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Manifest: How to find SaaS idea
26 July 2024
All our content is created manually, without using AI to write it (we use it rarely only for grammar corrections). In an era of exponentially increasing useless information, we will stand out by creating high-quality and valuable knowledge
Basics
Focus on a Niche
Small markets are easier to define, understand and serve. I can wrap my head around a small market because the user/customer, problem, go-to-market, value proposition and solution all become much clearer.
1] Small markets drive focus: You become an expert in that niche, which provides you with an unfair advantage over the competition. You go so deep into a market that you know it better than anyone else. You become laser-focused and can ignore the swirling noise around you.
2] Small markets move faster: Gaining traction in a small market is like a snowball rolling down a hill. You build momentum in a small market, become well-known, increase referrals & reputation and can start scaling meaningfully.
3] Small markets may become big markets: Markets aren’t set in stone. Small markets shift regularly and some of them will become big. If you only look at a big market (i.e. the global CRM software market is ~$60B3) it’s somewhat hardened. You won't shift that market; but you can influence and affect small markets, and those markets are prone to more rapid change, which you can use to your advantage.
4] Small markets may already be fairly big markets: You can over-segment a market and go after too small a niche, but in some cases a “small market” may already be quite big. Those “small/big markets” are probably underserved.
5] Small markets are great starting points. If you can dominate a small market, you have a chance of expanding from that market to another. I think of small markets as a wedge—you need to be in the game to have a chance of winning
Two must have articles to read, about market-size:
Market SizeWhy Focusing on Big Markets is a Bad Idea
I definitely appreciate the appeal of big markets. Those 💰💰💰 look so exciting!
But chasing a big market—certainly early on—is a mistake.
- It’s hard to define a big market and really understand your place in it. TAM, SAM, SOM is generic and doesn’t do justice to how markets really operate.
- Focusing on a big market likely means you have a superficial understanding of users/customers, their needs and what will get them to try & buy your solution.
- You set what seem like reasonable expectations (i.e. 1% of a big market) but it’s a meaningless number, and still almost impossible to achieve.
- You have no real advantage in a giant market because there are too many competitors with too much money, history and control.
Method if you don't have deep knowledge about a niche
1] Find a thriving SAAS company
2] Determine its main customers
3] Find a customer segment (ICP) that make up less than say 10% of their customer base and figure out what you can do better for them (It's small enough that the company can't really focus its feature development or marketing on them, that's where you can win)
20 Tips to help
1] niche down: apply an idea to a narrow audience.
2] go micro: take an app and boil it down to one feature
3] different angle: take a well-mined idea and find an angle no one is thinking of.
4] go local: take an app and apply it to one city/region/state
5] do less: could you do the idea as a Google Sheet, PDF, Chrome extension, etc?
6] streamline/automate: rewrite the app idea to use 50% fewer steps
7] leverage trends: find untapped search terms; build an app around it
8] "mom test": ask businesses about their problems and how they solve them today.
9] Lifestyle analysis: find your root goals; work backward to find an idea that fits that.
10] curiosity: what are you curious about; follow that passion; solve problems around that
11] find weaknesses: look up negative reviews on the SaaS and build yours to address these.
12] go upstream: they are solving X; what's the upstream problem? solve that.
13] how would they fix it: think of famous developers or marketers; how would they do X?
14] unfair advantages: what problem do you have unique skills or knowledge to fix?
15] your reach: what audience do you have access to? build something for them.
16] bigger pain: you came up with an idea; okay, what's the even bigger problem?
17] new opportunity: is there a new platform or law that change that opens up an audience?
l18] old world: what are industries that will never die? can you solve something for them?
19] think smaller: many big apps started very tiny; start small; build from there.
20] 5-year view: you can build the idea; but do you want to do it in 5 years?
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