The 3 Lies That Block Startup Success

Here’s a lie that feels like the truth:

“A mother is a person who, on seeing only 4 pieces of pie for 5 people, promptly declares, ‘I never did care much for pie.'”

That’s a lie that turns moms into martyrs, which is not what moms are supposed to be.

It’s one of many lies we’re born into – lies that are so entrenched in who we are, how we do things and what we expect that they don’t even appear to be lies anymore. They simply are. They normalize themselves, making it nearly impossible to cut through them, find the truth and shift toward that truth.

I could talk endlessly about the Myth of the Mother-as-Martyr, but this isn’t one of those blogs. We’re all about copywriting, marketing and startups around here – and there just so happen to be at least 3 lies I’ve seen negatively affect startups lately…

LIE 1: “The Overnight Success”

This lie works wonders for the big guys out there. It keeps the little guys from sticking around long enough to chip away at the trunks of their businesses and finally fell them.

The lie goes like this: Everyone else is making it big quickly. If you don’t explode onto the scene, you should be embarrassed, give up and shut down.

A few “overnight successes” that are absolutely not include:

Spanx:
Now-billionaire Sara Blakely didn’t even tell her friends about her idea for Spanx for an entire year, and then spent a second year getting the product store-ready

Angry Birds:
I’m sure everyone reading this knows that Angry Birds was Rovio’s 52nd game (do you think the world knows any of the first 51?)

Chicken Soup for the Soul:
The book that launched a massive brand was rejected by 140+ publishers before the authors took it to a small publisher and sold it for a $1000 advance

MediaBistro:
Laurel Touby sold mediabistro.com for $7M… after spending 10 years of 80-hr weeks on it

Pinterest:
Only after chugging along quietly for 2 whole years – and even asking a publisher to acquire it (which failed) – did Pinterest become one of the top 10 social sites

Dyson:
Sir James Dyson failed 5,126 times (or, as Einstein would put it, learned what didn’t work 5,126 times)

WD-40:
K, I’d never heard of this until I did a little research, but the “40” in WD-40 actually stands for “40th attempt”

Katy Perry:
2001 saw a Christian album; 2004 saw a never-released album; and only in 2008 did Katy Perry release her first hit

Harry Potter:
The first Harry Potter took 7 years to write, 1 year to sell after dozens of rejections, and resulted in an advance of just 1500 pounds for JK Rowling

Did any of those “overnight successes” take fewer than 2 years to get to a point of public recognition? No! And most took well over 5 years.

It’s not just the media that perpetuates this lie. It’s our family and friends, too. When I got a 5-figure book deal for a young-adult trilogy, my friends and family barely flinched. It’s as if they believed that everyone should be Stephenie Meyer and get $500K+ advances for their first book. As if THAT’S the norm.

When Lance, Steven and I shut down our first startup – a realtor rating site called What-Customers-Say.com, which had had tons of media coverage north of the border – everyone we knew saw it as a failure. After all, we’d actually “exploded” onto the scene in a very real way. Shouldn’t we have become huge? After our shutdown, everyone we knew was very hush-hush about it. What-Customers-Say.com has since become like Voldemort around these parts – The Site Whose Name Must Not Be Spoken. …Perhaps this speaks to yet another lie: failure is bad.

The lie of the Overnight Success tells startup founders that, to be a success, we need:

  • No previous successes of any kind, and certainly no successes greater than this one
  • 30,000 signups on our first day
  • 300 signups per hour from that point on
  • 1000 new Twitter followers a day (with Ashton Kutcher as an early follower)
  • 450,000 Facebook likes
  • Rounds of investments (even if we could easily bootstrap it)
  • Instant acquisition offers from Yahoo

Within a world ruled by this lie, you lose marks for trying. You lose marks for launching with a 3-year marketing roadmap. You lose points for not having a “we’re going to get acquired” exit strategy. You lose points for not trying to be the world’s biggest and baddest XYZ.com. You lose points for patience, diligence, intelligence, marketing and business acumen – all things that are, in fact, critical in business and that were key to every above-mentioned startup’s success.

