If you're watching this video, it means that you're on the hunt for that million dollar SaaS idea. It means that you're in that stage where you want to get into launching a SaaS business, but you don't want to waste months building the wrong product. Here's the thing. SaaS is more crowded than ever before. However, the opportunities for SaaS are greater than ever before as well. So here's a big question do you make sure you pick the right SaaS idea? idea that may actually be able to scale to $1,000,000 a year? In this episode, having done this over the last 15 years, having built multiple SaaS companies, having exited them in this episode, I'm going to walk you through the three steps that I follow, that I coach, the founders I work with to follow, to pick the right SaaS ideas so that they stand a chance in getting to that million dollar RR mark. Intro Welcome to Unstoppable. I'm T.K. and on this channel, Alpe SaaS founders like you start grow, scale and exit your SaaS businesses with an unstoppable strategy. Now, if you notice how welcome I drop an episode every single Sunday with actual strategies and tactics from the trenches on how to grow your SaaS business faster. So if you're new, be sure to hit the subscribe button and that bell icon. That way you'll get notified every single time I drop an episode with the dark energy. Now, if you're a part of this community for part my SaaS go to market coaching programs are people. Welcome back. It's really awesome to see you over here. my last company tower up I built over the course of a weekend. I built it over a weekend. I launched it and within the first week we were generating revenues. Now, here's the thing, though. Here's a story that a lot of people claim that it happened over a weekend. It was overnight success. But that's never really true. The reason I was able to build that over the course of a weekend was because I had spent 12 months thinking about building it. I had been doing customer development and also I was working on a different SaaS idea that was going absolutely nowhere. So I started Tout app it got to revenues and then I went on to scale it. I raised venture capital from the likes of Andreessen Horowitz. I scaled the company. We amassed nearly 100,000 registered users on the platform, and then we sold it to a company called Marketo, the a market leader in the marketing automation space. after selling Tout app, after actually working at Marketo, after helping sell Marketo to Adobe for $4.75 billion. I started this YouTube channel, and in this YouTube channel I codified every single thing I learned. Having been a SaaS founder and having actually scaled a company ever since I started that YouTube channel, I also started my coaching program. And over the last four years that I've been doing this, I've actually coached over 500 founders across the different programs that I run. Now, something happened a year ago. A year ago, I said, you know what? I did it once. did it twice, can I do it again? So I started following my own courses. The things that I teach, the things that I used to coach founders, the things that I teach in this channel to actually develop my SaaS idea and start bringing it to market 12 months later. I've actually taken two SaaS ideas from idea to building it to initial revenues, and now we're scaling it based on everything that we teach in this channel and in my go to market programs. So this begs the question, do I do it again? And what do I actually coach founders who are looking to start SaaS companies? So in this episode, I'm going to walk you through the three steps that I followed, that I teach founders that I work with to follow and that now you can follow and that we can avoid months building the wrong product and you can actually pursue that million dollar SaaS idea you're excited to again go and smash a like button for the YouTube algorithm. Let's dig right into it. Step number one is to actually do the math. There are a lot of gurus on YouTube that have never actually reached a million and hey RR but more importantly, don't really do the math. And they just say it's $1,000,000 idea or $1,000,000,000 idea, they're not real business people. They haven't really done the math on what it actually takes to get to a million in RR. And one of the biggest things I try to do when I'm looking at an idea, when I'm coaching founders, when I'm just even advising someone, a friend that wants to get into SaaS or any kind of business is to do the math. A lot of people just don't do the math. So let's just say you want to get to $1,000,000 in RR RR as annual recurring revenue, and that's a little bit of a gold standard for SaaS ideas. You get it to a million. That means you really have something you could scale $1,000,000 in RR essentially nets out to $83,000 of MRA Monthly recurring revenue. It means that you're selling enough product, you have enough users paying you monthly on a credit card where every month you're bringing in $83,000. Now, naturally, with SaaS, the way it works is some people will no longer decide to go on set. They'll churn, they'll leave you, but at the same time you'll add more people. So on average, you want to consistently be doing $83,000 a month therefore you will have $1,000,000 business. That's the basic math. And here's