Bootstrapper's Paradise

Summary
Sean discusses the importance of managing profitability for B2B SaaS companies and why it should always be a goal.

Key Points

• Growth for growth's sake trend in the VC world has led to historic numbers of failures of tech products and B2B SaaS product companies.
• The economic conditions have changed and interest rates have risen considerably, making solid business fundamentals and economics more popular among investors.
• Managing towards profitability should always be the ultimate goal for B2B SaaS products.
• Companies should focus on healthy business fundamentals and economics to run a sustainable business.
• While capital may be needed to get started, companies should manage towards profitability as soon as they can.
• Managing towards profitability allows for more control in the long run and a more sustainable approach.
• Few companies have successfully raised round after round of investments for growth's sake.

Quotes

• "Healthy business fundamentals and economics are key to running a sustainable business." (01:29 - 01:37)
• "You need to be able to take in more than you spend, but you need to be able to do so in a manageable way." (02:19 - 02:24)
• "Now that's come back into, or it's become more popular, I guess, again. But in my opinion, it never really fell out of style." (03:40 - 03:49)
• "So long story short here, despite the trends that happen over time, if you manage your B2B SaaS product and business towards profitability, that's something that won't go out of style and you'll have more control in the long run because that approach will be more sustainable." (03:58 - 04:14)
• "Despite the trends that happen over time, if you manage your B2B SaaS product and business towards profitability, that's something that won't go out of style and you'll have more control in the long run because that approach will be more sustainable." 04:01 - 04:14

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Summary
In this episode, Sean shares insights into B2B SaaS multiples and what factors can impact the negotiated sale price of a business. He explains why multiples can vary and provides benchmarking information and resources to help entrepreneurs make informed fiscal decisions when it comes to selling their B2B SaaS.

Key Points

• B2B SaaS multiples can vary depending on factors such as the state of the economy and the industry.
• In the past, B2B SaaS products were selling for a 10x multiple on revenue, but current market conditions have led to lower multiples of 3-4x on top of revenue.
• Understanding the market and your B2B SaaS's cash flow is crucial when deciding whether or not to sell.
• Multiples can affect the ultimate sale price of a business.
• OpenView's annual SaaS benchmark reports can provide valuable information.
• Cheap borrowing rates can lead to higher multiples, while increasing interest rates can cause multiples to drop.
• Ultimately, the decision to sell depends on a number of factors, including personal goals and the potential for future growth.

Quotes

• "There's a number of factors that will affect what type of multiple you may be looking at all the way from specifically what your B2B SaaS is and does all the way to and through what is the state of the greater just larger economy look like at the moment." (00:33 - 00:49)
• "If you don't have an interest in selling, you may or may not be interested in selling depending upon a number of these factors." (05:36 - 05:42)
• "Obviously a 10 x on top line revenue is very different than a three x on top line revenue." (05:42 - 05:46)
• "So long story short, I'm gonna be talking a lot more about this on the show as well too, to provide this insight with you as I'm learning where it is currently in the market." (05:56 - 06:04)

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Transcript
Hey folks, Sean here, and in this episode what I want to talk to you about are B2B SaaS multiples. That is, if your B2B SaaS scales to the point where you're considering or thinking about selling it, what might you ultimately be looking at in terms of a negotiated sale price? Now the first thing I'll say is that people have a tendency to throw around statistics when it comes to talking about multiples, but in reality, like many other things in our market and our world, this can be a range. And there's a number of factors that will affect what type of multiple you may be looking at all the way from specifically what your B2B SaaS is and does all the way to and through what is the state of the greater just larger economy look like at the moment. So I wanna share some of those variables with you as well as some benchmarking information and give you somewhat of an idea what to expect.

Now, depending upon where you are in the history of building and scaling your B2B SaaS, you may be more or less interested in entertaining this at the moment. But even if you aren't in a position to potentially sell what you've built so far, then it's still good information to know either way, because then you can factor it into the fiscal decisions that you make as you're growing and scaling your B2B SaaS. So the first thing I'll share is one of the more common, I say numbers or stats that's been tossed around in my circles relatively recently, I'd say within the past year or so, is that B2B SaaS products have a tendency to sell for 10 x multiple on revenue. Now obviously what that means is based on the revenue that your B2B SaaS is able to generate within a year period of time, so the ARR or the annual recurring revenue, what it was, at least when this was common, relatively common knowledge or where the market was, you would receive potentially a 10 x multiple on that if you were looking to sell your B2B SaaS.

