You'll make $0 WITHOUT this ONE skill

in this video I'm going to share the one skill that I had to learn the hard way after starting five of my own businesses and spending almost a decade in Silicon Valley's biggest tech companies I personally believe this is the main driver for Revenue in any business from software to Plumbing to home cleaning to vending machine literally anything and it's a skill that you can learn even if you've never started your own business or want to start your own business and is backed by millionaire entrepreneurs Who I Really respect like Noah Kagan and Alex Heros but first let me show you what life was like before I learned the skill couple years ago I went on a journey and was trying to find passive income I was trying to find ways to generate passive income for myself outside of my job to learn more about business and things that I could do uh to generate wealth passively now there's a lot of gurus out there and one of them that I really like liked her approach was Cody Sanchez and I think what she has to say is really valuable um but one of her passive income approaches is starting a vending machine or ice vending business and the napkin math made a lot of sense you put an ice vending machine near a beach or a location and people drive by it who need ice and purchase ice well after partnering with my best friend starting a company investing $10 to $30,000 getting it all set up hiring contractors negotiating contracts all of this mess the math wasn't mathing I think we started making maybe $100 a month and our rent was $300 a month why so it makes it makes sense right like logically you set up a vending machine people pass by it people buy right well that's a common misconception in business if I put the thing that I think people want in front of them they'll buy it that's not true now what I what could I have done I could have but this doesn't just parallel vending machines and ice machine business business this parallels software and and SAS businesses as well or honestly any business and I'll share another story with you have a buddy who who got investment has a really good idea I would buy the product but he started writing code started hiring people went full-time which is awesome but is now struggling with finding product Market fit and who actually wants to buy this is it B2B SAS companies is it uh offshore staffing companies so you're couple hundred, in the hole needing to raise another round but and and trying to figure out who's going to buy this thing that sucks spending 30 grand on vending machine sucks I want passive income the math made sense that I would make $1,000 a month maybe $500 a month at least just break even I don't care I don't want to be losing money but that that wasn't even that big of an investment people are spending ending hundreds of thousands of dollars building software that they think that if I build it they will come and you know sometimes it works but for 99% of the cases that I've seen in the real world it doesn't now you don't want to be in that position spending a ton of money needing it to work already being invested forcing it to work so let's take a look at what the other side of this looks like when you when you plan well and execute on uh an idea that's validated and good but first I need to break down kind of like what I think is the core pillars of business and so you have in my opinion four pillars so you have offers so you have an offer you have leads to the offer you have sales of that offer and then you have fulfillment of that offer that is that is how all businesses work but for this video I'm just going to focus on the first part of that which is just offer and leads because if you can't nail that sales and fulfillment don't even really matter not too long ago I started my own tech company in an industry that no one really want wanted to touch but I wanted to solve my own problem now I knew I would buy it but I before I have been a software engineer for almost 10 years I can build my own software I have people that can help me I know what questions to ask that wasn't the problem my problem was making sure that me spending all this time was going to result in a company that could keep going and that people would actually want to buy it because without a good offer you have no leads which means I can't make sales so I'm trying to nail that those first two points so I went out to this industry in the Combat Sports space and I started uh playing with the idea of a niche down Eventbrite for this space for combat athletes to run their seminar business so I reached out to EV I'm in the community I reach out to every contact I had influencers not influencers and I'm like if I build this will you purchase it and will this improve your experience I wanted to validate do you have the same amount of pain that I have and that this bothers you because I could just be the outlier Super Fan and there's not enough of me and are they willing to pay for the thing and I got a ton of really good feedback and validation that this was something that would be fruitful I probably should have done more validation but it worked out because I had partnered with celebrities in this space like Craig Jones who is an influencer and and this kind of gets into influencer marketing where if I could convince that person to run their business on my platform that they would bring their customers with them and I would be the essentially Tech middleman to move forward so after that point we had a couple handshake agreements with some different athletes and I started building the software with all of my time so there's I think one main lesson to take away from this and it's something I've learned from a uh legendary copy writer named Gary Halbert and when people ask him oh how does your copy sell so many products regardless of industry and he made a great point that I think is re re relevant to the situation it's he can sell anything as long as you have a hungry crowd it doesn't matter it doesn't matter if if you're selling hamburgers or you're selling tacos it doesn't matter people's pref food preferences change as long as you have a hungry crowd lined up in my software example when I was going out to these people asking if they uh would partner with me on my uh software as of service it was called artist mat I had enough validation to start building it which is a good step but honestly looking back I should