The startup world is a risky, scary place. But the rewards are great, if you know how to do things right. Startup expert Dan Norris shares the steps on how you can move from bootstrapper to successful business owner.
00:57 – A guest with a great story
03:38 – Why consider a startup?
05:28 – What’s a bootstrapper?
06:51 – The typical startup business
09:42 – Combining 2 main startup models
13:04 – Can you sell it?
14:27 – Achieving balance
16:59 – Being able to step back
18:51 – The need for quality execution
21:45 – How WP Curve has grown
24:11 – Doing it right
25:58 – Avoiding compromise
27:37 – What’s your profit margin?
30:45 – It must be a good fit
33:10 – A quick recap
34:46 – The role of PR
Get more startup wisdom from Dan Norris at the JamesSchramko live event
James: James Schramko here, welcome to SuperFastBusiness.com. Today we’re going to delve into the world of the startup. It’s an area that I haven’t visited for a while. I generally don’t take on coaching students who are doing startups, because there’s a huge amount of uncertainty, of risk, of fear, a slow progression in many cases, a world of pain. And that’s why I brought in a guest who loves those things. Welcome, Dan Norris.
Dan: I love pain. Thanks, James, I thought you’d never ask me to be on your podcast. It’s a pleasure to be here.
James: I wanted to ask you on the podcast, Dan, because you are in the same situation as a good portion of the listeners of this show, but you’ve just come out of it with a good success story, and that’s the exciting thing. And you’ve even documented it, you’ve got a book called “7 Day Startup.”
A lot of my audience would know you from your business as a service, which is wpcurve.com, but I think you’ve got such a great story because having been aware of you since the first time I think you did a review of my information product, as not an affiliate, I knew that you were a little bit different to the rest. You were always outspoken, you have strong opinions, you have an alternative point of view than a lot of the guru marketers, and I like that.
It’s probably a very iconic Australian trait, but you’ve come through a journey of pain and struggle, and you’ve actually emerged with a great business. And I’d love it if we could cover some of the factors that caused that to happen and we’ll see what we can come up with, hey?
Dan: That sounds good to me. What I was going to say before you fire questions at me is I have been following you for a while too, James, and it’s kind of cool to be speaking at your event coming up. Because I think my first memory of you was one of the events you had going in Caloundra, and I don’t know how many years ago that was, that might have been FastWebFormula 3 or something like that, but it’s been quite a while.
James: It was, it was FastWebFormula 3. So you know, we’ve been there in a similar space, we have a lot of crossover. I’m delighted that you’re coming to the event, because it gives everyone hope that no matter how painful it is or how difficult it seems or how frustrating it can be, there are things you can do to shortcut your path to the success. Certainly, if you’re listening to the things that I talk about, because I’ve started up my own businesses and broken through with them.
But you’ve also started to document some of the ins and outs, and you’ve definitely been following the tech startup industry, and you are an active participant in that world, which I’m not really involved in. I’ve moved on to focus on mature businesses. My sweet spot is the six-figure to seven-figure transition.
It’s fair to say that you’ve got some good experience now in the zero to six figures zone, having been there. You did it the hard way with your Web development business, and then you did it the easier way with your software business. But not the first software business, I think you’ve migrated and had plenty of goes at this. So let’s maybe just start off with why would we want to consider doing a startup in the first place.
Why a startup?
Dan: Yeah. I think it’s funny that I sort of don’t fit perfectly into your world, but at the same time I don’t fit perfectly into the startup world either, and all of the startup guys think I’m full of sh**, too, because I kind of disagree with everything they say.
But to me, if you’re in a position like I was in, which is you feel like you’re an entrepreneur and you want to be an entrepreneur, you don’t want to work for someone else, you’re prepared to work hard, and you want to start a business but you don’t really just want to start any business. You want to start something with potentially high growth and could potentially be worth a lot of money one day, maybe sell it one day, maybe create like a really significant impact in terms of thousands of customers or tens of thousands a year or something, then I think… the reason why I try to put out around those kinds of ideas is how you as a bootstrap founder or a solo founder can create a business that has some of the good aspects.
