Highlights from “How to Transform Your Ideas into Software Products”, by Poornima Vijayashanker
I’m sharing the key points I hand-picked while reading Poornima Vijayashanker’s excellent book about how to turn a software product into income. If you enjoy them, please buy the book!
Chapters
- How to come up with ideas, pare them down, and share them
- Start with a side project
- Mitigating market risk
- Building an audience before you build your product
- Finding your customer segment
- Identifying your ideal customer
- Differentiating with design
- What to put in a prototype
- How to manage product development and attract top technical talent
- Scrappy marketing startegies
- How to ask for your first dollar
- Metrics that matter
- Successful launch strategies
- Getting working capital to build your product and your business
My highlights from the book
Chapter 1. How to come up with ideas, pare them down, and share them
Make sure you understand why you are pursuing this idea.
Why is this idea important to you?
Who is the idea for?
If you are building a product that you want others to use, then you need to be taking feedback in constantly.
Notice that I don’t talk about the features. I start by mentioning whom the product is for: someone who is budget-conscious, so if you’re rolling in the dough it’s NOT for you. I talk about the problem: managing money is time consuming. I mention the name of the solution: Mint.com. Finally, I state the benefits: save time and grow your money.
You will share this idea summary and hone it based on the feedback you get.
the group that wants it, consider those your early adopters.
Another benefit to focusing on early adopters is that they will become your evangelists.
Chapter 2. Start with a side project
To be creative and to think creatively, your mind needs a lot of rest and relaxation.
Overcommitting only causes anxiety that constricts the flow of blood to the brain and ultimately inhibits your creativity.
Afraid of missing out on the opportunity?
use an app like RescueTime to track how long you take to perform a task.
You have to be firm with yourself and others if you want to stay focused!
each week, take stock of whether or not you worked on your idea and how much time you spent on it.
identify any times you weren’t able to make progress, and make note of the reasons.
Chapter 3. Mitigating market risk
if you don’t have domain expertise, then you take the time to do some research.
Having a level of market awareness helps you develop a position in the market. You can position based on any of the following factors: price, packaging, promotion, distribution, and competition.
Your product’s position in the market signals to customers how it is different from alternatives. This, in turn, helps to identify and attract customers.
They want to take the time to understand how your product appeals to their existing habits and behavior. They want to see how others will use it first.
Potential customers are more likely to trust their close friends and acquaintances than your marketing message. Hence earlyvangelists will be key to your success.
If you’re interested in learning even more about positioning, I’d highly recommend reading Al Ries and Jack Trout’s book, Positioning. I read it over 5 years ago, and it has left a very lasting impression on me.
Let’s switch gears and talk about how we develop a position. There are 4 steps involved: Competitive Analysis Market Sizing Identifying Neglected and Growing User Segments Differentiation
It’s not until they see the need for software to improve their operational efficiencies that they are willing to change their management practices. And often times, that is spurred on by competition they feel from other studios.
Start by defining the industry you are in.
Next, identify competitors within the industry, both large and small.
get a bird’s eye view of the various types of customers and the benefits they are seeking.
Next, you’ll need to understand the key success factors in the industry. This requires getting a historical perspective of how competitors formed the industry.
Some other things to think about when positioning a product are adoption and the rate of innovation.
Finally, there is a need to think about distribution as it relates to customer reach. What types of consumers are emerging whom your competitors don’t know about or have failed to serve?
Get a sense of how customers feel about existing competitors.
Take 3 competitors, dig into what people love and hate about their products, and list the key characteristics of these people. You can do this research by using something like Twitter’s search box
You’ll want to follow up and find out what they also love about the product. This is important, because even if someone hates a product, they might be loyal to it out of comfort.
It’s up to you to figure out if you can displace the competitor’s solution or work in tandem. To do this, you’ll need to understand how willing people are to switch.
There are 3 components of market sizing: Total addressable market (TAM): How big is the market you are currently in? How quickly is it growing? Served addressable market (SAM): Within the bigger market, whom do you actually service? How quickly is that segment growing? Target Market: Whom will you service first? Who will most likely be early adopters? Differentiation
Why aren’t there more products?
To identify if the neglected segment could potentially be early adopters. Directions: Ask yourself the following questions: Who doesn’t the competitor “get?” What will make this group loyal? What will it take to convince them to try out your product: price, features, credibility, comfort?
