FUNNELS PART 3: 12 MONTHS TO $1 MILLION

“How to pick a winning product, build a real business, and become a seven-figure entrepreneur.” - by Ryan Daniel Moran, founder of Capitalism.com

This book is about a specific method of achieving wealth (mostly Amazon sales with Fulfillment By Amazon (FBA)), but there is so much funnel oriented content, it made sense to include it in my 3 part funnels series. If it’s any indication, Russell Brunson, founder of ClickFunnels.com, wrote the foreword.

Introduction

In the introduction he outlines the steps:

1. Opportunity
2. Mindset
3. Getting customers
4. Product
5. Funding
6. Stacking the deck
7. Launch
8. Scaling
9. Marketing
10. Acquisition

There are many routes to financial freedom. Many entrepreneurs try real estate investing, Kindle publishing and affiliate marketing. The options are endless and this confusion keeps them stuck. They can clearly see various business models from which to choose, but the choice itself is the obstacle.

It is this stage of the process I think that is the most difficult along with creating the required alignment with your overall life goals. This is the most important stage and the one startup mentors don’t want to touch with a 10 foot pole. It seems most books, mentors, accelerators and VCs (understandably) are only interested once you have decided you want your startup to be a unicorn, you are generating revenue and you are close to Product Market Fit (PMF).

Once people have successfully implemented his methodology to cross the $1 million annual mark, he runs an accelerator called The Backroom where he takes 20% to 40% ownership to mentor them to a larger size and then navigate through an exit.

Money, which is a by-product of good work, will flow to you as soon as you realize it’s not about what you can get, but what you can create.

True growth is like interest. It compounds over time. This is what you want vs. getting paid by the hour for a task.

Chapter 1 & 2

Mostly a pep talk in my opinion.

Chapter 3

Choose your Customer

Focus on people not products.

I feel he means something slightly different than “build something people want.”  The author decided his people were bodybuilders at the gym. He came up with a pre-workout powder that helped with endurance. His follow up products might be protein powder, workout recovery powder, gym bag, sweats, clothes or a book. This is different than expanding his product by creating new flavors and then selling them to long distance athletes and people who work long hours truck driving. This means building a brand of solutions for your audience rather than trying to figure out the best audiences for your predetermined solution (famously called by Y Combinator a SISP – Solution in Search of Problem).

This is different than repeatedly iterating to solve the same problem (workout energy) or questioning if you simply need to sell it to a different market (pro athletes).

Example 1

Dave Asprey from Bulletproof coffee was actually a health and diet activist with a following of 60,000 people and he sold organic, mold-free coffee, along with other coffee additives, energy bars, etc. 

The issue I have with this and many other project-based strategies is they skip over how to build a following of 60,000 people.

Example 2

Another example is James, a sportscaster for ESPN, who was struggling with insomnia. He discovered that blue light filtering glasses when he used a computer helped him sleep at night. He made some that didn’t look dorky and sold them on Amazon. They sold really well, but what’s the follow up product? If he’s focused on product it, would be different styles of sunglasses shades or other kinds of glasses. If he’s focused on people, it will be additional sleep aids that may have nothing to do with glasses.

Identify your Gateway Product

For the coffee guy the gateway product was coffee. The second product however was not another flavor coffee. It was coconut-based oil, then souped up the coffee with another supplement that slows the absorption of caffeine, then protein bars and whey protein, etc.

He believes in knowing what your follow up products are from the beginning, so the base product sets you up to sell the future products. At least you have a product roadmap. It takes 3-5 products to have a business.

The Process

1. To whom are you going to sell?
2. What do they buy already?
3. Which product out of that suite of products do you want to focus on either to make a better version or one that solves that problem?
4. What does your group think about similar products currently on the market?
5. Where do these people hang out?
6. Do you know how you will get predictable sales? He simply means distribution channels (Amazon)?
7. What will be products two, three and four?

In the deodorant example he gave, the founder almost gave up because he got no feedback on Product Hunt. However, a friend had an “in” (influencer connections?) at Product Hunt and they got him boosted to the number one product of the day.  

Later in the story the owner turned down offers to sell at Walmart, Target or other brick and mortar stores and also refused to pay any influencers. He feels that if sales are growing and you’re doing well, perfect the things that are make your sales grow instead of trying to expand your methods. 

Not sure I buy into this 100%. Of course, lean into what is working, or as Andrew Chen says, grow by perfecting 1 acquisition channel at a time. However, the best channels will change and you must continue to split test methods as you grow.

NOTE: Here he provides a great case study on putting all of the above into action.

Chapter 4

Develop Your First Product

He said Amazon.com is great, but they also have a lot of competitors you could use. 

The Process

• He did yoga mats and talked to a lot of people about what they didn’t like about the yoga mats and did a lot of research on blogs.
• He sourced a supplier on Alibaba that already made mats that that fit that description.
• He doesn’t believe in prototyping something that’s custom to start because he feels you’ll lose 3 to 6 months doing this.

Focus on get something launched so that you can get real feedback immediately.

He believes in the beginning you should not worry about maximizing profits…just establish systems to get the product sold. 

Here he provides a great case study on putting all of the above into action.

Chapter 5

Funding Your Business

Funds Required

To get started with your first product you need about $10,000. OR….

Crowd Funding

If you want to go down the path of crowdfunding, you will need three things.

1. A great video. 
2. 10 ideal customers in your network we’re excited about what you’re doing. 
3. You need at least one micro influencer who can help spread the video message who has at least 10,000 followers

Kickstarter – this is to start

Tim Ferriss has great training on his blog about using Kickstarter.  

Note that Kickstarter is not equity crowdfunding. The rewards you provide “investors” are supposed to be non-monetary. Autographed copies of your first 10 products shipped, special editions not otherwise available, etc. As such, the average amount raised on Kickstarter is around $5,000, because people are looking for memorabilia and supporting something they believe in, not a return on investment.

Kickstarter provides an early fan base and a story that can be sold to influencers. It also allows you to pre-sell product without the pressure deadlines of delivery that Amazon will give you.

You can start looking for influencers by looking at local press or within forums for small influencers that have some following. Based on growth and a few write-ups you can ask slightly larger influencers to write about you and then work your way up the chain.

Bank loans, Kabbage.com – this is after you have revenue

Loans for businesses at high interest rates may be a good Band-Aid patch to prevent you from running out of inventory. Amazon lending is also available if you have 12 months of sales track record.

He feels it’s OK to take loans to Band-Aid patch through bottlenecks of a growing business. Do not take on debt to launch an unproven business. Wait until you have predictable sales to take out debt! Use money as an amplifier not a magic wand.

Capitalism.com/funding provides some other options.

If Undecided, Raise Prices

If you were unsure about taking on funding don’t go into debt. Raise your price. Make a list of investors who you might want to work with. Tell them what you are up to and keep them posted on progress.

ROI Arbitrage

One of his most famous YouTube videos is about how to use a loan against your house to buy a website that is producing 25% per year of passive income. I have searched and cannot find this specific video. In his opinion, borrowing 5% of your house value to make 25% is a good way to leverage debt.

Here he provides a great case study on putting all of the above into action.

Chapter 6

Stack the Deck

How to guarantee sales from day one

He believes you need to stack the deck so that you have people waiting to buy a product the day it’s released...

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