“How do you know it is bad advice?” you may ask.

Well, for over eight years I’ve co-hosted a tech startup podcast where we’ve interviewed many successful entrepreneurs. With each interview I’ve ‘unlearned’ a little bit more.

Here are some of the more important unlearnings…

Idea Secrecy

Grandpa says: “Don’t tell anyone about your idea kiddo! They’ll steal it. Look what happened to those Winklevoss twins in the Social Network!”

Nothing could be further from the truth! You need to gather as much information and learning as possible. You should talk about your idea to anyone who will listen. Each time you talk with someone, you’ll learn something new that might push your project forward. You should especially talk about your idea with potential customers!

People and companies generally don’t copy unproven ideas, they copy proven ones (see Slack, Flock, and Stride, for instance). Furthermore, if a large company is the type that does steal, they will usually only consider stealing when a product is massively successful (I’m looking at you, Facebook).

As Howard H. Aiken said: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

Further reading:
Why you shouldn’t keep your startup idea secret – Chris Dixon (3 mins)
Your idea isn’t good enough to keep secret – Ramit Sethi (2 mins)
Why You Should Tell Everyone Your Startup Idea – Kevin Siskar (3 mins)

First Mover Advantage

Grandpa says: “Ya got ta think a something new, see, something never been done before. Just like them Googles fellas did!”

In the vast majority of cases, there is no first mover advantage. Most ideas are not new. There will be some kind of competition already out there. In the rare case a project is wildly successful, being known as an innovator could result in favorable coverage, but being the first does not necessarily help you.

For example, Lyft came before Uber, then Uber launched UberX in retaliation to Lyft and surpassed their traction quite considerably.

Another great example is YouTube. They were not first, they just hit at the right time. Bill Gross talks about this in his TedTalk, “The single biggest reasons startups succeed.” Other examples of success stories that were not first to market: Google, Facebook, Slack, Apple, etc. The list goes on and on.

Further reading:
Here’s Why The First-Mover Advantage Is Extremely Overrated – Steve Blank (5 mins)
The Single Biggest Reason why Startups Succeed – Bill Gross (6 mins)

NDAs

Grandpa says: “I hope you made ’em sign an NDA, kiddo! Those guys like that are sharks. They’ll steal your idea and leave you in the dust, see.”

It is widely seen as an amateur move to ask a VC, friend, or angel to sign an NDA.

In a VCs case, they talk to hundreds of founders. It would be foolish for them to have to cross check each NDA they sign.

Basically, in the context of telling someone your idea, an NDA does very little other than cause friction between you and the person you are talking to. Also, if your business is so fragile that the idea being out there is a significant risk, then it’s probably not a good business.

NDAs do have a place, and that is usually within large corporations. For example, when Microsoft hires an outside consultant, they would need to sign an NDA.

But let’s say you went through the trouble of having someone sign an NDA, and they then broke that NDA by discussing your idea with a friend. Would you really have the need or wherewithal to take legal action? Would it be worth the damage you’d do to that relationship?

Further reading:
Ideas are just a multiplier of execution – Derek Sivers (1 mins)
Why I Won’t Sign Your NDA – Andrew Warner (2 mins)
Why I Also Won’t Sign Your NDA – Viktor Hanacek (3 mins)

Patents

Grandpa says: “You better get a patent kiddo! It’s your only protection from all them sharks, see.”

Patents are expensive, time-consuming, and generally pointless!

The irony is, once you have a patent, the inner workings of your idea will be publicly exposed on uspto.gov. To get around that patent, someone only needs to tweak it.

Precisely the reason why Elon Musk does not file patents.

Further reading:
For Most Small Companies Patents Are Just About Worthless – Todd Hixon (7 mins)
If We Published Patents, It Would Be Farcical – Elon Musk (1 mins)

Business Plans

Grandpa says: “You got to git yourself a business plan, kiddo! Then you can show it to your bank manager and git a loan, see.”

The truth is business plans are not useful in the context of a modern software startups. It takes time and effort to write a business plan – time and effort that should be spent on validating and building the business!

Note, by “business plan”, I mean a standard long-winded document as described here rather than a Lean Canvas, which is a very useful tool.

Further reading:
Don’t write a business plan – Jason Cohen (5 mins)
5 Reasons Why You Don’t Need a Business Plan – Geoffrey James (3 mins)

Technical Co-founders

Grandpa says: “You need to git yourself a partner, kiddo! Someone with some smarts, see.”

I talk to a lot of non-technical founders who think they need to get a technical cofounder before they get started. The problem is, it’s very hard to convince a technical cofounder to join an unproven business.

The irony is, to validate a business, you probably don’t need a technical prototype. In many cases, you can use lean validation methods such as the Wizard of OZ technique and Concierge MVP. After you’ve validated your idea, you’ll find it much easier to convince a developer to join you.