I mean you’ve mentioned some of the bad aspects of having a startup, but on the flip side I think that high growth and the high reward potential is the whole reason people start businesses in that kind of startup world. So my whole message is how do you get the best bits of that world and not the worst bits.
And to me, the way I’m attempting to go about it with my business is stay away from risk in terms of launching as quickly as possible, not investing a whole lot of money upfront, focusing on paying customers after you launch, but at the same time saying “No” to enough that you can build something that’s going to grow consistently 10% to 20% every month into a big market rather than just create something that’s going to be like an agency where you can earn some decent money but it’s probably never going to turn into anything other than what it is right now.
A bootstrapper defined
James: Right. So you skipped to some of the how there, I’m going to pull back. Firstly, define what a bootstrapper is, someone’s probably thinking, “What is a bootstrapper?”
Dan: Yeah, so in the startup world you essentially have people who’ve got funding, and you have people who don’t have funding. And they’ll sometimes cross over, you tend to get people that are passionate about one or the other, like the Rob Walling and Patrick McKenzie, those kind of guys are sort of famous bootstrap kind of guys, and they’re not guys that have a lot of funding. And I think the 37Signals guys, although they do have funding in their company now, I think originally they were big proponents of funding things yourself and doing work on the side to make sure your startup can grow and when it does grow sort of put that away and focus on the startup.
In Australia, especially in the Gold Coast and especially if you don’t have co-founders or a track record, it’s very, very, very difficult to get traditional startup funding. So my quest was, how do I start a business that still would be defined as a startup in terms of doing something significant and high impact and high growth but doing it without having to sit around and wait for investors to invest money in my company.
James: Exactly. From my perspective, I’ve always been self-funded, and I am the investor in my business, so I take it seriously. And I always am attracted to cash flow-positive businesses as well, because they can feed themselves.
Typical bootstrap businesses
Now, let’s just sort of zone in a bit on what type of businesses are we talking about here, just to be very clear on this. When we say startup, or bootstrap or funded business, can you sort of give us an idea of some of the typical businesses in your world?
Dan: Yeah, I mean in the book I go through what are some of the criteria of having a good business idea, if you’re a bootstrap startup founder. Those might not necessarily be the same thing as the typical startup. If you look at the typical startups, like we were talking about Slack recently, that’s an example of a company that’s just over a year old, is worth over a billion dollars and is one of the fastest growing startups in history.
That’s the kind of company that it’s going to be almost impossible for an individual to start without money. Like I think they’ve got $43 million in funding, and the average person probably wouldn’t even have any concept of what they could even do with $43 million in terms of building a live chat app. But that’s kind of that world, and my message is more of like, if you’re going to start a services business, for example, then you could do what I did in my first business, which is to create an agency and you could do everything. You could do hosting, Web design, development, SEO, you can be the guy that goes out and gets the deals and has coffee with clients and all of that.
Or you can pick something that is very, very specific and say no to everything else and thereby get some of the benefits of a startup. And not just very specific, something that’s consistent and ongoing and ideally recurring, so any business that I start now is recurring, and it’s based around a simple service. And software is a good way to do it, but it’s also a very, very difficult thing to do, and I think just about every person who’s ever tried to start a software company has failed at least once, and I’m no different there.
James: I’m no different, either. It’s a very hard model. It sounds so appealing, you just find a problem in the market, you pay a programmer to create the solution and then you’ll be really rich.
James: I’ve found it’s a constantly moving target. To get good development is expensive, and then things break and change constantly, depending on what you’ve chosen to attach yourself to. Or if you want to be an island, then it’s even harder to get awareness of it.
So you mentioned two main models there. Software as a service or services. And I’m a huge fan of recurring as well. So that’s a big clue. So the type of businesses that you mostly see are software as a service and there’s any number of those, like Basecamp, Teamwork, Slack, and then there’s business services. Like you have business services, I do a mastermind, that could be considered a business service on a recurring subscription.