So, how does this lie actually block startup success? As just one example, it keeps startup founders from putting together long-term marketing plans or even thinking about marketing – beyond getting a write-up on TechCrunch – pre-launch. After all, if you’re going to be huge instantly and if you’re going to be fielding investment offers before quickly being acquired, who needs marketing?

LIE 2: “The Too-Tiny List”

This lie goes like this: Everyone’s list is bigger than yours, and you can’t sell to a list with fewer than 20K people on it. But here’s the truth:

  1. You do not have to have a large list to sell to it
  2. You do not have to create a list just to sell to it

Musician Mike Monday (of Start Now, Finish Fast) wrote to me with this to say:

“I just launched a coaching program to my email list of 1800. I thought that my best case scenario was about 12 buyers. I ended up with over 60 buyers.”

EDIT (addition): Jesse S. wrote to me on Jan 8 to share this win: “I had a $20k ebook launch with a list of ~1200, about half of whom were previous customers.”

I’ve chatted with other people who’ve had great paydays after selling to their lists of 700 or fewer. Many of them find that they convert as much as 50% of their list with their offers. As of today, I have a list of 3000+. That’s small by most standards. But my open rates are consistently in the 40% – 60% range, and, on the rare occasions I do offer a promotion, the paydays are decidedly sweet.

The truth is that you don’t need a large list to sell your products. You need an engaged list. And, for even better results, you need a young list.

You see, the longer a person is subscribed to your list, the less engaged they generally get, as this MailChimp chart shows:

As you can see, if you wait until your list is “big” before you start sending offers to that list, you do not actually increase your chances of selling. (After all, your subscribers don’t know how many people are on the list… so why should they care if you’re “waiting” for growth to sell to them???) Rather, you should be segmenting your emails across your list, regardless of the size. Knowing what we know about subscriber recency, you might instead look at your list not as one big lump but as segments that may require different sales strategies:

  • Newest subscribers get good offers
  • Subscribers who’ve been around 2-3 and 5+ months get soft sells, invites to events and/or no pitches at all
  • Subscribers at the 4 month mark get the “last ditch” offers – after all, they’re probably going to unsubscribe soon, so might as well squeeze some pennies outta them

Check out your own reports to see open and click rates by subscriber recency. And adjust your email marketing strategy accordingly.

Secondly, you don’t actually have to sell anything to your list if you don’t want to. I strongly believe in email marketing… but some people just want to use their lists to communicate with people who like hearing from them. There’s nothing wrong with that! You do not HAVE to sell if you don’t want to. (Of course, when you are ready to start selling, email marketing is truly one of the most powerful tools at your disposal.)

And let’s not forget that sometimes our sites do the selling… so creating a list to sell to becomes a secondary goal. As I mentioned, my list is just 3000 strong… but I’ve sold enough copies of Copy Hackers ebooks that I can afford to leave client work behind to focus entirely on my ebooks. Most of those sales took place on my site, on AppSumo and on MightyDeals. Not via email. In 2012, I chose to sell first and ask for the signup second; after all, a bird in the hand is worth 2 in the bush. In 2013, my strategy is going to change a little… but I still won’t block entry to my site or catalog with an email signup form like so many others do.

LIE 3: “The Free Digital Product”

This lie goes like this: You have to give yourself away until you prove that you’re worth paying for.

This lie normalizes and is normalized by a general devaluing of actual work done in the virtual space. As if something that is digital is less valuable than a hard good. It’s closely tied to the idea that an ebook is ‘worth less’ than a printed book, in spite of the fact that the value – the thing you’re paying for – is the same for both, regardless of whether a tree was harmed in the making of it or not. The truth is that you value and are willing to pay for the content, not the paper it’s printed on.

This entire lie is based on a ridiculously moronic belief that you need to be able to hold something in order for it to be valuable.