Further reading:
Why you can’t find a technical co-founder – Elizabeth Yin (3 mins)
You will not find a technical co-founder – Rik Visser (6 mins)
Quick Guide to Outsourcing for Entrepreneurs – Ryan Battles (5 mins)

Sweat Equity

Grandpa says: “Sweat equity is all the rage, kiddo! Work for shares and you’ll own a giant piece of the pie, see.”

I advise people to be highly skeptical about sweat equity deals. Here are a few reasons:

1) An unvalidated idea will have a tiny chance of success, so the work will probably end up being for free.

2) If the company does gain traction and make some money, the founder will most likely feel bad about having to pay for work already done. Instead, they will want to spend money on new features.

Put another way, the work will feel like it has no value after the fact. Most founders do whatever they can to get stuff done now. They are focused on the now. It will feel like pulling teeth to have to pay for work that was done last year.

3) In many cases, future investors will not want to honor previous sweat equity deals. I’ve seen this play out in the real world. It doesn’t work out well for the developer.

4) Something that almost always happens after the fact: founders have different ideas of how much value the sweat equity is worth vs. the provider.

Even if a deal is struct beforehand, this situation is likely to arise. Founders usually undervalue the work that’s been done, and providers usually overvalue it.

Further reading:
Some Hard Advice on Working for Sweat Equity – Tim Berry (2 mins)

Company Formation & Lawyers

Grandpa says: “You need a real company, kiddo! Got to dot your I’s and cross your T’s! Git it proper and legal, or you’ll be sued, sued, sued, I tells ya!”

I advise to not form a company until you’ve validated your idea.

I’ve learnt this lesson many times over. Specifically, 4 times. Each time it cost anywhere from $500-$2000 in legal fees. And it’s a terrible feeling to have to dissolve a legal entity that once held so much hope.

Instead, when you’re first getting started, create a new Stripe account as an individual and make sure the “auto transfer” feature is disabled.

Then, start validating your business and collecting money using Stripe’s regular tools. If you reach the point where you’re earning enough revenue to prove your idea is good, you can incorporate. If your project is not working, simply refund everyone that you captured money from.

The same goes for working with lawyers. I regularly see new founders prematurely waste money on legal fees when they are at the idea stage. Obviously, in some cases lawyers are required, like if you are starting a crypto currency broker, but in in most cases it is prudent to validate that customers will actually buy your product before getting a lawyer!

Further reading:
When do I need to incorporate a company?  (5 mins)
Do I need an attorney when I start my business? – Jean Murray (3 mins)

Raising Money

Grandpa says: “That’s a great idea, kiddo – git yourself to silicon valley and the bigwigs will invest, see.”

I think many people try to raise money because they think that is what they are supposed to do.

However, if you are at the idea stage, raising money can become the ultimate quicksand. Instead of building a business, you’ll end up building a pitch deck. You can end up spending months, if not years, asking other people’s permission to give you money… just so you can get started.

But, in many cases… why?

Wouldn’t it just be faster to start validating and building your product until you already have decent traction or revenue as described here.

In other words, perhaps the best way to raise money… is to not raise money!

Instead, bootstrap a successful business, after which point you’ll be able to impress investors and/or accelerators, or bypass them altogether as you see fit.

Further reading:
Start Now. No funding needed. – Derek Sivers (3 mins)
9 Million Dollar Startups That Were Not Funded – Dan Norris (6 mins)
The advantage of no funding – Derek Sivers (3 mins)
Invest in Lines, Not Dots – Mark Suster (4 mins)

In Closing

With all due respect to your elders, you should tell grandpa to shut it. If you’re spending all your energy on lining 100 ducks up in a row, you’re not spending that energy on validating and building your product, and that’s where your energy should be focused in the early stages. Don’t get bogged down with advice – just focus on getting to the point where you can buy grandpa a beer with your profits!

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.

Instead, they walk the same route day after day. So much so, they create a visible deer path on the forest floor!

We do that same thing with our thought patterns. The technical term is cognitive bias. When someone tells us an idea and we shut it down, it’s most likely our pre-conceived notions that squash it. The idea is trying to push us off our familiar path, and we’re not having it.

This is not the optimal way to evaluate the merits of a startup idea.

I invite you to challenge yourself to think about startup ideas you see in new ways. Here are some examples:

Think About The Business Domain

Often times, an idea that seems stale in one business domain can translate to another and become fresh and relevant.

In Nugget we have a classic example of this. The CRM. You may think there is no reason in the world to build a new CRM. It’s stale. It’s been done. It’s owned by SalesForce, right?

Well, as it turns out, our most common idea submission is for a niche-specific CRM. We’ve had a request for CRMs that cater to makeup artists, estate agents, church pastors, educational trainers, party services providers, to name just a few.

In this same way, you can try to translate any idea you hear to a new business domain. You might come up with something pretty great.

