📚 Book Notes: The $100 Startup
Some key takeaways for me were to give people the fish (not many people want to learn how to fish), that you usually don't get paid for your hobby itself but to help other people pursue the hobby or for something indirectly related to it, and have a deadline on your offerings. It reinforced my belief to improve the quality of life I lead, not the amount of money I earn. And to not sweat about the small things. The case studies also conveyed that there's no rehab program for being addicted to freedom. Once you’ve seen what it’s like on the other side, good luck trying to follow someone else’s rules ever again.
Here are my notes from The $100 Startup:
1. There’s no rehab program for being addicted to freedom. Once you’ve seen what it’s like on the other side, good luck trying to follow someone else’s rules ever again.
2. Many of these unusual businesses thrive by giving things away, recruiting a legion of fans and followers who support their paid work whenever it is finally offered. “My marketing plan is strategic giving,” said Megan Hunt, who makes hand-crafted dresses and wedding accessories in Omaha, Nebraska, shipping them all over the world. “Empowering others is our greatest marketing effort,” said Scott Meyer from South Dakota. “We host training sessions, give away free materials, and answer any question someone emails to us at no charge whatsoever.”
3. I succeeded as a cartoonist with negligible art talent, some basic writing skills, an ordinary sense of humor and a bit of experience in the business world. The “Dilbert” comic is a combination of all four skills. The world has plenty of better artists, smarter writers, funnier humorists and more experienced business people. The rare part is that each of those modest skills is collected in one person. That’s how value is created.
4. Picture this scenario: It’s Friday night, and you head out to a nice restaurant after a long week of work. While you’re relaxing over a glass of wine, the waiter comes over and informs you of the special. “We have a delicious salmon risotto tonight,” he says. “That sounds perfect,” you think, so you order the dish. The waiter jots it down and heads back toward the kitchen as you continue your wine and conversation.
So far, so good, right? But then the chef comes out and walks over to your table. “I understand you’ve ordered the salmon risotto,” she says as you nod in affirmation. “Well, risotto is a bit tricky, and it’s important we get the salmon right, too … Have you ever made it before?” Before you can respond, the chef turns around. “Tell you what, I’ll go ahead and get the olive oil started.… You wash up and meet me back in the kitchen.”
I’m guessing this experience has never happened to you, and I’m also guessing that you probably wouldn’t enjoy it if it did. After getting past the initial surprise (Does the chef really want me to come back into the kitchen and help prepare the food?), you’d probably find it very odd. You know that the food in the restaurant costs much more than it would in the grocery store—you’re paying a big premium for atmosphere and service. If you wanted to make salmon risotto yourself, you would have done so. You didn’t go to the restaurant to learn to make a new dish; you went to relax and have people do everything for you.
5. “We’re not selling horse rides,” Barbara said emphatically. “We’re offering freedom. Our work helps our guests escape, even if just for a moment in time, and be someone they may have never even considered before.”
The difference is crucial. Most people who visit the V6 Ranch have day jobs and a limited number of vacation days. Why do they choose to visit a working ranch in a tiny town instead of jetting off to lie on a beach in Hawaii? The answer lies in the story and messaging behind John and Barbara’s offer. Helping their clients “escape and be someone else” is far more valuable than offering horse rides. Above all else, the V6 Ranch is selling happiness.
6. Like Barbara and John in California, Kelly discovered that the secret to a meaningful new career was directly related to making people feel good about themselves.
7. In our context, an even easier way to think about it is: Value means helping people. If you’re trying to build a microbusiness and you begin your efforts by helping people, you’re on the right track. When you get stuck, ask yourself: How can I give more value? Or more simply: How can I help my customers more? Freedom and value have a direct relationship: You can pursue freedom for yourself while providing value for others. As we saw in the discussion of convergence, a business ultimately succeeds because of the value it provides its end users, customers, or clients.
More than anything else, value relates to emotional needs. Many business owners talk about their work in terms of the features it offers, but it’s much more powerful to talk about the benefits customers receive. A feature is descriptive; a benefit is emotional. Consider the difference in the stories we’ve looked at in the chapter thus far. The V6 Ranch helps people “escape and be someone new.” Isn’t that more powerful than just offering a horse ride? Kelly’s private classes help busy female executives prepare for their day in a quiet setting, a much more meaningful and tailor-made experience than going to the gym with hundreds of other people.
8. Having done this for a while, Kyle knows that what her clients want and what they say they want may be different—and she also knows that the families of the bride and groom may have preferences of their own. Here’s how she handles these competing desires:
On the day of the wedding, I’ll grab them and say, “Let’s get your family and just do a couple of traditional shots.” I’ll make it quick and painless. I make sure everyone is laughing and having a good time and it’s not those awful, everybody-stare-at-the-camera-and-look-miserable kinds of shots. And then after the wedding, when I deliver those photos, either the bride and groom’s parents will be thrilled to have those pictures (which in turn makes the couple happy), or the bride and groom themselves will end up saying they’re so happy that we did those shots.
Kyle goes above and beyond by giving her photography clients what they really want … even if they hadn’t realized it themselves.
