Constructing AI-Powered SaaS Companies – O’Reilly

In preparation for our upcoming Constructing SaaS Companies with AI Superstream, I sat down with occasion chair Jason Gilmore to debate the complete lifecycle of an AI-powered SaaS product, from preliminary ideation all the way in which to a profitable launch.

Jason Gilmore is CTO of Adalo, a well-liked no-code cell app builder. A technologist and software program product chief with over 25 years of trade expertise, Jason’s spent 13 years constructing SaaS merchandise at corporations together with Gatherit.co and the extremely profitable Nomorobo and because the CEO of the coding training platform Treehouse. He’s additionally a veteran of Xenon Companions, the place he leads technical M&A due diligence and advises their portfolio of SaaS corporations on AI adoption, and beforehand served as CTO of DreamFactory.

Right here’s our interview, edited for readability and size.

Ideation

Michelle Smith: As a SaaS developer, what are the primary steps you are taking when starting the ideation course of for a brand new product?

Jason Gilmore: I all the time begin by discovering a reputation that I really like, shopping for the area, after which making a emblem. As soon as I’ve carried out this, I really feel like the concept is turning into actual. This was once a torturous course of, however due to AI, my course of is now fairly easy. I generate product names by asking ChatGPT for 10 candidates, refining them till I’ve three most popular choices, after which checking availability by way of Lean Area Search. I often use ChatGPT to assist with logos, however apparently, whereas I used to be utilizing Cursor, the favored AI-powered coding editor, it routinely created a emblem for ContributorIQ because it arrange the touchdown web page. I hadn’t even requested for one, nevertheless it regarded nice, so I went with it!

As soon as I nail down a reputation and emblem, I’ll return to ChatGPT but once more and use it like a rubber duck. In fact, I’m not doing any coding or debugging at this level; as an alternative, I’m simply utilizing ChatGPT as a sounding board, asking it to develop upon my thought, poke holes in it, and so forth.

Subsequent, I’ll create a GitHub repository and begin including points (mainly function requests). I’ve used the GitHub kanban board prior to now and have additionally been a heavy Trello consumer at varied occasions. Nonetheless, nowadays I maintain it easy and create GitHub points till I really feel I’ve sufficient to represent an MVP. Then I’ll use the GitHub MCP server together with Claude Code or Cursor to drag and implement these points.

Earlier than committing sources to improvement, how do you strategy preliminary validation to make sure the market alternative exists for a brand new SaaS product?

The reply to this query is straightforward. I don’t. If the issue is sufficiently annoying that I ultimately can’t resist constructing one thing to resolve it, then that’s sufficient for me. That mentioned, as soon as I’ve an MVP, I’ll begin telling all people I learn about it and actually attempt to decrease the barrier related to getting began.

As an illustration, if somebody expresses curiosity in utilizing SecurityBot, I’ll proactively volunteer to assist them validate their web site by way of DNS. If somebody needs to offer ContributorIQ a strive, I’ll ask to fulfill with the individual operating due diligence to make sure they’ll efficiently hook up with their GitHub group. It’s in these early phases of buyer acquisition you can decide what customers really need reasonably than merely making an attempt to duplicate what opponents are doing.

Execution, Instruments, and Code

When deciding to construct a brand new SaaS product, what’s essentially the most essential strategic query you search to reply earlier than writing any code?

Personally, the query I ask myself is whether or not I significantly imagine I’ll use the product daily. If the reply is an adamant sure, then I proceed. If it’s something however a “heck sure,” then I’ve discovered that it’s greatest to take a seat on the concept for a couple of extra weeks earlier than investing any further time.

Which instruments do you advocate, and why?

I often use a variety of totally different instruments for constructing software program, together with Cursor and Claude Code for AI-assisted coding and improvement, Laravel Forge for deployment, Cloudflare and SecurityBot for safety, and Google Analytics and Search Console for analytics. Take a look at my complete listing on the finish of this text for extra particulars.

How do you precisely measure the success and adoption of your product? What key metrics (KPIs) do you prioritize monitoring instantly after launch?

One thing I’ve discovered the exhausting manner is that being in such a rush to launch a product implies that you neglect so as to add an acceptable degree of monitoring. I’m not essentially referring to monitoring within the sense of Sentry or Datadog; reasonably I’m referring to easily realizing when any person begins a trial.

At a minimal, it is best to add a restricted admin dashboard to your SaaS which shows varied KPIs akin to who began a trial and when. You must also have the ability to shortly decide when trialers attain a key milestone. As an illustration, at SecurityBot, that key milestone is connecting their Slack, as a result of as soon as that occurs, trialers will periodically obtain helpful notifications proper within the very place the place they spend a big a part of their day.

On construct versus purchase: What’s your essential resolution framework for selecting to make use of prebuilt frameworks and third-party platforms?

