The humble business hyperspace
Let’s say you’ve successfully found an idea to solve a painful problem in a healthy market with some but not too much competition. What’s next?
Well, you need to decide what form your solution will take. Sometimes this is obvious. For example, if your problem is primarily relevant for Shopify store owners, you should build a Shopify app. But in many cases there are many possible angles you could take. And even if you already have a particular solution in mind, it makes sense to spend a few minutes thinking about the alternatives.
First of all, note that there isn’t a perfect general answers. It’s simply wrong to proclaim something like: “a web app is always the way to go”. Instead, you need to make this decision on a case by case basis and often it’s necessary to experiment with different angles until you find a winning product. Hence the best we can do in the following is to discuss the most important options and their respective advantages and disadvantages. This will allow you to make an informed decision and give you some inspiration for future projects.
In short, the key decisions you have to make are:
- Do you build a product in an environment you fully control or a product for a marketplace with existing demand?
- Do you build a physical product, a software product, or a content product (also often known as an info product)?
- Do you build something from scratch or do you buy an existing asset and then mold it to fit your vision?
For many problems, it’s possible to find a solution for each of these categories. To illustrate this, let’s say the problem you want to solve is that it has become increasingly difficult for med students to stay productive in this age of distractions.
- You could build a web app that implements proven strategies like the Pomodoro Technique and and spaced repetition into a single coherent framework that is optimized for med students. But you could also build an iOS app or a Chrome extension.
- Instead of an app, you could also write a book or record a video course with productivity tips for med students. And for each of these options, you have to decide whether you do it on your own or if you leverage an existing marketplace like Amazon’s Kindle marketplace or Udemy. Or you could develop a physical productivity system. See, for example this Kickstarter campaign and this physical productivity system for some inspiration.
- Instead of building an app from scratch, you could buy a software like Remnote that is already used by many med students and build on top of it.
Often it’s impossible to predict which of these options is the best one. Each of them certainly can work.
Arguably the most important factors you should take into account are your skills and what you enjoy doing. Since when you enjoy working on the product, you have a much higher chance of building something amazing. If you don’t enjoy writing, publishing a book is probably not a smart decision since readers are able to tell how enthusiastic an author was when he wrote the book. Similarly, if you don’t know how to program iOS apps and are not motivated to learn it, it doesn’t matter how promising this option might be.
With these disclaimers out of the way, let’s talk about the various options in a bit more detail.
Full-control product vs. product for a marketplace with existing demand
A full-control product is, well, something you have full control over. For example, it could be a web app that you run on your own server or a physical, info, or software product that you sell on your own website. The main advantages are that you are not dependent on some marketplace’s rules that can change at any time. Moreover, you get 100% of the profits.
The main disadvantage of full-control products is that it’s hard to lure people onto your site. Advice like “if you build it, they will come” is simply nonsense. Without marketing your website will be a tiny island in an infinite sea. It simply doesn’t happen that people magically start typing the URL that leads to your landing page into their browser. And even if you manage to get people’s attention when you launch your product, the initial traction you get this way typically vaporizes after a few days. Moreover, unless you’re lucky, successful launches require a founder with either a larger following on social media platforms or an established network of entrepreneurial friends that can help to get the product off the ground. For example, if you want to avoid that your product vanishes in the depths of platforms HackerNews, Producthunt, or Reddit, it helps a lot if you can manage to organize ~10 upvotes within the first hour. (If you try to manipulate upvotes on these sites any further, your posting will get deleted. They’re quite good at spotting this kind of behavior. But ~10 upvotes is not suspicious or harmful since if your posting is bad it will get downvoted quickly again. It’s just a little starting aid that helps to life your posting above all the low quality noise and, in my experience, is completely accepted by most platforms.)
One additional option you have to get people onto your site is to pay for Google Ads or Facebook ads. Unfortunately, managing Ads is often a full-time job since you constantly need to test new things and monitor if your ads bring in more profit than they cost. Since humble businesses should be as hassle-free as possible, this is not really a good option.
