The only way to know is to sell

The way I’ve been viewing choosing and building a business over the last 6 or so months may seem unorthodox to some, and too familiar to others. Rather than picking one thing, putting all my eggs in that proverbial basket and making it my ride or die, I’m accepting that I don’t know what I’m doing and just need to get my reps in. Skills in software engineering have very little to do with skills in your ability to assess the feasability of and operate a business profitably. And so, my goal over 2022 is to build 4 businesses “experiments”. Not just throw paint at the wall and see what sticks though, this isn’t “build any 4 things and call it a day”. My goal is to genuinely try to build 4 profitable businesses. That means I honestly need to believe an idea will succeed before making them one of the 4 projects. I’ve come a long way in this regard since quitting my job, becoming quicker (and more accurate) at culling ideas that are blatantly unfeasible.

To clarify what a working or profitable business means to me, it simply means that the cost to acquire a customer is lower than the customers expected life time value. At least for a product with fixed or marginal per customer costs, like a media business or most software businesses. This is a self sustaining business, a very liberal definition of success but the very real definition of being profitable (at scale, sans fixed costs).

I’ve been feeling down about one of the projects recently, as the outcome has been underwhelming even though there were a lot of early indicators that it would work. To be fair it’s early, and I don’t know if there is a path towards making it work. I’ve been trying to find joy in what I do, and decouple the outcome from the process but it’s still natural to feel down when the outcome becomes clear in a way that goes against your expectations. My wife has helped me clarify how I feel about it. We were talking and she was proud that I actually built something, put it out there, and got customers. A lot of people don’t get that far. But I felt that was missing the point. The goal is not to develop the skills to build, I already know how to build and the remaining administrative skills are easily acquired. The goal is to build up judgment about what will work and what will not, and to a large degree my disapointing comes from failing to do that correctly. It comes from knowing that I’ve fooled myself.

When I started building the dog bag opener (which, for those following, now sells organically on Amazon without ads), I fooled myself into thinking that somehow email signups translate to product purchases, when in fact they were poor proxies for one another. This time I’ve convinced myself that free trial signups will have some reasonable or predictable conversion rate to paying customers, when in fact this is highly variable and free trial signups are a very very poor proxy for paying customers (with a less than 1% conversion at the moment). The point is you don’t know until you know. The only way to know what sells, is to sell it. You don’t know what works until you do it. My advice for myself then is that it seems the most risky part of any business is knowing if someone will actually pay for your product. Not sign up for email information about it, not try it out for free, actually pay real money for it. And therefore the best way to see what works is to sell your product as quickly as possible. Charge real money, get real customers, and see what they really think when their cash is on the line.

Building an audience, email list, community, etc. and then figuring out what they’ll pay for is a completely valid approach. This doesn’t mean don’t do that. This doesn’t mean when something doesn’t work close up shop and throw all your work away. I mean that for any particular product or approach you’re trying to assess, don’t linger in the email singup phase. Don’t over analyze how users behave when they’re not paying. Figure out a path to charge customers as quickly as possible. And don’t count your eggs until they hatch. Maybe in the future my tune will change, maybe I’ll be able to look at a particular idea for a particular niche or domain and just know it will work or be able to figure out how to see it will work by estimation. But this is a subtle art as far as I can tell, apparently highly dependent on what niche and how you execute. This should go without saying but this advice isn’t for everyone, this is advice is for myself. If your goals are not the same as mine this may not apply to you, especially if you don’t want to bootstrap. If it does apply to you, great, go forth and sell!

If you liked this post, consider signing up for email notifications for my next one. The views expressed in this article are my own.