[#Bonus] - Top 10 Avoidable Mistakes SaaS Startups Make with Rob Walling

’In a start-up, you can’t move slowly because your competition is not moving slowly.’’ – Rob Walling. 

On this bonus episode of the First 10 Podcast, I have something a little different for you. I asked Rob Walling, serial entrepreneur, investor, author, and host of the popular podcast ‘Startups for the Rest of Us’, if I could reshare the audio from a Youtube video he posted entitled "Top 10 Avoidable Mistakes SaaS Startups Make". When I saw this video, I knew I had to share it. It’s short, and stuffed with classic (and not so classic) pitfalls to avoid when building your SaaS.  

Rob truly is a wealth of knowledge in building great businesses. Through his widespread books, recordings, articles, and discussions – Rob has guided thousands of start-up founders and continues to do just that through vlogs on his MicroConf  YouTube channel. I'm grateful to Rob for letting me share this content, and of course, subscribe to his YouTube channel (link below!)

Grab a pen and the nearest notebook as Rob shares his no-nonsense, fluff-free guide on successfully building your start-up, revealing the top 10 avoidable mistakes SaaS start-ups make. 

Resources: 

My original episode with Rob: https://www.conormccarthy.me/podcast-episodes/finding-people-who-care-with-rob-walling

The original YouTube video: https://www.youtube.com/watch?v=8Jjb7fPV6PQ

Connect with Rob Walling:

https://robwalling.com/ 

https://www.youtube.com/c/MicroConf 

https://twitter.com/robwalling 

https://www.linkedin.com/in/robwalling/ 

https://microconf.com 

Connect with First 10 Podcast host Conor McCarthy: 

https://www.first10podcast.com

https://twitter.com/TheFirst10Pod

https://www.linkedin.com/in/comccart/

Check out my podcast partners!

Buzzsprout:
https://www.buzzsprout.com/?referrer_id=1389931

Otter:
https://otter.ai/referrals/ETRNKY16

Calendly:
https://calendly.grsm.io/ilev18qxpn1e

Produced in partnership with podlad.com 

SPEAKERS

Conor McCarthy, Rob Walling

Conor McCarthy  00:09

Hello, and welcome to the First 10 Podcast. I'm your host Conor McCarthy, and I help people start and grow their businesses. I do that through joint ventures, collaborations, coaching and online workshops. In each episode of this podcast, I usually interview business builders about the early days of starting their business, about how they found their first 10 customers and got off the ground so that you can learn what works and what doesn't.  Today, I've got something special and it's like a bonus episode. And it's a first for me. I've been a big, big admirer of Rob Walling for many years, and have really appreciated his commitment to building great businesses and sharing everything that he knows in the support of others. I was lucky enough to actually interview him recently, and you can find that link in the show notes. In June of this year, Rob released a video on YouTube called Top 10 avoidable mistakes SaaS startups make. And apart from my love of all things, 10 I loved how Rob practices the technique of inversion here, and points out the pitfalls of starting a SaaS and how you can avoid them. It's a short video. It's really actionable. And it's kind of timeless. I liked it so much. And I thought it was so valuable. But I asked Rob, if I could share the audio here with all of my listeners, and he kindly agreed. This is classic, classic advice. So really do listen up. And if you liked this Rob has a ton more amazing videos for people building their businesses on his YouTube channel. The link of course, is in the show notes but if you search YouTube for micro conf, that's M I C R O C O N F, you'll find everything there from talks that Rob has given to sessions from the micro conference, lessons on acquiring customers, bootstrapping hiring, playbooks, dorks. It's a really fantastic go to resource for business builders of every stripe. So please do enjoy this bonus episode from Rob Walling.

