5 Lessons From Losing 3–4 Months Building My First SaaS Product
Part 2 of 3
So as I mentioned in my last article, there were a few classic startup mistakes I made, despite having observed multiple SaaS startups over the last decade. In this article, I’m going to share with you the key lessons I learned, and how I used them to turn things around.
- Don’t forget to water your garden
- Hire smart, not just quick
- Don’t be afraid to be a beginner again
- Know your (core) numbers
- Hold yourself accountable
1 — Don’t forget to water your garden
When it comes to gardens, most people know how important is to keep plants watered. If you forget, they whither and die. The same is true for relationships, customers, and sales.
When it came to my new startup (hona.io), I got too carried away with designing and managing the product itself in the first few months, so forgot to keep selling, growing the waitlist, and maintaining investor relations. In our team, as founder, my role is to: (1) set the vision, (2) recruit and retain talent, (3) ensure momentum, and (4) design/manage the product. The last point being a reality for founders needing to wear multiple hats in the early days of any venture.
When I first started Honā, it was off the back of a Slack prototype (below).
Since it was my first real product-driven tech company (all my previous businesses were service-based), re-engaging my old design and development skills had me geeking out over Framer (design), GitHub (code repository), Linear.app (issue-tracking), and even Notion (wiki).
But as the months went by, culminating in the eventual loss of my entire development team, I realized I had taken my eyes off some of the more important things: growth and talent retention. Which brings me to the next part of the story.
2 — Hire smart, not just quick
After losing my developers, I was stuck in a pickle. I needed to find someone fast, but didn’t want to hire in the same way I did originally. The original three developers I hired were young, quick, and clued-on. But they weren’t versed in how the Bitcoin blockchain works (as Ethereum developers), and didn’t have the passion I unconsciously expected.
Therefore, this time around, I honed in on some of the following traits:
- Must be senior than me and autonomous
- Must get what what we’re doing; ideally passionate about it
- Willing to work together long-term if all goes well during initial 3-month trial
- Honorable but not extreme
Within 3 weeks, after tapping into my networks, I was fortunate to finally find someone who wasn’t just senior, but had all the traits I was seeking, and then some. After working together for the first 3 months, we found the working relationship to be incredibly productive. In my opinion, one of him is the equivalent of 3–5 other people. By doing a 3-month trial, we were able to test each other out. By keeping it lean, and spending more time “testing things out” before committing, we were both able to make a more informed choice about long-term prospects.
3 — Don’t be afraid to be a beginner again
This was a reflection point for me. I had gotten used to leading my other consultancy, Faiā, that I had forgotten what it was like to start from scratch. As such, instead of reaching out to others for help, I tried to study everything myself online. And since we raised capital for this venture, the studies covered everything from definitions of vesting schedules to cap-tables to convertible notes (your typical VC/investor language).
As a result, I started blogging again, and committed to writing articles like this — sharing my struggles but, more importantly, lessons learned. By putting myself back into a beginner’s mindset, it removed my ego from trying to put forward a front like I had everything together. I didn’t, and still don’t. I’m learning on the fly, while trying to build something of value. Trying to build any sort of product or business is an ordeal — and it’s the ultimate self-development tool, because it forces you to face your own limitations in thinking.
4 — Know your (core) numbers
Another key thing I managed to neglect was the numbers. Spreadsheets aren’t my thing, but I’ve managed to get by by respecting numbers and surrounding myself with those who are better with them than me. However, when it comes to business, it’s important to know: (1) your north star, (2) your numbers, and (3) how the numbers are helping you get to your north star.
For Honā, since we were figuring out the business model as we were going along, we toyed around with the following metrics: waitlist subscriptions, user registrations, commitments created, commitments completed, actions taken, etc. But the big one that was forgotten was cashflow runway.
Why is keeping an eye your cashflow runway important?
Well, whether you’re VC-funded, or are making healthy profits, cashflow runways let you know how many days, months, or years you have before you lose all fuel to keep your business running. By not reviewing this frequently, I was surprised when our bank account started to run low.
- Cake Equity or Pulley (equity management)
- Mixpanel (human-readable analytics)
- Geckboard (pull all your metrics into a single dashboard)
5 — Hold yourself accountable
Now, it would be remiss of me to talk about accountability and not mention hona.io, our social accountability platform. One of the things that attract individuals to entrepreneurship is the idea of “being your own boss.” According to author Robert Kiyosaki, this is the realm of SMEs (Small and Medium Enterprises). What this means is that, if you get into business to simply “be your own boss”, you may get stay stuck in the Self-Employed quadrant (see here).
By choosing to go down the VC route, and taking on investors, I am actually putting other people “above” me to hold me accountable. Most people try to skirt this, but I’ve learned to embrace it. All power needs checks and balances. By holding myself accountable to shareholders (and ultimately, customers), it ensures my business actions are aligned with integrity.
And to capture this, I am actually using Honā to honor my own commitments:
There you have it! 5 lessons from losing 3–4 months building my first SaaS product. Interestingly enough, although I may have lost 3–4 months in time, I gained 3–4 months worth of lessons. And that is what motivated me to share it all here with you.
Stay tuned for part 3 of this series.