Category: Business (page 1 of 4)

Start Small, Stay Small (Book Summary)

Start Small Stay Small (book cover)This is my quick book summary of Start Small, Stay Small: a Developer’s Guide to Launching A Startup (by Rob Walling and Mike Taber). The book is available on Amazon.

Summary notes below. All emphasis mine.


What to Make

Make sure people want what you’re building before you build it.

Project/Product confusion:

  • A project is a software application that you build as a fun side project. The end result is a neat little application that likely isn’t of use to many people.
  • A product is a project that people will pay money for.

The single most important factor to a product’s success is not the founders, not the marketing effort, and certainly not the product. It’s whether there’s a group of people willing to pay for it.

The genius of niches is they are too small for large competitors, allowing a nimble entrepreneur the breathing room to focus on an under-served audience.

Choose a niche market and focus so tightly that your product becomes the best in class, members of that niche will have no choice but to use your product.

Building something no one wants is the most common source of failure for entrepreneurs.

The best niches are under the radar, and you have to get out and do something before you will find them.

As a self-funded startup you want a market that is already looking for your product, even if it doesn’t exist. This is because creating demand is very, very expensive while filling existing demand is, by comparison, cheap.

A vertical market as a single industry or hobby. Examples of vertical markets include pool cleaners, dry cleaners, web designers, wine collectors and punk rock enthusiasts.

Order of importance:

  1. Market
  2. Marketing
  3. Aesthetic
  4. Functionality
  • The product with a sizable market and low competition wins even with bad marketing, a bad aesthetic, and poor functionality.
  • In the same market, the product with better marketing wins.
  • In the same market with equal marketing, the product with the better design aesthetic wins.
  • Functionality, code quality, and documentation are all a distant fourth.

No book, blog or conference could ever teach you more about your customers than you learn from watching them use your software.

Time Management

Anytime you’re on your computer ask yourself “Is this activity getting me closer to my launch date?”

At this very moment am I making progress towards crossing off a to-do, or am I relaxing and re-energizing? If I’m doing neither, evaluate the situation and change it.

Information consumption is only good when it produces something.

When reading blogs or books or listening to podcasts or audio books, take action notes.

Define a long-term goal (e.g. launch your product), look at the next set of tasks that will get you one step closer to that goal, work, and re-evaluate in a week.

The faster you fail and learn from your mistakes, the faster you will improve.

Using a tool like SlimTimer, track every minute you spend working on your product, broken down into development, support and marketing. This allows you to monetize your time.

Outsourcing

Before I start any task I ask myself: “Could one of my contractors possibly do this?”

One of the biggest adjustments is accepting that time is your most precious commodity.

“Dollarize”: showing your prospect how your price is less expensive than your competition due to the amount of money they will save in the long run.

If you value your time at $100/hour, outsourcing work to a $6/hour virtual assistant is a no-brainer. Putting a value on your time is a foundational step in becoming an entrepreneur, and it’s one many entrepreneurs never take.

Skipping this step can result in late nights performing menial tasks you should be outsourcing.

Where To Get Business Ideas

  • Entrepreneur.com
    Business idea search engine. Specifically: Category: Online Businesses
  • AHBBO
    Over 400 home business ideas. More of a generator of niche ideas than product ideas.
  • Request For Startups
    Startup ideas YCombinator would like to fund.
  • Brad Ideas
    Crazy ideas from Brad Templeton (gets the mind thinking)
  • Springwise
    Covers innovations in products and business models. Think about applying the innovations they mention to a niche from your list.
  • TrendWatching
    A high-level look at emerging consumer trends.
  • Cool Business Ideas
    Another list of business ideas that are already being implemented by someone.

Traffic / Conversion Numbers

  • If your price point is in the consumer range of $1 – $50 and your product is priced appropriately for your market, your conversion rate should be between 1% and 4%.
  • If you’re priced between $50 and $1,000 or offer recurring pricing and your product is priced appropriately for your market, you’ll most likely convert between 0.5% and 2%.

If your website receives 1,000 visitors per month and you have a 1% sales conversion rate you are selling 10 copies of your product each month.

To increase sales by 1 copy each month (10%) you will need to do one of the following:

  • Generate 100 more visitors to your website
  • Increase your conversion rate by 0.1%

Which do you think is more difficult? Answer: the first.

Although common wisdom is to focus on traffic, the best internet marketers realize that increasing conversion rates for existing website visitors can yield a better return on investment.

You shouldn’t plan to sell to a customer on their first visit.

Your number one goal, even beyond selling your product, is turning browsers into prospects.

