The difference between a startup and a hobby is paying customers

Waaaaaay back in 2010, I wrote a read “The Lean Startup” by Eric Ries. Roundabout the same time, there was a Southpark episode about underwear gnomes stealing everyone’s drawers for profit. The gist of it is:

Phase 1: Steal Underpants

Phase 3: Profit.

Yeah, but what’s Phase 2?

Welp, in the spirit of those two ideas, I came up with the following framework with this blog post:

There’s lots of business advice out there, and most of it is crap. There are really a few principles you need to know to make $$$.

Phase 1: Make $1. If you don’t do that, you don’t have a business.

Phase 2: Make $2. From the same customer as $1. This is repeat business.

Phase 3: Quit your job. This makes you hungry to go after success.

Here’s a throwback video of me circa 2010.

So, does it still work? Hell yeah, it works. This is how we started Fixer on day 1:

Phase 1: Make $1.

I have a friend, Katie. She can fix anything. So, I asked her if she wanted to help me start a business. “Sure, she said.” I have a bunch of other friends. They can’t fix anything. I asked if they would use a business to help them fix some things. “Sure, they said.”

One evening, Katie, me, and another friend, Zach, gathered in my spare bedroom. I sent a text to my friends who couldn’t fix anything and told them we were open for business. 48 minutes later, Katie was on her way to Chris’ house to work on some shelves.

Boom. Business launched. Earning $ in the first hour.

Phase 2: Make $2

We ask Chris how he liked it.

“How was the quality?” I ask.

“Great. The job was tricky, but Katie handled it like a pro,” he says.

“Can we do something else for you?”

“Yeah, are you able to…” he starts.

“Yes,” I say.

“You don’t know what I’m going to ask.”

“Don’t need to. If we can’t do it, we’ll hire someone who can. We got you.”

“Ok… here’s what I want…”

Boom. Repeat Customer. Figure out the operations later.

Phase 3: Make it better.

Katie, Our First Fixer

We create a website, We put up a Yelp page. Instead of texting from my personal phone, we figure out how to handle lots of texts from a computer. We put an ad on Craigslist to hire experienced handypeople. And then we make it better. And then we make that better. And so on… now we’re on our way to becoming a national sensation.

My point is this: It’s hard, probably impossible, to make great things from scratch. But it’s easy to create minimal things from scratch. And it’s not too hard to make that kernel a bit better. By the time you’re on version forty-five, it starts to look pretty damn good.

And there’s a bonus lesson here: charge the customer real money. Theoretical customers don’t judge harshly. Paying customers do. Tough customers are essential to the whole process.

Published by Mike Evans

Founder of Founded GrubHub in 2004. Rode my bike across the US. Wrote a sci-fi novel.

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