
How I Made $4000 Selling A Product I Didn't Have - adii
http://adii.me/ultimate-validation/
======
ggreer
I'm not sure why you posted this. Are the pageviews from the controversy
really enough to offset a long-term loss of reputation? Maybe you don't
understand the line you crossed.

You advertised video courses taught by talented entrepreneurs. Later, you
launched what is effectively a forum. These two things are hardly similar, but
you charged users for the latter when they signed up to pay for the former.

Couch it in as many euphemisms as you want, but you tricked people for your
own gain. I don't want someone to do that to me, and I won't do such a thing
to someone else. Unfortunately, you didn't treat others as you like to be
treated. I think that's unethical.

In the future, please treat your customers with more honesty and respect.

~~~
rrhoover
Adii isn't forcing anyone to pay and as he stated in his essay, he personally
reached out to customers to inform them the video content was ready YET. Adii
isn't doing a bait-and-switch without intention of delivering a quality
product. He left his successful startup, WooThemes, to build a platform to
help entrepreneurs. Before criticizing his approach coming from the outside
(with less context), I'd prefer to hear directly from his customers.

~~~
rayiner
He's doing exactly a bit and switch, and he's proud of it judging by his
writing.

Let's consider a meat space analogy. Say I'm establishing a maid service. I
don't have any maids or cleaning equipment, but I want to gauge interest in
the neighborhood by signing people up for appointments and take their billing
info. I don't tell them that this is what I'm doing. If I "reach out" to my
customers and then say "J/K, I don't have an actual business yet, but I will
soon!" that doesn't make it all okay. If I took any money on top of that,
that's fraud. Indeed, even if I didn't take any money, taking billing info for
a product that doesn't exist without telling customers as much is sketchy as
fuck at best.

------
gjm11
You lied to customers to get something valuable from them (in this case, the
information that they were prepared to pay you, and their engagement with your
site). You used this, by your own account, to gain $4000. I wouldn't want to
make a large bet that that isn't fraud and outright illegal.

It probably isn't, unfortunately. But I hope your company fails. You should
not get away with such behaviour.

A decent person would learn from all the people here saying "This is not an
acceptable way to behave", and issue an apology for boasting about how they
made a profit from deceiving their customers. I wonder: are you a decent
person?

~~~
adii
You realize that the title is obviously exaggerated and that I didn't gain
$4000 on day one. I did however gain the kind of validation that eventually
allowed me to gain $4000 in cash when we launched a month later.

For every person that has criticized this, I have had another one saying this
is great. I also know for a fact that I'm not the first startup entrepreneur
to do this.

I have already apologized to each and every one of our customers. I have also
mended the relationships (AFAIK) to the extent that the "angry" customers
would consider being customers in future.

Ultimately, I think that this was ballsy publishing this and being open about
the pro's & cons of this. I'm not saying that this is the best technique ever
and neither am I saying that everyone should follow this approach. I am
however saying that it worked for us and I am keen to engage others on this
topic.

~~~
USNetizen
This is deception which and walks a fine line between legit and fraud. It
doesn't matter what you think about who should do this or not - someone will
attempt to emulate it, and they will end up in prison for taking money and not
producing anything. It degrades the reputation of entrepreneurs everywhere who
are diligently trying to build their businesses the RIGHT way.

The fact that you brag about it so boastfully is atrocious to be honest.

~~~
adii
You did read that we never took anybody's money, right?

~~~
Robin_Message
Since no-one reads newletters properly, I bet at least one of your "customers"
thinks they are paying for access to some videos which they will intend to
watch at some point in the future, and will be pretty pissed in the future
when they discover they've been paying for months and those videos are still
not available.

