Getting let go can be scary. Here's what I recommended to a software developer who got fired and had a little money saved up.
Introduction—This is more than I thought it would be
This started as a quick post that I created on April 20, 2015. I just needed to let off some steam and address anxiety I felt the day before I announced my free email course How to get promoted in 7 days. I thought that would be it, but then I realized that documenting the entire experience from before my announcement through the end of the course could be really helpful for me later on. So I kept adding to it throughout the process, and this turned into a pretty long article about what it's like to announce, launch, and run a free email course.
Today is June 20, 2015—two months after the initial entry—and I just finished the final update. You'll see that this isn't very polished. That's because the entire process isn't polished. Creating, announcing, launching, managing products (even small ones) is rough, especially the first time around. So for each update I simply sat and wrote what was on my mind without editing, and then saved the updated post. This may sound like laziness, but it was much harder to leave it as-is—warts and all—than it would've been to edit it and smooth over some of the rough edges.
This was helpful for me, and I hope it might be helpful for others who are trying to launch a small product (or a big one). I think the fear I describe here is very common, and it might help someone else to see me work through it and ultimately succeed at launching a product.
To make things a little easier, here's a table of contents:
April 20, 2015: The day before the announcement
April 25, 2015: Four days after the announcement
May 8, 2015: A week until the course starts
May 13, 2015: The day before the course (last day of registration)
May 16, 2015: On Day 3 of the course
May 23, 2015: Three days after the course
June 20, 2015: Final update, three weeks after the course
Coda: The irony of being afraid of launching a book about being fearless
April 20, 2015: The day before the announcement
Tomorrow, I'm announcing a free 7-day email course called How to get promoted in 7 days. This is scary. I've put a lot of work into it, and I'm really confident it can help a lot of people improve their short- and long-term career paths, but I'm still pretty scared that it's going to be a miserable failure and no one will sign up. I haven't seen much written on this, so I thought I would write this down, stream of consciousness style, to capture what it's like the day before a launch.
I'm not posting this on my blog yet because it would be weird to sandwich it between posts about my book, and probably wouldn't inspire much confidence in people deciding whether to sign up for the email course I'm announcing tomorrow. I think this is actually a main driver for the relative lack of transparency for pre-launch projects. If we talk about how hard something is, or about how we're not sure whether it will succeed, we might derail our own marketing efforts by discouraging potential customers. So I'm hedging a little and sharing this privately with a plan to share it publicly at some point in the future. It's going to be a very rough edit because I don't want to go back and polish it up. I think patina is important here—this shouldn't be polished and practiced.
Most analysis is from after a launch, so there's Survivor Bias
This is important because we so rarely hear about failed launches in general. And we hear even less about failed launches before they happen. We do hear a lot about the anxiety that makers experience leading up a launch, but it's often in the context of an ex post review of the experience once it's over, and usually in light of a successful launch being discussed on a podcast or in a blog post. "I was so scared this launch wouldn't go well, but here I am on your podcast telling you about how I brought in $25k in two days, exceeding my wildest expectations!" That's a lot more common than, "I spent six months building and marketing this thing, launched it, and got four signups. It was a miserable failure." So we do hear a bit about the anxiety surrounding a launch, but we mostly hear about that anxiety from people who launched successfully. This is called Survivor Bias, which means that we're likely to hear only the stories of successful people. I appreciate that successful makers are willing to talk about their anxiety, but that sort of discussion is much less powerful in a context where their anxiety was followed by a known quantity of success. What sort of anxiety do people feel before a launch that fails? I don't think we know a lot about that because those people aren't invited as guests on podcasts very often.
How many projects have never launched because of fear
My guess is that a lot of projects never see the light of day because of a fear of failure. Much of what we launch these days is launched online, which is to say publicly, and so it also feels like we fail publicly. "If I launch this and no one signs up, everyone will think I wasted my time and I'm a big dummy for spending so much energy on a failure like this. I will feel like a big dummy for spending so much time on a failure like this." Justin Jackson covered this well in the second season of Build & Launch, his popular new podcast. But most of that content was around failing to find motivation to actually launch. Even in that very honest context, there's little discussion about the fear of launching a failure and how that affects our willingness to launch at all. So, here's a rundown of how I'm feeling ahead of my first "launch" since I learned how to market and launch.