Another option is to focus on “organic marketing”. Usually, this term is synonymous with content marketing. The main idea is that you publish lots of helpful free articles that are somewhat related to your product, hoping that they will get people’s attention. This is a long-term strategy that requires a lot of skill and effort. It often takes months before you get any substantial feedback if what you’re doing is actually working. And please don’t be fooled, it isn’t free either. First of all, to do effective content marketing, you need to pay for tools like Ahrefs that allow you understand what people are searching for. Without tools like this you’ll be aimlessly wandering in the dark. Secondly, you either need to pay someone to write high quality articles or write them yourself. Both options are expensive. Even if you assume a low hourly rate for your own time (which you shouldn’t), you’ll discover that each article costs you $100+ dollars. And you need lots of of articles to get sufficient traffic to your site. In many cases, content marketing is a distraction and doesn’t lead to satisfying result. Hence, your time is better spent working on your product. Moreover, in theory, one main advantage of a full-control product is that your not dependent on some marketplace’s rule. However, if you rely on content marketing each change in Facebook’s or Google’s algorithm can lead to a catastrophic drop in your traffic. Hence you’re not really better off.
For these reasons, building a product for an existing marketplace is often the much better option for humble entrepreneurs. After all, we don’t want to spend our time optimizing Facebook ads or writing long-from articles. We want to build products and sell them and this is exactly what existing marketplaces allow us to focus on.
Examples for marketplaces you can sell your solutions on are:
- Chrome Web Store,
- Shopify App Store,
- Niche marketplaces like Envato where people buy things like Wordpress themes and plugins,
Once you’ve successfully established your product in one of these marketplaces, there will be a continuous stream of customers. People already visit these marketplaces and search for solutions to their problems. Moreover, it’s in the marketplaces best interest to make the best solution as visible as possible. Of course, marketplaces want to be paid for this service. But since they typically only take a cut of your profits, unlike with ads or content marketing, you can’t make a loss. Hence, products on marketplaces can easily sustain themselves with minimum effort from their creator.
Admittedly, it takes some effort to establish your product in a marketplace. But often it is sufficient to run some ads during the first few weeks after the launch until your product has attracted several good reviews. Afterwards, rarely any handholding is needed.
Another important aspect is that once you’ve validated your idea on an existing marketplace, you can still build something that you fully control. For example, if you start by selling a Kindle ebook, you can still sell it on your own site. Moreover, a Chrome app can become part of a far more sophisticated web app. This way you can still use the marketplace as an acquisition channel while reaping all the benefits of a product you fully control. For example, savvy customers typically try to do some background research before they buy a product they discovered on a marketplace. While doing this, they’ll discover you landing page
In summary, while startups typically start by building a full-control product and then gradually release products on specialized marketplaces (i.e. an iOS app, a Chrome extension etc.), humble entrepreneurs are better off by inverting this process. Start by validating your idea on an established marketplace and then leverage your success towards something you have more control over.
Next, let’s talk about the pros and cons of physical products, software products, and content products.
Physical product vs . a software product vs. content product
Oversimplifying a bit, we can say that physical products have the highest barrier of entry while content products have the lowest and software products are located somewhere in-between.
For a physical product, you not only need to create the product but also find a supplier, order samples, and handle the shipping processes etc. In contrast, a content product only needs to be created and published.
While a low barrier of entry means that it’ll be easier for you to create your product, this will also be true for competitors and hence it’s much harder to stand out. To use the example for above again, it’s certainly much harder to get anyone interested in yet another book about productivity while a physical productivity system will get many people excited.
Another important point you should consider is that physical products require the most initial investment, while content products don’t require any and software products typically only a little. It should be noted, however, that nowadays, thanks to platforms like Kickstarter, you can minimize your risk substantially.
Since it has become quite hard to get anyone excited about a content product (the golden days of ClickBank are long over), this option is only really promising if you already have a sizeable audience (e.g. a large following on social media platforms or an email list.) Moreover, as a beginner it’s probably not wise to start with something as risky as a physical product. Most physical products require too much handholding anyway.
Hence, for most humble entrepreneurs the best option is to start with a software product. This is, of course, a huge category and, as we’ve discussed in the previous section, there are many different kinds of software products you can build.
However, you certainly shouldn’t discard content product completely. While the chances that you’ll make a substantial amount of money selling one are slim, it’s still a great way to get your feet wet. Content products can be published quickly and require close to zero handholding once they’re published. This allows you to spend your time learning essential skills such as sales without being distracted by things customer support and bug fixing.
Next, let’s talk about whether you should build your product from scratch or try to buy an existing asset.
