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Success Story: Product Development with No Experience

Discussion in 'Lessons from Success/Failure' started by Atown512, Nov 14, 2017.

  1. Atown512
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    Atown512 Bronze Contributor Read Millionaire Fastlane Speedway Pass Summit Attendee

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    Hey guys, I haven’t been on the forum for a while so I’m due for an update. I realized I was reading too much and action faking so I decided to take a break and get sh*t done. I should’ve posted something sooner, but better late than never.

    Since I was last active, I developed and launched my own product and just recently sold the business. Now my wife and I are taking a bit of time off traveling around SE Asia so I have some time to clear my head. I can get into the reasons I sold the business, but I think the more interesting parts are all the lessons I’ve learned along the way. So I guess I’ll start with that and then feel free to ask me anything below.

    First thing most people have asked me…is how much did I sell it for? What was my revenue? What was the multiple on my biz valuation? And of course, how did I find the idea for my product?

    The first three questions won’t do jack sh*t to help anyone, so I’ll start with the fourth one. I found my idea by working in the beer industry. I would do literally any job that related to beer. I cleaned lines and got sprayed with moldy beer…more than a couple times too. Yes I can honestly say I’ve had a golden shower…not the R. Kelly style, but still golden nonetheless. I delivered 160-pound kegs and drove sometimes 15 hours in a single day to make sure our growing sales numbers were actually fulfilled. All the while getting bitched at for the delivery being 15 minutes late. I swept floors, installed plumbing, served beers, made cold face-to-face sales calls. Basically, I did every job I could at least once.

    The point of this story is simply that…ALL of my ideas came from my experience working in the industry. I kept a journal with me at all times and eventually had well over 100 different beer products, services, or software ideas. The key takeaway here is: if the reason you haven’t started yet is that you don’t have any good ideas…just go out and get involved in an industry (preferably a big one) and take any opportunity you get to learn something. Then, just keep your eyes open. The more important and sh*ttier the job is, the better the opportunity.

    At some point, I realized I needed to just shut up and do something. So I went through all of my ideas and marked off the ones based on three criteria.
    1. Would I actually stick to it long enough to give it a chance to succeed.
    2. Could I afford it?
    3. Did I have the know-how or at least access to the know-how?
    The first criteria ruled out most of the service ideas I had. And the third one ruled out the software ideas (for the time being). So that left me with a physical product. And since I learned firsthand what issues sucked the most, I picked the product idea that I would have most wanted in the field.

    And that leads me to my next big lesson. Product development can be VERY expensive and time-consuming. One of the biggest reasons I chose the product was because I could afford to launch it. I found ways to get through the development stages very quickly and cheaply. Basically, I found a way to use mostly off-the-shelf parts that I could resell if the product sucked. This actually turned into one of my product benefits since it wouldn’t cost a fortune to repair. So I spent about $200-300 bucks on parts and built a prototype.

    I can’t remember whose term this was, but I love the word “ghettotyping.” At first, I wanted my prototype to be perfect and complete. But then I realized just how stupid that was. All I really needed to know is if the damn thing would work. So I scrapped all my plans to have special parts custom machined, and then just used zip-ties, duct tape, scrap wood, and stole key parts from other products…whatever would allow me to simply test my product. Luckily, it worked…and it worked better than I thought it would.

    Great! Now I needed to figure out if it would actually sell. So I spent some time making a few more prototypes that looked decent enough to sell. I found some suppliers who were willing to do small sample orders. I promised to make larger orders if the samples worked. I guess I should also add that it took a very long time to find suppliers for a few key parts I needed. I had almost given up after several weeks of searching until I got lucky and found a picture of what I needed. I followed the link and voila, I finally found the manufacturer.

    They didn’t make it to the exact specs I needed, so I asked and the manufacturer said they’d do it if I would buy at least 100 units (roughly $2500). I agreed if they would sell me a few samples to test first and a few weeks later I had the missing parts. Then I went out where I thought my customers were and demonstrated the product. Right off the bat, I had several customers willing to hand me cash….Now we’re in business.

    Before this point, I never stopped to think about branding, what business entity should I organize, what kind of logo do I want, and when should I order business cards. These are the things I used to think about before I even had a product. Then someone on the forum slapped some sense into me and pointed out how silly this was.

    This time was different though. This time I actually HAD a product and was ready to start selling. It was invigorating to finally get beyond the over-planning stage and I started to get really excited. I had tons of energy and suddenly I was willing to stay up as late as necessary to get things done. And the really funny (or depressing?) part is that all the stuff I just mentioned…only took a few hours. I had organized my LLC, named the product, purchased the domain, and outsourced the logo design in half a day.

