The 100$ Startup Book Summary: Part 1
Hi everyone, so today I am going to summarise the first part of the book called “The 100$ startup” written by Chris Guillebeau. It is one of the best and my personal favorite book on Entrepreneurship. It teaches you the fundamentals of building a micro-business from scratch with just a few bucks in your pocket. Let’s hop onto it.
Introduction
Well, the cover says “reinvent the way you make a living, do what you love, and create a new future”. But before we start, what actually this book is about and why has the author written it? So what does the first thing that comes to your mind when you hear the book name? “The 100$ startup”. Seems like a startup built with 100$, right?. But is it possible to create a startup with just a 100$?
Now, before answering this, I took a survey of several people who want to start a business but are afraid of a few things which are – not able to hire people or find co-founders, not able to raise money, confused in the paperwork of registering a startup, not able to rent a good office place and so on.
Now, this is the exact reason why Chris has written this book to teach us about doing businesses that are unconventional and don’t require what a conventional business needs, like what I just said. This book is about teaching a way of earning a good living while crafting a life of independence and purpose.
This book is exactly about stories and entrepreneurship lessons from people who built a startup with the following 5 categories.
- Follow-your-passion model (that is build a startup around your passion)
- Less than 5 employees
- Low startup cost(that’s a few 100$)
- No special skills (that is skills that can be learned in 1-2 months and don’t require 3-5 years of degree)
- At least 50,000$ a year in net income
Let’s come to the stories –
Michael Hannah, a 25yr old veteran sales professional was fired one fine day. While he was struggling to pay his bills, his friend who had a furniture store had some mattresses to sell. He took them on a loan and stashed them in a shop he rented. The first lot went at a slow pace but he managed to sell them all through Craigslist and word of mouth. He was very much motivated and made abrupt changes such as built a website, gave loyalty coupons to people who bought multiple times, and also took a modified bicycle to become the first mattress delivery company in Portland, and soon within 2 years he was making 6 figures.
Next comes Susannah Conway from England, a journalist who loves photography and used to teach photography part-time to friends and neighbors. Her friend made her a cool-looking website for others to book private classes from her and soon she was making more teaching photography than in her journalism job. What she did was mix her passion for photography and a way to be seen by more and more people.
Similarly, we have Kartik Gurmule from India who was a 16 yr old school student when he launched his business. He’s very passionate about entrepreneurship and marketing. He made contracts with shoe manufacturers and put up an online website for selling shoes in 2018. Within a year he was earning revenue of Rupees 56 lakhs a month.
Microbusinesses
So, welcome to the world of micro-business or micro-entrepreneurship revolution. These are businesses typically run by a single person. These have been around since the beginning of commerce but what’s new in today’s generation, however, is through the advancements of technology how quickly someone can start a business and reach a group of customers. The building process is much faster and cheaper today. Going from idea to startup with a product can now take a couple of months and cost less than 100 dollars. Commerce may have been around forever but the scale, reach and connection have changed dramatically and it’s no more an elitist club. It’s for middle-class people. We don’t need investment, nor employees, or a formal business plan. Business launches quickly without waiting for permission. Market testing happens on the fly. Are customers buying? If yes, good. If no, what can be done differently. So I blabbered a lot of things we don’t need, but then what do we actually need to build a 100$ business?
Lessons
Chris Guillebeau has said in this book that we need only 3 things to start our journey to freedom and become self-independent. Number one a product or service that you’ll sell. Number two, people willing to pay for your product or service. These will be the customers and number three, a way to get paid that is how you’ll exchange your product or service for money. The easiest way for this is to set up a PayPal account and within 5 minutes you can accept payments from over 180 countries. And see this is one of those technological advances I was talking about which has led this micro-business revolution. These 3 are the barebones of any project and the author suggests that we shouldn’t overcomplicate things.
