How To Build a Software Company With No Money

– Don’t write the code. (upbeat music) How to test your
software idea without writing any code whatsoever. Maybe you’ve already
started hiring a developer. Potentially you’ve built the
product already in the market. Or maybe you don’t
even have an idea but you don’t even
know where to start. I’m going to share something in
this video that’s gonna make it ridiculously easy but I know
right off the bat you’re thinking, “My situation is
probably a little different, “Dan and I don’t know if
following this advice is gonna “work for my specific
situation,” and I’m begging you, I’m pleading with you,
please listen. Just try it. I can’t tell you
the amount of entrepreneurs, hundreds of entrepreneurs that
come to me after they’ve spent months, years, hundreds of
thousands of dollars invested in building a product
that nobody wanted. What I’m to show you is a simple
framework that’s gonna allow you to build something that the
customer absolutely wants. You can’t mess it up. If you follow this
process, it’s guaranteed. Right, you’re gonna do it in
a way that’s gonna get the customer to
finance the development. It’s called customer financing. It’s not venture. It’s not angels.
It’s not friends and family. It’s actually getting the
customers to finance it and it’s going to make it easy, okay? So I want to deconstruct
a few my companies first so you have some context. When I was building my company
Flowtown we were a venture backed software company but
before we ever raised money for that product, we were a
social marketing application, was we tested it. We actually
built a fake interface. We actually like, I called
it Wizard of Oz it. We created three screens. The first screen was
upload your email addresses. The second one showed a result
of those emails analysis and the social media data that
we had on all those emails. And then the third
screen prompted for payment. Now here’s the crazy part. When you submitted payment
details on the third page we didn’t collect a credit
card and we just said to you, “Oops, our
servers are overcapacity. “Our bad. Please
come back in the future. “We’ve collected your email. “We’ll send you an email
when we’re ready to go.” What that allowed us to
do is test the idea with real product that was fake. We actually
didn’t build anything. Real customers that
threw down credit cards. We just didn’t collect their
credit card and we saw the conversion rate from invite in
regards to what they thought it would do, what information
aggregated view they saw and did they have enough
interest in going forward. So that’s one example. My next company, Clarity, was a
marketplace for entrepreneurs to get advice over the phone from
other entrepreneurs in real time and what we did, what I did
to test it in the early days was real simple.
I used three technologies. One, I found an expert. Somebody that can give SEO
advice that people knew of, that was notable.
Guy named Neil Patel. Really expensive, so this
is actually a funny story. I emailed Neil,
I was on Skype chat, and I was like, “Hey Neil, “how much would you
charge for SEO advice?” Thinking like $500
or something like that. And he’s like, “$2,000 and
truthfully I don’t even do it “anymore outside of private
equity companies because they’re “usually gonna then put me
on retainer,” and I’m like, “Okay, good to know.” Now, why was that important
because before writing any software, I started to
understand the pricing dynamics of the experts. If you think that, you know, a
certain type of person’s gonna use your platform and you reach
out to them and they’ll say no for a reason you
learn more about it. So I had to find people that
were priced appropriately. So I found some expert that
had blogs that were pretty well known and they are
willing to do for 500 an hour. Then I reached out to a bunch of
startup founders that I knew had kind of marketplace-type
dynamics to their product, content marketing,
and I said, “Hey, would you pay
$500 to talk this expert?” And they said, “Absolutely.” And I was no problem. I coordinated the
call using Google Calendar, no tech, and
1-800-Free Conference Call. Free conference call,
Google Calendar, locked and loaded,
tested with money, PayPal. That’s what I’m talking about is
being creative about how you kind of test your idea. But I wanna walk you
through a very specific way that I think’s even better. So there’s three steps to
testing your software idea without writing any code. One is building a
clickable prototype. Here’s the way to think
about it is you wouldn’t build a skyscraper, you know, a
$100 million skyscraper without building kind of a miniature
version of that skyscraper to see kind of like how does it
sit on the land and how people interact with that and kind
of the dimensions and whatnot. That’s the same
thing for software. So what I recommend is using a
tool like Keynotopia that you can download and use Keynote
or maybe use PowerPoint and create clickable screens. If you can draw a
square box, you’re good to go. ‘Kay, that
simple and you just say, okay well somebody logs in here,
and then they go to this area and they create this thing and
then they have the results and then there’s a dashboard and you
just create the simulation of how the software will work. If you want to get fancy,
and I don’t recommend it, there are other products
out there like a Balsamic, like a UXPin, like InVision app
that allows you to create almost pixel perfect
simulation of your prototype. Now, here’s why I don’t
recommend those is because when you show them to
customers for feedback, they might be a little hesitant
to give you really honest feedback ’cause
they think like, “Oh, you already built this. “I don’t want to hurt
people’s feelings,” you know? I highly recommend
that if you want, you can use a clipboard. This is what I used
to do early days. When I was in my early 20s,
clipboard, piece of paper, big sharpie marker and I would
draw it and I would go to the mall or the farmers market or
whatever your ideal customer hangs out, okay? So you just big squares and it
sounds stupid but I’m telling you the entrepreneurs that are
