP)
• A CTA
  • Is this something you find helpful?
  • Will you use such a tool?
  • Are you open for a quick call about it?

You should have all this information in your doc. If you s*ck at writing like me. You can use ChatGPT but make sure to edit the text after generation.

The internet especially Reddit is quick to roast text generated by ChatGPT

Talking To Perspective Customers

Now that we have discovered places to find our potential user base. The question arises how to talk to them and what to expect. I have taken or been a part of a lot of these interviews and here are some points I have learned along my journey

Common Challenges

There are a lot of challenges when talking to people especially if you haven't done this before. The first few times will be terrible. That's why I recommend starting with people you sort of know.

Here are the top 3 problems I frequently encounter and how to solve them

People who matter won't give you their time. Especially if you are in B2B.

Start with people you know, Who have worked in the same company and who went to the same college/school. You get the pattern find common ground and include that as the first sentence of your outreach message.

If you have exhausted the above. Build relationships with them before pitching in. And no building relationships doesn't mean liking their recent 4 posts

People are too nice and will say yes to everything

Have you ever seen someone say Your baby is ugly well Startup ideas work the same way. Especially with people you know. They will say Yes to anything and tell you they will buy it and then ghost you 😅

How to fix it?

• Use a problem centric approach and don't discuss the solution. Figure out how big of a problem it is. How they are solving it currently and how much time and money they are spending on it
• Ask them for a small deposit($5-$10) like a pre-sale. If they say no they were just being nice or the problem is not big enough for them or either in general
• Ask them for referrals if you can't ask for money. People will only put their reputation on line if they genuinely believe in your idea
• Talk to strangers instead of people you know. Talk to decision makers instead of people who haven't said no to anyone

People love to talk about themself

TBH, It's not a bad thing you should let them talk about themself. Instead, it's recommended to let them talk about the problem before you pitch in the solution but make sure you put it guard rails.

• Make sure to set expectations and boundaries at the start of the meeting
• Don't ask opinionated questions about your idea
• Ask specific questions that have factual answers(Eg: Have you ever paid for a similar solution)
• Redirect them back to the question(politely). If they deviate

Key Indicators of Success

Not that we know how to talk to prospective customers. It boils down to the final question.

How we validate our SaaS Idea ?

What to get out of the conversation that will tell us. Yes, this is something worth pursuing.

• They are using/paying a competitor and are willing to shift to you
• They are willing to put in a small pre-deposit
• They are willing to introduce you to other people
• Here are some honorary mentions
  • They are willing to share their email or signup for a waitlist
  • They are willing to jump on a follow up call
  • They tell you. They would pay for it. Yup this comes at last

Common Pitfalls To Avoid

We have come a long way, aren't we?

Before you sign off and start validating your SaaS idea. Here are some common mistakes to avoid. I have seen even the best of the bunch do these and have seen them often enough that I think they are worth mentioning

Don’t Be Afraid to Share Your Idea

In 99.999% of the scenarios ideas are worthless and execution is key and no it's statically unlikely you are in the 0.001%

Sharing your idea with others gives you more clarity and can even help you improve it. We all come from different backgrounds and our own unique way of looking at things.

They can pinpoint things you missed, Some might also tell you that it sucks or good ones will help you refine it.

A copycat is inevitable and there is a high likelihood that you are one and a competitor already exists and you didn't find them.

Don’t get emotionally attached to your idea

I have been a victim of this during my early days of entrepreneurship. All of the mentors and peers told me it was a horrible idea but I was so fixated on it.

And guess what? They were right

There is a difference between being determined and being ignorant. If you find enough evidence that the idea is not being pursued, Let it go, you will find a new one.

Don't confuse evidence with the opinions of people. A piece of evidence is facts like

• Not enough TAM
• Too many competitors
• Unrealistic or super high barrier to entry

Don’t Build Before Validation

You are unlikely to make this mistake if you are here but if you are a software engineer like me building things comes naturally to you. It's your comfort zone.

Don't invest your time in something that no one wants. 9/10 founders who have an engineering background make this mistake.

Some justify this by saying. I am building this to solve my personal itch and secretly hope it becomes the next big thing. Very unlikely. Use your time wisely it's a finite resource.

Start With a Problem, Not a Solution

I should have started with this one. This is so common and very hard to diagnose.

This is often a result of the Dunning-Kruger effect. It happens when people learn a new skill, enter a new field, or do something new.

They come up with something that sounds brilliant in their head, a brilliant solution to a problem that never existed or wasn't worthy of solving.

This is why it's important to share your idea

The Next Facebook

This is a very common problem with industry veterans. They come up with an idea so big and general to a problem so big that no one is able to oppose them

I'll Build A Better Google Focused On Privacy

That's how DuckDuck Go was born a famous search engine but have a look at the background of Gabriel.

I can probably write a whole blog about it. Here are a few questions to ask yourself

• Why You? What uniquely qualifies you
• Why now?
• Do you have the resources or the connections?

I know it's a gray area there is a very fine line between a visionary and a fool. Tread carefully.

This is the most dangerous area. I have seen people exhaust their life savings here as the cause seems so noble and the rewards seem so high.

Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you and you can change it...Once you learn that, you'll never be the same again.
- Steve Jobs

Congratulations on being in the top 1% of people who chose to create. The journey you are embarking on won't be easy but you'll gonna love it 🥰

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All The Best 😊