Bootstrapping Side Projects into Profitable Startups


I presented about bootstrapping startups to profit at Dutch startup school Growth Tribe. Here’s the transcript. It’s pretty rough because I had to be very practical in my presentation, but I hope it’s useful for you! Also sorry for the layout on a few of these slides, I did it in Keynote and didn’t have a lot of time. Video will be up soon too of this. This presentation was about 30 minutes long and is everything I know about bootstrapped startups really. Most of it comes straight from my book that’s out soon which you can pre-order now already: MAKE. As always I don’t claim to know anything, this is just my ideas and hunches. You need to develop your own to succeed, not copy mine 🙂

Here’s the video thanks to Growth Tribe for filming it (colors of slides are a bit off but ok):

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Sorry for my face, it does these things sometimes ¯_(ツ)_/¯

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Sooooo I’m here because of a Twitter argument with this startup school’s founder (scroll down to skip to the good part!). He asks why Amsterdam (the city where I come from too) has such a low startup score on Nomad List. Well, it has relatively slow internet, not much of a real startup scene and mostly people talking about startups and a few big companies (like Uber) having their foreign HQ in Amsterdam purely for tax reasons, not for the “ecosystem”.

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There’s too much bullshit

It seems the Dutch startup scene (and most startup scenes outside Silicon Valley, I’ve seen the same in London, Berlin, Barcelona, Bangkok and Hong Kong) consists of:

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We spend tens or hundreds of millions of dollars to have our royalty prince (the guy on the left, who has zero industry experience, yes he’s an actual prince) and an aging bureaucrat lady “boost” the startup ecosystem by…well…organizing an annual conference called Startup Delta to “attract” startups, as if we needed more conferences…

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Dutch startup founder Alexander Klöpping from Blende tweets “I have a question. What did Startup Delta really accomplish after a year except for organizing a conference?”.

And they can’t even keep their site up:

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It’s pretty ridiculous. And it’s my tax money burnt for nothing. I really hate it. This is why people don’t trust governments.

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After this presentation a girl from Startup Delta approached me and thanked me for my critique of their organization and how they loved to invite me to come speak about it. NO YOU DON’T GET IT! YOU ARE THE ENEMY! GO AWAY!

To me, all this signifies what it all is in most startup scenes, lots of bullshit. Actually I’ve been in a few scenes in my life (graphic design, music and now startups), and I think I’ve never seen so much bullshit as in startups. All talk, little action.

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So what’s the opposite of talking about stuff? Well, people actually making stuff:

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And I don’t mean:

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Not as a hobby, but making stuff that’s actually profitable:

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Not many are, and that’s the problem. We could have more makers like that if we had less talk and more action.

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That’s why I wanted to tell about bootstrapping startups to profit. Because if I can show I can do it, more people can stop attending these events, and just open their laptop and build stuff. And it’ll solve the problem.

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As much as the startup scenes are like this, people in general are getting more sick of bullshit. They’re more informed. People don’t like being sold to. They want real stuff. That means ads are dead.

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Traditional marketing is struggling even reaching any audience anymore because people simply aren’t interested by bullshit.

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Therefore, the product has become marketing. You make something great. And it mostly spreads itself.

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My story kinda relates to this.

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My first “startup” was an analytics dashboard for YouTube. I was a YouTuber back then and saw the need for YouTube multi-channel network (MCNs) to have an overview over all their channels. YouTube’s own analytics was REALLY bad back then.

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I had never really built anything big for web except for maybe editing some PHP on a WordPress blog.

I spent 1 year (!) on building it as it was so difficult. I had to learn about database design with millions of entries per day. I had to learn about calling APIs to read how many views videos had. Then I had to build all sort sof of difficult mathematical calculations on the data. I had to learn design etc.

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But it worked out. VICE became a customer. They stopped using it after a month mentioning “they didn’t really need it” and never paid a dime. Actually nobody paid a dime for it.

So I thought, let’s try something different. I’ll not spend another year on one project again, I’ll just do a shotgun approach and build lots of stuff and see what sticks.

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I decided to do 12 projects in 12 months, and for fun I called it 12 startups in 12 months.

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The first project was PlayMyInbox.com which scraped your inbox for YouTube video URLs of music and playlist them. This was useful for me and my friends.

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Then I was in a store in Asia and saw some flipbooks and thought, why don’t I put animated GIFs on flipbooks? So I did. I called it GIFbook.io. And sold a few hundred of those.

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Then I made a site that lets you set a goal, deadline and price and if you don’t reach your goal your credit card is charged and I receive the money. A few $100k was committed with I think about $10k made by me from it.

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I made a site for remote jobs, as I started traveling and seeing the remote work revolution slowly happening. It aggregated the jobs from traditional job boards which can be done remotely.