I'm afraid this will fail
I've put a lot of work into making the course useful and valuable, and I've been working hard to get ready for the "registration is open" announcements I'll post tomorrow. It's based on a chapter from my book-in-progress, so I'm really comfortable with the material. I've had several people take the course to make sure it's good and valuable. I've put a lot of effort into setting up landing pages and creating a marketing ecosystem that should allow for a viral build-up over the next few weeks. I'm taking an unusual tack, inspired by David Kadavy, in that the course doesn't open until May 14, but registration opens tomorrow. This could pay off by creating some buzz and anticipation, leading to more signups. It could also be a miserable, prolonged failure if no one signs up. A tepid response to a one-day launch would be painful, but a month-long registration period ignored by everyone would be much worse. I expect to spend the next several days frantically checking my ConvertKit dashboard, staring at Google Analytics, and obsessively checking Tiwtter to see if people are signing up, viewing my landing page, etc. I think that's normal for most people who are launching something. I also think it's probably normal for people to be extremely concerned that their launch will totally fail. So here's a rundown of what I'm afraid of leading up to my announcement tomorrow:
- There's a good chance I won't see very much activity at all.
- I have about 150 newsletter subscribers, and I'll tell them about it first. What if they don't care? Or, worse, what if they unsubscribe en masse because they see my "Registration is open" announcement as spam?
- What if I share the announcement on Twitter and nobody even cares enough to retweet it? Same for Facebook.
- What if I post on popular news and aggregator sites and it's totally ignored and nobody even sees my big announcement
- Worse: What if people see the announcement and immediately begin frantically commenting to say how terrible this looks, or useless, or spammy, or how my landing page is awful?
- What if I manage to get tens, hundreds, thousands of people to sign up for this course, only to find out it's awful and doesn't help them? I'm giving the course away to get my name out there and demonstrate expertise so my book launch is successful. But I'm also doing this because I really like helping people.
- What if it's so successful I can't keep up with emails that people send me?
That's a small sample of what I've been thinking about for the past week or so.
But I'm announcing anyway
But I'm going to announce this thing, despite all those fears. Why? It seems like there's a lot that could go wrong, and only a very small chance that this will be a big hit. Why take that risk? The main reason is that the downside—total failure—is also a hidden upside: If what I'm doing totally fails, I need to know that. I can't know that what I've done doesn't work unless I actually try to make it work. If this fails, I may not try again. But if I do try again, I need to know why I failed. If I were to sit on this project instead of releasing it, Future Josh wouldn't have valuable information he will need for future projects. That's not fair. I want Future Josh to succeed, and this is a huge opportunity to give him extremely valuable information about what works and what doesn't.
What would success look like?
I think a big thing we're missing from the public discussions around launching things is that we often don't get meaningful context for what constitutes success and failure. Specifically, we're missing ex ante descriptions of what will constitute success and failure. "I made $10k yesterday!" is a form of success, but relative to what? Ok, so how am I measuring "success"? A while back, I talked to Justin Jackson about this project, and I said my goal is to get to 1,000 email subscribers before I launch my book. The reason I'm doing this course is to try to hit that goal. So: My goal is to get 850 net new subscribers with this email course. Measuring "failure" is hard, but if I get fewer than 100 new subscribers, I'll be extremely disappointed. That means anything between 100 and 850 new email subscribers would be a moderate success. What's a grand slam? I would be totally floored if I get 5,000 net new subscribers to my list from this course. I almost don't think that's possible, but if it happens, that's a smash-hit, runaway success. Why am I sharing that? Because it shows just how uncertain I am of what will happen when I announce this course tomorrow. I literally have no idea if I'll get 0 (or negative!) subscribers, 50, 100, 1,000 or more new subscribers. That's a big reason this is so scary: I have no idea what to expect.
Why do I think this will succeed?
I've spent a lot of space with a pretty pessimistic message: I think I could fail tomorrow. But I actually think this could be a big success. Why? The main reason is that I'm an expert on this topic: I have both earned and helped people earn promotions using the method in my course. It's verbatim what I do with my team, and what I've done in my own career. So I know it works if I can just get people to try it. I also have access to a lot of smart people who are much better at this than I am. I've namedropped a few people here, but there are many more people I didn't name. I'm I'm wholesale copying what they've done in the past. If it worked for them, it could work for me too. I'm also relentlessly asking for feedback on every aspect of what I'm doing. I had several people "beta test" the course and send me their feedback. I folded that feedback into the course to make it better. Yesterday, I sent all of my announcement material to a friend so he can review it and tell me if he sees any major issues. No one has raised a red flag for me yet, so I'm hopeful their feedback was as honest as I requested and that what I have is at least decent.