where it gets super interesting and here's where a lot of people don't do the math. if you were to pursue an idea, of the first things you want to ask yourself is how much would I charge for this idea? there's some natural price points when it comes to SaaS, especially B2B SaaS, which is what I specialize in. The first one is you could charge $9 a month, you could charge $29 a month, you could charge $99 a month. You could get real fancy and charge $299 a month, or you can be one of the best of the best and go in and charge $999 a month. Why is this important? Well, the reason this is important is the path to get to $1,000,000 per year or $83,000 and $333.33 per month. It can be very different depending on the type of product, the type of market and how much you're charging. And quite frankly, this is very important to do upfront because it will help you determine what kind of product in my building, who's going to be buying it, can they buy it, and how can I justify the price I'm going to charge? Because here's how it becomes really cool. Really cool. If you wanted to make $1,000,000 a year with your SaaS idea and you wanted to do $83,000 every single month, every single month, touching your bank account hits and both mobile, those credit card transactions add up to $83,000. If you're a millionaire, then you have to determine how much you're charging. If you created a $9 a month product, it means that you actually need to get to 9259 paying users. If you are charging $29 a month, it becomes a little bit easier. You're going to need 2874 users. If you are charging $99 a month, which in a way is like almost three times as much, you would only need 842 paying users if you were charging $299 a month. would only need 279 users and if you were charging $1,000 a month, 999 sounds cheaper than a thousand. For some weird reason, people like it better then you would only need 83 paying users or paying customers at that point. This is super powerful because this alone will help you determine, Hey, this idea that I want to go after, how much can I charge for it? How much business value am I driving who are the people that are going to buy this and can they afford at this price point? Also help you determine just how much work you're going to have to do, how many users would have to acquire to able to hit your million dollar number. Nicole A lot of times people don't do the math. And the way you would go about building a $9 product, it's going to be very different than how you build a $999 product. One of the biggest mistakes that founders make in the early stages of SaaS is they think that they can build a compelling SaaS product using no code tools. reality is no code tools aren't really going to get you great SaaS products that can compete. Maybe you'll get a $9 or $29 product. Maybe you can convince ten people and get them to buy it, but it's really not going to be sustainable. thinking about the price and thinking about the path to it, how you're going to get to a million can be very powerful and fleshing out what's the idea and how do we actually make it compelling. Now let's talk about how do you actually make it compelling? This leads into my second step. This is the second principle that I follow. This I call the ten rule. I call it the ten rule. But I didn't make this up. This is of a rule of thumb in SaaS. And so in business, you essentially need to have a product that is ten times better than the competition. Now, if this is your first SaaS company, I would highly recommend against going after something new. You should choose an idea that already has existing competition out there. If you are the only person doing this idea, chances are people smarter than you and I combine have actually already tried it and it never worked. And that's why there is no competition. It's just a bad idea. you should almost always figure out this this idea already exist who are already winning in it. And again, how much are they charging and how many users am I going to need to get to my million dollar number? Now, let's just say you find a really great idea. You're like, This is a great idea. I bet I can do better. Well, here's where the bar comes in. If you create a shitty SaaS product, that's $9 to compete against the $99 product that you built on no code using devs that have never built anything before, chances are you're not going to be successful. I don't get paid to give you this advice. I'm doing this out of the goodness of my heart, to be honest. But that's the honest truth. There are a lot of people out there that are like, Hey, know, you can just build with no code. But the reality is the bar is so high for SaaS, it needs to be quality products. Now, there are some cases where you can build a quality product using no code tools, you just need to understand this principle. needs to be ten times better than the competition. There's two ways you can actually be ten times better in the competition. There's a misnomer here. Sometimes people confuse this. They think it needs to be ten times better in terms of having all the features of competition as that's actually not true. What you need to do is be ten times better in at least one feature. you can always find one core feature that your competition that you can do ten times better. And you