3 Beliefs of Successful Internet Entrepreneurs
There are millions of unique businesses online but the ones making money have a very few common traits.
Are you one of the millions of people who, at one point in your life, googled “how to make money online?” Seven years ago, I joined that club.
Since then, I’ve met thousands of internet entrepreneurs successfully running their own companies -- from one woman running niche tarot card forums to multi-million dollar funded startups with hundreds of employees. I even wrote a book based on what I learned from them.
What I’ve discovered is that all successful internet entrepreneurs share a common set of beliefs about reach, growth and perseverance that you can incorporate into your own career or business.
1. Focus on your 1,000 true fans.
The 1,000 true fans belief is this: to be a successful entrepreneur in the internet era, you don’t need millions of fans. You need 1,000 true fans.
I worked with a company whose main product was a specialized piece of industrial equipment. About 400 people per month searched for that piece of equipment on Google. It cost about $400. How much money can you make selling a product that only 400 people in the entire U.S. (precisely 0.000125431 percent of the U.S. population and probably less people than you had in your high school) search for each month?
Millions -- you can make millions.
The math behind 1,000 true fans shows how they’ve achieved this. A true fan is defined as anyone who will spend at least $100 per year buying what you make. They buy the hardcover and audio versions of your book and the collector’s edition of your poster release each year.
Successful entrepreneurs focus first on finding their 1,000 true fans by gaining trust through content marketing, This includes everything from writing blog posts, speaking on webinars or to live crowds and posting to social media. Because the internet enables you to have a direct relationship with your fans, they buy directly from you -- not a bookstore or Walmart -- and you get to keep all 100 of those dollars.
One thousand people paying you $100 each is $100,000 per year, a pretty good living for most people. One thousand true fans is a lot more feasible than a goal of a million fans. If you convince one person to become a true fan every day, it will take you three years to get there. Back to my earlier example -- you can play with the math -- 400 people per month buying a $400 piece of equipment is $1,920,000.
On the internet, most businesses are built not by aiming at the masses, but by aiming at the niches. Even the largest internet-era companies started with very small niches. Facebook was just for Harvard undergrads (about 6,700 people) and Paypal was just for Ebay powersellers (of which there were less than 20,000 at the time).
How many products out there could draw 1,000 people per year to spend $100? A lot.
This hasn’t always been true, of course. The economics of 1,000 true fans doesn't work if you are Procter & Gamble selling Tide detergent. You need millions, or at least hundreds of thousands, of customers to get shelf space in Walmart and Target. How many people will pay $100 per year for gluten-free, fairtrade, organic certified detergent? Not many, and that’s just fine.
Figure out the work only you can do, then find your 1,000 true fans. Don’t worry about the millions.
2. Do things that don’t scale.
A lot of would-be entrepreneurs believe that products either take off or they don’t. You make something available and if it’s good, then people will beat a path to your door. If they don’t, it means that the market doesn’t exist, right? Wrong. The reality is that even if you make something amazing, you need to spend at least 50 percent -- if not 80 percent -- of your energy in the first few years doing things that don’t scale in order to sell it.
Stripe is an online payments company which is now valued in the billions of dollars. Stripe was started by a few hundred instances of a “Collison installation.” The founders, Patrick and John Collison, would ask friends in coffee shops or bars, “Will you try our beta version?” If they said yes, they didn’t do what most founders do and send them a link the next day. They immediately said, “Give me your laptop,” and set it up on the spot.
It took them two years to get their first 100 customers. That’s about one customer per week. Most would-be entrepreneurs would probably give up, knowing there was no way to scale this into a big business. But the Collison brothers didn't give up.
The truth is, most internet companies start very, very small and do things that don’t scale until they’ve got their 1,000 true fans. Once you have your 1,000, your message will start to spread. If you talk to a developer about Stripe, they will go on for hours about how amazing it is compared to its competitors. By doing things that didn’t scale, Stripe created true fans, not fair weather fans.
In my experience, it is most effective to think about how to 10x your current business. If you try to think about how to 2x your business, you are usually thinking too small, but if you think about how to 100x your business, you will get discouraged and quit.
If you have zero customers, you only need to figure out how to get to 10. You can do that by asking friends in coffee shops. Or texting them. Or posting on Facebook. Once you have 10, you need to figure out how to get to 100. You can probably do that with phone calls, emails or LinkedIn messages -- or even a lot of coffee shops.
3. Stay on the bus.
The third belief of successful internet entrepreneurs is the glue that ties the first two together. How do you get 1,000 true fans while doing things that don’t scale? You have to stay on the bus.
There is a bus station in Helsinki, Finland. Some two dozen platforms are laid out in a square at the heart of the city, and each platform has a sign with the numbers of the buses that leave from that platform.
Let’s say you’re at a platform with three buses leaving -- the 21, 71 and 58. You get on the 21. All three buses stop at the same three first stops. Metaphorically speaking, let’s say that each stop represents a year in your career. You get to the third stop and look around to realize that everyone else is at the same stop. Your work and their works look exactly alike. Shocked, you realize that what you’ve been working on for three years has already been done. There are other businesses just like yours!
So you hop off the bus, grab a cab back to the bus station, and look for another bus. You repeat the same process. Maybe at first you were in UI design, and you move to marketing. Three years into your marketing career, you realize your stuff is the same as everyone else’s. So you hop off, and go back to the bus station. This goes on forever.
What should you do? Stay on the bus. Why? Because if you do, you will start to see a difference. The buses that move out of Helsinki stay on the same line, but only for three stops or so. Then they begin to separate and each heads on its own unique path. The 21 goes north, and the 71 goes southwest.
Suddenly, your work is unique and starts to get noticed. Stripe was just another online payment company with not even 100 customers until it wasn’t. It became a billion dollar startup.
Companies evolve, just like animals. Labrador dogs are descended from wolves. At first, the difference was very slight, but over time they evolved into very different animals. No one wants a slightly nicer wolf as a pet, but lots of people want labradors. If you stay on the bus, your company or career will end up evolving into something you couldn’t have imagined when you first started.
Ira Glass, host of the now-iconic podcast and radio show This American Life, echoed this lesson in an interview:
“All of us who do creative work," he said. "We get into it because we have good taste. But there is this gap. For the first couple years you make stuff, it’s just not that good. It’s trying to be good; it has potential, but it’s not. But your taste, the thing that got you into the game, is still killer. And your taste is why your work disappoints you. A lot of people never get past this phase. They quit. Most people I know who do interesting, creative work went through years of this. We know our work doesn’t have this special thing that we want it to have. We all go through this. And if you are just starting out, or you are still in this phase, you gotta know it's normal, and the most important thing you can do is do a lot of work.”
If you truly believe what you’re working on is important, stay on the bus.