How to Build a Million-Dollar Business

See: http://sivers.org/1pct

I also think the complete premise is off target. This guy is talking about selling a newsletter for $25/month.

Most high-quality magazines go for $25/year, or even less. And most of those magazines have large staffs generating quality (usually) content so that the customer is willing to part with that $25/year.

If this guy wants to sell me a weekly newsletter for $25/month, that better be one hell of a newsletter.

Unless the whole point of this article was describing how to fool people into buying a low-quality product. In which case, why not just go all the way and start pushing fake Viagra? You'll get a lot more than 300 "contacts" a day if you're spamming!

What the hell happened to "Make a quality product, promote that product, sell the product, improve the product, repeat"?

Just pitch until you sell to 1 person. That person will tell their friends and create 1 more customer, and so on. Now you can just sit back and wait while the millions roll in. The rest, as they say, is maaaaagggggiiiiic.

I think Trizle makes more sense if you read it in context with everything else on there; my total apologies for the ambiguity.

Some points:

1. The typical $1M business has about 5 full-time employees working on it (~$200K in revenue per employee); so while building a business that generates that much by yourself is possible, it's out of the norm. I should've definitely mentioned that.

2. You probably don't want to throw X market dollars at something without understanding your conversion rates first. First, get your average conversion rates (you can do that through statistical inference) from a random sample of your target market, determine if the model is profitable, then gradually expand your reach.

3. The "$25 bi-weekly newsletter" is just one product example; you can replace it with whatever product you're selling, and then use the model to determine your conversion rates to get an idea of how many pitches it'll take with your current model. For instance, selling a $200 product would take 10x less pitches than a $20 product (in terms of revs) to make X.

4. The free market creates incentives to provide as much value to your customers as possible; it's a broken system when you let get-rich-quick folks exploit others and get rich; mechanisms drive society, and that's why the Trizle articles tend to emphasize that providing immense customer value as the sole way to building a solid company for the long-term in a free-market economy.

There are no get-rich-quick-schemes, and any model that tells you that you can consistently earn greater returns than Warren Buffett's annual ROE of 20% is likely suspect. Solid, long-term companies, are built over years/decades.

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BTW, I love Ycombinator's board (pleasantly surprise someones posted the article here); I come back daily to read the stuff you guys/gals post on here. I come from a technical background (EE degree, using Rails daily), so it's always a fun read every time.

In this vein, I want to recommend "Ready, Fire, Aim" by Michael Masterson. It focuses on the same topic (selling subscriptions to information products) but the ideas can be applied to most product businesses. The focus is on getting those first sales, figuring out how to convert, then fleshing out the product.

In other words, to build a Million dollar business, first you need to... build a million dollar business.

But his example that your selling an email newsletter with valuable information, leaves you wondering when you have time to create the newsletter. If you actually did have time to talk to 100 prospectives a day, you would have zero time left for anything else.

A better representation might be: say you have what it takes to research and put together a very compelling newsletter that you can charge $25 a month for. Now lets say, your wife is also at home unemployed and you both magically can last a year trying to bootstrap the business. You bust your butt creating the product and your wife makes 100++ phones calls a day. Sell, sell, sell.

Basically, OP says to sell a large volume of a commodity product to many customers. Since you only convert 1% of your prospects, you'll have to do a lot of pitching. (100 * a large number = a really large number).

Sounds like you'd be selling all the time with no time left for programming.

I'd suggest exactly the opposite: Spend almost all of your time building a great product, and do one of two things with it:

1. Make it a niche product and sell it to a small number of tightly targeted customers. Your conversion rate should be much higher than 1% and you can charge much more, not needing so many customers.

2. Make it a web-based commodity and leverage technology (SEO, blogging, etc.) to reach a large audience. You don't "pitch" thousands of users, you just reach them and let your product pitch them for you.

I just don't understand how someone who can program (which is the critical path for software products) should be spending all of their time selling.