can go into the market that they're competing in and say, Look, we don't do all the bells and whistles, but we do this one thing really well and we know that they suck at this and therefore you should go with us. So feature is always a good way to differentiate. The other way you can differentiate is to go after a specific vertical. So for example, Salesforce is the best CRM ever invented. while HubSpot might be right now, but however, if you decide to enter into the CRM space, it may be really hard for you to compete, even if you underprice it. But if you go in and say, Look, we are the only CRM that is purpose built, this is one of the key ways to say you are super vertical. We are purpose built only for salespeople who are selling used cars. I just made that up. But that's an example. Then you're going after a specific vertical and that over there there's less competition, so you can build your software specifically with that customer in mind and custom tailor it so that they are really well taken care of. And that's another way to be having a ten X better product. Look, I don't mean to hate on loco tools or code tools. I don't actually care what you build your product in, but the reality is It needs to clear a quality bar. And that's what the second step is all about. So you want to ask yourself, how do I clear the quality bar? Do I actually deliver a ten x feature or do I go after a vertical and deliver a ten x experience? Either way, you actually need to deliver some sort of a ten X experience. So this could be either where you set your purpose built for a vertical. So this is vertical, or you can say we actually zoomed in on this one feature and made that work really, really well. And so you could just do that and use the other tool for everything else and we integrate perfectly. That's step number two. You really want to make sure you're doing it the right way. Now, there's one word of warning on this one. real warning here. A lot of times I meet founders like, look, we're going to go after this competitive space, but they charge $99 a month. We are going to give them a lifetime deal of 199 and give it to them. And they're going to love us. a lot of times people actually think that you can compete on price in SaaS. reality is people don't want cheaper software. They want better software that's going to take care of them. So when you come in and say, hey, this really mission critical thing that you're using software and software X, Y, Z four, that's a well-known brand and they charge $99 a month and they have employees. Well, you shouldn't pay that. You should instead cancel that, move your critical business operations to us. Me, the one person startup, and I'll give it to you for one dollars and $0.99 for a lifetime deal. you really think someone would take you up on that offer? So this is where I always get people to think that cheaper is not always better. And SaaS, what you want to go for is ten X better in terms of feature. A certain feature one feature doesn't have to be all of them or a certain vertical where your purpose built for that person and say like Hey, look what purpose built for you? therefore are you going to have a ten times better experience and you can try it out. So that's step number two. step number three, this is where all of these things come together. Before I go now, let me just pause here for a second. These are the three steps. And I'm about to tell you step number three that I go through to actually figure out if there is $1,000,000 idea. You start to see the power in this instead of just writing code and starting up a guitar riff on the never getting any customers or going after an idea that no one has done, and now you're gonna be the first person since the beginning of the planet to actually be successful instead of doing all of that. If you can see how just falling the math and then the ten rule can help you save months of building the wrong product. Essentially the power of this. Can I just get a yes in the comments below and also smash a like button for the YouTube algorithm? It just loves it when you do that, and so do we. We put a lot of love into these videos. see if you're in this stage where you're trying to hone in on your SaaS idea and you're like, okay, starting to some math. kind of want to do a 29 hour product. kind of have this idea, how do I make sure I'm ten times better to sort of figure out all these pieces? You should grab a complimentary copy of my ten point SaaS business checklist. Having done this multiple times, having coached over 250 pre founders, these are folks that are honing in on their idea and getting the initial product market fit and initial revenues. These are ten questions I always ask myself and the founders that I'm coaching before they write a line of code. These are ten questions that I wish I asked myself before I created Tower Up and I was working on that other idea that was going nowhere. And these are the ten questions I asked myself before I wrote a line of code for the last two companies that I started that I've taken from idea initial revenues in the last 12 months. So you don't go anywhere right now. A link to it below. I'll tell you more about it at the end of this episode. Let's go to principle number three, where all this comes