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Entrepreneur-ing In Public: Journey Log #17
When a reader email really makes you think...
I teach entrepreneurship at Duke and I’m publicly growing a company — Autopest — from $0 to $100k/year in revenue in order to help entrepreneurs better understanding the process of building startups. Learn more about my journey here.
A couple weeks ago, I received an amazing email from a reader named Sathish. It engages deeply with every aspect of what I’ve been writing about Autopest, startups, and business, and, in doing so, it (very politely) challenges my core thesis about entrepreneurship, which is that entrepreneurs should be more focused on building audience than building product.
I love the thoughtfulness of Sathish’s email, and I love the challenge in it. It deserves an equally thoughtful response, and I’ve been trying to figure out the best way to provide it.
As you’re about to read, I’ve decided to respond in the form of an issue of Entrepreneur-ing In Public. Sathish’s email is below. My response follows.
P.S. Don’t miss the big announcement at the end!
Thanks for reading about my journey growing Autopest from $0 to $100k/year in revenue. To keep following along, be sure to subscribe!
I have been following all your posts every week including the Entrepreneur-ing In Public posts.
I have read in many of your posts that building an audience is important even before building a product.
"The museum and the train" blog post(blog title -The real reason nobody is buying your startup's product) is a good example of that.
But in reality, is it worth that effort(building an audience first, then trying to sell them later)?
I can see from your weekly email issue (Issue #173), you can reach close to "100k people" across your social media platforms.
Despite your existing audience, and despite building a product specifically designed to help that audience, so far we don't have at least 1,000 paying customers.
Even 1% of 100k people is a very low conversion rate. But still not able to get to that point, even after building a product specifically designed to help that existing audience.
[PS: I can hear your 'thoughts' :-)
1.Who said Entrepreneurship is that easy?
2.What makes you think getting customers is going to be easy for your startup?]
Now I see you are trying other approaches like cold-email campaigns.
So the question I have is, is it worth it for an entrepreneur to build an audience first(which requires spending lots and lots of time over the months)?
Failure is costly when not able to convert at least 1% of the existing audience(after building that audience over a few years).
Instead, an entrepreneur can build a product first(like Autopest) and try strategies like Newsletter Ads, running Cold-email campaigns.
If nothing works out, can just shut-down the startup and try another startup idea.
In that way, the entrepreneur can optimize for "Quantity", as quantity increases the opportunities for good things to happen.(blog title- Do the best
entrepreneurs optimize for Quality or Quantity)
What are your thoughts 'now' on this approach - build an audience first?
Thanks for your email. I appreciate both your thoughtfulness and your ability to engage me using my own words. More importantly, I appreciate this wonderful opportunity to explore the question of audience versus product.
I have two core points to make. One is more logistical, so let’s start there.
Yes, I have 100k+ followers, but that’s the tippy-top of an “awareness” funnel. For any number of reasons (algorithms, deprecated accounts, disinterest, etc.), most of those 100k people don’t see the majority of my content and have no clue I’ve been building/promoting Autopest. In other words, let’s not draw too many conclusions about social media audience conversion rates from the superficial, top-level stats.
But that’s only a small quibble about numbers. Let’s get to the real issue, which is whether entrepreneurs should spend time building audiences before building products. You’ve wondered if, rather than building large audiences that may or may not be able to drive traffic to a product, it’s actually more efficient for entrepreneurs to continue building multiple products (and pay for marketing) until finding one that works.
My answer is still: No, I don’t think it’s more efficient. I’m going to demonstrate why right now…
After last week’s strange events where I got more Autopest signups from having a successful Medium article than running an email marketing campaign, I started feeling like these weekly Entrepreneur-ing In Public newsletters, as currently constituted, are wasteful. If the best way to drive sales for Autopest is to write good Medium articles, what am I going to write about in these newsletters each week? For example, how many people want to read newsletters like this:
I published two articles. The first article got 10,000 views, which turned into 100 clicks on my website, which turned into 10 Autopest visits, which turned into three signups. Yay!
That version of a newsletter is going to get real boring, real quick.
For what it’s worth, the readership numbers for EIP were already suggesting it’s not as exciting as I’d initially hoped. My Tuesday newsletters (the EIP ones) get 20% less readers and generates a whopping 150% more unsubscribes than my standard, Friday EOH issue. (To be fair, the Friday issue averages almost zero unsubscribes, and this Tuesday issue gets between one and two, so “150%” sounds bigger than it is.)
Regardless, this Entrepreneur-ing In Public newsletter is a product I’ve launched for my audience, and it’s failing.
While failure isn’t fun, when it comes in the context of already having an audience, it’s also an opportunity because I get to create something new for the community I already reach.
Are you starting to see why building an audience is valuable? Sure, one of my products “failed,” but I still have the primary asset, which is EOH audience and community. Rather than starting from scratch next week, I’ll throw out a small portion of my work while mostly getting to continue building on all the work I’ve already done.
Isn’t that cool? More importantly, isn’t that a more efficient entrepreneurial model than one that places the product at the center of everything?
To be clear, you can disagree. Or, you can simply prefer building products more than building audience and decide you’d rather spend your time doing something that’s more enjoyable.
Either way, I’m thrilled to know a reader as thoughtful as you is part of the EOH community. I hope you’ll continue reading (and continue asking great questions) for a long time.
P.S. Autopest, itself, is still growing. It gained another three paid signups last week, and it’s making almost $3k in ARR, which is $2k more than it costs to run. So… yeah… I guess I’ll keep it going. I’ll also keep sharing progress updates, they just won’t be the focus of an entire newsletter each week because… well… see above.