Start Small, Stay Small: A Developer’s Guide to Launching a Startup

Chapter 1 – The Chasm Between Developer and Entrepreneur

It so happens that 90% of the knowledge needed to succeed at Micropreneurship and bootstrapping is identical. Finding a niche, finding a product, building, launching, marketing… it’s the same process.

Targeting a large, non- niche market is expensive in terms of marketing and support. It will eat you alive if you tackle it from the start.

Point 1: An entrepreneur is a technical visionary who creates software for a niche market. Niche markets are critical. If you want to self- fund a startup you have to choose a niche.

Point 2: An entrepreneur merges existing technical knowledge with online marketing knowledge. The key factor in an entrepreneur’s success is their ability to market their product.

Point 3: An entrepreneur is a cross between a developer, a webmaster, and a marketer.

Marketing is more important than your product. Let me say it another way: Product Last. Marketing First. Your product has to be good. If it’s not, you’ll be out of business.

Reason #1: Having a Product Idea

A project is a software application that you build as a fun side project. The code is fun to write because you’re not concerned about quality and performance, and 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. In other words, it’s a project that has a market (a group of people who want to buy it). Without a market, a software application is just a project.

Reason #2: To Get Rich

If you are doing it for the money you will not stick around during those long months of hard work when no money is coming in.

Reason #3: Because It Sounds Like Fun

In other words, the few glimpses you have into the life of a startup are not a true indication of what goes on behind the scenes to make it work.

Writing code, where most of us are well- versed, is only about 30% of the work needed to launch a successful product.

The price to achieve this kind of payoff involves a huge up- front investment of time.

The price you pay is negotiable and is truly guided by your personal goals. But the bottom line is: you will have to pay a price.

A study at Dominican University3 revealed that the following 3 factors substantially increased someone’s chance of following through on their goals: 1. Written Goals– “Those who wrote their goals accomplished significantly more than those who did not write their goals.” 2. Public Commitment– “… those who sent their commitments to a friend accomplished significantly more than those who wrote action commitments or did not write their goals.” 3. Accountability– “… those who sent weekly progress reports to their friend accomplished significantly more than those who had unwritten goals…”

One Short- Term Goal I Propose Here’s one question you should think about right now: what is a good short- term goal for your startup?

startup you are flying blind without guidance in situations where there is no right or wrong answer. Answers need to stem from your long-term desires for your startup and yourself. • Want to grow as large as possible? Make that your goal and take advantage of every opportunity that comes your way. Realize this will mean hiring employees, and working longer hours. • Want to spend more time with your family and quit your 9 to 5? Make that your goal and realize you will have to turn down many opportunities that come your way. Your goals must serve as your roadmap that takes you to your definition of a successful startup.

The hard part is that it sure feels productive to spend 4 hours doing research and it’s fun, to boot. Unfortunately, it doesn’t get you closer to launching.

Another common distraction masquerading as productivity is reading business books. It sure seems like Why We Buy6, Made to Stick7 and Outliers8 are going to help you launch a successful product. But reading books gets you no closer to launching than watching Lost.

You can’t consume and produce at the same time – when you’re in high-producing mode you have to temporarily step away from your magazines, blogs, and other forms of distraction for a while.

These are trivial examples of what I call drip outsourcing; outsourcing small tasks as I perform my daily work. Drip outsourcing has become invaluable to my productivity.

encounter as they try to launch is thinking they, or one of their co-founders, has to perform every task necessary to get their product out the door. Just for

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, and an effective hourly rate slightly above minimum wage.

If you are making $ 25/ hour as an entrepreneur you are doing something wrong. Improve your marketing, grow your sales, find a new niche, outsource and automate. $ 25/ hour is not an acceptable dollarized rate for a startup. While you won’t be earning anywhere near $ 50/ hour when you begin building your product, once you launch you should aim to hit that number within 6 months.

If you aren’t enjoying something, stop doing it.

Numerous times throughout the day ask yourself: At this very moment am I making progress towards crossing off a to-do, -or- am I relaxing and re-energizing?

energized and ready to dive back into work. The same goes for multi-tasking work in front of the TV. Your productivity level is around 50% when trying to do both.

