Building a Software Business – Update #1

 

As you may know, my primary focus these days is building a software business. I’m investing $599 a month in The Foundation, a software as a service (SaaS) training program. For those of you curious as to how I’m faring, here’s a quick update.

To start, here’s a simplified look at the process taught by the Foundation for building a SaaS business:

  1. Pick an appropriate niche
  2. Arrange interviews (usually over the phone) with top professionals in that niche
  3. Through a process called idea extraction, figure out what problems they have that could be solved with software
  4. Pick one pain that many people seem to be experiencing and which you can develop a good solution for
  5. To fund development, presell the solution to professionals eager for it (this also serves to validate the idea)
  6. Hire developers to build a minimal viable product (MVP)
  7. Launch
  8. Scale

As of this writing, I’m at step three above. I’m targeting the tour operator niche since I travel a lot myself, I already had some contacts there, and it’s an industry I’d be happy to serve as I’d ultimately be making it easier for people to travel.

So far I’ve managed to get on the phone and speak with ~15 operators, and I’ve been quite pleased with the development of my idea extraction skills. There’s a famous recording of Foundation head honcho Dane Maxwell doing idea extraction with the owner of a pool cleaning company. Within 45 minutes, the pool guy is telling Dane that he would happily pay $500 a month for a software solution to one of the problems they’ve identified on the call. And we’re not talking about some crazy complex solution here, but something pretty simple that could be built in a matter of weeks, and which would likely be of interest to hundreds of other pool cleaning companies across the country.

I can’t say I’m at that grandmaster level with idea extraction yet, but I have had four calls in recent weeks where tour operators told me they’d happily pay $30-100 a month for a software solution to a problem we identified on the call. Bear in mind that I’d never spoken to any of these four people before, only conversed briefly with them via email to set up the phone conversation. It feels pretty magical being able to pinpoint a pain and have people interested in paying you for a solution so quickly. It’s like you’re creating a business opportunity out of thin air. I didn’t think I’d be pulling off that feat repeatedly after just a dozen calls.

Of course, I still have a long way to go. People telling you they’d pay for a solution and them actually pulling out their credit card and paying for that solution are two different things. Plus you have to ensure that you can follow through and provide the solution you promised, which is no small thing.

My main challenge right now though is pinpointing a pain that many tour operators are having. The aforementioned four all had different problems requiring different solutions. I’m still on the hunt for a common problem that lots of people in the industry are crying out to have solved. I believe I can find something like that by niching down even more, as it’s become apparent that there are many different kinds of tour operators, all with different software needs.

Unfortunately, just as things are starting to heat up, I’m having to push pause on this project for the next month, as I’ll be hopping aboard a cargo ship on Wednesday to spend four weeks at sea with no Internet (the latest leg of my round-the-world trip without flying).

I know, I know, it’s not the smartest thing to be doing while I’m trying to build a software business, but I’m doing it anyway.

Let’s wrap this up with a few FAQ’s:

Is the Foundation worth the money?

It’s still too early for me to give a definitive answer on this (I’m just two months into the six-month program), but I will say that thus far the value delivered by the Foundation has exceeded my expectations. And my expectations were pretty high to begin with.

The content is superb, inducing ah-ha’s on the regular, but on top of that they also do a great job of emphasizing and encouraging the members to take action. I consider the $3,594 total I’ll end up spending on the Foundation to be an investment, one that will bring me much greater returns in the long-run.

What are the biggest lessons you’ve learned so far?

  1. Referrals trump cold calls.
  2. Taking 15-20 minutes to prep for a call and plan what questions you’re going to ask makes a huge difference.
  3. Framing how you ask a question goes a long way to determining what kind of response you’ll get. Example: “Can you recommend anyone else for me to talk to?” vs. “This has been great, thank you so much, I’ve really learned a lot here. I don’t suppose you could recommend anyone else who would have great insights like you and would be happy to talk to me?”
  4. People will automatically consider you an expert once you demonstrate an ability to deeply understand their pain.
  5. Reflection is key. You do yourself a massive favor by thinking back over a call (or listening to a recording), picking out a few things you could have done better, and then rehearsing the superior approach you come up with.

That’s all I’ve got for now. If you’re interested in hearing how this software biz develops for me, jump on my Business & Entrepreneurship mailing list below.

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  1. Hey Niall,

    I’d be interested in knowing if you have created a kind of email script/template that you used (with some modifications) to contact all these companies prior to the calls. Did you tweak them & see if they were having different results?

    Cheers!

    • Good question. I have tried a few different email pitches but I haven’t quantified the results so I can’t say with any certainty yet what works best. Out of the ~15 people I’ve had calls with, I think it was only 4-5 of them who I got in contact with via a cold email. The rest were all via referrals.

  2. Hi Niall,

    I am also participating in The Foundaion program. Your interview with Dane was one of the ways I became aware of the group.

    Your post summarises my feelings about the program at the moment. The content as well as the commmunity has made it worth the cost.

  3. Great post, Niall. I’ve only been peripherally aware of this SaaS thing. Do you or the Foundation people have any thoughts/concerns re choosing a product/solution that isn’t easily replicated by others (to protect your investment of time & money, in case people go with the new competitor), or is that not a concern?

  4. Hey Niall,

    good to hear about your progress here.

    As for your comments on hearing different problems to solve and not much overlap:
    it’s tough because you have to seek patterns in the noise.
    – why does this guy have this problem? is it due to the size of the business? due to his marketing methods? due to his market? due to his culture?

    It’s interesting once you have a few interviews under the belt to try to group people into personas for example. What happens is that, as you say, there are many different tour operators, and one of the most critical step is to be able to segment them in categories that make sense. It might be demographic segmentation, or worldview segmentation, or business size segmentation etc.

    For each interview, try to improve your pattern map and how you make sense of each tour operator, how they fit into your patterns.

    But I’m sure The foundation teaches this stuff :-)

    Good luck to you !

  5. The ‘biggest lessons’ at the end is exactly what I was looking for. I’m doing the foundation thing at the moment, without actually being a part of it. Keen to see how it pans out for you.