T-minus 20 hours to launch
In 20 hours, I'll kick off my launch sequence. I'm pretty much ready and just need to improve one email (the "Welcome to the course" email) before I'm all set. After the announcement, I'll still have a lot of work to do, but my guess is I'll have a sense of failure or success pretty quickly. Obviously, a month is a long time to build interest, but if the announcement falls totally flat, then that's not a good sign. Hopefully things will get off to a nice start and I'll build momentum from there. We'll have to wait and see. But the value of this announcement is only partially to get new subscribers. The experience itself will be valuable because I'm allowing it to happen and because I'm not chickening out. Now I Just have to see if my hard work will pay off and hope for the best.
April 25, 2015: Four days after the announcement
I think this post will be much more useful to Future Me if I update it a few times as I work toward the course's launch.
How's it going so far?
It's been four days since I announced my email course, and 148 people have signed up for How to get promoted in 7 days. That already puts me in the "moderate success" range of my criteria for success, and leaves me with about 700 subscribers before I hit my metric for "success". It also means more people have subscribed to the email course than were subscribed to my newsletter when I announced on Tuesday. This is surprising. I didn't expect almost 150 new subscribers in the first four days. Is this pace sustainable? I seriously doubt it. For one thing I've almost exhausting my ability to reach out to influential friends and ask them to recommend the course to their networks. In other words, I think I've picked most of the low-hanging fruit (it's pretty easy to ask someone to tweet about something). I'll have to get creative and try new ways of finding people if I'm going to continue to get signups. Here are the numbers of signups per day since the day before I announced: 24, 37, 30, 41, 16. The most interesting thing is those numbers trend up overall from Tuesday, when I announced, through Friday. I did not expect that. I figured I would get a nice bump when I announced, and then things would taper off pretty quickly over a few days.
What I've learned so far
I've gotten a sense of how some others' networks might respond to this course, and to the book I'm writing. A few of my friends shared my announcement with their networks, and nobody cared. But other friends shared my announcement and their networks responded very positively. So I've gotten a sense of where I should talk more about my book, and that should be very helpful as I continue to grow the roster for this course and for when I launch my book in a couple months. I've also re-learned a lesson that I've learned many, many times: It doesn't hurt to ask (but make it count). Although about 150 people signed up for my course, more than half of those came in big chunks from specific referrals. So I would have missed about half of the new subscribers if I hadn't asked, "Would you plug my email course?" Of course, most of those people were willing to give it a shot because I've never asked them to plug anything before, and they know I won't ask them again for a while.
I need to make progress on my book and make sure I'm sharing useful articles with my newsletter, so I'm focused on that this week. I'm also working on a guest post for another blog, so I'll get to double-dip a little bit by sending that article to my newsletter subscribers as well. I will also try to learn more about leveraging other social networks and social platforms to find new audiences beyond my own. This week has been a powerful lesson in the importance of finding new groups of people. I'll start with LinkedIn and Medium for now. LinkedIn is a pretty obvious place to communicate with people who would get a lot from my work, and I should've looked into it a long time ago. I'm out of the woods—this wasn't a total failure. Now I have a couple weeks to see how many more people will sign up for the course.
May 8, 2015: A week until the course starts
It's been almost two weeks since my last update, and I'm less than a week away from the beginning of the course (May 14).
How's it going now?
There are now 201 people signed up for How to get promoted in 7 days. This moves me further into the "moderate success" tier of my pre-launch goals. Things have slowed down a lot since that initial five-day rush, and that's discouraging and encouraging at the same time. It's discouraging because it would obviously have been amazing to maintain the pace set in those first five days. But it's encouraging because I've moved into more of a steady-state that helps me see how great those first five days were.
Punching above my weight
I was lucky that a few of my heavy-influencer friends shared the course on Twitter, Facebook, and even their blogs, and I got a lot of signups through those contacts. I also got a lot of signups by sharing the course on Designer News. But once the signups from those sources tapered off, I was left with my own, small network to try to gain traction. Before I launched this course, my entire mailing list was only about 150 people. I have since added over 200 people, which is a 130% boost to my mailing list. So, when I look at the course registration relative to my pre-course mailing list, I'm doing pretty well. It took me three full months to get to 150 newsletter subscribers, and I managed to get that many signups for my course in five days with (essentially) a single tweet.
