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In the presentation:
01:53 – Starting from a low point
04:35 – The fundamental problems of small agencies
06:57 – Bootstrapping a high-growth business
10:02 – Set your goals higher
11:47 – An exact definition of a startup
13:04 – What startups should do
14:55 – Conversational brand names
17:03 – Impeccable product execution
17:38 – What startups don’t do
18:24 – No less than world-class designs
19:56 – You can’t do it alone
20:45 – How to say NO
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Tweetables:
Predictable revenue for growth. [Click To Tweet]
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Transcription:
James: Now in contrast to an 8-figure business, what about if you’re starting from scratch? What if you’ve got nothing, or you’re at the very, very foothills? That’s why I’ve deliberately put our next guest, Dan Norris, up now, because we’ve covered the whole crowd here. If you feel 8-figures is beyond your scope, then this should be a very encouraging presentation.
I first found out about Dan when he actually promoted my Traffic Grab product, not as an affiliate, which was kind of unusual at the time. Most people promote things because they’re going to get a commission. It really was the start of what became the end result of me stopping my affiliate program. The fact that I could make a product that was good enough that someone would talk about because they thought it was a good product was really profound, and through constant observation of Dan’s approach, I think he’s very instructive in the zag while everyone’s zigging, and I think you’re going to really enjoy what he’s created. So I’d like to welcome up Dan, thank you for coming along.
Dan: Thanks man, thank you very much.
James: Have fun.
Dan: Hi, everybody, thanks for having me. So today I’m going to be talking about going from being an Internet marketer to a startup founder. And I’m hopeful that the people in this room are as obsessed as I am about startups, and I had become extremely obsessed about the startup world, and if you’re not then I think you’re going to learn things here that you’re not going to learn anywhere. It’s the first time I’ve given this talk or I’ve put out this content.
So I’m going to be doing it through a combination of my own story, a story of absolute failure, and then also creating the kind of business that maybe some people in this room want to create and certainly the kind of business that I dreamt of creating. And I’m going to be delivering 10 things that I’ve picked up from the startup world that I think you guys can include in your business.
The lowest point in 9 years
So that’s me in 2013, that’s 18 months ago. I wasn’t homeless, despite all evidence to the contrary. But it was the low point in a 9-year entrepreneurial journey. I’d spent the last year creating what I thought was going to be my startup, and I got within 2 weeks of completely running out of money. I’d sold my last company which was my safety net.
I was spending about $2,000 a month to just keep it going, and I had a team of people, I actually had to let one guy go to Jake Hower, which was the most painful thing. You don’t want to give Jake anything. Just kidding. Yeah, I gave him my website. There’s more on that later.
But the worst thing was I started feeling like I wasn’t an entrepreneur, and even through the 7 years prior to that where things weren’t going that well, I still felt like I was an entrepreneur, but I lost that feeling, and it was like I really questioned whether I was an entrepreneur. And what made it worse was I had kids and they were kind of starting to be at the age where they were interested in “Who is daddy and what does he do?” Back then I couldn’t tell them what I did. I was just a failure.
I want to go back a little bit before that. This is my wage as an employee. I’m completely obsessed with line charts. There’s about 20 line charts in this presentation. I like line charts that look like this, and my line chart for my wage didn’t look like this for a long time after I stopped being an employee. This is the only time I ever worked for someone else, for 4 years. It was quite good, I had a boss that was nowhere near as hard as I was when I worked for myself, in fact he was never there, didn’t know what I did. I worked for the government.
And it kept going up, which was nice, too. And it was a reasonable wage, by the end. But unfortunately, as you see, it ends in 2006, and if you don’t get anything out of this presentation, then you can get this: If you want to start a Web design business, don’t leave a 60-grand income and then the next day buy a book on how to design websites.