So for example, if your SAS product was bringing in, let's just call it about 10K per month, so you were 10K MRR, right now, that would be about 120K ARR. If you just took that monthly number and you scaled that up. Now, if you were to supposedly sell that and your benchmark at the moment was 10 x on revenue, then you'd be looking at potentially being able to sell that business for up to $12 million. Now that's what it was, but that's not what it is now. So there's a number of good resources out there, and one I'll link to in the notes, and that's from the company OpenView where they do, they have a tendency to do these annual SaaS benchmark reports, which provide a lot of good information

From unsuccessful B2B SaaS companies cuz they see a lot of deal flow and in it. Now, the one that I'm referring to is from 2022, but it's got some good information in it, which I think has only kind of continued into 2023. So it's more than likely still relatively accurate. But something to note is that, and what I'll talk about in this episode, the larger economy can dramatically affect what the open market is saying in terms of what a B2B SaaS product or company might ultimately be worth. And back when money was cheap, and when I say money was cheap, interest rates were low. So borrowing rates were real, were very low, the Fed funds rate was held at zero for a long time. That's part of the larger economic levers that the federal government has in terms of determining fiscal policy and trying to essentially make sure the economy is is relatively healthy.

That rate which banks borrow from is ultimately a catalyst for how, what the open market ultimately can offer when it comes to borrowing money. So for the longest time, like throughout the pandemic, those rates were very, very low, almost like at historic lows, which made it cheap and easy to borrow money. And when that was the case, a lot of people were spending, a lot of people were borrowing. So there was a lot of activity and that was part of the idea was rates were lower to try to courage activity and there was a lot of it. And when there was a lot of it there, it pushed the multiples up. So that's how we got to the 10 x multiple and and considerably higher in some instances, depending on your growth rate, your industry, a bunch of other factors that we'll talk in about in future episodes.

But for now, what I want you to focus on is because of inflation has been very high and because of the fiscal policy reversing and us raising interest rates continuously over greater part of a year and change at this point, the multiples have come down and they've come down considerably. So lately what I've been seeing in terms of B2B SaaS products or companies on the open market and what they may be selling for, I'm seeing more between the three and four multiple on top of revenue. And again, that would be arr. So that's what I want to start sharing with you is more about this information so you have an idea what to expect, and also where the market is at any given point in time, you can factor that into your decision because obviously if your B2B SAS product is throwing off great cash and you're appreciating that cash flow, if you don't have an interest in selling, you may or may not be interested in selling. Depending upon a number of these factors. Obviously a 10 x on top line revenue is very different than a three x on top line revenue. So you know, ultimately as the economy ebbs and flows and as some of these other factors come into play and those numbers change, you might ultimately want to change what you do with your B2B se. So long story short, I'm gonna be talking a lot more about this on the show as well too, to provide this insight with you as I'm learning where it is currently in the market.

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In this episode, Sean shares his strategy on how to find and solve business problems for B2B SaaS by using consulting services as a way to perform discovery. By positioning it as consulting, B2B SaaS founders can get paid to do research and understand which problems are worth solving, all while helping their clients solve those problems themselves. This method provides cost-effective ways to gain insight on target markets and allows for a source of positive revenue throughout the process.

Key Points

• B2B SaaS founders can use consulting as a way to perform discovery and find business problems worth solving.
• Using services as a solution to a particular target market or industry can provide insights that could be used for a future SaaS product.
• The research and discovery performed during consulting could be a valuable source of income and lead to overall sustainability.
• Understanding which problems are worth solving can help B2B SaaS founders better understand the tools, resources, or help they need to help eliminate those problems.
• Consulting allows for a cost-effective way to gain insight on target markets and provide value to clients.
• B2B SaaS founders can earn income while performing discovery and finding valuable insights on potential problems and solutions.
• Consulting can ultimately help B2B SaaS founders be more successful in the long run by providing valuable insight prior to creating a SaaS product.

