Sell Something Nonexistent
The difference between selling an existing product and pre-selling a product idea is really small
Market research can verify that the problem you are solving really exists. However, it is unlikely to produce a solid proof that people will buy your proposed solution. Prospective customers can say “yes we want your future product” and then never actually buy it.
Get a strong proof that some people will buy even the very limited first version of your solution. Do it before you even start working on a prototype. It is easier than appears to be.
- Do people want it? Change your idea, if they don’t.
- Who will buy it first? Get your first customers before you start building.
Action steps
- What solution proofs do you have?
- What proofs can you get in the next week or two?
Sell before you start building
Use the right role models at the right time. When people had success before or have funding for the next two years, they can take time to build prototypes and products. They can offer the first versions for free. However, when you are on your first serious project and your runway is short, look for other role models. Find stories when founders sell before they build.
Groupon launched as a Wordpress blog with widgets from ThePoint, the previous company of Andrew Mason, ThePoint. ThePoint was a platform for collective funding for big causes. At Groupon blog Andrew was using it to bring enough friends for group discounts for local businesses. The blog was so successful, that ThePoint was abandoned and the whole team went on to build Groupon platform.
Care about your chances. Every product has a market risk (nobody buys it) and an execution risk (you build a lame product a with serious delay and overbudget spending). Solution proof significantly cuts your market risk.
Surprisingly, many entrepreneurs do not care much about their chances. If they really like an idea with 10% chance of success, they just go for it. Do not be like that. If there is no strong solution proof, look for better idea.
You barely can swim. You stand by a wide river and there is $100M prize on the other side. You see it clearly. There is 10% chance you can get to the prize. Try swim there and you will be dead. Go train in swimming pool instead. Take swimming classes even! When you are trained, you chance to cross the river safely is 99.99%. The prize is long gone though. But there is a new ones, much like the previous. Actually, you see more prizes now.
Take a high chance on a small prize today and you will get a high chance for big prize tomorrow.
Sell before prototyping. Force yourself to sell before you even start the first prototype. Prototypes, feedback, iterations take weeks. If the idea was wrong, this time is largely lost.
If you prefer to start with prototyping before selling, you are a builder. Then who is the seller on the team? If you get a cure for cancer, hiring a salesman later is an option. For less obviously desirable and competitive products, the seller is someone from the initial team. This person should start selling from day one.
Solution proofs
Pre-orders. The best signal you can is when customers prepay for your future offering. Look for pre-orders from day one.
Crowdsourcing platforms like Kickstarter or IndiGoGo are particularly good for selling pre-orders.
“Coffee and Books” shop in Saint-Petersburg, Russia was near-bankrupt, its lease was terminated and it had no money to re-open. So they start pre-selling coffee cups for there future location. After selling several thousand cups to their loyal customers they got enough money to open the doors at a new place.
Letters of interest. If you sell to organizations, pre-orders are hard. Instead, work with your prospective buyers to sign a (non-binding) letter of intent confirming what product at what price with what features they are willing to buy. Get a written list of risks that can prevent sale as well. A few letters at the start can help significantly to attract team members and investors. If buying company is seriously interested in your solution they can fund your development for share in your company, long-term contract with attractive price, or some form of exclusivity. They can even buy you before the launch, if the product is critical and they can’t build it themselves.
Mailing list subscribers. Start a mailing list for anyone interested in your product. When people subscribe it confirms their interest to your value proposition but it still much weaker signal than pre-orders.
How to sell a nonexistent product
Interest capture. Setup a re-order site or mailing list subscription page. There are plenty of web solutions for that like Eventbrite, Gumroad, Shopify. Mailchimp, Unbounce or Launchrock.
Wix, Weebly and Squarespace are great tools to build a site in minutes. Themeforest has some great site designs for new product pages.
The pitch. Write a page-long sales pitch for your future product. What it is, what problem does it solves, whom does it target, how is it better than competition and how one can pre-order it. Add pictures and cartoons. Video can be used too, if you focus it on showing the problem and the struggles with current solutions.
You can note explicitly, that the product is not ready yet, but is likely to came at <some specific date>.
Traffic. Get you potential customers from social networks, relevant blogs and mailing lists. Buy some Google AdWords. Send the pitch and pre-order link to the same customers you were talking with during your market research. Generally, promote your pre-sales the same way you are planning promote your product at the launch.
You can also get on the phone and just call a hundred people or organizations to see whether they are interested in your future product. Ask whether you can contact them again when the product is ready.
Another option is go to an event with high concentration of potential customers and pre-sell your product in person.
Response. Write something along these lines:
Thank you for your interest in product X. We are ready to make it happen, if there is <some level of interest> at <some deadline>. Otherwise all orders will be refunded. Please, help us to spread the word and invite other people who might be interested. So far, we have <some exciting metrics of attention>. We will keep you posted on our progress.
One day launch. The pre-sell campaign can be done in just one day. Write your pitch, setup a site, promote it online, measure results.
Sell product ideas for practice
Pre-selling is a skill. Regardless of your current project, build a loyal audience in a form like social followers, mailing list subscribers or blog readers. Whenever, you have an idea try to pre-sell it to at least one person or organization in the next 24 hours. You can do it as long as you mix selling with useful advice and fun.
This article is a part of Earlydays, an open guide for first-time entrepreneurs.
Written by Yury Lifshits — yury@yury.name — @yurylifshits
