At uGurus, I am in charge of validating new products and services. Part of this job is to also work with my team and business partner to decide when, if at all, we introduce new products into our main line. I’m the kind of guy that has twenty ideas before breakfast. Some of these ideas are rubbish. Most are pretty good (I’ve been at this a while), but few are what I would consider “great” ideas.
And ultimately, I’m after great ideas.
Especially when new products are concerned. For a while I would come up with a new idea and just because a few people might be interested in the idea, I would put resources forth to launch the product. This led me to create several products that were either complete duds, or in a sense, worse than a dud – a product that happened to generate some revenue, but nothing substantial.
I say that is almost worse–because in a way it turns a shiny object into a shiny object with a slight magnetic pull. Ever so slightly, it pulls you away from the real meat and potatoes of your business and eats away at your time, energy, and dollars.
About two years ago I decided I would give myself a minimum threshold for new products. I don’t do a huge amount of projection work as this can become consuming and misleading. But what I did make myself do was some conservative projections to see if the product idea I was working on could become a seven figure product (otherwise put, generate at least $1,000,000 in annual revenues). If it couldn’t, then there better be a really good strategic purpose to pursue the product.
If it couldn’t meet this threshold, then it wasn’t worth the time as it wouldn’t be in service of our three and ten-year financial targets.
Even if there is a market for an idea–if it will only generate $100,000 or even $500,000 a year, the opportunity cost for me is too great. I would need to take that idea back to the drawing board and either improve it, or throw it out and wait for another to come along.
New products always take way more time than anticipated. Besides the time, they require financial commitments, energy, and even stress. I only have so much appetite for MVP development, feedback loops, and critical thinking in a given year.
Anyone that thinks they have an infinite appetite for such things surely hasn’t launched many products. And they don’t live on earth.
The Bigger Upside
Besides investing time in new products that will never reach your desired expectations, there is something else that I have learned in the past two years that is far more valuable a lesson.
Let’s say I build a seven figure product. Time to build a new one right? Then I would have two seven-figure products!
And this is where entrepreneurial wisdom is required.
When we did our first launch of $10K Bootcamp, it was really exciting. We sold 34 units in a couple of weeks and our MVP-launch was validated. About halfway through the first cohort, we knew we had something special. Lives were changing. Entrepreneurs were being empowered.
But it didn’t fail–in our quarterly offsite, the idea of new revenue streams and products certainly came up:
“Let’s create a recurring membership to follow-on Bootcamp…”
“Let’s create a Bootcamp for creating Bootcamps…”
“Let’s create a cheaper course to feed qualified customers to Bootcamp…”
And so on.
All were good ideas. But then our team came up with the best idea:
“How about we focus all of our efforts on trying to scale up Bootcamp?”
Finding The Ceiling
Basic market research tells me that there are over 100,000 web professionals in the United States. You can assume that this number becomes far greater when you consider English speaking countries. And then it gets even bigger when you consider English speakers in other countries that are in this profession.
The realization that we had only serviced 34 people in this market with Bootcamp was an observation that could not be overlooked. Creating new products and services feel safe. We just did it. We identified a problem and built a product to solve that problem. Again, this is safe because it is a known activity.
Couldn’t we just reproduce that over and over and over and achieve scale?
Not necessarily. Each time we launch a new product, we have to validate the problem and solution fit, and then the product and market fit. There is a considerable risk to this activity. With a combination of luck, experience, and skill, we had a product and it fit our market. So time to scale.
Or “find the ceiling.”
Which is a great question to ask oneself about a product or service that you have already created:
“Have I done everything within my power to find the market ceiling for what I have created?”
Once you have a product that you think has a great market fit, the next question you have to ask yourself is:
“How far away am I from market saturation?”
In our case, we had scratched a small fraction of our market. Like 1% of 1%.
Instead of going back to the drawing board to create additional products, we have (for the most part) stuck to trying to scale up sales and marketing for a single product.
