Validating Saas ideas is hard. Back in the good ol’ days I had a pretty good validation technique – squinting and thinking really hard about the idea for a couple days. Turns out, hypothesizing in your head about how an idea might pan out isn’t really the best method. To be fair, I was using my experience to make those hypothesis, so they weren’t completely crazy – but definitely not as good as they could be. I had a few problems with my methods…
I was guessing at things I didn’t know much about without any data. I rarely could accurately estimate how big a company was. (e.g. what do you think a company like Boxx is making annually?). It might seem dumb (well just google it), but I didn’t think this was an overly important metric. I was focused on how their website looked and what I thought of their product. (if I actually reviewed competitors at all). Actually, often I’d come across and idea and just go with it because I thought it would work.
That was another problem. Not knowing what other companies in the space were doing meant I rarely had a unique or compelling position (in a way that the customer cared about). This is what ultimately has lead to the demise of a number of my startups.
The better way
Recently on the Searching for Saas Podcast – ep 10 to be exact, Josh and I chatted about finding a better way to validate a good niche. This outline is the result of our discussion.
Only one page
Let’s not over complicate this. We’re validating a business idea. If we can’t capture the information on one page, we’re going to be here forever evaluating 1 idea. 1 page, that’s it.
Top of the page: Market Vertical Name
e.g. Digital Asset Management. Just something that says “what are we talking about here”. Is this a CRM? Accounting Software? I think you get the point
Market:Google it
One or two sentences on what kind of companies show up when you google terms related to your market vertical. e.g. blog articles about what a CRM is, lots of Garter reports, G2 and software reviews.
Market: SEO
Use a tool like Ubersuggest and find the search volume (per month) and SEO difficulty for your idea
Market: Companies in Space
Find ~3 companies already in this space and evaluate them.
- Estimated yearly revenue and founding year. (usually you can just google “COMPANY_NAME revenue” to find this)
- Position they have (e.g. CRM for solo founder startups)
- Sentence or two on overall feeling of this company (e.g. no pricing available, looks enterprisey)
Possible Position
List one or more positions you could use to win in this market. In a small market, your position could be similar to a competitor, but in general your “way of thinking” or “group you serve” should be unique in a meaningful way to your customer.
Distribution Methods
If you built this idea, what strategies could you use to funnel-in customers. Typically I choose SEO for this, but sometimes there’s other networks/strategies you can tap into.
Example 1 Pager
Digital Asset Management
Market: SEO
monthly searches: 4,400 (USA), difficulty: 64
Market: Google
- What is it? Garter report. G2 / software reviews
Market: Companies in Space
Widen
- 26M (est) since 1948
- no discernible position
- no pricing available – looks enterprisy
Brandfolder
- 24M, since 2012
- Asset management for Tech companies
- Forester report, no pricing available – looks enterprisy
Bynder
- 48M, since 2013
- Forester report, no pricing available – looks enterprisy
- no discernible position
Canto
- 18M, since 1990
- Make your team more effective
- No pricing listed
Possible Position
- Make your rebrand as easy as flipping a switch
- SMB, self-serve, down-to-earth, advertised pricing
- value-add there for SMB
Distribution
SEO
Repetition is key
Doing this the first time is going to be A LOT of work. But you need to push through and do at least 5-10 of these before you decide on an idea to pursue. Without the context of other ideas to compare against, you have no idea if you’re taking a bad idea just because it was the first idea the didn’t completely suck. It took me 3 days of it rolling around in my head to complete my first one-pager. But it gets better. I’m down to 1hr per idea now and I have a much better pool of ideas than the first 3 that I came up with.