5 ms·

How we did over $1K in profit during Startup Weekend

54 points by dpearce 13y ago

danso 13y ago
I think this is a great writeup and so I apologize in advance for what is going to sound like a bunch of armchair criticism...but why is money -- or profit the primary metric here? There are lots of cool wins here. Putting together a "rockstar team", as the OP says (i.e. building relationships), hustling, and just plain going out on a limb and trying something halfway crazy. Those are all good ways to spend a weekend, young or old. But making $1000 for 26 hours of work, with most of that money coming from the seller's personal network? That's not a headline-worthy achievement, nor is it a real measure of success. 44 hours between 8 people is a lot of work-hours, nevermind the opportunity cost of the recovery period the next day. The main problem, of course, is that the sales came primarily from the personal network, which is not a real indicator of anything when the time period is just a few days of sprinting. So while I again commend the OP for taking the time to write down thoughts and reflections...I think there should've been more reflection on how reliable these conclusions are. "Acquiring customers is ALL that matters"? Matters for what? Making a nominal amount that matches a number (1,000) that looks good in a headline? I agree that people can obsess with things like website domain and styles too much...but that's different than concluding that customers don't really care. I've seen unremarkable Kickstarters become huge because of well-written pitches and a lot of time invested into the pitch video. You can't really say that user/customer experience doesn't really matter...especially if your sample size is your personal network in a period of days. Another thing to consider...what about the ongoing costs? It's one thing to ramp up to get customers...it's another to service these customers who, presumably, have to be managed during the lifetime of their subscription...That's another potential opportunity cost. OK, one more complaint. I think this bullet point is really specious: > Determine what works and focus on it… this takes discipline. We started off with low hanging fruit — close friends and family. The OP describes a telemarketing type situation...which, I have to say, is something I regret not doing enough of because my friends who've spent summers/years doing telemarketing as a temp job are some of the most easy-going, well-balanced people I know, due to their ability to take rejection. However, they've been doing it long periods of time...doing a weekend of cold calls is not quite the same thing for building that tough skin. And you don't get discipline in a sprint, but continuing to do the work after the euphoria is over. OK that was more complainy than necessary...Again, great writeup by the OP (putting yourself out there is never trivial) and hope to see a follow up in 2-4 weeks
dangayle 13y ago
This seems like a very low ceiling ($$$) business, which I always find "meh" at Startup Weekend. At Startup Weekend Missoula, a lady was selling compost bins with worms. Another team worked the whole time on a project that would at best make $70,000 a year. Both of those are great individual businesses, as is selling beef jerky, but they're not the next Facebook.
- untog 13y ago
  Both of those are great individual businesses, as is selling beef jerky, but they're not the next Facebook. Who's to say that Startup Weekend is only for the "next Facebook"?
  - dangayle 13y ago
    It should at the minimum strive to create a business that could potentially support the team working on it? $1000 profit from 8~ people working 2.5 days isn't scalable to even the size of their team, let alone anything bigger.
    - clogish 13y ago
      This comment leads me to conclude that you don't actually understand what Startup Weekend is about.
      - dangayle 13y ago
        From (http://startupweekend.org/about/ http://startupweekend.org/about/): "Startup Weekends are weekend-long, hands-on experiences where entrepreneurs and aspiring entrepreneurs can find out if startup ideas are viable." I'm not denying that it was a great exercise, but not a great exercise in building a business. It's not a hackathon, you're supposed to be learning how to build the framework for a sustainable business.
genericuser 13y ago
So if each member of the team worked for that entire 26 hours they worked 208 hours total. Because their version of 'profit' does not seem to factor in wage for the 8 people involved. Their 1095 'profit' came out to a wage of just under $5.27 an hour for each of the 8. The amount made in the time period should not be viewed as a victory in this situation. There may have been an educational or other victory for team members, but the author seems to be celebrating a monetary milestone which would of been greatly exceeded by working minimum wage jobs doing telemarketing for an existing business.
- rexreed 13y ago
  That was also my first thought. Kudos to the OP in that you managed to build a product people wanted and paid something for. For creating something you could sell. And then went ahead and sold it. And made a profit. That's better than most wantpreneurs. But you didn't do better than minimum wage. You could have just done a bunch of TaskRabbit or Odesk or Elance gigs and for the same 26 hours ended up much farther ahead. What does that mean? Perhaps not much because it's comparing apples and oranges (contract / service work vs. product sales). Or perhaps it does mean that you need to understand the value of income (not just revenue) with relation to time cost. That might actually be the biggest lesson here: yes, you can build something you can sell. And perhaps you learned how hard sales is, but how possible making a profit is. But most importantly, you learned that not all businesses are worth it. And this one most certainly is not worth it.
  - aaronsnoswell 13y ago
    Wow guys - cut them some slack. Making profit at a Startup Weekend is a gargantuan accomplishment, considering that most teams only get to the point of having a powerpoint demo / half finished prototype. Sure they didn't actually make that much compared to a real job in an established workplace, but this is still an awesome achievement.