If you’ve done your market sizing, competitive analysis, and identified neglected and growing customer segments, then you’re one step closer to differentiating your product and creating a solid position in the market for it.
When you are getting started you have to build something small, which could be point tool that can be used alongside other products.
even if your customers have the same problem as you do, there are subtle nuances that you need to be aware of when building and designing a product. Those subtle nuances can dramatically affect how customers perceive, adopt, and use your product.
Chapter 4. Building an audience before you build your product
get people to preorder or pre-pay for it before they try it out!
You want to know what’s important to them because you can use that to refine your idea!
you need to get a head start understanding the priorities of your customers
made people take it seriously by telling them that my goal was to eventually build a product for them, one that they would pay for. Since they weren’t going to get a free lunch, they were willing to give me frank feedback.
However, I made people take it seriously by telling them that my goal was to eventually build a product for them, one that they would pay for. Since they weren’t going to get a free lunch, they were willing to give me frank feedback.
I made people take it seriously by telling them that my goal was to eventually build a product for them, one that they would pay for. Since they weren’t going to get a free lunch, they were willing to give me frank feedback.
I asked for referrals.
I also tapped into my broader network letting them know what I was doing and asking for help. I’d send out an email newsletter once a quarter.
Chapter 5. Finding your customer segment
It’s very likely that the type of customer you go after will change as you’re refining your idea. If that happens, then you’ll need to do another round of conversations with the new set.
Not everyone in your audience will become a customer. Some will go on to become great referrals or influencers. Be open to opportunities and don’t fixate on sales at this stage.
Tweet consistently.
you have to say it again and again, over different time windows and with varied content.
If you have thought leaders in your space that you know people love to follow, follow their followers. Their followers are engaged and chances are if you are offering a product, service, or knowledge that is similar but slightly different from the influencer’s, their followers will follow you back. The same rule applies to your competitors!
Use Twitter’s search functionality to find folks to follow who meet the criteria of potential customers. For example, I often search for “yoga instructor”
You can’t just schedule your tweets and walk away, or else people will think you’re just a robot. As I mentioned before, you do have to be engaged and have conversations with people.
What you’ve validated in this chapter If you completed the exercises, then you should have validated the following: There is an initial early audience (a subset of your broader target market) who may be interested in your idea There are online and offline channels you can use to connect to this initial audience.
Chapter 6. Identifying your ideal customer
Try to observe customers before the interview, and see if it deepens your understanding of them.
too often we target mainstream customers rather than early adopters.
If you see the signs of risk adoption or lack of interest, you should temporarily walk away. You won’t be able to convince them until later. Keep them updated on your progress, share testimonials, and let them know when you add features.
Chapter 7. Differentiating with design
Once you’ve built your audience, you are going to send this qualification questionnaire out to that audience, much like you would send a survey.
the goal is to get about 5–10 people who are prequalified in order to conduct some initial customer interviews.
Decision makers (people who make purchasing decisions within a group like a family or business) Economic buyers Recommenders Influencers
The qualification questionnaire should be no more than 5–7 questions. The first two questions should qualify the user, and the next ones should dig into the specifics of the problem.
take the link to your form and put it in a very short email — 3 lines max!
If you send it out via email and don’t get a single response within a week, then send a follow-up email with a friendly reminder.
feel free to post it at a few different times during the course of a week.
identify the people who are qualified and follow up with them.
I like to start with the following: “Thanks a lot for meeting with me, I really appreciate you taking time out of your day!” Then: “How’s your day going?”
the next phase is to look for the most promising interview candidates. You’ll want to study their responses and see which ones said they’d be open to learning more and working with you.
do at least 5 initial in-depth customer interviews, but you may need to perform more if you don’t have the right candidates or aren’t seeing good results.
in this initial stage, you do not want to talk about your product idea or solution. You want to get a deep understanding of the customer’s needs and problems.
I always recommend meeting people onsite to help them feel more natural and “in their own habitat.”
Tell them what’s going to happen.
I recommend taking an audio or video recording, because I like to be engaging during the interview
Ask different types of questions. In the book Interviewing Users, author Steve Portigal talks about the technique of asking naïve questions.
another important set of questions to ask are aspirational questions.
