How $967 turned into $2M+ and counting

I’ve been meaning to write this little story for a while. The “Lean Startup Challenge” being run by Noah and the guys over at AppSumo gave me incentive to actually do it. In the grand scheme of things, we’re comparatively still a small business. Of course we’re working hard to get a lot bigger.

Nonetheless, I hope this serves as encouragement for people who are trying to make things happen who don’t have much to begin with. With any luck it demonstrates that when armed with a good idea, a sound startup philosophy and a lot of hustle you can do good things.

If you’re looking for a great place for amazing tools to help you build your business at discount prices, check out AppSumo.

A story about Lean Startup hustle

Back in 2007 I fell into the world of software development.

To be honest, I didn’t set out to start a software company. It just sort of worked out that way.

My business partner and I were in the lead generation business. A lot of this was being done through Pay Per Click marketing. We drove pre-sold leads into affiliate programs using an arbitrage model. The aim of the game was to buy clicks for less than we made in affiliate commissions.

To do this effectively, I learned to hustle. Not hustle as in the shady character selling watches from inside his coat on 1950’s cartoons. More like Gary Vaynerchuk hustle.

I had to fire up both sides of my brain to find creative angles that others hadn’t already thought of, while at the same time analyzing the numbers like I had savant syndrome.

In one of these creative bursts I pieced together a methodology (and some corresponding code) that meant we could build massive, incredibly targeted PPC campaigns that make what I initially thought impossible, possible. I was able to build out campaigns that would normally have taken weeks to do manually in a few minutes.

For someone who wasn’t a programmer I was pretty proud of myself. I had solved a huge problem in our business and made us at least 1000% more productive. The code was ugly as hell, but the core methodology was elegant.

How business and pleasure do mix

A few days later I flew out from Australia (where I live) to Washington DC for a seminar for underground online entrepreneurs.

My crazy jet lag meant that I couldn’t sleep and ended up sitting in the hotel bar drinking overpriced Californian Zinfandel’s until the early hours of the morning. The nice side effect was interesting conversations with guys doing way bigger things than I was in industries I didn’t even know existed. With their primary method for driving traffic being PPC.

Now while our business was doing fairly well, these guys were doing numbers that were comparatively off the charts. As a result, my insecurity (I wanted impress them!) and my “Zin Buzz” had me sharing more about my little PPC invention than perhaps was prudent. From what I remember of those discussions, they seemed pretty impressed. However, it wasn’t until later that I realized how impressed they really were.

When I arrived home I ended up getting a numerous email and Skype messages from a number of guys who wanted to “Mastermind”. It seemed they wanted to know more about my PPC methods and how I was building these huge, highly targeted campaigns.

Their enthusiasm about what I was doing piqued my entrepreneurial opportunity sensors. I figured if I was stoked with how this crude, yet in many ways elegant piece of software worked and these other guys seemed interested, perhaps there was something in it.

So I decided I was going to go ahead and build a commercial version and see what came of it.

Now these days I’m pretty well versed in the customer development model. However, back then, I don’t think it formally existed. But it’s interesting how what transpired loosely followed the methodology that is now well taught by Eric Ries et. al.

How it went down was kind of interesting

I was really up against it from the start.

The big issue I faced was that my business partner INITIALLY had no interest in becoming a software company and didn’t want to invest much money into the project. Not only that, I had another business to run so couldn’t afford to spend the next 6 months full time on the project.

I didn’t have the skills to create the software either.

I knew that I needed a way to somehow first see if there was a product/market fit (although I didn’t use that language at the time). The initial response would either be an encouraging wind beneath my wings (Bette Midler can only take you so far) or a humbling reality check.

So I decided to test the market by registering a domain name and creating a teaser video to see what the reaction was.

In this video I showed an empty AdWords account with an atomic clock beside it (for time reference). Then I built the campaign (but didn’t show how I did it) and displayed the finished campaign with hundreds of extremely targeted Ad Groups and corresponding landing pages. I then showed the atomic clock to prove that it only took about 12 minutes to build. Theoretically this would take 145 hours manually.

