A Startup Out of Nothing 🌱
A Flyby Book Club Review
Welcome to the 8th edition of the Flyby Book Club. 📖
This month's post reviews The $100 Startup - by Chris Guillebeau and is a sizzling 16-minute read.🔥
This was the first time I'd read this book, and I was pleasantly surprised. If you read this as part of the club (or otherwise), reply back with how you found it, or use the buttons below! 👊
I thought it was quite good and covered a wide range of topics, mostly dealing with taking the first steps into the vast ocean of entrepreneurship, but it also covered growth and scaling a business without getting too big (employees, investors, outside funding, etc.).
Stuff that would be useful for any kind of bootstrapped entrepreneur.
Here's my review:
The last book, "Anything You Want," had the premise of building your own utopia (whatever that might mean) while delivering value to people.
This book is a bit more niche and has a slightly different yet related premise.
Freedom X Value.
Personal freedom (e.g., freedom from a job, to do whatever you want) while at the same time delivering value to customers. Where "value is created when a person makes something useful and shares it with the world."
This also has the constraints of starting out with a small budget (<$1000) but generating enough income to match your lifestyle (>= $50k). I found many parts very similar to The Four-Hour Workweek, and overall, this is an inspiring concept and mindset. Even if you don't want to make it your life goal and want to aim bigger, this can be a legit launchpad, and many of the concepts remain the same.
The goal in the book is not to scale into a huge operation but rather create a business that can fund your lifestyle and not require any employees or investors. The way to do this is by, of course, delivering value to customers. I'm all for this approach, and since the time this book was published, there are countless more ways to achieve this now.
The author calls this type of startup a microbusiness, but I don't see it that way. I'd say a lot of these concepts have the potential to scale into something bigger while at the same time keeping your operations small if you are smart and strategic about how you go about it. I've covered my thoughts on this subject in "How to Build a High-Growth Tech Startup (all by Yourself)."
"Microbusinesses aren't new; they've been around since the beginning of commerce. What's changed, however, is the ability to test, launch, and scale your project quickly and on the cheap."
Yup, and it's only getting quicker.🏃♂️
Passion & Skills💖🎯
The book focuses on building a business around your passion or skills.
"Many people are interested in building a business that is based on a hobby or activity they are especially enthusiastic about. As we'll see, not every passion leads to big bank deposits, but some certainly do."
The equation in the book is:
Passion or skill + usefulness = success
The formula listed here is the intersection of passion (or skill) with usefulness. Take something that you are super interested in or know a lot about and find a way to make it useful to the world.
"Not everything that you are passionate about or skilled in is interesting to the rest of the world, and not everything is marketable. I can be very passionate about eating pizza, but no one is going to pay me to do it. Likewise, any individual person won't be able to provide a solution to every problem or be interesting to everyone. But in the overlap between the two circles, where passion or skill meets usefulness, a microbusiness built on freedom and value can thrive."
This is exactly the equation we saw in Book Club #2 - How I Built This.
I'm definitely all for that and wouldn't do it any other way. I would actually go a step further and add scratching your own itch to the mix. My equation would be:
Passion X Skill X Scratch your own itch.
For me, my primary
passion+skill used to be software (games and graphics, to be specific), but now I’m adding entrepreneurship and writing to the mix. I plan to keep adding to this list throughout my life as I go about my journey in pursuit of mastery. The book has a couple of examples of apps as well, for example:
"Elsewhere, Brandon Pearce was a piano teacher struggling to keep up with the administrative side of his work. A programming hobbyist, he created software to help track his students, scheduling, and payment. "I did the whole project with no intention of making it into a business," he said. "But then other teachers started showing interest, and I thought maybe I could make a few extra bucks with it." The few extra bucks turned into a full-time income and more, with current income in excess of $30,000 a month."
That sounds like the definition of Scratch your own itch if you ask me. Solve a legitimate problem in your own life by creating a product and then marketing it to the world.
This book also introduces the core concept of Skill Transformation. That is, taking some skills you have, combining them with new skills, and using them to build a business.
I think this is super interesting and something every entrepreneur actually needs to become super comfortable with.
business will almost always require skill transformations and learning a bunch of new skills. Otherwise, you would be hanging out in the hobby or employee zone. For me, this skill transformation is the fun part and really my personal why behind initially wanting to get into entrepreneurship (and also writing this newsletter). I like learning new things, and I think this is the best way to go about it while also delivering value at scale. I suppose that's similar to what this book is talking about (
freedom X value). But for me, the freedom to pursue the process is the goal itself. It's kind of a self-reinforcing loop (we'll slope on down to another example of this later in this post; stay tuned!🎿).
