Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to get your first 10 SaaS customers. They reference a ParseHub blog post about the beginning stages of their startup. Rob and Mike walk you through the steps of this article and how you might be able to replicate their success.
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Transcript
Rob [00:00]: In this episode of ‘Startups for the Rest of Us,’ Mike and I talk about how to get your first 10 SaaS customers. This is ‘Startups for the Rest of Us’, episode 295.
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product or are just thinking about it. I’m Rob.
Mike [00:29]: And I’m Mike.
Rob [00:30]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So, what’s the word this week, Sir?
Mike [00:34]: Do you want to hear a joke about tacos?
Rob [00:36]: Always.
Mike [00:37]: Are you sure?
Rob [00:37]: Uh-huh.
Mike [00:37]: It’s kind of corny.
Rob [00:39]: Well, you know. It comes with territory, right?
Mike [00:41]: Get it, corny? Tacos?
Rob [00:45]: I was waiting for something funny.
Mike [00:47]: I know. I don’t know what you were expecting from me.
Rob [00:49]: Ah, man. Yeah that was pretty bad. I wouldn’t even tell that one at MicroConf. That’s how bad that joke is. Yeah, we were talking offline before this podcast and it’s like we don’t have so much going – we have a lot going on, but none of it this week is that interesting to do in this update upfront. It’s like there’s behind the scene stuff. You said you’d talked to a potential customer about early access stuff. I’ve been plugging away having meetings, charging ahead. But I really couldn’t think of anything in the last week that was that interesting to tell the listeners about. Some weeks it’s like that.
Mike [01:21]: Yeah. It’s not that there’s not stuff going on. It’s just that it’s not really interesting to hear about at this point.
Rob [01:26]: Yeah, well so maybe today we just dive right in to the topic of the day. We’re talking about how to get your first 10 SaaS customers. And, specifically, we’re going to be referencing this blog post on the ParseHub blog called ‘How We Got Our First 10 Paying SaaS customers.’ And ParseHub is a SaaS app. They’re a visual web scraping tool. So, they have tag lines like ‘Extract Data from Any Site,’ or ‘Turn Any Dynamic Website into an API.’ And so, obviously, you sign up for them. You can go and it does screen scraping, in essence. And then you can pull data out. I’m assuming you hit some ParseHub endpoint and then you can pull data through there.
But they published a post – this is over a year old at this point. They had launched in September of 2014 and they published a post in 2015 about how they went through and – basically from a standing stop. As far as I know, they didn’t reference having a list, or they didn’t reference having an audience, or any of that stuff. And so that’s where I found it interesting – is that these folks have done it recently, relatively. They walk through – what is it, 5 or 6 steps that they took to do this. And we won’t cover in detail everything that they talk about. We’ll obviously link it up in the show notes. But we did want to kind of walk through some steps of how you might be able to kind of replicate what they’ve done to also get your first 10 SaaS customers.
And so the first thing they talk about is don’t rush. And the post mentions there’s a lot of pressure to launch early and grow from day one. But premature growth can be detrimental to a small team that’s not equipped to handle a large number of sign-ups. And, back to my voice here, not only can it be detrimental if you can’t handle the support and can’t handle the onboarding, but it can be detrimental if you have a product that nobody wants yet, and you launch and people try it, and then they don’t give you a second chance later on. Whether your product is just plain bad, if it’s not built well. Or if you haven’t built something people want yet it’s going to be really hard to get the benefit of the doubt and get another try out of folks six to twelve months down the line once you actually have built your killer tool.
And so ParseHub – in the posts – talk about how they didn’t launch publicly right away, that they focused on finding a pay-in point. They solved one problem for one type of customer very well. And this is where having this early access – I called it the “slow launch”. I mean, DRIP launched over the course of six months, in essence. We got customer number zero and then customer number one and we figured out “How do we built it until they get value?” And then customer number two. And we built up one at a time. And ParseHub, in essence, did a similar thing where they really took they’re time to focus on finding a real pay-in point and solving it for one target customer type.
