Attention: This approach is for people who want to start companies & launch products.

Here is the 3 Line Summary of this Article:

  1. Build a “minimum viable audience” (MVA) through education.
  2. Build a “minimum viable product” (MVP) together with your audience.
  3. Scale your startup after “product-market fit” (PMF).

That’s it.

That is the Big Picture Overview.

If you’re only here for the key takeaway .. you can leave now 🙂

ah, wait!

One more thing: Check out this screenshot of Morgan Brown’s tweet ..

minimum-viable-audience

brilliant heh? 🙂

If you want the details .. stick with me ..

It gets better.

The strategy I am going to reveal to you is nothing new. Many entrepreneurs have already built successful companies with exactly this strategy.

(the only new thing is the name. I baptized this startup-building approach “Education First. Startup Second.” Or in short: EFSS)

🙂

Important Announcement:

I’m going to publicly announce how I will start my tech-startup.

I’ll share my plan, roadmap and reasons with you.

Read on to get the full details.

 

Why “Education First. Startup Second.”?

If everyone zigs..

..Better zag.

Remember?

Many of my friends start companies. But fail.

In fact..

The CEO of Business Insider places the success rate of Y Combinator startups at 10% or less.

startup-success-rate

The CEO of Dropbox once said..

..You need to build 10 companies to get one BIG hit.

10 companies?

I thought there must be a better way.

And that is why I’m using a different approach..

I’ll use the approach “Education First. Startup Second.”.

I build an audience first (through education). And only second I start my startup.

Let’s get started.

 

Who Already used this Approach & Succeeded?

I’m going to share with you 4 stories of how 4 different CEOs got started.

All of them used the “Education First. Startup Second.” approach (some of them unintentionally).

Alright .. Let’s dive in.

 

1) Nathan Barry – ConvertKit

Let me introduce you to Nathan. I look up to this guy!

He is the author of a book called Authority, which I read and love!

He published multiple online courses about design & marketing.

And now ..

Nathan is the CEO of a SaaS business called ConvertKit. ConvertKit solves a problem I’m very passionate about ..

Sending the right message. To the right person. At the right time.

= Behavior-Based Email-Automation.

My favorite topic. Ever 🙂

Anyhoo ..

This is what Nathan did:

  1. He provided free education through his blog.
  2. He made money with online courses.
  3. He wrote a book to establish himself as an authority.
  4. He launched a tech startup and turned it into a successful SaaS business.

You can see ConvertKits revenue here. (yes, these are ConvertKit’s real numbers!)

audience-first-convertkit

To the question what he would do, if he had to start over again with NO audience ..

This is what Nathan answered:

“If I started from scratch I would plan my product first, then start teaching content that the right audience for my product will find helpful. I’d work closely with that audience to shape the product into something they will buy. Then when it comes time to launch I would have an audience that was ready and eager to buy.”    – Nathan Bary

Sounds very much like “Education First. Startup Second.” 🙂

 

2) Jason Fried – 37signals & Basecamp

We announced it on our blog. Within a month, we had about a hundred paying customers. Hundreds more followed. Within a year, Basecamp was generating more income for us than our web design business. We had a hit! – Jason Fried

Curious what blog Jason is talking about?

He is talking about Signal vs. Noise. A place where he shared ideas about design, business, and tech.

“We built up an audience that turned out to be an invaluable head start when we eventually launched Basecamp. It’s a lot easier to market a product when you already have thousands of fans — ones who are the perfect target market for what you’re trying to sell.” – Jason Fried

 

3) Ryan Hoover – Product Hunt

Ryan brainstormed ways to build a quick MVP without writing a single line of code.

That was when he was reminded about the email-first strategy.

He ended up creating a collaboratively curated email newsletter that featured the best new products every day.

A couple of 100 people signed up in a matter of days.