As I was traveling and trying to work from anywhere, I was living in Bangkok, Singapore, Hong Kong etc. But I wanted to know about more places that were affordable, warm with fast internet. So I made a spreadsheet:

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I shared it on Twitter and thousands of people helped to edit it.

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It was the first project that kinda really de-railed and went crazy, in a good way.

Then I made a site around it:

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I submitted it to Hacker News and it went to #1:

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And Product Hunt:

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And the front page (!) of Reddit a bit later:

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Suddenly I was getting press coverage. It revolved around me traveling and building these 12 startups. How meta, they were helping the startups become successful merely by covering them. The point here is that the products had become the story. Without any marketing.

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When it hit TechInAsia I started getting recognized by people in the coworking spaces in Asia and they literally started making photos of me sneakily from a distance:

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Then it hit Wired, and I started getting recognized in the street (!) even in the West by startup people:

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I hit lots of press with it:

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And this is how I felt after everything happened.

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Over 2 years, I built the site into a business:

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I added paid social features:

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And after 2 years, revenue hit (along with the remote jobs site) $40k/m:

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What I learnt here that there’s a few stages of doing a bootstrapped startup:

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And every stage needs to kinda go well. I’ll go through each of these stages now and give you my little secrets and tips.

Idea

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Solve your own problems.

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You’re the expert on your own problems.

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That’s the issue though, as everyone builds either another app to find your friends, another photo sharing app or yet another food delivery service…

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So how to get original problems?

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And how do you do that? Well, travel works because you meet people in new cultures and see how they do things differently. And you’ll slowly become different.

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What also works is, working on stuff that’s taboo! Because there won’t be many others doing it. And you’ll be ahead of the curve. Stuff that’s taboo/fringe now but big soon is polyamory for example.

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Get jobs that you wouldn’t take normally. Just to figure out what problems those companies face. And see if you can offer a solution to them.

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Go to Burning Man. Although that’s kinda mainstream now. Go to some anarchist meetup. Go to a witch ceremony. Whatever it is, do different stuff, meet different people, become different and see different problems.

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When picking an idea, don’t start wanting to build a spaceship. Start small, like build a tiny rocket and see how high you can go. Progressively evolve.

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I started out with a social network for digital nomads.

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Now that’s it’s saturated that scene, I’m slowly evolving it into a social network for travelers. That’s a bigger market, and now that I have already validated the niche, I can expand a bit. But I started small.

Build

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So the next stage is actually building your idea.

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I’d strongly suggest not outsourcing it. This creates a lot of hassle. Imagine you want to change something on your site and you have to do a Skype call with a developer team and they have to have a meeting about it? Now imagine if you can do it yourself? Takes a minute vs. days!

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So do it yourself! Can’t code?

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You don’t “learn to code” one day. If you learn to bicycle, you don’t have to become Lance Armstrong. Just learn what you need to know WHEN you need it (e.g. when building). Most people just Google everything. I do. Start with the most basic question you have. Like how to make a button:

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Then continue from there.

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I see lots of people learn entire new giant JavaScript frameworks like Meteor or React, the first time they start coding. That’s stupid because it’ll take a long time before you have anything practical working. I see them still build their MVP after 3 months because it’s so hard. Better is to just keep it simple and build the most simple version with the tools you already know. Ignore frameworks. Keep it plain and simple!

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The first version of your startup doesn’t have to be a website. It can be a public spreadsheet on Google Docs.

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You can use Typeform.com to build a basic MVP that can even include a payment box to charge users!

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Or use SquareSpace.com to build a basic site. They also let you add payment boxes so you can charge users money.

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WordPress is probably one of the easier ways to build a basic web app as you can use themes and its interface is quite noob-friendly.

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If you can write HTML already, just build a basic page in a text editor in HTML and see how far you can get.

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Again I’d press on this. If you’re building an MVP (a basic first prototype to launch), don’t use giant frameworks. They’re bloated and will drag you down. You can always switch to a framework once you have users, money and can hire developers to scale for you.

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With everything I make, I’m sure to build in automation from day one. It’s super important. It means you’ll have lots of time left to develop new features, or launch more projects (increasing your odds of success).

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An example of basic automation is scheduled jobs on a Linux server (they’re called cron jobs). But most hosting services (like Heroku) will also have some sort of scheduled job planner that’ll let you run scripts on certain times. That’s literally automation.

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This is important. Add a BUY button, even if it’s not functional yet and you don’t have a product. Hook it up so people have to enter their credit card information. Then when they pay, don’t charge them but record their email and see how many people actually “would” pay for your product. Before you have an actual product even. This gives you a basic calculation how much your revenue will be (sales * price / day). And that means you can see if it’s actually worth it to build it out further.

