START SMALL, STAY SMALL by Rob Walling & Mike Taber

• Seeking funding of any kind creates two problems. First, it involves a massive investment of time and focus, which distracts you from the important things, like making money and staying in business. Second, it makes modest success nearly impossible due to the limits it places on the potential markets you can pursue.
• If you’re self-funded with one or two founders, you can support your entire business from a tiny niche that provides $10k/month in revenue.
• Targeting a large, non-niche market is expensive in terms of marketing and support. It will eat you alive if you tackle it from the start.
• Point 1: An entrepreneur is a technical visionary who creates software for a niche market.
• Niche markets are critical. If you want to self-fund a startup you have to choose a niche.
• The genius of niches is they are too small for large competitors, allowing a nimble entrepreneur the breathing room to focus on an underserved audience. Once you’ve succeeded in that niche, you can leverage your success to establish credibility for your business to move into larger markets.
• Point 2: An entrepreneur merges existing technical knowledge with online marketing knowledge.
• The key factor in an entrepreneur’s success is their ability to market their product.
• Millions of people in this world can build software. A fractional subset of those can build software and convince people to buy it.
• Point 3: An entrepreneur is a cross between a developer, a webmaster, and a marketer.
• Marketing is more important than your product.
• With an enormous amount of anecdotes to back me up I strongly believe that building something no one wants is the most common source of failure for entrepreneurs.
• If you have an idea for a product, odds are high that you have project/product confusion.
• A project is a software application that you build as a fun side project.
• A product is a project that people will pay money for.
• Without a market, a software application is just a project.
• A million dollar payday is most likely not in your future, but owning a successful startup can be.
• Writing code, where most of us are well-versed, is only about 30% of the work needed to launch a successful product.
• The other 70% is debugging, optimizing, creating an installer, writing documentation, building a sales website, opening a merchant account, advertising, promoting, processing sales, providing support, and a hundred other things we’ll dive into in later modules.
• It’s hard to re-train your mind out of the dollars-for-hours mentality.
• It’s a long road to becoming a successful entrepreneur.
• Remember that there is no single best path to success as a startup founder.
• I have a suggestion to help get you started: Strive to build a startup that generates $500 per month in profit. This may sound like an easy goal, but will require more work than you can fathom at this point.
• The reason you need goals and accountability is to stay motivated during the hard times.
• Once you launch a product, you are instantly building equity.
• This is by far the most common mistake I’ve seen – building something no one wants.
• It’s a common belief that building a good product is enough to succeed. It’s not.
• Avoid this roadblock by building a product after you’ve verified there is a market.
• The first time you try something it’s scary.
• As humans we fear the unknown. We fear failure…rejection…mistakes.
• Surprisingly, anything is much easier the second time.
• Without goals for both yourself and your startup you are flying blind without guidance in situations where there is no right or wrong answer.
• You’ve already heard this a few times, but define your goals and write them down.
• The main problem with inconsistency is that it makes you lose momentum and momentum is critical to staying productive.
• Another common distraction masquerading as productivity is reading business books.
• most of the information we consume is a waste of time.
• You can’t consume and produce at the same time
• It’s not easy, but scaling back your information consumption will have a huge impact on your productivity.
• Drip outsourcing has become invaluable to my productivity.
• The bottom line is to start small, gain comfort with a contractor, and gradually increase the amount you outsource.
• Outsourcing is a learned skill, and you’re likely to screw it up your first time around. Start with non-critical tasks and be very specific in how they should be executed.
• Design is much easier to outsource than programming.
• It’s a big leap moving from employee to entrepreneur. One of the biggest adjustments is accepting that time is your most precious commodity.
• Putting a value on your time is a foundational step in becoming an entrepreneur, and it’s one many entrepreneurs never take.
• Outsourcing aspects of your business is the single most powerful approach I’ve seen to increasing your true hourly rate as an entrepreneur.
• Wasting time is bad.
• If you aren’t enjoying something, stop doing it.
• Writing down important ideas is critical to building a list of ways to improve your business.
• Information Consumption is Only Good When it Produces Something
• Consuming and synthesizing are very different things; it’s easy to consume in mass quantity. It’s much more difficult to synthesize information.
• If you haven’t already, you will soon need to accept you are going to fail a lot.
• The faster you fail and learn from your mistakes, the faster you will improve.
• You Will Never Be Done
• The first month you launch you will be lucky to break $100 in revenue.