Services + software
Dan: Yes, so like I try to do is OK, you can start a business and it could have good revenue and all the rest of it, but what are the sort of the businesses that investors would likely invest in? And I don’t think that way because I want to get investment, but I think that way because it pushes me to think about how I can actually build something that’s going to be worth a lot of money one day, and one easy way you can do it, which is something I’m pursuing this year, is combining both services and softwares.
So what I like about services, and I’ve got to start somewhere, maybe I can link you up where I go through the various types of businesses and memberships and services and products and software and rate them on different aspects of growth and how good they are at providing a high growth company. And the reason I like services is they’re very easy to start, and you can start them quickly with no money. But what that also means is that anyone else can do the same thing, and you effectively have no point of difference other than your brand.
Dan: And we’ve seen that with WP Curve, literally every day. I started putting it up on Facebook for a while, but now when someone copies us, I don’t even bother putting it up because it just literally happens every day.
It’s one of the better businesses to start as a bootstrapper from the point of view that it’s easy to start, and it’s easy to grow and there’s not too much risk. But at the same time, it’s pretty rare for investors to invest in a purely services company, and there’s a few reasons for that. Probably the main reason is, there’s not really any intellectual property or any kind of asset that you’re building when you’re building a services company.
So what I’m interested in this year, which is something I’m going to do with a couple of my businesses is, how do you combine the best of both worlds, in that you would have a services business and you would also have a software component to that business that gave you a competitive advantage.
And I think if you can build a business that’s easy to build quickly, but then once you’ve got the revenue, like at the moment we’ve got the revenue to pay software developers and whoever we need to build a nice product, and so we’re in a good position to build our own system and build something unique that our competitors can’t copy, so I think that’s an interesting model for people to think about if they’re kind of tossing up between the two.
James: Yeah, and I think you might have done something similar to what I did, when… I think we’ve both had sort of dashboard-type products, and I bundled my dashboard product into my coaching membership as a value add because it’s something that people can use, and it adds value, and it creates a little bit of “stick,” as we say in the industry, which is it keeps people around, or the retention aspect. I think maybe you might have bundled in some of your software for members as well.
But the software by itself, that was tough going, and it takes a little bit to get right. The services are easier to set up, but much harder to sell, and you said it yourself, you’ve got a bunch of clones out there every day, you’ve got some new guy starting up the same business model as I see it, out there being pushed in the same circles.
So you need something to separate or differentiate you from the rest of the market. Because it’s not enough to be the first, right? Like O’Neill invents the wetsuit, but then in Australia Rip Curl and Billabong and all these ones become really savvy marketers and they say, oh, thanks for the idea and we’ll just sort of expand on that.
James: You don’t get an exclusive for that long, do you?
Dan: I think the saying is, “Furthest up the hill is first to get shot,” or something like that?
James: Yeah, the pioneers get the arrows in their back.
James: So you constantly got to keep innovating.
Is it saleable?
Dan: Yeah, part of that is just the nature of business itself. I don’t think businesses generally last forever. And so that’s why I think another thing you can borrow from the startup world is, I think in normal sort of startup business world or Internet marketing world, people don’t really think about selling their business much. In the startup world, it’s pretty much all people think about.
James: That’s like the big lottery ticket, it’s the dream. Everyone wants the next Facebook, they see something sell for a billion dollars and they’re really inspired by that, but I think they’re not looking at how much of that equity gets surrendered and how much does that founder get pushed down to employee or even exited at some point, you know, like Steve Jobs had happen to him, which was a fascinating scenario. It’s a pretty ruthless world.
Dan: Yeah, but I think there’s a balance. I think you can take some of those bits from that world and…
Dan: If I think about our business, I know at the moment I don’t want to sell it, but I don’t want to build something that’s not saleable. So if there’s an idea that we have in our business to do a certain project or to have a certain service, and I don’t think that’s something that going to create some kind of asset for our company, then we just won’t do it. And like you said earlier on, it’s kind of hard, you need to be a bit of a risk taker to start a business where you’re constantly saying “No” to people.