And we all know what this email-first MVP turned into ..

product-hunt-mva

“The “20-minute Linkydink MVP” was a great starting point. It allowed me to validate some assumptions very quickly and observe real user behavior without a single line of code. Entrepreneurs often assume an MVP needs to be “built.” The purpose of an MVP is to learn, to validate and invalidate assumptions. There are almost always faster ways to do this than building a product.” – Ryan Hoover

 

4) Rand Fishkin – MOZ

Rand wrote about “Marketing First; Product Second” in this article.

Rand (and mother) started a blog called SEOmoz.org in 2004 to share learnings about SEO. He later launched the SEOMoz Pro Membership subscription product to his existing blog audience.

“Moz was built on the back of a blog.” – Rand Fishkin

 

“If you build a marketing machine first, you are in an enviable position.” – Rand Fishkin

 

“Because we had a large audience – 10,000 marketers a day read the blog when we started our subscription in 2007 – we could iterate, grow, and learn with their help. By late 2008, we had a unique product that was pulling in subscribers far beyond just our community of blog readers. Without that “marketing first” approach, I’m skeptical if we ever could have gotten a product off the ground.” – Rand Fishkin

 

There are many other well-known entrepreneurs who used exactly this strategy ..

Want me to continue..?

Naa ..

I think you get the point .. There are already a bunch of people out there who used the “Education First. Startup Second.” – approach and now run successful companies.

Now ..

Let me share with you how I will execute “Education First. Startup Second.”.

Ready?

This is going to be good 🙂

 

Who should use “Education First. Startup Second.”?

This is not for people who already run a successful business.

No.

This is for people – young and old – who would like to start an online business, a startup or company.

For people who have not figured out yet what exact problem to solve.
(and what company to start)

It is for people like me ..

I always knew that I wanted to run my own business.

Now I know that I want to build a software company.

But my biggest problems (at the time I write this) are ..

  1. I don’t know what software to build.
  2. I don’t have a (tech) team.
  3. I don’t have money.

 

How to find your Topic?

Many people struggle with figuring out what kind of audience to build.

How do I find my target audience? Who would I like to attract?

Let me quickly give you some ideas on how to find your topic 🙂

Ask yourself the following 4 questions to find the right kind of audience ..

1) What are you?

Are you a designer? Then build an audience around design. Are you a marketer? Teach marketing. I think you get the idea. It’s a very simple approach. But it worked wonders for me to figure out what kind of tribe I would like to build.

2) What are you interested in?

What are your passions? What did you enjoy doing in the past?
Building an audience is hard. Starting a startup is hard. Running a successful business is hard. That is why most people fail. Better work on something you’re naturally interested in and enjoy doing.

3) What do you enjoy helping other people with?

“Education First. Startup Second.” is about helping people. This needs to be your highest priority.

4) Do you see yourself making money with it?

And then, of course, you need to make a living. I need to make a living. We all need to make money.

Now.

Why is the above part so important?

You know .. The biggest possible mistake you could probably do is to build an audience and offer them products they aren’t interested in.

That would suck.

BIG time.

That is why Nathan from ConvertKit recommends to first plan a possible product you would like to build and sell in the future.

Don’t build the product, though!

Just think about what you could build in the future.

In my case ..

I would like to build Marketing AI. I love automation.

This is what I know. And how far I planned.

But.

I make sure I build up an audience of marketers and founders who are interested in marketing automation products.

 

How to Build an Engaged Audience?

Once you figured out your topic ..

.. It’s time to build an engaged audience.

How do you do that?

Ever heard of content marketing?

lol.

I’m sure you have 🙂

You build up an engaged tribe with content marketing ..

1) Blog Posts

You create in-depth educational guides to teach people for free. Deliver as much value as possible. Blog posts are a big part of your growth engine to attract new leads. (but not the only one!)

2) Free Course

Once a new lead signs up, it’s time to establish a relationship. Deliver more value for free than what other people charge for. Build trust. Engage with your audience members. Help them. Be their advisor. Answer their questions.

3) Paid Course

At this point .. Your tribe already trusts you. Your audience sees you as the expert. Now it’s time to provide even more value in exchange for money. WOW your audience with a top-notch training. You can use this money to build MVPs (more about this in a bit ..).