Think About The Market

When you hear an idea, think about the market behind it. Perhaps the idea is not to your liking, but the group of people it serves is.

For example, one Nugget member kept gravitating towards nuggets that served authors. He was not consciously aware he was doing this. When I pointed it out to him, it was a revelation. This prompted him to start moving beyond the ideas in Nugget, and reaching out directly to authors, and asking them “What can I build for you?”

Think About The Value Chain

Each business idea is part of a larger ecosystem. The idea you hear might not interest you, but perhaps there are interesting possibilities up, or down, the value chain.

For example, let’s say someone told you they had a great idea to build a video platform for dog walkers.

There are many layers to the value chain behind this idea.

Dog breeders breed the dogs, dog trainers train the dogs, dog walkers walk the dogs, streaming services stream the video, domain services handle the DNS, etc.

If you think about the full value chain, top to bottom, you might come up with another idea that is far more compelling than the original one.

Think About The Little Snowball

Many times ideas we hear are sprawling and gigantic. It’s a classic rookie mistake to start building something too big. A much better approach is to try to find a single aspect of the idea that is productizable.

Just about every part of growing your business becomes easier if the foundational idea is do-one-thing-well.

I learned this lesson the hard way. I launched my tool Pluggio, a tool that buffers social content, at the same time as Buffer. Buffer focused on doing one-thing-well while I built Pluggio out to become a social media dashboard. Ironically, no matter how many features I added, Pluggio’s main selling point continued to be social buffering.

So, while I was adding 100k lines of code to make a really slick single page web app, buffer was marketing and integrating their very simple app. Due to my “high product surface area,” my time was sucked up by support requests. Sales were harder because the product was harder to explain. Integrations were a non-starter because the product was too complex.

After 3 years Pluggio’s yearly revenue was $50k and Buffer’s was $1m.

Think Optimistically, Even About Stupid Ideas

One of Elon Musk’s super powers is he thinks optimistically about any idea that comes into his head. He forces himself to think it through and try to solve all the problems it might present.

For example, if someone told you they had a great idea to ease traffic congestion by building hundreds of tunnels under cities, you would probably think, “That’s stupid, don’t waste any time thinking about that!”

Not so for Elon. He lets his mind go there. He optimistically tries to solve even the most outrageous sounding problems.

Next time you hear an idea that sounds stupid, try to think about it optimistically and see if that presents you with anything interesting.

Conclusion

These are just a few ways you can re-imagine and bring new life to any idea you hear. There are many more, and I’d love to hear your take on this too.

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.

Here’s a little example of why that is an optimal strategy:

Let’s say you were drilling for oil. You didn’t know exactly “where” it was. But you knew it was in a specific quadrant of land. You had picked 3 possible starting points to start drilling and investigating.

Unknown to you, one of those starting points was directly on top of the oil. The other two were not on top, but with work and some sideways drilling, you would be able to get there.

The starting point directly on top of the oil would take 2 days to discover the oil. The other two starting points would take anywhere from 4-12 weeks to discover the oil.

So, would your optimal strategy be to pick one random starting point and keep working it?

Or, would your optimal strategy be to investigate all three starting points and spend a day or two on each?

By picking more than one starting point, you increase your luck surface area and give yourself better odds.

Keep in mind, once you start working on an idea it’s much harder to back out due to sunk cost fallacy. That’s why it’s so important to run these experiments at the very start before you build anything.

If you’re zeroed in on one concept, you could be missing the bigger picture close by. Sure, some people get lucky and strike oil right away. But it’s more likely that you’ll run dry and need to move camp. Or, you might discover there are landmines and you need to get the hell out of there! The more methodically you explore your landscape and validate your options, the more likely you are to survive, and even succeed, in this crazy startup world.

. . .

Note: Validation tests = Talk to potential customers within a specific market segment and see if they have the pain point you hypothesis. Then see how willing/hungry they are to pay for your proposed solution. No need to build anything. Mockups and conversation should suffice.

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.

—

Firstly, I want to say congratulations to this competitor for doing something. The fact that he is actually doing something is a big deal. Most people don’t do anything.

Secondly, I want to say thank you to the new competitor. When someone is first to market with a new concept it’s a bit precarious. It’s not until a competitive market starts to emerge that a product category becomes validated.

Thirdly, I’m open sourcing the core Nugget Mechanical Turk HIT. Feel free to use it to create more competing products in this category or to get ideas for yourself.

Fourthly, Nugget originally offered 7 free ideas and then a premium subscription to get more. I’m launching a competing offer where you can get a free business opportunity every day from Nugget.

The Enlightenment

I’ve been executing on Nugget for over six months now. I’ve paid over $3,500 dollars to Mturk workers to get more than 3,500 ideas, of which I’ve distributed about 350(ish). I’m quite picky about what I let through.

What I have deeply learned is this: Ideas don’t matter.