Striking a balance
But again, it’s about balance. I think long term, the business we create will be much stronger than my last business. Well, it already is, but I think it would be a much stronger business than the agency-type model where you would quite easily get high revenue early on, but then just about everyone I know has started that type of business, kind of gets burnt out and they can’t get past the hurdle of exiting themselves from the business.
So I think there’s a balance, and I think you can get some, at least from the exit point of view, if you can think about why the company’s exited, what is actually valuable about them, how can you build some of those things into your own business. And I think you can end up better off than if you didn’t think about it to start with, even if you don’t plan on actually selling your company.
James: Even the discipline when you’re setting up something to sell, of having separate accounts and things that you could actually detach later on from your own personal life. For example, a lot of people in our industry in the IM space built their whole business around their own name, even their own dot com, very common. And they can’t sell it, it’s not saleable, but I suppose they’re just going down the cash cow model and lending personality marketing and authority to a business has the other advantage of it being harder to replicate. So hard to replicate, easy to start up, impossible to sell.
So there’s somewhere a balance. I think probably part of my business is saleable and the other part is not saleable at all. So I’ve kind of got a foot in both worlds there. I know exactly what you’re talking about, and to some extent I’m sure a lot of your content marketing and driving of the business, in the beginning, brought that personality to it and then over time it’s transferring off into the brand name.
Dan: Yeah, well I guess a challenge is, one of the things that Paul Graham said is, he’s a bit of a startup guru, is, “Do things that don’t scale.” Which is basically saying, when you first start up a company, you probably have to do a whole bunch of stuff that you can’t really easily get someone else to do. Like my content is a good example of that. I couldn’t have really had someone produce the amount of content and generate the kind of following that I did early on. I certainly couldn’t afford to pay someone to do it.
And even if I did it, it’s unlikely whether they would have cared that much about it anyway, because it wouldn’t have been quite as genuine. But I think there’s a good separation between, like, what stuff do you have to do early on to get traction versus what are you actually committing to long term in your business. And are you building a business that inherently cannot scale because it relies on you or are you building a business that is fundamentally scalable once it gets the boost that it needs when you start?
Stepping back from things
And so the content’s good in that we’re just going through that at the moment where I’ve got a full time content guy, he looks after all of our content. I haven’t posted on our site since October last year, and we’re going through the kind of process of how do I exit Dan Norris from the WP Curve brand, and make it more about just helping entrepreneurs and about WP Curve as a brand, not just about me.
James: It’s a great conversation. We watched Clay Collins do all his content in the beginning and then bring on experts to do the podcasts for ConversionCast and then to get guest contributions so that they could run content without him. Certainly in my case, for the last six months, I stepped back from being the prime content provider on my own site and having substituted methods where it’s team driven, for exactly the same reason.
I wanted to see how far at arm’s length you can make it. And it is a really interesting thing and I think the key point is, be clear about, when you’re starting, what type of business do you want to finish with, and secondly be conscious of that switch point where you need to drop the tools and get someone else to come in. And it’s probably at the point where you can afford to financially, where it’s hopefully self-funded and profitable to be able to step a few layers back like I have with my support team and with my services businesses. It doesn’t require me for day-to-day running, and that’s when you start to get the leverage.
Dan: Well, I think Clay’s a good example. Clay’s one of those guys who has sort of successfully exited out of the Internet marketing world and into the startup world. And I love to look at examples like that because you notice their kind of behavior and the way that they go about business changes a bit when they do that. Or in Clay’s case, probably before he did that, because he was able to get that funding and get that attention of investors because he did so many things right.