4) Book

Establish yourself as an authority. Build trust. Get speaking engagements. Get press. Write for publications.

Now.

It’s time to share with you the not-so-secret tool to connect all of your content marketing activities.

It’s my bread and butter.

It’s what I enjoy doing the most.

Everyone knows how powerful it is.

Still .. Most businesses do it completely wrong.

I’m here to change that.

What am I talking about?

Behavior-Based Email-Automation.

I’m taking “email marketing” to a whole different level.

Email is the tool to create strong relationships with your readers.

Email is the key to building an engaged audience.

Email is the platform (=home) for your audience.

 

How to Establish a Strong Relationship with your Audience?

This paragraph is key.

I mentioned behavior-based email-automation above ..

Let me tell you a bit more about this topic ..

Your goal: Send the right message. To the right person. At the right time.

As soon as someone signs up, it is your job to establish a strong relationship with your subscriber.

It’s your job to provide value through education.

It’s your job to build trust.

So in my case ..

People sign up because they would like to learn how to build a sales funnel for their online business ..

wild-audience

Once they sign up, it’s my job to create trust and build a relationship with them.

With you? 🙂

And I do this by sending my new subscribers bite-sized lessons via email about the topic they signed up for.

This is called a Relationship Builder Sequence or in short RBS.
rbs-drawing

Do you see “E1”, “E2” ect ..?

These are emails.

And all these emails are part of one big email sequence. (RBS #1)

All these emails are automated and behavior based.

Behavior-based?

Yes 🙂

If one of your subscribers reads a blog post about SEO and then clicks a link about SEO in your email .. (look at E2 in the graphic above)

You know something very important ..

This person is interested in SEO and it is your chance to teach that person about SEO.

And that is when RBS #2 is launched (see graphic above).

All these emails are part of one BIG story. They are all connected with each other.

This is how it looks in my email automation tool ..

relationship-builder-email-sequence-wildaudience

I know, looks pretty wild, huh? 🙂

Think about RBS as a TV series like Lost and Breaking Bad. Or Gossip Girl … hell, even Gilmore Girls. Whatever.

Like a TV series has a sequence of episodes..

.. An RBS has a sequence of follow-up emails.

Connected stories are the reason why you start a new TV series ..

.. And can’t stop.

I use techniques like Open Loops, Nested Loops and Cliffhangers to make my email subscribers come back.

I pull them towards me.

Instead of broadcasting irrelevant emails to them.

But enough about that.

It’s powerful.

And advanced ..

If you’re seriously interested in this topic, I created a 1-pager summary about the best engagement hacks and how they work.

You can get access here ..

how-to-make-people-open-your-emails

And it works like magic ..

If you use cliffhangers right you get people to respond to your emails like that .. 🙂

relationship-funnel-craziness

Or this one is even better 🙂

landon-new-edited

Anyways ..

I hope all of this makes sense.

Let’s move on ..

 

How to Figure out What Startup (SaaS product) to Start?

Now it’s finally time to bring in the minimum viable audience (MVA).

What is a minimum viable audience?

A minimum viable audience helps with finding out what people are willing to buy.

By building an engaged audience you have access to information and data.

1) Market Research:

Use your audience to figure out what problems to solve by observing your audience.

  • You observe what questions they ask in your email conversations.
  • You read & analyze what they talk about in your Facebook Group (that’s my own group 🙂 )
  • You talk to your customers of your paid educational products (like online courses)
  • You observe what they comment on your blog.
  • You ask them questions. You do surveys.

The key is communication.

Through communication, you will figure out the problems of your audience.

2) Build a Better MVP

Once you know the problems of your audience, you can build an MVP.

But you have a huge advantage to anyone who is building an MVP without an audience.

Why?

Because you have access to an audience, which enables you to ..

  • Access information and data to figure out what problem to solve (MVA).
  • Build an MVP your audience cares about (because they actually have that problem).
  • Get instant feedback for your MVP.
  • Attract early adopters (because you have a list of people who want to test your newest stuff)
  • Finance your MVP (read on to understand this part 🙂 )

You can basically build an MVP together with your audience.