The shady part is doing the pivot without doing another opt-in. It's a classic
bait ("Subscribe to get access to videos") and switch ("Continue paying to get
access to a community and the promise of plans to make said videos in the
future").

~~~
adii
If that's the case, I'm happy to issue a full refund, no questions asked.

There's a major difference between trying to scam someone and pushing the
boundaries to validate (and de-risk) an idea. If our ideas are shit, I will
never take someone's money for that (hence the no questions asked, full
refund).

------
gizmo
Launching early is certainly a good thing. Launching a product that is only a
proof of concept so people can really see what you're trying to do is also a
good idea. But taking people's money under the banner "WE'RE A COMMUNITY OF
ENTREPRENEURS THAT HELP EACH OTHER." when no such community exists seems
borderline dishonest.

When 5.5% of your initial customers feel scammed and are are upset about being
deceived it may be an "acceptable loss" from a business perspective, but I
certainly don't think that's a "great result". 5.5% is a lot. For comparison,
an eBay vendor with that many unhappy customers wouldn't last long.

Bootstrapping communities is notoriously difficult, and I'm well aware that
the use of "community building hacks" are more the norm rather than exception,
but I'm still not going to applaud this behavior.

~~~
BrechtVds
"taking people's money under the banner ..."

He didn't actually charge people before the product was finished and they were
able to opt-out after they knew what happened. Would have been a whole
different story if the cards had actually been charged.

~~~
tixocloud
While the author did not charge the credit cards, he did not communicate to
his site visitors about the situation either. It was only after the fact once
they essentially gave out their information did he reveal the truth. Sure, you
can argue that he did not charge for those that wanted to opt out. But from
the get go, his visitors were not provided with the correct information to
make an informed decision.

~~~
BrechtVds
Communicating about it would defeat the entire purpose of the idea.

The way he did it allowed him to validate the idea in the exact same situation
he would end up after building it, so it's a great way to take the (huge!)
risk out of building a product.

Personally I wouldn't mind as a customer as you did know all the facts before
you were actually spending the money.

~~~
chris_wot
Ethically, you must be honest and upfront with your customers. If your
experiment involves misleading the, in any way, then ditch the experiment.

I sure as hell wouldn't want to be the unknowing recipient of his
"experiment".

~~~
BrechtVds
It's hard to experiment if everyone knows what's going on.

If you didn't like the experiment you had the possibility to opt-out and never
become a customer of him again, without having to pay a single dime.

~~~
chris_wot
I don't care. It's not my role as a customer to make it easy for you to
experiment. You either tell me the truth, front up, or you don't try to make
the sale.

------
USNetizen
This type of thing has the potential to ruin the reputation of startups
everywhere. If it isn't outright fraud (selling people something that doesn't
exist) I'm not sure what is.

I'm amazed someone has the gall to boast about this type of thing publicly
while blatantly ignoring the long-reaching repercussions their actions could
have throughout the entire startup community.

People routinely go to prison for similar types of deception in other
industries. It is a slippery slope that is surely testing the bounds of fraud
while ruining the reputation of legitimate startups everywhere.

------
davidw
Interesting - he gave a talk on this at Microconf Europe which was this last
weekend, and a very good conference with lots of cool and interesting people.
There was (I thought) something of a feeling in the room of "hrm, maybe this
is a bit over the line?" although everyone was appreciative of the fact that
it was a much stronger validation of the idea than just handing over an email
address. Watching Adii talk, I certainly got the impression he was not 100%
happy with the approach himself, and wrestled with it some.

OTOH, I can understand the risk avversion: if they've given you a CC number
(they were not, however, charged), they're a Real Customer and your product is
far more likely to have legs than just getting an email address, which is in
turn better than not even having a pre-launch page and just hoping people want
whatever it is you've slaved away building for months. Spending a lot of money
to build something only to find no one wants it, or wants a fairly different
version sucks big time!

