How to build a $1M+ vertical SaaS business (step-by-step guide)

About this Video

• Video Title: How to build a $1M+ vertical SaaS business (step-by-step guide)
• Channel: Greg Isenberg
• Speakers: Greg Isenberg, Luke Sfinos
• Duration: 00:54:24

Introduction

This video presents a step-by-step guide to building a highly profitable vertical SaaS business. Luke Sfinos, a successful vertical SaaS entrepreneur and advisor, shares his expertise, emphasizing a scientific, data-driven approach rather than relying solely on creative intuition. The video covers various aspects, from market selection and competitive analysis to go-to-market strategy and pricing frameworks.

Key Takeaways

• Focus on Industries, Not Ideas: The initial step is selecting a promising industry, analyzing its size, segmentation, and operational characteristics, rather than starting with a specific software idea.
• Utilize P&Ls and Competitive Analysis: Analyzing profit and loss statements (P&Ls) of companies within the chosen industry reveals spending patterns and areas ripe for software solutions. Studying existing software solutions helps identify gaps and opportunities.
• Map Out End-to-End Operations: Visualizing the entire customer journey and operations of businesses within the target industry is crucial for identifying software opportunities.
• Embrace the Power of Wedge Products: Start with a smaller, focused product ("wedge product") to gain initial traction and build trust before developing a comprehensive all-in-one solution. This often involves identifying areas where manual processes still exist.
• AI as a Research Tool: Leverage AI tools like ChatGPT for market research, but validate AI findings through direct customer interaction.
• Consider Payments Integration: Integrating payment processing into the SaaS offering significantly increases market size and potential revenue.
• Develop a Robust Go-to-Market Strategy: Understand the distribution model – sales-led or product-led – essential for customer acquisition and scaling the business. This should be a key component of the business plan.
• Data-Driven Pricing: Base pricing on the value proposition – cost savings, revenue increases, or improved efficiency – and the customer's current spending in the area addressed by the software.