A prospect is someone who has expressed at least a small amount of interest in your product by giving their email.

For someone to provide you with their email address you must:

  1. Establish Trust – you aren’t going to spam them or sell their email address
  2. Establish Relevance – your product is relevant to their need and that anything you send them will be relevant
  3. Establish a Reward – offer something in exchange for their email

Knowing Your Customer

Imagine how your ideal customer feels when they arrive at your website:

  • What do they want to find there?
  • What will your product provide for them that they absolutely cannot live without?
  • What is best way to convey this message to them?
  • What will they respond to?
  • What elements naturally draw them in? Audio? Video? Images?
  • What is going to make them click a link?
  • How should you introduce your product to your customer? What should your copy say on the first page they see?
  • What is going to convince them to provide you with their email address?
  • What is going to convince them to purchase your product?

To help understand what motivates your ideal customer, think about the following questions:

  • What keeps your customers awake at night?
  • What are they afraid of?
  • What are they angry about?
  • What are their top three daily frustrations?
  • What do they desire most?
  • Is there a built-in bias to the way they make decisions? (example: engineers are exceptionally analytical)
  • Do they have their own jargon?
  • Who else has tried to sell them something similar? How have they failed or succeeded?

What Goes On The Site

No one reads. Text is a terrible selling tool; audio, video and images are always better.

The vast majority of downloadable products and SaaS applications will perform well with five core pages:

  1. Home
  2. Tour
  3. Testimonials
  4. Contact Us
  5. Pricing & Purchase

The #1 goal of your home page is to convince your visitors to click a link.
That’s all you have to do to convince them not to leave: click a single link.

Half of all home page visitors leave without clicking a single link.

The solution? A simple home page with very few options, and large, clickable buttons.

If you choose to have an image for your home page, choose one that shows the result of your product.

Your hook is your four-second sales pitch and it should be the headline of your home page. These are 5-7 word summaries of your product.

It’s the single sentence that grabs the reader in and makes her know she’s in the right place. Examples of hooks:

  • DotNetInvoice: “Save Time. Get Paid Faster.”
  • FogBugz: “Bring Your Project into Focus”
  • Basecamp: “The Better Way to Get Projects Done”
  • Bidsketch: “Simple Proposal Software Made for Designers”
  • iPod’s hook was “One Thousand Songs in Your Pocket”

TOUR page: include medium-sized screen shots of the major screens filled with data, along with a one-minute screencast (video demo) of each page.

TESTIMONIALS: can also be titled “Buzz” or “Who uses [Your AppName]?” and it’s one of the most important pages on your site. Do not launch without testimonials.

Monitor mentions of your product using Google Alerts and add choice quotes and backlinks to this page. This not only adds to your list of buzz, but shows people that you will link to them if they write about your product.

CONTACT: Always provide a toll-free number. Provide both a contact form in the browser and a separate email address.

PRICING: put this as the link on the far right of your top navigation and add subtle highlighting.

  • If at all possible, include an Upsell.
  • If you don’t offer a free trial, then at least offer a 30-day, no questions asked, money back guarantee.

EBOOK / REPORT:

Make a PDF report from 5-15 pages. The key is finding a topic that your audience will not only be interested in, but will be ravenous for.

Once you have the title, you can create this work yourself or hire a writer to handle the leg work.

Offering a free, five-day email course can be an exceptional draw.

  1. Create your report and offer it as a PDF download for one-month. Note the number of sign-ups you receive.
  2. Next, break the report up into a five-day email course and offer it for one month. Compare results and go with what works.

OUTGOING EMAIL:

  • Run Spam Assassin on outgoing emails to ensure they won’t get caught in spam filters.
  • Providing ongoing content every 2-4 weeks is the best way to build a relationship.
  • Autoresponder series: a 2-4 week gap between each email.
  • Share relevant links with a small amount of commentary. These are the best kinds of posts – easy to write but containing a lot of value for your audience. Most audiences (software developers and web designers excluded) are out of touch with current events in their industry so it’s dead simple to provide relevant content with a few minutes of time every few weeks.
  • Another great source of content is questions from customers or prospects. Answer the question in your email to solidify your place as an expert in this niche.
  • Tuesdays, Wednesdays, and Thursdays are the best days to send emails. Between 7 AM and 10:30 AM

Core strategies like building an audience, search engine optimization and participating in niche communities have far more impact on your bottom line than most of the new media tools you read about.

Marketing

Don’t think you’re building a global brand here – you’re not Coca-Cola or Johnson & Johnson. The minute those users leave your site you are out of their minds forever.

