The Business of Validation
In 2024, I set out to experiment with building 10 MVPs. More accurately, I wanted to fail with 10 MVPs - and fail fast.
I was trying for weeks to decide which idea I should focus on.
And suddenly, I realized that the ideas weren’t that important.
What’s important is building a solid team that can take on multiple product ideas and test them until they find the right one.
I’ve seen so many funded startups work on an idea for two years only to have to pivot afterward.
The pivot is painful and sad. Then they try the second idea and shut down.
And I really believe that if they could’ve tried 2,3,5 times more, they would have been successful eventually. But they didn’t get enough shots.
I wanted to avoid falling in love with ideas and instead judge them based on a pre-defined set of criteria.
There’s a lot of material on how to scale your product. But I couldn’t find any framework for the initial stage: How to research product ideas and ensure they’re solid.
So, I set out to create a framework that will serve as the basis for creating lean SaaS products.
Unexpectedly, I found some answers in the VC world.
I looked at what VCs are doing to create successful companies, not just fund them. I tried to adapt the process to develop lean and bootstrapped products (at least up until an MVP succeeds). Then I found out about team8.vc
Team8’s model of ideation, validation, and market fit test before launching a company immediately clicked.
We started asking: how do we adapt that to a lean SaaS product?
Together with my partners, we changed the Team8 VC model to fit lean SaaS products.
To get started, we focused our Phase 0 on ideation and creating a confidence test. How do we find ideas, and how do we know if an idea is any good?
Phase 1 is about market and tech validation. We want to ensure that, in the end, we’ll have a starving customer waiting for our product. We also want to have confidence we can deliver a product.
Phase 2 focuses on getting the MVP into the hands of the customers and seeing if they’re willing to pay for it. If they are, that’s a successful MVP. If not, we trash the idea and start over.
We also wanted to ensure we’re seeing enough dropouts between the stages. This proves our filters are working. And we aim to get each idea through the filters in 30 days or less.
We started by finding ideas through:
Looking at existing startups and adapting their model to the lean SaaS option (Creating a ‘Low-Cost’ experience). This increases the odds of finding a real problem we can optimize instead of creating a product that’s nice to have.
Looking through marketplaces and looking for products with low-tech complexity and high prices. (AWS Marketplace, I’m looking at you).
By reaching out to our network to discuss ideas.
By thinking through our pain points/experiences.
How do we ensure our ideas are solid?
We wanted to ensure our ideas go through a standardized filter to account for ‘Non-lean SaaS ideas.’
For example, Fiverr.com can be a great startup idea. But it’s not a lean SaaS, which is what we want to build.
Another question is the market size and tech complexity: If you need five developers to get your MVP up and running, you’ll have to raise VC funding. But if you want to build a company that aims to generate 1M US$ ARR, VCs won’t invest. So, we created the Lean and Mean SaaS MVP Risk calculator spreadsheet to ask:
What type of company are we trying to create?
Who is your ICP? Who are they, how essential and urgent is the problem for them, and do they even care about what we’re building?
What is your solution? How complex or easy is it to develop? How low or high are the market expectations you have to meet to become an alternative? Can you be profitable? (either VC or bootstrapped profitability works)
Are you a lean SaaS? We created Go/No-Go questions to drop the idea if it doesn’t meet specific standards. It has to be a subscription product; people must be coming back and experience a loss if they leave, and the market must be growing.
The spreadsheet takes a stand and shows our opinion. It may not be the best fit if you’re trying to test a VC-backed cybersecurity product. If you’re trying to have confidence in a lean SaaS operation, it will work- and show you if you’re on the right track.
It works like a street light: You want to get green on as many rows as possible to know you can proceed to the next step.
Here are some examples of ideas we ran through the spreadsheet:
Cybersecurity workflow automation idea(Passed through):
Content creation marketplace for B2B Enterprises and creators(Dropped):
For the first round, we started with 20 ideas. We ended up with five that received the most favorable results in the spreadsheet. We are now moving with them to the validation phase.
If you look at this spreadsheet before anything else, you will ultimately work on your best ideas.
You’re going to save years of your time.
And you'll also think about better ideas, which will ultimately allow you to have more inspiration, flow, and excitement. And probably, more success.