That deeper understanding will eventually translate to product design and marketing materials.
some of you might be interested in creating products that automate people’s tasks, you want to make sure people take the time to explain all the steps they perform, whether those are the steps in an ideal condition, and whether anyone else performs those steps.
Me: Why is it hard to use?
Me: Is there anything else?
It wasn’t until the 10th person told me that Mint was a much-needed solution that I felt we were onto something.
go broad and interview many people until patterns of needs emerge,
narrow down, and choose which segment to focus on first as you build your initial solution.
find out how potential customers hear about products and services so that you can tap into those channels for more interviewees.
sit down, review everything people said, and create behavioral descriptions of customers.
what they are doing when they aren’t using a tool (software). You should have also gained an understanding of why they are doing those actions.
one persona should always be the primary focus for the design.
Identify beliefs that people hold, the behaviors that result from those beliefs, and then create personas.
disconnect with your product idea, discover and understand your ideal customer persona, and become motivated enough to solve a problem for them.
taking advantage of the familiarity people have with another credible and highly-used product. If the experience is familiar, then people will instinctively think this product is as easy to use as the other and are more likely to adopt it.
Creating hierarchies of information in terms of importance or relevance is one way to help users accomplish goals by presenting the key information they need to make high-level decisions. When it comes to information architecture, a good product designer will focus on making sure the data can be inputted into the product seamlessly.
Understanding your competitors’ UI/UX weaknesses will help you design a better product.
Based on your first interaction with the product, did you experience the benefits the company publicized? Or, do you feel like it will require more work on your part to receive value?
identify a list of high-level verbs, or actions, that each persona performs.
We want to design for as many of the common behaviors as we can and validate whether those are enough to appeal to both segments.
You’ll want to understand a customer’s desires, feelings, preferences, and expectations in relation to each task. This will characterize their level of need, and based on their level of need, we can prioritize what to build!
take a task and translate it into a user story.
For each user story you created in the previous exercise (Exercise 7.2), you’re going to identify the steps the user will take through your product to accomplish the goal.
simulate positive and negative scenarios (error conditions).
storyboard template by dividing a page into 8 boxes. You’ll do this for each user story
verbally talk through the entire storyboard with at least two people.
I did a lot of customer interviews and then followed up with usability tests based on paper prototypes.
To create paper prototypes for our usability tests, we first need to create wireframes.
Ask permission to record the usability test.
you are not testing them, but that you are testing the product
At the end, ask people for feedback on what was confusing and what was clear.
ask them if the prototype contains the benefits they are looking for, or if they were expecting something else.
taking your paper prototype and making it interactive! You can make a clickable prototype using Balsamiq or InvisionApp.
You can make a clickable prototype using Balsamiq or InvisionApp.
In the third phase, you’re going to produce a high-fidelity mockup. A high-fidelity mockup is essentially a Photoshop file. It’s what your product will eventually look like.
The fourth and final usability test will be your actual software prototype. In this phase, you are testing usage and adoption.
Spot the consistent comments about what is confusing or could be improved, and be sure to understand why.
Before building anything, it’s important to understand who the early adopter of your product is and what your product’s value proposition is.
test out value propositions and see which ones people will sign up for.
Remember, it should only include benefits, not features!
Chapter 8. What to put in a prototype
I advise startup founders to start with a “concierge MVP.”
A concierge MVP is an experience, not a product. Essentially, you’re initially offering a service. You service the customer, keep track of all the steps, and once you have a critical mass of customers you can switch to automating the service through a software product.
Even if your ultimate goal is to create a technology or a physical product, you should start by crafting an experience.
before building the CRM solution, I created a 1-page ad listing the product’s benefits — basically a landing page
Chapter 9. How to manage product development and attract top technical talent
create two lists of features: Must-Haves vs. Nice-to-Haves.
List the Must-Haves under the value propositions. If one doesn’t fit, then you’ll need to either skip the Must-Have or modify the value proposition
review the list with customers
Marry the storyboards with the Must-Have features and make sure they reflect the value proposition(s) you are testing in your MVP.
include business metrics in your product roadmap is to make sure that what you are building is aligned with your high-level business goals.
list out a Must-Have feature you want to build for each week. For now, I recommend one feature per week.
Categorize all the features listed into the following buckets: infrastructure, new
take the time to break down a feature into user stories and observe how complex they are.
distinguishing between stories, features, and epics will make conversations go smoother.
