1 Year Since Co-Founding a SaaS Startup - Mistakes and Lessons Learned

In January of 2023, having recently moved to a different state with my wife and newborn son, I left a company I had been at for twelve years. By mid-February, I was forming the foundations of a new business that was going to be a SaaS startup called Essembi.

Since then, we have built and launched the business and continue to iterate, based on user feedback and KPIs, on everything from the nuts and bolts of the application itself to our top of funnel strategy.

I'm really happy with where we are, and excited about the future. That said, if I had known exactly how the year was going to play out, I may have stayed at by cushy/stable job. Starting a business was, however, a life long dream and I was drawn to do it.

Reflecting on the last 12 months, I put together a list of lessons that I learned. All of these are probably retellings of conventional wisdom, but still worth talking about.

Lesson #1 - Make sure you have at least one co-founder

This one gets talked about quite a bit in the common wisdom about startups, but I still think it's worth bringing up again.

I had never started a startup. At my last startup I was an early team member and senior leader, but I wasn't around when the thing was trying to find its legs. When you work at a company, there is a direction that the business is already headed in. There also is a larger team around to help come up with solutions as issues arise.

When you are working at a day-1 startup, it's just you and your co-founders. There are days when it looks like the sky is the limit, and there are days when you feel like a complete failure. I do not recommend trying to ride those waves alone. Instead, I recommend having co-founder(s) that balance your skills and emotions.

Lesson #2 - Deeply understand the problem you are trying to solve and its market

Here are some questions I recommend asking yourself when you're trying to pick a problem to solve:
• What problem are you specifically trying to solve?
• What data do you have that would show that this is an actual problem?
• What is the total addressable market of this problem?
• How commodified is that market?
• What is the price someone would be willing to pay to solve this problem?

It should be your mission to answer these before you worry about business names or writing any substantial amount of code. Basically, are you solving a problem that there are customers for and how price sensitive are these customers? From there you can estimate your unit economics and determine whether you have a business idea that actually makes sense in the market.

Lesson #3 - Establish your fundraising strategy early, and commit

We started our business with the expectation of bootstrapping it. By the time we had gotten a few months in, we were pretty excited about what we had to the point where we were pivoting toward seeking funding. I now view this as a massive distraction, which, while it did provide some value, it likely cost us more than it benefited.

Fundraising is a massive job. It requires creating and tweaking a pitch deck including supporting material and then spending tons of time trying to build connections, which then turn into hours and hours of meetings. Depending on where you are located, it also might take quite a bit of travel. It is just like selling to enterprise customers.

I don't think you can have one foot in and one foot out of fundraising. I do think it was a good learning experience and it helped us flush some things out, but given that we ended up back on the bootstrapped path, I do think that time would have been better spent selling to customers instead.

Lesson #4 - Do not get distracted by tulip mania

When we were first building our product, AI was storming onto the scene. All of the sudden everything was AI oriented. Every startup getting any substantial amount of funding had some relation to AI (when in reality many of these were just ChatGPT wrappers with no strong business prospects). It was a craze, and we decided that we needed to participate.

Overnight we changed our branding and pivoted our email addresses and website to a .ai domain instead of .com. We have since switched back to .com.

AI is still and will remain a major part of our business strategy, and it's certainly here to stay. That said, the technology has a ways to go in many respects. It is also somewhat of a commodity. It's become expected that every product will have some sort of AI component to it, and is therefore not a differentiator unless AI is your primary focus.

These tulip mania fads come and go, remember NFTs? It's important to not get distracted by them, and sometimes it's better to see how things play out a bit before pivoting into the latest thing.

Lesson #5 - Remove as much friction as possible from your customer acquisition process

When we were first launching our MVP, we decided to utilize a waitlist strategy.

We did this for two reasons:
1. We wanted to be able to iterate on the marketing message while the product was still in WIP
2. We were concerned about a wave of traffic that either ourselves or the product would be unable to support

The former is a valid reason to do a waitlist, the latter is not. In retrospect, the notion that we would hang up the "Open for Business" sign and there would be a line of people around the block is pretty silly. In reality, it's hard to get peoples' attention. It takes a lot of work to get a sign up, and it's very easy to lose them. The more friction you can remove from the process, the better.

We've spent a ton of time since launch on friction-reduction, and it's had a noteworthy impact on our results. Shortly we'll be launching SSO as yet another friction-reducing lever for us. My recommendation? Make it as easy as possible for your prospective customers to say yes to you.

Lesson #6 - The solution is usually to put your head down and keep building

The peaks and valleys are real. As I said before, having a co-founder or two really helps with this. It's also important to lean on friends, family and other connections for support and advice.

Usually, when you're having a bad day, the answer is to just keep plugging away. If every day you add another grain of sand to the heap, before you know it you have something pretty big.

As far as what you should build next? Just listen to the market. Establish as much data collection as you can from as many sources as possible and just keep prioritizing the next lever that you think can help you inch further ahead. Before you know it, you're gaining traction and gaining steam.

That's my list! Hopefully this has been an enjoyable or helpful read for someone. It certainly was fun to write and reflect.

Sheridan from Essembi -- https://essembi.com

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