How $967 turned into $2M+ and counting

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.