The road to successful SaaS application development is not only paved with failures but also pivots.
Pivot is the process when a product transitions from its original vision to a different objective. Generally, factors like user feedback, poor market fit, or quickly evolving trends lead to this course correction.
Some of the most successful SaaS ventures we know didn’t start to be what they are now. The key examples in this regard are:
- Instagram — started as a location-based app called Burbn
- Notion — envisioned to be a no-code development platform for non-technical users
- Slack — originally an online game that failed to take off
In this article, we will be discussing the case studies of these companies. We will explore their original vision, the reasons that led to the change, and the process they undertook to make it successful.
Instagram: From Location-Based App to Visual Social Media Giant
Instagram wasn’t always Instagram. It began as a location-based HTML 5 application called Burbn.
Founded by Mike Krieger and Kevin Systrom and launched in 2010, Burbn was a check-in app that integrated social networking with location tagging. The app had various features like planning meetups, points for hanging out with friends, and, most importantly, sharing photos.
At that time, the market had similar products (like Foursquare) that were built with a much more robust tech stack. Owing to this, Burbn found it hard to differentiate itself and gain the attention it needed to become successful.
User Behavior Analysis and Key Findings
Burbn’s co-founders focused on engaging with the early adopters from the get-go and keenly observed their behavior. It revealed some unexpected insights that shaped Instagram into what it is today.
Finding #1 — Heavy Usage of the Photo-Sharing Feature
Much to the duo’s surprise, users were crazily interested in the photo-sharing feature of Burbn instead of check-ins. It was also observed that due to the clutter of all the other extra features, navigating the app was much more difficult for initial adopters.
These insights revealed the true potential of the platform.
Finding #2 — Leveraging a Market Gap
While competing apps with check-in features existed, there was a silver lining too.
Apps like Foursquare and Hipstamatic had excellent features, but their photo-sharing option was not intuitive - the users had to go through complex hoops to publish them. Similarly, Facebook was the main competitor in the social aspect. But its iOS app didn’t have a great image-sharing feature either. Facebook positioned itself mainly as a social networking site/app.
Systrom and Krieger decided to utilize this market gap and sneak in with a seamless app with sharing and social networking features.
The Pivot and the Process
A clear understanding of user preferences and behavior led to the transformation of Burbn into Instagram.
“We decided that if we were going to build a company, we wanted to focus on being really good at one thing.”
— Kevin Systrom, Co-founder
Focusing on What Matters
The idea was to focus on only the features that users interacted with most. Consequently, the programmers cut out everything except the photo sharing, commenting, and liking features.
The entrepreneur duo also came up with the name Instagram — a combination of the words “instant camera” and “telegram.”
Introduction of Image Filters
As the team doubled down on the core features, they also introduced filters and photo editing to enhance the user experience. The app made regular people feel like professional photographers.
Each user now had a chance to play around and explore their creativity and artistic flair. It helped Instagram develop a simple unique selling point (USP) that put it leagues ahead of its competitors.
Mobile-First Approach
After the pivoting decision, the team focused especially on enhancing the mobile experience of the cloud-based SaaS.
The developers adopted a mobile-first approach, and that meant transforming the app to give users the best handheld experience compared to alternatives. Capturing, editing, commenting, liking, and uploading photos was made so simple that everyone could do it with a few taps.
As mobile application usage was an emerging trend, the engineers rode the tide to establish a strong position in the category.
Iterative Development
Instagram implemented an iterative and agile approach to roll out newer versions. The co-founders continually collected user feedback and used it to better develop features and functionality.
Ultimately, the first version of Instagram was released on the App Store on October 6, 2010.
Outcomes and Success
Entering the market at the right time, on the right medium, and with the right features led to the rapid adoption of Instagram. In less than 24 hours, the app welcomed 25000 users — which gradually rose to 1 million users in just a week.
“We’re not a check-in app; we’re a life-sharing app.”
— Systrom
With the introduction of features like hashtags and photo tagging, the platform saw its user base jump to 5 million users in June 2011 and then to 10 million users in September of the same year.
This explosive growth caught the eye of the big shots like Twitter and Facebook. While Jack Dorsey — the co-founder of Twitter (now X) — offered $500 million in stock for the app, Kevin Systrom turned it down.
Facebook saw this interest in and growth of Instagram as a threat. It panicked and offered to acquire it for $1 million in stock and cash. Ultimately, the founders went ahead with the acquisition and wrote the story of one of the most impressive buyouts in the history of mobile applications.
Notion: Redefining Productivity Through User-Centric Development
Notion, the app caters to over 35 million users across various platforms, is undoubtedly one of the most interesting SaaS case studies.
It is valued at roughly $10 billion and gearing up to compete against collaboration softwares like Microsoft 365 and Google Workspace.
However, that wasn’t always the case.