Scope creep is a byproduct of complexity. It happens when you don’t anticipate every scenario,
a “done” bucket for what has been shipped, and “backlog,” which is a list of stories that have been prioritized.
make sure you have a product development process in place. It doesn’t have to be perfect or rigid, but it should hold you and your teammates accountable and let you know where you’re headed!
sell the benefits of working for you and with you to potential employees or teammates.
you need to sell people on the vision for your product. A vision isn’t a high-level overview of what your product does and whom it’s for. Rather, it describes the positive impact you want to make on people’s lives. In other words: why you do what you do.
pay people a small amount and keep the project to about a week. This lets me answer the following questions: Can they deliver something on time? Do I enjoy working with them? What is the quality of the finished project?
decide what kind of team you’re going to lead: in-house, remote, or outsourced. In any case, you need to set some clear standards for communicating.
“Being transparent about what’s going on in the company is really important. When everyone has a general idea of the state of the business, no one is surprised when things take a turn for the worst, or the best. It also takes a great amount of emotional intelligence (so called “EQ”) to know when someone is feeling down.
‘I see that you are feeling this way…’
The key is to be to be empathic but not sympathetic.”
“Founders also need to learn to understand what motivates the engineers they are recruiting; some people are motivated primarily by money, others by impact, others by role.
You can take shortcuts when you’re building your MVP to test it, but you need to revisit it later on and refactor it. The last thing you want is a fragile system, where things are constantly breaking.
You want to hire people based on their ability to get things done, rather than the number of years of experience they have under their belt.
You can keep your engineers motivated by being transparent, acknowledging when you’ve noticed a change in their behavior, and giving them a chance to voice their concerns.
Chapter 10. Scrappy marketing startegies
I’ve noticed a number of innovators with shiny object syndrome, especially when it comes to marketing their products. You might be suffering from this too if you’ve invested a lot of money into various marketing channels and hoped to see substantial results. If you’re running campaigns and not seeing results, I’d encourage you to turn them off right away!
I highly recommend you comb through your interview data to understand which channels resonate with your customers,
To show up in organic search results, you need to do content marketing and have a site that is optimized for a web crawler.
Customers don’t want to read these descriptions. It causes them to have to make decisions, which is mentally taxing. What they want to know is how this product will benefit them. Therefore, everything needs to be developed through the lens of the customer:
include a single CTA in each piece of content you create.
Check out a tool like OpenSite Explorer to keep track of who is linking to you, who is linking to your competitor, and searching for broken links.
interview them about how they use your product. The conversation you’ll have needs to revolve around what their life was like before your product, and how it has changed dramatically since then.
you want to drive potential customers to your site and then ask interested visitors for their contact info so you can follow up with them periodically.
Include trust indicators. If you already have customers, you can include a short testimonial. If you don’t, then put in a link to an About page describing your team (at the bottom so that it doesn’t interfere with the callto-action), or something else that humanizes the site. Otherwise, people will think that you’re going to spam them.
Even though you get a lot of emails, you probably still feel obligated to go through each email to make sure you’re not missing some important communication,
Everything matters in an email: delivery time, subject, sender, and the message contained within it.
The sooner you start sending out valuable information and the more frequently you do it, the more likely someone is to forward your info to another potential customer
Don’t be afraid of sending out sales emails alongside a drip campaign.
If you find yourself putting sales or product info into a newsletter, then move that info into either a drip or sales campaign.
Let’s take a top-down view. You are pulling leads in through your landing page,nurturing them through a drip campaign, and then priming them through a sales campaign with a single CTA to purchase.
If you write a blog post that you think is worth sharing with your subscribers, send them the first few paragraphs in an email with a link to come to your blog and read the rest. This will also clearly signal whether or not your audience members are truly interested in your product.
Remember to keep track of subscribe and unsubscribe rates to see what messaging is working.
Just like search or content marketing, social media marketing is a way to get leads, but it is not a way to close them! Once again, save that for email.
most people make the mistake of just posting rather than pulling people into conversations.
If you want to effectively convert people, you have to incite interest through a conversation and then drive them to an action like reading a blog post or going to a landing page to find out more info.
you have to be a little bit patient with customers and you also have to send them messages on a few different mediums
ask your customers what channels they are using
Chapter 11. How to ask for your first dollar
Much of the perceived value circles back to positioning. Remember, positioning is creating an image or identity in the minds of the target market. Occupy a position in a prospective customer’s mind — one that reflects strengths and weaknesses as well as those of the competitor. It ultimately determines the type of customers you attract, and determines the type of customers you eliminate.