Scale Requires Systems and Investments
We knew how to deliver a great Bootcamp. We got 34 people into the program in April of 2014 and we had a 90%+ NPS score at the end. What we didn’t know how to do was to deliver the same exact product with 100 students instead of 34.
For the first program, I was the only Mentor. I ran 4 groups. It pretty much crushed me for the duration of the program–as I was leading groups and creating the product simultaneously.
Our second program had twice as many enrollments. We took a risk and brought on three Mentors to lead the program alongside me. This required me to transfer my knowledge to others which required systems and documentation.
That took reasonable effort (and was also a bit risky the first go).
What took a much bigger effort and investment, was working to double our sales. Our team enlisted the help of several contractors and a marketing agency. We put on a big livestream “summit” and spent gobs of money on advertising. For the most part, this was all new territory for us. Up until then, 98% of our leads were the result of content marketing and slowly building our email list over the course of several years.
Doubling our second cohort was a big deal. But the question I had to come back to was this:
“Had we found the market ceiling?”
We were still batting in the space of a small percent of a percent.
But in the past, this success would often give me the confidence to create a new product. Because I had so much success with this one product, surely we can launch another product with the same success!!!
And this is where entrepreneurial wisdom has again come to my aid. Realizing that we are far from the market ceiling, and that further investments in sales and marketing are going to be the big levers to pull, not in ramping up more products.
I want to be totally forthcoming in that even knowing everything I know about sales and marketing, it is still hard to think to yourself: “I need to double, or triple down on my customer acquisition efforts and NOT add new products.”
Double Down Scale
For uGurus, doubling down on sales and marketing over the last year has required a lot of work, money, and risk. We hired a marketing manager. We hired a full-time sales rep. We started spending more on ads. And this doubling down has begun to work for us. We continue to add more enrollments to Bootcamp.
And we’ve gotten some tastes of scale with cohorts that have included over 100 students.
But a taste of scale is not scale.
It would be really easy at this point to take our foot off the pedal and think of other mainline products to produce. I have lists and lists and lists of ideas, problems to validate, and possibilities.
Yesterday I asked myself a question:
“What would it take for 10% of the US market to go through our Bootcamp?”
This would be around 10,000 students. Let’s say we accomplished this over a five-year period of time. This would add up to 2,000 students per year. Based on what we are doing per cohort right now, even pondering this brings up many questions:
- What processes, support, and infrastructure do we need in place to maintain the current “magic” of our program at this scale?
- What kind of investments and infrastructure in sales and marketing would be required to achieve this market penetration?
- What insights about market appetite can I find to determine if this goal is even plausible?
When just considering the marketing and sales infrastructure, I know that right now, we do not have the required pieces in place to support that kind of growth. As the entrepreneur in the business, I then need to consider the tradeoff of creating new products versus focusing 100% of my efforts on that problem. It’s hard (or impossible) to do both simultaneously.
Ceilings Interest Me
I found the ceiling in one market (or near to it). I created a product and saturated every known channel to acquire new customers. There was nothing that would add a marginal addition that was worth the investment of time, energy, and money.
But it was a small market.
At that point, the only way to increase revenue, would have been to add additional products and services to our offering. Sell more to existing customers. My revenue scale would have always been a limit of the customer pool which was a limit of the market size. I could have increased revenues by two, three, or maybe even five times. But never ten or fifty.
So I sought a new ceiling.
And now I must stay steadfast in my commitment to find the ceiling. Resist the temptation to create new products. Double down on the hardest part of any business: customer acquisition; and make sure my product and delivery infrastructure is poised to deliver.
In my training and mentoring of entrepreneurs on a daily basis, I observe many that quickly abandon a market or product idea at the slightest hint of success. They land a single client or customer – receive revenue – then move on to the next market. I am sensitive to observing this as I have personally endured such decision making on numerous occasions.
If you find yourself at a similar juncture, I want to hear about it. Have you thought about the market ceiling for what your business offers? Can you overcome the temptation of new and instead achieve scale?
I’d love to hear about it.
Until next time.