How can I determine whether a specific SaaS product idea is a worthwhile pursuit?

I'm a product developer, startup veteran, and advisor to SaaS companies. Hopefully you've been already developing this new product with input from your existing customers, letting them beta test it and give feedback. (If not, my advice is to STOP immediately and get enough pilot customers involved to be sure that you're delivering something really valuable to them, that works the way they expect it to work, is easy to understand and get started with, etc.. The last thing you want is to do a big splashy launch of a product that is D.O.A. because you built what you assumed the customers wanted instead of they actually demonstrated that they wanted.) OK, so let's assume that you've got customers in the loop. Interview the heck out of them. Really understand how they use the product, why they use the product, what makes it valuable to them, what they can do with it that they couldn't do before, etc. If the product's not done enough for them to be best testing it yet and getting results, at least get some insights into how they see themselves getting results from it. How does it/will it change their lives? As you do this, be on the lookout for things that really resonate. Emotional language, for example. "It's such a relief that I don't have to worry about sending invoices manually anymore." (or whatever pain it is that your software solves) Also look for (and try to elicit) specific result statements: "This new software saves me [or is going to save me] 15 hours a week. Now I can spend that time where I really want to, with my kids ( ... my cat ... my golf buddies ... )" You're doing this for three reasons: 1) This stuff makes for phenomenal testimonials; 2) it helps you come up with great ideas for pre-launch content; and 3) it generates *PURE SOLD GOLD* you'll use in writing the copy for your launch offer. OK, launch mechanics. There are people who teach huge long expensive courses on this stuff. I'll give you the Cliff's notes. While I haven't personally run a major product launch, I have been trained in the strategy and am very familiar with it. - Plan your launch period in advance. You might want to do a pre-launch sequence that lasts 1, 2, even 3 months depending on the magnitude of your product and how much effort you're willing to put into creating content for the launch. - Create some teaser content of interest to your customers who might want to buy this product. Offer to teach them something, or offer to give them a sneak-peak behind-the-scenes of your new product. - Send an enticing offer for this content out to your list. Get people who are interested in this content to sign up for it. This creates your launch email list. - Send your launch list weekly updates: development milestones, sneak-peak screenshots, videos, educational material, interviews with/testimonials from beta users, and so on. - You're not trying to sell here yet (not hard sell at least). Drop some hints that there is going to be a special offer when the product launches, just for special loyal customers like them. - Create at least three videos on topics that are really, really interesting to your prospective customers... not necessarily about your new product itself, but teach them about what they can achieve with it, or what others have achieved with it already. As you publish these videos, send the link out to your launch list. - Also send out an offer to see these videos to your main list, to entice more people to sign up for your launch list. - As you get closer to launch time, keep sending frequent updates to the pre-launch list, and send another email out to your main list to let them know that the product is launching soon, and that if they're interested in the special one-time-only launch pricing, they need to sign up for the "early bird list" (your launch list). - Send out a 24-hour notice that the launch is going to happen soon, and the launch pricing will only be available for a limited time (potentially, to a limited number of customers ... to increase scarcity and urgency). - I recommend that even if you plan to open the product up to all your customers that at launch time you limit it to a smaller number. This makes the inevitable post-launch gremlins less painful to deal with because you have fewer customers, and it motivates people to buy because they fear that they'll lose the opportunity to do so. You can open the product up to more people later... the delay will result in pent-up demand and easier sales. - Start the launch. Tell your early-bird launch list a few hours early, then tell your main list. Direct them to a web page with a video and long-form sales copy of your launch offer. - Send out 2-day, 1-day, 12-hour, etc. notices that the launch is ending soon and reminding people what they're missing out on if they don't act now. If you're offering a limited number of spots, tell people what percentage has already sold out. Remind people that if they're "on the fence" about this, that this is the time to make a decision. - Send out an email letting people know that the launch is over and thanking them for their support and their vote of confidence. Tell the people who didn't buy (or didn't get in) that you'll let them know that the product will be opening up for new registrations some time in the future. (You may get people sending you emails begging to be let in at this point, if your product is desirable and your marketing was executed well.) And, of course, you don't just have to promote your launch content to your existing customer list ... you can post it to social media (and encourage your customers to do so) to attract brand new customers into your world. If you'd like to go into more detail about launch planning for your specific product and market, I'd be happy to jump on a call and talk about ways to make this work for you.