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This is another one that won’t be popular. But work alone. It. Saves. So. Much. Time. I don’t have meetings. I literally go to bed and put my head on the pillow and have a meeting with myself and decide what I’m going to do tomorrow. I don’t have to schedule. I don’t have to discuss. No compromises. Just what I want myself. Especially in the early stages this is SO important. Your first product can’t have compromises. It needs to make a distinct statement.

You can always hire people later, even a co-founder, a CTO, or whoever. But oh please, DIY early on!

Launch

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Launching is probably the most important stage of any startup. Because you can have a great product but without a launch you’ll never get people to find out about your product.

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A launch is simply getting people to discover your product.

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If you just upload or deploy your app to your server and send it to your friends, it probably won’t get very far. You need a substantial audience (like 10,000+ people) to see and use it first. And then if it’s good, a few of those might send it on and it’ll start rolling.

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When are you ready to launch? Well, when you’ve removed most bugs. And the basic functionality of your app/site works. Don’t launch with just an email sign up form (like we’ll message you when we really launch). THAT’S NOT A LAUNCH.

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When preparing for launch, make sure you don’t forget:

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Analytics!

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Add an email sign up box so you can re-engage users later. Of those 10,000+ people, maybe 10% will sign up, and you’ll have 1,000 emails now to talk to later and tell to come back to the site when there’s new features.

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Add a feedback form. I use Olark free but they’re a badly maintained aging dinosaur of a company. Most hip new companies use Intercom which is great, but not free. Having a feedback form means you can get instant alerts by your users of bugs or features they want.

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Now when approaching journalists for your launch, make sure you only pick out the ones that are actually relevant and talk about your industry. That means I can email journalists about Nomad List when they’ve written about travel stuff before, not chat bots.

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Make the story you pitch to journalists deeply personal.

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This doesn’t work.

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This is personal and might work.

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Also make sure you keep messages to journalists short, they’re busy people and get hundreds of pitches/emails every day:

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Getting on Product Hunt is a big thing for startups. The best time to submit is 1 minute past midnight San Francisco time as the leaderboard refreshes then. Make sure to participate in the comments section and answer people’s questions and implement their feature requests immediately!

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You can email your friends or email list that you’re on Product Hunt. They’ll check it out and if they like it might give you some upvotes.

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Hacker News is the more engineer hangout of the startup world. To submit here, make sure you title it properly. HN has a Show HN section, which is like people showing each other’s startups. So title it like it: “Show HN: I made an app/site/thing that does X”. After submitting, get a few (I mean like 4 or 5) people to upvote it. It’ll then rise up to the front page. Now STOP! Don’t do anything. Let the organic flow take over and if it’s good people will upvote it. Otherwise it’ll fall down and it’s just not good enough for HN’s front page. Participate in the comments, but not too much because it’ll hit HN’s controversy filter which will push it down.

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To get on Reddit’s front page, find a subreddit that is featured on the front page in this list. Submit it there, and title it in a similar way “I made an app/site/thing that does X”. Be nice and answer everyone in the comments.

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Product Hunt, Hacker News and Reddit are good starts but if you’re app is about a very specific niche (like motorcycles), then you need to find the places where your audience hangs out:

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So did you validate your idea?

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You’ll know by checking your analytics.

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Your revenue.

If it didn’t work out. No worries, go back to the idea phase. If it seems promising continue to the grow phase. Yes this is like a text adventure book 😛

Grow

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Now that you’ve launched, and you have a product that kinda works. How can you grow it to a bigger audience (and more revenue)?

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Here’s where you’ll see lots of growth hackers come up to you and tell you they have the magic. They don’t. Don’t hire growth hackers. They’re bullshit.

The best growth you can get is organic!

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Because it’s free.

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Most importantly though, not paying for ads and paid traffic means you have direct market feedback. If people open your app or site and then leave, you’ll know something is wrong with the landing for example. If people leave after a few days, you’ll need to work on re-engaging them. Now if you did pay for traffic and ads, you might get lots of growth for months, but then the money runs out and all those users might disappear overnight! You won’t know if you build something people actually want!

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So how do you get new users? Well, you get them the first time you launch.

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But it doesn’t end there. Nobody said you should launch once. In fact, I think you should keep launching with new features. Not every week, every month, but every few months at least. Launch a new version, tell press and put it all over the internet. Make it into a thing.

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See all those spikes? That’s where I launched with new features. It adds to the traffic in the long term.

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Another trick is to spin of a new feature into an entirely new product. I’ve done this multiple times where I was building a new feature and then figured “hey this could work on itself even better and reach more people”. Add a new domain to it, give it a fresh design and launch it.

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Another example is Places to Work. I was adding coworking spaces to Nomad List. Then at some point I had so many and I made it into a separate page. And I thought, lots of people that don’t travel might need a place to work too. So I spun it off.