Rob Walling 01:55

I'm going to cover the top 10 mistakes that SaaS startups should avoid. I'm going to walk through the most common mistakes I see from both new and experienced SaaS founders. I'm Rob walling. I'm a startup founder with multiple exits, author of three books about building startups, and an investor in more than 100 companies. Mistake number one is building something that no one cares about, I cannot count the number of times, I've seen a SaaS founder, go off into their basement for six months, and build something they think the world wants without any external validation, without any idea if anyone will pay the money for it, and maybe they want it. Maybe it's for them and they're scratching their own itch. But they've done no validation that anyone else in the world will be willing to use this or anyone else will be willing to pay for it. And there's no validation that they can reach those people in any kind of a sustainable way. It's perhaps the most common mistake that I see. And it's one you should avoid. Mistake number two is underpricing your product. Pricing is the biggest leverage in SaaS, recurring revenue is this amazing cheat code that we get for free because SaaS is a subscription business. But the issue that I see is many founders will undervalue not only what their product does, but they undervalue the time they've invested, and they look around at the rest of the competitive landscape and think to themselves, if I basically clone a product and under price by 10, 20 30%, that will be enough to get customers. And usually that's not the case, most businesses factor price into their decision making, but it's not the sole factor. And I think oftentimes, we bring this consumer price sensitive mindset to a business context. And in business price is just one of many factors. And in fact, if a business can ensure that they will get better results by paying more money, they will a lot of consumers will not do that. And oftentimes, being as expensive or even more expensive than your competitors can offer up an advantage in terms of the signal that it sends about the quality of your brand. Mistake number three is trying to be a little too innovative. There are so many opportunities in b2b SaaS, that are basically a simple twist on an existing product or a refresh of an old, clunky competitor that people are tired of that hasn't been refreshed in 10 years and has an old user interface tons of opportunity in these spaces. But many SaaS founders look at the Silicon Valley model of needing to be this massively innovative disruptive force, that's going to be worth a billion or $10 billion. And if that's your goal to get there, then yeah, it's the likelihood is you're going to have to do something that didn't exist before you think about Facebook as a social network. There were other social networks around but Facebook was the one that that you know, gained the traction. And Uber was for the most part it wasn't the first ride sharing app but it you know, it was the one that was the winner take all well in SaaS, it isn't winner take all and almost all spaces you can have amazingly profitable and fast growing SaaS companies that are the second or the third or even the fourth player in the space if the space is big enough. So don't feel like you have to reinvent the wheel or build something amazing if a business is using Excel to solve a problem today, that's an opportunity. And if your SaaS app is going to replace that it doesn't need to be super complex and fancy, it probably just needs to be, you know, a bit better than that Excel spreadsheet and, you know, enable communication and enable people to get it done a little faster. The fourth mistake is expecting that a good product will sell itself. So many founders think that their idea is so innovative, or that it is so much better than the current examples, pen and paper, Excel or a competitor, that it's just going to market itself, right that it's not going to need anyone to go out and a let people know it exists, and then be convinced people that it is actually a better option. And so just keep in mind, if you're going to start a SaaS app, it requires marketing. And it requires sales, don't use companies like Apple, or Basecamp as examples of these companies that they just built it and people came, right, they built it. And suddenly they had customers, there are so many reasons why those are exceptions to the rule that you will have to market and sell your product. That's the way 99.9% of products are sold today. And in fact, if you think Apple doesn't do marketing, it's because their marketing is so good. It doesn't look like marketing. Mistake number five, within the business, it's working one of the easy things. So if you're a designer, why not just keep continually redesigning your homepage to make it better. If you're good on a microphone, why not start a podcast that builds an audience that maybe you can sell your SaaS to, if you're a developer build more features, these are the easy things. These are the things that are your comfort zone. And it's where you want to live in that business. Hard things are things like grinding on a new marketing approach, analysing, testing, and improving your marketing funnel, doing sales demos, asking for the sale. Things that make you uncomfortable that actually grow the business are the things that you should be working on. And I do see a lot of founders working on the easy slash fun things. And that is not a great way to grow a business in a startup every week is like a month. And every month is like a quarter. Mistake number six is moving slowly, the cadence of shipping features and getting marketing