The book gives a great example of skill transformation in Scott Adams, who writes the popular Dilbert comic:
"I succeeded as a cartoonist with negligible art talent, some basic writing skills, an ordinary sense of humor and a bit of experience in the business world. The "Dilbert" comic is a combination of all four skills. The world has plenty of better artists, smarter writers, funnier humorists and more experienced business people. The rare part is that each of those modest skills is collected in one person. That's how value is created."
He took his interests and skills and combined them together into something that brought unique value to the world. This is differentiation and how you make the competition irrelevant. In short, creating a blue ocean for yourself and swimming in uncontested waters.
One of the core skills needed, according to the book, when turning your passion into a business is Marketing. Or, as Chris calls it→ Hustling.
The author describes this as a sliding scale.
All marketing + No product = Scam ( Avoid 👎)
All product + No marketing = Hobby ( Quicksand 🏜️)
50% product + 50% marketing = Hustle (Yes! 💪)
Personally, I tend to skew more towards the product side, as this is where I find my flow, but I am starting to pick it up on the marketing side as well now. I'll be discussing marketing in more detail soon in the premium posts as I'm starting to get more into this. #WatchOut!💥
"The vast majority of case-study subjects I talked with built their customer base without any paid advertising at all; they did so largely through word of mouth."
As we've seen over and over in this publication, this book also suggests that the goal should eventually be
word of mouth. But you do have to get that initial traction somehow. That's where hustling comes in, and really, what's at the core of it → Building something worth talking about.
This brings us to the copy or how your product is framed.
When selling your product, you want to convey the emotions users will feel rather than features. This is to allow users to picture your product in their lives and more clearly imagine how it would fit in.
"More than anything else, value relates to emotional needs. Many business owners talk about their work in terms of the features it offers, but it's much more powerful to talk about the benefits customers receive. A feature is descriptive; a benefit is emotional."
It's really about making the customer the hero in their story. As we discussed in writing your own story.
Here are a couple of examples from the book of going from features to benefits:
V6 Ranch: Horse rides and campfires → Stay with us and become a cowboy (or a cowgirl)
Higher Ground Yoga: Private yoga classes for busy women → Relax and prepare for the day through a personalized, guided practice
And here's one from me:
Startup Flyby: Notes, thoughts, stories about entrepreneurship → Think Big. Follow your dreams. Move the world forward.
I'm working on some new ones as well.💡
The book mentions how the subjects in the case studies all had a common experience. Getting started was much harder than keeping the ball rolling and growing.
"Over and over, the subjects of our case studies discussed how growing the business wasn't nearly as hard as starting the business. "It took a while to find something that worked," a common statement began, "but once we were rolling, we gained traction and quickly took off."
Like this example of Purna, who started with a personal blog and then shaped it into a resource for mastering Excel, making a six-figure income.
"Purna started his website several years back, but for a while it only contained posts about his family and life in India. In 2009, he settled in and got more serious, chronicling a series of tips and tutorials about using Excel to become more productive. Crucially, he didn't target Indians, but instead reached out to interested prospects all over the world. He also didn't depend on advertising revenue, something that very few people in our study mentioned. Instead, he created products and services himself, offering downloadable guides and an ongoing training school.
He was also a good copywriter. Updating spreadsheets can sound like incredibly tedious work, but Purna positioned the core benefit away from numbers and toward something far more powerful: "Our training programs make customers a hero in front of their bosses or colleagues." Not only would their work become easier, Purna said, but other people would recognize and appreciate them for simplifying a complicated process."
We discussed this strategy in detail in Making Hits 📀💥. Check it out for a deeper dive.
"Take it from Purna: If spreadsheets can be made sexy, surely any business can find a way to communicate a similar message."
Spreadsheet Templates: Templates to help users of Microsoft Excel → Become an office superhero: Help your colleagues and get your work done quickly.
Once you've got a business, then it's about applying "tweaks" or improving on what's working and what's not working. The trap many business owners fall into is that of maintenance mode, where the business is chugging along but not improving (we saw this in the E-Myth revisited). The author suggests setting aside some time every day to focus on
improving the business.
I like to do this pretty much all the time, as discussed in The Telephoto Lens. 📸
As far as tweaks go, here are the main one to grow your business (specifically revenue):
Increasing Traffic — Bringing more eyeballs to your business.
Increasing Conversion — Converting more eyeballs into customers.
Increasing Price — Either by add-ons or delivering more value and raising the core price.