Just because something can’t be touched doesn’t mean it holds no value.

Time is intangible. I can’t remember the last time I held air. Yet both are extraordinarily valuable. (To say nothing of the “worth more than gold” value of knowledge, love and hope.)

Code cannot be held. Words transmitted electronically cannot be held. Although your iPad can be held, the productivity apps on it cannot. Does that mean that code, words and apps have no value and should be given away? It shouldn’t! We’ve already seen that there are some pretty major intangibles that are critical to life and enjoyable existences. I would pay for time; I would pay for air; I should pay for utility apps, games, basic versions of SaaS, digitally delivered information – things that I believe to be valuable and actually need.

Now don’t get me wrong. Some things should, perhaps, be free. Certain types of digital offerings for consumers – like Facebook, Twitter, Pinterest and Instagram – surely wouldn’t have made it if you had to pay for them. Perhaps any and every social tool should be free; after all, the product then becomes your users themselves – they are the things you sell to, say, businesses looking to advertise. But what non-social tools, apps and digital products should be free? Should any B2B products be free?

If you’ve decided to go with a freemium model, do you have a plan in place to monetize your free offerings and free trials? I’m not talking about a pissy little nothing plan, like, “We’ll just send them a series of autoresponders during their trial, and they’ll upgrade.” Like, really? Well, what’s inside those autoresponders? What are you going to do to get people 1) to open your emails, 2) to read them and 3) to click through and actually upgrade to paid? How many do you send? How do you know when to stop? What if people sign up for your free version – because there’s no barrier to entry – and then don’t use it?–suddenly your upgrader emails won’t mean much to them. (Colin at Customer.io and Patrick of Kalzumeus can help you with a better A/R strategy, and they’ll both be presenting at our email bootcamp.)

Here are just a few great arguments against the freemium model:

WSJ – When Freemium Fails
“The freemium approach doesn’t make sense for any business that can’t eventually reach millions of users. Typically only 1% or 2% of users will upgrade to a paid product, said David Cohen, founder and CEO of TechStars.”

Mashable – The Freemium Model Doesn’t Work (op-ed)
“The decision to go the freemium route should be based on math specific to your business — not a pricing philosophy. Because the reality is, the freemium model doesn’t work for the majority of companies who try it.”

GigaOm – Freemium Has Run Its Course
“Can your startup stay solvent while you wait for the conversion to kick in? Freemium only offers the hope that non-paying users will fall in love with your product and start paying for it.”

I have found that everything I give away is devalued almost immediately. Like what? Well, I have answered loads of emails over the course of the past 14 months since Copy Hackers launched… and, in many of those emails, I gave thoughtful recommendations about what X startup, consultant or marketer should try to optimize their copy. I must have sent over 200 such emails. All with free advice.

Do you know what most people write back?

“Thanks. I’ll give that a shot.”

In fact, only ONE person has followed up after implementing my recommendations to tell me about the lift he achieved. Just one!

Now, compare that to my paid website review product. People pay $900 to have me review their sites and list out recommendations. Do you know how many of these people actually implement my recommendations? ALL OF THEM. They invest not only their time in updating their copy but also their money in hiring designers to help them bring my copy recommendations to life.

PLUS the people who pay me end up leaving me great testimonials

When I asked one gentleman – to whom I’d given free advice via email – if I could use his “thanks for the freebie” email as a testimonial, he actually said, “Sure, but don’t use my full name.” …I had just given him advice others pay for. And, in spite of this ongoing belief in the persuasive power of reciprocity – which I have yet to see actually work online – he wouldn’t even cough up his last name for me. Wow.

Perry Marshall beautifully explains why he doesn’t do anything for free anymore… and it only makes me love that guy even more. You NEED to read his post, and then you need to charge for your time and the output of your time (e.g., your products).

Giving things away does not prove your value. Rather, it devalues you.

