At the end of last month I turned 26. Although I’ve been building websites from a young age, my entrepreneurial career didn’t officially start until I was a college student at the age of 19.
From that time until now, I’ve started 3 companies, created and sold 6 different products, generating about $250,000 worth of sales (I don’t think that’s a very impressive number, but it’s something; it actually sounds cooler if you say “a quarter of a million dollars”). Most of that was generated in the last 3 years after I graduated from college. They say necessity is the mother of invention, when it’s more accurate to say “the need to pay bills is the mother of more sales.”
If I’ve learned anything at all about being successful in building a business it is this: if you are selling something people want and which you can turn a profit on, it is extremely likely you will be successful. It doesn’t matter who you are, it doesn’t matter what the product idea is, it doesn’t matter whether or not you have investors.
The core, fundamental requirement for building a business is that you must sell something people want.
It’s that simple.
Often in life, I’ve come across principles of success from individuals with more experience than myself. I’ve read their words of wisdom, and then went back to work and mostly forgot what they said. In many cases, I simply choose to learn the hard way.
However, if your mind is even slightly open to suggestion, let me repeat this principle for good measure: to be successful in business, sell something that people want. Period.
You might be saying, “Ok Matt, that’s great. I may or may not have read that somewhere else. I may or may not be selling a product right now, I might be an employee at a large firm with vague visions of one day being an entrepreneur. But tell me how to do it. Principles are good, but I need specifics on how to execute as well as examples.”
Written below is my checklist for building and marketing a new product. Some of the items on this list are sub-principles of the primary principle of building something that people want. For each I’ll elaborate in detail.
Solve your own problem
My first three products were “good ideas” I thought at the time. They were related to coupons and giving consumers discounts at local businesses. However, I am not naturally a “savvy shopper” and before I introduced those products to my college campus, I had rarely if ever used coupons. I was an outsider to the market I would be marketing to. I simply thought: ok, consumers get a free discount, businesses get more advertising and more customers. It sounded logical, and the product worked reasonably well.
If I had focused on it for longer than a year rather than pivoting the business to focus on a new, more profitable product, I’m sure we would have figured out how to make it grow and how to make it turn a profit (this is a principle we’ll get to later on).
But, a big part of the reason I moved on from it after a relatively short amount of time is that it wasn’t a personal pain of mine. I wasn’t on a mission to save every college student some dough because I had some terrible “poor college student” experience. Rather, I was more focused on building a successful startup. So I couldn’t fully relate to my market. I was selling to local business owners and to frugal college students. I wasn’t part of either side of the equation.
If you’re going to start a start-up, take the easier route and choose to build first for a market of one: you.
Need to do market research? Not sure if you should add a feature? If you build for yourself, you can ask yourself these types of question, get an answer, and more likely than not, be right.
With my newest product, Saber Blast, I’ve done exactly that. Sure, I talk to my customers and get feedback from them as well. Still, it’s always easier to understand your own needs rather than guessing at someone else’s.
B2B is easier and less risky
When I first got the entrepreneur-bug at age 19, one of my professors recommended that I read the book, “SmartUps” by Rob Ryan. Rob was an alumnus of my school, and some years after graduating he went on to build a company that provided products and services to ISP’s (his company literally helped build the “pumbing” of the internet in the 90s), and later sold that company to Lucent Technologies for somewhere north of $20 Billion.
In his book, Rob talked about startup success principles, like the importance of building a team and some of his thoughts on whether or not a company was worth investing in.
I’ll never forget the portion of that book where he stated he shied away from B2C (Business-to-Consumer) companies, and preferred to invest in B2B (Business-to-Business) companies. Why? The markets are completely different and buy products for completely different reasons.
Businesses buy products to save time, save money, and/or make money. They are ROI focused. If the product produces a return greater than the cost, they are more than likely buy it because it makes practical sense. Not only that, businesses are more open to being sold to for this reason and they can spend a lot more per sale than any consumer can.
Consumers on the other can be incredibly fickle. For twenty sales of a consumer product, you could make 1 sale to a business and generate more income and profit with less effort. With consumer facing startups, you often have to lose money for a longer period of time before you get to a certain scale and start generating a profit.
This is why B2B startups are less risky. So when deciding on what product you want to go to market with, think B2B first.
Sell before you build
Pick any twenty people out of a crowd of people and most will have one or two new product ideas. That’s because ideas are easy. Imagining how awesome the world will be with your non-existent product is fun, but, ultimately, completely unpractical and unproductive.