Realization #4: Information Consumption is Only Good When it Produces Something

When reading blogs or books or listening to podcasts or audio books, take action notes. Action notes are short- or long-term to-do items that apply directly to my businesses.

Action notes allow you to quickly determine which resources provide real value and which are fluff.

They are: entrepreneur, manager and technician. • The entrepreneur is the dreamer, the visionary, and the creative mind. • The manager is the person who thinks about return on investment (ROI), near-term success, and productivity. • The technician gets the work done. She follows the manager’s guidance and is concerned about today’s success.

Realization #2: Market Comes First, Marketing Second, Aesthetic Third, and Functionality a Distant Fourth

In the same market, the product with better marketing wins. Every time. 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.

Documenting repeatable processes for anything you will do more than once is essential to your sanity.

The problem is, nearly everything about a startup requires ongoing effort.

Chapter 2 – Why Niches are the Name of the Game

What matters is finding a group of people who need your something more than they need the money you’re charging for it.

The lesson here is that the narrower you can make your product while still maintaining a large enough market, the more profit you will generate. It’s that simple – if you can find a small group of people and make them amazingly happy, you will make money.

Odds are high that if a publisher started a magazine aimed at a niche, and full-page ads are less than $5,000, it’s a good niche to explore.

The Best Niches are Reserved for People Who Do Something

As a self-funded startup you want a market that is already looking for your product, even if it doesn’t exist.

there are two questions you need to answer about a potential niche: • Is the market large enough? • Is there an inexpensive way to reach them?

Magazine publishers are in the business of market segmentation. You didn’t think the $10/year you pay for Fast Company comes close to paying their printing and shipping costs, right? No, they’re in the business of reaching the maximum number of demographically “similar” people so they can increase ad rates.

It’s important to remember during this process that a large market is not helpful if you can’t reach them economically through a specific website or magazine.

The Top Shelf approaches focus on two key areas: building an audience and search engine optimization.

Other marketing approaches abound, which I call Second Shelf approaches. They include: • Building internet buzz and referral traffic • Joint venture partnerships • Article marketing • Cold calling • And so on…

• Think of 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. • By contrast, a horizontal market cuts across many industries or hobbies. General purpose invoicing software is a horizontal market since it can be used by pool cleaners, dry cleaners, and web designers.

• Conversion Rates – The ratio of people who buy vs. visit your website • Traffic Levels – A look at the level of traffic you might need to succeed in a particular niche • Traffic Breakdown – A look at common percentages that different traffic sources might provide to your site

You only need to master two skills to sell online: human behavior and math.

If your price point is in what I refer to as the consumer range of $1 to $50 and your product is priced appropriately for your market, your conversion rate should be between 1% and 4%.

Google AdWords Keyword Suggestion Tool30

SEO Logs Keyword Difficulty Tool31 Or the following tool

In the beginning, the master metric of keyword difficulty was KEI, which stands for Keyword Effectiveness Index. The formula for KEI is: number of searches per month / number of results

Using some clever Google queries, you can manually research individual keywords using a spreadsheet, as described in this article: This is a good approach, but

Chapter 3 – Your Product

The Product Success Triangle The success of your product will depend on three things: product, market and execution,

You should aim to master all three in the long-term but at the start, place emphasis on the latter two to determine if the idea will fly. Once you know you have a market and can execute, then you can improve your product.

As a rule of thumb, your path to 1.0 should fall between 200 and 400 hours.

If you’re under 200, it’s a good sign, but take a second look at whether you are offering enough functionality to differentiate yourself from the competition, or if you are really building a “tool” rather than a full-blown application.

If you’re over 400 hours, take a serious look at eliminating functionality to shorten your time to launch. This is the most common mistake I’ve seen with 1.0 products – too many features and too many months between the start of development and launch.

The sales website, documentation, marketing, and everything else will be 100-200 hours.

If you are dedicated to your product idea and can afford it in the short term, you may want to think about working 4 days per week with the idea that in the future, you will replace the lost income with product revenue.

