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Something obvious to bootstrapped entrepreneurs, but seems alien to corporate & VC funded founders:
A business that makes money ‘except for..’ doesn’t make money. A business that doesn’t make money has no value (apart from as a building block towards a business that makes money)
A business that makes money ‘except for..’ doesn’t make money. A business that doesn’t make money has no value (apart from as a building block towards a business that makes money)
Some categories of ‘except for...’ are quite easy, some are as hard as building a business that works from scratch.
If your ‘except for...’ is CPA (Cost to acquire 1 customer), you don’t have a business. You have an idea for a business that you’ve tested, and which failed. Your building block is probably worth less than a brand new, untested business idea (I can give you 100 of those for free)
Most B2C (business to consumer) business ideas go something like this:
“I think people will buy X for £Y. I can get/make X for 0.5(£Y)”
Maybe let’s try that without the algebra:
“I think people will buy titanium iPhone cases for £100. I can get titanium iPhone cases for £50.”
“I think people will buy X for £Y. I can get/make X for 0.5(£Y)”
Maybe let’s try that without the algebra:
“I think people will buy titanium iPhone cases for £100. I can get titanium iPhone cases for £50.”
Fantastic. You buy some cases from the manufacturer and you have a business. Except for... you need to find your customers. You advertise on Google, Facebook, Gumtree, but you spend £1000 and you only sell 8 cases. You try Gumtree, eBay... same story.
If the suppliers had told you the cases were £120 each, you wouldn’t have thought you had a business, but because the failure is in marketing, which feels like something you have control over, you’re tempted to think you’re on to something except for... the marketing problem.
TLDR: a business that can’t find customers at a profitable CPA is no more a business than a business that buys its product for more than it sells them for.
“Hey, I’ve got this really cool startup. We’ve grown 100% every month since launch”
“What do you do?”
“We send out a £10 note every month to each of our members”
“How much is membership?”
“£5 a month”
“Dude, no. Stop that.”
“What do you do?”
“We send out a £10 note every month to each of our members”
“How much is membership?”
“£5 a month”
“Dude, no. Stop that.”
But, what about building a brand over time?
Mostly, it’s bullshit.
If your product is something people want, you will be selling into a vacuum to start with. Those will normally be the easiest and cheapest sales you ever make. Margins don’t grow, they erode.
Mostly, it’s bullshit.
If your product is something people want, you will be selling into a vacuum to start with. Those will normally be the easiest and cheapest sales you ever make. Margins don’t grow, they erode.