Your pricing model is how you go about collecting payment from customers. In my car purchase example, the pricing model was monthly financing with a 1% down payment and 1% interest.
I cannot tell you how many people I have come across who just give away their products because they feel like it’s still in beta or a prototype. As a result, they have no idea what their customers value in it.
Once you have a hypothesis of who your customers are, that’s when you price.
You want to price early and even before the product is built! The point is to test price early and often in order to figure out the bounds of what your customers are willing to pay.
Directly asking a customer what price you should charge doesn’t help, because it doesn’t get at the value they are deriving from a product.
Feature-based pricing is when you offer various price points (low to high), and offer one or more features at the various price points. I personally feel like you end up leaving money on the table, because it doesn’t capture the entire value of what you are offering, such as quality and customer service, which goes beyond the product itself. Customers need to know and understand the value of that too.
customers need to understand that your pricing is not just about the product but the experience too, and they should be including that in their ROI. This is known as value pricing.
Time, convenience, and exclusivity (to convey status or a persona) are things that people value.
I do believe in providing discounts as an incentive or a reward for loyal customers!
I’ve raised prices a number of times, but I don’t change it for existing customers. Instead, I let them stay at their current price, and request that they pre-pay for a whole year to lock in the rate.
You can, of course, reduce the buy time with 3 things: scarcity, urgency, and exclusivity. But once again, you’ll need to make sure your customers are aware of those factors as they relate to your product.
you can’t always get a clear ROI. So you need to understand what your customer gets out of your product in terms of value. Are they interested in your product because it provides a convenience or alleviates a pain? If it’s a convenience, what amount would they be willing to pay for it? If they’re in pain, how much money does their pain cost them today?
Ask them about the substitutes they are currently using and how much each of those cost. This will help you know what their budget is.
The switching cost has to be low;
Chapter 12. Metrics that matter
In business, analytics is the discovery and communication of meaningful patterns in data.
A metric is measurement that is used to gauge some quantifiable component of a company’s performance, such as ROI or churn rate.
Tying a metric to a goal makes it understandable, and people will naturally start to prioritize their activities to accomplish it (i.e., they’ll know how and why they need to make decisions).
If you don’t want to be a yo-yo, you’ve got to follow this formula: 1 to 2 business goals + 1 metric + activities (which are subject to change depending on the results you see) + realistic time interval
KPIs (key performance indicators) are metrics that tie back to business goals and tell you if you are indeed accomplishing them.
at times, we aren’t able to piece together a coherent story from just looking at data. Therefore, we need to bridge the gap between quantitative measurements (data) and qualitative measurements (which feed into stories).
There are a number of ways to collect data. I’m going to mainly focus on 3 types in this book: Cohort Analysis A/B Testing Multivariate Testing
There are a number of frameworks out there for metrics. The two most popular are Eric Ries’ “Engines of Growth” from The Lean Startup and Dave McClure’s “Pirate Metrics.”
In Ries’ framework you begin by creating a sticky engine, which basically tries to retain as many customers as possible. This requires changing the product to make sure it is engaging for customers. Once you have established that, you move on to determine the virality engine by measuring the viral coefficient, which is the number of new users that each user brings in (i.e., refers). You also factor in churn and loss. Finally, you create a paid engine that brings in payments and you measure the customer lifetime value (CLV) and customer acquisition cost (CAC).
Let’s contrast this with McClure’s “Pirate Metrics,” which is a simple funnel consisting of the following steps: acquisition, activation, retention, revenue, and referral. At each step of the funnel you will experience a loss of customers.
You’ll want to keep track of the funnel for each channel.
If you want to know if users are actually using those features or how they are utilizing your product, I’d highly recommend using a tool like Kissmetrics 69 or Mixpanel70.
Retention rate: If you’re running a subscription-based business or put people on some form of contract, then you’ll need to keep track of how many customers you retain each month.
Churn rate: This is the opposite of retention.
Lifetime value: Take a snapshot of all your customers in aggregate, calculate how much they each paid you in total, and then look at the median of all your customers’ lifetime values.
