Dear founder,
Today, we’ll dive into the kinds of alternative solutions most founders miss when they attempt to validate their ideas.
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A lot of early-stage founders have understood—mostly because more and more people are talking about their early-stage strategies—that you need to validate your ideas. You need to make an effort to figure out if the thing you’re planning to do is actually reasonable to attempt. Validation is important and absolutely worth doing prior to building.
That much, many people have understood.
But here’s where things get interesting. Often enough, validation looks like checking if people have the problem—checking if people have the challenge that your idea solves. And if you find people complaining about it, if you find people mentioning that they struggle with this, to some founders, that’s a sufficient reason to build a software-as-a-service solution.
Then they bring it to market and realize something frustrating: even if they directly engage people in their market, even if they directly show this and onboard people into the product, they still don’t get a sale.
People stick with what they’re currently doing, even though it is something that, from your perspective as a founder, is much worse, much more expensive, much more complicated, much less scalable.
Why is that?
The Critical Missing Step
What I have seen—and do see a lot when I talk to my consulting clients who show me a view into their business and strategy—is that validation is missing a central and critical step.
They look for challenges. They look for proof of pain. But they do not investigate alternative solutions.
They might look for existing software-as-a-service solutions in the field and see those either as potential competitors or as inspiration for solving problems. But what they absolutely don’t do is investigate non-SaaS alternative solutions.
Let me walk you through the alternative solutions I’ve found in the past for my own projects and the projects my consulting clients have built. Because when you go through your idea validation stage, when you try to validate that there is a solid market and a solid group of prospects for your business, you don’t just need to understand what they lack. You also need to understand what they make do with.
The Most Overlooked Competitor: The Spreadsheet
The most commonly overlooked alternative solution to your product—and the alternative solution to the challenge that your prospects face—is the extreme DIY. The pen and paper. The custom, handcrafted Excel sheet.
You would be surprised how far people get with just a single Excel sheet that tracks everything they need to know and does all the math, all the data massaging. Excel is one of the most flexible tools when it comes to handling data, and people, through sheer necessity, have figured out how to use that particular tool.
It’s not a sexy tool. It’s not a fun tool. But it is likely your biggest competitor in most fields and industries that you can imagine.
I’ve seen Excel—or a spreadsheet tool just like it, could be Google Sheets, could be Airtable, something like this—being used in the construction industry, by medical professionals, by authors, hairdressers, lifeguards. The nature of data that needs to be segmented, sorted, collated, and graphed makes Excel the tool for almost anybody. And it’s so flexible that most business processes can at least partially be mapped into a spreadsheet.
Understanding the Job to Be Done
There’s something we don’t really think about much when we talk about product: the job to be done that your customer has. Everybody has a job. Everybody has some input data that needs to be transformed into output data.
People get a request for a proposal as input, and the output is either the project itself or some other kind of artifact. In between, they do their job. Some people get a list of invoices, and the output is bookkeeping. People get a script, and the output is a fully realized podcast episode. That’s how products work. That’s what a job to be done is and does.
To be able to do a job, people have to have a mental model of the process. They have to know exactly which steps to take to get from input to output. And in almost all cases, that model has to exist fully established in the mind of the person executing the work.
This means that when an organization uses software tools, they try to map as much of that mental model into the software tool as possible. The Excel sheet that contains all this data doesn’t just contain data. It contains an attempt at mapping an internal model of a process and the flow of data into a very flexible but not very customizable tool.
The Hidden Moat Around Spreadsheets
And here’s the thing: the act of mapping that model into a spreadsheet is extremely costly.
A spreadsheet that has been in a company, that has been tracking the internal process of that company, is extremely hard to replace. Not only does it contain all the historical data that’s relevant for internal analysis and that kind of stuff, but it contains the probably very painfully learned lessons of trying to both establish a process and map that process into a software tool.
It is the best they could do, and it is the result of a long journey of tiny experiments to make it work. We tend to forget the complexity that goes into configuring a simple spreadsheet.
And that’s what you’re competing with. You’re not competing with the spreadsheet. You’re competing with the months and years it took to get that spreadsheet to where it is. Unless your solution is significantly more maintainable and even more apt at mirroring the process that your prospect, your customer, has than what they already have, the cost of switching and setting up again a mapping of the internal process into your tool is likely going to be too high.
That’s always a big competitor. The spreadsheet, the homegrown DIY solution, is a big competitor with a big moat around it that is just time and pain that people spent to create it.
Learning from Failed Attempts
Which is why, when you look for alternative solutions, you very much have to investigate if people have actually attempted this transition prior—if people have attempted to solve the transition from homegrown tool to software project. And if that’s the case, why they failed.
This really differs between industries. In some industries, this spreadsheet, as complicated as it might be, is still replaceable with a software business. There’s still a chance that whatever you build is worth building because it does effectively improve on the existing solution for people.
But if existing DIY solutions are very complex due to the complexity of the underlying process that they map, then a lot of businesses likely thought they could have solved it in the past and failed.
So when I look for competing solutions, for alternative solutions in a space, I first look for the amount and intensity of DIY solutions. Then I look for attempts at solving this problem by building a business that have failed. I try to find the founders for whom this failure occurred and learn from them about the failure and the specific reasons they failed.
It’s a pretty significant thing to do when you’re building, or trying to verify the potential future existence of a business—to look for people who have failed and then investigate why that’s the case.
Sometimes there are websites like failory.com where you can find interviews of people in this field. You can ask experts in the field if there were any attempts, if they ever tried a solution for this and what that was called, so you can figure out the name of the founder and maybe reach out to them.