I think there’s two themes, and I’m really happy to see the themes that have come out of the presentation. I’m actually blown away by the presentations today, like the general themes that are coming out of those sessions, and to me the idea of mindset and what you’re thinking at the time of creating your business has been really important to me. And what I was thinking in 2006 was, how do I replace my wage? And that changed dramatically 6 years later, and the results are dramatic.
A rough start
That’s what happened, in the middle, is what happened. The first bit at the start, the nice bit, that was me as an employee, the massive cliff is when I started my business. But the worst thing about that is for the next 7 years, the business didn’t grow. The business was creating websites for people, and every year I was running my business I felt like it was going OK, like I kind of felt like, OK revenue’s going up, I’ve got an office, I was like going to the next step, I got an office, I got a phone system – I’ve got a phone system and a server! – and I threw it out like a year later.
But I was doing those things that I thought you do as a business to grow. And revenue was going up. My profit was not going up because it was not a profitable business, and I just didn’t realize it. Because I did everything. And I think a lot of those sort of small agencies have all of these fundamental problems, things like you’re not differentiating, you’re really struggling to compete.
I was doing like $2,000 websites. I tried doing big projects as much as like 30 grand, thinking that would be better. But they were like more on me, so I couldn’t scale that. I tried doing smaller projects, down as small as $10 a month for hosting, because I thought I could scale that, but then the margin wasn’t there and there was too much competition. I tried everything you can imagine to fix this agency, all the way down to buying a website for $15,000 that ranked well in Google, buying 200, 300 domains to try and get individual keyword rankings for all those domains, who’s done that?
And then even buying another agency for 45 grand, that was supposed to be like 45 grand profit on top of mine, and it just didn’t, it just added 45 grand of expenses. The fundamentals were just wrong. And the most dramatic thing I did is the end of that chart, which is obviously, I stopped. And I got to a point where I couldn’t figure out how to fix it. So I sold it, for not much, but for enough to give me a year to work on something else.
So that’s an example of the monthly revenue chart, and I do like line charts, but I don’t like line charts that look like that.
So 2012, I’d at least been able to run a business for 7 years, which I think is more than a lot of people. I was sort of like scraping through and able to replace my wage. And I live on the Gold Coast and I had a good lifestyle. That was like, I’d achieved that at least, and I knew I didn’t want that, because I’d completely given up on that.
A new challenge
So this time around, I obsessed over a different challenge. And that challenge was how do I bootstrap a high-growth startup. And that had two components. One is bootstrap, which means self-fund, and the reason I wanted to self-fund was because no one would give me any money. And if you don’t have a huge track record, or if you don’t have co-founders, or if you’re not part of an incubator, then no one’s going to give you money either, unless you know rich people. If you want to join SilverCircle you probably will.
But I actually even applied for incubators. I applied to Star Made In Sydney twice, best incubator in Australia, they rejected me twice, and they didn’t even tell me. They didn’t even tell me they rejected me, but I know they did, because I didn’t go.
And so I became obsessed with this. The first attempt was an analytics dashboard called Informly. It was called Web Control Room and as I learned more about startups, I’ve learned that Web Control Room was a shi*** name. And this was the year before 2013. And that’s what happened.
That’s my wage going down to zero, and the only reason it doesn’t go below zero is because the chart just looks so embarrassing I just stopped at zero. And that brings me to 2013 when I was two weeks away from having to get a job.
The attempt that succeeded
The second attempt was launching WP Curve and at that time I had no choice. I couldn’t do software, because you can’t build software in 2 weeks unless you’re very, very clever, much cleverer than I am, and I even looked, in my book I wrote about people who started businesses in 7 days, and I could only find one or two examples of people who did that with software companies, they’re very, very challenging. I’ll talk about that more later.
But I launched a WordPress services business called WP Curve, which gives you unlimited WordPress jobs on your website for a subscription of, at the time it was like $50 a month or something.