    So while I waited for all the paperwork and logo design process, I followed through on my word to my suppliers and quickly put in a bigger order. This seems like a good time to mention another thing I learned about dealing with suppliers. If you promise them bigger orders and they deliver, be ready to stick to your word and act quickly and decisively. I have no doubt my suppliers lost money on the sample order and I wanted to build a strong relationship from the start. They went above and beyond for me, so I returned the favor. This supplier turned out to be one of the best I’ve ever worked with.

    Next, I went to work on the website. I had no experience and since money was tight at the time, I had to build it myself. Again, this was the type of crap that I’d normally spend way too much time perfecting, so I decided to go with Wordpress and woocommerce. I basically let the reviews decide for me which theme to use and I hit the ground running. The only goal was to have a website that could accept credit card payments and a few pictures with some decent sales copy. Again, money was tight and I couldn’t afford a copywriter, so I learned and wrote it myself. I used stripe for my CC processing for no other reason than it was incredibly easy to setup. Again, I just needed to be able to take payment. Who cares about 1-2% processing fees when I still technically have $0 in sales?

    This seems like a good place to stop for now…next post I’ll start with how I got the initial sales rolling and my biggest mistake which lead to a pivot that made the business viable.

    Oh, and before I go here's two more random things I learned:
    1. Failure is nowhere near as scary as we make it. If you're not taking too much risk, failure usually means you lose a little bit of money or simply waste a little time. And all the while you're learning...If my product failed, I could have sold all the parts on ebay. Or worst case scenario, I lose about $3k and a couple weeks of my time. Now that I look at failure this way, I'm not afraid of it anymore.
    2. The advice about sticking to one business/project at a time is spot on. It’s damn hard to juggle two projects at once and be exceptional at both. Either you get burned out or the value you provide starts to decline. In the end, one or both businesses usually suffer from the divided attention.

     
    Mutant, luniac, Kade and 30 others like this.
  2. jon.a
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    jon.a Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Well done.
     
  3. AnAverageJoe
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    AnAverageJoe Worse than a drunken sloth Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Great stuff, thanks for posting. I’m developing a product right now but I didn’t follow your rules unfortunately. I have a great product with good feedback, but I can’t afford the big order.

    I’m having to get creative with my marketing and sales copy to get some pre-orders done to fund the initial order. Made things a little bit harder, but like you said I am learning every step of the way.

    Can’t wait to read the rest.
     
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  4. Chazmania
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    Chazmania Silver Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Congrats on your success, looking fwd to updates.
     
  5. B. Cole
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    B. Cole Stop me. Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    A fellow product developer who’s in the beer industry...

    How are we not best friends? :playful:

    Great job so far, looking forward to the updates.
     
  6. samsig03
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    samsig03 Contributor Speedway Pass

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    I am currently developing a product and trying to license and build a brand myself. Getting pretty close to the big order. I am looking forward to the updates man. Great job, amazing. HTOWN!
     
  7. Eskil
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    Eskil Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Good for you my friend, and an awesome update post as well! Now enjoy that time off in SE Asia! :)
     
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  8. Eisenstein
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    Eisenstein customer is king Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Such an inspiring story. Thanks for sharing! Looking forward to your updates :)
     
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  9. Atown512
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    Atown512 Bronze Contributor Read Millionaire Fastlane Speedway Pass Summit Attendee

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    Hey guys, sorry for the delay on the updates. I just got to Thailand and the internet is terrible here. We got stuck in Indonesia for a few days due to the Mt. Agung eruption and finally settled into our new place. I'll get an update posted this afternoon (morning in the US).
     
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  10. Atown512
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    Atown512 Bronze Contributor Read Millionaire Fastlane Speedway Pass Summit Attendee

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    Sorry for the huge delay on a follow-up. The thread about the Fastlane Summit cancellation drove me to post the follow-ups. When I last posted in December, I was living in Thailand with plans to update at least once a week. Then just before I could post the second part, I got news that my brother died in a motorcycle accident. He was my best friend and the president of my other business (a craft brewery) so I had to drop everything and immediately fly half-way around the world at the worst possible time of year to keep the business afloat. On top of all the sh*t I had to deal with, I didn't feel like I was in the right place to contribute. It took nine months to get the business back on track, so here I am.

    Lesson learned: make sure you have key man insurance if you rely on personnel as important as this. It costs almost nothing and can save everything. I’m working on a post for the brewery, but I think the business I recently sold is more relevant here. So here’s where I left off…

    Time to pick up where I left off. In my last post, I talked about how I got started and ended just before I was truly “selling.” From my last two businesses, I can tell you that raw sales are 90% of the battle…at least at first. And if distribution is one of your main concerns, that represents at least half of that 90%. Everything else only supports those two objectives.