By having an audience before you build an MVP, you can minimize the risk of building an MVP no-one cares about.

 

How to finance your Startup with an Audience and Educational Products?

Let me tell you two stories about the two Bryans.

Both Bryans are normal dudes. Just like you and me 🙂

(These are true stories)

1) Let’s start with Bryan Harris

Bryan runs Videofruit, a popular blog where he reverse engineers growth strategies.

He’s an expert in email list building. He teaches people how to grow an email list from 0 -10,000 subscribers.

And he recently completed a product launch of this course ..

build-audience-product-launch

He generated $650K from a 5k email list in 10 days.

Now.

Think about what you can do with that money ..?

Well.

I would re-invest it into my business and build software products to solve my audience’s problems.

Guess what ..?

Bryan is doing this 🙂

He built ListGoal, a little Chrome extension to help you grow your email list.

Or SmartBribe .. A tool to encourage your website visitors to share your stuff.

These apps are all designed to help solve his audience’s problems.

And recently, he launched his latest flagship software product called SlingShot to his email list.

He had no problems getting early revenue and BETA users ..

Why?

Because he has a couple of 10,000 people who know, like and trust him on his email list. Many of them even bought his educational products in the past.

2) Let’s talk about Brian Moran now

Bryan is the founder of “Get 10k Fans”, which is a business he founded in 2010. His goal is to teach business owners to create epic marketing & sales funnels with Facebook.

He got really good at it.

Like really good at it.

He had a 1 Million product launch .. That’s crazy.

Look at his funnel ..

product-sales-funnel

You can view the above picture in high resolution here.

Pretty cool funnel, eh?

Anyhoo ..

Back to the story.

A couple of years fast forward .. (2013)

Bryan identified a problem ..

Shopping carts sucked. They were ugly and lacked crucial features he as an internet marketer needed.

That is why he built SamCart.

He first created the product entirely for his business Get 10k Fans. Because he really wanted to solve that problem for himself.

But guess what ..?

His audience, which he built up through his education business “Get 10k Fans” were small business owners and internet marketers.

.. In other words ..

The perfect audience and customer base for his new SaaS product “SamCart”.

The best part?

Bryan was able to finance “SamCart” through his education business “Get 10K”.

[End of story.]

And that’s what I’m talking about people 🙂

 

Bootstrap Longer .. Perhaps Indefinitely?

By using an “education-first approach” you have the advantage of financing your software product without taking money from an external investor (and keep your shares & control!).

Why?

Because you generate money through your educational products, which you can reinvest into your software product.

Or at least you can finance your product development, BETA feedback iteration loops and grow your product enough to get early traction.

Then you take your built product, early traction and results and approach investors to take external money to scale/grow your product even quicker.

Who do you think investors prefer ..?

Someone with an MVP and high early growth or ..

.. Someone with a product that has paying customers, high early growth and an audience of 10,000s of people you can instantly access?

I think you get the point ..

 

Summary

  1. First, build an audience of people who trust you through free education.
  2. Further educate your audience in exchange for money.
  3. Use your audience to identify a problem.
  4. Take the money you generated through your educational products and finance your software product.
  5. Sell the solution to your audience and generate recurring revenue.
  6. Scale from there.

🙂

 

What are the Disadvantages of the “Education First. Startup Second” Approach?

Building an audience is hard work. (what isn’t, eh?)

The rejections I get the most are ..

  • “I’m a real business person.”
  • “I’m too busy making money.”
  • “I don’t have time for that kind of stuff”

That’s cool. Do your thing. Stop reading here.

1) It takes time

The people who really want to take the time to building up a reputation for helping and educating people .. will be the people who create huge engaged audiences.

If you can’t take the time because you’re too busy doing other things .. don’t use “Education First. Startup Second”.

2) You need a part-time job at the beginning

All beginning is hard.

You won’t make money at the beginning by building an audience.

Why?

First of all, you don’t have an audience yet. And therefore no relationship.

That is why ..