9. Purna started his website several years back, but for a while it only contained posts about his family and life in India. In 2009, he settled in and got more serious, chronicling a series of tips and tutorials about using Excel to become more productive. Crucially, he didn’t target Indians, but instead reached out to interested prospects all over the world. He also didn’t depend on advertising revenue, something that very few people in our study mentioned. Instead, he created products and services himself, offering downloadable guides and an ongoing training school.
He was also a good copywriter. Updating spreadsheets can sound like incredibly tedious work, but Purna positioned the core benefit away from numbers and toward something far more powerful: “Our training programs make customers a hero in front of their bosses or colleagues.” Not only would their work become easier, Purna said, but other people would recognize and appreciate them for simplifying a complicated process.
10. As I learned from my early mistakes, homing in on what customers really want from a business is critical. Simply put, we want more of some things and less of others. In the “More” column are things such as love, money, acceptance, and free time. We all want more of those things, right? In the “Less” column are the undesirables: things such as stress, long commutes, and bad relationships. If your business focuses on giving people more of what they want or taking away something they don’t want (or both), you’re on the right track.
A spa takes away stress while making guests feel loved and accepted. A popular message is, “We’ll do everything for you—relax and leave the details to us.” This is also the message that a good restaurant sends, not, “Come back into the kitchen and make your own dinner.”
11. Many successful follow-your-passion business owners understand an important principle that aspiring (and unsuccessful) business owners don’t. The missing piece is that you usually don’t get paid for your hobby itself; you get paid for helping other people pursue the hobby or for something indirectly related to it. This point is critical. I began my writing career by sharing stories about a quest to visit every country in the world, but I don’t get paid for that. I have to create value in my business the same way anyone else does—without real value, I wouldn’t get paid, and the travel would be just a hobby (albeit a passionate one).
12. Like any trend or business model, not every story of independent publishing is a success. Many aspiring publishers operate on an “if you build it, they will come” model. Later in the book, we’ll rename it the “if you build it, they might come” model—sometimes it works, but many times it doesn’t, and there’s no guarantee of instant riches. For every online course that becomes a Mondo Beyondo-size success, many others flounder on with five participants. For every $120,000 e-book like Brett’s, many others sell two copies (one to the writer’s grandmother and one to a friend of the family) before fizzling out.
Some of the failures relate to unrealistic expectations. Put simply, some people want the sun and the fun (or the $300 a day) without the work. Partly as a result of the allure of working from anywhere, many aspiring entrepreneurs focus much more on the “anywhere” part than they do the “work” part. Since the work part is what sustains everything else, it’s better to focus on it from the beginning. After all, the best thing about a location-independent business is possibility. The fact that you can head off to Argentina or Thailand on a whim doesn’t necessarily mean that you actually will.
The classic image of a roaming entrepreneur usually involves a guy or girl sitting on the beach in a swimsuit, drink nearby, with a laptop propped up against the backdrop of a sunset. My limited attempts at replicating such a scene usually involve worrying about the laptop (Will it get stolen? Will I get sand in the keyboard?) and straining to see the screen against the glare of the sun. Furthermore, most beaches in tropical locales do not provide WiFi access, and for that matter, plenty of other places don’t either—so if you’re going to operate your business on the road, you’ll need to learn to think about your business as much as you think about being on the road.
13. Popular diet plans come and go, but a few of them stick around. The Paleo diet, which encourages its followers to eat a lot of some things (meat and uncooked vegetables) and very little or none of other things (grains, dairy, sugars, etc.) looks like it’s here to stay. Like all strict diets, Paleo attracts a passionate following in addition to a passionate group on the other side that questions its scientific basis. Situations like these—an industry or movement with lots of lovers and haters—always present a good business opportunity.
Enter Jason Glaspey, who had adopted the lifestyle after reading The Paleo Diet, a popular manual for Paleo followers. Jason noticed a big difficulty with trying to follow the diet: It was complicated. “Eat natural food and avoid grains” sounds simple enough, but adhering to the whole diet requires a fair amount of ongoing planning. This is another sign of a good business opportunity: when lots of people are interested in something but have a hard time implementing it in their daily lives.
14. As you focus on getting to know “your people,” keep this important principle in mind: Most of us like to buy, but we don’t like to be sold. Old-school marketing is based on persuasion; new marketing is based on invitation. With persuasion marketing, you’re trying to convince people of something, whether it’s the need for your service in general or why your particular offering is better than the competition’s. A persuasion marketer is like a door-to-door vacuum cleaner salesman: If he knocks on enough doors, he might eventually sell a vacuum cleaner … but at great personal cost and much rejection.
Persuasion marketing is still around and always will be, but now there’s an alternative. If you don’t want to go door to door with a vacuum cleaner in hand, consider how the people in our study have created businesses that customers desperately want to be a part of.
What do you sell? Remember the lesson from Chapter 2: Find out what people want and find a way to give it to them. As you build a tribe of committed fans and loyal customers, they’ll eagerly await your new offers, ready to pounce as soon as they go live. This way isn’t just new; it’s also better.