together. Let's just say you decide. All right? Okay. I think I want to go after this $29 pricing, tier $29 pricing tier. I'm going to get to 2800 customers and I'm going to have $1,000,000 SaaS business. Awesome. I am actually going to go after a very specific vertical and I'm going to target, let's just say, salespeople. I love salespeople. That's going to meet my vertical. So at $29 a month product. I'm going to target salespeople. This is where the rubber hits the road. You're like, I should go build the product, right? Well, you can. It's up to you. But there are some ways to pre validate before you write a line of code to make sure that there's real value here. first one, again is some simple math, this ten X rule actually applies to ROI. Return on investment. Turns out when you are asking someone to pay $29, they're basically times telling that number. So in order to justify $29 a month of spend, they really want to make sure they're getting at least $300 a month of value every single month from whatever they're spending. People don't explicitly do this well in the large enterprise deals. They do ROI analysis, but people intrinsically try to figure out like, is this worth ten, nine bucks? And turns out, if they can figure out the math on what if I spent 29 bucks on this, I'll make this much in commission as a salesperson, and that's going to pay for it. And if that number clears, at least $300, they're going to try your tool out. So one of the first ways to start validating this is to actually just think about can I ten x my price and can I meet that number? Can I look someone in the eye and say, Look, you give me ten, nine bucks, you use my software, you're going to make $200 even more based on commission for the salespeople you're targeting. So that's one small litmus test that you can just do internally or people that you already know that are in the target market you're going into to start to understand if they're willing to pay this price point. And of course, as you're looking at competition, you can start to see if they're already charging for it. If they are and they have product market fit and they have customers, chances are that they're already proving that market. But now you have to test if they're willing to pay for this ten x feature without ten x vertical. So the variable that's there, you can actually test for that by just asking following the ten x role. Now let's just say it clears the ten X, you're like, Look T, okay, I have the sales tool and they're going to pay $29 a month. But the average commission check for a salesperson is $1,000. So they're definitely going to make money and I'm going to have to make even more than that. So I'm going to pass that annex rule. So how do I actually make sure that I'm building the right product? How do I get initial customers? How do I actually make sure that I'm not building a terrible problem? And it's truly tax feature? Well, this is where this last rule comes into play. I call this my 100 times, ten times one rule. The 100 times ten times one rule is pretty straightforward. This kind of plays out every single time. I'm going to make a little line here. You talk to 100 people that are in your ideal customer profile. These are your targets, salespeople, right out of those 100, if you reached out to them or you defend them or you message them, or you meet them at a cocktail party, or you go to a conference, ten of them are going to become real opportunities. Meaning ten of them will say, Hey, that's kind of interesting. I would like to learn more. And if you have a good product and your thesis is correct, you'll get at least one customer. That's roughly how the average is work out. How can they be better? Absolutely. But when you're first starting out, the 110 one rule has always proved to be true until I talk to 100 people. I don't really rule out an idea after all these things check out. So what you would need to do is figure out ways how you can talk to 100 people in your target market and figure out if they would actually find value in what you're looking to build at the price point you're looking to build. Super simple. Now what happens is once you get one customer, you know you have something. Then what you do is you go and talk to another one and you get another one. You talk to another one and you get another one. And this is how you get initial revenues. Once you have initial revenues, then you can figure out how do I actually at scale talk to hundreds and thousands of people so I can consistently get new customers. But in its early stages, what you really want to do are these on scalable things to figure out if this product thesis of yours is correct at all? And remember, you can back into it. You can also figure out are there 2874 customers that I can even target that are salespeople? So sometimes founders choose ideas for markets that are just too small. And so you can easily see, like, are there 2000 people? But really, in order to get 2800 customers, I have to talk to like 28,000 people at scale. At some point, are there 20,000 people in this target demographic? So you can figure out if there's big enough of a market for your software as well as you're doing. This exercise puts simply every hundred people you talk to. If your idea is good, you should get