Hacker News Reader

Comment by monero-xmr | Hacker News Reader

Safest way to start an enterprise SaaS startup is to have a buyer lined up before it’s founded.

The way to have a buyer before founding is to have worked at an established, profitable firm that has that exact problem, cannot build a solution themselves, and get a signed agreement from them to buy your future product. If you leave that firm and have that document, you can raise money, then use that money to hire a team, then build the product and fulfill the contract.

Getting into such a position requires an established career. Therefore safe, reliable entrepreneurs cannot possibly be college drop outs - they need to be established careerists with good connections who have entrepreneurial ambitions.

View on HN

Easier said than done. Your employer would probably prefer you to stay and build it exclusively for them, rather than leave and also sell to their competitors.

There’s also the issue of trust. For some reason, managers tend to trust third parties more than their own employees. For example, they won’t think twice about using open source libraries with a single hobbyist maintainer, but often feel uneasy about using an open source library built and maintained by one of their subordinates. I’m not sure why this happens. There must be a name for the phenomenon. I suspect the same thing will play out when you try to pivot from employee to supplier.

Yes I've never seen an employer sign such an agreement above. They'll either buy it off the shelf, or built it in house. Why would they enable an employee to leave to build a product externally to then buy for an inflated price?

I have. If you’re good enough and have decided to leave because you’re bored, this is one way the org can still retain your services and better, if you succeed, they have diversified into one more adjacent problem space with the investment in your startup.

> There must be a name for the phenomenon.

Blissful ignorance. If we actually knew the library has only one single hobbyist maintainer, we would be worried. But often we intentionally don't look at the fact. We just tell ourselves "well it's open source so there must be multiple eyes on it..."

I guess the maxim Familiarity breeds contempt captures that.

To expand on that.

Most succesfull businesses I've seen started in my close circle indeed came from the job they had before.

Most of them were not new products, but either were what they were already doing or a variation or improvement of that.

In that case you know your product and often already have it, know your market & know how to reach them.

And often your former employer either becomes a client, or he is upset :).

But that's maybe not really a startup.

Creating a new product is often what is most difficult. It takes time to figure out what to create, who to create it for and even if it's a great product how can you affordably get enough new clients. That's a lot of stuff to figure out.

So yeah it's way easier to expand on what you already know.

I was a founding engineer at a Legaltech company that had buyer lined up before it was founded. Not just buyers, customers lined up before it was formed. Their execution was terrible. They actually did not understand customer need, did not talk to customer to understand their real problems.

It might seem safe, but you can still screw up.

> Getting into such a position requires an established career. Therefore safe, reliable entrepreneurs cannot possibly be college drop outs

Anecdote warning: I'm a college drop out. Joined a 5-person YC company when I was 20 as an engineer. 2 years later I was halfway through building a product (my current company which I've been building for 8-9 years).

I took a very similar path as one you're describing, except not as formal. The company was a tiny startup. They became my first customer (while I still worked for them!) which validated the need for the product, but I only charged them maybe $40/mo.

Then went on to a startup accelerator, funding etc.

All that to say the spirit of your comment is on target, but the specifics can be executed in different ways. No college degree required!

Agree with everything except the last line. You outlined one path to creating a successful SaaS company, but there are other paths.

Keyword I think you missed is "reliable".

This is usually included in the exit strategy (if one exists). Many startups are built with pure intention to sell. There is no prerequisite to doing it. Having deep empathy sure will get you further and is why more successful founders are in their 40s.

> and get a signed agreement from them to buy your future product

Just make sure you are not captured by your first buyer. A product built for one customer often has little value.

Maybe I missed it in the text, but I haven't seen anywhere "enterprise SaaS" mentioned specifically? I thought this was general startup advice.

If you are selling to other businesses I consider that enterprise. If you are selling to consumers you don’t need signed contracts from other businesses to buy your product.

Reply on news.ycombinator.com