What truly matters is product/founder fit, serving a market you care about, learning from your customers and maintaining momentum.

Ideas are simply stepping stones to a market and a lot of hard work.

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.

Out of 20m global software developers, very few have built a profitable SaaS business.

To give some context, consider “software developers” as a group, have built 4m mobile apps, but only 15k SaaS businesses.

This is especially odd, given the amazingly commoditized and fickle nature of app marketplaces, with low price points and levels of competition never seen before.

Funny story. Last year, I joined a membership site of a mobile app guru, he’s made millions from mobile apps. I sent him a private message describing my skill-set and asking what the best thing for me to build was. His response?

“Build a SaaS app. It’s a better revenue model.”

True that.

Romancing the SaaS

In the hacker world we like to romanticize impressive outliers like Zuckerberg building Facebook or Koum building WhatsApp. Yet, a solo developer building a profitable SaaS app, is also an outlier and deserves of some romancing.

So let’s get started

The practical reason to build a profitable SaaS side project is because, on the lower end of success, it can net you a second salary while being a fairly low risk endeavor when done right.

In my case, my apps monthly $3.5k enabled my wife to quit her job, take a year off work, and establish herself as a play therapist in private practice.

I was then able to sell my modestly successful app for $100k which helped us to shift gears with regard to our quality of life.

But the real, unexpected gain that I feel, is the sense of personal achievement and growth as a result of the process.

I don’t think I’m being over dramatic when I say I feel like I trained for, ran, and won an ultra-marathon. It was a four year journey of ups and downs that forced me, many times, to push through my own self limiting beliefs and cognitive bias about what I was able to achieve.

Or put another way, it’s a bit like playing a four year strategy game, against a zomby hoard opponent, in god mode, and winning.

As a solo developer you need to wear every hat to build a business. And I mean eeeevry hat.

Customer relationships, Marketing, PR, UX, Pricing experiments, Conversion Funnels, Mailing lists, Case studies, Product road map, Infrastructure management, Customer Support, and the list goes on and on.

If you do that and emerge victorious from the other side, it is impossible to NOT be profoundly changed as a person.

That’s the reason why when you tell someone who has gone through this process your world changing “idea” they are seldom impressed – they simply know too much 

It’s also the reason why we have the saying “Execution is everything” because, execution, literally is, everything.

My favorite part of all of this is that if you can do it once, you can do it again, but this time with knowledge.

Rob Walling’s career is the perfect example of someone who repeatedly did this and with each business leap frogged in size until his Drip exit.

The Grand Quest

So, if you’re the kind of person who likes to play a one month game of D&D or run an ultra-marathon, or climb a mountain, or spend a year fixing a vintage car, or get your teeth stuck into a really hard problem, or deeply challenge yourself, then I would like to invite you to try the journey of being solo software developer building a SaaS side project.

It is a worthy and life changing one.

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.

“I would love to build my startup, but I don’t want to quit my day job.”

Well, of course, you don’t. You’re likely a skilled developer, marketer, or sales professional making a significant income with bills to pay and perhaps even mouths to feed. It would be crazy for you to quit your job with nothing built.

Your full-time job, however, eats up least 40 hours per week that you could be using to build your business. So how do you ensure that you have food in your stomach while also building your dream business?

In this blog post, we’ll go over five ways you can keep your full-time job while growing your business.

This list will include:

Building a product that you’re passionate about

Concentrate on your key metric

Time block

Create an exit strategy

Stay Legal

Build a Business You’re Passionate About

We’ve talked about product/founder fit at length on the Nugget blog and for a good reason. Without a real passion for the product that you’re working on, your chances of success will decrease drastically. You’ll either lose motivation and just stop working on the business, look to exit too quickly, or find yourself miserable because you aren’t doing something that you enjoy.

Choosing to build a product in an industry that you are passionate about also means that you likely have a significant amount of domain expertise in that area, which will help you build a better product.

We recently discussed Logojoy and how Dawson Whitfield was able to create a company that was doing $15k in MRR in less than a year. There were many reasons why he was a success, but his ability to build a product 10x better than the competition because of his domain expertise stood out as a top factor in the company’s rise. He was the perfect mix of designer and developer which made him one of the few people in the world to be able to execute the product how he could.

His competitive advantage was his domain expertise.

Concentrate on Revenue

Founders tend to get pulled in all different directions, especially solo founders. Many of us act as the CTO, CEO, CMO and everything in between at our startups, so it’s easy to lose focus of what will move the needle.

What you need to remember is that everything comes down to revenue, and if you’re not spending time on things that are going to bring your startup the most revenue the quickest, then you are wasting time.

So don’t spend 10 hours in a week perfecting your company’s logo, deciding your business’s name, or creating social media accounts. Do spend that time talking to customers, implementing NEEDED features, and generating revenue.

