Startups should make money
In 1999, you could get Kozmo to deliver a Krispe Kreme donut to your door in under an hour. For free.
The 2013 revenue stats I didn’t want to share
I work full-time as a Product Manager, but I also love side-projects. Like many of you, I’ve been working on little products and ideas in my spare time since I was in high school. People who know me say:
“Oh, Justin’s always working on something.”
2013 felt pivotal for me: it was the year I met many of you (the folks who read this blog, and interact with me on email). It was the year I wrote some of my favourite pieces: This is a Web Page, J.F.D.I., $20 in an Envelope, and Why You’re Not Making Sales. I was also able to produce about 50 episodes of Product People, my podcast.
But more than anything, 2013 was the year I really launched my own products. I quit thinking, dreaming and talking about it – I started doing it.
There’s no substitute for doing. Great product people are great because they consistently build, launch, and sell. I’ve learned more from doing a single product launch than I did in 4 years of university. It’s not enough to plan something out, or build it and never launch it: it’s the act of putting your product up for sale that will teach you the most. That’s where the rubber hits the road:
“If you can get anyone to show up and pay you $1, you’ve made it on the internet. People don’t [charge money for their products], because they’re scared that their product sucks.” – Dan Martell, from our interview here
Why I’m sharing my revenue numbers
I wasn’t originally planning on sharing my revenue publicly. One danger with sharing numbers like these is that they can invite comparisons. Personally, when I compare myself to others (with higher revenue) it can be demotivating. The same could be true for many of you that will look at my stats: for some of you, my numbers will be higher than yours. I don’t want that to detract you from the act of creating.
While the transparency in the bootstrapping community is awesome (and can be really helpful) it needs to be tempered with a disclaimer: everyone’s situation is unique. We’ve all had a different combination of good + bad choices, opportunities, luck, timing, and life’s circumstance. That’s OK. We’re not in a race with other people: we’re merely trying to improve ourselves. If you made $50 from your own product in 2013, that’s great! This year see if you can double it to $100.
Here’s how I’m hoping my stats will be helpful:
- They’ll inspire you to get started: things really clicked for me once I released Amplification, my eBook. You don’t earn revenue until you put a product up for sale.
- They’ll show you what’s possible: yes, your situation is different than mine. But I believe that most of the folks reading this have the potential to build something of value, and earn their own income from it. Having someone buy my eBook was one of the most exhilarating moments of my life.
- They’ll give you a picture of what “one guy” accomplished on the side: unlike a lot of my product compatriots, I don’t do this full-time. I have a full-time job and 4 kids at home. I build and sell products in my spare moments: early mornings, evenings, weekends. Like Chris Bowler said, you need to adjust your expectations to match your current stage of life. If you have 20 kids, you’re most certainly busier than I am with 4. If you have a newborn who sleeps all day, you’ll probably accomplish more than a parent whose baby has colic.
My 2013 side-project revenue numbers
|Month||Web hosting (recurring)||Podcast (recurring)||eBook (one-time)||JFDI.BZ (recurring)||Monthly total|
Web hosting revenue: this is ongoing recurring revenue I’ve had for years from websites I’ve built on the side. Basically, I charge a flat $50/month fee for hosting, automatic security updates + maintenance, and up to 30 minutes of customer support. I’ve been doing this for years, but didn’t put much work into increasing revenue here in 2013 (I don’t built many websites these days).
Podcast revenue: you’ll notice that in the first half of the year, I focused a lot of my time trying to earn revenue with my podcast, Product People. I knew podcast advertising was a tough business, but I wanted to give it a try. Even though I had great monthly advertisers (Sprintly being one), I realized that there wasn’t going to be a lot of growth here. A funny lesson: serving 2-3 advertisers is actually more stressful, than serving 100 customers who are paying you for a product. Building an advertising business is a lot of work + a lot of risk for a potentially small reward.
eBook revenue: everything changed when I sat down and released Amplification. I was originally going to write a much longer book, but instead, I decided to write a short guide that I could get to market sooner. The original version was a 45 page PDF, videos of me showing my stats, and Excel worksheets. The initial price was $19. I’ve slowly improved the product (and increased the price) since launch: it’s now a 55 page book + the Hacker News Handbook, and includes a video case study. It now retails for $39. I can’t stress this enough: start with a tiny product. That’s something I learned from Amy Hoy, and it really helped me get my “first thing” out the door.
