The 5PM framework for evaluating early-stage SaaS ideas

Executive overview

Most founders pitch ideas when they should be pitching problems. The 5PM framework reframes idea evaluation around six criteria — in order of importance — to expose weak assumptions before any code is written.

The framework targets businesses aiming for seven figures of ARR, not lifestyle micro-SaaS. Each criterion is a data point, not a binary pass/fail gate.

The core insight: start with the problem, not the solution — your idea is just one of many ways to solve it.

The six criteria (in order of importance)

1. Problem — Is it important? Is it urgent? Think of the importance/urgency 2x2: the best ideas sit in the high-importance, high-urgency quadrant. Start every pitch by describing the problem, not the product.
2. Purchaser — Does this buyer adopt new technology? Do they have the willingness and ability to pay? Classify them: consumer, aspirational (prosumer), B2B, or enterprise. Each has different churn risk and sales complexity.
3. Pricing model — Can this support a recurring subscription? Estimate average revenue per account. Know whether you're targeting monthly, annual, or revenue-share pricing.
4. Market — Total reachable market (not addressable). Ease of reaching customers. Market stage: early, growing, mature, or declining. Level of competition.
5. Product-founder fit — What gives you a unique right to build this? Tech chops, marketing chops, audience, network, or domain expertise. You don't need to love the problem, but you need an honest answer.
6. Pain to validate — How hard is it to run a lightweight MVP or have 10–20 validation conversations before writing serious code?

Example 1: NPS tool for applicant tracking systems

The idea: an NPS integration for ATS platforms (e.g. Job Adder), targeting HR and people-ops teams. One existing competitor charges $800/month.

• Problem: HR teams want NPS scores from job applicants; no cheap, well-integrated option exists. Likely important if NPS is a tracked KPI — validate with 5–10 HR professionals first.
• Purchaser: HR teams are B2B, have budgets, and are reasonably tech-adoptive. Not a hobby or aspirational market.
• Pricing model: subscription makes sense; recurring NPS collection means ongoing value. ARPA of $200–$400/month is viable.
• Market: HR tech is large, accessible via LinkedIn and Slack groups, and growing. Not bleeding-edge early — an ecosystem already exists, which reduces risk.
• Product-founder fit: depends entirely on the specific founder's HR network and domain access.
• Pain to validate: low. Find Job Adder customers via BuiltWith or Datanyze, reach out with "no pitch" research calls. MVP can be a hardcoded email trigger — no admin console needed.
• Verdict: promising wedge. Not a standalone seven-figure business on Job Adder alone, but a foothold to expand across multiple ATS platforms.

Example 2: Parking space rental software for independent airport hotels

The idea: software enabling independently owned airport hotels to rent unused parking spots to air travelers.

• Problem: assumes hotels want to monetise spare parking — not yet validated. Risk that it's not on their radar as a problem at all.
• Urgency: low. Making more money is always appealing, but this competes with more pressing operational priorities like staffing and room upkeep.
• Purchaser: independent hotel owners are less tech-adoptive than, say, developers. Sole proprietors may be price-sensitive; pricing should be usage-based (per spot rented) to reduce friction.
• Market: potentially small. Most visible airport hotels are chains (Marriott, Hyatt), not independents. Trade events skew general hospitality, not airport-specific.
• Reach: harder than HR — no obvious online concentration. Trade shows and magazines exist but reaching airport hotel owners specifically adds cost.
• Pain to validate: high. Hotels need physical signage and operational buy-in before a single booking occurs. MVP is a responsive web app plus Stripe, but the hotel-side setup is the real friction.
• Verdict: weaker than example 1. More unknowns, harder to reach, lower urgency, and a two-sided marketplace problem lurks beneath the surface.

Using the framework in practice

• No scoring system — the framework surfaces pros, cons, and open questions, not a numeric verdict.
• Each criterion is a data point, not a dealbreaker.
• The best next step is always more conversations, not more code.
• Platform risk (e.g. building on a single ATS) deserves its own checkpoint — not yet formalised in v1 of the framework.
• The full framework doc is available via the Startups for the Rest of Us email list at startupsfortherestofus.com.