Learning The Differences Between Software and Wetware {Million Dollar Idea Project}

As you know, I’ve been working what I’m calling the Million Dollar Idea Project, a side project I am doing in my spare time to turn $5,000 into $1,000,000 using only the tools I have available to me. I’ve pulled cash out from my bank account, and will be keeping track of everything I spend that money on and keep you abreast of my progress.

I recently wrote about the new adventure I’m enduring of having packaging manufactured, sachets for containing the nutraceuticals and boxes for dispensing them.

This is my first foray into the wetware, as I’ve been focused primarily on building software tools up to this point. It’s been a real challenge, but I am slowly learning everything there is to know, and I think we’re going to end up with a really cool product.

Here’s some of the stuff I’ve learned in the past couple weeks:

Unlike software, when you sell a physical good, you can’t update it

This one feels obvious, but it’s worth reiterating. When I release a software product, I typically do this over the internet, and I typically retain the ability to release fixes to problems even after the tools end up in my customers’ hands.

I’ve been ordering packaging, and I’m ordering at quantities big enough to essentially push me through to the next phase of this business: determining whether or not the market even exists.

I’ve ordered 500 boxes and 2,500 packets. The limiting reactant here is the packets, which will last me through about 80 monthly orders at 1/day, and 40 monthly orders at 2/day. Assuming a normal growth trajectory, that’s going to last us 3–6 months. The boxes, on the other hand, we’re probably stuck with for at least a year. If we experience even more success, we’ll need to rush to get restocked.

So two things are vital here:

1. We need the design to be perfect. Typos are unacceptable.
2. We need to make room on the design for providing information as the known information needs change.

The second point is where we are buying optionality. By leaving a blank space on both of the designs, we can use printed stickers to provide additional information and disclosures, as we learn what information we’d like to include. It also gives us an opportunity to make the experience more personalized and fun.

Everything takes forever

I’m used to working on sub-week and even sub-day timelines. When I want a website or feature to exist, I cause it to exist on my own terms. It happens fast, because I am fucking amazing at my job.

But when we are printing packaging, we’re entering a totally different world. We’re entering a world where there are many actors along the way overseeing the project, many people whose job is at risk, and therefore much cover-your-ass type behavior.

Everything requires proofing, which can either be digital or in print. Print costs money and time. Digital is subject to uncertainty. As I am a renegade, I’ve generally elected to make the digital proofs work, but we’ll see how that turns out when the products arrive.

For the box printer, we had about six rounds of back-and-forth to get the box shape just right, so that the sachets come out facing the right direction, so that when viewed from the front, there is minimal disruption from the various flaps that go into making the box, that everything is as symmetrical as possible, that the dispenser is on the right size, that the box will fit the appropriate number of packets.

I placed the order for sachets on Monday, and it won’t arrive until the end of the month. I have no word on the box ETA just yet. I also ordered some branded tape from Sticker Mule, and even that takes about 2 weeks.

The upshot here is that this all requires careful prediction of demand, so that you don’t find yourself in a situation where you have orders, but no products to ship. Also, you don’t want to find yourself in a situation where you tied all your capital up in products you can’t move. It’s frightening.

It’s expensive

Everything IRL costs a lot more than in the digital world. I’m used to on-demand pricing for most of the tools I use, paying only for what I use, but due to the above reasons, you need to buy in bulk.

Even if we didn’t need to tie up capital in up-front purchases, the unit prices are also a lot higher. This will fundamentally be a lower-margin business than I’m used to, but I’m hoping that will be made up for with higher revenues and better customer retention.

Luckily, we’ve been able to spend most of our money using debt, on fairly comfortable financing terms. Also, luckily, we’ve purchased enough here to be relatively stable until we get to the next phase, so most of the money we have left can be focused towards customer acquisition, operations, and the actual supplements themselves (which, interestingly, are proving to be some of the lower-cost components end-to-end).

Financials Summary

• Cash on hand: $4,646
• Debt: $1,460
• Customers: 0
• Monthly Recurring Revenue: $0