You can see the old crusty video here.

I put an opt-in form below the video as a conversion metric. It wasn’t long before the sign-ups came in and the questions asking when they can get the software started turning up in my inbox. These conversations encouraged me to go full gas.

So I started asking everyone I came across lots of questions. In fact I probably became annoying to some. But I didn’t care. If I was going to jump into the world of being a software company, I wanted to nail it from the start.

It quickly became clear that there was at least some demand for the software. But again, the problem of having almost no budget and limited time was rearing its ugly head.

So again I had to hustle.

Ever heard of “ridiculously lean start-up”?

One of the reasons I’m writing this is to show that good ideas can stand on their own and with some MacGyver smarts you can make good things happen.

Now keep in mind my restraints:

  • No budget (maybe $1000)
  • Not that much time
  • A business partner who wasn’t yet sure of what it all meant
  • Very elementary programming skills

As you can see, I wasn’t really in a great position to create and launch a product. But I knew how to market and I thought I had a good idea that was somewhat verified so I ran with it anyway.

I wrote a fairly cryptic spec (I was afraid someone would reverse engineer it) and posted the job to RentACoder.com (now vWorker.com). I purposely kept if very simple as I needed them to understand and create the core engine first without complicating the product or production. I received just 6 responses varying in price from $50 – $2000. Being the big spender I was, I went for a developer out of Egypt for the grand total of $120.

Here’s the job posting:

What I discovered when talking to our potential customers is that they were concerned about the privacy of their keywords and campaigns. It seemed like they thought I’d steal all their keywords and spy on the campaigns they were building (this attitude has changed a lot nowadays). So I built the software to run on the desktop which gave them more confidence that their campaigns were private.

It was an important distinction as I was initially going to build it as a SaaS. I reckon if I’d gone ahead and done that I would have gone on to get far fewer customers.

Another head nod for the customer development model.

Perfect sucks

While the Egyptian dude was building the software, I needed to figure out the logistics of selling a software product online and how my ideas for marketing it could be integrated. For me, figuring out how the marketing fits into the mix is as important as the product itself.

Now of course I was a novice programmer and had no budget to pay a developer to build me a beautiful backend.

However, beautiful wasn’t my primary concern.

My biggest concern was the speed I could get this thing to market. I already had momentum and my own enthusiasm was high so I needed to get this thing out there. So I researched a bunch of off the shelf software and services that I could use to rapidly get this product selling.

I ended up with:

WordPress – Sales and Customer Sites.
1ShoppingCart – Checkout, Email, Affiliate Program.
Amember – Product delivery.
2Checkout – Taking payments.

It was a rough and ready approach, but it got the job done pretty well. Sure, if I had developed it from scratch I could have had something that was perfect. However, by the time it was built, I would have missed the boat.

Testing my marketing chops

Now I consider myself a student of sales and marketing and consumer psychology (my college degree is in Behavioral Science). So I was pretty confident I could drive a few sales. But once again budget was my ball and chain.

So I decided to focus squarely on performance marketing by setting up an affiliate program for the product. I knew I didn’t need any budget from the start and could fund the marketing retrospectively.

Strategically it was also a match.

I was able to combine a feedback loop (with PPC experts) and get them excited enough to promote it to their circles of influence.

So once the software was basically built and I had written the user guide, I set an official launch date. I then worked day and night contacting influential people, giving them free access to the product, getting their ideas and constructive feedback. While at the same time helping them see how the product could improve their own PPC campaigns and as a result getting them excited.

I also set a very healthy affiliate commission (at 50%) for any sales they sent. I wanted to do as much as I could to look after these guys as they were pretty much my only hope if I wanted to pull this off.

The process meant I ended up with a great result. When the product was set to launch, I had a refined product and enthusiastic influential evangelists that were racing each other to get the word out about the product.

The launch – fly or fail?

Now it’s important to mention that the initial SpeedPPC launch still took a bit over 4 months to roll out and a crazy amount of work/hustle on my part. So this was no walk in the park. However, it was certainly lean.