at least one customer. And as you keep doing that, as your messaging gets better, as emotions get better, you can do more scalable things and talk to hundreds and thousands of people at scale and convert to customers down the line. And that's where SaaS gets super interesting because for every additional customer there's no cost. It's just software you just running the servers, they don't exponential increase, which is why SaaS businesses are so incredible. Now I've nerd out on this plenty, so let's actually recap all the pieces that we've covered in order to figure out your million dollar SaaS idea. Step one is to do the math. In order to do $1,000,000 a year, that's $83,000 a month, depending on your price point. That's how many customers paying customers you would need. So just do the math and figure out where you want to price it and then figure out who you're actually going after. Is your first time founder. It's better not to go after an idea that no one's ever done because chances are it's a terrible idea. Otherwise, they would already done it. So pick an idea that you can compete with and you want to actually make sure that you can break the ten X rule, meaning you can be ten times better than the competitors that already exist either in one feature, it's going to be one gap in their product. We were like, Look, I'm sure you love those guys, but they don't do this and we're ten times better in this. And this is the thing that you really care about. Or you can say, we're purpose built for blank, which is a very specific verticals like, look, you can use a generic CRM or you can use the CRM that are only for clowns, for example. I don't know, clients probably need a CRM because they got deals close. once you have those two steps, then comes that 100 times, ten times 110 one rule. Every hundred people you talk to, ten of them will actually express interest in the product you're building or you're solving for, or you have a better beta around. You get one customer. If you actually talk to 100 people and absolutely no one's interested, it's a terrible idea. Go back to the drawing board. But if you get one customer you know something, then you get another hundred and another hundred and then you can scale from there. That's where it becomes really, really exciting. And these numbers can start to compound and pretty soon you'll have that 80 3ka month, which is $1,000,000 a year, and you can exit the SaaS company for anywhere from three X, upwards of eight X depending on how fast you're growing, which is what gets super interesting. Now, you know, the three steps that I follow to develop million dollar SaaS ideas. Now what you may not know, it's like, how do I make sure this idea is any good? When I approach these people, what do I ask them? do I engage with them? do I communicate to them what I do and why we're ten times better? So if you're figuring out these questions, this is why I created my ten point SaaS business checklist. It's ten questions that you should ask yourself to figure out if your ideas and good. It's very straightforward. I've used this personally. I developed this after I reflected on my own journey of products that worked and didn't work. And I'm like, These are the questions I should have asked, and I would have gotten there a lot faster. I've then coached nearly 500 founders across different stages on how to scale SaaS companies, how to go from initial idea to revenues to scaling. I've worked with founders upwards of 100 million revenue even. And so these ten questions are battle hardened. And then I followed those ten questions again, just to prove I'm not stale and I can keep doing this to take to SaaS ideas to revenues in the last 12 months. And now we're scaling it based on all the principles that I teach in this channel. So if you want to grab a copy of that ten point checklist and save yourself from months of building the wrong product, just go to T.K. Catered our com slash SaaS dash checklist to hit it our com slash SaaS dash checklist. It's incredible checklist. You can download it. You'll get access right away and inside of it you can ask the ten questions that you should ask yourself before you write a line of code so that you can actually make sure you're following this framework. Also, if you got value from this video, please smash it like button for the YouTube algorithm. It just loves it when you do that. So do we. We put a lot of love into these videos. If you have a fellow founder, if you have a fellow founder, if you're part of a Slack or a WhatsApp group other founders that are looking to build SaaS companies, please share this video with them. You would mean the world to us. We want to help as many SaaS founders as possible build incredible software companies. Also, I drop in episode every single Sunday with actionable strategies and tactics from the trenches on how to start, grow, scale and exit your SaaS companies. So be sure to subscribe button and that bell icon. You'll get notified every single time I drop an episode. And lastly, remember, everyone needs a strategy for their life and their business. When you are with us. Yours is going to be unstoppable a.k.a Alice in the next episode or inside the ten points as business checklists say that ten times faster. Take care everybody.