If you have an idea, and you’re serious about building a company around it, remember the principle of “Sell Before You Build.” I was lucky enough to use this principle with almost every product I’ve created (or chose not to) to date. It has saved me countless weeks and months of lost time.
Why? Because I validated whatever I was selling before or while I was investing the time to build it.
To play devil’s advocate though, one might say: well, Matt, if you used this principle, why haven’t you sold millions of dollars of products instead of hundreds of thousands?
All of my products worked to some extent and I was able to sell all of them. The problem I usually faced with growing my businesses was either a lack of focus (I would lose interest about a year after starting because, in one case, I realized I wasn’t passionate about the product or the market) or I wasn’t disciplined enough to keep iterating the product in a practical direction that the market wanted.
Beyond my own personal experience, I can tell you this is one of those principles that are echoed in conversations with successful entrepreneurs all over the internet, especially with the rise in popularity of the “lean startup” methodology.
More to the point, how do you sell before you build effectively?
There are a number of approaches, but the simplest are to schedule meetings with potential clients and show them some drawings or mockups on your computer of what the product will look like, and hear their feedback about if it will solve a problem for them. Keep the presentation simple, and make sure to listen.
If the answer is yes, they want the product, they have said pain point, then tell them you’re going to build it as long as you can prove there’s a market for it. Ask them to pay you 10-20% of what you estimate the value to be to their business (e.g. $20-$200) — the amount isn’t so important, what’s more important is getting real people to pay you something, confirming there’s a need as well as confirming that there’s potential to build a profitable product or business around that need.
Sell some more to test the broader market
After I graduated from Cornell, I immediately went to work on my new startup, BlueSkyLocal.com, with my co-founder. After explaining the concept to local restauraunt owners, we collected credit card info pre-selling automated marketing software at $99 – $299 per month. We sold about 3 or 4 at first. We were living in our apartment in Ithaca, NY at the time, so $700 per month almost paid the rent. We were pumped. So after that we put our heads down to do the work of designing and developing the product with a hard deadline…
However, looking back I should have listened to the advice I received just prior to graduation a famous tech entrepreneur.
Every year, Cornell has an entrepreneurship conference where they crown the “Entrepreneur of the year.” It’s usually some super successful alumnus (The cynics will tell you they do it because it’s an easy way to get large donations to the school).
Anyway, that year the Founder of Priceline.com, Jay Walker, was given the award. So I tracked down his contact info and called him up before the celebration. I told him all about the Blue Sky Local idea. He thought it was smart and made sense.
He told me I should view my early customers like my investors. In fact, I shouldn’t waste time building a product at all until I had validated the broader market. I should go around and sign-up 100 or more restaurants first. Then I should sit down and actually build the darn thing. At least then we would know there was a real market for the problem we were solving.
But I, being a wise-college student, ignored this nugget of wisdom thinking we would do both at the same time. So I stopped selling after we had a handful of initial customers. That was validation enough for me. But that was a mistake because the scaling challenges of selling into the broader market proved enormous and nearly unprofitable.
So don’t just sell early, sell to at least 30-100 customers before you build your product.
Keep the product simple (really simple)
Imagine a graph. Risk is on the y axis and complexity of your product is on the x axis. The more features your product has the higher the likelihood that that the product will fail with customers.
This is because for each new feature you add to your product, you’re making an implicit assumption: some significant portion of your target customers will actually want that feature.
Let me illustrate this point with an example.
When I initially launched Saber Blast, it allowed customers to find marketing partners and share content they want to promote with them (e.g. a link to a newly published blog post). However, I also extended this to include email newsletter features. I figured, “oh heck, I’ve got this huge vision, the product is obviously going to take off like a rocket, and people are going to want to help each other promote one another’s newsletters too, right?”
Wrong. Sharing newsletters wasn’t natural. I was solving two problems at this point: sending newsletters to stay in touch and helping customers get more exposure online.
I had also assumed by adding the “Grow” feature, that customers were happy to put in the work of growing their base of marketing partnerships from scratch. “They’ll invite their marketing allies via email, social media, etc. We will be extremely viral a few days after launch, I know it!”
Wrong again. People are lazy. Entrepreneurs and people in general want to be efficient with their time: show me what it is, give me some benefit quickly, ok cool, I’ll come back later and use it again.
In light of this, I ended gutted the product of about 5 or 6 unnecessary features (the above included). I’ve showed the new version to several customers and feedback thus far has been positive. “I like it because it’s simple” one of them said.
Knowing what I know now, I could have saved us about 3 months of development time, so make sure to take this lesson to heart.