You don’t have a business until you have paying customers. There is no greater validation than paying customers, and nothing will make you believe in your business more than getting paying users.

Block Off Your Time

Time management is a crucial skill for every founder. You have a full-time job, your startup, a family, and a social life to manage. So you NEED a system to keep yourself on schedule and accountable for your time. One of the best ways to manage your time and stay on top of your tasks is with time blocking.

Time blocking is a productivity “hack” that helps you to make the most of your work day by assigning very specific tasks to very specific blocks of time. Time blocking helps you stay focused on the task at hand and plan out your days more efficiently.

My favorite tool to do this is Plan, but you can use any calendars like Kin, Google Calendar, and Sunsama as alternatives. You simply list out your tasks for the day, estimate the time that each task will take to complete, and drop them in your calendar.

Once you’re all done, your day plan will look a lot like this:

This strategy will help you focus on the task at hand and remove unnecessary distractions.

Create An Exit Strategy

As you build your business while working full-time, the one thing that will keep you going until 3:00 am grinding your ass off is knowing that you’ll reach your goal and quit your job. For bootstrappers, this probably means making enough money consistently to cover your cost of livings and continue to grow the company, however, everyone’s goals are different. You need to figure out specifically what you need to do to leave your current situation and work on your business full time.

Ask yourself questions like:

What is the date I’d like to leave my job?

Do I need to raise money first?

How much revenue do I need to be generating (If any?)

How much should I have in personal savings?

Do I need to have my product 100% complete?

Do I need to have cofounders?

Thoroughly think through these questions and answer them. I suggest you then write them down and display them somewhere that you can see every day so you can let these goals motivate you.

Stay Legal

Your current employer is paying you to do a job, so you need to honor the commitment you made to them. At the same time, you need to protect yourself so that when your startup is a success, your former employer won’t have any recourse to come after you or your business.

If you are working on an idea that is unrelated to your current employer and you work on it in your own time with your materials, then you should have nothing to worry about. I would suggest checking out any employment or non-disclosure agreements that you may have signed and check to see what the company’s policies are in regards to outside businesses.

If you’re working on something that might compete with, or step on the toes of your current employer, I suggest consulting a lawyer to avoid any future issues.

Achieving your dream of building a business takes a LOT of work. Your dream will test your dedication, courage, and willpower.

Before you start working every night, take a moment to visualize taking the next step, quitting your job, and running your business full-time. Now get to work like you can see the finish line! You’ve got a dream to build.

. . .

Nugget is an online incubator & community. We help founders start and grow profitable side projects.

I hate to start off so bluntly, but every entrepreneur must remember this:

If your friends say they will buy your product idea, that does not mean they actually will buy your product.

We have an entire blog written about why you can’t always trust your feedback loop, but let’s recap.

Your friends and family are extremely biased because they know you, they care for you, and they would hate to do anything that might hurt your fragile ego, including crushing your startup dreams by telling you that your idea is absolute shit. What your friends and family don’t understand is that criticism is exactly what you need. Without it, you will go and spend a year building a product that no one wants, all because you never received appropriate constructive criticism.

So how do you go about getting real, useful feedback from friends, family, and other people in your target market?

The answer is by asking about their pain points and their process, instead of talking about your idea and hypothetical future events, like if they would purchase a product or not.

In this post, we’ll discuss how you can find out if your product is something that people would pay for in the following five steps.

1. Research and understand your customer’s process and create a hypothesis as to what their pain points are

2. Understand what pain points exist in that process

3. Understand the impact of these pain points

4. Rinse and repeat

Ready!? Alright, let’s go!

Research and Map Your Target Markets Process

Most problems that a product solves are simply friction points in a process. It’s up to you to research and understand what points in that process cause the most friction and what the impact of you solving that problem will be for the customer.

Start by using the following websites, and websites like them, to understand your customers process:

Quora

Reddit

Yahoo

StackOverflow

StackExchange

Every industry has specific forums and blogs where members discuss problems they are having. You should be finding those communities, researching them, and starting to engage with them. This DOES NOT mean ask them to fill out a survey or visit your landing page. It does mean that you should offer genuine and helpful advice when you can and asking good questions.

For Beam, a startup that I’m building with a cofounder that I met in the Nugget community, we found the following links on Quora that helped us understand our target markets process and pain points.

Are there any tools I can use to manage SaaS subscriptions?

Which tools can I use to cancel my subscriptions?

How do you manage your SaaS subscriptions?

What are mission critical SaaS tools?

After researching the problem, take some time to think through and understand what your customer’s’ process is and how your solution may fit in. This hypothesis will help you frame the conversations that you’ll have with potential users.

Now that you understand your target market’s process, you’re ready to start to talk to customers.

Discuss and understand how your target market sees their process

The first question that you should ask when talking to a potential user is simply “Tell me how X process works for you”.