~~~
adii
Do I think that this technique can be refined? For sure. :)

One of the reasons for publishing this and being open about how this worked is
to be a catalyst for a conversation around this, which would hopefully see a
refinement of the technique.

~~~
tixocloud
I applaud you for being so open and transparent. Although I personally feel
that the line was crossed, your openness to see a refinement in technique is
refreshing. There are just too many "entrepreneurs" these days justifying
their practices by saying that it works and it's completely legal. For me
there are 3 responsibilities (in the same order) to any entrepreneur/business:
1\. ethical responsibility 2\. economical responsibility 3\. legal
responsibility

To say that something is completely legal does not make it unethical. So I do
hope we can find a better way. The false advertising that companies put out
makes me sad but it's also an opportunity for businesses to be honest with
their customers.

Question for you though: You mentioned you received numerous signups
signalling their interest. Could you have conducted your interviews with them
instead? From the story, it seemed to me like the key point was identifying
the needs of the customers. Of course, the ones who placed their credit card
information are the ones most interested which filters them out from the rest.

~~~
adii
Sure, I could have just done customer interviews without requiring CC details.
I truly believe that this feedback is however still hit-or-miss and we
might've optimized for the wrong thing thereafter. Paying customers' feedback
is always better than the feedback from any kind of "free user".

------
roberthahn
If you use deception to found a company, you'll find reasons to continue using
it while running the company, and you'll eventually lose the company because
of it.

There are ways to measure buying signals. Please research them. Here, I'll do
you a solid, and Google "how to measure buying signals"

Oh, look: [http://www.socialmediaexplorer.com/social-media-
marketing/ca...](http://www.socialmediaexplorer.com/social-media-
marketing/can-you-get-roi-from-simple-words-on-twitter/)

While it's not my intention to hold this up as _the_ authority on buying
signals, what you will pick up on is that nothing on this page talks about the
number of subscribers on an email list. Subscriber counts are, _at best_ a
weak buying signal. It measures interest, not willingness to purchase.

------
epaga
It already goes right up to my ethical "pain threshold" to have a "buy" button
that links to a page that says "sorry! we're not quite ready yet. enter your
email here" just to gauge interest. It's questionable.

This goes way beyond that. This is no longer a grey area. This is lying to
potential customers. Justify it however you want, it's wrong.

------
elmuchoprez
This is specifically what services like Kickstarter were designed to address.
And there is plenty of evidence to suggest that crowd-funding services are
viable funding models, especially for low budget projects like this.

This feels like deception for the sake of deception and I would have been
among those who were pissed had I signed up.

~~~
adii
You'll see in the article that Kickstarter or crowdfunding would not have
validated this idea, as the difference between backing / pre-ordering /
investing in a product versus purchasing a product is significant. To validate
an idea, you need to know that you can actually sell it in a repeatable
fashion. Kickstarter or crowdfunding is generally a once-off process, so
doesn't give you that validation.

(I know that many Kickstarter projects that were successful have turned into
longer-term, sustainable businesses.)

~~~
davidw
We don't have any data, but "would not have validated the idea" is ... perhaps
not 100% accurate?

