If you’re at all interested in starting a business (aka…something that pays dividends over and over for multiple thousands of percent returns), you might be interested in this audio of Noah Kagan teaching how to make your first dollar (mp3 download).
Speaking from experience, the first dollar is the biggest mental roadblock. After that first dollar is earned, the world is suddenly a different color.
I’d suggest listening during your commute, or while raking up the leaves in your yard (mine is buried in oak leaves).
But if you don’t want to put in the time (it’s about an hour of awesomeness), I’ve listed out below the highlights that I thought made it awesome, as well as a full listing of my notes after that. Enjoy!
What made it AWESOME:
1) Funny and entertaining. (“let’s snuggle”, wearing lingerie, “it was a love connection”, “engineers are smart…they have a disease”, etc.)
2) A bit in your face. “3 steps to create a business. Idea, validation, and growth. 1 and 2 should be done TODAY.” And he was on that like a terrier. Cutting off rambling. Digging for that core idea and how to test it. Herding the audience forward to the goal of “today…NOW”.
3) Spoke from experience and personal pain in successes and failures. 2 multi-thousand dollar business flops. And noted this is *a* method to build businesses…other ways might work, but this is what has worked for him and the other people he has helped.
4) Gave some metrics. 3 *paying* customers in a week or give up.
5) Don’t be married to the idea, don’t look at edge cases, don’t worry about scaling…or any technology until pain makes you, and don’t worry about an apparent future obstacle (like getting the trust of people outside of your friends and family).
6) Keep poking to find the “aha” moment…the upper end of their totem pole…you’ll know you’re there when they pay you.
7) How to identify “shitty questions”…a question you already know the answer to. Don’t waste time. Only ask if you don’t know the answer.
8) And of course, he did a validation, got that first dollar, a paying customer, for one of the attendees from one of the other attendees, right there in the last 13 minutes of the meeting.
9) Short circuit and get that money. It’s a truth-teller.
10) Grow or monetize…choose one and focus on it.
This talk was a taste of a product Noah has been working on at AppSumo. Conveniently called How to Make Your First Dollar. I don’t get paid or anything if you click that link. I just like AppSumo’s stuff…and they make me laugh.
Do what you’re good at. Focus on the things that you are an expert at.
Idea, validation, growth. The 3 steps to creating a business.
– Idea: think about what things you can do that others might pay you for.
– Validation: get someone to pay you. This validates the idea and tells you it’s worth spending time on. If you can’t do this, go back to step 1, Idea, and try again.
– Growth: find more people that will pay you. Keep doing this process manually before you jump to adding technology like a website, click ads, or an app.
Idea and Validation should be able to be done in a day or less. If you can’t validate the idea in a day, you will waste too much time before knowing if it’s any good.
Engineers are really smart…in this case, it’s a curse, a disease. They don’t want to get away from the computer. Building is too easy for them. They will happily spend a ton of time building, and then find out that no one wants what they’ve built. (tuRVel anyone? My own personal flop.)
Business people have a complementary disease. They think they need an engineer to build their idea into a product before they can move forward. They need to lose the excuse of “I need code”.
Both the engineers and the business people need to get out there and manually test the idea. See if you can sell it to someone first, and keep selling it manually, until the pain of not being able to do it enough makes you automate. And at that point, you’ll have a nice income to pay someone to code it up.
Pay attention to the Totem Pole. How high up is your idea on your customer’s Totem Pole? Is this something they need? Is it at the top? Or is this something they might want (or more likely are just being nice to you about)? Is it at the bottom? You find this out by getting them to pay you.
Don’t do something you don’t know. So no customer development.
Everyone is an expert in a few things, so concentrate on those. You may not realize you are an expert. Expert is relative…you just need to know how to teach someone else something. Look for those situations where you are looking at someone else thinking “You don’t know this? This is the basics!”.
Start a business, right then, trading jelly beans. You don’t need an app or a website. Just open up a Google Form. Look for a simple, ghetto way to test the idea. And if that works, then you move forward. Anything you want to do, you have to do it today.
