Lately, I’ve been paying an excessive amount of attention to SparkToro.
Sparktoro is a B2B SaaS company founded by Rand Fiskin and Casey Henry. You may recognize Rand’s name from Moz, where he was formerly CEO. He’s kind of a Big Deal. Casey, too, has an impressive background at Moz, Wistia, and Hubspot.
I’ve been really intrigued by Rand and Casey’s recent work for a few reasons. 🤔
First, they took a super interesting approach to funding.💰
Nearly two years ago, Rand and Casey raised $1.3 million from angel investors. And—here’s where it gets interesting—these investors put money in an LLC that pays the investors back from SparkToro. Meaning, the investors own distribution units and participate in profit sharing. (👂 Hear Rand talk about this with IndieHacker founder, Courtland Allen. )
P.S. They still have nearly half that initial $1.3 million amount.
This is awesome, but it’s not all.
Rand has also done a ridiculous amount of customer research. 🔍
Through and through, SparkToro is a product that’s built for customers, based on customer input.
Now, if you’ve followed us for a bit, you know customer research is something we’re big fans of, and for good reason—it’s how you build an incredible product. 🚀
Here are some highlights from Rand’s research:
- Before building anything, Rand interviewed a lot of potential customers 1-on-1
- Pre-launch, he built a 30k member early access list and surveyed 4.5k of them
- He spent two days manually combing through those responses to confirm his target customers
- In beta, he sent 400+ invites, BY HAND y’all, to those target customers
- 70-80% of those invites used the product and gave feedback
- By the time he publicly launched, Sparktoro already had 200 customers
And by the end of August 2020 (in the midst of a pandemic and shifting economy!), Rand was already a stone's throw away from profitability, with ~$29k MRR for August...just $6k away from a profitable ~$35k MRR.
How’s that for incredible??
And while stuff like experience and luck and networking do all play roles here, customer research plays a bigger, fatter, whopper-sized role. Research impacted his positioning, promotion strategy, funnel, and product improvements. If you take it out, Rand wouldn’t have seen near the success he has.
Stealing from Rand’s playbook 📚
Okay, stealing isn’t the right word. More like Rand has cracked his playbook open and we’re helping share it.
A while back, we chatted with Rand about the specifics of his research, and we have a load of details in our upcoming piece. But I had to trim a few juicy bits out for the sake of length. 😭 Because I’m reluctant to straight-up trash those bits (what, me? word hoarder? no way), I’m delivering them to your inbox today. 😏
See, one of the things that’s too good to let go is this: you don’t have to be Rand with 436,000 Twitter followers to research customers the way he did. In fact, if you’re in the very early stages of building a company, you already share some of the ingredients he had.
In a conversation with Claire Suellentrop and Gia Laudi from Forget the Funnel, Rand talks about how the just-starting-out phase lights a fire under your pants. He confesses it’s, “easier to focus on customer need in early stages. You have inherent humility and fear...it gives you the panic you need to hone in on the pain point.”
Fear, humility, panic. Check. But where do you go from there? 😅
Well, you take those ingredients and follow his recipe—surveys, interviews, and quantitative data. On the Sparktoro blog, Rand provided a helpful breakdown of what any company can uncover with these customer research tools. 👇
A short and sweet summary is:
- Surveys help you reach a large number of people and are best for breadth
- Interviews help you go deep; they add color and depth to survey findings
- Behavioral data shows what people are doing (vs. what they’re saying)
- Analytics give additional context for everything above
And there’s actually another one Rand doesn’t have on this chart but really leans into: relationships. Rand excels at building relationships, and some of those provided perspective even interviews don’t touch.
Layer on all of these, and you have a helluva base recipe for building a killer SaaS product.
Does this research stuff really work?
“Hellllooooo,” some of you might be thinking, “ever heard of survivorship bias?” Yeah, I know it. And I wouldn’t put this out there if I thought only Rand succeeded from this approach.
From interviewing Krit’s clients, I know customer research played a massive role in GreyNoise’s and B3i Analytics’s growth. From talking with Hiten Shah, I know it’s worked for him, too (several times actually). And from watching startups for years, I know it’s worked for Asia Matos and the startups she partners with, as well as giants like Casper and Glossier. It’s also more or less a hallmark of every product-led company.
Suffice it to say Rand’s success with customer research isn’t a fluke. It’s a proven way to de-risk building a SaaS product and ensure your market loves it when you launch.
Here are a few research things you could do this week:
- Define: Write down who your potential customers are, what you know about them, and where you think they hang out online.
- Listen: Go to those online places and listen to what they’re saying. What keeps coming up? What do they complain about? What do they rave about? Record all this raw qualitative data in the customer’s voice. (Spreadsheets, Google docs, or airtable are all great for this.)
- List: Create a list of people to talk to and build relationships with. Include potential customers, niche experts...anyone who’s deep in the market you’re eyeing or part of your audience.
- Connect: Start hanging out with all these people. Follow them on Twitter, engage with their posts, read up on what they share, hang out in their Slack communities. (Do NOT spam them.)
- Interview: Identify some of your biggest knowledge gaps, and pick 5-10 people to directly ask for an interview.
Fun fact: We’re doing all these bullet points right now for Krit’s audience!
We have more on customer research, de-risking your business in a recession, and other great stuff (like how Rand worked less than 50 hours a week building SparkToro) coming your way soon. Stay tuned. 😁