An evidence-based approach to testing your business idea and bringing it to market
Playbook
Not A Genius OverviewNot A Genius Playbook18 month plan for a $5M exitA Checklist for Startup FailureNot a Bad Idea - The Constanza Approach to the Lean Startup
Can we self-fund a new business and grow it to $1M Annual Recurring Revenue (ARR) in 18 months?
Starting a company is a brutal, time intensive and costly process, the rewards can be great and your business can change peoples lives. But, you can also waste years of your life, ruin relationships and go broke. All three have happened to me.
Ultimately I have found some successes and have come to terms with some of my mistakes, but I also love building products and growing businesses and I cannot help testing out new business ideas as the world is changing around me. I show here the full process of refining an idea to building a growing company. This is designed for solo-founders or small teams who building bootstrapped businesses on the side and have limited time to waste or finances to risk.
This is the focus on this website. I will be documenting several attempts to do this and will be refining the playbooks along the way as I learn more. In particular we will both be focusing on the business validation alongside the product validation. The goal is to develop sets of metrics and checklists to evaluate the progress and to identify when to quickly pivot, abandon or double down on certain strategies or tactics.
My goal here is to present actionable sets of playbooks, timelines, tactics that synthesize what I have learned from personal experience, through second-hand experience with my peers and through absorbing as much information from talks, videos, podcasts, books and articles as I can.
Five Business Stages
The growth of a company from zero clients and zero revenue to $1M ARR is extremely difficult, exceptionally rare and embodies much of the idealized American Dream that many people pursue. To make this concrete, let’s break our progress down into 5 stages:
- Ideation (no clients and no revenue)
- Default Alive (10 clients & 1k MRR)
- Ramen Profitable ($1k - $15k MRR)
- Left the Garage ($15k-$40k MRR)
- Crossed the Chasm ($40k-$200k MRR)
Depending on pricing and your sales model, the business could have these attributes at the various stages. I dive deeper into the business model and plan here.
Stages | Default Alive | Ramen Profitable | Left the Garage | Crossed the Chasm |
Active Trials | 30 | 750 | 2000 | 3000 |
Paying Customers | 10 | 150 | 500 | 1500 |
Monthly Revenue | 1k-2k | 15k | 40k | 200k |
Valuation* | $25k | $350k | $1M | $5M |
On the idea validation and product development side, we can break it down into 8 steps that we interlace into the four stages of our business:
Business Stage | Duration | Product Focus |
Ideation | 1 months | - Audience Discovery
- Problem & Solution Research
- Product Ideas, Landing Pages and Leads
- User Flows and Wireframes |
Default Alive | 5 months | - From Vaporware to MVP
- Real Data, Authentication and Payment Flows |
Ramen Profitable | 4 months | - Activation, Conversion and Retention |
Left the Garage | 3 months | - Activation, Conversion and Retention |
Crossed the Chasm | 5 months | - Activation, Conversion and Retention |
You have 6 months to launch version 1 of the product and the next year to iterate on it. The hope is that after 1 month of proper idea validation you are on a solid path to reach Ramen Profitability (about 150 paying clients and $15k MRR) without having to pivot the product significantly or losing momentum on your sales and outreach.
Jump right into the Playbook
Not A Genius Playbook
Further Reading
First build your product for the blindDoing machine learning consulting projects is dangerousBusiness as a Science ExperimentThe Danger of early “Validation”
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