By asking this question, you’ll get them talking broadly about the process so you can verify if the way you mapped their process in step #1, is accurate. Ideally, a pain point will stick out when your interviewee starts to talk about their problem. If they don’t mention any pain points or problems with the process, you’ll have to start asking some probing questions. These can include questions like:

• What part of this process takes the most time?
• Is there any part of this process that costs more money than you’d like?
• What is the most inefficient part of this process?
• What tools do you use to help you with this process currently?
• What part of this process provides you the most value?
• How happy are you with the current process?
• If you could improve one thing about this process, what would it be?
• Do you use X tools to help you with this process? If so, do they do what you need them to do?

These questions should help you hone in on the most painful parts of your customer’s process. Your last question should be “So it sounds like, X, Y, and Z are the biggest friction points in this process, is this accurate?” If your prospect answers yes, then you’ve discovered three pain points.

Now you have to understand if these are pain points that your customer would actually pay to have solved, and you do so by understanding how big of an impact these friction points have on your customers.

Understand the impact of these pain points

Just because a problem exists, doesn’t mean someone will pay for it. It is up to you as an entrepreneur to find and focus on the problems people are willing to pay to have solved. Simply asking if someone would pay for a problem will yield false positives more often than you want and is an unscientific approach.

After you’ve determined what pain points your interviewee is experiencing, ask them the following question: “What would it mean to have X problem solved for you?” The answer to this question is likely to involve creating extra revenue, saving time, or saving money.

This is a valuable question because every SaaS solution should either make your customer money, save them money, or save them time. If the answer to this question is a significant amount of money made, money saved, or time saved, then you likely have something people will pay for.

Once you establish what the impact of solving the problem will be, you can ask one of these follow-up questions:

• How much time would it save you if you didn’t have to do X
• How much money would it save you if you could solve X problem
• How much money do you think you could make additionally if you could solve X problem

These questions will also help you understand how much you can charge. If your product is intended to boost revenue, you can likely charge 10% – 25% of the expected additional monthly income that your product is supposed to make your customer.

If your product is intended to save them money, you can likely charge 10% – 15% of the annual savings that your product is intended to bring your customer.

Understanding how much you can charge for a product that saves a person time is slightly more complicated. Start by learning how much time your product would save someone. Then understand the value of their time regarding things they could be doing otherwise (find their opportunity cost), and how much this person is worth per hour. If someone spends 4 hours doing something nonvalue-add every month, and could otherwise be doing an activity that makes them $400 in that four hours every month, you could likely charge them 10%, or $40 in this case, of their missed opportunity cost per month.

Rinse and repeat

You’ll need to have multiple interviews with your target market to be confident that you understand your customer’s process, pain points, and how much you can charge them. The answers to these questions will likely change as you interview more and more people.

I would aim to have anywhere from 5 – 10 positive and similar interviews in which your interviewee confirms your hypothesis before starting to build your solution.

Luckily, we wrote a blog post a few weeks ago about getting customer development interviews that you can read here. So now that you know how to figure out if your idea is brilliant or not, you can go out and do it!

. . .

Nugget is an online incubator & community. We help founders start and grow profitable side projects.

Often times, they steer clear of really interesting projects because they feel there is too much competition in that market. It’s a common cognitive bias because that’s how we’re taught to think about competition in the “normal” business world.

However, in my not so humble opinion, if you are a building a self-funded SaaS app as a side project, competition is irrelevant and should be ignored 99% of the time. Here are six reasons to support that assertion:

Reason #1: If you build up a rapport with your customers by building what they want, and serving them well, you will get a solid customer base. Jessica Livingston, co-founder of Y Combinator, points out – building something people want is the single most important factor for success.

Reason #2: People don’t think the same. That which your competitor considers to be an effective UI will annoy the hell out of a percentage of their customers. Every day those folks will login and think “damn, I wish they didn’t do it this way”. Then, one day, those people will find out about your app and be overjoyed.

Reason #3: It helps to be in a market with competition. It means potential customers are already educated about the type of tool you’re building. So now, rather than spend time educating people, you can spend time finding clever marketing angles and differentiators to siphon people from the competition to your product.

Reason #4: There are many, many, examples of companies moving into saturated markets and killing it.

Social networking was old news by the time Facebook started gaining Traction.

Google was preceded by over 20 competitors.

Slack was soooo late to the party. There was Hipchat, Campfire, Skype and a host of other services.

How about Gabriel Weinberg and DuckDuckGo? One guy going head to head with Google. One guy and a few linux servers up against a market saturating behemoth… and now DDG is one of the default choices as an iPhone search engine and getting over ten million queries a day.

Rob Walling’s Drip. Who in their right mind would enter a saturated market owned by Constant Contact, Mailchimp etc.? But it worked out. He even exited for undisclosed millions.

Reason #5: With true differentiation you can carve your own segment out of any market.

