How to Start a SaaS Business From Scratch

About this video

Martell gives seven steps to build a SaaS business from scratch, saying he has built and sold three software companies, spent tens of millions of dollars on developers and invested in over 60 software companies. Step one, start with the problem: consult for others, ask technology firms in an industry what they build over and over, keep a frustration list, ask people to show their spreadsheets, and look for growing tailwind markets rather than headwinds. Step two, build a clickable prototype — from pen and paper to Balsamiq, Figma or InVision — checking both function (do APIs exist?) and flow, so users can go from sign-up to value in a few clicks. Step three, validate by getting paid, citing crowdfunding as an $18 billion a year industry in his account; his early-adopter program offers a year licence at 50% off paid upfront, without promising each buyer different features. Step four, build an MVP constrained to what can ship in 3 months, warning against building on someone else’s platform and recalling Flowtown’s problems when a data provider changed. Step five, collect customer feedback by phone, focusing on mid-level users rather than non-users or the loudest 2%. Step six, generate demand via content, paid ads, partners or press, preferring affiliate fees of 20-40% over giving equity. Step seven, find a growth hack — a unique, little-known acquisition channel — asking ‘who’s got my list, my data, my customers?’

Key takeaways

• Start with a customer’s acute pain, not a big idea: consult first, ask industry technology firms what they repeatedly build, inspect customers’ spreadsheets, and favour markets growing 30-40% year-over-year in his framing — billion-dollar companies, he says, started as a $50 a month tool.
• Prototype before paying engineers: wireframe function and flow on paper or in Figma/InVision and test it with real users, because changing code is far more expensive than deleting a screen.
• Validate with payment, not praise: pre-sell an early-adopter year licence at 50% off paid upfront, but sell the same product to all buyers instead of promising custom features for each sale.
• Constrain the MVP to 3 months and the budget raised in validation; he says most people he works with can reach paying customers for less than $100,000, sometimes $50,000, versus a friend he cites who spent $5 million over 3 years without launching.
• Generate demand mainly through partnerships, paying affiliates 20%, 30% or 40% when you get paid rather than giving away equity, and hunt for a growth hack by asking who already has your list, data and customers.

Episode details: published July 14, 2024 · 29:03 long. Summary written by Self Growth Videos from the episode itself. Business results and any income figures mentioned are Dan Martell’s own claims, shared for education — they are not typical or guaranteed.

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