Most products you launch should have their own blog, if for nothing else than to draw search engine traffic.

While the worldwide podcasting and video blog watching audiences are small compared to blogs and infinitesimal compares to mailing lists, the engagement achieved from talking to your listeners is unprecedented. Blogs and mailing lists can’t touch it.

The bond you are able to build with an audio or video audience is unachievable with the written word. There’s absolutely no comparison.

For video blogging, I recommend the book Get Seen: Online Video Secrets to Building Your Business (amazon link)

Google provides a Search Engine Optimization Starter Guide

SEO is only two components: on-page factors and incoming links.

Google alerts is one of the most under-used tools in online marketing. Create an alert for all variations of your product names.

For articles, 500-700 words is best. You need 500 to be over the minimum length requirements. [Note from Nick: this should probably be updated to 2,000+ words to stay competitive these days in SEO]

Delegating, Outsourcing, and Automating

Nearly anything I try to automate is easier to outsource first, and then automate down the line once the volume warrants it.

Out of 30 tasks you might be able to outsource 6 or 8 of them tomorrow if you spend 2-3 hours today writing up the processes. Compare that with automation, which can take a week or more to get each task off your plate since it takes a lot of code to automate a task.

As a startup, one of your advantages is that you move very quickly. You can roll out new features much quicker than your competition. And being able to manually process some parts of a task can often reduce your development time by 50-80% which allows you to get the feature out the door and in front of customers.

If customers decide to use it, then you can automate it. If not, you can throw what little time you spent on it away. You develop the minimum required functionality to make the bare bones feature work; nothing more. You scaffold the rest with a human being; your VA (Virtual Assistant).

Selling Your Startup

Startups are much better bought than sold.

Even if you never plan to sell your startup, you should be collecting and reviewing the data that will ultimately allow you to facilitate an easy sale.

The eBay of website and software sales is Flippa

Here are key metrics you should track:

  • Traffic Stats (Google Analytics)
  • Revenue and Expenses –
  • Hours Spent: Using a tool like SlimTimer, track every minute you spend working on your product, broken down into development, support and marketing. This allows you to monetize your time during month-end

Success story from author:

  • Bought CMS Themer for a small sum (less than 2x monthly profit).
  • The site paid itself off in net profit in 4 months.
  • Owned it a total of 9 profitable months and sold it for a substantial gain.
  • The reason the site had literally hundreds of interested parties when  listed was due to one reason: he had outsourced the hard part, and had tracked time meticulously (showed effective earnings of $100/hour working on CMS Themer).
  • He was selling a business, and a well-paying one, rather than a job like the previous owner.

Read other reviews and notes on the book’s Amazon page.

The Personal MBA (Book Summary)

Personal MBA book coverThis is my quick book summary of The Personal MBA: Master the Art of Business (by Josh Kaufman). This book is an excellent overview of business & entrepreneurship, and cuts through a lot of the typical fluff you read in modern non-fiction. A solid read. The book is available on Amazon.

Summary notes below. All emphasis mine.


A business is a repeatable process that:

  1. creates or provides something of value that
  2. other people want or need
  3. at a price they’re willing to pay, in a way that
  4. satisfies the purchaser’s needs and expectations and
  5. provides the business sufficient revenue to make it worth it for the owners to continue operation.

It’s a repeatable process that makes money. Everything else is a hobby.

Either provide a little value to many, or a lot of value to a few.

Value creation: discovering what people need or want, and creating it.

Marketing: attracting attention & building demand for what you’ve created.

Sales: turning prospective customers into customers.

Value delivery: giving them what they want and ensuring they’re satisfied.

Finance: bringing in enough money to keep going & make your effort worthwhile.

Skills that are economically valuable: any skill/knowledge that helps you create value, market, sell, deliver value or manage finances

Successful businesses sell some combination of: money, status, power, love, knowledge, protection, pleasure, excitement: clearly articulate how your product satisfies one or more of these drives!

Assessing Business Idea Viability (Assign 1-10 points for each):

  1. Urgency – how bad do people need or want this right now?
  2. Market size – how many people are actively purchasing things like this?
  3. Pricing potential – what is the highest price a typical purchaser would be willing to spend?
  4. Cost of Customer Acquisition
  5. Cost of Value Delivery – how much does it cost to create & deliver value offered, in money/effort?
  6. Uniqueness of Offer – how unique are you? How easy is it for others to copy you?
  7. Speed to Market – how quickly can you create something to sell?
  8. Up-Front Investment
  9. Up-sell Potential
  10. Evergreen Potential – once offer has been created, how much additional work to continue selling?