Quotes

• "There's a way for you essentially to get paid to perform discovery if you do so by positioning it as consulting services." (01:34 - 01:41)
• "If you are offering services as a solution to a particular target market or industry, then you can essentially get paid to perform the discovery." (01:44 - 01:52)
• "As a consultant in the work that I do, I'm looking for essentially the same thing - these problems we're solving, like what is preventing my customer and my client from making the kind of progress that they want to." (02:03 - 02:17)

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Transcript
Sean here, and in this episode, what I want to talk to you about is if you're having trouble figuring out which problem to solve or even how to find a problem worth solving, I wanna share with you a strategy or two that has worked very effectively for me in order to help you do that in the past, and that's where you'd look to potentially compliment what you want to do from a product perspective or with B2B SaaS with services. Now, I know this sounds counterintuitive because for those of us that wanna build B2B SaaS businesses, we're looking for that scalability. We're looking for small teams to make big impact. But when I wanna share with you, and my latest article on my website dives deep into this topic because I've had a lot of success with it, and so I have a lot of other B2B SaaS founders complimenting that effort with services.

Now, if you think about discovery, which is part of the process that helps you find those problems worth solving, it's similar to typical research, right? As in you're looking for people within a particular target market that have problems. And as you're learning about those problems and the impact that it causes their business, that starts to give you the kind of context you may need to find out whether or not those problems are ultimately worth solving, and if software or a SaaS solution could help move the needle in a significant way to help those customers with relieving those problems. Now, that process is actually strikingly similar to a particular service model, which is something else that I've also done significantly in my career, and that's consulting. So what I'm getting at here is that there's a way for you essentially to get paid to perform discovery if you do so by positioning it as consulting services.

The bonus here is that if you are offering services as a solution to a particular target market or industry, then you can essentially get paid to perform the discovery, which will help you better understand which problems are worth solving, and in particular with software or a potential SaaS solution, which could be yours in the future, right? As a consultant in the work that I do, I'm looking for essentially the same thing. These problems we're solving, like what is preventing my customer and my client from making the kind of progress that they want to. I dip into my bag of tricks in terms of what I know about the industry and the work that I do, which is helping B2B SaaS companies scale to help them understand the tools, resources, or help from me that they're gonna need to eliminate those problems and to make positive progress and momentum that they're looking for in order to get them to where they need to go. As I'm doing that, and this could apply to you in any industry that you want to build B2B SaaS solutions for, you can essentially do the same thing because you're trying to help them with solving their problems as well too. So what I want to share with you here is that if you're trying to figure out, how do I get better at finding problems or solving,

And what are potential, any other more cost effective ways to do so, it's essentially consulting in that the research and discovery that you may do independently on your own dime and time is something that if positioned properly as you're better understanding these problems end you feel like before you even have a SaaS product that you can bring to market or a position as a solution to those problems, you can solve those problems or help your clients with solving those problems yourself, and that as a service if valuable enough, as in if you're solving a painful enough problem for that target market, you can get paid to do it as well. Also, which doubles as positive revenue and income for you to help you and make your project more sustainable, as well as getting paid to perform discovery, which is just bonus and extra.

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Summary
In this episode, Sean shares his experience with receiving emotional reactions about his B2B SaaS product and explains why it can be a positive sign. He emphasizes the importance of addressing users' concerns and how lack of reaction is a much bigger problem. The presence of strong reactions means that the product is being used and providing value.

Key Points
• Emotional reactions to a product can be a good sign of engagement and value.
• Addressing user concerns is crucial to maintaining customer satisfaction.
• Lack of reaction to product issues may signify low usage and value.
• Availability and usability issues can be solved, but lack of reaction is a harder problem to address.
• Emotional reactions indicate potential product market fit and value for the user.

01:02 - 01:09
• "If you're getting a reaction like that when your product has some type of issue [...] that's a really good thing."

02:10 - 02:17
• "You can fix availability, you can fix usability. If your product is out there in the wild, your users and customers are interacting with it."

02:31 - 02:43
• "You wanna look for areas of opportunity for a product to generate emotional or strong reactions, because that actually is a sign of positive feedback as in the value that your product is providing."