Struggling to maintain momentum
The way I'm launching this course is unique and was inspired by David Kadavy's method (which he spoke about at MicroConf 2015). Instead of just announcing it and opening it up, I decided to make the course itself an event with a one-month build-up before it goes live. I like the idea, because it feels like a one-month ramp-up is a good thing for building buzz and momentum. But it turns out that a month is a long time to hustle and focus on getting people to sign up for a course.
I started out pretty aggressively, but then it became harder and harder to find new ways to find new groups to tell about my course, and some of my ideas fell flat. Once my secondary ideas started falling flat, it got harder and harder to really push things forward. I didn't get around to guest blogging like I hoped I would, and I could've been more aggressive about asking friends to share my course with their networks.
I haven't written anything new for my book since MicroConf because I've been so focused on maximizing my reach for this email course. That's frustrating because my biggest takeaway from MicroConf was "launch the book as soon as possible", and "launch this email course" was secondary. So, over the past month, I've lost momentum on the email course and my book.
Five days until the course begins
The course begins in five days, and I have no idea if it'll start with the 200 people currently registred, or if I can find a way to grow that list with a last push. So my task this weekend is to think of ways to get one last push before registration closes at midnight on Thursday morning. It would be nice to get a bump in registrations before I launch, but I'm not sure how to make that happen.
May 13, 2015: The day before the course (last day of registration)
In about 90 minutes, I'm closing registration. In 12 hours, the course will be live, and 212 (as of this writing) people will get the Day 1 email. That's a moderate success according to my pre-announcement criteria. Not bad!
I'm a little nervous because this course makes a big promise: How to get promoted in 7 days. I would be more nervous if I hadn't had several people test the course when I finished writing it. Not only did they test it, but they gave me feedback to help make it better.
So I've put a lot of work into it, and others have too. It's hard to think it might not be any good. But...it might not be any good. How will I know? Much like I laid out criteria for success before I announced the course, I think I should lay out some broad criteria for success of the course itself. Much like the criteria for signups were a shot in the dark, I'm guessing here. I haven't done this before, so I don't have any prior experience to draw on.
I'll be very happy if each email in the course gets opened by 60% of the recipients. I'll be very happy if fewer than 10% of the participants unsubscribe before the course ends. I'll be very happy if 10 people (5% or so) share a big success story after the course is over. I think these are pretty aggressive goals, but they're achievable.
...As I was writing that last sentence, I thought, "Is there anything I can do to make this course even easier to take? If there is, then that would directly contribute to those goals." So I created a worksheet template that is included in the Day 1 email. That saves the step of having to create a document from scratch. Maybe that will help people get engaged earlier and stick around longer. Or maybe I just wasted 30 minutes....
One more hour until I close registration. And things kick off tomorrow.
May 16, 2015: On Day 3 of the course
The course is live, and ConvertKit is sending out "Day 3" as I write this. Day 1 is at 59.4% opens, and Day 2 is at 52.5% opens, and four people have unsubscribed from the course so far. That's a pretty good result.
Post-launch blues? Not this time
I've heard a lot about the post-launch blues: when an entrepreneur finally launches something—gets it out into the world—and then immediately feels a sort of anxiety or sadness afterward. As I understand it, this happens because so much work went into the launch that there's really no way to feel satisfied with any amount of success after the launch.
I didn't experience this with my course. In fact, I felt a tremendous sense of relief as soon as the first email went out, and I've been really relaxed since it started. It took so much time and energy to write, announce, and promote the course that the launch itself was a welcome opportunity to take a breather.
But I think the real reason I haven't experienced the post-launch blues is that I put quite a bit of thought into how I would measure success before the launch. I can objectively measure the results and not rely on emotion and intuition (both extremely subjective) to evaluate the results. The further I get into this process, the more I realize how important this is.
I see two primary benefits of explicitly pre-declaring the metrics to measure a successful launch:
1. It forced me to do research and calibrate my expectations to give myself a good baseline to work from. I talked to several people who have run email courses, and even looked at their stats (enrollment, open rates, attrition) to learn what a "successful" course looks like. This gave me a great sense of what to expect and how to measure things appropriately.
For example, I realized that measuring signups relative to my existing number of newsletter subscribers was wise because most email courses' enrollment metrics are best measured in terms of that "existing subscribers" baseline. I talked to a few people who had tens of thousands of people sign up for their free email courses, which used the same announce-promote-launch strategy as I did. But it wasn't realistic for me to expect tens of thousands of new subscribers like they got. Why? Because they started with thousands or tens of thousands of subscribers. I started with 150 subscribers, so measuring relative to that number was more realistic.