But one of the main things, I think, is that whole issue of branding. And maybe a better word for it is just execution. I mean, if you look at the way LeadPages was executed, even when he didn’t have that many resources, I think it was just him and Simon, and they were just making LeadPlayer, but everything they did was just really high standard, because Simon’s a talented developer who’s got a good eye for design and I think one thing you can get from the startup world is they really, really value execution, or if you want to say it a different way, branding or design.
And that’s something that’s not valued that much in the Internet marketing world or the general start your own business world, and I think that’s something that I’ve tried my best to bring into my companies and I think a lot of people can probably do the same thing if they look at things like, what are the types of brands that people are actually falling in love with, what are the types of brands that are ending up on people’s screens, on their phones, that are getting four hours of their attention each day? And how can you bring some of those elements into your own business?
James: It’s such a great point. It’s why I’ve really been pushing the design thing, interviewing experts like Greg Merrilees on it. And it’s also, coincidentally, I think you’re on the same page and probably influenced my thinking on this a little is why you don’t have to have affiliates when you have a good brand and a great solution for the market. It’s not a mandatory thing, and it’s certainly even uncommon in a lot of these startups, the need for pimping your product.
I love that the design of the product can be so good that it inspires users to be motivated to share it with other people even without an affiliate program.
Dan: Yeah, I think a lot of the more aggressive sort of Internet marketing tactics don’t get used by startups. Even if you look at something like popups, like I often look at the startups I looked up to and look at their sites and look at how many of them are using popups, and it’s quite rare for them to use them, because it’s taking a bit of a risk with your brand when you’re kind of putting something up in someone’s face and asking them for something, and in some cases, treating them like an idiot. You know, like the ones that say, “No, I don’t want higher conversions…” you know, like the Neil Patel, not that I’m having a go at Neil Patel, but he’s extremely aggressive with his popups.
James: I’d say he’s one of your superheroes, right?
Dan: Yeah, yeah, for sure, and if you’ve got that level of authority, you can probably do whatever the hell you want. And as I understand it, I don’t think he monetizes his blog, I don’t think he actually cares, I think he just likes doing the the content.
James: Well, I think, having spoken to Neil, he doesn’t feel right monetizing his blog. His goal is a million uniques a month. That’s the goal, it’s not a monetary goal. But again, if you’re not married and you don’t have a bunch of kids and whatever, you could do anything you want. You can live wherever you want, you can wear whatever you want. And I think you can have different goals, but you’re a family man, you’ve got different needs than a lot of these young gun tech startup gurus.
WP Curve’s progress
Dan: Yeah. I mean from our point of view, our process has been, how the hell do we generate a wage for ourselves as soon as possible. And so with WP Curve, like for the first year, it was quite hard to turn down potentially tens of thousands of dollars’ worth of work to focus on just creating this one simple service. But I also knew that it was growing very quickly, and it would be well and truly worth it in the long run.
The position I’m in now is quite good, we can pay ourselves a really good wage, much more than I’ve ever paid myself, but we can also afford to pay full time content people. I’ve got a full time system developer now that builds our systems, we’ve got a whole bunch of team members all around the world, and we can pay two designers to redo our brand, and we can sort of get the best of both worlds.
And having that recurring income is really important. People kind of see that as being, OK, it’s nice to have consistent income, but it’s much better than nice. It completely changes the way you can do business, because you’re completely confident next month how much money you’re going to make, so you can make some of those decisions a lot earlier.
So we can hire three or four weeks before we have to and have people up to speed before we need them, because we know that we’re going to be growing, and we can invest a couple of thousand dollars more this month than we otherwise would have, because we know next month we would have grown to make up for it anyway. And it kind of changes the way you can go about business if you’ve got that consistency.
James: Absolutely. I mean, I can feel comfortable about spending half a million dollars in wages because I know that the business is going to cover that. And that is a mental mindset block that a lot of people stumble against, that they’re not prepared to invest, and I imagine a lot of your clones who come along and try and rip off your business model have not thought about hiring or scaling beyond the one or two people who are starting to work in the beginning. And I imagine in the beginning, they’re probably working very long hours doing some pretty small jobs. And probably some of them burn out.
