The Chasm Between Developer and Entrepreneur
The book is not anti-venture capital but it's against the dogma of every startup needs VC to proceed or succeed. It tries to narrow down the scope to the two types of entrepreneurs:
- Micropreneurs: people who want to remain solo, owns a single product or multiple products.
- Bootstrappers: something larger than a single person venture, perhaps 5-10 employees.
A self-funded entrepreneur is a
- Technical visionary who create softwares for a niche market, targeting a niche audience
- Merges existing technical knowledge with online marketing knowledge
- Cross between a developer, a webmaster, and a marketer
If you have a product idea, but you didn't do your homework for the market, that means it's a project, not a product.
Some random research findings from some random Dominican University reveal the significant contribution of the three factors for achieving goals:
- Writing them down
- Making public commitment (to friends, or another kind of audience)
- Accountability (reporting the progress in a periodical schedule)
Spend 20 minutes making a list of the things you are hoping to accomplish by starting up. If you believe what was said above, it'll make a difference. Worst case, you waste 20 minutes of your life.
One short term recommendation from the author is to build a product that generated 500$/m in profit.
Transitioning from Developer to Entrepreneur
There are some realizations we need to face...
Market comes first, marketing second, aesthetic third, and functionality a distant fourth. In the same market, the product with better marketing wins. Every time.
Things will never be as clear as we want them to be. Writing code is dry and clean but marketing is about math and human behavior, which is the most hard to master part.
We need to fail fast and recover. We are going waste money, time, make bad decisions, miss deadlines and release buggy code. Each time this happens, we need to accept that we are failed and move on.
Process is the king! Documenting repeatable process for anything you will do more than once is essential to your sanity. It also makes it easier to sell the product if you ever consider to exit.
Why Niches are the Name of the Game
If you can find a small group of people and make them amazingly happy, you will make money.
The niche market approach
- Requires product to be focused on a narrower horizon, design decissions and processes are easier.
- Advertising is more cost effective.
- Less competition.
- Higher profit margin.
Brainstorming Niches
- Look at all areas in your life: hobbies, interests and work experience.
- Look at list of occupations.
Evaluating Niches
- Estimate your conversion rate, based on the pricing
- Examine traffic breakdown (search engines, incoming links, direct traffic, advertising)
- Measure the demand based on the traffic estimation
Testing an Idea for Under $100
- Build a mini-sales site (home, product tour, pricing, sign-up)
- Collect user contact instead of actual product when people press sign-up
- Create AdWords campaign and send targeted traffic to the site
- Track the CTA impressions, assume the actual conversion rate will be %2-5
Your Product
The extremely surprising product success triangle:
- Product: your product has to be good
- Market: you need a group of people willing to pay money for it
- Execution: you have to market, sell and support it
Building It: Estimation
- Site map with list of screens
- Sketch out how each page will look like
- Estimate 4-12 hours per page
- Add 10-20 hours for DB design depending on complexity
- Estimate back-end functionality such as payment, scheduled tasks etc. Add 10-40 hours each.
If the path to 1.0 is between 200 and 400 hours, it's good. If under 200, take a step back and check if it's a tool or a full blown application, which provides real value and easier to charge.
If over 400, eliminate the functionality.
There is also landing page, documentation, marketing and etc, which is estimated to take 100-200 hours.
Calculate the sum out, estimate the total duration based on your eligibility to allocate time.
- 15h/w → 300h means 4.5 months
- 15h/w → 550h means 8.5 months