A good analogy to use is Photoshop layers. In this analogy the market is a single picture in Photoshop, built out of multiple layers.

The trick is to make sure you are not on the same layer as anyone else. In many ways this type of segmentation is like having no competition at all.

Consider Drip, it sits within the competitive eco system of email-as-a-service providers, but is still exists on a different layer than any other service in that market, no wonder Rob cleaned up!

Reason #6: If you give a shit you can overcome almost any obstacle.

We KNOW with dogged determination you will get customers. We KNOW you will build a unique and competitive offering because you will be in constant communication with your customers. We know once you start talking to real customers and making them happy you will be energized.

What we don’t know is… Will you stick at this and get past the 3 year dip it takes to build any business? A feat that is way easier if you give a shit about what you’re doing.

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.

*Hey man, our angel just pulled out.*

Crushed.

I sat at my desk for 20 minutes or so trying to understand my feelings. I was stunned that the deal I worked so hard to put together fell through, and I was horrified that I was 15 minutes away from quitting my job for a startup with $0 in the bank. I had an amazing role at a prestigious financial company, an amazing and supportive girlfriend (now fiancé), and a whole host of expenses to pay for. Not the least being an engagement ring for said fiancé. So what was I doing nearly throwing away the career and life I had worked so hard to obtain?

I deeply love entrepreneurship. I love the thought of building something that I have ownership of, and I love being in the trenches, fighting for traction with my cofounders.

That love, however, nearly betrayed me. Because I nearly dropped everything for an idea that not even I was sold on and a team that would eventually dissolve due to petty disputes. Looking back, I assumed we’d just figure it all out, but we never did. I was ready to jump before we had any validation. I was ready to jump before I validated whether the product would make any money (just because an angel gives you money, doesn’t mean you have a product that will sell). I wanted to jump before I validated whether or not I was truly passionate about the idea and was ready to spend the next five years of my life building. Most importantly, I wanted to jump before I validated whether myself and my family were personally ready to take this journey.

My love of entrepreneurship nearly drove me to make the same mistake I feel thousands of otherwise brilliant entrepreneurs are making. Quitting your day job before you truly have validation.

True Validation Always requires a credit card

My team spent months building a product we thought customers wanted. We conducted customer interviews, released surveys, and drove traffic to a landing page to validate our little SaaS App. We got people to sign up to a mailing list… so we must have a validated idea and product/market fit, right?

Wrong.

We released our product to our list of over 1,000 signups and received very little interest, and 100% churn from those who chose to sign-up. Still, we thought with a seed round of investment we could “figure it out.” So we took our business to some angel investors and somehow got a bite.

The problem with this plan, however, is we’d be burning investor money while we continued to attempt to pivot and find some traction. This means by the time we found any sort of traction, we’d likely need even more investment in order to scale. As a startup, you should be scaling with other people’s money, not trying to figure out what it is that you can build that people will want to buy. While you have a steady income from a day job, you need to HUSTLE to gain traction. For SaaS, that means sales because at the end of the day that’s the only thing that matters.

Our lack of customer validation through traction was a huge red flag, but not the only red flag.

Validate Your Own Passion

I like music. I listen to Spotify for a few hours a day while I work and while I’m at the gym, and I’ll attend a concert every now and then. I however have never met a concert promoter and I’m not even sure how the concert event industry works. Yet I was going to be the main co-founder of a company that sold an app in the concert venue space.

That wasn’t the real issue, however. The real problem is I didn’t want to learn anything about the concert venue industry. I didn’t want to learn about the industry because I didn’t have a passion for the space or the product. I was happy to rely on my team to have industry expertise, and I’d just learn what I needed to from them. Even worst than that, I was already thinking about an exit. Nevermind the naivety of even thinking we had a shot at a profitable exit at that point. How could I be starting a business that I couldn’t wait to exit because I didn’t like the industry it was in?

Looking back, I cringe at the excuses I would make in my head as to why I was even pursuing this idea. I wasn’t excited about the thought of coming home from my day job and working hours to build this business. I tried to be excited, but I never validated my passion for that product.

We’ve talked about product/founder fit in the past on the Nugget blog, and this was my first-hand lesson in how important it was If you aren’t willing and excited to work nights and weekends like a sleepless maniac to launch your startup, you haven’t validated your passion. If you don’t dream of working in your space for at least the next 20 years, then you haven’t validated your passion.

Want to build a million dollar business? You better have passion.

Check Your Personal Validation. Are You Really Ready?

The people closest to me have always been encouraging when talking about my entrepreneurial aspirations. However, when it’s time to quit your job, tones tend to change. Those that once were your biggest cheerleaders may turn into the one’s questioning you the most. You can’t just lump them all into the “They just don’t get it” category because most of them are truly concerned with your future.