Dan: Yeah. I’m not too worried about the individuals to rip off exactly what we’re doing. But it is going to get interesting, what we’re doing, because there are marketplaces, like PeoplePerHour, who’ve ripped off what we do word for word. And they’re a very, very big company with thousands of developers at their disposal, so it’s going to be kind of interesting to see if they can pull off that model better than we can or if our model of just hiring full time people ends up being a better way to go and providing a better service.
How to do it right
James: Yeah. I’m sure that it’s going to go fine for you. So let’s talk a little bit more about the how. How do we do this right? I know you had a Web development company where you were working long hours and it wasn’t as profitable for you as you would have liked. You tried some software stuff, that was hard slog because I think you were having trouble figuring out who it was for and how they would pay for it.
And I think you changed names several times, probably name change once a month, was sort of like the standard operating procedure for a while. And then you found your zone. Out of all of that, you know, we look back, you can laugh about it now, but what are some of the things you learned on how you would go about setting this up and avoiding some of these mistakes?
Dan: Well, just probably the main thing I learned is that the whole message in my book, which is “You Don’t Learn Until You Launch,” is that the first mistake I made is it took me way too long to launch. And again, we’ve talked about the difficulty of software companies and how it’s not easy to build a good piece of software. So the first thing I say to people who are in my position is don’t build a software company. Unless you’re a really, really, really good software guy.
There’s only one guy I can think of, and he’s a guy I mentioned in my book, Josh from Baremetrics, who managed to start a software company in week or two and has gone on to create something really significant, and he’s now a funded company, I think he employs 10 people, and has half a million dollars in funding. I searched far and wide for other examples and I couldn’t find one. So I think start a business that is easy to launch, start something that is simple but in a big market, not a little niche.
James: Oh, I’m so glad to hear you say that. I think it’s great being a huge fish in a tiny little pond, except that it gets boring really quick. I’m so on the same page as you. Go for a huge market, and have a very easy-to-understand offer for that market.
Dan: Yeah. It’s kind of difficult because in a way we were sort of first with the model that we’re doing. And that was probably a fluke, I mean I don’t think I’m some kind of genius who invented something. I think it was probably just a fluke that I pulled that out of my a** and it happened to work. But the key thing I guess is that I was able to this time around do it really quickly. But I was also able to not compromise on some of the things I didn’t want to compromise on.
So when I started Informly, or whatever the words I gave it at the time, there were a few, all I wanted to do was create a startup, and I wanted it to be something that could be big. And I guess the definition of big was multi-million dollars. But I think, really, for something to really actually be a startup it probably has to have the potential to be much bigger than that.
With WP Curve, I didn’t want to compromise on that, I wanted to start something that still could be big. And so I wasn’t about to go and start a little niche service for a particular market. I can’t think of too many examples, but it seems to be the thing you do now is create a little niche, and these guys come and start these businesses and they get to two or three grand a month and they just get stuck. And so that was one compromise I wasn’t prepared to make.
And I was prepared to forego whatever income I had in the short term in order to start something new in a big market that wasn’t going to hit some kind of ceiling as we started growing. And actually, we’ve grown at about 20% a month from then. Nineteen months in, and we haven’t had a single month where we haven’t grown. If it had been in a small market, we would have stumbled and we would have had to change and pivot and that would have really impacted our momentum.
James: Yeah, absolutely. So go for something you can launch fast, go for a big market, don’t compromise…
Considering your profit margin
Dan: The profit margin is probably something your audience has been exposed to through your content as well, but that’s an important consideration. And a good way to work at it if your business has legs as well is just think about, like what I did with WP Curve is work out, OK, I can estimate how many jobs people are going to request each month, I can estimate how much it costs me to have a developer, what’s the admin overhead and what’s the project management overhead, how much does that cost each month, and then can I double that and still offer something competitive?