Obviously, I wanted to have tens of thousands of people to take my course because I think it's really good. But my research told me it wasn't realistic to expect that many people to sign up.
2. It forced me to measure the results objectively so I couldn't do any ex post goalpost moving. Bowling is one of my hobbies. My high score is 236. Before that, it was 221 (I think), and 213 before that. All those scores have one thing in common: After I bowled them, I thought something like, "Man, if I had just picked up that one spare, I could've had 10-20 more pins!" Regardless of the score, I have a tendency to think I could have done better even though, in all the games I had ever bowled, I never even achieved this score, let alone done better.
I'm also ignoring all the times I got lucky to get that score. I should also think, "...but I got pretty lucky to pick up that strike in the seventh frame, and that was worth 20 pins and got me to six straight." I usually catch myself and try to take a step back and just enjoy my new high score, but that's harder to do with longer-running projects like an email course, a book, or an app launch.
Setting a specific goal is a way that Present Josh can help Future Josh keep his emotions in check. I know that I'm more objective before a launch than I will be afterward. So I just set my goals when I'm objective and force myself to trust objective Past Josh so subjective Future Josh doesn't rain on everyone's parade.
So far, this strategy has helped me keep the post-launch blues in check. My friends ask how it's going, and I just say, "So far, everything is in the middle range of what I expected. Nothing amazing, nothing disappointing—right in the middle." I think this is annoying to my friends because they feel like I'm trying to be stoic or something, but I'm literally just describing the results based on the metrics I set out ahead of time. My even-keeled response to their question is possible because I'm simply describing the results relative to objective metrics.
I've mitigated the scariness of launching by doing research so I had realistic expectations, and by setting metrics so I can objectively measure the results. So far, that's paying off.
May 23, 2015: Three days after the course
The course ended three days ago, so I have a pretty good idea whether it was a success relative to two of the three metrics I proposed. Here are my current results:
- 60% of participants opened the emails—As of today, 51% of participants opened the emails (on average). This is still pretty good. Not amazing, but pretty good. I'm happy with it, and I expect the number to creep up over the next week or so.
- Fewer than 10% of participants unsubscribed—Only 9 people unsubscribed, and that's less than 5%. I'm really happy with this. I created the course to gauge general interest in a topic from my book, and to find people interested in my book so I can share articles with them and tell them more about it as I get closer to launch. The lack of unsubscribes tells me people are interested, and it's good because that means more than 95% of the people who signed up for my free email course are still listening to what I have to say.
- 10 success stories—I can't evaluate this one yet because I haven't sent out the final email, which includes the free guide and a request for feedback.
A lesson learned: People lose interest on the weekends
One thing I struggled with was finding a good 7-day window to run my 7-day course. I wound up choosing May 14 as the start date because it was between Mother's Day and Memorial Day. I knew it would be a bad idea to run an email course over either of those holidays.
I also chose the two toughest days—Day 3 and Day 4—to run on the weekend (May 16 and 17) because I figured people might want a little more time to focus on getting it right. Looking at the stats, this was a mistake. Day 1 and 2 were both opened almost exactly 60% of the time. Then there's a 10% drop-off (to 50%) on Day 3—Saturday—and it looks like that 10% just never came back. In hindsight, I shouldn't have run the course over a weekend. Next time I run it, I'll just exclude the weekend and focus on business days.
As far as mistakes go, this is a pretty minor one. Everyone who dropped off can still go back and open those emails, and those people didn't unsubscribe, they just stopped opening the emails. My guess is they "got behind" on the course over the weekend and just never picked it back up. They didn't explicitly opt-out of the course, which is good.
So far, so good
So I feel pretty good about the results. It looks like I would've hit my first two goals if I hadn't run it over the weekend. I didn't get any nasty emails from anyone complaining about the content or spam. All of the emails I have gotten have been positive, and some people have mentioned that they're essentially shadowing the course by having friends forward the emails to them because they can't sign up anymore. I also have a few people on the waiting list, which is cool.
Some time in the next week or two, I'll send out the final email (with the guide, and the request for feedback), and then I'll write my final update to this little journal.
June 20, 2015: Final update, three weeks after the course
The final email (the one with the free guide) has gone out, and I gave everyone some time to read it, download the guide, and respond. So everything is pretty much settled down and I can step back and take a look at the entire process to see how successful it was.
