How I Generated Revenue Before Production 💰
Jul 30, 2021 2:01 pm
As the week closes I was thinking about a business I started with my wife in 2015 that we ultimately put on hold, until recently.
A few years prior to that Lean Startup was all the rage, and people were talking about how to do it, and like most that I encountered, it was a lot of lip service. That is to say, people could easily talk about the Build, Measure, Learn loop, but very few were putting it into practice.
So I took an idea for a business that I had that had nothing to do with tech and applied what I learned to it. My wife was the boss, and I was in charge of how we will accomplish it. The rough sequence of events that got us to revenue in one month for $200 went roughly like this.
- Build canvases and prioritize them
- Prioritize assumptions that would kill the business
- Conduct an experiment to prove the assumption is a risk or not
- Go back to two and prioritize a new assumption
- Conduct a new experiment
- Go back to 2
- Conduct experiment
Now, throughout this process, we only built what we needed at an absolute minimum. This flew in the face of what everyone wanted us to do, but when I'd ask them to front us cash as an investor to cover the costs of building it they'd all back away. I guess their advice wasn't worth much.
So, we validated our first experiment by constructing a landing page and running some Facebook ads. We set criteria that if we could get 50 signups that our experiment was a success. We got 500.
Our next experiment was around if our product was going to be of high enough quality, so we made one of our items and decided that if it could hold up for two weeks of constant use it was good enough, and it was.
Last, we wanted to prove our pricing was correct so we reached out to the 500 people, asked for some demographic information, and gave them the chance to buy now. Out of the 500 or so we e-mailed, 20 were ready to pay.
I wanted to bring this up because when I tell this story people follow it easily because of how logical it is. Yet, when I get asked to help with product work and recommend an approach like this it is rejected out of hand. Which leads me to wonder, how many millions have I personally seen wasted by companies who build first, and hope it works out later?
If you share this concern, I'd love to talk with you.
Oh, I updated my website again because I'm great at spending time on the wrong things. Though, one thing that is pretty nice that I finally got around to is adding a page where you can get access to my recorded conference talks, podcasts, and downloadable content.
Here's my weekly update for July 30th, 2021...
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