Customer acquisition cost
Customer profitability: This basically boils down to subtracting LTV of a customer from how much you are spending on them on average.
Net Promoter Score: This is the percentage of people who will go on to promote your product minus the number of detractors — people
Fire those who aren’t profitable. Not every customer is a fit, and you’ll want to be sure that you’re clear in your messaging.
When it comes to price, there are really 3 core metrics: volume, margins, and reservation price.
the One Metric That Matters. The metric is primarily based on your current stage of business.
The metric that you set should guide the activities that you and your team are pursuing.
Chapter 13. Successful launch strategies
There are 3 S’s to a successful launch: security, scale and support.
Encrypt usernames and passwords.
Set up an SSL certificate for your website. This means that your site will start with https:// rather than http://.
Set up a data backup mechanism.
you’ll want to test the product internally, giving it to a handful of trustworthy early adopters and putting some mechanisms in place to track usage and collect feedback.
If you’re not sure whether your product can scale, then you’ll want to do some load testing. Check out loader.io 83 or LoadImpact 84.
You’ll also want to test it across various popular browsers. Check out BrowserStack
A landing site, which is the public facing site where customers are going to come and sign up to try out your product, but they are also coming here to look for things like an About page, a Contact page, FAQs, testimonials, and video tutorials.
A live chat client like Olark to be able to message customers as they come to your website.
A ticketing tool for customers to report bugs and any issues they experience, like GetSatisfaction, HelpScout, UserVoice, or ZenDesk.
A performance monitoring tool like New Relic, because you’ll want to know if any bottlenecks emerge once you start to put some load on your product.
A launch sequence is a set of marketing campaigns you send out to prime your initial set of customers. Yes, you have to prime them!
You’ll want to send out a sequence of emails to your network, early adopters, and whoever signed up to try out your product. You want to do this at least a month in advance. Ideally, you’ll send out about 4–5 reminders.
The day after, you want to reach out to customers and ask how things went. Following up is the key to getting feedback!
If you are eager to line up press and influencers to help you spread the word on launch day, then I highly recommend reaching out to them at least 2 months in advance and keeping them primed with a few reminders along the way.
Keep track of outliers, like feedback that was extremely positive and extremely negative. You’ll want to reach out to these folks. The extremely positive ones will become great case studies
look for the common criticisms.
If you’re not getting enough traffic to the site, you need to step up your marketing game and find more channels to spread the word about your product.
If the problem is that people are visiting the site but you’re dissatisfied with the percentage of people signing up, you need to work on messaging to convince them to sign up.
If people are visiting and signing up but not paying or coming back, then you’ve got to focus on the product engagement. This may mean redesigning user flows,
Types of pivots to consider:
- Zoom-in
- Zoom-out
- Customer segment
- Customer need
- Platform
- Business architecture
- Channel
- TechnologyThere may come a time where you discover that things just aren’t working out and you might want to end-of-life your product.
If you decide to sunset your product, you basically have to follow the launch sequence in reverse.
figure out whether you can put it in a low-cost maintenance mode or if you have to turn it off completely.
If you have another product in your portfolio or another company’s product that you regard highly, recommend it to people as a substitute.
Finally, provide reasons you are shutting down the product to your customers, give them 3–12 months of notice (not 1 day), and be prepared to off-board them.
Chapter 14. Getting working capital to build your product and your business
Bootstrapping is building a business without funding from investors.
Angel investment is capital that you receive from a business angel or high-net-worth individual in exchange for an equity stake in your company.
Venture capital is similar to angel investment in that you exchange equity (a percentage of ownership in your company) for capital. It is usually provided to companies pursuing high growth with exits like large acquisitions or IPOs.
The product validation steps I’ve listed in chapters 1 through 6 will require less than $500 of startup capital. Once you’ve gone through these steps and are ready to build, I advise you to try generating revenue immediately. Create a concierge MVP if you can, or a very simple prototype if you can’t, and couple it with a pre-order campaign.
If your goal is to create a lifestyle business or have a passive source of income, then I’d recommend building a fairly simple product that doesn’t require too much maintenance.
Most people I talked with who had bootstrapped had really just done it through savings or as a bridge before they received investment; there were very few who bootstrapped all the way to break-even and profitability.