Throughout this process, I tried to define my criteria for measuring success before I got to the next stage of the project. There were two major areas I wanted to measure: Number of signups for the course, and response to the course.
Here's the final evaluation of my email course relateive to those criteria:
Number of signups for the course
Here were the ranges of outcomes I defined:
- Fewer than 100 would be a failure
- Between 100 and 850 would be a moderate success
- Top-line goal: 850 net new subscribers.
- 5,000 subscribers would be a smash-hit homerun
Result: I wound up with right at 200 net new subscribers (about 215 subscribed, and about 13 unsubscribed during the course or after it), so very much in the "Moderate success" range.
Engagement for those who took the course
I set some goals that would make me "very happy" (these were ambitious goals):
- 60% of participants opened the emails—The final result was 54.2% of participants opened the emails on average. This is a good result, and it's close, but not quite "very happy" territory.
- Fewer than 10% of participants unsubscribed—Only 13 people unsubscribed, and that's just a bit more than 5%. I'm really happy with this—it exceeds my "very happy" milestone by a bit.
- 10 success stories—This one was a miss. I only got a few good success stories. That's too bad, but it's asking a lot for people to take hte time to write out a story, so this goal was probably a little too ambitious.
Final thoughts on this experience—What did I learn?
My pre-launch fear was understandable, but not justified. I knew what I was doing, and I knew the material would help people. I had a lot of support from friends and influencers I know, and their support helped me extend my reach beyond my own relatively small network.
I learned that the thing most people are interested in is whether they're paid appropriately. And if they're underpaid, they want to know how to fix that. So while I was researching and launching this course, I changed the focus of my book from "A career management guide" to "A step-by-step guide to getting paid what you're worth". This could turn out to be the single greatest benefit of running this course because it could help me write a book that people really need. This is pretty exciting!
Finally, I learned that the main reason launching things is scary is that we just don't know what we don't know. By actually launching something, I've now expereinced it, and I know what to expect from beginning to end. It will be a lot easier to launch my next course because I've been through it already. This may be the best reason to just do it and stop thinking about it: the first time through, much of the value of the thing is simply experiencing it from beginning to end.
Coda: The irony of being afraid of launching a book about being fearless
There's a deep irony here, of course. I'm very close to finishing the manuscript for Fearless Salary Negotiation, a book to help demystify negotiations for salaries, raises, and promotions. I'm writing the book because simply understanding how salary negotiations work (from the company side and the candidate side) can help eliminate so much fear about the process.
Meanwhile, I'm struggling to totally decided on my own publishing strategy for the book. I'm definitely going to self-publish independently, but beyond that I'm stuck.
Because I'm afraid it will fail if I choose the wrong publishing strategy. I've now overcome much of the fear around launching an email course because I successfully launched an email course and experienced the process from beginning to end. But I've never self-published a book before, so that's a whole new set of unknowns.
How am I overcoming this new fear around self-publishing my book? Fortunately, I learned several lessons when launching my email course. Here are some things I can do this time to push past that fear:
- Do research to get a sense of what success has looked like for similar projects.
- Seek advice from more expereinced authors.
- Set goals ahead of time so I can measure the results against those goals to keep myself grounded—this will help mitigate the post-launch blues.
- Understand that the first time through a process is as much about experience and learning as it is about shipping the product (this may be the most important one).
- Push to finish the project, and finish it quickly. If the value of the project is in the experience, then I would lose most of the value if I either don't finish, or if I take too long.
This was ultimately a very stressful, scary process, and I'm much better off for having experienced it. Now I need to face the fear and get back to finishing that manuscript.
Why I'm writing this
"I have a cool new idea for an app! How do I get started building it?" I get some form of this question about once a month. It recently came up again over lunch with a friend who owns a small, successful business. “I have an app that we’ve been using at my business for a couple years. I think it could really be valuable to other businesses like mine, so I’ve been talking to a couple of my friends, and I think we’re going to go in together and build the app out so we can sell it as a service to other businesses.”
As we talked, I heard some really encouraging things and some red flags.
- A few other business owners have told him they think it’s a good idea and they would be interested in learning more.
- He already has a prototype that’s a functioning web app, so he wouldn’t be starting from scratch.
- The app saves him a lot of money every month by almost eliminating the time needed for one aspect of his business’s customer service that is being managed in https://instantinfosystems.com/why-does-your-business-need-unified-communication/; it also brings in a little revenue of its own.
- He has direct access to a good-sized target market. His particular business is very well respected in his niche, and those who respect him could benefit from this product and would take his call if he wanted to ask them to try it.
