Hey guys, All great points and thanks for commenting. As the author of the post, I wanted to address a few things:
- First off, yes, if you add up the hours we spent on this business over the 2 days at Startup Weekend, we probably made less than minimum wage (although you may be discounting the fact that we played some wicked sick ping pong matches during our breaks, which were often longer than they should have been :). As someone with a MS in Economics, I completely understand opportunity cost and fully realize that we could have all worked at McDonald's for 2 days straight and made more money (ie. profits). However, as @dpearce acknowledged, driving up profits wasn't the point of the exercise. The point was to try to start a recurring revenue business as quickly as possible and hit a goal of generating over $5K in revenue and over $1K in profits (not a goal that we set, but one that Noah Kagan set for us here: http://www.appsumo.com/sumo-jerky).
- A secondary point was for everyone on the team to get comfortable with what I believe is the most difficult part of starting a business - sales. I've mentored dozens of startups and watched many of the struggle through the customer development stage because they don't want to ask customers for money. They would rather tweak the product, build a logo, add features, etc, etc...all things that might add marginal value, but shouldn't happen until you've validated that you have paying customers. These things also don't involve rejection...so they are easier in most people's mind. In just 2 days, everyone on our team was responsible for dozens of sales and I watched confidence rise from each team member as they made a sale (confidence that cannot be acquired by doing anything else BESIDES ACTUALLY closing a sale yourself...it feels good and then you want more of that feeling). Yes, this exercise was an extreme - as we didn't even really have a product before we sold it - just a simple landing page and a paypal account...but nonetheless it accomplished the goal of improving our team's confidence and abilities when it comes to sales.
- This wasn't mentioned in the original article and my bad for not publishing it. But, out of 267 total subscriptions, about 150 of them are unique (some bought 3 or 6 months subscriptions and we counted those orders as 3 or 6 total subscriptions)...This means that if we can retain those 150 unique customers each paying $20 / mo, we'll do $3,000 in revenue each month...this equates to about $600 - $800 in profits each month for doing about a half days worth of work to fulfill the orders (now we're talking close to $200 / hr... which is > than minimum wage (even if the recent strikes result in increasing min wage to $15 / hr...geez, could that really happen?? :)). Granted, $800 in profits per month is not a ton of money, but it's not a bad side gig for my younger brother (and fellow team member for this project) who is currently in college.
- Lastly, this project was a ton of fun...Our team was awesome and we learned a lot about what it takes to sell, move fast, and work together. This is really the point of a Startup Weekend event - learning something and meeting new people.
Thanks again for the feedback and comments guys!
If you have other questions, hit me up.
Thanks for the writeup! I've done a couple of Startup Weekends and never thought about doing a subscription service, especially not for something I only ever eat on road trips.
Since you plan to keep the subscriptions going, I'm curious about how you plan to follow up with this project:
* do you plan on returning profits to the team?
* if so, is it evenly divided, or are individual sales tracked to the person that closed them? The latter could be the beginning of an affiliate system.
* also, would each team member get the full profit of each sale, or would you take a cut of their sales? The margins might be thin but could be interesting for the work-at-home types.
* have you learned more about sales or products during this time? i.e. did this fire you up to do sales for other existing products, or did it give you ideas for different subscription-based businesses? I can see product ideas for this - e.g. a "healthy pack" kind of offering, where you choose from jerky, nuts, dried fruit, and other Paleo-friendly road trip food, which you upsell to existing customers and hopefully make the offering more enticing to new ones - but don't see how the sales lessons scale if you tap out your friend network within a single weekend, unless you do the Amway kind of thing and just keep finding new sales people that sell to their friends.
* what's your long term plan? Do you plan on putting in more work into this?
I can think of several scenarios for the last point: to do no work and just let it ride as free money while you work on other projects; to do occasional weekend sprints of work with a team; to do little bits of work by yourself every day, like 30 minutes each morning.
I'd personally be interested in trying to learn other aspects of business that could make it grow, especially content marketing. I.e. would a blog about jerky be worth it in terms of sales? What kind of writing could you come up with that felt authentic? What kind of a time sink is it? Would it build a returning audience or be linkbait for Google? Would random people from adwords convert at all? Could you convert office managers that stock the office kitchen, or do they all use other services like Amazon? Etc.
- First off, yes, if you add up the hours we spent on this business over the 2 days at Startup Weekend, we probably made less than minimum wage (although you may be discounting the fact that we played some wicked sick ping pong matches during our breaks, which were often longer than they should have been :). As someone with a MS in Economics, I completely understand opportunity cost and fully realize that we could have all worked at McDonald's for 2 days straight and made more money (ie. profits). However, as @dpearce acknowledged, driving up profits wasn't the point of the exercise. The point was to try to start a recurring revenue business as quickly as possible and hit a goal of generating over $5K in revenue and over $1K in profits (not a goal that we set, but one that Noah Kagan set for us here: http://www.appsumo.com/sumo-jerky).
- A secondary point was for everyone on the team to get comfortable with what I believe is the most difficult part of starting a business - sales. I've mentored dozens of startups and watched many of the struggle through the customer development stage because they don't want to ask customers for money. They would rather tweak the product, build a logo, add features, etc, etc...all things that might add marginal value, but shouldn't happen until you've validated that you have paying customers. These things also don't involve rejection...so they are easier in most people's mind. In just 2 days, everyone on our team was responsible for dozens of sales and I watched confidence rise from each team member as they made a sale (confidence that cannot be acquired by doing anything else BESIDES ACTUALLY closing a sale yourself...it feels good and then you want more of that feeling). Yes, this exercise was an extreme - as we didn't even really have a product before we sold it - just a simple landing page and a paypal account...but nonetheless it accomplished the goal of improving our team's confidence and abilities when it comes to sales.
- This wasn't mentioned in the original article and my bad for not publishing it. But, out of 267 total subscriptions, about 150 of them are unique (some bought 3 or 6 months subscriptions and we counted those orders as 3 or 6 total subscriptions)...This means that if we can retain those 150 unique customers each paying $20 / mo, we'll do $3,000 in revenue each month...this equates to about $600 - $800 in profits each month for doing about a half days worth of work to fulfill the orders (now we're talking close to $200 / hr... which is > than minimum wage (even if the recent strikes result in increasing min wage to $15 / hr...geez, could that really happen?? :)). Granted, $800 in profits per month is not a ton of money, but it's not a bad side gig for my younger brother (and fellow team member for this project) who is currently in college.
- Lastly, this project was a ton of fun...Our team was awesome and we learned a lot about what it takes to sell, move fast, and work together. This is really the point of a Startup Weekend event - learning something and meeting new people.
Thanks again for the feedback and comments guys! If you have other questions, hit me up.