    - dangayle 13y ago
      I could pay $1 dollar to my team to subscribe to their service and call it "profit". But I do agree that most teams spin their wheels without actually executing much.
RokStdy 13y ago
First: Good for you all for doing something. It's great that, rather than just talking about how you're going to make the next 'instatwitairpalbook' you hustled and produced something. Second: But..... You produced something that you all don't seem to really care about. I don't think that you have to be an evangelist to work on a project, but I guess I just don't care as much because this is just an exercise for it's own sake. Third: and.... I'm reminded of how, in grade school (Primary school...Brits?), we would have contests to sell cheap crap. Either wrapping paper, or knives, or whatever. The entire point of these exercises is to have small children hit up their family and neighbors to sell a bunch of crap so that the kid can win a Huffy. This mainly relies on people feeling bad saying no to a cute (not in my case, but generally) kid. Or like multi-level marketing. Basically you hit up your personal network and then peter out.
drakaal 13y ago
Good case study, but wrong conclusion. There is only profit if you always have volunteer workers. I think that it would be false to say you were cash flow positive. Since the revenue split between the team would not make minimum wage I can't even give you a "pass" on you all taking Minimum wage and the company being ahead the difference. This is a nice proof of merchantability, but it doesn't equal profit.
stevewilhelm 13y ago
Most of the lessons learned by this 208 hour exercise could have been learned by spending one hour talking to a seasoned salesperson.
- omegant 13y ago
  I can´t agree. THE most important thing is not what they learned, but how they learned it. They went out and did the difficult stuff, they started selling, and kept doing it till the end. The point is to sell, afterwards you´ll be able to improve your technique and the theory behind...
jbkkd 13y ago
I'm not sure what a beef jerky subscription is. Are you going to send them Beef Jerky daily/weekly/monthly from now on?
- raney18 13y ago
  Yes, we send them jerky monthly from now on.
raney18 13y ago
Hey guys, All great points and thanks for commenting. As the author of the post, I wanted to address a few things: - First off, yes, if you add up the hours we spent on this business over the 2 days at Startup Weekend, we probably made less than minimum wage (although you may be discounting the fact that we played some wicked sick ping pong matches during our breaks, which were often longer than they should have been :). As someone with a MS in Economics, I completely understand opportunity cost and fully realize that we could have all worked at McDonald's for 2 days straight and made more money (ie. profits). However, as @dpearce acknowledged, driving up profits wasn't the point of the exercise. The point was to try to start a recurring revenue business as quickly as possible and hit a goal of generating over $5K in revenue and over $1K in profits (not a goal that we set, but one that Noah Kagan set for us here: http://www.appsumo.com/sumo-jerky http://www.appsumo.com/sumo-jerky). - A secondary point was for everyone on the team to get comfortable with what I believe is the most difficult part of starting a business - sales. I've mentored dozens of startups and watched many of the struggle through the customer development stage because they don't want to ask customers for money. They would rather tweak the product, build a logo, add features, etc, etc...all things that might add marginal value, but shouldn't happen until you've validated that you have paying customers. These things also don't involve rejection...so they are easier in most people's mind. In just 2 days, everyone on our team was responsible for dozens of sales and I watched confidence rise from each team member as they made a sale (confidence that cannot be acquired by doing anything else BESIDES ACTUALLY closing a sale yourself...it feels good and then you want more of that feeling). Yes, this exercise was an extreme - as we didn't even really have a product before we sold it - just a simple landing page and a paypal account...but nonetheless it accomplished the goal of improving our team's confidence and abilities when it comes to sales. - This wasn't mentioned in the original article and my bad for not publishing it. But, out of 267 total subscriptions, about 150 of them are unique (some bought 3 or 6 months subscriptions and we counted those orders as 3 or 6 total subscriptions)...This means that if we can retain those 150 unique customers each paying $20 / mo, we'll do $3,000 in revenue each month...this equates to about $600 - $800 in profits each month for doing about a half days worth of work to fulfill the orders (now we're talking close to $200 / hr... which is > than minimum wage (even if the recent strikes result in increasing min wage to $15 / hr...geez, could that really happen?? :)). Granted, $800 in profits per month is not a ton of money, but it's not a bad side gig for my younger brother (and fellow team member for this project) who is currently in college. - Lastly, this project was a ton of fun...Our team was awesome and we learned a lot about what it takes to sell, move fast, and work together. This is really the point of a Startup Weekend event - learning something and meeting new people. Thanks again for the feedback and comments guys! If you have other questions, hit me up.
raney24 13y ago
As being a part of the team, I think the point of the start up was to show that anyone can do it, it being making that green show up. You just have to hustle. We took something we enjoyed (perhaps was losing it's joy by day 3 but still a ton of fun) and we turned it into a venture that anyone would be willing to work that half day / month for that profit. We weren't trying to revolutionize start up weekend or show other teams that profit is the only thing that matters. We were just trying to fulfill Noah's challenge (http://www.appsumo.com/sumo-jerky/ http://www.appsumo.com/sumo-jerky/) and show that if you hustle you can make it.