have made sure the crowd was hungry the reason why that that software didn't take off was or I didn't put more time into it was after one or two years uh of running seminars for people like Craig Jones and help helping build the software one Co happened so events essentially stopped and I decided to pull the plug but two the people like uh people in the combat industry space didn't have enough pain that my I didn't have a hungry crowd I was really I convinced them that they needed this thing but honestly like people in that space don't really want what I was selling um so I really don't think it would have gone that much better I think I would have gotten some momentum but I I don't think this would have taken off in the way that I had hoped which is fine and I've tried this in starting other businesses just to learn more about business and selling uh service based businesses remote Home Service businesses software businesses um vending machine businesses and a couple couple more that I'm not going to get into but regardless of the industry this works so back to our business equation of offer and leads before sales business if if you're starting a business that's not something that is a household need Plumbing home cleaning electrician accountant lawyer you're going to need to go out and pre-sell that idea um and it might take some time right you might need to finesse the offer might crush it but you might need to reframe the value of the offer for example you could sell weight loss but hey I'll help you lose weight that that's not powerful what is powerful is which is in100 million offers from Alex rosi is result in time I I'll help you lose the last 10 pounds in 30 days okay now we're talking this is another reason people like Alex Shi recommend starting a service based business you have you've worked on skills just sell them like there's really no upfront investment except for starting your company and running some ads but that's very different than starting a tech company where you need to invest $150,000 so what is the minimum amount of deliverable that you can use to go pre-sell is that just an email opt-in list is that a Google doc and a zoom account and a stripe hookup I have friends on the internet making more than half a million dollars a year on Google Docs by selling things like you don't need all this fancy Tech everything so distill your idea down into can you use a Google sheet can you solve the problem can you sell let's say I wanted this tech company like Airbnb we'll use that as an example and I want to validate that I can connect people that want airbnbs and host that want to host I don't need a technology to to do that I just need to go on Craigslist and and start facilitating or privately booking these things for people then once I've collected the information I have confidence that I can start building the technology behind that without worry about wasting my investment or no one wanting this thing so with my vend to bring it home with my vending machine example or the ice machine something that I should have done is just shown up to that location with a bag of ice and sat there for two days and seeing how many could I sell just that's it I would have saved so much money and so much more importantly my time like I explained with having a software business sell it with the tools that you can stitch together and if it's an offline business you can validate this idea just by hanging out in a location to see if people will will purchase before you invest in in uh in the location if I wanted to open up a hair salon I might hang out in the shopping center and just give out flyers or say uh $5 haircuts or something and see how many people I get maybe no one in that shopping center is interested in getting a haircut for whatever reason you could be in a medical building people don't want to get haircuts I have no idea but but it's a way to validate your idea before time money and headaches so with all of this being said from my experience in slen Valley starting five of my own businesses failing I highly recommend learning the skill of pre-selling and prevalidation of your idea before investing in hiring a software engineer hiring a CTO whatever that is it will save you so much time so much heartache and you'll be able to validate your ideas faster so that you know maybe it's not the first idea but it's the fifth and you need to be able to get from first iteration to fifth as fast as possible so the foundation of this skill is learning how to sell and then learning how to validate your idea with already built tools on the internet no code Google Docs Google Sheets anything so that you can stitch them together to say I have an idea that people are worth paying for I can move forward and the last point I'll make on this is this kind of uh pre-selling or or prevalidation of idea helps you figure out profit margins early on myself included and I know a lot of i' I've been talking to a lot of people in Facebook groups that are having this issue is they spend all this time and money building the software they have traffic so they have the offer and they have the leads but the profit margins just don't make sense at scale so I saw someone online say uh that they've been working on this project for a year and they have like a thousand users and they made $20 okay well you're either selling the wrong thing or you're selling the right thing to the wrong people or it's one of those things that you need to figure out but pre-selling would help you figure that out pretty quickly um and that's not a position you want to be in 100,000 in the whole and your profit margin on a th000 users is 20 bucks so now I need 50x h no not even a million x that to even make some some real money if you like this video I recently did a video on 4 lessons we can learn from Alex Hero's software fail from my perspective as a software engineer in Silicon Valley for the last decade and how to drisk your software business by following kind of my core principles to help you make better decisions when starting your software business before you even get started so check it out hope you enjoyed the video please like comment let me know if you like this video um I'll make more of them and if you have any questions please please let me know thanks for watching

Channel: Scott Stern

Views: 102

Keywords:

Id: r1mt5FOnEgc

Length: 13min 0sec (780 seconds)

Published: Wed Jun 26 2024