Now to start building your product or service, there are 3 important lessons to take from the first half of the book –
Convergence –
The first is convergence. Convergence represents the intersection between something you especially like to do or are good at doing (preferably both) and what other people are also interested in. It is the overlapping space between what you care about and what other people are willing to spend money on. Because not everything that you are passionate about or skilled in is interesting to the rest of the world, and not everything is marketable. You can be very passionate about eating pizza, but no one is going to pay you to do it. With the overlap between the two circles, where passion/skill meets usefulness, a microbusiness can thrive.
Skill Transformation –
The second is skill transformation. See many times even you don’t know what you are skilled at. People try to build businesses on the primary skill they have whereas there might be several other skills. For example, Computer Science students will be good at coding but they might have several other secondary or tertiary skills about which they can build an income source. It always helps to think carefully about all the skills you have and the combination of those skills that could be helpful to others.
Magic formula –
So, going ahead the third is the magic formula which is passion or skill plus usefulness is equal to success, and what this means is always try to provide value to others to be successful.
Value
Now, what’s value? The author defines it as something desirable and of worth, created through exchange or effort. But in layman’s terms, I would put the value as simply “helping people”. If you’re trying to build a microbusiness and you begin your efforts by helping people, you’re definitely on the right track. Whenever you get stuck, ask yourself: How can I give more value? Or more simply: How can I help my customers more? Freedom and value have a direct relationship: You can pursue freedom for yourself only while providing value for others. A business ultimately succeeds because of the value it provides its end-users, customers, or clients. More than anything else, value relates to emotional needs. Many business owners while talking to customers make this mistake that they talk about their work or product in terms of the features it offers, but it’s much more powerful to talk about the benefits customers receive. A feature is descriptive, but a benefit is emotional.
Ideas
Now, where do ideas come from? The author suggests that we should always look for opportunities such as in the form of new technology or an inefficiency in the market-place, a changing space, or a side project. And when we are thinking of ideas we should always think in terms of money as to how should I get paid with this idea? How much would I get from this idea and is there a way I could get paid more than once?
Customers
Then after you are done with your ideation and your thinking of the money-making funnel, then comes your customers. And we should always ask ourselves 2 questions about our customers which Arshad Warsi has been asking us forever –
“Kaun hai ye log? Kahan se aate hai ye log?” Which is who are your customers and where do they come from? And when you have figured out the first 2, try to answer the third which is what can you do for them? Some strategies that you should follow while dealing with customers are – number one is to dig deeper to uncover the hidden needs of your customers because many times what a customer says that he/she wants isn’t actually what they would be willing to pay for. I remember in an interview where Henry Ford said that if we would have asked people in the late 19th century that whether they wanted fast horses or fast cars, the answer was obviously fast horses. But when they made cars we all know what happened. So it’s not the customer’s job to tell you what they want, it’s your job as an entrepreneur to ask your customer what problems are they facing and then come up with a solution and give them that solution and see if it’s working or not. Now the second strategy is – make your customer a hero. This point is very important in marketing as to how you put your offer in front of your customer and how you make them believe that this product can change their life. One very inspiring story related to this is the story of a person from here India who had a net profit of 200,000 $ which is about 1.4crores and that too in the year 2009. What he did was run a training center for teaching ms-excel. Now we all know ms-excel isn’t that cool stuff but his tagline said – “Our training programs will make you a hero in front of your bosses and colleagues.” and which middle-class working Indian doesn’t want this? So this strategy is very useful to keep in mind when you want to reach your customers. The third is to sell what people buy. Many times people first make a product and then take it to the market. Instead first look for problems people have and then build a product to solve that.
Summary
Formalizing, we can put 6 steps to getting started right now –
- Decide on your product or service.
- Setup a website.
- Develop an offer.
- Ensure you have a way to get paid.
- Learn from steps 1-5 and repeat.
Now once you are done with formalizing your product or service, you have thought about revenue streams and also did your research on your customer base. Then comes the part where you have to launch your offer to the world for which we need to cover the second part of this blog. So see you guys in the next blog.