The Fake Startup

I just realized that I don’t have a category for “Business.” That’s neat. Almost the moment I finish focusing on Web Design I’ll be writing and thinking exclusively in terms of business.

But for now! I have a website about compliments that I’d like you to check out. I know you’ve been there before, that’s fine, just take a look. What do you see?

That’s right, it’s a big red arrow. And it’s pointing at an email submit form. The offer is a list of compliments for girls that will be emailed right to your inbox. Interestingly, I haven’t emailed my subscribers anything. Yet.

It is a fake startup. And it’s an awesome technique for learning how much demand your product or service will have. Basically, I’m selling something that I don’t have to see how well it actually sells.

I’ve discovered that my conversion rate is about 1:200. That means one in every two hundred people who visit my site subscribe to the email list. Granted, that’s not very high. But I know that there is demand for the product. I’ve seen conversion rates go from 1:200 to 1:50 given different words or colours, and certainly different placements or context. So I’m expecting a minimum conversion rate of 1% (1:100) once I do a little work on it. Since I’ve reached and held the first benchmark for the site (#1 for the easy keyword, getting me about 200 visits/day) I’ll be targeting the harder keyword for approximately 9-10 times the traffic once I have the actual product in place.

Basically, now I can talk numbers instead of asking my friends or god. If I work X amount of hours (X = hours worked) on the product, what can I expect to gain from that work? Right now it’s about 7,000 subscribers per year. If I had to guesstimate a dollar value per subscriber, I’d say they’re at minimum worth $1 each. So, $7,000 / X = hourly wage. In this case, is that worthwhile?

I wanted to write a post about this method because I read something similar today on a post called the 24-Hour Fake Startup on Keith Mander’s blog (I’m not a regular, was just linked there from Project 1%, but I have enormous respect for all gutsy entrepreneurs). I wanted to mention that it’s important to focus on a niche that you want to work on in the future rather than spreading yourself thin. I’ll leave that for another post though.