And this is WP Curve 18 months later, I’ve got a co-founder in the U.S., a team of 38 people. I haven’t checked in in 2 days I’d be surprised if that wasn’t over 40 people now. We’ve got 850 customers, we’ve got just past a million dollars in Australian dollars annual run rate, that’s $85,000 Australian, and that’s helped to some extent by the exchange rate.
But the thing that excites me the most about WP Curve and the things that I’ve obsessed over from the start is not the monthly revenue. Because when we’re 10 grand a month, you know, a lot of people didn’t take us seriously because we were 10 grand a month, but all I ever looked at was how much we were growing from the last month. And I think ten grand a month for the problem that we’re solving is tiny, and I think 85 grand a month for the problem that we’re solving is also tiny.
We also have got good traction with our content. That’s something I’m really passionate about and I actually haven’t done content on our site since October last year, we’ve got a full time content guy that does all of it. That’s something I’m really keen on because I love helping people with their content and getting traction on that was really big the first time I’ve ever done stuff that people really cared about, I mean in terms of content. And we’ve been featured everywhere, and we’ve been copied 6,526 times, but only once by Jake Hower.
And I’ve got a nice line chart now for my wages, it’s going in the right direction. The other point I want to make about this chart is like, one of the things I think about with business is, if your goal is to like match your wage, then you’re just not setting your goal high enough, which everyone in this room probably knows that already. But I think you forget about the risk you’re taking as an entrepreneur, when you go into entrepreneurship, and you deserve a lot more than you’re going to get paid in a job. So I think you need to set your goals a lot higher than whatever you could earn in your job.
That’s the WP Curve monthly growth rate in U.S. dollars.
The other thing about 2012 was, it seemed like a disastrous year, but there’s actually a lot of things that happened that turned out to be really, really good long term, sort of asset building type things, and some of those things have been mentioned by the other people. I mean, James has mentioned one. I don’t know how long ago that Traffic Grab thing was, but that was well before this. And to think that I’m speaking on stage here, because of a random video.
I saw the product, I thought it was good, I told people about it, probably 5 years ago. How do you measure the impact of something like that? You just can’t.
So 2012, I did a lot of things. I did all of these things. I built a name for myself. Before that, I’ve never been mentioned on a podcast. No one knew who I was. I’ve never been linked to in a blog post. I’ve never been to an event like this. I certainly haven’t spoken at one. I didn’t know anybody. I met people like Chris Ducker in 2012, James Schramko, and started cultivating these relationships with people, tried to help them. Building things that long term would end up creating this like momentum boost for WP Curve that just blew it up when we launched. Content started taking off, and I built an email list. All things that I hadn’t done before. So I had to bootstrap a hard drive startup.
What is a startup business?
First of all, this is what a startup is according to my definition, and other people might have a different definition but; a startup is a fundamentally different to another business. For one thing, it has to have a really high impact potential. In my head, I think it has to be potentially a $10 million business. I think if you’re starting a business that couldn’t potentially be a $10 million business, then I don’t think it’s a startup. It has to be innovative, it can’t be, “I’m going to start making websites for my local community like my last agency,” because it’s just doing what other people are doing. There has to be some little twist of innovation for something to be startup.
More often than not, that twist of innovation is technology, but it doesn’t have to be technology. In our case, it’s very slight innovation but just a business model we use to the recurring revenue unlimited jobs, which is done everywhere now, but it was never done before WP Curve.
And startups are uncertain, which makes people uncomfortable, but that is the nature of a startup. If you’re going to go after something that is potentially a $10 million company, there’s a very, very high chance of failure. There are some things you can do to get around that and I think the theme of my talk is “How do you get some of these elements of a startup without actually being a startup.” So you can get around that to some extent but I think generally, if you’re doing something that’s innovative and high potential, it’s going to be uncertain.
So the first thing that startups do is they choose their business wisely. This chart is an analysis I did. Just looking at the types of business models that exist in the community that I live in, and looking at what actually makes a high growth business? And then on the left-hand side, it’s got to be fundamentally profitable. If it’s not, like my last business was fundamentally unprofitable, so it’s impossible to grow.