Mike [03:53]: And I think in most cases that’s probably the way to go if you don’t have traction yet, and you’re not really sure if what you’re launching is really what people need. I mean, so there’s a difference between what your vision for the product is and what you’re able to deliver on day one. And there’s a lot of people who are going to be willing to put up with the early access bugs and the lack of features and functionality that you just aren’t going to be able to have on day one. And then there’s going be this large category of other people who are not willing to wait, and they don’t want to because they’ve got a problem right this second that they need solved and they need to have either you solve it or somebody else. And if you can’t solve it right then and there for them, they’re not going to be willing to wait.
So, I think that this point kind of drives home the idea that there’s this certain classification of customers, or prospects, that you have to have early on that are going to be willing to work through whatever those issues are over whatever that timeframe happens to be for you to get to a point where you can deliver not just everything that they need, but go above and beyond it, to the point that you’re able to attract and retain these other types of customers.
Rob [04:52]: Another reason that they’ve said don’t rush is that they’ve spent a ton of time up front solving this problem well. They said there are dozens of competitors that can extract data from simple, well-structured sites. But nobody could tackle the edge cases. ParseHub essentially spent a year – they said they grabbed a random sample of 30 scraping jobs from oDesk and they told themselves they wouldn’t launch publicly until they could handle at least 20 of them, and it took almost a year of development before they hit it. By that time, they’d built something really unique, really special. But what is they’re value proposition then? We can scrape sites that no other tool can. Like we are, quite literally, the best. We know that no one else can do that. So, they had a value prop that they’d developed through working with real customers over a longer period of time then most start-ups would be comfortable with. And – I haven’t done research into ParseHub – but I’m guessing by the fact that they took that much time that they were bootstrapping. Because if they had a big chunk of funding they probably would have been pushed to hire faster and get bigger faster. But instead they were really trying to build – in this case a better product – and seeking that product market fit in essence of building something people wanted. And it took them a long time. And it will very likely take that long when you’re doing it as well.
So, the second tip they offer is to perform extensive user testing with potential customers. They said they did more than 50 hours of user tests. And they said almost every change to their product was hinted at by what users did during an interview. They had friends, co-workers and friends of friends use the product while they watched. They found potential customers on marketplaces like Elance and oDesk and PeoplePerHour. They interviewed early adopters. They tested usability. They did all that stuff and they asked questions. Here’s a few sample questions they asked: “What web scraping techniques and tools did you try? What did you like or dislike about them? What kind of websites do you want to get data from? What do you need the data for? Is that data essential for your business?” And so, they said they focused on solving the customer’s problems. And they spent a ton of time doing it. So again, this is part of the don’t rush. It’s like, do it well. Don’t try to short-circuit this part of the process. We’re all in a hurry, and we’re all impatient and we want to get there, but realize that investing the time now will yield dividends if you really nail it in this early stage.
Mike [06:55]: And I think the point of what they’re trying to get at here is, specifically, that if you know what the customer wants before you try and build it then you can design towards the customer expectations, not what you think that they want, and then try to match it up later. At which point you’re going to have to go back and adjust for whatever that gap is between what you thought they wanted and what they actually were looking for. And that’s going to hold true regardless of whether or not you’re using the tool. And I think that if you are using like whatever the type of tool is that you’re building, if you’re in that target market, then you’re probably more prone to maybe make some assumptions about what the customer really wants. And that can be very difficult to adjust for the gap between where you ended up versus what they were really looking for, what they really needed.
Rob [07:39]: And the third tip they lend is to build something people will pay for. So, very much like building something people want. And I think the way they phrase it is they say, “Provide value that customers are willing to pay for.” In their post they say, “Finding a problem is great, but is it a problem that your customers are willing to part with their hard earned cash to solve?” They said before they had a product they would go on oDesk every day and apply for web scraping jobs. They asked people to commit to $150 a month for a tool they could use themselves. And once they got a few commitments, then they were sure there was a need to actually build software. And they point out that customers will pay you if you help them make money. We’ve said this many times on the podcast. Help them make money, help them save money, help them save time. And they found a product that, in essence, does all three.