- He wants to bring a couple of technical people in as co-founders to start a company and build the app.
- His background is in sales and marketing, but he has little technical expertise (someone else built the current app with his direction and input).
- He’s already pretty busy running his current business day to day. He also owns another totally different business on the side.
After lunch, I told him I would think about his idea and email him with my thoughts. I realized I had a lot more to say about his idea and I put together a long email, hoping to help him avoid some possible pitfalls and set him up with an actionable plan in case he moves forward with his idea.
Then I realized this could really apply more generally to the question in the title of this piece. So I’m posting it here and I'll refer future requests here as a starting point.
Here’s the email, slightly edited. I swapped out the specific function of the app for a generic term “uses” or “instances” so I don’t give too much information about my friend’s business or his app. I also edited for brevity in some spots.
DISCLAIMER: I’m not a lawyer or an expert on building apps or starting businesses, or co-founding, or equity, or anything like that. If you need an expert or a lawyer, you should go find one 🙂
I looked at the app on your site, and it's pretty cool! I'm happy to talk about this over lunch some time, but here are my general thoughts. Everything I'm saying here is from the perspective of how to build and grow a business to give yourself a good shot at success. I'm not really looking at it from the perspective of someone who just wants a challenge, or something to do with friends, or is looking for a new project.
Overall bottom line
- Get a rough idea of who you're going to sell to and what you’re going to charge.
- Go find potential customers and see if they're really interested. Get a commitment from them that they would pay for your product at a certain price-point. You may also want to put up a "landing page" where other potential customers can sign up for a mailing list and/or pre-order.
- If there's real interest then start building it either by outsourcing or with a single technical co-founder with experience in this area.
Bottom line: I recommend charging monthly using a tiered model based on number of times they’ll use the app. I don't know where the prices should land (I'm not sure how much value the app adds - more on how to figure that out below), but something like: "Up to 50 uses a month for $149/month; Up to 100 uses a month for $249; Up to 200 uses a month for $399; Up to 1,000 uses a month for $999; Call for Enterprise pricing".
You should start thinking about this now. You may change it later, but it's important to know how this app will actually make you money. Are you just charging customers a monthly fee to use it? If so, does every customer pay the same amount? How do you differentiate between "big" and "small" customers? Or maybe you just take a cut of premium upgrade fees and give the app to customers for free.
How to determine price: The easiest way to do this is just to figure out the value-add for a customer and price accordingly. You mentioned that you used to spend a lot of time every day for this aspect of your customer service. You could do a rough guess on how much time you save (man hours) per month with the app, then figure out what that translates into on a per-use basis for you.
Example: "We complete about 100 instances a month. My employees probably spent about 40 hours a month performing this function manually, and my cost of payroll is about $12 an hour. I don't save all of that time because the app doesn’t replace all of the manual work, so let's call it $400 a month in savings." But this app also increases top line revenue, so you could add, "And we make about $100 a month from upgrades. So we'll save total value is about $500 per month at my store." But you have to add value - not break even - for your customers, so let's cut the cost to the customer in half: $250/month for 100 uses.
This is just a ballpark number that you would use to build other tiers around so you have a pricing plan to show to potential customers. The reason this matters is that the next thing you need to do is...
Marketing and Customer Development
Bottom line: You should find customers before you invest the time and resources in building the product. You want to go out and find a few customers who have the pain point you're addressing, and who are willing to pay for your solution. If possible, you want some kind of commitment that they'll be a customer when you launch. I'd say you want at least five customers who say, "Yes, I have this need and I would be willing to pay that amount for a product that addresses this need."
If you're serious about building this app, you should start with Marketing and Customer Development. You should start by going out and finding customers who will pay for your product. From what you told me at lunch, this could be easy - but you won't really know if it's a viable (meaning - profit-generating with customers ready to buy) business idea until you have commitments from customers to give you money to use the product.
So you'll call up some of your contacts in your own niche and ask them if you can get their feedback on a product idea you've been thinking of bringing to market. Show them a demo or some mockups to get their input and gauge their interest. Then ask them if they're a customer at their estimated price-point, and ask if you can keep in touch with them via email as you move forward with the project. You want to leave the meeting with two things: 1. Some kind of commitment that they're a customer around the price you anticipate charging them (this could range from a verbal commitment to a pre-order); 2. Some way to keep in touch with them (email, phone, etc.).