In devaluing you, it limits your ability to sell down the road and traps you in ways that you will never be trapped when you get paid for what you do and offer.

So, to recap:

  1. You’re allowed to take 5 years or more to grow your startup
  2. You’re allowed to sell to a ‘small’ list
  3. You’re allowed to charge for your digital products

And, in keeping with my goal for 2013, check out the following short video, in which I walk you through an example of driving emails to high-converting landing pages (which just so happens to be a subset of the topic of my bootcamp clinic):

YOUR TURN: What’s the best result you’ve achieved with a small list? Or why do you choose to give actual products, like apps, away? Leave a comment to share, or email me

~joanna

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  • http://www.notchtherapy.com Matt Cauthorn

    Very interesting, and I totally agree with the myths. For example, I converted more when my prices were higher, and sure enough (taking your advice and reading Amazon reviews) I found some validation of that. If you’re conspicuously low price or conspicuously freemium when you shouldn’t be, it’s….well, conspicuous. If you deliver value, charge for it.

    PS: Regarding Email campaigns and driving conversions: you’re always practicing what you preach, and your own business serves as a case study for what you sell. It’s extremely thematic and consistent.

    So I *always* read your emails, and I always will. Hell, I even look forward to getting them. Want to sell me stuff? Awesome – I’m happy to buy it from you if I feel like it lines up with my needs. And I’m happy to pay you a lot for it. But I don’t feel this way about the other lists I’ve joined lately (Perry’s being among them).

    Why? Chiefly because I know this is making me and a bunch of other folks better at what we’re trying to do. Much is based on trust. You understand the folks you’re addressing and how to address us. Once again, its own case study.

    To contrast that to the others that come into my inbox, it’s not the same. They add some value too. They get me thinking about new stuff. But I don’t feel *part* of it somehow. And I think that’s the point – if you actually pull off connecting with folks and meeting them where they are at, you’ll have successful campaigns.

    PSS: In the video I absolutely love how he’s so actively ‘writing people’ out – not up for this? Here’s where to unsubscribe. This weed-out seems unnatural at first but the chances of delighting a customer are so much higher when you’re qualifying them so carefully. I’ve decided to do something similar, and will report back on the results. Hopefully I’m right :)

    –Matt

    • Joanna

      Hey, Matt — wow! Thanks. Regarding pricing, I don’t know anyone who’s done better by leading with free than leading with paid; if you lead with free, sure, you’ll get more signups / micro-conversions… but you need to have a seriously genius monetization strategy in place to turn those free leads into paying customers. That’s a nut the marketing world still needs to crack.

      So glad to hear you’re digging the emails! I know what you mean about some other lists. I’ve unsubscribed from at least 3x as many as I’m on simply because they were so busy selling to me rather than trying to connect with me (and then sell). Businesses need to balance both, right?

      Good luck with the experiment of eliminating new subscribers to create a better list. FYI that I’ve tried that, and I switched away from it. I ‘warned’ new subscribers that I might be selling to them at some point — when, in fact, I had yet to figure out how to do that — and my unsubscribe rate skyrocketed. Sure, some people just don’t want to be sold to; but there are others who’ve been burned by evil email marketers that do nothing but sell, so I can’t blame them for being quick to skip town. I ‘sell’ so rarely that it was sort of foolish for me to warn people about something that wasn’t even likely to happen. That said, I hope you test it and share your results. :)

      • http://www.notchtherapy.com Matt

        Joanna: I should have clarified that a bit more. My ‘elimination’ strategy is going to be done via long form copy as opposed to an email list. My particular market is loaded with hucksters and snake-oil, so differentiating by actually being up front and honest about who will see success and who will not will (I hope) help me differentiate. It’s more in the spirit of disappointing early…

        Either way, I’ll definitely post an update on how the new copy and choices fare.

  • http://www.faeriewriter.com Christina @FaerieWriter

    I would like to know more about your YA trilogy. Are any of them available yet?