People do manage to "kinda/sorta" validate their ideas by getting email
signups. Granted, it's less accurate than actually collecting CC details, but
it does provide some indication. And kickstarter involves actual money, so
perhaps it gives you a better idea than email, even if it's not _quite_ as
good as getting their CC. Maybe that tradeoff is worth it in terms of openness
with your future customers?

~~~
adii
Sure, maybe that is a worthwhile trade-off to consider for anyone considering
something similar in future.

------
seiji
The comments here have covered all the shady/illegal aspects of the post, but
the most dangerous part (and you may not experience it in person outside of
major tech areas): people get _really_ excited about manipulating and abusing
others for their own gain (especially small numbers of technically competent
people abusing large numbers of "normals").

People are just anonymous hits online, right? Drive up the hits. How? Just
manipulate people. Oh, we got money? Chest bumps and high fives all around. We
did it!

When you start thinking about "right" or "wrong" when doing work like this,
your world falls apart, so you don't think that way. You run the hustle. You
run the borderline-illegal practices all in the name of growth. When you're
successful it'll all be forgiven by rich people who want to leech of your
success anyway.

If we keep telling ourselves it's bad/wrong/illegal, all the people willing to
do this shady work will end up ruling the world while we still sit on our poor
sanctimonious asses.

------
bradt
TL;DR - Putting up a marketing site and asking for money up front sets
customers expectations for what is to be delivered. But startups change
significantly in the early stages, so it's very difficult to meet customer
expectations.

I'd like to hear more about what people said in the customer interviews.
Here's my experience as a consumer...

After flipping through the library, I signed up immediately. The cost/value
was very high.

After putting in my credit card details, I was put in a queue, which was a
little frustrating as I was expecting instant access, but I got over it
quickly and didn't mind waiting. I think this was fine.

The big problem came when the library disappeared from the site and the
business went in a very different direction. I had pledged $30/month for
something specific (the videos from high-profile entrepreneurs), so it was
disappointing to see that it wasn't going to happen. It even entered my mind
that it was only ever a carrot to get my credit card details and that there
was never an intent to make the videos. So, some confidence lost there. Also,
still having my credit card on the hook for something else that I hadn't yet
learned about was a bit disconcerting.

Adii is a friend and I was still curious about what it would be, so I stuck
with it. It's highly likely if I didn't know the founder, I would have
cancelled immediately.

I struggle to consistently participate in communities, so I will be cancelling
my membership. The video library was more my thing, consumption without
engagement. And that's what I pledged my $30/month for.

~~~
adii
I'd like to clarify two things:

1) The intention was always to produce the videos / content. And it still is
too (we have just deprioritized this and tweaked the roadmap from our initial
plan). 2) The customer interviews we had (along with the survey we did
thereafter) gave us insight into what our founding customers really paid for
and for the majority that wasn't the content.

~~~
bradt
1) Ah, excellent! Perhaps I missed the communication on this?

2) Yep, re-prioritizing based on this makes complete sense.

------
edw519
1995Vaporware = 2013ProofOfConcept.

Sigh.

~~~
OhHeyItsE
So true.

------
exo_duz
I am currently doing a startup too. It seems that I can handle all the design,
coding and technical side of things but I cannot market and do sales.

Although I agree with some of the points such as launching early and the
communication aspect of it. I'm against deceptive tactics to get sales. Even
though he said that it didn't feel good, then why continue with the same
tactic? Does getting the sales and numbers justify the actions?

I'm in the same boat as the author at the moment and if anyone out there has
any advice I would greatly appreciate it.

Thanks in advance.

~~~
drharris
Best advice is to not do this, or anything like it. If you're a one-man show,
then be sure to blog, tweet, or otherwise communicate with your customers
often. Treat them like people, and build a following. When your startup fails
(and 99% do), hopefully a good portion of those will follow you to your next
venture. Building customers through respect is what builds a lasting brand
(you). Don't take money until you have a product to give them, unless you're
upfront about it.

~~~
exo_duz
@drharris:

That's what I'm doing at the moment. One of the biggest pivot in my Internet
habits is that I've changed from being a lurker (just looking and not doing
things) to being more active in the community, discussion or post. Even on HN.
I've been here for ages but never contributed anything of value.

That will change now as I have to be able to harness the comments and
engagements of people who are more knowledgable than me in this respect.

Thanks again for your advice.

------
3stripe
I have mixed emotions about this strategy.

On the subject of deception, Adii hasn't yet replied to my comment about this
section from his previous article:

"So I took the testimonials that they had left on my Clarity profile, reworked
them (for the purpose of my book) and sent it to the individuals (along with a
sample chapter of the book) for approval."

[http://publicbeta.co/how-to-validate-your-idea-with-a-
landin...](http://publicbeta.co/how-to-validate-your-idea-with-a-landing-page-
without-social-proof)

~~~
adii
Responded to your comment on there now. :)

~~~
3stripe
Thanks!

------
groundCode
I'm pretty sure this tactic would cross a line for me personally. Different
story if you actually started out with even just 1 video, but to base a sale
on a lie of content not yet created is a bit dubious.