And, of course, this one from the Happy Knit case study that stood out for me:
"Every order sent by mail includes a personalized thank-you note from an employee, encouraging customers to call if they need help with a pattern, plus free samples of other products. If an item is back ordered because of a computer glitch, an employee will call the customer proactively to apologize and ask if she would like a substitution.
"Be nice to people and provide a great service" may not sound like much of a differentiation, but all these things add up. Whether you have a retail store or not, you could learn something from Happy Knits."
This is exactly what we discussed in Customer Service IS the Marketing.
"The first $1.26 is the hardest, so find a way to get your first sale as quickly as possible. Then work on improving the things that are working, while ignoring the things that aren't."
So, if you haven't started yet, then what first step can you take to get off the ground?
Note: This doesn't have to mean launching right away, but even just getting started on building your product or service and getting it ready for launch. (see The Three Pathways to Entrepreneurship)
After that, it's just improve, improve, improve.🚀
Speaking of launch, the book discusses launch strategy.
I think this is interesting, and I'll do a deep dive on this topic in a premium post soon, but let's give it a quick spin for now.
The book talks about treating your launch like a Hollywood movie. Or, to be exact, a Blockbuster. Building hype, pre-selling, teasing, and then launching in style!
I'm actually not too keen on this approach. Firstly, as described in the book, it can be overly stressful. Second, this tends to get people stuck up on the launch and then quickly wanting to move on to the next thing, putting all your hopes on a big success on day one, or leading to a huge spike of initial customers, overwhelming you, then leading to a drop, making you want to try and replicate it like a dopamine spike. Nah.
I think growth should be a gradual process. Even courses and one-time products should be treated as part of a core business and marketed on an ongoing basis, focusing on the details and creating a product so good that people can't help but get enough of it. I like this more zen approach of just doing a softer launch and then continuing to improve your product from there. I'll discuss my philosophy in a separate post.
That being said, doing a little teaser and pre-marketing probably isn't going to be the worst thing, especially if you already have an audience somewhere.
With a launch, you want to create an offer that people can't refuse. As the author describes — Picture running a marathon; if you reach the middle, would you rather have a slice of refreshing orange or a sluggish donut? For most runners, the orange would be the way to go. This is what your offer should be like. Something that naturally attracts customers (orange) vs repelling them (donut).
"Build something that people want and give it to them." ← That's it right there. Entrepreneurship in a nutshell.🌰🐿️
Once you launch, then it's about scale.
"Nev Lapwood was a classic ski bum. He lived in Whistler, British Columbia, and worked "off and on" in restaurants at night while snowboarding during the day. Life was basic but good…until the limited employment ended when Nev was laid off. Needing to make ends meet, he began offering snowboard lessons, a part-time gig that was highly valued by his students.
Teaching students in person on the Whistler slopes was fun and rewarding, but it also had a number of built-in unavoidable limitations: lots of competition, relatively few clients, and limited times of year when he could work. Nev knew that people all over the world wanted to learn about snowboarding—what if he could teach them all virtually without needing to be in the same place? Getting his act together, Nev worked with a couple of close friends to create Snowboard Addiction, a worldwide series of snowboarding tutorials.
It was an instant hit, drawing customers from twenty countries and making $30,000 in year one—not bad for a ski bum. (Since Nev had never been that focused on making money, that was the highest annual income he had ever had at that point.) The next year, he put more thought into the business, scaling up with affiliates and a broader range of products. The result: just under $100,000 in net income. Nev was still on the slopes during the day but worked closely with his new partners during the downtimes to scale the business even further. The next plan was foreign language translation: Snowboard Addiction went out around the world in nine languages, with more versions scheduled to roll out based on customer demand."
Nev took his passion for snowboarding and went from local (teaching) to global (information product + physical add-ons). He put in the work to build a kickass product and then scaled it throughout the globe.
Soon, his product was taking off, allowing him to free up his time to do what he liked best. Snowboarding. This was his passion, which he turned into a product, which allowed him to put more time into his passion, developing the skills even further, allowing him to improve and create even better passion products, creating an unstoppable self-reinforcing loop of passion at scale (Here it is! As mentioned at the top of the post. Cha-ching! 🛎️).
Not bad, indeed.
"Naturally, the growing business had its challenges. An untrained and accidental entrepreneur, Nev had to learn a lot about strategy, accounting, and marketing. Stickers that were ordered from China arrived months late and in an unusable condition. Just two years in, however, the business was on track to earn at least $300,000."
There's also a lot of skill-building and transformation going on here. "Nev had to learn a lot about strategy, accounting, and marketing." As we discussed, this is the heart of entrepreneurship. Take the skills you have, in this case, snowboarding, and combine them with new skills (branding, marketing, sales) to create something of value for others.🏂
Product → Service 🛠️ Service ← Product
This is similar to the concept discussed in the book about turning a Service into a Product. This is super interesting and perhaps an easier onramp for anyone wanting to get started with entrepreneurship.
