Building A Multimillion Dollar SaaS Company From Scratch with Dan Martell of SaaS Academy

Episode Summary:

In this episode of SaaS Origin Stories, Dan Martell, Founder, and CEO of SaaS Academy, joins host Phil Alves. SaaS Academy is the number one coaching program for SaaS founders. Dan has over twenty-two years of experience in the SaaS space as a serial entrepreneur with three successful seven-figure exits. 

Dan shares his insights on critical but rarely mentioned skills that SaaS founders need in their toolkits before building their SaaS. He also unpacks the playbook for implementing successful exits and how each exit paves the way for your next and bigger venture. Dan is also the author of the best-selling guide for entrepreneurs, Buy Back Your Time. 

Guest at a Glance:

Name: Dan Martell

What He Does: Dan mentors SaaS founders at his company, SaaS Academy. He equips founders with the foresight to capture demand for the best product-market fit and implement successful exit strategies. 

Dan on LinkedIn

SaaS Academy Website

Dan’s Book Buy Back Your Time

Topics we cover:

• Upscale your knowledge base by reading
• Learn to insert yourself in customer conversations
• Exit strategy 101, every exit is a doorway to a new venture
• The first ‘oh shoot’ moment

Key Takeaways:

Expand Your Horizons by Reading Books

Every SaaS startup has two sides: a technical and a business side. Most SaaS founders come from a technical background and have the first one covered. The technical side is essential for the design and proofing stage, but once your SaaS hits the market, your success pivots around your business skills. Every SaaS founder needs technical skills and business nous in their toolkit.

Books like Purple Cow by Seth Godin and Start With Why by Simon Sinek are must-reads. Reading books like Atomic Habits and The Power of Positive Thinking is essential to building your core strengths. Make it a habit to read at least ten pages a day.

“Books are so powerful, and that’s how I learn the things that I know today to run my business”. 

Timing Your Customer Conversations Delivers Product-Market Fit

Dan shares a story about a salesperson for an office supplies company who, for fifteen years, consistently outperformed his peers by a wide margin. His modus operandi was simple; he would wait outside the competitor's warehouse and follow the delivery trucks as they made their monthly deliveries. He noted the delivery addresses, and next month, a week before the competitor’s delivery, he would contact the company and offer his office supplies. 

Learn to insert yourself in customer conversations when your customer is problem-aware. You can have the coolest software, but if you pitch it to a customer who is unaware of the problem, you’re not going to make a sale. If your sales cycles are consistently at sixteen to twenty-four months, chances are you’re talking to customers who don’t have a problem. Timing your customer conversations is critical for creating product-market fit. 

“The moment our target clients realized they had a problem, we became the most obvious and responsive solution”. 

Every Exit Builds Your Net Worth and Opens Doors for a New Venture

Let’s address two universal truths. Most successful startup founders have an endless chain of ideas. And all profitable startups will eventually hit an inflection point and come up against someone larger who has been doing it for longer. Don’t let your passion blind you; learn to cash in if you get a good offer. 

The ability to let go and exit, and knowing when to do it, is a critical skill in your toolkit. Every successful exit teaches you valuable lessons on the technical and business side, and investors love entrepreneurs with proven exits. On all three fronts, a successful exit eases your segue to your next venture.

A seven-figure exit when you own 80 percent of your company puts more money in your pocket than an eight-figure exit down the line when you only own five percent of the company. With every exit, maintain the discipline to invest half of what you get while keeping the other half as your seed capital for the next venture.

“In the valley, if you’re a founder with a successful exit behind you, investors will move their calendars around to meet with you”. 

The First ‘Oh Shoot’ Moment – Be Open to Pivoting Post Launch

Dan’s first ‘oh shoot’ moment came with his third startup, Clarity.fm. The SaaS solution pivoted around monetizing the time spent by an influencer while talking to followers seeking advice. The app used Facebook connect to reach the follower, and the call was placed through an 800 number, and the follower was billed via Stripe at the end of the call.

The unique concept generated much interest among the investors, and Dan was able to tie up just under two million dollars in thirty days. The problem arose at the proof of concept stage, where it was discovered that the followers wanted to talk to the influencer but were unwilling to pay for their time. This is when Dan pivoted on the target audience and started focusing on investors who would pay high dollars for advice on their planned investments.

“We pivoted out of my passion area and targeted investors who were willing to pay four to five thousand dollars for an hour with someone who could provide insights on their planned investments”.