When you’re brainstorming different ideas and aren’t sure which one is best, one of the most effective ways to figure it out is simply to ask your prospects, your current customers (if you have them), or anyone you think might be a good fit for your idea. It helps to be specific; asking people if they “like” something isn’t very helpful. Since you’re trying to build a business, not just a hobby, a better method is to ask if they’d be willing to pay for what you’re selling. This separates merely “liking” something from actually paying for it.
Questions like these are good starting points:
What is your biggest problem with ______?
What is the number one question you have about ______?
What can I do to help you with ________?
Fill in the blanks with the specific topic, niche, or industry you’re researching: “What is your biggest problem with getting things done?” or “What is the number one question you have about online dating?”
The fun thing about this kind of research, especially the open-ended questions to which people can respond however they’d like, is that you’ll often learn things you had no idea about before. It’s also a way to build momentum toward a big launch or relaunch.
15. A few years ago, I ran my first marathon in Seattle. I’d love to tell you I ran strong to the finish, but by mile 18 I was wiped out, focusing entirely on putting one foot in front of the other. As I trudged along in the final hour, I spotted a volunteer handing out fresh orange slices on the side of the road ahead of me. Tired as I was, I made sure to change my position, slow down, and gratefully accept the gift. The piece of fresh orange was an offer I couldn’t refuse—even though it was free, I would have gladly paid for it if I had the money and was in the right frame of mind to make a transaction.
Two miles ahead, I saw another volunteer handing out a different gift: halves of Krispy Kreme donuts. Unfortunately, this offer did not excite me (or any other runners I saw) at all. I’m no puritan and have eaten more than my share of donuts over the years, but three hours into the longest race of my life was bad timing for a sugar rush. The offer was unattractive and a poor fit for the context.* A compelling offer is like a slice of orange at mile 18. It’s a marriage proposal from the guy or girl you’ve been waiting for your whole life. An offer you can’t refuse is like the $20,000 Bonderman Fellowship offered every year to graduating seniors at the University of Washington. The fellowship has very strict rules: Take our money in cash and travel the world on your own; don’t come back for eight months. Oh, and once in a while send us a quick note so we can tell your parents you’re alive. If you guessed that hundreds of students compete for the fellowship every year, you’d be right.
How can you construct an offer that your prospects won’t refuse? Remember, first you need to sell what people want to buy—give them the fish. Then make sure you’re marketing to the right people at the right time. Sometimes you can have the right crowd at the wrong time; marathon runners are happy to eat donuts after the race, but not at mile 18. Then you take your product or service and craft it into a compelling pitch … an offer they can’t refuse.
16. If the launch is a week long, you’ll tend to see a strong response on the first and second days, followed by a significant downturn and then a big uptick right before the close. This further illustrates why you need a launch cycle: If you have no closing, you won’t see the uptick! If you just launch and move on, you’ll have no opportunity for growth.
17. As with everything else in life, it’s important to keep your word with launches. If your offer ended at a set time and you had a big response, you’ll invariably be contacted with requests for exceptions after it’s over. It’s tempting to take more money, but if you said it would end at a set time, you need to stick to your decision. In the long run, this works in your favor, because people will realize that you mean what you say. Karol and Adam received numerous requests for their bundled package after the seventy-two-hour period had ended, but they politely declined each one.
18. We initially imagined a community of thousands for our triathlon and Ironman distance training programs. In reality, fewer members meant deeper roots and a much more powerful experience for everyone. Unlike most programs, which try to keep pushing the price higher, we reward our members by decreasing the price the longer they remain in the program. This is because we recognize that the more experience they have, the more they can help other members … and the more active they are in recruiting new members to join as well. —Patrick McCrann, Endurance Nation
19. Business is good, but Cherie has purposely declined to pursue a number of expansion ideas. Here’s how she puts it: “Without a doubt, the smartest decision I made was to set a specific intention to not grow the business. Growing up as the daughter of an entrepreneur, I watched my father’s creativity and inventor mind-set get sapped as the business grew from just him to over fifty employees. The stress wore him down and diminished his quality of life.”
When I last spoke to Cherie, she was on the island of Saint John, where she and Chris had settled in for a stay of a few months (“maybe longer, or as long as we feel like it”). Cherie earns a good income of at least $50,000 a year but is insistent that the money isn’t the point. “My feeling of being a successful business owner is based on the quality of life I lead, not the amount of money I earn,” she says. “I own my business. The business doesn’t own me.”
20. The best thing that ever happened to John, as he tells the story, was a late-night disagreement with a crazed cab driver, who pulled him into the back room of a diner and held a gun to his head for a full ten minutes, screaming and threatening to pull the trigger. John finally escaped and walked out into another cold Michigan night, sweating, trembling, and glad to be alive. “I get it!” John yelled at the sky as he hobbled away. “I’m just so lucky!”
“You don’t really worry about the small things after that,” John says now. “Everything takes on a whole other level of meaning.”
If you liked the above content, I'd definitely recommend reading the whole book. 💯
Until We Meet Again...