Founded by Ivan Zhao and Simon Last, the original concept was to build a no-code cloud-based SaaS that would allow everyday users to build apps. Their approach was to break up SaaS development into its basic building blocks and let people access them to experiment and create.
The vision didn’t gain the traction it needed to make the app successful. With the investors breathing down their necks, the founders had to decide whether to wrap up the project for good or rebuild it from scratch.
Notion’s Community Engagement and Findings
“They found a small group of really die-hard fans that carried the product with them. They looked for ways to cultivate the community at every step along the way.”
This is what Mike Vernal, Investor and Product Engineer, had to say about Notion’s approach to community engagement.
Zhao, while handling the programming responsibilities, gave great care and attention to community support from the beginning. He believed it helped him improve the app consistently. He would also interact directly with early adopters on Twitter — a practice that would go a long way in building a highly successful SaaS.
Thanks to this level of audience interaction, Notion’s founders realized quickly that the vision they had in mind was not going to stick. They had to learn the hard way that the early users — mostly their friends — didn’t want a software-building app.
Finding #1: Poor Product-Market Fit
“It didn’t work because the product was not understandable for most people. It was more for nerdy tech crowds … Nobody wakes up wanting to make software.”
— Ivan Zhao on the first version of the app.
User feedback helped them learn that most non-tech people didn’t want to spend time creating new apps but instead wanted software that would make their work easier. This poor fit led to higher churn rates and lower retention in the first 3-4 years. But that wasn’t the only issue.
Finding #2: Recurring Bugs and Crashes
Early versions of Notion were built using a Google Web Framework known as Web Component: the HTML elements that were used to create web applications, but this approach resulted in constant crashes and people losing their content.
By the time the co-founders moved towards more dependable React Libraries, they were at the end of their investment rope. Their key team members were leaving, and running the business was becoming more and more challenging.
At this point, in a last-ditch effort, Zhao and Last decided to sublet their places in San Francisco, go somewhere cheaper (Kyoto, Japan), and try to reset everything in the hopes of a revival.
Their decision proved beneficial and led to a highly profitable pivot that is often cited as an example of perseverance in the world of SaaS application development.
The Pivot and the Process
“We focused too much on what we wanted to bring to the world. We needed to pay attention to what the world wanted from us.”
— Ivan Zhao
Permutations — A Case Study in Iterative Programming
To pivot efficiently, the duo implemented a homegrown technique Zhao called “permutations”. This technique focused heavily on even the tiniest aspects of the UI. Every single feature of Notion’s appearance underwent rigorous and iterative programming until the optimal solution was reached.
Here’s an example of Ivan Zhaos iterative work process:
The team had already implemented stable tech stacks, and the focus of these permutations was to declutter the product and give users only the features they desired most.
Notion 1.0 — 2016
After a year of grinding work in Kyoto, Notion 1.0 was launched in 2016.
The latest version focused on the following key features:
- Seamless note-taking, tables, calendars, knowledgebase, wikis, lists, etc
- Community and feedback-driven programming
- Editor and collaboration features that allowed early adopters to create templates accessible to all
Up until this point, Notion was free for all. The goal was to build a loyal user base first. The $150,000 loan from Zhao’s mom kept the SaaS development company running.
Notion 2.0 — 2018
The founding duo doesn’t believe Notion 1.0 to be the “first version.” To them, Notion 2.0 (released in 2018) is much closer to the product people wanted. The stand-out features introduced in this variant were:
- Highly customizable databases that let users manage large amounts of data — in addition to features like tables, lists, galleries, calendars, and Kanban boards
- More focus on pre-built templates for project management and personal planning use cases
- Introduction of dedicated apps for iOS and Android that replicated the desktop experience closely
- More flexible pricing with a free tier that came with lots of features to expand the user base
This version enjoyed immense growth and success not only because of its features but also the founder’s unique strategy to market it.
Zhao and Last got the app featured on Product Hunt — a community site that asks users to vote on new applications. In addition, the co-founders asked the famous entrepreneur Naval Ravikant to ask his huge list of Twitter followers to vote for their SaaS. Consequently, Notion became the number one application for March on Product Hunt.
Outcomes and Success
Notion is one of the best examples of SaaS that has captured the productivity, project management, planning, and collaboration market.
Most recent figures estimate the tool to have a $10 billion valuation — with entrepreneurs, freelancers, enterprises, and small businesses using it for a wide range of applications. Zhao predicts that within a decade, the company might compete with every software as it gradually becomes capable of making any tool or integrating with any application.
Notion owes its immense success to a keen focus on community engagement. Keeping in line with this philosophy, Notion has also introduced an Ambassador Program. This feature aims to bring together the most creative and highly passionate users to teach how to use Notion to others.
The Ambassadors are responsible for providing support to new users through playbooks, resources, best practices, and collaboration.