I feel it’s an amazing mistake to attempt to reinvent the wheel. Frameworks and libraries akin to Ruby on Rails, Laravel, Django, and others are what’s generally known as “batteries included,” that means they supply every part 99% of what builders require to construct a tremendously helpful, scalable, and maintainable software program product. In case your intention is to construct a profitable SaaS product, then it is best to focus solely on constructing a high quality product and buying clients, interval. The rest is simply enjoying with computer systems. And there’s nothing mistaken with enjoying with computer systems! It’s my favourite factor to do on the planet. Nevertheless it’s not the identical factor as constructing a software program enterprise.

High quality and Safety

What distinctive safety and high quality assurance (QA) protocols does an clever SaaS product require that a normal, non-AI utility doesn’t?

The 2 most vital are immediate administration and output monitoring. To attenuate response drift (the LLM’s tendency for inventive, inconsistent interpretation), it is best to rigorously take a look at and tightly outline the LLM immediate. This should be repeatedly examined towards numerous datasets to make sure constant and desired conduct.

Builders ought to look past basic OpenAI APIs and contemplate specialised customized fashions (like the two.2 million out there on Hugging Face) which can be higher suited to particular duties.

To make sure high quality and forestall hurt, you’ll additionally have to proactively monitor and overview the LLM’s output (notably when it’s low-confidence or doubtlessly delicate) and repeatedly refine and tune the immediate. Maintaining a human within the loop (HITL) is crucial: At Nomorobo, for example, we manually reviewed low-confidence robocall categorizations to enhance the mannequin. At Adalo, we’ve reviewed hundreds of app-building immediate responses to make sure desired outcomes.

Critically, companies should transparently talk to customers precisely how their knowledge and mental property are getting used, notably earlier than passing it to a third-party LLM service.

It’s additionally vital to distinguish when AI is really needed. Typically, AI can be utilized most successfully to improve non-AI instruments—for example, utilizing an LLM to generate advanced, difficult-to-write scripts or reviewing schemas for database optimization—reasonably than making an attempt to resolve the core drawback with a big, basic mannequin.

Advertising, Launch, and Enterprise Success

What are your prime two methods for launching a product?

For early-stage development, founders ought to focus intently on two core methods: prioritizing Search engine optimisation and proactively selling the product.

I like to recommend prioritizing Search engine optimisation early and aggressively. At the moment, the vast majority of natural visitors nonetheless comes from conventional search outcomes, not AI-generated solutions (GEO). We’re nonetheless definitely seeing GEO being attributed to a bigger share of tourists. So whilst you ought to give attention to Google natural visitors, I additionally recommend spending time tuning your advertising pages for AI crawlers.

Implement a feature-to-landing web page workflow: For SecurityBot, almost all visitors was pushed by making a devoted Search engine optimisation-friendly touchdown web page for each new function. AI instruments like Cursor can automate the creation of those pages, together with producing needed property like screenshots and promotional tweets. Touchdown pages for options like Damaged Hyperlink Checker and PageSpeed Insights had been 100% created by Cursor and Sonnet 4.5.

Many technical founders hesitate to advertise their work, however visibility is essential. Overcome founder shyness: Be vocal about your product and get it on the market. Share your product instantly with pals, colleagues, and former clients to begin gaining early traction and suggestions.

Mastering these two methods is greater than sufficient to maintain your workforce busy and successfully drive preliminary development.

On scaling: What’s the one largest operational hurdle when making an attempt to scale what you are promoting from a handful of customers to a big, paying consumer base?

I’ve had the chance to see enterprise scaling hurdles firsthand, not solely at Xenon but additionally in the course of the M&A course of, in addition to inside my very own initiatives. The most important operational hurdle, by far, is sustaining give attention to buyer acquisition. It’s so tempting to construct “only one extra function” as an alternative of making one other video or writing a weblog put up.

Conversely, for these corporations that do attain a measure of product-market match, my commentary is they have an inclination to focus far an excessive amount of on buyer acquisition at the price of buyer retention. There’s an idea in subscription-based companies generally known as “max MRR,” which identifies the purpose at which what you are promoting will merely cease rising as soon as income misplaced attributable to buyer churn reaches an absolute greenback level that erases any income positive aspects made by way of buyer acquisition. In brief, at a sure level, it is advisable to give attention to each, and that’s tough to do.

We’ll finish with monetization. What’s essentially the most profitable and dependable monetization technique you’ve seen for a brand new AI-powered SaaS function? Is it usage-based, feature-gated, or a premium tier?

We’re definitely seeing usage-based monetization fashions take off nowadays, and I feel for sure kinds of companies, that makes loads of sense. Nonetheless, my recommendation to these making an attempt to construct a brand new SaaS enterprise is to maintain your subscription mannequin as easy and comprehensible as potential to be able to maximize buyer acquisition alternatives.

Thanks, Jason.

Appendix: Really useful Instruments