54 points by dpearce 13y ago

danso 13y ago

I think this is a great writeup and so I apologize in advance for what is going to sound like a bunch of armchair criticism...but why is money -- or profit the primary metric here? There are lots of cool wins here. Putting together a "rockstar team", as the OP says (i.e. building relationships), hustling, and just plain going out on a limb and trying something halfway crazy. Those are all good ways to spend a weekend, young or old. But making $1000 for 26 hours of work, with most of that money coming from the seller's personal network? That's not a headline-worthy achievement, nor is it a real measure of success. 44 hours between 8 people is a lot of work-hours, nevermind the opportunity cost of the recovery period the next day. The main problem, of course, is that the sales came primarily from the personal network, which is not a real indicator of anything when the time period is just a few days of sprinting. So while I again commend the OP for taking the time to write down thoughts and reflections...I think there should've been more reflection on how reliable these conclusions are. "Acquiring customers is ALL that matters"? Matters for what? Making a nominal amount that matches a number (1,000) that looks good in a headline? I agree that people can obsess with things like website domain and styles too much...but that's different than concluding that customers don't really care. I've seen unremarkable Kickstarters become huge because of well-written pitches and a lot of time invested into the pitch video. You can't really say that user/customer experience doesn't really matter...especially if your sample size is your personal network in a period of days. Another thing to consider...what about the ongoing costs? It's one thing to ramp up to get customers...it's another to service these customers who, presumably, have to be managed during the lifetime of their subscription...That's another potential opportunity cost. OK, one more complaint. I think this bullet point is really specious: > Determine what works and focus on it… this takes discipline. We started off with low hanging fruit — close friends and family. The OP describes a telemarketing type situation...which, I have to say, is something I regret not doing enough of because my friends who've spent summers/years doing telemarketing as a temp job are some of the most easy-going, well-balanced people I know, due to their ability to take rejection. However, they've been doing it long periods of time...doing a weekend of cold calls is not quite the same thing for building that tough skin. And you don't get discipline in a sprint, but continuing to do the work after the euphoria is over. OK that was more complainy than necessary...Again, great writeup by the OP (putting yourself out there is never trivial) and hope to see a follow up in 2-4 weeks

dangayle 13y ago

This seems like a very low ceiling ($$$) business, which I always find "meh" at Startup Weekend. At Startup Weekend Missoula, a lady was selling compost bins with worms. Another team worked the whole time on a project that would at best make $70,000 a year. Both of those are great individual businesses, as is selling beef jerky, but they're not the next Facebook.