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For example, when the Brexit happened this year, I quickly bicycled home and ran to my computer to make a spin off of Nomad List. I changed the layout and excluded all UK countries from the list. I hooked it up the domain EscapeTheBrexit.com. Now it was a search engine for people from the UK to figure out where to flee. It went viral and got some press in the UK.

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This worked and I could launch it to Product Hunt and Hacker news etc. and now it’s about 50% of Nomad List’s traffic.

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A great way to grow is to blog/vlog/tweet/share everything you learn from doing your startup. I kinda do it a bit and it works for me. A more famous example is Buffer, who literally wrote about everything they did (the good and the bad) from day one to now being a $10M revenue company:

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One often missed but very important part of growth is making your site easily shareable.

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What I do is add dynamically generated pictures to each of my individual pages (automatically), so that their thumbnails on Facebook etc. show the contents of the page in a summary and attract people:

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So now that you’ve got your new users, how do you get them to come back? Or how do you re-engage old users?

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Well, remember those email boxes we added in the beginning? Now that you launched you probably have a list of emails you can message. Don’t message them too much, but send them a message very few months to tell about new features they might like:

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Also, you could add push notifications. That means you can send them notifications on mobile and web if you have new stuff that’d be interesting for them to see:

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When I launch a new version of my site, I usually send out an email like this:

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I also have dynamic notifications though, like when users are in the same city and they could meet up:

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A great way to keep getting people to come back is simply keep improving your app or site. An example is Snapchat. People simply open it up to see what new filters and features there are as they’re added weekly.

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You should improve based on user feedback. Use your feedback form and listen to what people say and build based on that.

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As you add new features, see if they work and get used, and if not, scrap them as fast as you added them.

Monetize

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The final stage is monetizing.

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Why should you monetize?

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Because a startup that doesn’t make money isn’t a startup, it’s a hobby.

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So, don’t make free stuff! Charge people for what you build.

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A startup that doesn’t charge money will never make more money, whatever the scale is. In fact, the bigger it is the more money it loses.

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To avoid users getting angry later. Make sure you state early on clearly that you charge money.

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Don’t feel bad about asking for money. You put HOURS of work into this, why can’t you get rewarded for that work?

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I used to be a bit more naive and just build whatever I wanted (which is nice too). Now I think a bit more about monetization because I know I have to maintain apps (they will break because of sheer entropy). So I pick ideas where I have some idea of how to monetize them (later).

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Charging money is also another test. It validates your idea. It shows people value it and are willing to GIVE you money. By the metric of startups, where the goal is revenue, that means it’s a good idea.

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So let’s go over some potential business models for startups in 2016.

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IMHO the whole affiliate market where you get commission for people buying or booking stuff (like hotels) is dead. What is left is a very sleazy industry. Stay out of it. I make about $10 per month with hotel booking affiliate income from Nomad List. No, NOT $10k, but $10 dollars. Yes, that’s insanely low. Don’t even consider it.

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Traditional ads like AdSense are dead to me too. They’re super ugly and annoy users. And income is low, like $1 per 1000 views. NOPE.

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You know what works and makes A LOT of money? Asking people for money. Yes, insane. But it works. And more than ever people are willing to take out their credit card and pay for stuff they really need.

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Think about your app and its features and see which stuff you can charge for. Keep it in the interface but when people click on it, tell them they need to pay directly to unlock it.

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I do this on Nomad List. The moment users want to start using premium features (like interacting with other people on the site), this modal shows up and they need to pay to unlock (e.g. become a member).

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I charge recurring membership fees. You want recurring income because as long as people don’t cancel, it kinda doubles every year. Your paying userbase keeps building up. Year 1 you have 1,000 people paying $100/y or $100k/y. Then year 2 you add another 1,000, now you have 2,000 people paying $100/y or $200k/y. See? As long as people don’t cancel this works well.

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A more recent and interesting model is patronage. It’s asking your users for donations. It seems stupid but it works.

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My friend and YouTube vlog celebrity @abroadinjapan does this now through patron platform Patreon:

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Marco Arment does this with his podcast app Overcast.fm:

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This is the most important slide of this presentation. I’d suggest strongly to put BUY buttons on everything all over your site and app and see what people want to buy or not. Then remove what doesn’t sell.

A great example is Buffer, who started kinda like this with a button that then told people the product wasn’t even ready yet:

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So ads are dead right? But what about customized ads that kinda fit the site’s design and are not obtrusive? Those are native ads!

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I use them on my site.

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You can either sell them yourself (I do that) or through a native ad network like BuySellAds.

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If your site gets enough fame, sponsorships also work well.

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When Nomad List launched, on day one I got an email from the founder of WordPress who wanted to sponsor the site and add a mini ad to recruit remote workers:

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This helped the first few months of keeping the site up tremendously.

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Future trends

Finally, I’d like to tell you what future trends you can build for that I believe will be big.

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