You first need to build an email list and establish a relationship with your email subscribers. And you have to create a product (like an online course for example).

All of this takes time and energy.

So until you launch your first product to your audience .. you need some sort of side hustle to make a living.

These are your options:

  • Take a part-time job.
  • Do freelance work.
  • Do consulting.
  • Do coaching.
  • Take a full-time job and work on audience-building at night.
  • Save money. Move to a cheaper country. Hustle.

Are you curious what I did ..?

I moved from San Francisco to Medellin in Columbia.

In the Bay Area, I paid $800/month to share a garage with 5 other dudes.

Here in Columbia, I pay $165/month for a private room in a really nice apartment in the best neighborhood.

Not too bad, huh?

By moving from California to South America, I was able to decrease my cost of living drastically (lunch costs around $3!).

I also did marketing (15 hours/week) for a company in Europe (which was more than enough to cover my costs).

Now onto something else ..

 

The Product Ecosystem

Listen up friend ..

I’m going to drop a few gold nuggets now 🙂

In order to make the “Education First. Startup Second.” approach work ..

.. You need to think about this ..

All your products need to overlap.

What do I mean by that?

Each product needs to serve the same (or very similar) audience.

This is crucial.

If you mess this up .. You’re screwed.

Or at least ..

The audience-first effect will not kick in.

How does that look?

Let me introduce you to my mad photoshop skills. lol 🙂

build-an-engaged-audience-product-ecosystem-startups

Do you know what the above graphic means?

It means: You have a problem.

If you want to build an audience and end up with something like this .. you won’t be able to leverage your audience.

Why?

Each circle represents a product.

There are 5 products in the graphic above.

Circles “Blog”, “Free Course” and “Paid Course” have a small overlap.

What does that mean?

Some of the people who read the blog will also sign up for the free course. And a few of those will be interested in your paid course.

Then there is the book, which serves a completely different audience. So does the SaaS company.

The audiences are not overlapping.

This is not an ideal scenario.

Instead, you should aim for something like this ..

how-to-launch-a-product

And that is exactly what I’m aiming for 🙂

 

The Ideal Scenario

In an ideal world ..

All your products serve one big audience.

All your products are part of one product ecosystem.

If you manage to pull this off ..

Well, Nathan said it best ..

“When each new product fits the audience you already have, launching each successive product becomes easier.” – Nathan Barry

Let me explain my graphic below. Because the “devil is the details”…

how-to-start-saas-startup

This is one possible way ..

  1. Traffic arrives at your blog post.
  2. You offer a content upgrade. User signs up to download the bonus.
  3. New email subscriber receives free email course.
  4. You provide value right upfront without asking for any money (strategy of preeminence). You establish a relationship with your email subscriber. You create trust.
  5. Now it’s time to story-sell your paid course about topic X.
  6. You cross-sell your book about topic Y. (The book is highly related to your paid course.)
  7. To improve the outcome you teach in your book and paid course, you offer your software product. The software product helps to overcome certain roadblocks.

Please keep in mind ..

This is only 1 possible funnel!

There are many different ways how a subscriber could go through your funnel.

The key takeaway here is that you have an unfair advantage if you have different products with different price points to sell to the same audience.

Why?

Some products are introductory products with a lower price.

It’s much easier to sell an introductory product to a new lead than your most expensive product.

Once a lead becomes a customer of one of your cheaper products ..

.. He or she is in your sphere of influence.

Let me explain this to you by taking Nathan from ConvertKit as an example..

(this is not a true story)

  1. John dreams of becoming an authority. He would like to speak in front of huge audiences. John wants to inspire other people. He wants to help as many people as possible.
  2. John goes to google.com and types “how to become an authority?
  3. John ends up on one of Nathan’s blog articles: http://nathanbarry.com/why-authority/
  4. He reads the article and likes the content. He understands that one of the best ways to become an authority is by writing a book.
  5. He also saw that Nathan sells a book called Authority, which teaches exactly how to self-publish a book.
  6. He buys the book.
  7. John reads the book and learns how important it is to have an email list as an author.
  8. He finds out that Nathan also sells software to solve exactly that for him.
  9. He becomes a customer of ConvertKit (Nathan’s software product) and pays a monthly fee.