02:43 - 02:59
• "When it becomes unavailable, the sooner you hear about feedback from your users about availability or usability, whatever the issue might be, the stronger potential your product market fit, and the more value they may be getting out of the product experience."

Episode Transcript
Hey folks, Sean here, and in this episode, what I want to talk to you about is that if you are getting strong emotional reactions about your B2B SaaS product from your users and customers, even if those emotions are negative, why that can be actually be a very good thing. Now, the example that I'm gonna share with you is my podcasting B2B SaaS application called Podcast show notes. And what happened recently was that it was offline or unavailable for some users for a number of hours. As such, I got a flurry of messages through our support channel about them not being able to access and use our application. Some users, as you can imagine, were pretty upset now, while they rightfully should be, and this is always something that more like when it happens to you, not necessarily if, if you get to this point, is something that you should address as soon as you can.

What I want to share with you today is that that is actually a great sign. And here's what I mean by that. If you're getting a reaction like that when your product has some type of issue, whatever it is, usability, availability, it doesn't matter. But if the reaction you get is strong, emotionally charged, potentially about your users and customers not having access for some reason, are not being able to get what they had been able to get from your product previously, that's a really good thing. That's a sign of the fact that they're using your product, they're getting value out of their product, and at this point they may need your product. So that is what it looks like when your users start to form habits around their process and your product. So all of these are largely good signs. Now, on the other hand, what I want you to consider is that what if that happened and you didn't get any feedback, as in no one said anything.

That's actually the worst situation. That's considerably worse than if they're reaching out, they're complaining, and even if they're emotional about it, or particularly upset, if you're not getting any reaction whatsoever, that more than likely means that the product either isn't being used or it's not providing a ton of value. So those are much harder problems to solve. You can fix availability, you can fix usability. If your product is out there in the wild, your users and customers are interacting with it. But if you are not getting any reaction when the product isn't available, that's harder a problem to solve. And I'm always gonna prefer the formula over the ladder. So what I'm kind of getting at here is that you wanna look for areas of opportunity for a product to generate emotional or strong reactions, because that actually is a sign of positive feedback as in the value that your product is providing. When it becomes unavailable, the sooner you hear about feedback from your users about availability or usability, whatever the issue might be, the stronger potential your product market fit, and the more value they may be getting out of the product experience.

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AI has made it easier to build more capable B2B SaaS products.  However, this has made it harder to build defensibility into your product.  Let's talk about how to solve the 'Moat Problem' for your B2B SaaS.

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Episode Transcript
 Hey folks, Sean here, and in this episode I want to talk to you more about how to solve what I call the AI mote problem. Now, if you're considering adding AI to your B2B SaaS or your B2B SaaS already incorporates artificial intelligence, and I'm sure you're very familiar with this problem now, one of the products I'm working on now leverages AI tools to strengthen its value proposition, and that's my podcasting tool.

And one of the challenges with that is, The bar, the barrier to entry is relatively low. For those that know how to leverage artificial intelligence tools these days, meaning that it's very easy to potentially build a basic competitor to what I've been building in this instance and what others may be building as well.

As such many that have experience in this realm are considering it to be a growing problem for those that want to create a defensible B2B SaaS product. And we're referring to that as the moat problem, as in is very difficult to create any form of a moat to protect your business or your idea or your investment into any particular B2B SaaS if it incorporates or heavily leverages artificial intelligence.

Now, there is. The strategy that I think works best in terms of making your product more defensible is all related to continuing to go deeper as opposed to wider in your target market. So that's the first thing. The second is the moat ultimately will materialize over time as you are continuing to add functionality that's addressing the top problem worth solving for your target market.

I'll give you a little bit more context here. Now, you might begin by building a product that solves a very specific problem, hopefully the top problem we're solving, which I talk about a lot, and that should give you great early traction. Now if you've made it to this point with your product, You're going to need to go further in order to potentially continue growth success and to go from a product to ultimately a business, because just starting with a single feature may not turn your product into a business.

You might need significantly more contribution than that. So if you leverage this strategy successfully enough, then it will become a business and the deeper you go into your target market, solving the top problem over and over again until you have created. A complete experience that offers your target market a ton of value to the point where your product essentially is invaluable to them, as in it's a key part of what they do now all day, every day for your business customers, and they really couldn't live without it.