Validate your business first with friends and family. Don’t tweet it or post it to Facebook. Directly contact people you think would be interested enough and ask them to pay for it. “Would you pay for this” is a bad question. Not “would” they pay, but actually ask them to pay and give you money now. Email, text, phone call, or in person. Direct contact. Not a blast.
When validating, look for what is the core and why are you doing it. Test that. Ignore all the other extra features that you think would be cool to have. What is the core? Why does the potential customer care? Test that. Validate that.
Part of the resistance is that you don’t want to be dishonest. You don’t want to sell something to someone that doesn’t exist yet. That’s cool. Just be upfront. Tell them they will be the first user, and you are going to spend time building this, and you need to be paid something to make sure they are serious, and you aren’t wasting your time.
You don’t have to validate…this is just the way he does it, and the way that works for him.
Beware of the Future Fantasy Illusion. Don’t be concerned with edge cases. Just get working what you can get working right now. The lay of the land will look much different if you ever get to the point where that fantasy or edge case actually exists.
Marketing is not a panacea. You can’t market a product that is shit. Build only after you know people want it (after it’s validated), and more people will come. Marketing won’t save a product that won’t validate.
If you want to validate a “marketplace” idea (like github, or airbnb, or ebay), start with the people who have money. Get one of them to pay you, or agree to pay you. Then go find a person who has the stuff. Then put them together. Then do it again. Over and over. If you are worried about getting sued, google a consent form. Don’t put roadblocks in your own way.
If you want to create an app, just put a screen shot on your phone. Show it to people. If you can get 5 people to give you $3 each in person, then you’re in business. If you can’t, tweak it or start over. Change the idea.
Get 3 paying customers. Don’t take more than a week on an idea. If it takes more than a week to get those 3, rethink the idea. You started with friends and family, so those should be the easy hits. It’s only going to get harder after that.
After it’s validated, then you can grow. There are two things you can grow, customers or monetizing. Focus on one or the other. If it’s customers then every decision is viewed through the lens of “Will this get me more customers?” If “yes”, then do it. If “no”, then don’t. Same thing with monetizing.
Don’t be married to the idea. It doesn’t seem like it, but there are tons of ideas out there. Don’t think “this has to work”. Just move on and look for something else that might work, and validate that.
When you are talking to people, keep poking to find the “aha” moment and find the top of their totem pole. If they are lukewarm to your idea, keep looking for what would get them interested.
Starts a validation for a grocery delivery service. Initially intended for students.
What’s the core? You want groceries and you don’t want to waste time going to get them.
Find the person that has this problem the worst. “Does anyone not have a car?”
Equate the service with money. Find out where this is on their Totem Pole. Maybe they like riding the bus? “How much do you make per hour?”
Don’t ask “shitty questions”. “Do you want happiness?” If you already know the answer, you’re wasting their time, and yours. And the whole point of validating is to not waste time.
Close the deal. Get paid today. $20 for grocery delivery changes hands.
It hurts and it’s awkward, but it is good. And it’s not that hard after you get into it. You do this now because it saves the pain of regret later.
What is something you would like to see? Go do that. Any time he has done a business just to make money, it always sucks.
Deliver the value manually before automating. This will help you to move faster, make changes faster to find the best service to provide. And when it comes time to automate, you’ll know the process intimately.
Short circuit all that time and waste of building a product before you know if someone wants it. Get that money. Not because you are greedy, but because it is a truth teller. People don’t want to be mean, so they will tell you that your idea is good. But it’s only when you ask them to pay for it, that you find out if they really mean it.
Start with friends and family. People you know, or can get introductions to. These are the low hanging fruit. Then see what the hang ups are when you get to them. Don’t stop today because of something in the future. Don’t worry about scaling until it’s actually a problem. Until you get to a point where you physically cannot do something, do not add technology (websites, apps, etc).