    • Joanna

      Hey, Christina! The first one is due out in Jan 2014 – a whole year away. It’s tentatively titled “Before I Wake”. :)

      • http://www.faeriewriter.com Christina

        Congratulations, I look forward to reading it. “Before I Wake” is the name of a Soul Screamers YA novel by Rachel Vincent among others so you might want to rethink that part though ;)

      • Joanna

        Yes, every title under the sun is taken. :)

  • http://prospectsnap.com Andrew Woo

    Freemium might work for some cases, but I wanted to share my results with my iphone/ipad app,

    From the very beginning my plan was to charge for it.

    It did start off super slow, but I’ve been growing every 2 months at 100% since August.

    • Joanna

      So you’ve been charging, Andrew? And it’s been growing steadily? (Or am I misunderstanding?)

  • http://www.theyogipreneur.com Racheal Cook

    Great post Joanna! I’m not in the “start-up” field but when I came back to my coaching/consulting biz after year long maternity leave in January 2011, I was able to fill up 4 private client spots (worth $10K) with 2 emails. To a list of maybe 100 people. Then I spent another 6 months focused on list building before launching my first online training program to my slightly bigger list of maybe 300-400 — which quickly filled with 25 clients (about $15K). Since then, I’ve been able to consistently fill my private client spots AND my online programs without much stress — propelling overall revenues from essentially $0 during maternity leave to over $12K a month in a span of 2 years. All that to say — you can absolutely make great money with a small list :) and keep at it if you want to grow a successful biz.

    • Joanna

      Wow! Awesome examples and great transparency, Racheal. I love what you’re doing over at The Yogipreneur — and how cool to hear about the process you’ve followed to achieve your results. You should do a post on this!

  • http://TheRobertD.com Robert D. Smith

    Great post, Joanna! I actually recently put together a video about the “overnight success” myth…so true. Your “Chicken Soup” example reminded me of my own.

    I’ve managed an author/speaker for over 30 years named Andy Andrews. When he wrote his first manuscript, “The Traveler’s Gift,” it was rejected 51 times before it finally got accepted nearly three years later (by a publishing house that had already rejected it twice). Good Morning America picked it up and it became a NYT bestseller. It’s now in over 25 languages!

    Anyway, none of that is to brag…just wanted to reiterate how right you are about overnight successes. They are not what they appear. There is always years of hard work behind just about every success. Thanks for the great post! Looooove your ebooks.

    • Joanna

      That’s awesome, Robert. I love the story. Authors, actors and musicians are most often seen as “overnight success stories”, regardless of the amount of time it took to get there. If we heard more about how long it truly takes 99% of the “successful” people to reach that level of acclaim and success, it would normalize the slow-and-steady, patient approach… and surely we’d see even more successes. Excuse me while I go weep for humanity. ;)

  • http://www.gojanenews.com Janet Garraty

    Thanks for this insightful article. It’s nice to read examples that the overnight success story is a myth. It encourages the rest of us to continue to work hard and smart to build strong companies. Very good pointers about leveraging your mail lists, even if they’re small. And I love the tip on incentivizing your longer term subscribers!

    • Joanna

      Yeah, it’s really tragic to know how many startups have shut their doors over the last year or so for reasons we don’t know — reasons that may have something to do with high expectations poorly met. (A workspace-share startup I was quite excited about closed quickly, and there was another business social site that disappeared.) I mean, even Amazon took years and years to get profitable. Imagine if they’d shut down at the first signs of not being an instant success. Unless your operating costs are high, why not wait it out?

  • http://www.gojanenews.com Janet Garraty

    Excellent article. With all the noise about hip new companies achieving immediate success coupled with the egos of small business owners faking it til they make it, it’s good to read that success takes real time and hard work to achieve, and more importantly, to maintain or improve.
    Thanks for the insight. It will help keep the chins up for the rest of us working hard to build solid businesses.