Mike [08:24]: I think it’s very easy to kind of skip this particular piece of it and think that you’ve got this problem that needs to be solved, and it needs to be solved so people are going to be willing to pay for it. And it’s really a matter of whether or not they’re going to be willing to pay you for it. And the other side of it is whether you’re going to be able to find additional people who are also willing to pay for that. Back in late fall, when I started the process on Blue Tick, there was actually another idea that I was looking at and I really thought that that was the one that I was going to be able find traction with and get customers for, and it turned out that it wasn’t. It was an interesting problem. I think that there was a lot of money to be made there, but I don’t know if I would have been able to actually make that work, because I couldn’t find enough people that were – essentially a critical mass – that would have been able to develop into a customer channel. So I think that you have to have those conversations with people and find enough of them early on. And if you can’t go through the process and find even just 10 or 20 people who are willing to pay you for it, then what’s going to make you think that you’re going to get 100 or 500 or 1,000? So, if you try to think to yourself, “Oh, well, that’s a lot a work. I don’t want to do that.” Well, you’re not going to really be able to build a business if you don’t do that to begin with. So, you have to take a little bit of a step back and at least just take a baby step in that direction. Try and find the core group of users that you’re going to target. And if you can’t find them, you’re probably not going to be able to scale that into a viable business.
Rob [09:44]: They’re fourth tip is to leverage marketplaces and communities. And, with ParseHub, these guys focused on Elance and oDesk, but they specifically have a couple questions you should ask yourself. Number one: Where does my customer spend his or her time online? Two: Where does he or she look to find a solution for the problem I am trying to solve? And they give a couple of good examples. They say, “If you’re running a business that can help jewelry designers sell more product, reach out to them on Etsy?” If you want to solve a pain point in the real estate market, you can try kijijirealtor.com and other industry-specific communities. If you’re developing a solution for teachers, you can find them on Udemy or Skillshare.com. The idea here is that if you can find a community or a marketplace you’re not looking to scale it up to a bazillion users at this point. What you’re trying to do is get early feedback. And it gives you a little bit of exposure to people who are experiencing a pain point pretty dramatically, and if you’re solving that you are going to get some interest from folks. And that’s the point, you’re looking five, 10, 15 people at this point. Which the reason the title of this episode is ‘How to get your first 10 SaaS customers,’ so you’re doing stuff that doesn’t scale very well at all. But that’s the point. You’re just trying to hone in on their needs at this point so that you can solve them, and then you look to scale it later, and you look to replicate that out and expand it.
Mike [10:57]: One of the things that I really like, that they kind of eluded to in this particular articl,e which was they went out places like Elance and oDesk and looked specifically for job postings to solve this particular problem. They used those to help build their software, because it was evident from those job postings that people wanted that particular problem solved and they were willing to pay the money right this second for it. So, I think it’s worth going out there and taking a look at those different types of sites to find out if there are active job postings to solve the problem that it is that you’re trying to solve. That might also be a good place to just leverage to find ideas as well. I mean, if there’s enough people that are paying for a particular job over and over and over again, or particular problem they need solved, then you could, in theory, build software that is going to solve that problem for them. And – maybe you’re not going to be able to sell it to them because they need the solution right this second – but down the road if they need that problem solved again, or if there are other people who also come across that particular problem you can get them into a sales funnel and solve it later for them.
Rob [11:58]: Yeah, I agree. It’s a hack I don’t know that I’ve heard about it before, but it totally makes sense. These aren’t going to be easy things to solve. Imagine going onto oDesk and getting the list of all the people who want something extracted and then looking at those sites. I bet a bunch of them are really nasty, because I bet they had already tried all the solutions available on the market. And so you’re going to have to do some hard work here. You’re going to have to solve a hard problem. But that’s the nice part, is that you’re going to be able to charge for that if you are in fact able to solve it. I get the feeling so many of us as engineers, or of the engineering mind-set, or even just the entrepreneurial mind-set, once you have a problem you really want to tear into it. But it’s just finding that problem that people are willing to pay for. Even if it’s hard and you’re willing to spend six months of nights and weekends, or as these guys spent a year of customer development time. Finding the problem and vetting it is perhaps as challenging or more so than solving it itself.