untog 13y ago
Both of those are great individual businesses, as is selling beef jerky, but they're not the next Facebook. Who's to say that Startup Weekend is only for the "next Facebook"?
- dangayle 13y ago
  It should at the minimum strive to create a business that could potentially support the team working on it? $1000 profit from 8~ people working 2.5 days isn't scalable to even the size of their team, let alone anything bigger.
  - clogish 13y ago
    This comment leads me to conclude that you don't actually understand what Startup Weekend is about.
    - dangayle 13y ago
      From (http://startupweekend.org/about/ http://startupweekend.org/about/): "Startup Weekends are weekend-long, hands-on experiences where entrepreneurs and aspiring entrepreneurs can find out if startup ideas are viable." I'm not denying that it was a great exercise, but not a great exercise in building a business. It's not a hackathon, you're supposed to be learning how to build the framework for a sustainable business.

genericuser 13y ago

So if each member of the team worked for that entire 26 hours they worked 208 hours total. Because their version of 'profit' does not seem to factor in wage for the 8 people involved. Their 1095 'profit' came out to a wage of just under $5.27 an hour for each of the 8. The amount made in the time period should not be viewed as a victory in this situation. There may have been an educational or other victory for team members, but the author seems to be celebrating a monetary milestone which would of been greatly exceeded by working minimum wage jobs doing telemarketing for an existing business.

rexreed 13y ago
That was also my first thought. Kudos to the OP in that you managed to build a product people wanted and paid something for. For creating something you could sell. And then went ahead and sold it. And made a profit. That's better than most wantpreneurs. But you didn't do better than minimum wage. You could have just done a bunch of TaskRabbit or Odesk or Elance gigs and for the same 26 hours ended up much farther ahead. What does that mean? Perhaps not much because it's comparing apples and oranges (contract / service work vs. product sales). Or perhaps it does mean that you need to understand the value of income (not just revenue) with relation to time cost. That might actually be the biggest lesson here: yes, you can build something you can sell. And perhaps you learned how hard sales is, but how possible making a profit is. But most importantly, you learned that not all businesses are worth it. And this one most certainly is not worth it.
- aaronsnoswell 13y ago
  Wow guys - cut them some slack. Making profit at a Startup Weekend is a gargantuan accomplishment, considering that most teams only get to the point of having a powerpoint demo / half finished prototype. Sure they didn't actually make that much compared to a real job in an established workplace, but this is still an awesome achievement.
  - dangayle 13y ago
    I could pay $1 dollar to my team to subscribe to their service and call it "profit". But I do agree that most teams spin their wheels without actually executing much.

RokStdy 13y ago

First: Good for you all for doing something. It's great that, rather than just talking about how you're going to make the next 'instatwitairpalbook' you hustled and produced something. Second: But..... You produced something that you all don't seem to really care about. I don't think that you have to be an evangelist to work on a project, but I guess I just don't care as much because this is just an exercise for it's own sake. Third: and.... I'm reminded of how, in grade school (Primary school...Brits?), we would have contests to sell cheap crap. Either wrapping paper, or knives, or whatever. The entire point of these exercises is to have small children hit up their family and neighbors to sell a bunch of crap so that the kid can win a Huffy. This mainly relies on people feeling bad saying no to a cute (not in my case, but generally) kid. Or like multi-level marketing. Basically you hit up your personal network and then peter out.

