Some entrepreneurs find themselves pursuing ideas on short timelines and therefore looking for early revenue.
I personally find it refreshing with so many others going off on a wild goose chases of network effects, bags of VC money and overnight crazy growth leading to billionaire exists.
It means however that, more than ever, these 4 things must be true:
- you need to find a painful problem
- you need someone that recognizes that problem
- you need that someone to be dissatisfied with how the problem is solved today
- you need that someone to be able to pay for a better solution (yours!)
If this sounds familiar is because 3 of those 4 points define what an early adopter is and the other addresses the vitamin Vs aspirin question.
Hopefully that resonates at a very basic level: if you are looking to get revenue as soon as possible you need someone desperate to be relieved of their pain.
If your idea is more centered around building large user bases with a nice to have/cool commodity service and monetization relying on ads or selling access to that user base, you're in for a long wait.
Similarly if you're in the B2B space, especially enterprises, expect longer sales cycles of 1 to 3 months if you're lucky, the bigger the company the longer the cycle. Step into education and government and the wait can be measured in years.
1. Early adopters
There's a whole article you can check out if you want to deeply understand how to identify your early adopters, but in a pinch the main differences with other customer segments are:
- Has a problem
- Is aware of having a problem
- Has been actively looking for a solution
- Has put together a solution out of piece parts
- Has or can acquire a budget
If the person is not aware of the problem, even if you can see they have it, it will be really hard (read expensive) to show it to them and you have to since nobody would buy a solution to a problem they don't think they have.
The fact they have actively looked for a solution and tried to solve the problem proves that they care enough. Too often we complain about stuff and call it a problem, but then are not willing to do anything about it. If that's the case they are unlikely to pay for your product.
And speaking of paying, if they are supposed to be customers, not users, then they must have the money to buy your solution.
2. It hurts badly
I've written in the past about how a need really exists in the spectrum of pain and gain or in other words aspirins and vitamins.
I have a more in depth article coming up, but the short story is that you could easily rephrase most things to sound as a problem and people often get hung up on that.
What I think is worth doing instead is to focus on the intensity. In other words is it really painful, like a family-size headache, or really desirable, like a fresh glass of juice in a hot summer day?
Whatever your product idea is, after you've identified your early adopters you should figure out how they really feel about it. Note the really.
If you just ask, people will lie to you. The best way to assess the level of pain is to look at what people have done to try to address it, which goes back to point 4 above and why you're looking for people that have tried to solve the problem themselves. Specifically you should be looking for people that have spent money to address it.
If your early adopters have solved the problem, even if it's a kludgy bunch of things hacked together, but they are happy with it, why would they buy yours?
The last piece of the puzzle is for you to figure out your competitors and assess them. What are the top 3 things the customer is unhappy about existing solutions? And going back to point 2, are they important enough to them or can they just live with it?
If you can do better and solve those problems you are in good shape to bring in early revenue.
Early Revenue Checklist
In conclusion if you're trying to build a startup that will generate revenue early on so that you can leave your job or avoid taking capital and retain full control, you need to make sure these 3 things are true:
- you can find early adopters (defined as someone who has a problem and has paid money to solve it)
- the level of pain or need is high, a must have, identified as an almost obsessive search to solve the issue
- the existing solutions/competitors are unsatisfactory and you can do better