This piece of the conversation really left me wanting more, especially since I've been using that very same list with no success over the years. What are some good niches? Better yet, what's a heuristic for picking good niches? She seems to suggest we should focus on an audience we already have, as Nathan has with web developers (designers?), or that we could easily build. So I am the local corporate javascript expert: perhaps I could rally that into an audience of javascript developers or maybe even people that really need javascript developers?
Ok, so to perhaps answer my own question I'm just going to reverse this. A good niche buys things (specifically software if you're selling it). A good niche is well defined, easy to find and filled with competent people with money to spend.
I think it's interesting that we are defining a kind of person, not a job description or industry.
People buy things… job descriptions and industries don't :)
SOMEBODY will win the lottery. That doesn't actually increase your chances.
Everything I write, all the advice I give, is increasing the chance that the person I'm talking to will experience success. Some people get rich off consumer products. Some people get rich selling sex, or cool, or experiences. Some people do manage to sell into very tough (but lucrative) industries. But those are all a lot harder than taking the easy path of creating tools for people like you, who have problems you can solve, and who pay money.
Me, I don't like risk. I also never tell people that my way is the only way. It's simply the way with the highest likelihood of returns.
EDIT: By the by, I recently sold back my 12% share in a VERY promising, disruptive startup in the legal space… WITH insider knowledge and connections. The major cofounders worked their tails off for years doing everything right and for their troubles? They got almost zero buy-in. Then they clawed back shares for one last do-or-die thrust (which imo is more likely to be die than do). Unlike many people, I'm speaking from experience.
http://unicornfree.com/2011/niches-are-for-suckers/
When I said Nathan was throwing away every advantage he had, and he ought to go vertical, I meant to go with an audience where you already have experience, pull, connections, insider knowledge. That's what I mean by "vertical."
So yeah, if you're a go-to JavaScript guy, why would you start anywhere else but there? You'd just be pissing away your advantages.
The first problem is actually shipping something that customers can buy. I'll skip over this because both Nathan and Amy have certainly been able to do that. So the next step, the 'white whale' project is the infamous second project.
The advice out there suggests either:
1) Outsource Development (it certainly helps if you're a developer)
or
2) Learn it the hard way and do everything yourself
Rob Walling has certainly had fantastic success himself - all by outsourcing. In fact, if I remember correctly, Rob struggled to successfully launch countless products before he chose a different route. Rob chose to purchase existing businesses (HitTail, Beach Towels etc.) and then started marketing them . I don't believe he had any success before that.
Amy Hoy has had great success with building everything herself - Freckle being a great example. However, Amy has also failed with Charm: "It ended up with me spending 2 years and $200k on something I had to shut down."
It seems like it's not just as simple as choosing either option 1 or option 2. There are examples and counter-examples to both options.
I outsourced the early code and design. Quality of both was shaky, but I only had $3,000 to put into it so I wasn't working with much. I later picked up on the last 25% of the development to get into a beta (since my cash ran out), but I was very glad I took this approach.
I've since been able to work with higher quality of developers and designers and improved both areas, but when you have a product that's solving a real problem, customers will be more than happy to pay for that shaky 1st version (as they did with mine).
That said, I have a dev background and learning Rails before outsourcing it was a big help. I know people that don't have a dev background and successfully outsourced dev of their products (I even helped a couple pick their developers), but it's a bit tougher and it helps if you have at least someone with a dev background that can help you pick the right developer.
You had development experience and could tell what was going on… and Nathan didn't, which is why I was discouraging him from that route.
I personally don't know anyone w/o dev chops who fully outsourced the development of their product, with success.
I'd love to hear about how your friends made it work. Was it with your help?
Charm would have been an enormous commercial success based on all the indicators, but we belatedly realized that running it would entail a stressful type of business we didn't want. Big fat "Duh" there. I stake full claim of my mistakes and warn others about it.
This may sound like me twisting definitions but I don't think buying-an-existing-product is the same as outsourcing development, even if it is your only product. In the former, you've got something that already exists, that you can look at and try and poke around in; in the latter, you've got some rough designs and the hope that you picked the right freelancer.
I've seen so many people take the latter course - true outsourcing - and flop around til their money was all gone. Despite trying very hard not to be a party to it, so many of my clients were like that. I eventually had to come to the conclusion that I could push them to cut back features and launch, but it wasn't my job to refuse to do what they asked just because it was dumb.
On the other side, if you fully outsource your product, from scratch, what do you do if (as I mention in the transcript) you have a falling out and suddenly there's a major bug? You not only can't fix it yourself, you aren't sure if you know what it is, how to know if the person you hire can fix it, how to know if they've done a good job or not… plus your track record for hiring is already bad. It's a kind of helpless death spiral — tiny cuts leading to arterial spray.
Sidebar: This has made me realize just how little I know about Rob's origin story, so I'm going to have to fix that :) And by "this" I mean "this discussion" and not "arterial spray," ha!
Regarding Charm, it wasn't always clear to me why you shut it down. You mentioned it here: http://news.ycombinator.com/item?id=4814598 which received some positive and negative comments. I'd rather not start that debate again but it would be interesting to hear your thoughts on whether the development of Charm was the issue i.e. internal vs. outsourced.
Rob has recently detailed his story on the excellent (and fairly new) Product People Podcast (from mijustin): http://productpeople.tv/2013/01/16/ep09-rob-walling-part1/
To add a little fuel to the fire, I’ll make a few comments:
> Amy: "I’ve never seen anyone do successful presales for a software product, for the record."
I guess it depends on the definition of “successful” – Jason Cohen had 40 pre-sales before he started building WPEngine: http://blog.asmartbear.com/stop-customer-interviews.html
> Amy: "I don’t know ANYONE… ANYONE… who outsourced their product and made a success out of it."
Again, it depends on your definition of “success” but I personally think Rob Walling is pretty successful, and he outsources almost all of his development: http://www.softwarebyrob.com
Serious question: Isn't Rob originally a developer?
We outsource a lot of our development too, but outsourcing part (even if it's a large part) as a developer is very different than outsourcing all of it, or outsourcing the "core competency" of your product/business, or outsourcing all the code from day 1. Which I still find sketchy and predict will land a person in trouble if they are unable to work on their own product, just as I describe in the transcript!
As for Jason, I didn't know that, that's great. He does write that 40 promised, but only "20 actually did before launch." What I meant, in my terse way, was "presales to fund the development," which is what I understood Nathan to mean because of his only-$5k budget. Jason had some proof of concept in 20 people but that probably paid for just about nothing :) Or… he was able to get a significant pre-sale $$$ by reaching larger, institutional clients with his connections and track record! Which isn't something a bootstrapper starting out should count on.
Thanks for clarifying!
"Customers are bad about figuring out features, but good about explaining their pain or what they'd like solved."
In your chat with Nathan, you said that people are not good at explaining or even noticing their pains. I guess your experience differs from Jason's in that respect. Mine is probably somewhere in the middle :-)
So, if your prospects are not aware of their pain, how do you sell them your solution?
I expect you have to educate them. It's probably unlikely that you just build something, unveil it, and they go "Of course I need this! Why didn't I think of it?! Silly me! Here's my money."
But then how long do you spend on educating them? Is this why you recommend info products? So that you don't waste time educating for free?
Or do you recommend doing landing page tests?
This is turning into an interview, so I'll stop here. I don't expect you to give away all the secrets you teach in your courses, but would appreciate anything you can share. Thanks!