Now you've got something that amounts to real potential of a significant moat, and that's gonna be something that's gonna be very difficult to replicate. Whether or not they're leveraging artificial intelligence doesn't matter all the time, effort, and energy that you've put into creating that product experience and providing all of that value for your target market.

That's the defensible element for your B2B SaaS.

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After your B2B SaaS product begins to get traction, ideas or improvement will fly at you fast.  If you aren't laser focused on who your product is for (and who it isn't) your product could become a convoluted mess.  Let's talk about this strategy and how to manage it effectively for your B2B SaaS.

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Episode Transcript
 Hey folks, Sean here, and in this episode I want to talk to you about why you need to remain laser focused on exactly who you're building for. When I say what, what I mean is your B2B SaaS product, who specifically is it for? As in, who's your target market? Who's that buyer persona? Who has the problems worth solving that you're trying to help?

Reason why I mentioned this is because once you start gaining some traction with your product, it's entirely possible and even likely, That ideas are just gonna fly at you fest. From people that are using your product, even people that aren't. So it can get really noisy really fast, and this is where it's going to test your resolve in terms of your ability to remain laser focused on precisely who you're building for.

And if you haven't defined that right outta the gate, it gets a little bit harder to do. But this is an opportunity to get definitive about that, and that's a good thing. The more definitive you are about. Who your customer is and who they aren't, the easier it's gonna be to understand which ideas make sense, or which problems worth solving you should be chasing, and which ones you should not.

The most easiest or the easiest distinction here for those of us building B2B SaaS products, applications that we're trying to turn into profitable businesses is the business versus consumer argument. Now, I'm building a podcast post-production kind of automation tool at the moment. On podcast show notes, and that can be in terms of who the customer is for that product.

That can be podcast agencies, so specific businesses that basically manage podcasts for businesses or. Podcast hosts, and I would consider the former example to be a business and the latter to be a consumer. So one would be B2B and the other would be b2c. Now, if I tried to build around the needs of both, it's gonna kind of turn my product into a convoluted mess, or I should say that's the first step on a slippery slope that really leads to your product becoming a mess because you're trying to build around the needs of.

Two potentially very different target market customers, and I know they sound similar, but the needs are definitely different. I'll give you just one example for the podcast agencies, for the most part, they have teams, teams of people helping their customers with managing the podcast. The consumers on the other hand, which are probably just host.

They may be doing everything themselves. They may not have a team of people. So something like user management may make sense for the podcast agency, but it may not make any sense for the podcast host or the consumer variation. So just that, just with that example, you can see how almost an entire module that might get built into your product would be used or leveraged very differently depending upon who you're building around.

Now the B2B versus B2B distinction can be a little bit easier to see, but sometimes not really. What the challenge is here is avoiding chasing a market that could be very difficult to figure out where the patterns are. And this is why I love building around businesses is because they have long-term goals in mind and they stick to them.

For the most part, they have to, right? They define plans, they put up a lot of time, effort, energy, money. Into building these long-term plans, and your objective is to help them achieve those. That's the successful outcome they're trying to generate for our B2B customers, consumers, on the other hand, I've always felt as like herding cats.

I'm sure you've heard some variation of that phrase before, but there's just a lot of opinions. There's a lot of inconsistency, and it's very difficult to define the patterns around there. Also, there may or may not be budget because consumers may be doing this as a hobby. They may be trying to generate revenue with it.

But their strategies may be flawed, potentially severely flawed to the extent where that revenue may never be coming, which means that the conversation with you and your product in terms of whether or not it's worth investing into is very different with consumers than it is for businesses. So I strongly recommend, and vast majority of the content I'm producing is all B2B oriented.

I'm only building SaaS products for businesses for those reasons and more, but, Even beyond that, even if you're talking about multiple business customers, you need to make sure which one you need to be laser focused on because that is gonna be where the source of where you're gonna go to find new opportunities to build features and functionality around to strengthen your products value proposition.

And if you're chasing anything else that has the potential to turn your product into a convoluted mess.

