Don't Benchmark Your Success Against Outliers
I am sure that all of us building businesses do this from time to time. We read some article about an individual who made half a million dollars on some small app, or a company who launched their product and six months later sold it at a huge profit, and our minds start racing. That could be me! All I need to do is find the secret sauce, follow their example, find the perfect version of my landing page and we’ll have overnight success!
Even if we manage to stay away from multi-million dollar flights of fancy, it is easy to do some quick math and work out what we could be earning if we just had 1,000 customers, or maybe 5,000. Surely it won’t take too long to get to that point?
In reality building a profitable product business takes a long time. It might be a few years before your business reaches a point where you can say no to client work, or quit your job. Is that a reality that you are prepared for and expecting?
If not, then it might be that your definition of success has been shaped by these outliers, these exceptional stories where luck often has as big a part to play as the product itself.
These stories are only news because they are unusual. In addition the “growth hacking” trend seems to add to the noise as these stories of great success are used as a way to drive traffic to the business or individual concerned. If you dig a little deeper however, there are plenty of stories of business success that speak of the long game that most of us are playing. I’ve listed some of them here.
The podcast that prompted this post was episode 14 of Chasing Product.
This episode is full of great advice from Joanna. As a writer she can see how companies and entrepreneurs are using their success to drive traffic by implying “and you can do it too” with their headlines.
LessAccounting is a simple accounting application for small business bootstrapped by development firm Less Everything. Cofounder Allan Branch wrote,
“It takes years to get a “noticeable” amount of revenue from a SAAS app. You’ll work for years to get your first 100 paying customers. Some products never even get to 100 paying customers before it’s game over. The truth is patience sometimes wins. Numerous applications that compete with LessAccounting have blown through millions of dollars in funding while we’re still here and profitable. We’re the cockroach of the accounting software industry.” – There’s no myth, only years of hard work
Tower is a Git client for the Mac. In a post on their blog about bootstrapping the product Tobias Günther wrote,
“When bootstrapping, you can only grow as fast as your revenue permits. You can’t just hire 5 more people out of your piggy bank. You can only hire new people / open that extra office / buy those new super-fast machines / etc. if you have enough revenue to cover the additional costs.” – Bootstrapping a Company: Lessons Learned
Amy Hoy notes that to succeed in bootstrapped business you need to be willing to “do the same thing for years”,
“Building a real business takes endurance […] Endurance isn’t about working extra hard, or extra long, it’s about incremental progress.” – Lessons Learned from 5 Years of SaaS … and 1 million in revenue
Ruben Gamez wrote about how he nearly gave up on his app,
“I was trying everything I could think of and not getting results. Couldn’t get more people to sign up to a paid trial, or get them to upgrade.” – Failing to Get Traction and (Almost) Giving up on the Road to My First $1,000 in Revenue
The side project approach to building a business
It is because of this long game that I believe launching real businesses as side projects can be genuinely successful as an approach. My product Perch was profitable in terms of cash outlay within 24 hours, however it took over three years before we could stop taking on client work and replace our services business completely with a product.
If you start out with a side project there is no panic to achieve profitability. If the product can pay it’s way as a tiny part of your business, and grow from that point, there is little risk. Make it a serious and important part of your business and life, but accept the long game for what it is. By accepting progress may be slow, and that your story is unlikely to make the news, you can create benchmarks for success without comparing yourself to stories that are far from normal reality.