You have to get over your desire to write the software yourself.

The steps for finding your first cut at a purchase price are: 1. Know your market. The first step is to get a sense of your market and of the price it will bear,

2. Ask yourself. When 37Signals determines pricing for a new product38 they ask themselves the following two questions: a. What would we pay? b. What numbers feel right?

3. Look at your competition. If you have competition this step is easy. With little or no competition you’ll need to compare to similar markets.

4. Determine your product’s value. If your software saves your prospect 5 hours per month and you can monetize their time at $25/hour you will save them $125 per month.

5. Combine. Use the numbers from steps 2-4 to determine the optimal price range for your product.

6. Lean towards higher pricing. Developers tend to undervalue their software, and think that lower prices will result in higher sales.

7. Use three tiers. There is no single best price for your product, so shoot for multiple price points. Use the low end of your range as your lowest tier price. Multiply by 2 for your middle tier, and multiply your middle tier by 2 for the top tier.

8. End in 7, 8 or 9. It’s stupid, but it works. Make each of your three prices (the dollar column) end in a 7, 8 or 9 and be sure they all end with the same number.

9. Determine the benefits of each tier. For each tier, based on your knowledge of your market, decide which metric(s) will increase as you step up the tiers (invoices sent, disk space, processing power?). Ensure that as your price doubles from tier to tier, you provide more than double the benefit.

10. Add Support. If you charge a one-time fee for your software, seriously consider charging 20% of that fee annually for support and product upgrades.

Don’t be confident in your numbers until you’ve tested them.

one knows the right pricing structure for your product. Instead of finding a price point and latching onto it for eternity, you should test your pricing to determine how far you can push it. And your approach to price testing depends on your sales cycle.

Chapter 4 – Building a Killer Sales Website

The idea behind the sales funnel is that there are several steps between someone surfing the internet and buying your product.

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

The Number One Goal of Your Website 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. On the web, this is typically achieved by asking someone to provide their email addresses.

to your website. In order for someone to provide you with their email address you must do three things: 1. Establish Trust – Your visitor must believe that you aren’t going to spam them,

2. Establish Relevance – Your visitor must believe that your product is relevant to their need and that anything you send to them via email will be relevant. 3. Establish a Reward – We are predictable creatures. Offering something in exchange for an email address is guaranteed to work better than offering nothing.

Your goal should be to understand what your ideal customer wants to find on your website, what they want to find in your product, and what triggers will make them buy.

Now 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?

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? Calls to Action

Seven Rules of Sales Site Design Rule #1: The home page will not necessarily be the most visited page on your website. Search engines and deep linking50 have changed this.

Rule #2: As a result of rule #1, every page needs a call to action. A visitor may first interact with your website through your Tour, Testimonials, or Pricing page. All of them should urge the user to take an action that gets them closer to providing you with their email, trying your demo, or making a purchase.

Rule #3: Every page needs a single focus. Think ruthlessly about eliminating extraneous functionality and duplicate information from your website. Each page should serve a single purpose and contain nothing to distract the user from that purpose.

Rule #4: Everything should be within 2 clicks. From any page, a visitor should be able to demo your product, buy your product, or provide you with their email address with two clicks, including the click of the “submit” button.

Rule #5: Accommodate different reading patterns. Use headlines and bulleted lists for skimmers. Keep paragraphs unnaturally short for those who read every word.

Rule #6: Make buttons look like buttons. Make your buttons so clickable that people can’t help but click them. Rule #7: No One Reads. Text is a terrible selling tool; audio, video and images are always better.

Home The #1 goal of your home page is to convince your visitors to click 1 link. That’s all you have to do to convince them not to leave is click a single link. The key metric with home pages is abandonment rate (the number of people who leave without clicking a link). The book Web Design for ROI estimates that home pages have a 40- 60% abandonment rate on average before they are optimized.

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

hook. 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. Each one conveys an image in your mind. Each one describes what the product does and (in most cases) who it’s made for.

