It’s probably not what you think
The most common source of failure for a SaaS business is not a lack of traffic of leads. It’s a lack of product-market fit, i.e. solving the right problem for the right type of customer.
But product-market fit is not enough.
I love the analysis made by Brian Balfour (source). For Brian, product and market need to also be aligned with your acquisition channel and price. In particular choosing the right acquisition channels depending on the lifetime value of your customers.
For instance if the lifetime value of your customers is $100, you won’t be able to afford a sales team and probably not even paid traffic. SEO looks like a better option in this case.
So for Brian Balfour, you need to align:
- Market
- Product
- Acquisition channel
- Pricing model
But even Brian, didn’t take into account in his framework another critical factor.
The most underestimated factor of success of a SaaS business is probably WHEN you launch it. This is explained in detail by Bill Gross in his TED Talk (source: TED video).
Bill Gross is the founder of Idealab, where he started more than 100 startups, some of them hugely successful. For him to say that timing is so critical is worth considering seriously.
When he did his study, he analysed five factors: idea, team, funding, business model and timing. What came out was a surprising order of importance of these factors with timing as #1:
- Timing
- Team
- Idea
- Business model
- Funding
The time window for some businesses can be much wider than for other ones, so you have more time to launch.
If you get the timing perfectly right and the window is narrow, then you get a definite boost. For instance if you launch a mobile app early enough in the AppStore and get a lot of positive reviews, it will be more difficult for competitors to beat you.
A common mistake, that I made several times, is to be too early in a market. For instance, we launched a first version of Veeroll, our video generator, in 2014 dedicated to YouTube ads. We thought that YouTube ads would grow exponentially in the next 12 months. In fact, it took five years to do so and only early adopters bought it.
Now we are seeing a Cambrian explosion of the number of SaaS platforms around AI. Is the timing right or is it too early? The risks of being too early are many: burn through your cash, create a legacy debt in your tech….
So, is the timing right for your SaaS? Is the time window a wide one or a narrow one?
