Sell Build Plan

img_book-sellbuildplanWhen I went to business school in the late nineties, the operational roadmap for starting a new venture looked like this:

  1. Plan your business,
  2. Build your product,
  3. Sell it to customers.

All the venture books I read and all the courses I took at Babson’s Ranked-Number-One-In-Entrepreneurship business school said the same thing: PLAN, BUILD, SELL.

Now that I’ve been actually doing startups for the past fifteen+ years, I can tell you that what I learned was backwards. Here’s how to do it today:

  1. SELL your product

  2. BUILD your product

  3. PLAN what to do next

(Not coincidentally, this is the title of my forthcoming book on the subject. 🙂

Five reasons why Sell/Build/Plan is the new model for venture creation

  • The landscape is moving too fast for anything other than the most efficient business plan to be effective
  • Plans don’t remove risk as much as market contact does
  • Building (and iterating) a product is easy and cheap
  • Marketing your product is even easier and cheaper
  • Product/market fit is everything

In 2013, even though MVPs are cheaper than ever to build, it still costs more than a social media marketing campaign and a brochureware website or a crowdfunding campaign. Plus, given that the odds are close to 100% that your first MVP will be wrong, adapting an existing MVP once it’s built is much more expensive than adapting your concept and positioning *before* it’s built. Most importantly, if you can’t attract customers to your product before your MVP is ready, what makes you think you’ll be able to do it afterward?

Look at it this way: if you are successful in defining and marketing your product in a way that captures eager customers before you’ve built your MVP, would that give you more confidence that your MVP will be A) correct, and B) the right thing for your market?

Of course it does.

Step 1. Sell Your Product

Pretend for a moment that your conceptual product is already built. What does it do? How does it work? Why should people use it? What price would you charge? Do some competitive benchmarking and make your best guess.

Now. Use all that to create a great marketing presence. Pick a brand and get a domain. Describe your product in the present tense – as if it already exists. Add screenshots (mockups, really), descriptive use cases, features and benefits, and pictures of happy people. Make a video. Create a pricing and plan page. Then add big Sign Up Now buttons.

When people click the buttons, ask for their email address and tell them that you’ll let them know when your product is actually available.

Pro Tip 1. If you can possibly do so, CHARGE customers money, or take their credit cards, or get them to indicate which price they’re willing to pay. Of course you’ll refund the money if you don’t build the product. The point is to measure whether people will buy your idea. The closest you can get them to making this decision, the more valid your result will be.

Pro Tip 2. Whatever you do, don’t use future tenses (“the product will do X”) or conditional tenses (“the product might do Y”) during this step. And don’t ask anyone to fill in a survey. You’re not persuading people to tell you whether they think your business is a good idea, you’re asking people to decide whether they want to buy your product. These are two totally different things.

Then go find your keywords, optimize your site and buy PPC campaigns around those keywords. Ask bloggers to take a look and write about your idea. Email potential customers directly and ask them to check you out. Promote it every chance you get.

Then sit back and see what happens.

THE THREE POSSIBLE OUTCOMES OF THE PRE-SELL STEP

  1. No one cares. See? You’ve just saved yourself the cost of an MVP. Now identify what you got wrong, tweak your concept and your marketing site and do it all over again.
  2. People love it. See? You were right! And now you have hundreds of people ready to use/pay you for it. Now get busy: go build exactly what you described and sell it to them when it’s ready.
  3. Some people love it, but not enough. See? You were close. Now identify what you got wrong, tweak your concept and your marketing site and do it all over again.

Bonus Round: The Crowdfunding Campaign.

Not all businesses or products are Kickstarter-worthy, but if yours is, it can be the best mechanism for achieving product/market fit out there. Set up your product on their platform and promise to give people your product if a minimum threshold is met. If yours hits, you’ve A) achieved product-market fit and B) just funded your MVP.

Once you have successfully described and marketed your product, and you know who will buy it, move to step 2.

Step 2. Build Your Product.

Because you successfully conceived of something that people actually want, you can now formally design your product with confidence. Your product people now have a firm grasp on the high level user stories and principles that customers said they wanted. They also have a pool of beta testers and early customers to work with during the development process.

The same process of determining what’s ‘minimal’ and ‘viable’ still applies, of course. Not everything you sold your customers on is necessarily required for your first release. Remember that your product will never be ‘done,’ and that everything is a work in progress. At least now you have actual, eager customers to work with to help answer those questions.

** Note: if you need outside money to build your product, you’ll have a far easier time finding it now that you have customers  waiting for you. But if there’s any possible way you can get your product built without it, do it. You’ll be better off.

Once your product is live, go back to all those customers and invite them in to your ‘private beta.’ Listen to them closely and adapt as needed. Charge them. Now change the Sign Up Now button to link to your actual signup page and accelerate your marketing as much as you can. After all, you already know how to do it.

Step 3. Plan your business.

The rest is easy. Plug in all your data – cost to acquire, pricing, marketing spend – and build out a financial model. If you can bootstrap, you’ll know fairly accurately how long and how fast you can survive. If you choose to raise outside money, you’ve become a fairly low-risk investment, since you’ve already achieved all the milestones an investor might want to see: product design, product/market fit, marketing prowess, execution skills, real operational data, even revenue – and probably made progress towards an actual team as well.
But come back in 2015 because all this will have changed.

Michael Sattler

With a career spent in founding and technical leadership roles with new and enterprise-level organizations, Michael Sattler is a veteran in technology strategy, operations, and product management. He’s spent decades in B2B and B2C SaaS product development, software and application design, engineering operations, new venture creation, and innovation practices.

He has scaled and managed technical teams from 2-50+ across three continents, led large-scale cross-functional program management, and founded or co-founded six companies.