JFDI.BZ revenue: the idea behind JFDI was to quickly validate a pain pattern I kept seeing in the conversations I had with people on my email list, on forums, and on Twitter: building a product on your own can be pretty lonely. It’s hard to find people that you can immediately bounce ideas off of, or who can give you good feedback and advice. The initial “product” was a $10/month Campfire room. Since then, we’ve raised the price to $20/month, and expanded JFDI to a full membership site, with forums, a searchable membership directory, and regular campaigns (like Week of Hustle).
First: keep in mind that these are revenue numbers, not profit. I’m going to need to subtract taxes, payment processing charges, and hosting fees off these numbers.
Last year, it looks like I made roughly $10,000 in income on my side-projects. This year, I was able to double that. In 2014, I’d like to quadruple this year’s numbers.
What will you accomplish in 2014?
I’d like to help you achieve your goals this year. If you’re just getting started with building and launching your own products, now’s a great time to join my mailing list. Why? I know how it feels to be where you’re at right now. I’ll be showing you the techniques I used to get my first products off the ground, and what I plan to do this year to grow my revenue by 4x.
Published on January 1, 2014
@bmann An estimate: Recurring web hosting: 1-2 hours / month Podcast advertisers: 4-5 hours / month Book: 20 hours JFDI: 5-10 hours / month
— Justin Jackson (@mijustin) January 2, 2014
Why people buy products
“What causes us to buy products? Stuff happens to us. Jobs arise in our lives, that need to get done. When we have a job to do, we find something that we can buy or hire to get the job done. Understanding the cause of purchase, really improves the chance of success.”
– Clayton Christensen at Startup Grind 2013
Understanding a person’s profile, or their characteristics, doesn’t help you sell more products. Here’s what does: finding the cause behind a buyer’s decision.
You can watch the whole video here.Published on August 6, 2013
Sitting on the curb drinking a slurpee
This post is a part of this week’s Startup Edition: “How do you discover what people really want?”
I used to be a youth worker.
Our team’s mandate was to connect with at-risk teenagers, and figure out how we could improve their lives. The problem in youth work is that you can’t follow the traditional social work playbook: set-up a center, come up with programs, and have people come to you.
With teens, you have to go to where they’re at.
And so that’s what we did. We went to skateparks. But we wouldn’t show up, and be those goofy adults that stand on the sidelines in a button up shirt and khakis. We would actually skate with kids. Jeans, t-shirt, skateboard. We’d spend time. We’d stay until city’s night lamps turned on.
There was no judgment from us. Kids could be themselves. They could swear. We mostly just asked questions and listened. We were trying to figure out: “what’s it actually like to be a teenager in this town?”
Here’s what we discovered: adults don’t listen to teenagers. Most programs targeted at teens are laughably awful. It’s because bureaucrats have never sat with a kid on a curb, drank slurpees, and actually listened.
Surprisingly, what kids needed most was meaningful relationships with adults. That became the foundation of our program: having adults (parents, volunteers, staff) build meaningful relationships with kids.
Now I’m working in the software industry. That might seem like a funny career transition, but the foundations are still the same.
I’m working with real human beings, who need help.
I think the question isn’t: what do people want, but rather, what do people need? (Amy Hoy recently reminded me of this)
To figure this out we use the same method: we need to spend time in their world.
That might mean asking them about their day on a phone call. Or going to visit them at their office. Or maybe even taking a customer out for lunch and just listening. Spending time in their world.
I remember visiting the office one of our users, and being blown away: a noisy cubicle farm, with outdated hardware and impossible deadlines. Those are your customers. They’re real human beings stuck in particular situations. They’re not thinking about how you chose Rails instead of Python, or flat design vs skeuomorphism. They’re just people with problems.
