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

The Startup Ideas Podcast

Join me as I chat with Luke Sophinos, Founder & CEO of CourseKey, as we discuss the frameworks and strategies for building a successful vertical SaaS business. Learn how to find, validate, and launch SaaS opportunities!

Timestamps:
00:00 Intro
01:51 Why Vertical SaaS?
05:46 How to pick your vertical
11:05 Understand the industry inside-out
19:11 Analyze existing solutions
22:02 Automating the ideation and validation process with AI
35:04 Go-to-market strategy is CRITICAL
40:19 The power of the wedge product
49:35 Pricing framework

1) Why Vertical SaaS?
• Market often overlooked by VCs chasing unicorns
• Opportunity to build enduring businesses with strong retention
• Still massive potential in 2024, even in "boring" industries

2) How to pick your vertical:
• Focus on industry, not idea
• Look for:
a) Large market size ($1B+)
b) Fragmented (many SMBs)
c) Mix of small, mid-market, enterprise

3) Understand the industry inside-out:
• Map end-to-end operations
• Get hands on P&Ls
• Follow the money - where are they spending?
• Identify areas still using pen & paper

4) Analyze existing solutions:
• Look for legacy providers
• Identify where they're using horizontal solutions
• Find gaps where AI/FinTech could add value

5) The power of the wedge product:
• Your "get in the door" offering
• Should be:
a) Easy to implement
b) Solves a critical problem
c) Ideally free or low-cost
• Example: Roofer․com's proposal tool

6) Go-to-market strategy is CRITICAL:
• Many industries require relationship-based sales
• Product-led growth is ideal (but rare)
• Get creative: Industry newsletters, memes, etc.

7) The payments opportunity:
• Owning the transaction can 10x your market size
• Build before/after transaction, then capture it
• Example: Toast in restaurants

8) Pricing framework:
• Understand current spend on problem you're solving
• Price based on ROI you deliver
• Aim for 20-50% of value created

9) Keys to success:
• Only build products that:
• Increase revenue
• Decrease costs
• Prevent churn
• Maintain compliance

10) Validating ideas:
• Don't just Google search
• Talk to actual businesses
• Offer to buy lunch and shadow operations

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