willing to do that are the ones that are going to be successful. If you think that that’s above
you and that’s hokey pokey and you don’t want to do it, trust
me it’s gonna be a shock to you when you finally have to go out
into the world and actually sell a product that is probably not
really where it needs to be. So that’s one is build a clickable
prototype of your idea. The second thing is
find the early adopters, ‘kay, and the innovators. There’s this thing called the
technology adoption curve by Jeffrey Moore and it talks
about the different phases of technology adoption and what
I’ve seen most entrepreneurs starting often failing at
their software do is they go for feedback from people
that aren’t early adopters. People that are what’s
called the early majority or even worse the late majority. If you live, here’s the deal, if
you’re building a restaurant app and you live in a town of
100,000 people and you think that there are restaurants
that are early adopters, you’re probably misled. In small towns there’s
not people innovating and pushing the limit. I remember a long time ago a
friend of mine came and he’s like, “Hey, I’ve got this idea. “There’s these new
things called iPads and “I want to build an app
that lets people order their “food from the table,
from the iPad.” And I was like, “Cool.
Go talk to potential customers.” And the challenge is that they
went and talked to people in their own town, that were not
early adopters restauranteurs and all of them said,
“Customers will never do this. “It’s about experience. “Never work,
never work, never work.” So they stopped. The challenge was that
they didn’t think about, okay, what are some of the
characteristics of an early adopter customer? Where did they spend time? What do they look like? Maybe they’re using
Snapchat for marketing. I mean that would be
a clear characteristics. If I find a restaurant that
used Snapchat then I’d be like, “Okay, they’re early adopters.” Back in the day it would’ve been have Facebook page, right? Maybe they’re using Facebook
messaging for marketing. You’re gonna have to figure it
out for your context and your time in the world, what is it
that gives you inclination that that type of
customer is an early adopter, is an innovator,
progressive in their thinking, willing to try and
adopt new technologies? Once you have that, then you use
those people to validate your clickable prototype. And then the third thing you
want to do is pre-sell it. Pre-sell your software so that
you’re not building for three, four, five, six months, spending
tens of thousands of dollars on a product and then finally
showing it to the customer for them to say, “That’s really cool
but it’s really not gonna meet “our needs ’cause it’s
missing this one thing.” You know the unfortunate
situation is that most potential customers
giving you feedback when there’s
no financial commitment, they’re just being nice and I can’t hold
them against it. If you’re an entrepreneur
and you’re passionate and you’re excited
about what you’re building on, the last thing they want to do is be the person
that busts your bubble. They don’t want to
say it’s a bad idea. But I will tell you this,
everything changes when they give
you a dollar. Okay? Once you ask for a dollar,
I don’t care if it’s 1, 10, 100, 1,000, soon as you ask
for money everything changes in regards to their thinking around your product and what’s required
to actually meet their needs. If they’re gonna exchange money
then they’re gonna start saying, “Well, does it allow
me to invite my team? “How do I collaborate? “How do I pull
a specific report? “If you’re making me, if you’re
asking me to use this to run my “Facebook ads, what’s the report
I’m gonna see to know that “I’m getting a positive ROI?” Whatever it is, as soon as you
ask for money that’s when the customer’s gonna get clear of
what they need and give you very what’s called true
customer validation. Most people think they’re
doing customer validation, they’re not. If you don’t ask for
some kind of commitment, either major time commitment
and/or a financial commitment, the feedback is not validated. Now, here is the that the myth. Most people say think,
“You know Dan, “my situation’s different.
I can’t presell my software. “There’s no way a big company
is gonna give me money for “something that’s not built.” Here’s why I know that
that’s just absolutely not true. I built a consulting company,
Spheric Technologies. I worked with innovation
departments inside of Procter & Gamble, Dole Foods, Johnson & Johnson and
here’s what I learned. They were willing to give
my company money to build innovation, to
build custom solutions, to build software and had there
been a product off-the-shelf that delivered the solution
to the problem they had, they would’ve bought that
versus asking us to build it. Anytime people say, “Well, my
situation is different.” I say, “No, it’s not.” If there is a company out there
that you can see doing something similar to you but
maybe just for them, for their business, that means
that they thought enough about having that problem solved that
they were willing to invest and have a company build a custom
solution for them which means they would’ve paid you
upfront for your solution. They would’ve want to help you
co-create it especially if you show the mockups,
you can work with them, you put them part of the
customer advisory board and that is how you validate your idea,
you get pre-sales and you ensure you build the right products. So, real quick, make sure that
you create a clickable prototype to get real feedback, find the
customer that’s an early adopter and third, get in the
pre-buy your software. I hope this video finds you
incredibly well and I’ll see you next Monday. If you liked this video be sure
to subscribe to my channel for other videos on how to grow
and build your software company. I’d also invite you to join my
newsletter where I share free training videos,
exclusive contests and other private
invites to events and also if you’re
ready to get going I got two other videos
queued up for you right now. See you next Monday.