The whole project only cost:

Software Development: $120 + $420 (for additional features based on feedback)
Amember: $179 (one time fee)
2Checkout: $50 (sign-up fee)
1Shoppingcart: $99 per month x 2 (two months by the time we launched)

Total: $967

Within the 4 weeks of launch, we did about $230,000 in sales with rave reviews despite the fact we had zero marketing budget.

This initial burst of sales provided a fantastic platform to quickly add resources and iteratively improve the product moving it from quite a simple piece of software into something more sophisticated based on customer feedback. Over time, we’ve continued this philosophy and have gone on to make over $2,000,000 in sales.

The process of launching SpeedPPC certainly taught us a lot of lessons. Many of which are well documented through the processes discussed by Eric Ries, Steve Blank and the 37Signals crew. I’d encourage anyone looking to building a business online where you are selling a product (not just software either) to become a student of these guys.

Just don’t forget to throw in a healthy dose of hustle!

An Epilogue – Announcing my new start-up

“We are so vain that we even care for the opinion of those we don’t care for.”
– Marie Von Ebner-Eschenbach

For the past couple of years I’ve been fairly vocal in my views on how video is being used strategically online as well as the tools available to measure its performance.

For the most part, I reckon video is measured by vanity metrics. Too many people are concerned primarily about “plays” and videos “going viral”. I think by itself, for a business, that’s mostly pointless. Viral video veterans like Jonathan Mann only have a success rate of 0.5% of the videos he creates.

You may as well go and build a Unicorn Ranch while you’re at it.

I believe people should mostly forget about the vanity metrics. Instead ROI (or at least well constructed objectives) should be the focus. The trouble is, until now the tools available to measure or optimize video to meet stated objectives have been very limited.

What OK tools that are available tend to lock you back to certain content platforms or players. I wanted an agnostic video analytics platform.

I waited a while for a product offering to grow up and offer these kinds of metrics. No-one did, so I went out and founded a new start-up that would do just that.

For the past 5 months we’ve been building a pretty exciting (read: frickin’ awesome) video analytics platform we’ve called StreamRanger.

My approach has taken the lessons learned from launching SpeedPPC and applied it with the same hustle but in a more mature and structured way. We’ve followed the agile software methodology, are using FOSS tools and have properly adopted the customer development model.

Of course, we’ve remained lean.

I’m personally funding the whole project and as a result I’ve made sure I’m not burning my kids college funds in the process. We’re using open source technology and I’ve built a remote team outside of Australia.

It’s a common misconception that the West has the monopoly on good developers. It’s simply not the case. It took a lot of work, but I’ve built a small team out of the Philippines (3 Developers, 1 Sys Admin & 1 Designer ) who are simply amazing.

This has kept costs down considerably while we get the product to market. As the product matures and the revenue builds, I’ll then reinvest this to build out the team further.

Throughout the process we’ve been talking to and meeting a wide range of users from small business right through to one of the largest youth action sports brands in the world. In the early stages, we only had graphical screens for these discussions, but they were good enough to cause us to completely reshape the product.

What was very interesting was a growing level in sophistication in how companies saw online video and the outcomes they were expecting from it.

Even the large brand who might have traditionally been happy for “eyeballs” were now expecting to see some ROI through their online retail channel. At this point, they haven’t had the ability to track that. They told us explicitly they’d be our first customer.

This comment alone has lifted the team to really take this thing by the throat and create something great.

Want a sneak peek? Here’s the first public look.


This is the Dashboard view. This is where you can see a snapshot of all your videos in aggregate and you can filter this based on date, tag and/or category.


For each video, you can drill down into more detailed metrics. When optimizing for video you want to optimize the view through rates, the engagement and conversion rates. This detailed view allows you to get these key metrics very quickly an easily.

It was important for us to build an analytics platform that was super easy to integrate with and open. We don’t lock people to a platform but integrate in open ways. It will work for almost all HTML5 players as well as some proprietary platforms like YouTube, Vimeo, JWPlayer and FlowPlayer.

We’ll be launching in about 4 weeks. Insert your email to get on the beta access list.