    The business I’m talking about in this thread was sold fairly early. I'll get into the reasons why I sold in a little bit, but the main reason was that the challenge of running two businesses really started to catch up with me. The brewery was the bigger opportunity, so it was really a no-brainer decision. And in that regard, I cannot offer much knowledge beyond the point at which I sold, other than the knee-deep situation I am in with the brewery. (More to come on this one in a separate thread) The brewery is an extremely capital intensive business, so I expect not entirely relevant to most. So for now, I’ll stay with the venture that anyone could have started…

    Once I had proof of concept, it was time to actually get cash in the door. Now I needed to collect cash in the technical sense. No more promises, no more “you’ve got my word” pledges to buy my product. I needed them to swipe their credit card…or hand me the exact amount in cash or check…including sales tax.

    I realized a website was crucial if I wanted to look legit. And just like the lesson I learned about “ghettotyping” the website just needed to look good enough to close the sale. So that’s all I did.

    I built a website with a few decent photos, and some decent copy, and a youtube embedded sales video that I created myself. For the video, I used an iPhone that was duct-taped to a barstool. One of my friends has a real estate photography business, so I gave him free beer whenever he could help out. I edited and did the voice-over myself. And this is the funny part…I had to keep re-shooting a crucial scene because random cars kept showing up and ruining my clip. I ended up getting a pretty solid buzz since this shot involved taking a large gulp of beer. While I remember these things, it makes me realize how much fun this process really was. At the time, I was angry and irritated with the inconvenience. But now I can laugh at the whole thing. This is the kind of story I expect all startup entrepreneurs have.

    I worked on the video and website during the weekends and at nights while my friends were out drinking. Since I could only dedicate about one full uninterrupted day per week to this, I would say it took about a month to complete. It turned out to be great timing since it took about 3-4 weeks to get my initial order in. Now that I have some experience with video editing, I think I could have completed this in two days.

    Once the website was functional I went out to get sales. I sent them to my website to check out or used a free PayPal credit card swiper on my cell phone. First I sold to the customers who showed interest in my prototype. Then I needed to find more customers, so I tried to guess what market presented the biggest opportunity. My guess turned out to be completely wrong. For some reason, I forgot that I built the product to solve my own problem. So the most likely customer would be the one who had the same problems as I did. Of course, that’s not always a good assumption, but in my case it was.

    Plus, there was another benefit to pushing sales to prospects with a similar “persona” as mine. Since the problem my product solved was far more painful to me, similar prospects would get more value from the solution. They were willing to give me raving testimonials, product reviews, social media shares, or even better...word of mouth recommendations. Most of the time, all I had to do was ask for it. Or if they had some kind of problem or needed a cheap replacement part, I would help them out at no charge in exchange for a review. Of course, I never asked for a 5-star review, but 100% of the time that’s exactly what I got.

    So I guess I should back up a bit. I said earlier that I would talk about the biggest mistake I made and how that lead me to pivot. It was so easy to sell to my first customers, I assumed the broader consumer market would be just as receptive to my product's benefits. First I tried facebook advertising and got maybe a few sales. Then I tried Adwords. Again, a negative ROI. I really didn’t know what I was doing, but I could tell it wasn’t working and it would take a long time and likely cost a lot of money to figure it out. And that’s when I decided to focus entirely on the B2B market.

    I determined that industry conventions and events would be where I’d find the most B2B customers. I didn’t have the cash to purchase a booth at conventions at first, so I basically just went to them. I made a business card with a picture of my product on one side and contact info and website address on the back to hand out. I left a blank line on the back so I could hand-write a coupon code that expired soon. I made different coupon codes and tried different things so I could track what worked and what didn't. This made a huge difference in getting the orders placed without having to follow up.

    I cold-called and demonstrated the product every chance I could get in front of potential customers. And that’s when sales skyrocketed from just under $1k per month to more than $5k. Next month was 6, then 7, and then I easily blew past the $10k mark. And that’s where it became difficult to scale any further.

    I’ll stop here for now. My next post will take a look at keeping the sales momentum going, my scaling problems, and what I did from there. Feel free to ask any questions. I’m committed to giving back to this forum which has given me so much. So please fire away and I’ll do my best to answer.

    Cheers
     
    Mutant, B. Cole, Ghostfusion and 6 others like this.
  11. AllenCrawley
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    AllenCrawley Legendary Contributor Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    So sorry to hear about your brother. It's never easy to come to grips with the death of a close friend or family member. Especially when they leave this world far too soon.
     
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  12. TheSilverSpoon
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    Oh man! I remember back when you were prototyping this thing out and sourcing parts. Amazing to see it come full circle to healthy sales and an exit.

    Congrats man.
     
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  13. robjohn
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    robjohn New Contributor Read Millionaire Fastlane

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    Congrats on your success, and very sorry about your brother.

    Can you give us part 3 update?
     

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