The fifth tip from ParseHub is to engage on Q and A sites like Kora and Stack Overflow. And they talk about how they answer questions on Kora and Stack Overflow about web scraping and that this had a measureable impact on their revenues, especially in the early days. They also talk about launching on Hacker News Reddit and [Product Time?], which I think these days most people would probably try to do and they talk a little bit about. But I like the Kora approach which they reference – there’s a Kora how-to guide by Kissmetrics. And they talk about how there’s 40 underrated niche sites where you can post about your start-up and you can engage about that. This is – I’ll say it’s a somewhat common approach – it’s not completely novel or new. But if you can get on Kora or Stack Overflow and you do provide value and you can answer questions, because by this time you’re such an expert in your topic that probably off the top of your head you have more knowledge than 99+% of the people on the site. And so you actually can, off the top of your head, answer stuff with really in-depth numbers or thoughts or metrics because it’s just something you’re living and breathing. I have seen this with my products. Whether it’s DRIP today, or HitTail previously. I have seen getting customers from these types of things, because what’s interesting is that these aren’t just forums off in the corners of the internet. These are big sites with a lot of traffic, and the people who search for these questions are desperately seeking an answer. And so if you can provide a good answer to it – it doesn’t even need to be that the answer is “Oh, use my product.” The answer can often just be here’s some insight, here’s some metrics, by the way I learned this as the founder of this product. And it lends you that credibility. I like this approach.
Mike [14:20]: The other thing that nice about that is, as you said, these sites have lots and lots of traffic. And it’s not just the immediate traffic from the people who are asking the questions. It’s more the long-term traffic over the course of a year, or two years, or five years, because those answers that you left several months or years ago will continue to be searched and indexed, and people are going to look for those. Because the same questions on forums tend to come up over again. So, even on Kora you’ll find that the same types of questions keep getting asked and they keep getting answered. And even on Stack Overflow, to some extent, there’s a lot of times where there will be one canonical answer. And that’s really what the community there strives to try and do. But a lot of times there’s variations of a particular answer, and you can go in and you can answer them. And as Rob said, you just drop some notes, “Hey, I learned this as the founder of X.” And people will go through those and they’ll take a look at it and if they still need the problem solved, or if they still have questions, they’ll click through and they will end up at your site, and hopefully that will lend itself towards another marketing channel. But I do know people who’ve been using Kora to some degree of success to try and help push their sales funnel further.
Rob [15:26]: Yeah, and you might that that Kora doesn’t scale – and it’s not going to scale infinitely – but you see entire brands built just on answering Kora questions. Like with Jason Lemkin and [SaaStr?]. He says that’s how he built, pretty much, the core of the SaaStr brand. And he’s answered thousand’s, I’m assuming – I’m sure you’re going to look and see how many he’s answered – but thousands of Kora questions. And he’s become kind of the defacto guy to be talking about B2B SaaS, and how to grow that because of that. So, while you may not have the time to do that, if you’re able to answer questions up front and then later on you can use the approach that Steli does at close.io where he says they’ll often put out a blog post. And then he basically records a video and then they turn it into both a video, audio and a blog post. And then the kind of editor – the guy who’s helping him do the content production – reads the post and gets the ideas out of it and goes onto Kora and figures out are there questions that pieces of this post answer? And then will answer it, whether it’s posting it all on Kora, or linking back. I’m not exactly sure how they do it. But There can be value that is a somewhat scalable thing, because it’s not using Steli’s time anymore, and you’re not using someone else to continue offering a lot of value to the audience and answering questions that they want answers to. And, in effect, getting some of that value back by the handful of people who are going to click back and potentially check out your product.
