Founders Kitchen Sink: Shaping an online business idea. Principles which you should hold on to
In the previous article, I’ve described three founder profiles which are individuals, a team of individuals, and companies. In this experiment, we’ll follow the individual path where I’ll play the Individual role, and I will show you how I’m bootstrapping software as a service platform. Before I start discussing the idea that we are going to implant in the following weeks, it’s vital to look at this idea that we are thinking about from different angles.
- Before you start working on the project, consider it from the market perspective.
- The project either opens a new market or extends the existing one.
- Follow some principles/rules when working on the project on the idea level.
- Ensure your product will do at least one of: earn money, save money, save time.
- Have scalability in mind but don’t focus on it too soon.
- Focus on solving a problem and delivering value rather than features.
There are various sources of inspiration for new project ideas, and all of them sound great before we confront them with reality. People are always trying to create something new, something big, a new Instagram, something that will change the world. The truth is that there are people out there who are earning billions of dollars by solving unsexy problems. When thinking about startups, we usually imagine a well-known brand. Still, many companies are working silently, providing a service for its niche and may happen, and you will never learn about them. However, these companies have billions in revenue.
When working on a project on a level idea, it’s worth considering this idea from the market perspective. From the market perspective, there are two groups of projects: those that are new, unique and those that are similar to what’s market is offering.
Project ideas which open a new market are bringing the most of the excitement to its founders. These allow them to be the first on the market, and it means that they’re a pioneer and don’t have to compete with others. The challenging part is here that creating the market from scratch is difficult, it requires a lot of resources, and a lot of time is necessary before these projects will make revenue. Just think about how much energy and time Tesla had to spend before they sold the first electric car. Or think about how long Bitcoin was on the market before it boomed. Of course, some projects can create market effortlessly. However, these are unicorns, and it does not happen often.
When creating a new project idea that may sound like something that creates a new market it’s worth to think about this twice before considering this market creator, because in some cases, for example, online courses for astronauts or stratosphere jumpers, they sound like they are opening a new market. However, what happens here is that they are operating an existing market which is an online courses market. These are extending the current market of online sources.
The second group of projects is extending existing markets by doing a new service or offering a new product on these markets. It could be that these are just competing with competitors and they’re offering similar products that are already out there. There is always a question whether it’s worth it to create something that’s already out there and fight with competition. The answer here would be, is it worth opening a new bakery or a new coffee shop in a town if there is already a bakery or our coffee shop in that town? Think about Facebook. Facebook wasn’t the first social media platform on the market, there were social media platforms before Facebook, like MySpace, and it was a big player. However, Facebook came and conquered the market because there is always room on the top.
If there is a competition on the market, then there is a demand for services these competitors are offering. It is an excellent thing! From my experience, it is easier and better to enter the market that’s already out there than to create a market from scratch especially if you don’t have a significant budget and significant time for creating this new market.
Considering the project from the market perspective is not enough. What’s worth doing when working on the idea level is to follow some principles. There are a lot of different rules, and each of the founders has its own unique set of principles when creating a new project. There are even entire books about these principles, but I’m going to reveal here three principles that I think are enough when thinking and creating SaaS platforms.
Three Basic Principles
The first principle is something that I have learned from a business partner Jason Alexis with who I’ve created CCB.events, and this principle says that the product that you are going to develop should do at least one of the three things. It should: allow you to earn money, save money or save time. If your project can do three of these things, you hit the jackpot! Now there is a small exercise you can do with this principle, imagine a triangle where each vertex of the triangle is: save money, save time or earn money and try to fill the triangle depending on what you think your project does. It is something that you can use in your marketing campaign.
The second principle is scalability. Your project should allow you to scale up, and some investors are looking for startups which services can be sold to millions because if you sell $1 razor to 1 million people, you earn $1,000,000. However, there is a catch with the scalability, something that can lead you to a dead-end. If you think about scaling up too early and you try to cover many different target groups at the beginning, you actually won’t cover any of them entirely. You won’t explore them entirely, and you won’t understand their needs in full. It is something that I failed at the beginning of my journey as a SaaS creator. I was trying to cover too many target groups at the beginning, and I reached none.
The last principle says that your SaaS platform, your tool, should solve a particular problem of your clients or bring them value. What I mean here is that it’s not about the software that you create, it’s about what your users get when they use your software because the software itself has no value. Just think about Twitter. It has a mobile app which allows you to post images, post videos, add tags, but these are not the most crucial part of Twitter. The most important part of Twitter is the idea that its users can create content and share their messages in a fast way. So as you can see it’s not about the features your platform will have, it’s not about the colours or how it will look like, it’s about solving a particular problem or bringing a value.
That is a set of three basic principles. I know that there are other, more complex principles and probably you have your own set of principles. If you do please share this in a comment. It’s worth following some rules at the beginning because it will allow you to avoid harmful and painful confrontation with reality.
This article closes the first part of the theory that I had to cover before making my hands dirty. In the next entry, I will describe the SaaS project, which I’m going to create during this journey.