I wonder if you looked in to your legal obligations at all? I know in the UK a
company has a duty to trade fairly and not mislead consumers....I'm not sure
to what extent you fall foul of the law if you do something like this?

------
vinceguidry
Why in the world would anyone title a blog post this way? It sounds like he
purposefully went out of his way to phrase his tactics in the worst possible
way. Call it "market testing", call it "product validation", anything but
"selling shit I didn't have".

Worst PR ever.

------
petercooper
A good read. However, the first rule of using white lies is you don't talk
about it (in public - this would be a great thing to use PublicBeta for! ;-))
otherwise you get the sanctimonious types in the peanut gallery excited, as
some of the comments here demonstrate.

------
bachback
"Obviously being open and sincere about all the facts after the deception
helps, but it also contradicts the very fact that you were deceitful."

I don't understand how this is going to help anybody's cause.

~~~
adii
Well, that's like reactive transparency. For some people this means that I /
we have broken their trust and any future relationship is thus dependent on
earning back that trust. Being open, honest and apologetic after that fact,
helps with mending those relationships.

~~~
chris_wot
So am I to assume you'll never try this sort of thing again?

------
chris_wot
"If other people knew we didn't have the content, they probably wouldn't sign
up any more."

Damn straight I wouldn't. And I sure as hell wouldn't be giving you my credit
card details to _store on file_. I don't care what your PCI compliant third
party provider is like, if I give you my credit card details, unless its a
refer payment, then you debit it and throw away the card details.

This is totally unethical business practice. It's a bait and switch as far as
I'm concerned!

------
waterlion
I have a feeling this would be illegal in the United Kingdom.

~~~
bigiain
I wonder what Braintree and Recurly think about it? (I'm pretty sure that "5%
angry customers" would have been enough for Paypal to trigger its "hang on to
all the money for 180'days" thing. Probably righty so…

------
yesplorer
Honest question: taking customers' billing information with the promise of a
product at a later date without they _actually knowing_ that you don't even
having the product. (more importantly when customers' are made to think the
product exists:
[http://publicbeta.co/library/](http://publicbeta.co/library/))

Is it even legal?

------
skiplecariboo
This is really sad.

------
mxfh
When did HN-headlines start to be interchangeable with randomly selected
YouTube scam comments?

------
ye
That's seems immoral and just wrong.

The angry customers you get can ruin your reputation very very quickly. Angry
customers are the ones that usually go out of their way to write bad reviews.

~~~
adii
I love this from Abraham Lincoln: [http://www.goodreads.com/quotes/281050-you-
can-please-some-o...](http://www.goodreads.com/quotes/281050-you-can-please-
some-of-the-people-some-of-the)

The reality is: Yes, angry customers are never good for business or brand
building. Neither are bad reviews. Trust me when I say that I hate the fact
that I had angered even one individual.

That said, I interacted with every one of the angry customers and explained
the rationale behind the decision. I managed to resolve the emotion to the
extent that they were appreciative of my explanation / reasoning and would
even consider becoming a customer in future.

~~~
gizmo
You can't use a pithy quote to excuse bad behavior.

~~~
adii
This isn't excusing bad behaviour at all. In fact, I've been very up-front
about the fact that this technique relies on deception and that I didn't like
that bit.

I stick to what I've said though, which is that putting up a landing page with
an e-mail signup and a "Request Early Access"-kinda thing is similarly
deceptive. The only difference is that I actually asked for CC details. To
that extent, I'm willing to do whatever I need to do to see my startup
succeed.

This is obviously not for everyone and that's why I posted the quote from
Lincoln.

~~~
drharris
Oh, well since you didn't like it, that's ok then. Wait, no it's not; it's
horrible, indecent advice. Good business is being honest with your customers.
Count me among the ones who would never turn over money with scumball tactics
like this. Do your domain research, spend a few months making an MVP, and sell
it in a working state. Give your early adopters premium pricing so they stick
with you through the early churn. I wish your customers the best, as they're
in for a rocky ride turning money away to such a scammy businessman.

