For some unknown reason, I’d already been compulsively listening to “startup” podcasts like “Everything Entrepreneurship” where Yaro and his co-host Walter Hass talk about their businesses, Walter being in the throes of taking his software startup through incubator stage to Silicone Valley investment.
And then of course, there’s the new big daddy on the startup block – Alex Blumberg’s Startup – which is a podcast about a startup that is a podcast production company and awesome in so many ways, and has got me totally fired up about my own podcasts “The Business Success Factory” and “Own It! Your Business & Your Life” with co-host Judith Morgan.
What’s the difference between a startup and just a new business idea?
I just googled that and found this great definition at the General Assembly blog:
“According to serial entrepreneur and Silicon Valley legend Steve Blank, a startup is a “temporary organization designed to search for a repeatable and scalable business model.” A startup, which he argues in the context of the tech industry (and this conversation) should be short for “scalable startup,” is searching to not only prove their business model, but to do so quickly, in a way that will have a significant impact on the current market.
A “Scalable” Startup Has The Intent To Become A Large Company
As Blank describes it, a scalable startup founder doesn’t just want to be her own boss; she wants to take over the universe. From day one her intent is to grow her startup into a large, disruptive company. She believes that she has come across the next “big idea,” one that will truly shake up the industry, take customers from existing companies, or even create a new market”.
Hmmmm, not sure my plan is that grandiose, but let’s sit with it for a while…
Why am I obsessing about startups again, all of a sudden?
I think it’s the exciting “bigness” of it all, the scalability factor, the way you can potentially reach many people with a simple offer, clear systems, and turn that into a big company. Big in terms of turnover and profit, but not necessarily in overheads and staff. Dan and his business partner, Alex, still run their company from their two homes using a team of outsourcers but are turning over $50,000 a month now in MMR (monthly recurring revenue).
Back in the early days of the internet, I had a website called ArtistManager.com that matched up aspiring artists in the music industry with potential managers. It was just at the start of all the talent competitions on TV, with Pop Idol attracting hundreds of thousands of auditionees already, so I knew there was a market.
I got it going with one software designer, offering him sweat equity, as it was a database driven site and needed a techie. This got it up and running and because early users could create a free basic profile it contained “user generated content” so the search engines loved it. The fee to have a profile and search was just $4.95 a month and I was earning about $1000 a month from it as it grew fairly rapidly by SEO and word of mouth. No social media in those days!
I wanted to grow it and went for several investment presentations and actually got down to “Producers Auditions” on Dragon’s Den with it, but when I got to the BBC, I discovered you were expected to work on your idea full time, and as I was a newly divorced mum with two small people and a hotel and coaching business to run, that just wasn’t an option.
My First Important Startup Lesson
I decided to search for some more developers who were willing to work for sweat equity and this proved quite easy as it was already producing an income, a rarity in those days! However, I made a big mistake in that I handed over the equity shares without putting any performance standards in on their side, such as X hours of development time, and this eventually killed the business as they were not maintaining it, much less improving it.
You live and learn.
So while I’m very keen on the idea of a startup, I’m not keen on doing it the traditional high-pressure way, where you put your idea together, find a team, get venture capital or angel investor funding and then work yourself into the ground creating a “minimum viable product” to get some traction before your financial runway expires.
See, I’ve got all the jargon down pat!
So all of this was percolating around in my head all the while I was slowly building my Facebook Ads service and watching The Apprentice this year.
The Apprentice, if you don’t know, was won by charming aussie Mark Wright, who will be starting a company that, according to Lord Sugar “helps businesses get up the pecking order on those search engines thingies”. Nobody’s very clear on how he’ll do that, but it’s presumably a mix of social media/ content management and PPC (pay per click). Hopefully he won’t be outsourcing the building of thousands of backlinks to their websites to the Far East or India, eh?
And I was very intrigued when they found that customer willing to spend £3500 a month – was that ad spend or fees, I wondered….
However, jokes aside, it made me realise that the potential for business to business internet marketing services are really getting going now if Lord Sugar’s getting involved. Which brought my thoughts back to my own Facebook Ads service, which I still haven’t got quite right yet.
The challenge is that it’s not very scalable yet really, due to the kind of clients I’ve been attracting who want a rather personal service from me, including several meetings just to secure the gig.
The challenge/ pain from a customer’s point of view is that most media buying agencies (for that is what they are called) will only look at clients who have a minimum ad spend of $10,000 upwards, because the traditional pricing model is to charge a percentage of ad spend and that’s the threshold where it starts to get attractive for an agency.
However, I’ve been having quite a bit of success with ad budgets as small as $20 a day and have got a nice little setup system going now, which could be outsourced under my supervision for a fixed fee initially.
It got me thinking… I wonder if there’s a way to simplify the process even further – particularly the sales process – and scale it. To create a WPCurve for Facebook Ads, in fact.
No time to do anything about it as Christmas was looming….so I dug out Dan’s book to have a little recap and see how he graded his potential ideas.