[End of story]

Your advantage?

  1. You can cross-sell your products (if your products serve the same audience).
  2. You have the right product for each audience member
  3. You can onboard customers into your sphere of influence by having introductory products and then slowly guiding them through your funnel.

Does all of this make sense?

Do you understand the power of a product ecosystem?

First: The educational courses and books build trust, relationship and demonstrate value.

Second: The SaaS company brings in long-term revenue.

That is the magic of “Education First. Startup Second.” 🙂

 

How to Turn an Education Online Business into a (Multi-Million) SaaS Company

I’m hitting 4k words. It’s time to wrap things up 🙂

At the beginning of this blog post .. I mentioned that I’m going to share with you how I launch my tech startup.

I already explained my strategy.

Now it’s time for the roadmap 🙂

 

My Roadmap

  1. May 2016: Launch Wild Audience.
  2. June 2016: Launch my 9 lesson free training about “How to build a Marketing Funnel for Online Courses”.
  3. July 2016: Launch my paid online course (“Relationship Funnel”) in BETA.
  4. October 2016: Move paid course out of BETA and start to scale.
  5. 3rd April 2017: Hit 100K in revenue.
  6. End of 2017: Hit 1 million in revenue.
  7. 2018: Launch SaaS startup.

 

Why am I doing this?

Why do I choose this approach?

You might wonder why I just don’t start building software products ..

Well.

I want to build my education focused online business first so that I have money, experience & authority to scale my software business.

It will take around 12 to 15 months to hit the 100k revenue mark (starting from scratch ..).

But once the end of 2017 is around the corner, I will have ..

  • Plenty of insights into my audiences’ problems
  • Immediate access to an audience that trusts me (that allows me to get instant feedback & generate revenue)
  • Enough money to build software (not depending on outside investments)
  • Experience & a brand that allows me to easier hire & grow a team

I also really enjoy building relationships with fellow marketers.

And it’s a great way to learn more about my passion, which is marketing automation.

I would like to end this article by sharing a few inspirational quotes with you:

“While we teach, we learn” – Roman philosopher Seneca

 

“The very best thing you can do as a startup founder is to earn a reputation for helping others.” – Spencer Fry

 

“By teaching people you see how people react and get insights into their problems.” – Bryan Clark

 

“Teaching and helping others first through content marketing will help you build a better first MVP.” – Unknown

 

“One of the key things we’re learning is that you need to build an audience before you build your product. Build your audience not for marketing, but for learning.” – Hiten Shah

 

“Start by teaching someone something this week.” – Derek Silvers

 

“Marketing is the first thing we do, not the last.” – Seth Godin

 

My Final Words

The more I share what I already know, the more I learn. The more I share, the more people I connect with.

The more relationships I establish the sooner I find out what problem I would like to solve. By sharing what I know, I establish myself as an authority.

By becoming an authority, it becomes easier to build a bigger audience and find the right team members to start a tech startup.

🙂

I hope you enjoyed this article.

I hope you understand that there are many different ways to build a startup nowadays.

This is the path I choose.

If you have any suggestions .. please leave a comment below.

I’d love to learn from you.

If you’re aligned with my approach and would like to offer educational products ..

You will probably have a lot of questions by now ..

  1. How do I drive traffic to my blog posts or email course?
  2. How do I establish a relationship with leads that go through my free online course?
  3. How do I create an automated funnel?
  4. How do I sell my online course?

I had these questions too ..

Until I figured them out ..

And created a free course to share with the world 🙂

If you’re interested in what I have to say, I recommend reading this article.

This article explains how online businesses can sell anything, if they have the right funnel.

The funnel is called Relationship Funnel (RF) is designed for online businesses.

I’m sure you will love it 🙂

Anyhoo ..

Have a beautiful day 🙂

Be Bold. Be Different. Start Now.

bastian-ernst-sig