Most importantly, don’t assume that just because there is no current solution, you will find success with yours. A lot of people may have tried and failed because they assumed that their solution would be enough, where the resistance to moving from DIY to a hosted or software solution is too high.
Other Alternative Solutions to Investigate
Let me walk through the other alternatives you need to research.
Legacy Software: People may have had some software built in the early 2000s that had their business process mapped custom for them. It’s installed on their Windows XP machines, and they are and have and will keep using it for the foreseeable future. That’s just the way they’re going to run their business. Only once that software breaks will they ever think about finding a new solution.
Since you don’t control when that happens, these customers are not actually prospects of your business, at least not at this point. There’s a strong external reason for them to either opt into or out of your sales process, and you have no control over that.
Direct SaaS Competitors: Of course, you actively need to research the software-as-a-service space for actual competitors. When you do this, one of the most important things I would look at is not the specific feature set or UI or workflow. You obviously still have to look at that, but what I think is even more important is understanding what their positioning is and who they’re aiming at.
Successful companies will have understood that they’re best at serving a particular part of the market—a niche within the niche—with their software product. Look at how they talk and who they talk to, and how that reflects on the product they offer. What is the input data they work with? What is the output? What is the result that the product facilitates? What do they not offer?
How well or how hard is it to integrate this product with other solutions in the space? Is it easy or hard to export and import data? Do they have integrations into workflow systems, or do they try to keep all data internally? That gives you a lot of insight about what the expectations of the market are, and maybe also how expectations in this market differ from subgroup to subgroup.
Open Source Solutions: You’re building software. It’s likely that somebody in the late ’90s has built a maybe less functional but still pretty well-working version of that software before. Or currently, the thing that you want to build exists in seven different varieties for JavaScript as an example project that people build upon.
As much as operating them and maintaining them is costly in terms of time, they are free. And for a lot of people who struggle financially or who are not yet in the wonderful position to have a lot of budget, these free solutions are much preferable to a paid solution, even if the paid solution has a better workflow or integrations or interface. People will struggle through the weird, completely arbitrary interfaces of somebody’s pet software if that is freely available to them.
Agencies and Services: This one’s not very obvious, particularly because we think, in the software-as-a-service world, in terms of products. But there’s an actual agency or service or consultant that is tasked with the job, and that’s somebody you would replace.
If you think about your product in terms of a job to be done, you’re replacing a full job that somebody is executing with your software. And that might already be somewhat outsourced to an agency. An agency gets the input data, they’re expected to provide the output data, and how they do it is up to them.
Let me give you an example. In the writing world, people are wildly creative and vision-led. They’re very focused on the vision of the book, the stories, the narratives, the characters. But somebody needs to proofread that, somebody needs to edit that and make sure that consistency exists and spelling errors are removed. Usually that person is not the author themselves because they don’t concern themselves with that—it’s too technical. They also might not be capable of looking at their prose from a neutral, professional distance.
There are probably tools that do this, and you could likely build one that’s much faster and probably just as reliable as a person or agency. But that’s who you’re competing with. It’s going to be the “pay 100 bucks and you get it in two days” kind of agency. You’ll have to have an offering that is much faster, much cheaper, and more reliable to compete with the already pretty optimized processes that these agencies have.
The Status Quo: Finally, let me bring up the most painful alternative to a problem that we as founders have to live with, and that is doing nothing.
Some people will just keep doing what they’re doing and not buy any solution to their problem because, to them, living the pain is not a problem. Some people cannot handle the pain and will look for a solution. But a lot of people will say, “Yep, that’s just par for the course. That’s just part of the experience. You have to suffer through this so you can get to the final result.”
People will do nothing as an alternative solution to a problem. They’re just going to suffer through it, and that’s something you can’t really deal with. No amount of customer education will move people who have chosen to just deal with the pain and not deal with the problem.
What You Can Actually Deal With
So which of these can you work with?
I think the best ones to deal with are people who are using legacy or incumbent solutions, where you can build something better for them if you understand that process perfectly and map it directly into your product.
You can deal well with people who are using direct competitors—you just have to find the right niche that is currently underserved or unserved.
You can also deal well with people who are using general tools like spreadsheets for mapping processes that are not extremely complicated. The more complicated it gets, the harder it will be to get people to move away from their DIY solutions.
The Insights You’ll Gain
Ultimately, understanding all of these alternative solutions gives you a lot of insight into who your actual competitor is, and that’s often not who you think it is.
You’ll see a lot about price anchors and willingness to pay or unwillingness to pay. If everybody in your field uses an open-source solution and there is no SaaS that could ever exist in this field even though people tried, that might not be a good industry to be in.
You’ll see switching costs and friction, maybe even from stories of people who’ve done this in the past. And in investigating all of this, you’ll find things like feature gaps and market gaps. A feature gap is something you can exploit to serve a market that’s underserved. A market gap is something where, even with an existing feature set that other tools have, you can replicate and serve them better than anybody else.
Most importantly, you will understand why people stick with worse solutions. Why do they stick with something that doesn’t work as well as something that could?
There are probably underlying reasons that you might not be aware of, and you’ll figure this out by looking.
The biggest mistake? Only looking at direct SaaS competitors while ignoring the 60% of your market that might just be using spreadsheets and Slack.
Don’t make that mistake. Investigate the alternatives, understand what you’re really competing against, and you’ll have a much clearer picture of whether your idea can actually succeed in the market.
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