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When B2B SaaS products start to get traction sometimes they get lost by going wider across markets instead of deeper into the market where they already have traction.  Let's talk about why this is a mistake what going deeper into your target market actually means.

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Episode Transcript
 Hey folks, Sean here, and in this episode I want to talk to you about where to grow from and how to do it after you've gotten some initial traction with your target market for your B2B SaaS. So if you've been through the process of con converting prospects to paying customers and they're getting value out of using your product, you're probably gonna want to know, okay, now what?

How do I continue to grow from there? How do I continue to be successful and then scale this product? The key here, my opinion is to go deeper into your target market, not wider. I see this mistake from time to time, and I'm gonna explain to you what I mean. So let's say, let's use my podcasting product for an example.

Now I'm building a tool to automate essentially the process of creating great titles and summaries and key points and quotes and all that kind of stuff from an individual podcast episode. Now there are plenty of people that can use that functionality and different types of personas are signing up for my product.

And by that I mean it's podcasts in general. Individuals who may be recording podcasts like myself and podcasting agencies as in businesses that do podcast production for anybody who wants one in particular for businesses now. The idea that I'm pursuing for my product is to build it around podcasting agencies as opposed to individuals.

So there are two options in terms of where I can go. I can go deeper into one of those two areas, or I can go wider and I can try to apply to both. Now, the objective here, in my opinion, is to go deeper as opposed to wider first. So that's a a key sequential step, as in that should happen first. And this comes from lessons learned from great books like Crossing the Chasm, which talk about what it's gonna take you to get from those early adopters to essentially like the early, and then ultimately late majority, which is a much larger percentage of the target market.

In the early days with your product, you're not gonna have reached the kind of market penetration you're ultimately looking for. To establish what some might consider to be product market fit for your B2B SaaS. And until you do, you should continue to go deeper until you have essentially made the kind of progress and you've made the kind of market penetration that you're looking for with who your target market is in the beginning.

Until you reach that, don't go wider because you're gonna spread yourself too thin and your product isn't really gonna be a great fit for any of the potential target markets that you're pursuing. I just gave you two examples for the product I'm building. If I build around both of them, that ultimately is gonna mean that I'm only really gonna fit one or the other, but not either very well, and that's what I'm looking for.

That's what I'm trying to achieve in the early days. So instead of doing either or, Pick one, pick one, and then continue to go deeper. And what I mean by that is continue to build around that specific target market's needs. And as you continue to do that, then your fit in that market is only going to continue to increase.

You will gonna continue to become more defensible. You're gonna continue to become more unique. Cuz more than likely, as you are getting more specialized, other people are not. So you're gonna want to continue to do that until you reach the kind of traction with that market that you're looking for. And then we'll talk about it in another episode.

But after you've had that level of success, assuming that's worked out, Then, and only once you reach essentially like a saturation level, which is a certain percentage of traction within that target market, then should you consider going wider because you're looking to grow beyond that target market, but not before that.

So the key here is really to focus on how do you continue to success of your B2B SaaS product. And my strong recommendation, especially in the early days, is to go deeper into your target market and not wider across others.

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Customers are bad as designing solutions (hint: that's your job) so let's talk about how to steer conversations with them away from this topic and make sure you get what you need from that time spent to provide them with the value they really need.
 
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Episode Transcript
 Hey folks, Sean here, and in this episode I want to talk to you about why when you're in the research and discovery mode with your customer, you want to avoid. Having them dictate to you. Solution design, allow me explain integrated detail, and I'm also gonna share an antidote. So a million years ago, I used to work as a mechanic working on cars.

We work on like passenger vehicles doing oil changes and replacing tires and stuff like that. So I learned a lot about that trade, but more importantly, I learned a lot more about how the professionals in that industry, Do that job well and important for that role was efficiency cuz of how the business model operated.

But either way, one of the things that they told me early on was to be careful of what a customer says the problem is. And I want, I kind of wanted to know why. So they, I had asked them for an example and they shared one. They shared an example in terms of why this is such a problem. From the perspective of if someone came in and thought they needed an alignment, which is where they essentially, they realign the drive wheel, which front two wheels in your car, that's when you turn the steering wheel.