If there are several successful businesses serving a market, you already know that people are buying.

Don’t ignore what pulls you. Find an attractive market that interests you enough to keep you improving your offering every single day.

12 Standard Forms of Value

  1. Product – single tangible item or entity, sell for more than it costs to make
  2. Service – provide help or assistance, charge a fee
  3. Shared Resource – create a durable asset that can be used by many, charge for access
  4. Subscription – offer a benefit on an ongoing basis
  5. Resale – acquire from wholesaler
  6. Lease out an asset
  7. Agency – market /sell an asset /service on behalf of third party, then collect % of transaction fee
  8. Audience Aggregation – sell access in the form of advertising to another business looking to reach your audience
  9. Loan
  10. Option – offer the ability to take a predefined action for a fixed period of time (for a fee) à examples include concert tickets, coupons, retainers, licensing rights
  11. Insurance
  12. Capital – purchase ownership stake in a business, collect corresponding portion of the profit

Capital is that part of wealth which is devoted to obtaining further wealth.

“No business plan survives first contact with customers.”

Give potential customers the opportunity to pre-order.

A successful business is either loved or needed.

Always improve either convenience or fidelity. (Very hard to do both at the same time!)

  • Convenience – things that are quick, reliable, easy, flexible
  • Fidelity – things that offer quality, status, aesthetic appeal, emotional impact

Pick 3 attributes or features, get those things very, very right and forget about everything else.

By focusing on the core features, you find the true essence of your product.

“If you’re not embarrassed by the first version, you’ve launched too late.”

“Advertising is the tax you pay for being unremarkable”

“People don’t buy ¼ inch drills… they buy ¼ inch holes”

Screen out your customers: Define your ideal customer and focus on him/her

“Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.”

A good story will make even the best offer even better.

  • Hero’s Journey: your customers want to be Heroes
  • Telling a story about people who have already walked the path your prospects are considering is a powerful way to make them interested in proceeding. Testimonials, case studies.

“If you want controversy, start a fight” Controversy provokes a discussion. Discussion is attention.

“The market’s perception becomes your reality.”

Most businesses in the world earn the trust of their prospects and help them understand why the offer is worth paying for. No one wants to make a bad decision or be taken advantage of, so sales mostly consists of helping the prospect understand what’s important and convince them that you’re capable of actually delivering on that promise.

“Compromise is the art of dividing a cake in such a way that everyone believes he got the biggest piece.”

You must provide a reason for WHY the price is worth paying:

  1. Replacement cost method answers question of “how much would it cost to replace?”
  2. Market comparison: “how much are other things like this selling for?”
  3. Discounted cash flow/NPV: “how much is it worth if it can bring in money over time?”
  4. Value comparison: “who is this particularly valuable to?” (often most optimal way to price an offer)

“Upgrade your user, not your product. Value is less about the stuff and more about the stuff the stuff enables. Don’t build better cameras—build better photographers!”

Reciprocation! The more legitimate value you offer up front, the more receptive they’ll be when it’s time for your pitch.

Don’t pretend to be perfect, or they’ll wonder: “what’s the catch?” Instead of making them wonder, tell them yourself

Offer a very strong risk-reversing guarantee and to extend the risk-free period as much as possible.

Value stream (i.e. TPS) -> make it as small and efficient as possible

Expectation Effect: Quality = Performance – Expectations
– give them a BONUS as a pleasant surprise (surprise is far more valuable)

The performance of the offering must surpass the customer’s expectations in order for them to be satisfied. Violating the expectations of loyal customers is not the way to success. If you’re offering something completely different, present it as something new.

Measure everything!

The easier it is to multiply your business system, the more value you can ultimately deliver. There is an upper limit on what any single business system can produce

“Don’t compete with rivals – make them irrelevant”

The less human involvement required to create & deliver value, the more scalable the business.

If you can’t describe what you’re doing as a process, you don’t know what you’re doing.

Only 4 ways to increase business revenue:

  1. Increase the number of customers you serve
  2. Increase the average size of each transaction by selling more
  3. Increase the frequency of transactions per customer
  4. Raise your prices

Always focus the majority of your efforts on serving your ideal customers: they buy early, buy the most, buy often, spread the word, and are willing to pay a premium

Magic of exponential growth: Improve by 1% per day, and you’re twice as good in just 70 days.

To get more done, dissociate yourself from the voice in your head. Meditation makes the voice in your head quieter.

Whenever an individual/business decides that success has been attained, progress stops.

If you think your weight is fine, you won’t exercise. If you think you’re making enough money, you probably won’t do much to earn more.