• A product, marketing effort, and a reputation take time to build.
• The effort of getting a new product off the ground is exponentially more than launching a new product once you have resources and experience behind you.
• Documenting repeatable processes for anything you will do more than once is essential to your sanity.
• You can sell garbage to a hungry market and make money.
• What matters is finding a group of people who need your something more than they need the money you’re charging for it.
• If you choose a niche market and focus so tightly that your product becomes the best in class, members of that niche will have no choice but to use your product.
• A Niche Requires You to Narrow Your Product Focus
• The lesson here is that the narrower you can make your product while still maintaining a large enough market, the more profit you will generate.
• if you can find a small group of people and make them amazingly happy, you will make money.
• The most common mistake made by inexperienced marketers is attacking a market that’s too large.
• In general, since niche markets are small they have less competition, and less competition means you are able to charge more for your product, resulting in higher margins.
• In smaller markets it’s easier to make a name for yourself since people are more likely to hear about you multiple times in a shorter time period.
• things will never be as clear as you want them to be.
• One way to avoid the multi-step process of brainstorming niches, evaluating demand and selecting a product is to jump right to a product idea.
• The best niches are under the radar, and you have to get out and do something before you will find them.
• As a self-funded startup you want a market that is already looking for your product, even if it doesn’t exist.
• This is because creating demand is very, very expensive while filling existing demand is, by comparison, cheap.
• Any target market you choose must be online and you must have a product that solves their problem.
• From a startup perspective, vertical market niches are superior to horizontal markets for a number of reasons we’ll look at below.
• Members of a Vertical Have Similar Behavior
• Members of a Vertical Talk to One Another
• Small industries tend to have a handful of thought leaders.
• If your product is good, word of mouth marketing will spread quickly
• If you can find the thought leaders and convince them to adopt your product, you will receive massive exposure in a short period of time
• Members of a Vertical “Hang out” Together
• Members of a Vertical Have Similar Needs
• As a general rule, horizontal markets are too large and expensive for self-funded startups to navigate.
• You only need to master two skills to sell online: human behavior and math.
• Understanding human behavior means you know how people think, what motivates them. You need to know how to speak to the voice inside of them that makes buying decisions, rather than their tough, rational exterior.
• Math is the science behind every business in the world, whether they realize it or not. With internet marketing, the math involves views, clicks, click through rates, unique visitors, goals, conversion rates, gross profit and net profit.
• The term “conversion rate” technically refers to the ratio of the number of people who visit your website to the number that perform a specific task.
• Marketing is not programming; there are no exact numbers when projecting conversions.
• There are a few dozen free keyword difficulty tools on the web, but the vast majority of them are junk.
• Estimating demand with a keyword tool is one thing, but watching the behavior of real website visitors as they click through your website, browse, and try or buy is a completely different experience.
• The only way you know if someone would try or buy your product is if they think they are really trying or buying it when they visit your sales site.
• The mini sales site approach works best if you are selling a downloadable or web-based (SaaS) application.
• The success of your product will depend on three things: product, market and execution, which together make up what I call the 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
• But a brilliant product with no market or execution is dead. A mediocre product with brilliant marketing and execution will make you money.
• Once you know you have a market and can execute, then you can improve your product.
• As a rule of thumb, your path to 1.0 should fall between 200 and 400 hours.
• This is the most common mistake I’ve seen with 1.0 products – too many features and too many months between the start of development and launch.
• If you’re coding in your spare time, it will be a stretch to get 15 hours of productive work in per week.
• If you have a few thousand dollars set aside, you should consider hiring out development.
• Letting it go and stepping away from the code will increase your chance of launching.
• You have to get over your desire to write the software yourself.
• Determining your price is one of the most challenging aspects of launching a product.
• Lean towards higher pricing. Developers tend to undervalue their software, and think that lower prices will result in higher sales. This is typically not the case.
• Ensure that as your price doubles from tier to tier, you provide more than double the benefit.
• Human behavior is irrational. This means no one knows the right pricing structure for your product.
• When thinking about a new application aimed at businesses, start with the position of a hosted web application. The ease of support, ease of adoption, and recurring revenue model are major advantages.
• The idea behind the sales funnel is that there are several steps between someone surfing the internet and buying your product.
• In a successful sales website, every page has a single, primary call to action. That is, an action you want your user to take.