Those are the car, those are the wheels that move. They said that some people will come in and it was a common problem, say that their steering wheel was vibrating at highway speeds. So when the car got up to speed, they'd feel vibration in the steering wheel, and then they would march into a mechanic shop and they would demand an alignment without providing sometimes even any additional context.

Now, the problem comes in the fact that that problem is not connected to the solution that they think it is. So if that mechanic shop went ahead and just gave them an alignment, They get their car back and it still would have the original problem. So in that example, the customer is not sharing with you what the problem is.

They're trying to tell you what the solution should be, and that's a problem. Cause customers are not particularly equipped for solving their own problems. That is your job now. Instead, what they tell me to do. Is to listen for the problem as they describe it, as in why they feel like they need an alignment.

And if you had asked that question, you would've found out that it was their steering wheel vibrating at highway speeds. Now, the real solution to that problem is to balance your wheels. So that has nothing to do with an alignment. But in the end of the day, if that's what you do to correct the problem, the customer gets their car back and it no longer has the problem.

That's all they care about. So the point of this story is that, The customer just wants the problem to get solved, but they might jump around and dive into solution designing with you because that's a natural thing for humans to just do. It's part of basic human psychology. So what I'm trying to describe here is that, and I'm doing this now with several of my products, but when you are interacting with a user free trial or otherwise paying customer, that's using your B2B SaaS, And you start talking about the additional value your product can provide.

For example, what you wanna stay away from is the customer saying things like, wouldn't it be great if, or maybe your product could do this. Cuz there that's them ideating around solution design and there may or may not be value there, but more than likely there isn't. Because of how they're describing it should work as probably either not ideal or not going to work.

When you ultimately figure out, remember back from the mechanic story. How whatever they're asking for is tied back to a real problem, and that's where you wanna focus. So if they start basically throwing feature ideas at you, you need to make sure that those are gonna solve real problems of theirs. So when they share that kind of stuff, ask them, okay, well if we did that, what problem would that solve for you?

And then if they can connect that to a problem, what kind of impact is that problem causing? Making sure it's connected to a problem ensures that they'll get value out of it, meaning that they'll use it. And then asking them what kind of impact that problem has will help you prioritize that against the list of any other request that they have.

That's the best way to manage that conversation. Now, if they throw a solution design element at you or a feature request and they can't tie it back to a problem, that means it's not really a priority for them. And it's highly likely that if you invest a time and money in building that, that they wouldn't actually use it.

So anyway, long story short here is stay away from solution designing with customers from their perspective, and if they do volunteer or anything like that. Make sure you tie it back to a problem cause that's what's going to be necessary in order for you to verify whether or not if you build functionality that solves that problem, whether or not that's actually gonna provide real vol, real value for them and move the needle.

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There's a famous quote in the B2B SaaS circle that goes something like this - "Don't worry about anyone stealing your idea, if it's any good you'll have to hammer it down peoples throats".

I want to talk about why you should NOT be protective over your idea.

How to build a profitable AI-powered B2B SaaS product for less than $750 - https://nxtstep.io/b2bsaas

Episode Transcript
 Hey folks, Sean here, and in this episode I want to talk to you about your idea, which you may be very protective over, but I wanna explain to you why you probably shouldn't be. There's a famous quote that's often attributed to one of the godfathers of computing. I don't know whether or not that's actually the case.

I can't find great records on that, but it doesn't matter. The whole point of the quote is really what's important here, and that's, don't worry about anyone stealing your idea. If your ideas any good, you're gonna have to hammer it down someone's throat. I love this quote because I've experienced this in that your ideas are probably not as worth protecting as you think they are, and that's really what speaks to the value of execution and that being the most important element of what it is you want to do with your potential idea, which could become a business.

And in terms of the way I described them in a B2B SaaS application or product. So now I mentioned this because I'm getting more deeply involved in venture building and helping people with getting their ideas off the ground, turning them into successful, profitable B2B SaaS products. And I'm still getting a lot of people coming to me that are very hesitant to describe anything about their idea, or they're unwilling to share all of the details.

Now, what I can tell you is that that. Essentially is almost a sign or a flag to an advisor, to a potential investor of the fact that you may not have been through this before and that you may not be ready for a conversation with someone at that level because the ones that have been there, myself included, know that there really is nothing behind an idea.