If you're able to get five commitments or so, you've got a good thing going and you should think about developing the app. But first, you might want to set up a "landing page" - a one-page website with a little brochure about what you're building, and where potential customers can sign up for a mailing list to keep up with your progress. You could market this page and continue soliciting signups as you build the app so that you have a nice mailing list to reach out to when you are ready to launch (or do a Beta or whatever). Marketing will be an ongoing activity as you develop the app, and it's best to start early.
Bottom line: In your case, I would recommend either 0 or 1 co-founders. Since your available time to work on this is limited, it seems like you'd be best off getting one technical co-founder to manage app development (including outsourcing if you want to save time by spending more money).
Now I'm finally getting to co-founders! You've gotten to this step because you've figured out a potential revenue model for your product, and you've found a number of potential customers who said they would buy your product at some price. So it's time to figure out how to bring this to market given your constraints. In your case, it seems that your constraints are primarily your available time to invest in building another business, and technical expertise. (Your strengths are that you are very comfortable running a business, and you're an experienced Sales and Marketing guy.)
I think you should have a really, really strong business reason for bringing on co-founders. For example, if I decided to start a business tomorrow, I would be capable of owning the technical aspects of the business (technology, writing code, testing, etc.), and a lot of the business operations (cash flow, whether to hire, etc.), but I am pretty green when it comes to Marketing. If I were bringing in a co-founder, I think my blindspot is Sales and Marketing, so I would try to find someone who is very strong there. But I wouldn't go after multiple people with that skillset - just one.
Be careful bringing on co-founders - they're very expensive and difficult to get rid of if they don't work out. If you give someone 25% and they work a few months and then get bored and moved to Indiana, they're still a co-founder with 25% and that would be really unfortunate. [Digression, which I didn’t include in the email itself: You can do some smart things around vesting periods that mitigate this, but their ownership stake is only a small part as they’ll also be influencing the actual operations of the business, possibly slowing it down or derailing it, or just generally getting in the way.]
It sounds like you had a good idea, and talked to some friends, and they thought it was a good idea, so you're all thinking of co-founding together. But you already have the idea and you had a prototype built. And, if you've gone through this progression the way I wrote it, you've already gone out yourself and found people willing to pay for your product. What you need now is technical expertise. I think it's reasonable to find a technical co-founder, but I don't think it's necessary (or even useful) to have multiple technical co-founders. The difficulty in managing the business increases exponentially with more co-founders--the more you have, the harder it is to make decisions, and the more likely someone will just free-ride on your work.
Things I would look for in a technical co-founder for your idea (these aren't all mandatory)
- Has some level of business experience - after all, you're co-founding a business. You want your partner(s) to know something about what that means.
- Experience building web applications.
- Experience with billing and payment integration into applications (you'll be taking money and he'll be responsible for making the app do that).
- Experience with multi-tenant web applications ("multi-tenant" just means that the app can be used independently by multiple businesses without them seeing what the other businesses are doing).
- Experience managing technical resources. Odds are you'll need to outsource some of the work (although a really strong technical founder could at least build the prototype and Minimum Viable Product).
You could also do this without a technical co-founder, but it would be tough. What you would need to do is find a web app developer who could build the app as a contractor or something like that. This could be problematic for a few reasons:
- It might be tough for you to manage a contractor given that you aren't experienced with app development. It's not impossible that this could work (after all, you have a prototype), but it could be tough.
- Proficient web app developers are in very high demand right now, and could be both difficult to find and expensive to hire.
- If you want to move quickly at all, it would probably be better if your technical lead was really invested in making this product work and bringing it to market. Contractors charge by the hour and would be pretty happy to just plod along at a reasonable rate. A co-founder with equity would want to start generating revenue quickly in order to get paid.
I'm not trying to discourage you here - I know it may seem that way. I'm trying to help you maximize your chances of succeeding without running yourself into the ground. I've heard this methodology described over and over again, and I wish I had approached TaskBook this way.
Some resources you may find helpful
- Most of the "get customers and signups first" stuff I am talking about is based on Nathan Barry's book, Authority.
- Startup For The Rest of Us is an excellent podcast on startups. I've listened to about 60 episodes and I'm moving through them as quickly as possible. You could scan the list of episode names for relevant topics (co-founders, customer development, etc.).
- Amy Hoy's blog is a great resource for bootstrappers. In particular, How do you create a product people want to buy? might be helpful to you right now.
- Product People is a really great interview podcast where Justin Jackson asks entrepreneurs about their products and businesses. It's a really informative, and really easy listen.