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70 thoughts on “How To Build a Software Company With No Money

  1. You don’t need a working product to get customers to buy your software, you just need to approach the right customers. Here’s how it works.

  2. Starting a software company without writing code but that’s where the fun is , but I see what you are talking about and it’s a pretty good point

  3. One of the best actionable advice. You made my day! It was today I was fretting on something that it needs to be usable by the end consumer to be able to sell it but I'll try this approach the Customer Advisory Board is a brilliant idea.

  4. Thank you Dan, really super valuable video.You could have charged for this , I mean as a trip wire offer for $7-$27 and upsell your saas product creation course, which I guess you had.

  5. Dan – I have no idea how your videos don't have 100,000+ views. Your channel is the internet's best kept secret.

  6. When you were in the process of testing Flowtown how much digital marketing was done to drive people to test product and how did you collect specific feedback from them or was the goal to see how many people would pay for the service in general? I ask this because it seems it could be difficult to decide whether effective digital marketing or quality of concept brought that initial group of people. And if you received extensive feedback from the people that were willing to pay, did your target market or service change at all? Thanks Dan! Really appreciate your content as it has been allowing me to gain crucial information that will increase my chances of success as an aspiring first time SaaS founder

  7. Dan, it was great meeting you yesterday. You gave great advice in person… almost as animated as your videos! Looking forward to future insights. Thanks

  8. First video I watched and I immediately built a clickable demo. Since then it's been invaluable when talking to people, they get the idea in less then two minutes. Thanks, Dan!

  9. Hey Dan! All these videos have been so helpful for starting my company! I play pro football for the BC Lions and see you live up in Canada as well! Would love to connect!

  10. Thank you Dan. Quick question:
    How should one ask a corporate prospect to pre-buy a product that's not yet built? Especially if we are a little known startup.

  11. come on talk about real thing as most of you have videos going on you tube than just making anything real or telling what to do

  12. What's your take on doing presales in the form of an ICO, where the crypto backed coins represent services on your platform?

  13. Hey Dan, I really want to start a SaaS but my main problem is going out and finding people to talk to. Right now I tried cold-emails but found it unsuccessful. Let's say I want to do customer interviews with Accountants. Do I just call local Accountants and ask if they have a few minutes to talk about any current problems they're facing? If you have a video or some resources on this aspect, please let me know as well as anyone else who reads this comment.

  14. Great video! Your idea of using a clickable prototype makes a lot of sense to test the market demand first and do so at low cost. Paired with your other concepts, and maybe a simultaneous Kickstarter or Indiegogo campaign, its a great way to get your customers to help fund your project. Another "gold nugget" video, Dan!

  15. Want to create a software/app company but don't know where to start? Just check out this FREE training that will help you create & launch your software company in 90 days

  16. I have started my software company but I don't know how to get the right overseas clients for my organization.
    Yet, I have developed a few software like Real estate, Hutchbuck, colleges, and few others software but I have no client so please suggest me how to get a new overseas client for my organization.

  17. Hey I'm 15 year old and I am interested in software and computers.I want to do something similar and I want to learn the basics as soon as possible immediately after I complete my studies.I need to know what I need to know to get mentally ready.

  18. Just great thoughts, Dan. I did exactly the same before coding an EMR software suite for my customers. The difference was that I had my 2 UI designers worked for 2 weeks, finally delivered about 60 screens. When I presented the screen pictures to my prospects, they were very satisfied and started to ask the price, which at that moment, I had nothing coded but the screens only!

  19. Hi Dan, as always, many thanks for sharing your experience saving people like me ten thousands in development cost.

  20. what I do is since I use VB.NET for most of my apps is I just make part of the app functional and then go to people and say "So this is what I have so far and its not finished and I want your feedback of what needs to be changed"

  21. 100% agree . I created software by spending $2000 in 5 month . Then I understood it already in market with open source.

  22. I'm good at coding and web development, and a bit of cyber security and hardware…accelaration… Please suggest me any idea that i can use to create a startup

  23. If you show customers the idea, someone might run away with your idea and get a head start by building the product themselves.

  24. What this guy is talking about is the pure marketing.. and nothing else.. Anyone have ideas.. but they lack Marketing.

  25. Hi Dan! thanks for the tips. please can you help me on how to set a team of programmer to build you software idea for you without any capital and inverstor at a start

  26. Great Video! Thank you for sharing all of this great and valuable information. I wonder if this is somethign that I could use with what I am doing.

  27. My product is a service. I have some soft capital offered upon my first pitch. This is a service that is needed country wide. I am in the infancy of this project. I’ve secured the URL. Made a simple webpage.
    But I need to bounce this info off someone I can trust, someone that won’t send me another way and make off into the sunset selling my concept to a retail giant. Heeeeelllllp MEEEE! 😣

  28. 1:32 Ha, ha, that's so funny. I did the exact same type of market testing on Craigslist years ago to see what people wanted to buy. That way I literally turned the table and had people contacting me.

  29. Thanks sir, this video really helped me and it was life changing video. But can I start my own Multinational Company with the help of the tips which you shared in this video?

  30. Very useful video – We are micro tech company and looking for creating SW products. Those steps was really really important to hear – see. Thanks Dan.

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