From a value perspective, your idea really isn't worth all that much. If you haven't turned it into a successful business already, that's where the value comes from. So if you're worried about someone stealing your idea, you're thinking about this all wrong. And instead what you should be doing is you should be sharing your idea with as many people as possible in order to try to get validation and feedback on it in terms of how much value it can provide to the target market.

And especially you wanna reach out to those personas who could be your users or buyers. So that's what really matters. So if you're still in a situation where you're afraid to share your idea with anyone, then this work may not be for you, or you just may not have this experience yet. Trust me when I say that for the most part, people are not necessarily looking to steal your ideas, and even if they are.

There's so much work they have to put into in order to turn that into anything that it's really not worth worrying about. And in reality, if there is no competition out there for what it is that you're doing, that's an, that's a different in problem entirely. If there is no one out there trying to do what you were doing, that sounds like an advantage, but it's really not.

Um, so don't worry about anyone stealing your idea. Get it out there, test it, validate it, see what it can become.

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I'm getting more involved with venture building.  As such, I'm seeing more deal flow which shows me where most people are making the biggest mistakes.  Thus far, the biggest one is building before you sell.  9 times out of 10 if you build before you sell then you won't be able to sell that product. 

How to build a profitable AI driven B2B SaaS for less than $750 - https://nxtstep.io/b2bsaas

Episode Transcript
 Hey folks, Sean here, and in this episode I want to talk to you about, again, what I think is the most important thing you can do as a B2B SaaS founder to increase your odds of success. And that's to please sell before you build. So I'm getting involved with venture building now, and that means I'm looking for folks who have ideas that they may want to pursue and turn into a successful B2B SaaS business.

As such, I'm seeing more volume of what folks are working on and that's giving me greater insight into the patterns of what's preventing people from being successful. Now, having been down this road myself before, as in having been someone who's built before they sold, and that product, and ultimately the business inevitably failed.

I've lived this experience. I write about it all the time. I have an email course that walks you through. Precisely how to do this if you're unsure, but by far the biggest thing that you can do to increase your odds of success if you wanna compete in the B2B SAS world is to sell before you build. Let me talk a little bit about why building is very expensive, both capital wise, as in how much money it's going to take and how much budget you'll need to invest.

And time-wise, how long it's gonna take for you to ultimately build whatever the first version of your product is. More importantly, if you build in the wrong direction, most of what most or all of what you've built may be useless because you might be building something you can't sell. Think of it this way.

Let's say you already have a product and you're considering whether or not to build feature A or feature B. Now, if you go to the customers that you have or prospects or whomever, and you say, Which of these two features would you be willing to pay for? And if they said they would not pay for feature A, but they would pay for feature B, which one would you build?

Right. It becomes painfully obvious. I. You would never build feature A because you know you can't sell it, right? It's the same concept, but it's applied to your entire product and ultimately what becomes your business. So if you aren't doing this, you are dramatically increasing your odds of failure, and that is one of the major reasons that I believe the startup failure rate to be so high.

So the best thing that you can do to avoid that trap altogether is start selling whatever it is you want to build. Like you've already built it, you do not need the product in order to build it. And I'll walk you through a ton of examples about how to do this, some in great detail in an email course that I created, which is tagged onto the end of these episodes in terms of where you can go to sign up.

But that said, my website. Next step IO slash B2B SaaS. I walk you through. Just how to consider selling whatever it is you're thinking about building or validating the idea you want to chase before you go down that long. Expensive, time consuming road of actually building something. So if anyone, now just to give you an imp, an idea in terms of what I'm seeing from a venture building perspective, cuz I'm looking for more folks to partner with to help them achieve success in this world.

If someone comes to me and they've already built something that they have no validation criteria for, I 99% of the time already know they've made a major mistake. Because of everything that I've talked about in this episode. So hopefully I can get to more folks before they decide to build because it will.

It has major implications for the potential for your product and ultimately your ability to turn that into a business.

Free Email Course - https://bootstrappersparadise.com/course

Private Coaching - https://bootstrappersparadise.com/coaching

Bootstrapper's Paradise - https://bootstrappersparadise.com/