To find your hook you can take one of three approaches: 1. Explain what your product does and for whom. Such as “Simple proposal software made for designers.” 2. Make a promise to the customer espousing a benefit of your product, such as “Save Time. Get Paid Faster.” 3. Describe the single most remarkable feature of your product, such as “One Thousand Songs in Your Pocket.”

Tour Page My recommendation for your tour page is to include medium-sized screen shots of the major screens filled with data, along with a one-minute screencast (video demo) of each page.

First, you will never email someone without their permission. You will only send relevant emails to a small group of people who signed up to receive them specifically from you.

Second, every email you send will include an unsubscribe link so your recipients can unsubscribe at any time.

Lastly, you will never sell or rent out your email list. To do so would destroy the trust of your list.

Give Something Away Have you ever seen the credit card tutorial PDF given away by Freckle Time Tracking57? Look at that PDF – it’s awesome; the perfect example of providing an enormous amount of value for free.

I recommend shooting for 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.

Strategies for Sending Emails Here are seven critical tips for improving deliverability and getting people to open your emails.

1. Time of Day/Week

But as a general rule, Tuesdays, Wednesdays and Thursdays are the best days, between 7am and 10:30am.

2. HTML vs. Plain Text – The answer is: you should always send at least plain text, since many mobile devices don’t read HTML emails.

3. Never Send Attachments – They hurt deliverability and many will be stripped by spam filters.

4. Pay Attention to Your “From” Name & Address – Look at an email in your email client – notice how the “from” address reads.

5. Your Subject is Your Headline – Perhaps the only factor that determines if your mail gets opened is your subject line.

Have One Goal for Each Email – Is this a relationship-building email filled with information, or do you have a call to action for it? If you have a call to action, make it prominent and ask people to act.

Chapter 5 – Startup Marketing

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 in the business press.

only certain marketing tactics will benefit your startup. Those tactics will change, depending on the niche you’re in.

By quality, I mean the following: how close each visitor is to your ideal customer and how much of a relationship you have with that visitor. High quality traffic means each visitor is very close to your ideal customer and they know and trust you. This is why TechCrunch traffic is not profitable for startups.

Top Shelf: Traffic Strategies that Will Sustain a Business 1. A Mailing List 2. A Blog, Podcast or Video Blog 3. Organic Search

Second Shelf: Supplemental Traffic Strategies 1. Social Media / Social Networks 2. Pay-per-click Advertising 3. Forums 4. Press Releases 5. Guest Blogging 6. Affiliate Programs 7. Banner and other advertising 8. Everything else…

The Point The point is to understand that investing time in Twitter63 and Facebook64 is a fun diversion and can bring traffic or notoriety to your business, but the way to build long-term, sustainable traffic that will sustain a real business is through Top Shelf traffic strategies.

Strategy #1: A Mailing List A mailing list is the most effective marketing tool you will possess. It works in any market. It’s a marketing requirement for startups.

Strategy #2: A Blog, Podcast or Video Blog Blogs, podcasts and video blogs require a certain amount of unique insight or expertise. If you don’t have this, partner with someone who does. For every person like yourself looking to gain the audience of a market so you can promote your software, there is someone with insider knowledge looking to be recognized as an expert in that same market.

If you need a reference for on-page SEO, I recommend the book Search Engine Optimization an Hour a Day69.

Chapter 6 – Virtual Assistants and Outsourcing

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.

The key to learning how to work with a VA is experience. The question is: how can you get started easily and with little risk? The steps are: 1. Find a VA 2. Start with a single task and gradually increase the amount of work as you gain comfort 3. If things don’t work out, find a new VA

Chapter 7 – Grow it or Start Over

If you can hone your email response snippets, optimize your installation process and online help docs, and especially if you own a SaaS app, you can minimize your support time. Every time you receive a support request, your first thought should be “how can I make sure I never receive this question again.” You will make a time investment beyond a simple reply, but it will pay for itself for years to come.

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.

Spend 30 minutes at the end of every month going through your payment processing, PayPal and credit card statements and determine your total income and expenditures for this product to calculate your profit for the month.

Track Hours Spent – Using a tool like SlimTimer78, 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, and to speak honestly about the monthly time investment if you sell.

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