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Geez… sorry. This ended up longer than I thought it would be. I guess that’s the nature of stories. Hopefully it will inspire some of you to see that you can build a business from virtually nothing. Even if you can’t code.

Plus, I hope you’ll help us get the word out about StreamRanger when it launches!

Got some thoughts or questions? Hit the comments below.

40 Comments on “How $967 turned into $2M+ and counting”

  1. Jay,

    That story was WELL worth the read… thanks so much for sharing it!

    It’s particularly inspirational for me right now as I’ve had a product idea kicking around in my head for quite some time now, but like you were, I’m not really a programmer that can get it done myself. I only recently reached out to some influential people to carefully share my idea, and the response was very positive (read, VERY positive!)

    So, I’m now working with one of them and trying to get things spec’ed out by a programmer. We hope to get an idea of what this may cost to bring to market fairly soon. Your ‘lean success’ is very encouraging to say the least! :o)

    I actually think there may be some useful applications with what I have in mind as it pertains to SpeedPPC. If -scratch that-… WHEN I have a working model, I’ll check in with you to see if you’d be interested in having a look.

    Good luck with StreamRanger. I’m sure it’ll be [email protected] :o)

    1. Hey K. Thanks man… great to hear that you’ve got a solid product idea kicking around. If influential people are positive about it, that’s a really great sign. Now you just have to take Kaizen steps forward all the time. Just make sure it’s in the right direction.

      Of course I’d love to have a look when you’ve got something up and running.

  2. Jay,

    Fantastic account of your struggle from virtually nothing to where you are now-congrats!

    I too wrestle with growing the business while remaining lean. You’ve given me even more inspiration to keep at it and stick to my guns.

    Thanks,

    Jeff

  3. Great story Jay!

    That is raw entrepreneurial spirt you have shown and very impressive. I remember when you came out with speedppc and I’m glad it’s worked out well for you 🙂

  4. Excellent post. If the product is great enough, it will sell itself. We were one of your first customers (I remember the opt in video!).

    Look forward to your future release updates

  5. Jay, congratulations on developing the SteamRanger application; it looks like just the tool I need (I’ve signed up to receive the notifications!).

  6. I wondered where you were. Once you stopped writing the Allan Gardyne newsletter, I suspected you’d hopped off on to an exciting project. I’m vindicated. Great to hear your inspirational story, not only about your successes, but about the lessons learned. Much luck with the new adventure. Satisfied Speed PPC customer.

    1. Thanks! Yes both Allan and I are on new exciting journey’s although still collaborate together from time to time which is nice. I’m pleased that you’re a satisfied customer. 🙂

  7. Hi Jay,

    I publish a social activism web site named LoveShift http://www.loveshift.com. We are very close to going into video production, and can’t wait to see what you have cooked up.

    Currently, LoveShift has hundreds of YouTube videos, and we send a daily LoveShift Morning Mail e-zine, with its own video.

    This new program of yours will be PERFECT!

    John

  8. Hi Jay,

    I support what you are doing as a fellow Australian and I get all my coaching clients and seminar attendees to sign up for you SpeedPPC program. You are a solid example of how powerful belief and commitment to your business vision is.

    We have been in business 30 years and it has come with it share of project development up’s and down’s had we given up we would not be here. My personal belief in our little Australian company ended up with me building and running the Asia Pacific business for Anthony Robbins, then Jay Abraham and Brian Tracy… and in fact then becoming the President of Brian Tracy worldwide out id Solana Beach, CA.

    The reason I say this is simply because as Australians we can do anything we set our mind to, as human beings our belief is our power and you and the team are a great example of this keep up the great work Jay you have my support.

    Garry

    1. Great to hear from you Gary and it’s cool to hear of your success story. Thanks for the referrals as well. I appreciate it. Let me know if I can do anything more hands on for you.

  9. Hey Jay

    Great post dude. Kudos on the story – I never realised just how lean the initial start up was!
    & Congrats on the new product – exciting times

    Let me know if you’re ever down in Melbourne… I’m sure I still owe you a beer 🙂

    Mike

    1. Thanks Allan. I hope you’re right! 🙂

      (For others reading this, Allan was my partner in SpeedPPC and was also instrumental in its success with sound strategic advice and key introductions to the right people who helped launch the product).