approaches out the door and getting new blog posts written and getting content marketing and SEO and ad campaigns and optimising your funnel these things have to be so much faster than probably any day job you've had at you know, if you've worked for the government or at a fortune 1000 company, these entities move pretty slowly. And in a startup, you can't move slowly because your competition is not moving slowly. And one of the main advantages you have as an early stage SaaS startup is that you can move so much faster than that competition, you cannot beat them head to head they have more resources, more money, more developers. But if you have big incumbents, one of your chief advantages is moving quickly. So don't squander it by making this mistake of moving too slow. Mistake number seven is waiting too long to hire. I get it. I'm a bootstrapper I bootstrapped all the SaaS companies that I launched, but even then, I hired out support within a few months of launching them. And then I hired out development even though I was a developer within six months after that waiting too long to hire straps you to the business so that not only does it become a job, but you can't move as quickly as you'd like, see mistake six that I just mentioned, I find that some founders are resistant to giving up, I guess it's control or they think that no one can do a particular job as good as they can. And maybe they're right. But if you hang on to everything for the life of your company, you're going to be constrained in the growth dramatically, you're going to work too many hours you're going to burn out. And frankly, it's more fun to do as a team. There was a time when I really wanted to start startups as a solo person. And I did and in fact, I got pretty lonely, got pretty boring. And I got tired of grinding on support tickets and doing things that frankly, are below your paygrade as a founder. So as a founder think about how soon can I hire support out even if it requires being a developer or being more technical, you can find people who are technical enough to do support. And even if you think it's being close to the customer, which it is you can find people who will pass along those notes and who will communicate to you the important thing so that you can stay in close contact with your customers. Mistake number eight is fundraising too early, you'll hear me say build your business. Instead of your slide deck. The best slide deck is traction, it's MRR. And I see folks coming out with an idea and a sketch on a sheet of paper. And they're looking to raise funds. And the hard part is if you are able to raise funds at that point, you are very likely to burn through those funds before you have any type of traction and be able to raise at a higher valuation. So if you decide that you are not going to bootstrap longterm bootstrap at as long as you can, and maybe raise some friends and family. But think about the fact that in the early days your company is worth so much less, the less traction you have, so you have to actually sell more of it for the same dollar amount. In addition, we have seen founders applied to Tiny Seed which is the startup accelerator for SaaS bootstrappers that I run and we see folks applying with two or $3,000 of MRR who have burned through two or $300,000 of funding because they raise Did it and they felt like they needed to spend it. Having money can be this amazing resource. But it's also easy to waste it. And to spend it too fast in an early stage product because you don't know if product market fit is going to take you three months, or 27 months more people should think about bootstrapping longer than due today. Funding is not a panacea, it does not solve all the problems that we think it does, you still have to grind it out and get to product market fit. Mistake number nine is not vesting founder equity. This is just a basic startup mistake. I've seen folks where two founders get together, maybe three to each own, that 50 or 33% of that company, they don't invest their equity, meaning they get all the equity upfront, and they don't have to work in order to earn that equity. And then one founder leaves six months in 50% of the equity or two founders left with 33 Each and there's just someone not working on the business who owns a third of your company. This is pretty much one on one startup advice. But if you're not vesting your equity with your co founders, you're making a big mistake. The tenth mistake is thinking in terms of months, not years, SaaS takes a long time, the cheat code that we get with recurring revenue also brings with it the opposite of a cheat code, which I don't know the word for that. But it's basically that you can't charge $1,000 upfront for your software, maybe you can charge $30 a month and you get that $1,000 over the course of many, many months. And that makes it hard to grow revenue, right? It's a lot harder than when you could back in the day, you did downloadable software, and you sold it for 1000s 10s of 1000s of dollars. SaaS takes a long time to build up takes a long time to find product market fit. And you need a lot of customers to get to substantial MRR and so if you think that you're gonna get product market fit in a few months, you're gonna get to 10k a month in a few months, you're going to have the success that you want from your SaaS startup in a few months. It's not going to happen. Very, very rare. It's the Cinderella stories where that happens. And frankly, I've been known to say there are no Cinderella stories, expect to invest years into building your SaaS. So thanks so much for joining me. I hope you enjoyed the top 10 mistakes that SaaS startups should avoid.