The major benefit to bootstrapping is that it will give you the financial freedom and control that allows you to direct your company and innovate
The key to getting that freedom is to hit the revenue milestones that will let you switch from purely pursuing sales to doing creative work.
The 3 most common ways to bootstrap while still scaling your business are: Build a simple version of a product, then switch your focus to customer acquisition.
Initially offer services that are high touch, while automating and productizing them.
Offer services that require a level of expertise that can only come from you,
To understand your funding needs, compare what people are willing to pay with the costs associated with customer acquisition and rendering your service.
Keeping the top of that funnel filled is a must when bootstrapping,
If your goal is to scale, then you’ll have to keep a close watch on how costs go up as you increase sales volume.
Buy time has 2 stages: first, the amount of time it takes the customer to go from becoming aware of your business to understanding your value proposition; second, the time it takes for them to experience enough pain to decide to use your service and pay you for it.
If you see some progress but aren’t sure about the results being repeatable, stick with your strategy rather than veering off course.
if you see a trend of negative results consistently, you need to investigate their causes and refine your approach.
To get back to creative pursuits, I needed to let prospects come to me rather than always chase them. That’s when I realized that I had to focus more on value-creation activities.
basics, I’ll stop here and summarize what we’ve covered on bootstrapping: Figure out your service offering and start charging people for it. Start by setting a small revenue goal that
I’ll stop here and summarize what we’ve covered on bootstrapping: Figure out your service offering and start charging people for it. Start by setting a small revenue goal that is repeatable. Then, figure out marketing and sales activities along with their time intervals to yield returns. For the subsequent revenue goals, figure out which activities will continue to help achieve those goals and be consistent about pursuing them. Punt or refine your approach if activities demonstrate failing or inconclusive results. Watch your ratio of revenue to cost, and if need be, service a smaller set of customers at higher value.
Exercise 14.1 Create a revenue roadmap.
Figure 14.1 Income and expenses spreadsheet.
Figure 14.2 Service and product offerings spreadsheet.
Figure 14.3 Profit spreadsheet.
unlike a pre-order campaign where customers are primarily concerned with a product that meets their needs, crowdfunders care more about why you are building this product. Hence, you’ll need to have a story that showcases your vision.
If you’re considering an accelerator, take the time to do some research to understand if it’s right for you and for the stage you’re in.
Unless you’ve previously sold your company for millions of dollars, investors will not want to risk investing in an unknown person until you have some traction.
Traction today means: at least having a prototype built out, and preferably one that is being used by paying customers; as well as a solid team of seasoned technical people, along with business people who are doing sales or marketing to help with customer growth.
Finally, you need to have a BIG idea, which means that it needs to expand to service a large market segment.
In the early stages you’ll want to approach angels, who are willing to take a bigger risk, rather than venture capitalists,
A typical angel investment would be $10K to $1M.
An initial investment round, also known as a seed round, can range from $50K-$2M,
If you are going to go the route of seeking capital from VCs, then realize you’re going to need to find an investor who is interested in your market, because some (though not all) have a thesis around the types of ideas and industries they like to invest in. You’ll also need to be willing to give up a larger portion of equity in your company, anywhere from 15–30%. You’ll need to give them a board seat,
I want your strongest takeaway from the book to be the following: building isn’t enough; you also have to invest in generating demand and refining your product.
Generating demand might take weeks, months, or years. It has definitely taken many companies that long — even those that might appear to be overnight successes! If you dig down deep in a founder’s story, you’re sure to discover a path of failures that came first.
Conclusion
As a developer who dreamt of making a living out of making software products, I discovered the hard way that I was lacking basic marketing knowledge that was critical in order to be successful.
I discovered Poornima in Paris in 2017, when she came to give a talk at The Family. I was stunned by her talk because I realised that my ambitions and flaws were similar to the ones she had experienced before becoming a successful developer turned entrepreneur.
One of the a-ha moment for me was when she said that most developers were naturally reluctant to actually ask for money for their software, even though they wanted to build a business out of it! This is only one of the road-blocks that we need to get rid of, and that are explained in the book.
I was lucky enough to be given a free copy of this book for my Kindle. Today I’m hoping that these extracts from the book will make you want to buy it. I assure you that it’s a very wise investment if you’re a developer who is serious about starting a business:
Note: I am not getting any compensation for writing and sharing this article. The link above is affiliation-free.
