I’m somewhat new to this product thing. I’ve run an established company, helped other companies make more money from their products, and operated a side consulting business. In each of these three, I had clear paths to follow in terms of a business model.
Now that I’m building a product (and by building I don’t mean coding, I mean validating a business model), I’m learning new lessons. In my first post on Medium, I talked about shipping things. But what should I as a founder be shipping — code or a business model? Or both?
I have a website, but should I spend time also coding the product? I don’t code well anymore, and I definitely have never learned Ruby or any of the newer languages. I could learn, as I have in the past, but I wonder if that would be the best use of my time as a solo founder. I’ve heard the advice that the solo founder of a company, especially of a software company, should create the first version (or at least do some coding). For me, this would mean taking time away from validating the product idea and revenue streams, and instead I would spend my time writing code for an idea that isn’t fully vetted.
That seems like a waste. Here’s what I’m doing instead.
Connecting with Customers
As a professional internet marketer, I make my living helping companies create websites, products, and brands that people will love. This can even be a challenge even with a loved brand, but what about when you’re first starting out and building a new company and brand?
My venture has two types of customers — the people seeking trusted internet marketers and the marketers themselves. I want to make both happy, which is why I personally broker all of the deals and connect the business with the most suitable consultant. Without this direct customer interaction, how would I know if people are satisfied with the service or what they would like to see added?
To do this even more, I’m conducting surveys of the consultants to see what they want. For example, I recently realized that one reason why a decent number of people are not converting is because they don’t know who the consultants are. However, I don’t want to invest time/money into a feature that none of them want or will use. In the survey I sent out the other day, I asked if the consultants want a public profile. Here was the answer:
Lesson: Always ask, don’t assume.
Validating The Business Model
The first thing I did, and I tell this to everybody, is I went on Skype, and I found some people, and I said, “Would you pay X for advice about this?” and they said, “Yes.” Then I went to my buddies, and I said, “Hey, would you take $250 an hour for your advice on SEO, or your advice on social marketing, or whatever?” and they said, “Yes.”
And then I just said to my other friends, “Send me the money on PayPal, and I’ll make the introduction.” I wanted to know, “Did anybody care about getting great advice?”
People forget the next step, which is, “Great, give it to me.”
I didn’t buy the domain name (I had already thought of the name, thanks to the book POP: Create The Perfect Pitch) or hosting (nothing fancy) until I had the first payment of $50 in hand. This way I paid for the domain name and the hosting for the first year and still had $25 in my pocket.
I also want to note here that this is the time to test your revenue model. When an agency closed a large deal, I asked them (because I had a relationship with them) if they would be open to paying 10% of the first month instead of a flat fee. They were more than happy to do this, and I ended up making 5x what I would have otherwise. Test test test.
Lesson: Most people who say they’d pay for it won’t. Get the money up front.
Trying New Revenue Streams
When I started HireGun, I thought I knew the four main areas that I would focus on — SEO, content marketing, paid search, and social media consulting. However, after 4 months I started to realize that for a couple of these people don’t want freelance consultants.
I realized however that people were contacting me for other services — whitelabel SEO, content production, and more. So I thought to myself, “Why not build these out as well?” The revenue stream is different and the sales cycle changes from the other services, but at the end of the day they make money and fulfill a felt need.
Lesson: Interact personally to find new ideas, then be open to including them.
Marketing The Idea, Not The Product
Ideas are powerful. People love ideas. People can come to love a product once they have used it for long enough, but I’m willing to bet that it’s not the product that people love, but rather the idea and what it helps them do better. When a product redesigns and users through a hissy-fit, it’s not because they loved the way the product worked necessarily. They complain because they have to put a bit more work into re-automating their work, but rarely do they unsubscribe.
I’m not saying that you should not build a product that people love. You absolutely should. What I am saying, though, is that you should validate that people love your idea and want to give you money before you build your product. If you want an example of an idea over a product, check out Apple’s.
Lesson: Validate the idea, then the product.
Let me make this clear: I have every intention of building out the product so that it can work more scalably than it currently is. However, right now what matters more to me is creating a brand that people will keep coming back to for more work. A strong brand alone doesn’t pay the bills, and doing it all manually forever won’t enable you to make as much money as possible. What I’m saying is — worry about the first $10 before you worry about the $10s of millions.
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Futher reading: The Unprofitable Saas Business Model Trap
Top Image Source: Coding Computer Guy