It’s got to go after a large market. If it doesn’t go after a large market, you’re going to hit a growth ceiling and you’re not going to keep growing. The other thing is, you’re not going to be able to get that same referral ability because there’s not as many people that are able to refer your business.
It has to be building assets. So it has to be some kind of intellectual property or asset building that separates you from the competition.
It has to have a simple business model. It can’t be controlling a thousand different things because no one can run a business controlling a thousand different things and keep scaling that.
I would replace recurring with predictable. It has to be predictable revenue. And recurring is the best kind of revenue if you can get it, but not everything suits recurring and not every startup is recurring revenue either.
Down the right-hand side is the way I would describe my last business. It was a business that was fundamentally unprofitable, a typical freelancing type business, an agency business. Fundamentally unprofitable, local market, not building anyone’s assets, just building other people’s websites. Not a simple business model at all. Offering a thousand different products and very small potential for a recurring revenue.
On the other side is software as a service. And to me, that’s still the ultimate business model because it ticks off all these high growth elements, and most startups should look at software as a service businesses. But the problem with software as a service is, like I mentioned before, it’s very hard to launch quickly. And I believe the best thing you can do as an entrepreneur is launch quickly and learn quickly. And I learned that the hard way by wasting 7 years of my first startup and then doing the next startup in 7 days.
This is another thing startups do. What do you notice about this slide? What do you notice about these brands?
They’re short. They’re very, very short. Uber is probably the most impactful startup I can think of. That’s in terms of impact in my life and that’s a couple of years, that’s four letters. Anyway, the point of this slide is startups are obsessed with brand. The thing that stands out to me the most is creating a brand that is conversational and that’s what I believe startups do.
An interesting thing about the length of characters in a business name – when I wrote my book, I looked at the top brands in the world. The top 25 brands in the world all have a business name of less than 12 characters. The only brand that doesn’t have a business name of less than 12 characters was General Electric, and they changed it to GE. And all those are old businesses, too. All the new businesses have much, much shorter names. So startups are obsessed with building a brand.
The magic of conversational names
Here’s the things I’ve noticed: they’re brandable names and they fall into conversations. The first time I heard this phrase was at the TV show, “The Profit.” Who’s watched “The Profit?” That should be more hands. It’s awesome. Best entrepreneurship education you can get on TV.
So Marcus says, “brands should be conversational.” Who said, “I’ve got an Uber” before? Who said, “We use Slack?” It just folds into conversation like it’s so easy. They just create these words that just embeds itself into your conversation with other people. And I believe that’s the secret towards building a high growth business, and I believe there’s any kind of online marketing tactic that gets you there. I believe it’s word of mouth. And it’s people having conversations with other people. And especially with social media, and the pace at which things move now, having long business names and names that don’t flow and fit into the conversations that are happening is a no-go.
And obviously, extremely well executed. These companies are obsessive about brand. They’re obsessed about execution. Everything they do, they call it product. So the software on the screens are products. And they’re obsessing about product. So every interaction you have with something like Slack, every little detail that comes up, the onboarding, the fact that you can message the slackbot when you start and it talks back to you, those kinds of things. That’s what designers do. They don’t just make it look pretty. They make this experience that is an extremely well executed product.
And you can do that in your own business. We’ve heard that this morning, the idea of experience. And even just the theme of excellence. These guys are obsessed with excellence.
What startups don’t do
Things they don’t do? I don’t see them using 99designs. I don’t see them doing it. I don’t see them putting three logos on Facebook and asking their friends which one is good. They have designers that they pay $200,000 a year to tell them which ones are good. They don’t want their friends who don’t know about design to tell them what’s good. They don’t use keywords in their domains. They don’t have 5, 50 or 500 websites. And they don’t kill trust because they respect trust above everything else. That’s the reason why I don’t do all of these stuff in my own business, and never have, because I think that trust is more important.