  • http://www.london-copywriter.co.uk/ Mike Robinson

    Absolutely – if you identify who your target audience are, talk about what interests them and concerns them then you are much more likely to get them to listen. Of course, that’s the first step for them to become customers.

    • Joanna

      Totally, Mike! I find a great trick to keep me on track with writing for my audience is to start EVERY headline, subhead and paragraph with the word “you” or “your”. As soon as you force yourself to write “you”, you can no longer write “we” — which brings you that much closer to writing visitor-centric copy. Naturally, for the second draft of that copy, you’d pull out the clunky or unnecessary “you” mentions… but you wouldn’t replace them with “we”. Little trick.

  • Charles

    Don’t want to be a nit-picker, but I take minor issue with your over-simplification of the contrasting value between tangible and digital goods. With books, for instance: you seem to say an ebook has no less value than a printed book. This holds true for some, but not all, and not without good reason. Each has inherit qualities and functional capabilities that make them less or more desirable than the other, leaving some legitimately finding more value in a printed book, and others in a digital book.

    Users perceive the same things differently, often with good reason that does not put opposite choices at odds to the point of devaluing one of them in its entirety. Sometimes users are wrong in how they perceive value, and even then sometimes they can be corrected and convinced to find greater value in it. The markets perception, and the flexibility of it, is what determines the value and outcome (success/failure) of a product.

    • Joanna

      I love nitpickers! They make you talk about things instead of glossing over. :) So, let’s pretend there never was a printed book before. Let’s pretend the world started with digital and paper versions of books available —- you always had the choice between paper books and ebooks. Knowing that both contain the same content, you would assume you should pay the same for both… because the content is the part you actually want. Now, comparing further, an ebook takes up no space so you can carry 1000 with you; an ebook can be read on multiple devices so you don’t have to have your Kindle with you at all times; and ebooks can be easily searched — in ways that paper simply can’t. Would you pay more for the ebook or the paper?

      The only reason we pay more for paper is because of exactly what you say: perception. Perception of value cultivated over time and by historical factors that we pretend are still relevant, when they are not.

      • http://eex.io Taryn

        One more point to add on this — I worked in manufacturing for some time and feel that the price of a printed book should be more than an ebook. The main reason, in my opinion, is not that ebooks have any more value, but because the cost of making and distributing the physical product is higher.

    • Lance Jones

      I find it interesting to see the impact of a specific marketplace on the perceived value of a digital versus printed book. Take Amazon.com for example, which has set up a pricing/payment structure that moves e-books into a pretty narrow range. Amazon has effectively “told” consumers that e-books should be priced less than $10. And yet, you see independent authors/writers pricing and selling their e-books outside the Amazon marketing machine at much more than $10. Joanna’s e-books sell extremely well at $18 per… and much higher for the 4-book bundle. To me, it shows that the context of an e-book purchase can have a striking impact on its perceived value.

  • http://www.startupdesignnewsletter.com Robert

    Hey Joanna, Loving the videos at the end of the posts, great idea to re-enforce and clarify your posts.

    I started my small design newsletter a few short months ago, and the best results I’ve achieved is about 12-15 people coming to me for help. A few have answered my questions to them, others have asked me specific questions, and a few have come to me for help designing their site, but with all of them I’ve learned about the people I’m sending emails to.

    What their needs are, what they care about, and what they don’t care about.

    Moving forward, I’m taking what I’ve learned and applying it to my consulting and design business, and using it to expand into creating other resources for them in the near future. All signed up for the email bootcamp and ready to take it to the next level!

    • Joanna

      Sweet!—-learning from your list is as good as learning from a split-test. It may not be the goal you were trying to reach — you wanted to increase sales in many cases, not learn — but it’s ultra-valuable in getting you to the point of reaching that ultimate goal, right? See you at the bootcamp. :)

  • http://mwsys.com.au Ash Smith

    Great read. I needed to be reminded that you need to work for success.

    • Joanna

      Thanks, Ash! I need to be reminded of the same. :)