James: That should be a rule of thumb. In my mind, an online business should be able to run somewhere between a 40% and 50% profit margin if they’re in a reasonable level, you know, retail or wholesale for the right market and if they’ve got their labor rate right and if they’re within the spectrum of practical. That needs to be about the number. If your profit margin’s 90% plus, you’re not hiring enough people or you’re not marketing. You are doing all the work, generally.
That’s a very common thing that I see with businesses doing $100,000 a year or $200,000 a year. They’ve got no infrastructure, and they are the business. And then there’s the flip side where you’re reinvesting all the money into the business, but you want to make sure that you’ve got a little bit of reserve so that you can get yourself through the hard times.
But the reality is, the business that can make somewhere around a 50% markup is going to be sustainable, profitable and an enjoyable business to run because you’re getting a reward for doing it and you can reinvest on a sliding scale to speed it up or just kick back and enjoy it.
Dan: Yeah, and I think that we talked about that agency model before, and this is where I think a lot of people struggle. I mean, there’s a few answers to how you fix profit margin problems, and the obvious one is put up your prices. But then that immediately changes where you sit in the market and changes how you have to go about generating business. Like if I was to look back at my original agency, and look at the amount of jobs I was doing, like I was pretty much doing everything.
I was doing sales very badly, I was doing content, I was doing SEO, hosting, I was even, at one point I was coding websites. A lot of the time I designed the websites myself. I’d even write content for sites, I managed the projects, I did the accounting. I mean, if you got someone to do all of those jobs for all of those clients, and actually added up how much that would cost at a market rate, and then work out your margins, then I would have worked out very very quickly that I had absolutely no profit in the business.
James: Well, your customers were getting a bargain.
Dan: Well, that may be true but it also may be true that if I was to put up the prices, that I would not have been in a good position to build that business. And that’s one of the things I talk about in the book as well, is, like, for a startup it’s OK to be purely analytical and follow like a lean startup, Eric Ries thing. But for someone who’s running their own business, and is self-funding, it really does rely a lot on the founder.
Finding the right fit
I knew I was never an agency guy, I knew I would always struggle to sell high-priced services. And so that model just wasn’t right for me, and there might be other people in your audience where the fit isn’t there, so I think for it to be a good business idea for someone who is an individual who’s self-funded, then it needs to be good for that individual. It needs to be something that they have some kind of, I guess an advantage.
Like my content is a good way for me to market WP Curve, but if I was selling $5,000 websites, I think my content would probably be close to useless. So there needs to be that fit there between the founder and how they go about generating interest in their business and the business itself.
James: Absolutely. It’s aligning your core strength. I’ve surrounded my business around being able to use my speaking, so I can podcast, I can talk, and my willingness to participate in communities, which is why I’ve built a couple of communities. I’m really happy to roll up the sleeves and get engaged with my customers on a daily basis, in a forum environment.
And I also love grooming a small team of managers who run the service businesses. It’s a very rewarding and enjoyable but also super comfortable role for me to do after doing that for Mercedes-Benz for all those years. So we should try to align our business models to the things that we’re most comfortable with.
And on the same page as you, I just can’t stand dealing with high-end agency customers and all that hand holding and going and visit people’s offices and coffee chats and re-educating people one at a time. That stuff drives me mental. So we are predominantly a wholesale business serving resellers for that reason. I need to be back a layer where I can really focus on delivering amazing product.
Dan: Yeah, and look, a couple of things there. One thing is, if you are good at that then that’s cool, but that might mean that that’s something that’s good for you to do when your business first starts, but if that is the way that your business goes about generating customers, then that cost needs to be factored into your margins.
James: Yes. You need to allow a commercial wage for that role, and then you would want to see that the business can run without that, without you having to do it.
James: And some businesses won’t work, especially the business models built around someone’s own domain. And the other ones will still work, but at a smaller profit. And then they become a real business. And that’s really the interesting thing.
A brief summary
So let’s see if we can summarize all of this. So I’m speaking with Dan Norris, he’s published “The 7 Day Startup,” which is a really good read, and takes you through some of the steps to consider if you’re going to do your own startup.