• No One Reads. Text is a terrible selling tool; audio, video and images are always better.
• One of the most difficult pieces of marketing to create is your hook. Your hook is your four-second sales pitch and it should be the headline of your home page. It’s the single sentence that grabs the reader in and makes her know she’s in the right place.
• Double opt-in means that after they enter their email address in your sign-up form, they will receive a confirmation link via email. Until they click on that link they are not added to your list. This ensures that your list is of the highest quality.
• Maintaining high relevance is critical to keeping people subscribed.
• Another great source of content is questions from customers or prospects. Answer the question in your email to solidify your place as an expert in this niche.
• Perhaps the only factor that determines if your mail gets opened is your subject line.
• Core strategies like building an audience, search engine optimization and participating in niche communities have far more impact on your bottom line than most of the new media tools you read about in the business press.
• Traffic quality plays a huge role in how well your website converts visitors into customers.
• High quality traffic means each visitor is very close to your ideal customer and they know and trust you.
• Top Shelf: Traffic Strategies that Will Sustain a Business
• 1. A Mailing List
• 2. A Blog, Podcast or Video Blog
• 3. Organic Search
• Building an audience through a mailing list, blog or podcast is by far the best source of traffic. I encourage you to try at least one.
• My recommendation for PPC is to use it for finding keywords that convert for you, and spend the time and money to search engine optimize for those terms.
• So instead of looking at PPC as a long-term marketing approach, use it as a shortcut for finding keywords that convert and work on ranking organically for those terms.
• A mailing list is the most effective marketing tool you will possess. It works in any market. It’s a marketing requirement for startups.
• Getting people to engage with you, to listen to and trust you will have more impact on sales than any other marketing approach.
• Blogs, podcasts and video blogs require a certain amount of unique insight or expertise.
• Most products you launch should have their own blog, if for nothing else than to draw search engine traffic.
• Google alerts is one of the most under-used tools in online marketing.
• A virtual assistant (VA) is a remote worker hired to complete tasks you prefer not to do, or should not be doing as the founder of a startup.
• Outsourcing to a virtual assistant will dramatically reduce the time you need to spend on administrative tasks, and increase the time you can commit to growing your business.
• Through a bit of outsourcing to a VA, you can get to market with less up-front expense and in dramatically less time than if you try to automate everything.
• Every hour spent writing code is wasted time if that code could be replaced by a human being doing the same task until your product proves itself.
• As I’ve automated pieces of my businesses, I’ve noticed an interesting trend: nearly anything I try to automate is easier to outsource first, and then automate down the line once the volume warrants it.
• In addition, outsourcing provides you with a written process for the task that serves as a blueprint if the time comes later to automate it.
• Outsourcing is a learned skill, just like writing code.
• I’ve had the best results hiring VA’s in the Philippines.
• Finding a VA is about trial and error.
• Most startups that achieve early success find themselves in the chasm. That place Geoffrey Moore talks about in his seminal work Crossing the Chasm, where early adopters are using your product and you are trying to solve the puzzle to get to mass adoption.
• Starting a company requires enormous amounts of effort and time, and can’t be done in parallel.
• With the ability to attack niches that can provide $500-$2000/month in income, you are able to fly under the radar of most businesses.
• Being self-employed is risky business, but it’s even riskier if you own a single product.
• The biggest downside to owning multiple products is the task switching.
• Do not build or buy your second product until you have outsourced or automated as much as you possibly can with your first product.
• Here is the formula for Serial Micropreneurship:
• 1. Build or buy a product
• 2. Launch or revamp it
• 3. Grow revenue to its natural plateau
• 4. Outsource and automate ruthlessly
• 5. Go to step 1
• Once your product is built and launched there are three areas that will require ongoing maintenance:
• Support
• New Features
• Marketing
• Let me be clear about one thing: no product is going to sell at the same level forever. It’s going to need updates at some point.
• Ad campaigns require an initial investment and then a tiny amount of weekly or even monthly maintenance. Once you’ve found keywords that convert and ads that work, you only have to adjust as your competition changes.
• Once SEO is in place, it’s all about maintenance.
• If your startup does not turn a profit, the odds of making an exit for anything more than a few thousand dollars is remote.
• Even if you never plan to sell your startup, you should be collecting and reviewing the data that will ultimately allow you to facilitate an easy sale.
• Make sure your product doesn’t share a database with another website. Keep things separate so it can be easily migrated to another server.