Books/magazines/blogs/competitors are valuable if they violate your expectations about what is possible.

If you realize that something you want is possible, you’ll start finding a way to get it.

Quarter-life crisis (reorganization) occurs when reference level is violated but you don’t know what to do to bring the perception back under control. You start doing random things – Backpacking Europe, tattoos, etc… don’t fight it, it’s the way to learn and discover what works.

Great management looks boring, because it resolves problems before they occur (on time and on budget)

If you’re trying to sell the absence or prevention of something, you’re fighting an uphill battle even if your product is great.

Experience lets you notice when something is “off” or “missing” from the patterns you’re used to, so that you can find/anticipate an issue before it seems serious.

Don’t forget to add scarcity to the offer! The more scarce the value, the more intense the desire.

Human attention requires novelty to sustain itself. Continue to offer something new and people will pay attention to what you have to offer.

“To think is easy. To act is difficult. To act as one thinks is the most difficult.”

Priority #1: don’t get distracted. Takes 10-30 minutes for mind to become absorbed in what it’s doing. Get into the zone quicker with a “dash”: a quick burst of focused work

Setting an artificial deadline is extremely effective.

Takes a few moments to program your mind to find what you’re looking for, and it will alert you on sight.

Keep asking Why? Why? Why? Why? Why? (5 times)

“Words are a lens to focus one’s mind”

Your mind handles information from outside your head better than the thoughts rattling inside your head. Challenges can be solved much quicker if you write them down, or talk to someone about it. You’ll have a new insight by the time you’re done talking.

Self-Elicitation: simply by asking yourself questions, you’re exploring options you previously didn’t consider and priming your brain to notice related information.

Ingvar’s Rule: assume each task will take no more than 10 minutes to complete, then begin.

“Ignorance more frequently begets confidence than does knowledge” – Darwin

Most individuals become less confident in their abilities shortly after learning more about a topic.

One of the best ways to figure out whether or not you’re right is to actively look for information that proves you wrong. Seeking this evidence will either illuminate the logical flaws or will strengthen your confidence.

Only those who will risk going too far can possibly find out how far one can go.

Things worth testing:

  • How much sleep do you need to feel rested and alert?
  • Which foods make you energetic vs. ill?
  • When do you do your most productive work? Are there any patterns?
  •  When do you get your best ideas? What are you doing when you get them?
  • What is your biggest source of stress or concern? When do you start worrying, and why?

If you don’t have a plan, your actions will be determined by someone else. (i.e. someone with a plan)

Better to work on ONLY your strengths rather than trying to patch up weaknesses.

“Any fool can criticize, condemn & complain – and most fools do”

People hate to be told exactly what to do (universally!)

Micromanagement is annoying, inefficient, and bound to fail.

Best testimonials are NOT superlatives (amazing! Life-changing! Best!) Instead, “I was skeptical, but I purchased anyway and was very pleased with the end result.” Because it matches how your prospects are thinking: interested but uncertain.

Individuals tend to rise to the level of other people’s expectations of them. Let them know that you expect great things from them.

Pygmalion Effect: all our relationships are self-fulfilling prophecies (we fall in love with who we imagine)

When others screw up, we blame their character. When we screw up, we blame our circumstances.

Six Simple Principles of Effective Real World Management

  1. Recruit the smallest group of people who can accomplish what can be done quickly and with high quality.
  2. Clearly communicate desired end result, who is responsible for what, and the current status. Everyone must know the reason WHY what they’re doing is important.
  3. Treat people with appreciation, courtesy, respect.
  4. Shield your team from distractions and give them the best equipment for PRODUCTIVITY.
  5. Don’t have unrealistic expectations and be ready to modify your plan as you go along.
  6. Measure to see if what you’re doing is working.

“Start over, beginning with a simple system”

“The system that will evolve most rapidly must fall between, and more precisely on, the edge of chaos—possessing order, but with the parts connected loosely enough to be easily altered” – Systems Theory

“It is not the strongest of the species that will survive, nor the most intelligent, but the one what is most responsive to change.” – Darwin

Gall’s Law: complex systems that work inevitably evolved from simpler systems that also worked.

“Profit is sanity. Turnover is vanity.”

He who refuses to do arithmetic is doomed to talk nonsense.

Optimize and refactor up to the point you start experiencing diminishing returns, then focus on doing something else.

“The measure of success is not whether you had a tough problem to deal with, but whether it’s the same problem you had last year.”

“Experimentation is the essence of living a satisfying, productive, fulfilling life. The more you experiment, the more you learn, and the more you’ll achieve.”


Read other reviews and notes on the book’s Amazon page.