The $1,000 Challenge by Paul Orlando
Startups often start with limited resources, but they never face a shortage of theory on how to operate. Tools abound. Talks, seminars, videos and classes are plentiful. Advice is thrown around. Want to learn about building mobile apps, or crowdfunding, or e-commerce, or design, or marketing to millennials? There are thousands of places to go.
Unfortunately, for a resource-strapped startup, trying to try out every new tool can lead you down a death spiral of scattered directions.
Don't combine this wealth of options with a poverty of action.
Goodbye Theory, Hello Practice
I recommend that as you ground yourself in general frameworks like lean startup and customer development, you start to practice. You will learn better when you have to act and live with results rather than just read about ideas and think about results. Here are some examples of times startups I advised took action and how it impacted them.
One founder I know had a personal love of supporting young authors and built a site for them to list their work. He kept thinking of ways to improve the site but with limited time from his developers he delayed iterations until he was more confident that they were the right move. Instead, he started to interview authors as a way to gain subscribers. This took no tech resources and moved him forward to the point that he had the start of an affiliate business -- a different outcome than he expected.
Another founder I worked with discovered that while his education product worked and made sense for his target market, he couldn't close deals. That is, his target customers were a closed group and not that open to people from outside. If he hadn't first figured this out by trying to close deals, then he might have wasted time trying to scale up before getting an insider to help him sell.
In another startup I advise, the founders love collecting sneakers. As a side project they hacked together a quick and high-priced sneaker collecting app. While the market for this is limited, they also only gave themselves one week to put it all together. Dependent on moving forward was that the app had to make money almost immediately with minimal marketing effort. They had fun building it regardless of outcome. But they did pretty well with sales from that side project.
Building a company that requires millions in investment before any returns, or even a product, of course remains a way huge value is created. For example, Facebook might have died 10 years ago or become a small niche site had they followed a path of monetizing early without thinking of a big land grab. That land grab was only possible with funding. For one, Facebook already had demonstrated the ability to gain 90% signups at each new university campus and high retention as well. They had already proved that they had a repeatable model. So for them, raising money was an easier path. But here I'm talking to the majority of you -- those who are not yet at the point that Facebook was in back then. If you know my bias toward bootstrapping in the beginning, you'll know I have other suggestions.
Let's assume that you are trying to build something that can generate revenue. Let's then start with a very small goal. One that you can state openly now without anyone thinking you're unrealistic. Yet, this might scare some of you.
Here is it: try to get your startup -- or a project you're interested in -- to earn $1000 from customers and relatively fast, say in the first month. Whether it's one customer handing over $1000 or 1000 customers paying $1 each, try to reach $1000.
For many of you, it will be a bigger challenge than you think. You'll push it off until your work is better. You'll delay until you're up to the challenge. Don't. Embrace every part of the challenge.
For the three startups mentioned above, the first got to his first $1000 as a matter of building his business, the second more quickly avoided the pain of wasted time and addressed a needed personnel fix and the third got to $1000 on a side project as revenue requiring minimal effort.
This exercise is independent of whether you are building an enterprise startup or a consumer-facing one. And I don't mean you should try to earn $1000 only as a direct stepping stone to building a sustainable business. While you might be on that track, just the practice of getting something to customers is a great exercise in and of itself.
If you make it to $1000 with something new then share how you made it happen.
Paul Orlando co-founded and ran Hong Kong's first startup accelerator, AcceleratorHK. He advises startups around the world on lean startup, customer development and analytics. Paul now lives in Pasadena, California and wrote the book for startups outside of tech hubs, called Startup Sacrilege.