Have you ever funded future developments by pre-selling to current users?

If so, can you give advice on any of these points? 1. The kinds of offers that work best. 2. Delivering remarkable value for these early adopters. 3. Building in virality so that interested users have a strong incentive to share across all their networks?


I haven't done it personally but I know of a few that have. I think it's a brilliant way of doing things though.

Check out some campaigns on kickstarter and indiegogo to see what works well.

Look for Pebble on kickstarter or space monkey.

It's also worth doing some customer development with your audience to see what would work.

It's difficult to be specific but I would think about the following in relation to your questions.

1. Give them something of tangible value.
e.g access to the app, delivery of the product

2. Give them something that people can only get if they pay
e.g early access to an invite only beta

3. Give them an incentive to tell their friends. Reward them for doing so.

As I say, most of the ideas of what will work will come from your target audience.

Answered 10 years ago

I've seen this work in crowdfunding models (i.e. indiegogo, kickstarter, etc) and some companies who built it themselves (Lockitron).

It can work but I believe it really depends on the innovation and the size/type of the market.

For it to work at scale (raise enough money) you need to demonstrate a future product that's remarkable (people will talk about it after they see it) or it won't have the viral aspect. Seth Godin calls this a Purple Cow.

I did build a service company by closing deals and getting 50% up front, so that I could afford to higher more people, and then sell more deals. I called it "customer financing" and it's a beautiful thing if you can make it work. The only risk is you NEED to deliver on the promise sold, or it's a ponzi scheme waiting to implode.

Hope that helps.

Answered 10 years ago

Great question!

Charging for a product or service you haven't built yet has both a lot of upsides and at the same time potential risk. I believe there are both ethical and unethical ways to handle this. I have prefunded a lot of stuff. But only things I was comfortable buckling down and fixing if it went wrong! I wouldn't recommend prefunding something like a high end SaaS where if it goes wrong you go bankrupt!

If you decide to prefund anything serious, you had better do your frickin' homework to the max, and leverage the Lean models 110% so you minimize risk! Not only are you playing with your own reputation and future, but other people's money as well!

Question 1 is answered by the answer to question 2. Magnitude of pain is a good indicator of early adopter value perception, if it hurts bad enough, they will naturally value things higher. If you offer a SaaS product that magically saves someone life, people would mortgage their house to get it. But if it saves them money on bottled water, don't quit your day job just yet haha.

As far as offers go, generally the problem isn't increasing the pain of NOT buying! If you have done even a minimal level of targeting and demographics/psychographics, you should only have more or less qualified people viewing your offer. Which means if they don't have the pain you're trying to solve, you're likely wasting your ad spend. So if only qualified traffic is viewing your marketing (aka communication), then you need to REDUCE the pain of PURCHASING! (Whether or not the purchase involves dollars).

3. I've participated in hundreds of closed/open/etc betas, and forced virility especially prior to joining seems to generally just seem to piss me off haha. And again unless the pain magnitude is REALLY bad, I simply won't do it and either wait or I'll email the founder etc to get early access. I think this is because there hasn't been any practical value provided yet, so it's like using a pick up line and then asking them to marry you. It just isn't a harmonious experience.

I completely understand the desire for this by the founder! But creating some value debt first, and now where some desire for reciprocity exists, you can THEN offer the opportunity to pay the founder back. This seems to work great.

Let me know if this answers your questions and if I can help you further through a call etc!

Answered 10 years ago

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