With all respect to Dan, I'm not seeing anything like that. You said "pre-revenue." If it's pre-revenue and enterprise, you don't have anything proven yet. You would have to have an insanely interesting story with a group of founders and execs on board with ridiculous competitive advantage built in. I have seen a few of those companies. It's more like $3m-$5m pre. Now, post-revenue is different. I've seen enterprise plays with $500k-$1m revenue/yr, still very early (because in the enterprise space that's not a lot of customers yet), getting $8m-$15m post in an A-round. I do agree there's no "average." Finally, you will hit the Series A Crunch issue, which is that for every company like yours with "cutting edge tech" as-yet-unproven, there's 10 which also have cutting edge tech except they have customers, revenue, etc.. So in this case, it's not a matter of valuation, but a matter of getting funded at all!

Generally bootstrapped startups should avoid salespeople, for a few reasons: a. they typically can't afford the base and overall comp required to attract sales people who can actually sell / or afford to support them with marketing, management, etc b. it will be very difficult to find the rare person with the right mix of sales and startup DNA along with the critical domain knowledge, consequently the startup is likely to settle c. the founders need to be very involved in the selling and customers will demand it That said, if the plan is still to hire a salesperson, find someone who has demonstrated sales success in startups and is excited by the early stage in company building. Create a comp plan heavily leveraged on sales results (unless you are in an industry where 100% commission is a common practice, would recommend against $0 base as this creates the false impression that your hire isn't passing time with one company while looking for another job with a richer comp plan - you want your rep focussed). Sell the vision and opportunity to be part of a growth story. I have written a several blog posts on hiring sales people into start-ups. You might find these useful: http://www.peaksalesrecruiting.com/ceo-question-should-i-learn-to-sell-or-hire-a-sales-person/ http://www.peaksalesrecruiting.com/start-up-sales-and-hiring-advice-dont-stop-selling-once-you-hire-your-first-sales-rep/ http://www.peaksalesrecruiting.com/hiring-start-up-sales-reps/ http://www.peaksalesrecruiting.com/startups-and-salespeople/ Good luck!

One word: Royalties This means you generate the idea and develop it enough to look interesting to a larger company who would be willing to pay you a royalty for your idea. This happens all the time. Rock stars, authors and scientists routinely license their creative ideas to other companies who pay them a royalty. Anyone can do it. Your business, therefore, would be a think tank. You (and your team, if you have one) would consider the world's problems, see what kinds of companies are trying to solve those problems, and then develop compelling solutions that they can license from you. You have to be able to sell your idea and develop a nice presentation, a little market research and an understanding of basic trademark and patent law. The nice thing about doing this is that if you develop enough cool ideas you will have royalties coming in from a lot of different sources, this creates a stable, passive revenue stream that requires little or no work to maintain. Start in your spare time and plan on the process taking 3-5 years. Set a goal to have a few products in the market that provide enough revenue (royalties) to cover your basic living expenses. Then you can quit your day job and dedicate more time and increase the momentum. A good idea business should have dozens, if not hundreds of license contracts generating royalties. It's possible to pull this off. And it is a fun job (I'm speaking from experience).

10% of the total monthly sales churning on an absolute basis is near fatal. That means that within 5 months, you have 50% absolute churn per year, which reveals fundamental flaws with the service itself. Anything above small single digit churn is telling you and your team that customers are not seeing enough value in your product. I'd start by doing as many exit interviews as you can with those that have churned out, including, offers to reengage at a lower price-point while you fix the issues that matter to them. Happy to talk through this in more detail in a call.