Slack: Byproduct of a Failed Online Game
One of the most unusual SaaS examples when it comes to pivoting, Slack came about as a byproduct of a failed online game.
When the founders, Stewart Butterfield and Cal Henderson, built the game development company, Tiny Speck, their goal was to create a game called Glitch and not an enterprise-level communication tool.
The game was freely accessible with in-game purchases, and a subscription-based version down the road. So, how exactly did Slack happen, and what were the factors that led to it?
Findings Leading to the Pivot
Glitch went live on September 27, 2011, and shut down more than a year later on December 9, 2012.
The game failed to attract a large enough audience to make the venture profitable for the founders and investors. Butterfield realized that it was not as exciting as they planned it to be.
Finding #1 — Outdated Tech
Firstly, the game’s performance was stifled by Flash, an Adobe development environment that was already on its last legs by the end of 2010s. The newer games had already ditched it for a more stable and modern experience.
”We had spent a lot of money; we had a big team; we had no real avenue to port to mobile, or have a good and powerful mobile component.”
— Butterfield
This outdated technology made the game perform poorly on mobile devices. Butterfield admitted it was time to either close the project or make something new out of it.
Finding #2 — An Unusual Revelation
Interestingly enough, Tiny Speck’s team was located in different regions across North America. They needed a fast, efficient tool that kept them connected for real-time conversations. The team’s engineers developed an internal messaging app to make that possible.
When the gaming venture failed, Butterfield’s mind lit up with another idea. Despite the initial cynicism of some investors, he believed that this homegrown communication tool had the legs to go the distance.
“So I’m like Stewart, do you really want to run an enterprise software company, that seems like not you? He’s like no, I think this product is good, I think it would work.”
— Ben Horowitz, a Glitch/Slack investor, on how Butterfield responded to his skepticism.
The Pivot and the Process
Butterfield had been through these circumstances before.
While working on a similar multiplayer game project called “Game Neverending,” he had pivoted to focus on a photo-sharing platform created by the game devs. Eventually, this platform became known as Flickr — a highly popular photo app later acquired by Yahoo!.
When he decided to transition from Glitch to Slack, he already had the necessary experience to create a practical strategy that made Slack a household name in enterprise communication.
Reliance on Word-of-mouth Marketing
Slack intelligently used early adopters like friends and acquaintances in different companies to let them test the software before the official launch.
They ensured that the product was at the top of its game so that the users spread a good word organically. It created a buzz in the relevant circles, and many executive decision-makers looked forward to the official launch.
This strategy primed the market, and users flocked upon the release.
Earning Investor’s Confidence
Butterfield knew that even though some patrons were not too keen on shifting towards Slack, they still trusted in his capabilities as a leader. He had a network of financiers around him that many early-stage startups were envious of.
Consequently, thanks to his goodwill, he managed to convince the big-shot Silicon Valley investors like a16z to put their weight behind this “corporate email killer” idea.
Naturally, this meant that engineers could now undertake the SaaS application development process without any financial limitations and develop a near-perfect solution.
Capitalizing on the Market Trend
Slack launched during the emergence of two key trends:
- The absence of a sleek and seamless team communication tool
- The rise of remote working models around the world
By being present in the right market at the right time, Slack quickly became the go-to collaboration and messaging tool for many organizations. But it wasn’t mere luck. The user experience Slack offered put it on the top shelf with practically no competitors to even consider.
Focusing on the User Experience
The MetaLab design team responsible for creating the first version of Slack focused on making the app fun for the users. They used bright colors, engaging interfaces, and emojis. It helped break the boring image etched in the minds of users when it came to business communication tools for so long.
Here’s what the interface of the first release looked like:
Slack followed this approach for later iterations as well — and eventually created a memorable brand in the minds of its users.
Outcomes and Success
Slack was launched officially by the end of 2013 and reported 15000 daily active users in 8 short months. By March 2016, the number of active daily users reached a staggering 2 million.
Simply put, this tool redefined the future of enterprise messaging and set a new standard. Small and large enterprises, including names like Airbnb, Oracle, and IBM, use Slack today.
From failing to gain enough users in its Glitch days to undergo a $27.7 billion acquisition by Salesforce, it is one of the best SaaS examples, proving that it is not always necessary to have the right idea from the start.
Summing it Up
The examples of Instagram, Notion, and Slack teach us that it is never too late to reconsider and correct your approach. But you must have access to authentic insights to inform your decisions through community engagement, user behavior analysis, and an attitude of self-honesty.
At VeryCreatives, we are firm believers in this philosophy.
Owing to our expertise in MVP design and development, we have helped various projects transition to become a more profitable version of themselves. Even if you’re just working with an idea, we can strategize the entire project lifecycle that leads you to a successful launch.
Our team awaits to hear your thoughts about your next big SaaS product!
