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How to Pick the Right Idea and Launch Your SaaS Startup?
Shekhar is a Partner at Accel, focuses on early-stage investments in SaaS and Krish is the co-founder and CEO of Chargebee, which specializes in subscription management and billing. Chargebee today serves customers in 53 countries and processes over 3 billion dollars of annual invoicing by managing millions of subscriptions around the world.
Shekhar and Accel have been part of the Chargebee journey from its seed stage in 2014.
Shekhar starts off with his famous mountain analogy. Drawing parallels between the journey of a founder and that of a mountain climber aiming to reach the peak, he says
“Most founders pick the mountain they see first and start climbing before thinking about whether this is the right mountain to climb and are they well prepared to climb because it takes the same effort, time energy, and hard work, whether you climb a small mountain or a large mountain”.
This happens more often as a result of the founder’s strong passion for the idea, but realizing this when they’re halfway through their journey makes it very hard to abandon the mountain they’re climbing to go after a new larger mountain (opportunity).
“To those who’re starting today, I would recommend taking time out to study the market map of what mountains exist in the area you’re interested in and talk to fifty to hundred potential customers and ecosystem stakeholders to validate the problem statement”, Shekhar adds.
Krish talks about the immense value that comes from having experience of working in the industry. “Learning on the job is like a fast track MBA: somebody pays you to actually learn on the job”, he says. Krish adds that building context on the industry and how to build a business is extremely important before going out to solve a problem.
There are plenty of examples when being early to the party and riding a new wave early on has helped companies chart success stories. Krish and Shekhar share analogies to exemplify how being among the early ones to spot a trend can help build a moat. Shekhar chimes in with another mountain analogy, saying “I love those mountains that are small today, but as a founder, you know ahead of everyone else that the mountain is a growing mountain. By the time everyone realizes, you’re already halfway through”.
“Another interesting opportunity for those based out of India is going after established markets where there are a lot of players but they’re either tired or not able to innovate fast enough with modern toolsets, giving an opportunity for you to build a better product that is able to show 2–3X value at half the cost”, says Shekhar
Longer runway with the same capital, ability to offer 24X7 support, ability to assist with implementation, engineering capability and intent to build multiple integrations, service level advantage to profitably serve SMB customers allowing for slowly maturing to serve the enterprise makes India an excellent launchpad for starting a SaaS company
Shekhar and Krish share the traits of a good founding team: diversity of thought & domain expertise, ability to learn and support each other, members bringing unique skillset to the table and most importantly having someone with the ability to build the product and take it to market.
Krish says that understanding customer problems is key before going ahead with building your product. “Building the website before building the product is wrong and building the product before speaking to customers is even worse”, he says. Shekhar adds that recognizing a change in customer behavior early on can help you get an advantage over existing players.
On willingness to pay, Shekhar and Krish share their learnings on how most of the SaaS ideas these days are new tools for which people are not paying today. “Any new tool that crosses the boundary from using emails and spreadsheets for a task requires a nuanced conversation around hours saved or the benefit seen by the customer because in the older way there is no money being spent”, says Shekhar. Having the willingness to pay conversation early on, identifying key features that warrant the customer to pay, and recognizing the stakeholder who’s going to pay for the product become important.
We end the podcast with a quick rapid-fire round. Shekhar ends with the closing thought: “The art of storytelling is an important attribute for a successful founder. All large companies have a successful high-quality team and the ability to narrate your story and the potential impact on the world that your company would create gives a significant advantage to attract the right talent”
01:47 — Climbing the mountain analogy
05:18 — The advantage of having a strong industrial experience
09:08 — First mover advantage
13:32 — India advantage for SaaS startups
19:00 — Picking a good founding team
21:57 — Co-creating product with initial customers
23:30 — Understanding go to market
29:28 — Building MVP
32:15 — Testing for willingness to pay from early on
35:00 — Rapid Fire Round
Blog post contributed by Shrrinesh Bala