  10. Hey Jay, I’m a fellow Lean Startup Challenge entrant with a similar story coming from the affiliate industry moving into another industry!

    (http://bradmills.tumblr.com/post/3937579987/coinwhaleleanstartupchallenge)

    Your story was well worth the read, any success story like this is easy to digest.

    I’m glad you learned the lean startup methods and stuck with it for StreamRanger instead of bloating up for your 2nd project like we did =)

    A couple of things:
    1) Have you met Ryan Bukevicz of Bevo Media yet? I can send you an intro if not, it would be a good intro and will get you even more sales for SpeedPPC.
    2) Have you met David White of ReelClever.com? He’s also from Australia, and they just released their own film distribution platform, and I bet they’d be interested in integrating StreamRanger analytics.
    3) Have you met the guys behind Unbounce? They are a landing page platform, and I think combining SpeedPPC with Unbounce as a SaaS would be the evolution of the product.

    Let me know if you want to send the intro to both of those guys and I will (email me, I might not get an email notification if you reply here)

    P.S. I really want to buy SpeedPPC now for some of our ppc campaigns if it still does all of that crazy stuff!

    Good luck man, you’re definitely top 10 material for this contest (I’ve read every entry).

    Brad

  11. Hi Jay,

    Inspiring stuff – well done! I loved the focus on the market testing as well as the clever product development approach.

    Oh, and great writing too. Anyone who can work a Bette Midler reference into a story on PPC and video analytics has a way with words!

    Best of luck,

    Ben

  12. It’s great to see you sharing this story for the challenge! I was glad to see someone I knew of take a shot at it and from reading this long post, it looks like you’ve got another awesome project coming our way!

    Good luck with the contest, Jay!

  13. Maybe a bit off this latest topic but if your new one is as good as SpeedPPC then I hope you make a killing. Without a doubt the best product I have ever bought over some 10 years was SpeedPPC

  14. Awesome read! I can’t believe you knew to take a screen capture of that developer out of Egypt. I wish I was that aware of my process. I just go go go… Rad success story!

  15. Hey Jay,

    Great story – inspirational. Like others here I’ve also had an idea for a application which has thrown up a question. I don’t know who else to ask! The question is this: Google (and probably the other search engines) state in their Webmaster Guidelines that:

    “Google’s Terms of Service do not allow the sending of automated queries of any sort to our system without express permission in advance from Google. Sending automated queries absorbs resources and includes using any software (such as WebPosition Gold™) to send automated queries to Google to determine how a website or webpage ranks in Google search results for various queries.”

    If this is the case how can there be so many software products and web applications that track rankings and submit other automated queries to the search engines in order to crunch the results – Spyfu and KeywordSpy for example.

    The reason I ask is because my proposed application will also look at search engine results and now I’ve found this out I’m unsure whether to go ahead. Any thoughts appreciated.

    Al

    1. Yep… automated page scraping is outlawed alright. I’m not sure when, but I’m sure there will be some blowback for those guys at some point. I’m sure they consume a lot of resources.

  16. Wow, we have incredibly similar paths (careers wise) over the past few years! I remember watching your first video back in the day wishing I could get my hands on your product. At the time I was an affiliate marketer who was in transition to become an affiliate manager for MarketLeverage.

    Anyways, I’ve been back on the affiliate side for 3 years or so and purchased speedppc. LOVE IT! I primarily use a Mac so I would LOVE to get my hands on the Mac version sooner than later. Any hookup would be appreciated!

    I’m a web developer and internet marketer so I can assist with bug reporting too.

    thanks ttys

  17. I was thinking about using one of those outsourcing sites to help me create a product.

    But how can you trust someone in Egypt not to try to sell the product themselves after they make it for you? Remember how Mark Zuckerburg did the Twinklevoss twins? Haha.

    Good article…you definitely put down the hustle. Hard work pays off.

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