We covered some of the aspects of why you would want to get into this. If you’ve got that entrepreneurial streak, if you want to have your own e-business, if you like the excitement of a high growth and building something significant, this is for you.
You can either bootstrap that, which means fund it yourself from a small start, or you can get someone else to fund it, which often comes with compromise because they’re going to want their money back, just a reminder. Quite often they’ll control and dictate how that’s going to work.
The type of businesses we’re often talking about are either software as a service or perhaps a simple service business that goes beyond you being the only person in that business. So you want to start with the end in mind, and you want to try and scale it as quickly as possible in the biggest market that you feel you can reach and compete in.
And try the low-risk model where you’re just getting paid customers early and you can see promise in the model. And don’t compromise on things that are going to ruin this end vision for you or take it off track, especially doing jobs on the side that suck up your time and energy just for a quick buck now but at the expense of the business’s long term safety.
How did I do?
Dan: Good. I think a big part of the message is also around branding.
James: Yeah. Focus on good-quality design, great product, and not annoying the crap out of people.
The importance of PR
Dan: Yeah. And I think I was going to mention before, this might not be a word you use, but PR is something that startups do a lot of. And it’s not really something that Internet marketers or agency-type freelancers do much of or really understand. And I think PR could be getting your face on Forbes, or getting covered on TechCrunch or something, but it also could just be being interviewed. And I know you’re all like very generous around the way you spend your time, and I’ve definitely tried to do the same thing in that if someone asks me to be interviewed somewhere, I’ll always do that.
That’s kind of one of those things that you can’t, PR’s impossible to measure. You will never know whether my time doing this podcast or your time doing this podcast was worthwhile or whether you’ll get an ROI on that. But if you have the attitude that you will just help people and you will take the opportunity to get your name out there and spread the message that you’re passionate about, then overall that kind of PR engine kicks in.
And I think people who are starting businesses who aren’t in that startup world can learn from that. They might not get on TechCrunch, but they could look at the types of businesses that do and they could be generous with their time and looking for opportunities to be quoted in places or to be mentioned on websites or to be interviewed on podcasts and that kind of thing.
James: Yes. I think PR’s really important. We used to have a PR rep in the dealership. Obviously, a lot of the online businesses are utilizing online PR, but the real PR is where you’re developing relationships and strategic alliances and getting positioned well. And you’d have to go with the idea that if you possibly can measure it, great. Sometimes you can’t.
But I agree, if you’re constantly putting out content and you’re getting a good feel from at least your analytics where the listeners come from, which is much easier from podcasts, incidentally, especially if you have individual episodes, you get the actual download rates, you get the number of comments, you get indicators such as shares as to where you’re hitting the mark. I think this topic is something that people need to be aware of, because as I said, you‘ve been a personal experiment in some of the hard start aspects of it and you found a way through and you’ve documented it and that’s been really useful.
And you’ve given away some fantastic tips in this podcast, Dan, especially, you know, the area to really focus on to get some impact. And I’m looking forward to seeing what you do with your hybrid of combining service and software. I absolutely think that’s a winner, and in fact my first forum that I set up had a website-building software element, which I still have to this day, that helps people build their own websites. And that was a really fundamental thing that kept members in, was the ability to have a suite of tools in line with their coaching and content. So great idea.
I’m looking forward to your next book, and you’re going to be previewing some of the ideas from your next book at SuperFastBusiness Live, so I’m looking forward to what you’re going to share with us at that event in Manly.
Dan: Yeah, well I’m really looking forward to it. I really want to delve into, like, what are some specific things you can measure in your company against some of the best startups in the world and what can you change about your company to basically try to execute things on a world-class level even if you don’t have the same resources as the big startups have.
That’s my passion and I really hope I can spread that message to people at the conference and they can walk away with a list of things to change about their business to make it into a world-class brand.
James: It sounds very compelling. Thanks Dan, have a nice day.
Dan: Thanks man, thanks for having me.
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