Notes from "Shut Up and Take My Money" by Josh Kaufman
Link: http://vimeo.com/71250239
Every business has five parts:
- Value creation
- Marketing - "here i am, this is what i do, here is why you should be interested"
- Sales - doing transactions
- Value delivery - what does it take to give what i've sold to the customer?
- Finance - money in is greater than money out, and is it enough?
How to find ideas? Look for ideas that are:
- More awesome
- Less awful
Also, look for hassles. Things that generally suck to do. The larger the hassle, the greater the business opportunity.
Remove friction; make a system move more efficiently. Even removing just a little can be worth a ton of money.
How does someone pick which idea is the best one to do?
10 ways to evaluate a market:
- Urgency - how quickly do people need it?
- Size - how large is the potential market?
- Pricing potential - how much can you feasibly charge?
- Cost of customer acquisition - how much is it going to cost to bring a new customer in?
- Cost of value delivery - how much is it going to cost to deliver to a customer?
- Uniqueness to offer - am i unique, or can someone else compete with out much effort?
- Speed to market - how quick can you start selling?
- Up-front investment - how much are you going to need to spend?
- Up-sell potential - are there other things in the market that target customers want?
- Evergreen potential - how much work is needed to continue keeping the product up for sale?
12 standard forms of value:
- Product - tangible or intangible; one-time transaction
- Service - intangible; for a fee
- Shared resource - create once, let a lot of people use. software as a service, museum, amusement park, etc.
- Subscription - buying now, but pre-commit to future value
- Resale - buying something for a price, selling it for a higher price
- Lease - buying something, letting people use it
- Agency - selling something you don't own. brokering a transaction. example: Airbnb
- Audience aggregation - collection people who have similar interests, selling access to those people for a fee. this is advertising.
- Insurance - transferring risk for a fee
- Option - giving people the ability to do something. example: support retainers
- Loan - giving money in exchange for the money back plus interest
- Capital - venture capital, angel investing
9 universal economic values:
- Efficacy - how well does it work; does it work better than other options?
- Speed - how quickly does it work?
- Reliability - does it work all the time?
- Ease of use - how much work does it take to understand?
- Flexibility - how many things can it do?
- Status - how does this make other people perceive the customer?
- Aesthetic appeal - how beautiful is the thing? do people want to look at it; play with it?
- Emotion - how does this make your customers feel? are they happy?
- Cost - what does the customer have to give up to get it?
Outcome: prototype or sell sheet.
How to validate a market:
- Talk to your ideal prospects; real people who are in the position to buy
- Ideal method: collect pre-orders
- ask if they'll pay. the goal is to either get their money, or to get feedback they wouldn't give otherwise
- At minimum collect email addresses; especially if it's not possible to collect pre-orders
- if they wont give you an email address, they'll never give you money
- Focus on closing real sales as quickly as possible
Also: be sure to have fun