Buying an existing asset vs. building something from scratch
Obviously, if you don’t have at least a few thousand dollar you would be willing to invest in a new venture, there’s no point in thinking about buying a business. (Please, never risk a substantial percentage of your net worth!) In that case, feel free to skip this section.
However, if you have the means to do it, you should absolutely try to buy a business before you try to start one yourself. Buying a business is often easier, smarter and less risky than building one from scratch. All the groundwork has already be done, the business model has been validated, there is an existing customer base, and all systems are in place. All that’s left to do is to tweak it until it fits your vision. (If this is isn’t true for a company, don’t buy it.)
Marketplaces you should visit if you’re interested in buying a humble businesses are:
- Flippa (lots of scams and overcrowded)
- Empire Flippers
The best deals, however, are usually made by cold outreach. While there is a lot that needs to be said about this strategy, the gist of it is that you look at a particular product marketplace (e.g. the Chrome app store) and search for extensions which many users, no or bad monetization, that haven’t been updated in the last few month. Then you send a short email to the owner if he’s interested in selling it. Alternatively, you can also look at SimilarWeb / Alexa ranked properties in the 20k-50k range.
Sending an email to the owner of an app and asking if he’s willing to sell costs nothing and is always worth a try. Humble businesses are often astonishingly affordable.
With that said, buying a business is as much of an art as building one from scratch. Both topics require a proper discussion and we’ll talk them in more detail at some later point.
But in the any case, the most important step is to just get moving.
Hopefully, you’re now not too confused by the multitude of options that are available. Analysis paralysis is the surest way to failure.
Once you’ve considered all the options for a day or so, just pick one and start.
If you’ve decided to build a product yourself, start by spending a day or two creating a minimum viable version of it. (We’ll discuss later how exactly you can do that.) In most cases, you won’t end up with a satisfying result. But this doesn’t matter since the goal is not really to build a minimum viable product. Instead, you’re just trying to get a better understanding of how much work is necessary to build the product and if you enjoy working on it. For example, you won’t be able to write a book or record a video course in a day. In this case, you should create an outline and write or record at least one chapter (not the introduction). This will give you a good idea if you would enjoy writing the whole book and how much time it would take.
While working on the product for a day or two you’ll quickly find out:
- How friendly are related communities?
- How well-documented are the tools that you want to use to build your product?
Typically, as you try to build the minimum viable version of different products, you’ll feel pulled towards one of the ideas and don’t want to stop working on it. In this case, you should trust these instincts and continue. Motivation is often the factor that makes all the difference between success and failure. The best idea is worthless if you’re not motivated to work on it. And since you’ve already filtered out all the bad ideas, there’s no reason why you shouldn’t pursue it further.
Move all ideas for which you’ve already attempted to create a MVP from the “good ideas” list to a new list titled MVPs. Moreover, move the one idea you want to continue working on to yet another list titled “Work in Progress”. (Bonus points if you jot down some notes why you weren’t excited to continue working on a given product. This will help you to avoid making the same mistakes over and over again.)
If you’re not truly excited to work on any of the solutions, you should try to come up with new ideas and repeat the exercise or try another angle.
Our journey is far from finished. In fact, we’re just getting started. While picking a promising idea you’re excited about is important, there are lots of further steps that’ll determine you success chances.
But while it’s possible to stay quite general as long as we’re at the idea stage, all further steps are very different depending on what exactly you want to build. For example, a web app is built differently than an iOS app or a content product. Moreover, the process of building a product is very different from the process of buying a business. Hence, we’ll talk about these topics in separate articles.
For example, if you decide to build a product from scratch, a question we need to talk about is: What’s the best way to build the product you have in mind? However, the answer to this question, of course, depends on the kind of product you have in mind. Chrome extensions are built differently than iOS apps or web apps.
And if you decide that you’re more interested in buying a business, we, of course, need to talk about quite different things.
But there are also a few additional aspects like monetization and marketing that we can discuss in quite general terms. We’ve already talked briefly about several marketing above, but since this topic is so essential it deserves a longer discussion. Moreover, while monetization is usually straight-forward for physical products and content products, there are many things to consider for software products. And since most humble businesses are build around software products, this topic deserves some attention.
Since there is no longer any linear sequence from this point onwards, feel free to jump to whatever article sparks your interest.