drakaal 13y ago

Good case study, but wrong conclusion. There is only profit if you always have volunteer workers. I think that it would be false to say you were cash flow positive. Since the revenue split between the team would not make minimum wage I can't even give you a "pass" on you all taking Minimum wage and the company being ahead the difference. This is a nice proof of merchantability, but it doesn't equal profit.

stevewilhelm 13y ago

Most of the lessons learned by this 208 hour exercise could have been learned by spending one hour talking to a seasoned salesperson.

omegant 13y ago
I can´t agree. THE most important thing is not what they learned, but how they learned it. They went out and did the difficult stuff, they started selling, and kept doing it till the end. The point is to sell, afterwards you´ll be able to improve your technique and the theory behind...

jbkkd 13y ago

I'm not sure what a beef jerky subscription is. Are you going to send them Beef Jerky daily/weekly/monthly from now on?

raney18 13y ago
Yes, we send them jerky monthly from now on.

raney18 13y ago

Hey guys, All great points and thanks for commenting. As the author of the post, I wanted to address a few things: - First off, yes, if you add up the hours we spent on this business over the 2 days at Startup Weekend, we probably made less than minimum wage (although you may be discounting the fact that we played some wicked sick ping pong matches during our breaks, which were often longer than they should have been :). As someone with a MS in Economics, I completely understand opportunity cost and fully realize that we could have all worked at McDonald's for 2 days straight and made more money (ie. profits). However, as @dpearce acknowledged, driving up profits wasn't the point of the exercise. The point was to try to start a recurring revenue business as quickly as possible and hit a goal of generating over $5K in revenue and over $1K in profits (not a goal that we set, but one that Noah Kagan set for us here: http://www.appsumo.com/sumo-jerky http://www.appsumo.com/sumo-jerky). - A secondary point was for everyone on the team to get comfortable with what I believe is the most difficult part of starting a business - sales. I've mentored dozens of startups and watched many of the struggle through the customer development stage because they don't want to ask customers for money. They would rather tweak the product, build a logo, add features, etc, etc...all things that might add marginal value, but shouldn't happen until you've validated that you have paying customers. These things also don't involve rejection...so they are easier in most people's mind. In just 2 days, everyone on our team was responsible for dozens of sales and I watched confidence rise from each team member as they made a sale (confidence that cannot be acquired by doing anything else BESIDES ACTUALLY closing a sale yourself...it feels good and then you want more of that feeling). Yes, this exercise was an extreme - as we didn't even really have a product before we sold it - just a simple landing page and a paypal account...but nonetheless it accomplished the goal of improving our team's confidence and abilities when it comes to sales. - This wasn't mentioned in the original article and my bad for not publishing it. But, out of 267 total subscriptions, about 150 of them are unique (some bought 3 or 6 months subscriptions and we counted those orders as 3 or 6 total subscriptions)...This means that if we can retain those 150 unique customers each paying $20 / mo, we'll do $3,000 in revenue each month...this equates to about $600 - $800 in profits each month for doing about a half days worth of work to fulfill the orders (now we're talking close to $200 / hr... which is > than minimum wage (even if the recent strikes result in increasing min wage to $15 / hr...geez, could that really happen?? :)). Granted, $800 in profits per month is not a ton of money, but it's not a bad side gig for my younger brother (and fellow team member for this project) who is currently in college. - Lastly, this project was a ton of fun...Our team was awesome and we learned a lot about what it takes to sell, move fast, and work together. This is really the point of a Startup Weekend event - learning something and meeting new people. Thanks again for the feedback and comments guys! If you have other questions, hit me up.

raney24 13y ago

As being a part of the team, I think the point of the start up was to show that anyone can do it, it being making that green show up. You just have to hustle. We took something we enjoyed (perhaps was losing it's joy by day 3 but still a ton of fun) and we turned it into a venture that anyone would be willing to work that half day / month for that profit. We weren't trying to revolutionize start up weekend or show other teams that profit is the only thing that matters. We were just trying to fulfill Noah's challenge (http://www.appsumo.com/sumo-jerky/ http://www.appsumo.com/sumo-jerky/) and show that if you hustle you can make it.