The sixth and final tip from ParseHub about how to get your first 10 SaaS customers is to use Twitter. And, specifically, they say that Twitter works magic, and so do your first few loyal fans. They talk about how they had a few users give them positive shout-outs on Twitter. And that after their initial launch, someone noticed them and reached out to write about them. And, to quote, the author says he wrote an honest comparison between ParseHub and Komodo Labs and he included the pros and cons of the first version of ParseHub. I agree. I have this love-hate – mostly hate – relationship with Twitter and Facebook for that matter. You need to use your head when you’re doing this. You can’t be on Twitter all the time, in my opinion. You need to be running your business. But, he’s right that monitoring Twitter and engaging with folks, especially in the early days, will earn you fans. It can earn you press. I’d say it’s more important in this early stage, as you’re starting, to get momentum. And he indicates that the opinion of your first few users matters more than gold. Reach out to them. Ask for their feedback. Engage them in your story, because then they become advocates of yours. And if they like you and they like what you’re doing, they’re the ones who are going to help spread the word. And so, engaging with them on Twitter is one way of doing that. Email is another. The nice part about Twitter, of course, is that it’s public and if folks are asking you questions or high-fiving you essentially, virtually through Twitter that’s a nice way to engage and kind of I guess broaden your reach so to speak.
Mike [18:05]: That’s also a double-edged sword because if they’re experience was a negative one then, of course, it’s out there publicly for the entire world to see throughout all of human history at this point.
Rob [18:13]: But most people, like if you really are working with them and they have a negative experience, they tend to do it via email.
Mike [18:18]: Right.
Rob [18:19]: Especially in the early days when you’re really hands on. I would hope that you could handle that one on one and –
Mike [18:23]: Sure.
Rob [18:23]: – help them move along. But you’re right. It is a danger.
Mike [18:25]: Right. I mean, I won’t say I take issue with this so much as it really like – I don’t think that Twitter is a silver bullet for every single business. I think it’s great that it worked for them and it’s great that they were able to land an honest review between them and somebody else. But that’s certainly not going to happen to everybody. In some ways it was a lucky coincidence, but in other ways if you are really working hand-in-hand with a lot of customers over the course of a year to build your product, then that’s going to happen naturally on its own, regardless of whether it’s Twitter or some other place.
Rob [18:55]: Yeah. I would agree with that. That’s a good point to raise. There is absolutely some serendipity in this. I think there are ways to tip that serendipity in your favor by providing amazing support and hand-holding experience up front. I think, if possible, working with influencers – whether you’re handpicking them or whether you’re just lucking into them – that’s always a big one. Because then you want to know that email list or a big Twitter following, they tend to want to create content to send to that list and, if you really knock their socks off, it often gives people an excuse to talk about you. It’s not a sure fire thing, for sure. And you’re going to spend a lot of time that’s never going to yield anything. But at least ParseHub, in their early days, said that they used it to great effect, or at least to get them to that 10 customer mark. And I think if you did all of their other things and didn’t use Twitter, I think you’d be just fine. I think Twitter is more or an icing on the cake if you’re already there and you know your audience is there as well and that that is going to be a viable channel, then I think it’s something to think about. But I wouldn’t prioritize it as high as any of the other points we’ve spoken about.
Mike [19:53]: Right. But I think that’s more because it’s so dependent upon those other things. I think that your comment about icing on the cake – I think that that’s very true just because of the fact that if you do all of the other things then Twitter will work well, or Facebook, or showing off your stuff publicly is going to work well because you’ve already worked with customers a lot. You’ve seen exactly what they’re looking for and what they’re willing to pay for, and you’ve done all of those other things. And it eventually leads you down the road of being more public about your stuff, and being more public about your interactions and the success that your customers are having, which then leads to these other things and these other success marks like the unbiased reviews and things like that that you can then highlight. So it becomes something of a snowball effect at that point, whereas if you were to start out with Twitter, for example, it just wouldn’t work because there’s nothing to base it on. You don’t even know if you have a viable product yet, or you’re solving a real problem that people have. So I feel like this is not just the last on the list because it just happened to fall there, but because it naturally falls there. It has to, because all of the other things have to be in place in order for that to really work well for you.
Rob [20:57]: So, again, we’ll link up the full blog post in the show notes. And, hopefully you’ve enjoyed this look today into how to get your first 10 paying SaaS customers.
Mike [21:05]: I think that about wraps us up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690. Or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Comments. Subscribe to us in iTunes by search for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