The way we discover those problems is hanging out with them. Email them some questions, and engage with their responses. Instead of spending your whole travel budget on conferences, pick a city where you have a bunch of customers and take them all for dinner (Freshbooks does this). Go to online forums, find people in your niche that need help. Spend time in their world.
The professional term for this is customer development. I don’t like it. Let’s just call it hanging out. Go hang out with customers, and just listen. Do that, and you’ll discover insights that will make your product, much, much better.Published on July 7, 2013
Pretty doesn’t sell
I was fed up.
After suffering with my low-cost web host for years, I decided to switch. I was fed up with poor up-time, slow load times, and bad customer support. The price was cheap ($5/month), but I needed something better. So I started evaluating other providers. Anyone who’s tried to compare managed hosting providers knows what a pain it is: spammy review sites, 100 item feature lists, and cheap looking marketing pages.
Finally I found a provider that stood out from the crowd: they had a beautifully designed website and promised speed, reliability and support.
Did I mention they were pretty?
There was a time when most web apps looked bad. They were cluttered, noisy, littered with icons, and had little in terms of cohesive design (here’s a good example).
But then companies like 37signals came on the scene. Their products were beautifully designed; they believed that software should look good. Soon new SaaS apps emerged with a similar design aesthetic.
For those of us buying this software, an unspoken rule emerged: software with a nice design = better software.
And for a long time, the rule held true. Software that looked good often was better than it’s uglier counterparts.
Back to my story
I chose the web host that had the prettiest design. They were 4x the cost of my low-cost provider, but I was confident that any company that cared about design also cared about building a great product.
I was wrong.
As I started to use their service, the pretty veneer faded away and revealed an ugly truth: they weren’t reliable. This meant frequent downtime, slow customer support, and an interface that “looked nice” but was cumbersome to use.
After a few years of using this new provider, I finally bit the bullet and switched again. This time, I chose a web host recommended by a friend. They were a bit more expensive ($9 more per month) but they delivered on the things that really mattered:
- they were blazing fast
- they had almost perfect uptime
- they could handle a lot of traffic
- they had great customer support
Notice that “beautiful design” isn’t on that list. The design of their website and their back-end is basic, utilitarian, and (dare I say it) a little ugly.
We’re in the post-pretty era
Let’s get one thing out of the way: I’m not saying that the principles of design don’t matter. They do, especially when applied to structure, flow, readability and navigation. Good interface design helps users get things done, and creates great experiences.
What I’m focusing on is the “look”. It’s the philosophy that we need to create gorgeous looking screens. It’s the desire to emulate the pretty designs we see on Path, Mailbox, and Pinterest. It’s wanting to have an app that is the most “stylish”, “sexy” and conforms to current design trends.
The era of stylish design being a competitive advantage, or a marketable feature, is over.
Pretty doesn’t sell (anymore)
Like I mentioned, there was a time where I’d pay for a new app just because it looked great. Not anymore. Here’s why:
- It’s easier to fake a nice veneer – using frameworks like Foundation, Bootstrap, and other UI libraries, it’s easier and easier to make an app “look nice”. For marketing pages, there are dozens of cheap templates available that look good.
- I care more about outcomes – I’m use software to achieve tasks. What’s the use of a pretty design if it doesn’t help me get my work done? Apps should focus less on making it “look good”, and more on making it “work good”. Help the user get from point A to point B in the most efficient way possible.
- What’s under the hood matters – speed and reliability matter. I want the software I use to be fast, whether it’s on the web, on my phone, or on my desktop. I also want uptime: anytime an app crashes, is down, or unavailable it’s a disruption to my day.
Essentially, a good looking app is no longer a good measure of quality. These days, most apps look pretty good. Customers aren’t as easily wowed by a stylish design.
What impresses B2B buyers now? Apps that solve a pain, are efficient and reliable, and have support when you need it. Focus on those things first; don’t worry about flair.
Want to hear more?
Thank you for reading this post! If you’d like to hear more of my musings on products, business and marketing you can: