How I Saved My Startup Before It Even Launched
Launching your product first and looking for customers second will leave you dead in the water
One of the most important things I’ve learned after running a company for 10 years is that before you talk to an accountant, a lawyer, or even your spouse about starting a business, you need to talk to your future customers and understand their frustration points. Most importantly, you need to put their names on a list.
This can be life or death for a startup. It was for mine. It’s what kept my business afloat when I had almost no money left in the bank.
Building my list
I started my multimillion-dollar cybersecurity education business 10 years ago at age 26. Although I didn’t realize it at the time, I had really started building my audience at 14. Back in 1998, I was an aspiring white-hat hacker, and the best internet speed I could dream of was 56 kilobits per second — something that, for economic reasons, I only had access to for an hour at a time, once a week.
I was eager to learn everything about computing, and I wanted to share my knowledge with others because it reinforced my understanding and forced me to do thorough research. I published a newsletter containing tutorials, how-tos, demonstrations, and so on — something that would solve a problem or explain a concept in simple terms. Every week, I would email my newsletter to my small but growing list of subscribers. I was basically helping my audience for free, and this turned me into an expert they trusted.
Turns out, I was unwittingly applying the most powerful technique in online marketing: content marketing. When founders educate their audience through thought leadership, they position themselves as advisers instead of just marketers. They build trust and authority with an audience—two powerful triggers when it comes to buyers’ psychology.
Up to that point, everything was moving in one direction: I was broadcasting messages without much feedback. I had no idea the content I was producing would build such a strong relationship with my audience. Yet that relationship lasted for years, and it would be there when I needed it.
The turning point
The moment I realized I didn’t know anything about my audience was when I received an appreciation email from a subscriber who turned out to be a big shot at Microsoft.
That feeling of getting appreciation for my free work was enough for me to overcome my introverted hacker nature and take a big step forward: switching to a bidirectional communication channel. I turned my newsletter into a conversation and applied a series of techniques that, many years later, proved to be effective for my business as well. I used my real name in the “From” field of each email, wrote with a conversational tone, and encouraged replies and feedback. I even ran polls in the emails asking my audience to actively suggest research topics. I also invited subscribers to join a forum and continue the conversation there.
Compared to 1998, most of the above is easier to be achieved today through social media. But regardless of the medium used, the same lesson still applies: First, attract potential customers with interesting, practical content. Then, start conversations using the channels most appropriate for your audience (newsletters, social media, forums, etc.).
A founder should be developing a list of prospective customers at the same time — if not before — they develop a minimum viable product.
By building my newsletter audience like this, I not only added a human touch to my interactions, but I also got to know why people were interested in my content. I started asking questions and involving the audience in the decision-making process for my content.
Even though I had nothing to sell at the time, I began to learn how engaging with an audience that shared similar needs would help me discover customer pain points, position my product, fine-tune marketing messages, and figure out pricing. (Years later, I found out big consulting firms charge six-figures to do this stuff!)
When to start creating a list
All of this taught me that a founder should be developing a list of prospective customers at the same time — if not before — they develop a minimum viable product.The last thing you want to do is launch your product first and then go looking for someone who’s interested in it.
The valuable conversations you have with your customer list will prioritize product features and help with development. Conversations can and should involve the engineering team at all times. There’s nothing more fulfilling for a developer than solving someone’s problem by writing lines of code.
From a marketing and sales perspective, the ideal situation is to have at least a few hundred people on your list by the time you launch your product. A properly nurtured, excited, and engaged audience can convert into paying customers at unbelievable rates.
The day I launched my first product
When we launched on April 14, 2010, with almost no money left in the bank, our only chance was to get enough early adopters paying for our product on launch day that we’d have enough fuel to keep the car going.
We had been working on our first product for months, but most importantly, I had put a lot of effort into building an initial list of about 2,000 engaged prospects. We’d gotten those prospects excited for launch day with weekly updates that provided valuable content and positioned us as experts in the field.
Everything was ready for the launch. We were three people in a room, hopeful and tired of long hours. We broadcast our launch announcement email to our list and waited… Bam! The first sale came in. Then another and another.
The last thing you want to do is to launch your product first and then go looking for someone who’s interested in it.
We were stunned by the sheer amount of sales that came pouring in. Our business was not only safe, but it raised nearly as much cash as a small seed round in just a few days—and without giving up equity. If we hadn’t built that list or hadn’t engaged the list with valuable content, our business might have been dead soon after launch. That’s why I believe that launching your product first and looking for customers after is the wrong approach, no matter how big your bank account is.
Techniques you can use
It is now easier than ever to build a big list of early adopters for your product. What is harder is getting users’ attention. As marketers compete for users’ attention, quality and frequency of content matter more than ever.
Today, I prefer a platform like Medium over any other blogging platform for content generation because it already comes with the targeted audience I’m looking for. I use social networks like LinkedIn or Twitter to gain targeted leads as well as start conversations. And I’d exploit what I’ve found to be the most important list-generation and engagement tool available today: webinars.
When you host an educational webinar about a topic that’s core to your product, you are collecting targeted leads of people who are committing one hour of their time to listen to you, which is itself a testament to their interest in what you have to offer. You’re engaging them with your voice, visuals, demos, and storytelling to position yourself as a thought leader in your field. You’re also collecting feedback, sparking live discussions through Q&A, and building relationships with potential evangelists for your brand.
I have been the host of almost 100 webinars in the past 10 years, and I can tell you that nothing says “engagement” like educating and inspiring an audience of 1,000 potential customers at the same time.
New methods are available every day and you should experiment with what works for you and your audience. The most important takeaway is this: It’s better to have a conversation with 100 engaged leads collected organically than a list of 1,000 uninterested email addresses you bought somewhere.
Metrics of a good seed list
I hope I’ve convinced you that building a list of engaged potential customers is a valuable use of time and money. If your goal is to sell to this list once your product is ready, engagement is key.
If your list consists of email addresses, the only metrics that count are (in increasing order of importance): open rate, click rate, and reply rate.
Each additional person who hits Reply every week is worth much more than 10 new clicks. When a conversation starts, you have a chance to turn that person into a customer, and your customer into an evangelist later on. So don’t stop at click rate. Go further and encourage them to talk to you.
If you are hosting a webinar, track metrics like attendance rate (attendees/registrants) and keep track of how many people stick around to the end of the webinar. Another important engagement metric is the number of questions you receive at each webinar.
If you’re leveraging LinkedIn, comments are what counts. Focus only on engagement metrics. Likes and views of your website are just good-to-haves.
If you are a founder, I’d recommend doing the same thing with your audience as I’ve done with mine: Build your initial list of customers through quality content. It’s an investment that will pay dividends over a long period. Sometimes, like in my case, it could even be your only chance to survive.