If you are already providing a stellar service, then think of a way to turn that intro a product and scale it on the internet.
This can take many forms, but we can use the course example again. For example, if you are teaching people a skill in real life, like the piano teacher example we saw earlier. Then, this can easily translate into a product that can scale independently of your time.
Spend some solid time building a kickass product and then launch it. After that, you'd just be left with marketing and customer service. But if you already have clients from your service business, then they would very likely be interested in buying the product and being your first customers. If the product is really as good as you say it is, then they might just tell their friends about it, triggering the magical word-of-mouth loop!🎡
This concept can translate to a job (skills) as well. If you have a job or any domain in which you've spent time gaining expertise, find the areas that could be turned into a product. This could either be a course or something that uses those skills in the product itself. Or, the best way— find a problem you had in that domain and scratch that itch!
The key aspect of skill transformation would be what skills you are most interested in learning. In the piano example, there could be several options; the target would depend on your inclinations, timeline, and goals.
Learning the new skills of speaking, presentation, and video editing and turning the existing skills of composition, music theory, scales, chords, etc, into a video course. See Year of the Tiger for an example of this.
Learning the new skills of computer programming or app development and taking the existing music skills into creating an app that helps people learn to play piano in a unique way or something similar. This doesn't need to be a big enterprise, and you could choose to keep it as a small app. See Deja-Vu.
Learning whatever is needed to create a physical product that you feel is missing in the market. This is how Vic Firth started his drumstick business. He was practicing for a concert but found that the sticks he could buy at the time weren't holding up. So he went full inventor mode and decided to come up with a better drumstick. His sticks are a stronghold in the market today. (this probably wouldn’t fit the criteria of this book, though.)
The book provides the inverse, too. Turning a product into a service. I'm much less inclined towards this, but it might be a viable option for some.
"After relocating to Toronto, the idea was to build a small business helping other people make the adjustment to raw foods. Being a software engineer (and a self-described geek like Brett Kelly in Chapter 4), Nathalie programmed a database, set up an app, and built her own website. The first incarnation was Raw Food Switch, which correctly represented the concept but seemed a bit boring. One day Nathalie noticed that the same letters—and therefore the same website—could be rendered as Raw Foods Witch, leading to a new theme. Dressing in character with a pointed black hat for photo shoots, she rebranded the whole business around herself. Nathalie created programs, one-time products, and individual consultation sessions in the same way we've seen others do throughout the book. Raw Foods Witch grew into a $60,000 business after the first year."
Start with a product (e.g., blog, website, newsletter) to establish expertise in a domain, and then sell consultancy services to whoever is looking for said expertise. Again, it's not my M.O. I like to create things at scale, but this might be suitable depending on your personality and inclinations. It's all about constructing the right mountain for yourself.🧗
There are loads more examples and case studies in the book. Definitely give it a spin if something in here caught your eye.👁️
Overall, this book is rock solid and a constant source of inspiration, especially if you want to get into entrepreneurship. It felt a lot like the Four-Hour Workweek but without the focus on outsourcing. This book actually has a discussion about the pros and cons of outsourcing; the people surveyed all fall into two camps. Pro Outsourcing and Against Outsourcing. I'm definitely on the do-it-yourself and aim-for-mastery side, so I tend to do things myself (with a little assistance from ChatGPT every now and then). But everyone can decide whatever works best for them.🌞
If you haven't yet set up a business and have been wanting to do it for a while, or if you have a service and want to turn it into a product, or if you are already running a business and are looking for some useful tweaks, check out this book. It's surprisingly good.
The core message again is that anyone can become an entrepreneur. You don't need large amounts of capital, or have to quit your job, or even take any unnecessary risks. It's more about focusing on building something of
value and scaling it as you see fit. 100% Agree. See "The Three Pathways to Entrepreneurship" for a deep dive into this.
And then, as your business takes off, you can channel some of the profits toward social causes as well. For example, 1% of the profits from paid subscriptions to Startup Flyby go towards cleaning up the planet by removing carbon from the atmosphere. I plan to increase this % as more people start subscribing. You can figure out your own way of helping out, and as the book shows, sometimes this can even be the core mission of the business and building a social enterprise.
That's it for now, and see y'all next time. If you liked this post, please share it with a friend, and better yet, upgrade to the paid subscription. We'll be going deep into many of these topics over the coming months.
You're going to love it! 💌
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