I have a supportive family and a wonderful fiance that I thought would be 100% onboard with the idea of giving up the huge raise, signing bonus, and benefits that I spent $100k and four years in school getting. Unsurprisingly, they were less than enthusiastic. It probably didn’t help that I only had about four months of personal runway to live off of, and as stated above, clearly no passion for the space.

It’s critical to have a support system around you when you are making such a drastic decision, emotionally and financially. You don’t want to be worried about where your next meal ticket will be coming from while you’re trying to build a unicorn, and you’re going to need someone to vent to when another growth project goes up in flames. So make sure that you are financially ready to pursue your dream. Have an exit strategy that includes going back to a paying job, and please, embrace your family, don’t push them away. You’ll need them to pick you up when you fall.

How do you know?

I learned that for a founder, validation doesn’t just mean building a landing page, driving traffic, and getting a few signups. Thoughtfully consider these questions before you’re sitting at your desk, 20 minutes away from quitting your job for an invalidated product.

• Have I reached X product traction goal

• Do I have Product/Founder fit

• Am I financially ready to take this plunge

• Do I have the emotional support system around me to be able to take this plunge

• Are you ready for endless sleepless nights and stress-filled days

If you want it, you will find it

I thankfully missed that opportunity to quit my job by about 15 minutes. I instead took a skill I had been building for years and started to monetize it to a point where I could support myself and my family. I built the business until I could comfortably quit my day job and I wasn’t stressed about getting any last minute texts. I’m not on a constant vacation, in fact, I work more than I have ever worked in my life. However, I love what I’m doing and know that I’m building something that I’m truly proud of.

To be an entrepreneur, you must take big risks. However, you must take smart risks. Join a community like Nugget to start thinking about customer pain points and brainstorming ideas. Then validate every aspect of your startup and every aspect of your life before you jump. When you finally do, buckle up and enjoy the ride. It’s going to be a roller coaster.

. . .

Nugget is an online incubator & community. We help founders start and grow profitable side projects.

We hear the term Product/market fit all the time, but few talk about Product/founder fit. Ironically, it may be a great deal more important for your individual success.

So what exactly is it?

Product/founder fit is a measure of how well your startup fits YOU.

The better it fits, the more likely you are to succeed. Because, with full Product/founder fit, you are curve-fitting your business around you. Which means you will be far more likely to stick with it for the 3+ years it takes to build and grow your business.

The criterion for good Product/founder fit are different from founder-to-founder. Broadly speaking, you need to make sure the business you’re building matches up with your personality, skill-set, resources and goals.

Example of a bad fit

After the win of selling Pluggio I needed a new side project to work on. Uber for x was all the rage. So, I spent a long time thinking about what kind of Uber for x I could build.

I really liked the idea of Uber for coffee and snacks. So, I worked nine months nights and weekends to build a beautiful app & dispatch platform called Lyte.

When I finished building it. I launched it, hired some couriers, did some local marketing. Orders quickly started coming in. The business was officially launched and making money.

There was just one problem… I did not like it.

I discovered this the first time I used my own service. I ordered a cup of coffee. My courier quickly delivered it to me. However, I felt a strange feeling of awkwardness and wondered why I had not just gone out and grabbed it for myself.

Uh oh.

There was no way I could spend the next 3-5 years building a business that made me feel awkward, no matter how big the pot of gold at the end of the rainbow.

Example of a good fit

Pluggio, on the other hand, was a much better Product/founder fit for me. I didn’t design it that way, it just happened by accident. Apart from the fact it didn’t make me feel awkward to use, there were a lot of other aspects that made it right for me.

For example, I am highly motivated by talking directly to customers and brainstorming a solution to a problem they have. It’s a great feeling delighting a customer.

It suited me to work on a product that was built, marketed & sold completely online. The asynchronous nature of the work fit very well with my random hours of availability.

The B2C nature of the product was an excellent opportunity for me to learn about branding, funnels, case studies and other SaaS business practices.

The final product was very low maintenance and did not require real world hands-on operations. This was perfect for someone with a day job who only had enough time for a side project.

Find YOUR Product/founder fit

Before you embark on your next journey, I encourage you to take a step back and make sure the project aligns well with you. Here are some key questions you can ask yourself to try to establish if you have found Product/founder fit, or not.

• As a founder, does the project suit your personality type?
• Do you have enough available time to support and build it?
• Is the problem space interesting enough to work on for 3+ years?
• Do you have a way to connect with, and find, early customers?
• Do you have the skills and/or resources to build it?
• Is it something you can build and release in 3 months?

If you can answer yes to all those questions, congratulations, you’ve found something special!

Now you can start interviewing customers and iterating your product with the knowledge that you’ll see it through. Perhaps, one day, you’ll find Product/market fit too!

On that day, you’ll be unstoppable.

Discuss on HN

. . .

I’m creator of Nugget, an online incubator & community. We help founders start and grow profitable side projects.