Think of product development like building a funnel through which people (like water) are poured. People come in one side with a problem and on the other money comes pouring out along with happy customers who have a solution to their problem. More complexity in your product (especially early on when you should be focused on solving only 1 problem) is like adding funnels within that funnel that customers have to go through in order to get out at the other end. More will get stuck.
So keep it simple, don’t over-think it.
Have low expectations for launch
As I mentioned above, I had some lofty expectations for Saber Blast’s launch. I had built the product to have a strong viral loop, so why shouldn’t I?
The reason is because effective product development is hard (unless you follow these principles of course). It is an iterative process. Test and refine, test and refine.
With high expectations, any progress you make will seem insignificant to the grand vision you had. You’ll feel let down unless your product shows explosive growth, like Facebook (which is by far the exception, not the rule).
And when your expectations are always higher than the end result, this can weigh on your will to continue. Your counter-mind (as Andrew Warner calls it) may kick in. You’ll become more likely to give up rather than taking the next step.
I recently listened to an interview with founder, Joel Gascoigne of BufferApp.com, which helps people to automatically spread out their social media messaging through out the day. Joel explained that when initially launching Buffer, his only goal was to prove there was a market for this, that there was something of value that some portion of users would be willing to pay for.
Joel didn’t start with a grand vision. He didn’t say, I want Buffer to become the social media sharing tool of the year, used by millions of people, making millions of dollars. None of that. Joel was happy enough when the tool actually started generating a little bit of revenue shortly after launch. His dream back then was to make $1000 a month so he could quit his freelancing job.
He steadily built on that, tweaking and improving. The vision was never grand, expectations were never crazy. So, at different points when he stumbled, it was easy to keep going.
“Dog-food” your product
If you are able to use your own product on a daily or weekly basis, you’re putting yourself in your customer’s shoes. This a good thing.
By doing so, you’ll be able to spot problems in the customer experience early on. You’ll be able to see natural optimizations, like: “Oh, this button should be on the right, not the left. My hand and eyes instinctively look for it on the right side of the screen.”
In using your own product, you’ll also get new ideas for useful features. To do this effectively, make sure you’re self-aware when you’re using your product. Pay attention to each little twinge of laziness or frustration that runs through your mind. ” I want to do X, but… Why can’t I do Y here?…”
Be a Scientist
There are two schools of thought on business. One says, be passionate about your ideas! The other says, don’t be married to your ideas, think like an investor, be objective.
The best way to be is to have both. To care and be excited about your ideas, but simultaneously, not be afraid to change them if customer data shows them to not be as strong as first thought.
In the past, I’ve made the mistake of swinging from one extreme to the other. In college, my second business was a discount card company. We were profitable within the first week because we had our distribution partners (local businesses and non-profit campus organizations), pre-pay at a steep discount so they could resell the cards profitably to their customers or members. The team and I were super excited to have hit upon an idea that turned a profit so quickly.
However, mid-year, we faced scaling issues. We were trying to expand to 5 other college campuses by recruiting and training students who were on the ground. Instead of solving the problems we faced based on observing where the “blockages” lay, we became disheartened and the business fizzled. We lost our passion and we weren’t objective.
Don’t make the same mistake. First, work on ideas that you think are “cool,” and always understand why it excites you in case you forget later. And second, even if your initial product idea doesn’t work, there’s usually some nugget of opportunity or value that can be taken from the experience and help you in your next attempt; always be objective, and look at your product in terms of value-flow.
Perfection is the enemy of Progress
Waiting too long to launch could kill you. One of my mentors in college once told me his three golden rules of business, and rule number one was: cash is king, it’s the life-blood of your company so NEVER run out of cash.
One of the fastest ways to run out of money is to spend all your time developing rather than showing your unfinished, imperfect product to real-world customers. They’ll tell you where you’re going wrong (or right, hopefully).
Another set of accomplished entrepreneurs, the founders of 37Signals, Jason Fried and David Heinemeier Hansson, wrote in their book REWORK, that it is “better to launch half of a product, than a half-assed full product” (paraphrased).
If you try to be a perfectionist when you’re bringing a new product to market, you are increasing your chances of failure by delaying launch, getting invaluable feedback from customers, and understanding the flaws in your assumptions.
Launch early, launch often, and don’t stop iterating. That brings us to our last guideline…
Talk to Customers
Just do it, even if it’s uncomfortable. Mark Twain once wrote, “Do the things you fear to do and the death of that fear is inevitable.”
So don’t forget…
The big takeaways of this article are don’t be afraid to fail, you’re not going to get it right on your first try, change and adaptation are a natural part of the process, talk to customers, be objective, and keep it simple.
What are you currently working on? What are your biggest challenges in bringing your product to market right now?