After two weeks, our brand new startup has 500 paying customers.
How did we do it?
What did we learn?
What did we irrevocably do wrong?
Are we a mystical unicorn or an average Joe?
And what can you do to massively accelerate your results?
The resemblance is uncanny.
These are just a few of the things I’ll be answering today, so read on and change the way you launch startups and business ideas forever!
Stage 1: The Idea
A platform that has literally exploded — and what came with it? More influencers than ever.
Influencer marketing has been a thing for a long while now. Ever since your crush in high-school made you want to do sports you’ve never had interest in, people have been influencing others.
But Instagram brings a much more intense type of influence.
With YouTube and TV, there’s a bigger commitment of time.
With Instagram and a simple scroll, you can idolize people you don’t know to buy things you don’t need.
My latest need? A pet pig.
Cue the startup.
Seeing so many people with so many followers and likes, I sometimes yearn for more engagement. I think sometimes we all do — but what happens if we’re not getting noticed? Gary Vee is showcasing 20 year olds with 1,000,000 followers and I’m sitting here with mum being my number one fan. Maybe I’ll never be Justin Bieber…
So I started getting deep on strategies with Instagram and the one genuine strategy that works time and time again is engaging with people in your niche. If you’re a yoga instructor, and you chat and share photos with other yoga enthusiasts, you’re going to start to build a community.
If you like and follow someones profile (especially if they have 5,000 followers or less), there’s a 22% chance that they’ll follow you back. 22%!
So what happens if I start following and engaging with a thousand people a day? Well, you stare at a screen for 10 hours while the world rushes but, BUT you also get hundreds of new followers!
And what if I automate the process (in a super controlled way that is genuine, value driven and isn’t spammy and in line with Instagram’s Terms of Services) so this can happen while I’m sleeping, leaving me to spend my time on commenting and engaging instead of followers and liking?
Our startup helps you engage with people directly in your niche. On average, people that use Authentically grow 100 genuine followers in their niche every single day — pretty crazy, and all for $35 a month.
We help with the amplification of your profile, but you’re still in charge of ensuring what you’re posting is high quality.
So we’ve got the startup idea (usually the easy part) — but how do we get users?
Note: we didn’t spend years developing the software and then launch it to the market. We already had most of the tools around us so we spent 1 month bringing it all together so we can test if people actually would use it before we continued the development. Then if people show interest, we’ll develop out the rest!
Actionable Tip #1: Start testing acquisition the second you have your MVP (Minimal Viable Product) ready. Otherwise you might spend months developing something your customers don’t find valuable and don’t even want.
Read Andrew Chen’s ‘Minimum Desirable Product’ for more thoughts about when you should launch and the theory behind this.
Stage 2: Acquisition
Since we were targeting Instagram users our initial acquisition strategy was to advertise on Facebook & Instagram! They’re social people. They’ll be craving engagement. They’ll love our product!
Now some quick back of the napkin math:
- We had a 7-day free trial,
- If someone converted, they’ll be paying $35 a month,
- We don’t know how long people would stay on for so the LTV (lifetime value) was a mystery to us,
- We assumed that 50% would stop after the free trial (this would reduce heaps after we built out the product after testing).
So, we needed to acquire free trial users at $17.50 per user to earn our money back.
Cue our secret weapon — AdEspresso.
I’ve been launching Facebook ads since before I started drinking coffee so I consider myself above average. But AdEspresso ruined my dreams and my ego and turns out to be 10x better than launching an ad on my own.
With AdEspresso, you can add 5 headlines, 5 body texts, and 5 images, and it automatically creates 50 different ads combining all these combinations.
BUT IT GOES FURTHER.
You then enter your audience and you can split test even more.
We chose to initially split test between different Facebook placements ‘desktop feed’, ‘mobile feed’, ‘Instagram’, ‘right column’ etc.
This means AdEspresso launches 250 split test ads which quickly gives you massive insights into what’s working and where you should be focusing.
Every day you log in, click a pause button when AdEspresso determines that one ad is performing worse than the other and you can sit back, relax and watch your Instagram follower count increase.
Here were my results for the first 7 days:
Day 1: Cost Per Acquisition (CPA) of $160 (250 ads running)
Day 2: CPA of $80 (135 ads running)
Day 3: CPA of $50 (70 ads running)
Day 4: CPA of $31 (50 ads running)
Day 5: CPA of $27 (25 ads running)
Day 6: CPA of $21 (10 ads running)
Day 7: CPA of $17 (3 ads running)
Yeah! Mission accomplished.
Now after a week, here is all the incredible juice that we learned:
- Our conversion rate from free trial to paying customer was 80% (much better than we anticipated).
- Instagram boasted a CPA of $17, where Facebook desktop was $30.
- Targeting iPhone users lead to a 30% lower CPA than targeting Android users (whaaaaaaaaaaat?!).
- Females had a 40% lower CPA then guys (although guys had the lowest at the start)
- And probably more important than anything else — we validated that people want to use our startup — even the average version of it which we’re now going all out and improve.
And with every new customer, we started asking for feedback, so we can really ensure we’re delivering a product that customers will continue to buy.
Step 3: Venture Capital
Actually, I lied here.
Ben Horowitz (pictured above) isn’t investing in us… but call me, maybe.
No VCs approached us but there’s a reason why I included this in the title.
We don’t actually need VC because we’re now funding our own growth.
I feel like there’s a hype with startups and funding, but why not actually figure out a way to fund your own growth without having to rely on half a million dollars on an idea you haven’t validated yet?
And you get to keep all the equity.
Now, I’m not saying we won’t get funding, but now VCs will appreciate that instead of being an imaginary idea, we’ve got a significant amount of customers, we have a clear path of growth that we’ve validated already, and we can have a much more solid idea of where an investment will take us (and what return a VC will get).
- Figure out what your MVP is and start talking to customers the second you hit that point. Otherwise you might find yourself spending a ton of time developing an idea that no one wants.
- Launch an ad and get some eyeballs on your product. See if people buy! See if they sign up. Have zero budget? Talk to friends and family, and see if you can get someone to pull a card out. Having someone pay for what your selling is the biggest indication that you’re on the right track.
- Post a picture of Ben Horowitz, and hope he sees it and gives you a round of funding.
I’ll be documenting my whole journey on the way to launching this service and getting to $100,000 in monthly recurring revenue and beyond.
If you’re interested in following the journey, subscribe below!
Have a startup / business and need help? Let me know!
I love helping companies and startups grow.
I actually run an 8 person boutique marketing agency, so even if you’re just after a fresh pair or eyes or can only pay in thank you cards, I’d still love to help.
It’s more of a passion than a money making scheme ;)