First came the arrival of low code and no code, which allowed developers to write software without using complex programming languages. Fast forward to today, when AI enables anyone to code and develop their own tools, meaning businesses might no longer need to purchase outside software. Many people are viewing AI as hailing the demise of the SaaS industry as we know it.
But let’s remember one thing – the key to a SaaS startup’s success doesn’t lie in product alone. In my view, the most critical factor is whether founders can understand the user better than the user understands themselves, identify their needs, and define the right problems. AI can’t replace those traits, which make up the core of true entrepreneur.
So how can we understand user needs? For many founders, the first go-to is conducting user interviews. However, there are several challenges to this approach: can users clearly and accurately express their needs? What if a hundred different users express a hundred different needs? And how do we select which one to pursue or prioritize?
To address this topic, I want to share the story of iLife.
iLife: A one-stop platform for the insurance industry
In 2020, Cherubic invested in iLife, a SaaS startup focused on the US insurance industry. The startup’s aim was to create a “One-Stop” operating system for insurance agents. Previously, an insurance agent would need to use nearly fourteen different SaaS tools throughout the customer acquisition, interaction, and transaction processes, making the workflow complex and fragmented. iLife’s product integrates the previously scattered sales tools and workflows for quoting, CRM, payments, and other items relevant to the insurance industry.
In January of this year, iLife announced the completion of a $17 million Series A funding round.
Before officially launching the company, iLife’s founder, Nelson Lee, interviewed nearly two hundred insurance agents to understand what kind of product the insurance industry needed. However, he had an unexpected finding: most customers were dissatisfied with the existing solutions on the market, but they couldn’t clearly articulate what kind of product they wanted.
As Steve Jobs famously said, “People don’t know what they want until you show it to them.” Jobs’ statement tracks – if before the iPhone came out you asked people what kind of phone they wanted, they might just answer “A better Nokia.”
A true entrepreneur, Nelson knows that when people are dissatisfied with the status quo but don’t know how to change it, it means opportunity. If someone out there can describe a specific solution now, that means the market is already either too crowded or too small to allow any new players. But if all anyone can come up with is vague solutions, then that person with a specific solution is probably the first to get there.
Understand the user better than themselves by asking the right questions
To clarify, saying users might not know what they want doesn’t mean customer interviews aren’t important. But instead of focusing on what customers say they want, the key is to focus on the “intent” behind their words.
Nelson shares the example of the biggest pain point many users expressed during the interviews: the need to constantly switch between different CRM-related tools like Salesforce, Hubspot, Microsoft Outlook, etc. They wanted iLife to build a feature that would save them the time of software-switching by speeding up the process of uploading and downloading customer lists.
Many founders might stop with the answer that iLife received and start working on a solution to fulfill them. But Nelson and his team took it a step further by asking, Why did they want this feature? This led them to discover the fundamental pain point behind the user’s request was the wish to integrate all data into a single platform, effectively eliminating the need to switch between multiple tools. This insight enabled iLife to go beyond the specific feature initially proposed in the interviews and develop a platform integrating all CRM capabilities, which became their current core product.
As Nelson puts it: “If we develop solely based on the functions users ask for, the best product will never come into existence.”
Fall in love with the problem first, then consider the solutions
My purpose in sharing iLife’s story is to remind founders that rather than rushing to find a solution and look for where it’s in demand, it’s vital to spend the time to identify the right problem. Otherwise, it’s all too easy to fall into the trap of solving “false problems”. That’s why every time I talk with founders, I pay more attention to whether they are targeting a sufficiently large market and what pain points they aim to solve. Because when the correct problem is identified, it opens up opportunities to find solutions that are yet to be discovered, easier to market, and better overall.
Go find the problems that fascinate you. It will help you to bust out of the box and find unique rewards.