Not to say that every pop-up and affiliate link kills trust, but I think if you abuse those kind of things that take it away, then you have the potential for taking the focus away from your brand. So the growth secret I think of startups is word of mouth.
Prioritize world’s best design. I’ve talked about that a little bit. This is how I think you can do it as a bootstrap founder, if you want to relate to that term, or just as a founder who can’t get any money from an investor. You can partner up with a world-class designer; and by that I don’t mean like work with them on the side, I mean like give them a gigantic chunk of your business, and that’s what startups do.
Startups get together from people who’ve got technical skills, design skills, and product skills, and business skills, and they divide the company up amongst themselves. That’s generally how they start. And even if they already started and they need a world-class designer, they’ll still give that designer a percentage of that company at the early stages because that’s how much they value design.
You can have a plan to spend decent money on design, which is what I did. The first design I did in one day and it was the best I could do, which is sh*t a**. The second design, I spent about $2,000 on it and I think it was better than any of our competitors. But now that we’ve got a thousand competitors, some of them are companies that have $10 million in funding, our design is not the best anymore. So I’ve just spent $10,000 just on the design, just the one Photoshop file, just of our homepage and we’re going to launch a new design soon. And to me, $10,000 is nothing compared to a startup who’s paying 200 grand a year to a designer, every year to make sure their design is good.
The other you can do is you can hack a design early on, and there are ways that I think as a non-designer you can try to be more like a designer. I mean the easiest way is to pay more attention to design. If I get time at the end, I’ll go into more detail about how to hack design, or if you see me around the place and you’re interested on how to do that, we can talk about that.
The other point that I noticed about startups is you can’t go it alone. There’s hardly any startups I can think of that are founded by one person. Paul Graham, the guy from Y Combinator, one of the biggest startup experts in the world, picks one thing for reason why startups fail and that’s because they’ve only got one founder.
If you want to attack the kind of roller coaster that I’ve been over the last year, the last 9 years and you want to do that alone, then good luck. I don’t think you can. I think you need someone else to start the business with, and I also don’t think that there’s anyone in this room that has design skills, dev skills, product skills, people skills, leaderships skills, sales skills and business skills; I don’t think there’s one person that has all of that. Some of these stuff, the commitment, the passion you need from people, you can’t hire for. I don’t believe. I believe you need to do it with someone else.
And you need to learn to say no. This comes as no surprise. If you think like someone like Uber, they don’t compromise on what they’re doing. None of these startups compromise on what they’re doing. They just do one very, very simple thing. And I took that in my business very seriously. I was known for doing websites and online marketing stuff, and I was getting all the time, can you build me a website, can you do SEO, can you do content. Any type of online marketing stuff I would get all the time. I said no to every single project that came in.
I got asked every single day for a white label version of WP Curve, we still don’t have a white label version. In fact, we’ve got a post on our site that says, “Why we don’t have a white label version” and I still get daily leads from people who read that post, asking for a white label version.
Multi-site we don’t do. One of the jobs we started to do, and some of the stuff as we grow, we will start to do. Multi-site is something I really would like to do but I don’t feel like that we’re doing our one thing well enough yet to do something else.
A week ago, I had one of my all-time favorite entrepreneurs reach out and asked if I could help him with a project and I said no. I’ve had a very, very, very big CMS provider. I probably shouldn’t say who it is, you can probably work it out. Asked us to partner with them, and we said no. And this is what I used to do to get myself through those times where I was like, “OK. I’m doing 3 grand a month and some guy wants to pay me 3 grand for one website.” How do I say no to that? I said, “There are 70 million WordPress websites in the world. Surely, there’s 500 people who would pay me $69 a month.” And you read it like that and you’re like, “Of course. Of course there’s 500 people in the entire world, we have like 24/7 that would pay $70 a month.” And that was my go-to phrase for saying no to everything else. And we got to those 500 people within a year.
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