12 Rules For Building Your First Profitable Startup

[dchuk]

12 Rules For Building Your First Profitable Startup

Had a lot of fun writing this. Obviously, this is targeted at people interested in building internet startups and not really anyone doing advertising or aff stuff. Hopefully still helpful to some of you though.

Here's a bulleted tl;dr list of just the main rules:

-Sell something
-Build a product your customer can directly or indirectly use to make money
-Build a “must have” product, not a disposable “nice-to-have” product
-Replace part of your customer’s workflow with a better solution
-Have a “no-touch sales process”
-Build something that can scale independently of your staff
-Avoid products that rely on a community to exist and grow
-Build a specialized version of an ordinary product targeted at a niche you’re acquainted with
-Don’t avoid competitors
-Never compete solely on price
-Build something that you know can exist for at least 2 years
-Don’t plan for exits or VC money

Feedback appreciated always of course. Also, I won't turn down upboats:

Building Your First Profitable Startup | Hacker News
12 Rules For Building Your First Profitable Startup : startups
12 Rules For Building Your First Profitable Startup - Inbound.org

(I also chose the MSN thread icon because I feel like it doesn't get enough love here)

 

[dmnEPC]

INB4 Page 4

Glad to see you keeping Layered thoughts going with top notch stuff.

 

[EricVonDoobie]

Nothing ground breaking and seems like common sense, that being said it's good to have reiterated, helps reinforce it.

 

[pinchyfingers]

Nice. Upboated on HN and Reddit.

 

[dchuk]

Nothing ground breaking and seems like common sense, that being said it's good to have reiterated, helps reinforce it.

yeah, I definitely wasn't going for anything earth shattering, moreso I was just trying to reinforce the idea that you should focus on building a strong profitable company first before attacking the next awesome socialmedianewscirclejerk project that is so popular on sites like hacker news

 

[pinchyfingers]

I'm actually working on an offer right now (I'll be posting some more details in a different thread) where there are definitely a couple steps to getting the customer up and running, but I'm striving for a "no-touch sales process". To get closer to that goal, I'm enabling the customer to make their initial payment without any interaction with me, and that first payment will initialize the process of getting them actually benefiting from the offer.

So, it could be a multi-step sales process, but instead I'm just asking for the money first and then taking care of the details later. Writing this down it sounds stupid and obvious, but it actually took me a little thought to get there, lol. I suck.

 

[kingofsp]

Nice. Upboated on HN and Reddit.

Wait, it's on Reddit? How do I undo a retweet/blog comment?





jk bro

 

[dchuk]

I'm actually working on an offer right now (I'll be posting some more details in a different thread) where there are definitely a couple steps to getting the customer up and running, but I'm striving for a "no-touch sales process". To get closer to that goal, I'm enabling the customer to make their initial payment without any interaction with me, and that first payment will initialize the process of getting them actually benefiting from the offer.

So, it could be a multi-step sales process, but instead I'm just asking for the money first and then taking care of the details later. Writing this down it sounds stupid and obvious, but it actually took me a little thought to get there, lol. I suck.

sounds good to me (without knowing anything about your offer)...the goal should always be to lower the hurdle to get a customer on board to be as low as possible

 

[TechS]

good article

 

[Paper_Chase]

Looks good bro. I tried finding the facebook fan page for your blog but didn't see anything. I don't like subscribing to blogs by email or rss anymore. I like it when all I have to do is "like" the fan page and it shows up in my timeline every time you have a new post. Just a suggestion!

 

[greenleaves]

I'm actually working on an offer right now (I'll be posting some more details in a different thread) where there are definitely a couple steps to getting the customer up and running, but I'm striving for a "no-touch sales process". To get closer to that goal, I'm enabling the customer to make their initial payment without any interaction with me, and that first payment will initialize the process of getting them actually benefiting from the offer.

So, it could be a multi-step sales process, but instead I'm just asking for the money first and then taking care of the details later. Writing this down it sounds stupid and obvious, but it actually took me a little thought to get there, lol. I suck.

Been there done that. Beware: Getting the details first means they don't have to commit (money) until they committed (time) in filling out the form. You also get to email you lost leads this way.

What you are trying to do is cool, but don't be lazy either.

 

[mattseh]

Me after reading this blog post (it's like the red pill yo):

 

[j0hnsmith]

good read

 

[mx=headroom]

yeah, I definitely wasn't going for anything earth shattering, moreso I was just trying to reinforce the idea that you should focus on building a strong profitable company first before attacking the next awesome socialmedianewscirclejerk project that is so popular on sites like hacker news

Don't try to sugarcoat what you're doing. You're trying to drive traffic while providing value/giving "entrepreneurs" something to think about.

 

[pinchyfingers]

Been there done that. Beware: Getting the details first means they don't have to commit (money) until they committed (time) in filling out the form. You also get to email you lost leads this way.

What you are trying to do is cool, but don't be lazy either.

Yeah. In this particular case, I already have email and phone # for the leads, so there will be no laziness on the marketing end. Once they are sold on the idea, though, I don't want to trip them up with some confusing process. That's why I'm trying getting payment first, and then walking them through the more involved part of the process.

You have a good point that will be relevant in the future. One of my goals is to have my early customers become a strong source of referrals, so I won't necessarily have info on the referral traffic. In that case, requiring payment first could definitely result in lost leads.

 

[thelorax]

I have two main goals for this post:

1. To provide a set of rules for first time startup founders to follow to help increase their chances of building a successful, profitable company
2. To use as many tacky stock photos as possible

No touch sales process is golden.

 

[thehobbster]

Very nice. As I said in the comment, I think many of us read awesome posts like this, but they dont' really become a reality until after we make some of the mistakes. Good stuff. Newbs should heed the warnings and learn from the mistakes of others.

 

[Andrew Scherer]

Great list, very cool.

The Vaynerchuk in me has beef with your #5. Depends on the business and model I suppose.

 

[pinchyfingers]

Haha, "Bandwith limit exceeded"

Good job, man!

 

[mituozo]

-Have a “no-touch sales process”

That really depends entirely on the problem you are trying to solve. For example if you are trying to solve a problem small retailers have somewhere in their day-to-day, you're not going to be able to sell easily without touch. But solving that problem could be worth $1000/mo/retailer.

There's two flip-sides to it. A more involved sales process results often in better customer retention, as they feel more personally committed to the product. On the other side, having a sales team is expensive - and harder to scale. (But for your first business do you need to be thinking of how you'll grow to $1BN? Most people would be more than happy with building a $X/$XXm business. You can then go for something bigger the second time round.

Build something that you know can exist for at least 2 years

Is a tough one too.

For example with SERPIQ you're relying on what Google uses to rank websites for your software. If Google was for some reason to fundamentally change that in the next 2 years, for reasons currently unforeseen - your business is toast.

When you're building a start-up, if you're ahead of the curve, it should be hard to tell if it can exist for at least 2 years, because you are building now what you think will be standard in 2 years, and the market can change a hell of a lot during that period. If you're building just what's good today, then you are behind.