
How I Grew My Company from $100 to $400M - prostoalex
http://www.entrepreneur.com/article/246690
======
Bamafan
On some level, I hate articles like this because of all the unanswered
questions:

[1] What did you spend that initial $100 on? (Even the cheapest overseas
programmer can't do jack for $100)

[2]You mention $400 million in revenue, but how much of that is profit?

[3] What exactly does Trace3 do (if it was so great, I would have heard of it
on my own, or you would have explained it in the article, without me having to
Google research it)

[4] If things are going so great, why are you writing articles for websites
like entrepreneur.com? (oh yeah, you have another thing called POP you're
promoting)

[5] You mentioned a "bold" client's advice. How did yo know this was advice
worth listening to vs advice to be ignored?

I'll probably get voted down into oblivion, but IMO these kinds of articles
say a lot and nothing at all.

~~~
alphapapa
The $100 must have been spent on phone calls to all the potential clients he
asked to tell him why he should not proceed with his ideas. From reading the
article, it sounds like this pre-company, ground-pounding, customer-finding is
more like finding suckers who would be willing to pay him for his new
product/service.

The amazing thing is the POPin product/service he is now selling to large
corporations. From what I can tell, it's just software that lets people take
surveys and vote on polls so the higher-ups can find out what other people in
the company (and supposedly customers) think. Of course, there are mobile apps
for it, so it's trendy.

What does it do? It "generates buy-in," and "leverages knowledge" in a "fun
and interactive" way to "derive tangible business results." You know the
"buffalo buffalo buffalo buffalo buffalo buffalo buffalo" thing, where it's a
valid sentence using the same word to mean 7 different things? You clearly
could do the same thing with "buzzword."

"Buzzword buzzword buzzword buzzword buzzword buzzword buzzword." And these
millionaire corporate execs drink it up and hand over their money! For
something they could do already, with existing software, existing employees
(who are already paid to do this stuff), and people throughout the chain who
should already be communicating back and forth, up and down.

It really makes one wonder if they're all just college frat buddies who, being
so insulated from their companies' actual work, budgets, and successes or
failures, readily agree to scratch each others' backs at the opportune times.
"Oh hey, man, you got a new company selling a new mobile survey app we can use
to poll our employees? Well, we could do that already for free, and that's
what our managers and VPs are supposed to be doing already--but sure, here's
$500,000 for one of your sessions. By the way, aren't you still on the board
of the last company you founded? Would that company be interested in buying
some XYZ from us? Great, that's what I thought. Good deal."

Their app doesn't do anything new or unique. Anyone could set up a web forum,
a wiki, a bunch of online polls--for free. Managers should already be talking
to their employees and communicating up and down the chain. Instead of just
doing that, they pay this other company big bucks to use their mobile app to
do it for them.

And then, after getting a few bigcorps to pay them, they put those bigcorps'
logos on their web site, and write an "article" for an entrepreneur magazine,
supposedly revealing some business wisdom. Then they link to those articles on
their own web site, showing how smart and published their founders are. Then I
suppose that sets them up to sell to the next level of suckers, the ones who
wouldn't buy in at first.

I can't help but think that it's just like the old Scrooge McDuck comic,
"Scrooge's Plain Old Soap." Donald starts his own soap company and sells the
same soap in fancy packaging for more money--but it's still just soap. And
that's all these guys are doing: repackaging existing stuff and selling it to
the execs who have the corporate budgets to burn. Then those execs can point
to how they "leveraged knowledge" and "derived tangible business results," and
they can then "pivot" those "successes" into their next, higher-paying job.

All of this is not technology--it's salesmanship. He talks about finding
"truth" and "value"\--but the truth is that he's providing very little added
value, merely acting as a middleman repackaging what already exists, then
finding people willing to pay extra for it. Barnum covered that a long time
ago. Still works, and I guess it always will. But with tech and the Internet,
you'd think it'd be harder to get away with that.

Makes one wonder, who are the real suckers? The people buying that stuff? Or
the ones _not_ selling it?

~~~
carrotleads
Suckers are the ones not selling it which would be majority of the programming
populace..

I have seen top guys code up a entire solution at $X per hr. People who
support that solution are able to charge 2X or 3X and who know only 1/10 of
it... All cause they know how to speak the language or the sales guy who spoke
the language sold it at that level.

People who have access to money are always paying for convenience..
programmers feel guilty charging for such stuff as we are aware of all the
free options and generally do it for free.

~~~
noonespecial
_People who have access to money are always paying for convenience.._

I'd paint that in big block letters on the side of the time machine I'd send
back to younger self if I could.

"Why would anyone pay $100's for that when you can just do it for free (with
only 3 days of googling and configuring)?" They pay for the bit in
parenthesis, and I failed to even consider it.

~~~
dreamfactory2
...and the higher powered they are, the more that time and context switching
costs them

------
rectang
The heroic solo entrepreneur aspect of this article really rubs me the wrong
way. "How _I_ grew _my_ company"? Like one dude deserves all the credit and
nobody else employed by the business had anything to do with that 300 million?

The advice to solicit feedback and pivot until you find the true value you
offer your customers is fine. How about:

* Engineering and Product advising as to whether the requested features are feasible -- and if not, suggesting creative variants.

* Marketing running analysis and advising as to whether the new product direction is salable outside the small sample size accessible to one individual CEO.

* The little people who keep the lights on.

Probably entrepreneur.com knows their target demographic and I'm not in it. :\

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gabemart
How do you get a company to pay 35k for a "concept", a product that doesn't
exist yet and that you can't be 100 percent sure how long it will take to
build?

I have some hustle and I know enough about sales to appreciate how little I
know about sales, but asking a company to pay tens of thousands of dollars up-
front for a product you haven't made yet is something I literally can't
imagine. Why wouldn't the company laugh you out of the room? What's the upside
for them to pay tens of thousands now, assuming huge amounts of risk, when
they could just wait for you to build the product and then decide if it's
worth buying? What's their upside?

~~~
danieltillett
I can actually answer this. The idea that started my company way back in the
1990s was an ok idea, but it was not fantastic. What was fantastic about it
was it had a magic balance between complexity and intuitiveness. What happened
when I told people about it is was the first 30 minutes they sat there totally
confused, but at some point around the 30 to 45 minute mark they would have an
eureka moment where everything would fall into place and they would get it.
The effect of this was truely amazing - basically people would come to believe
that they had thought of it themselves and of course at that point selling was
not a problem - people literally gave me large amounts of money for free
because of this effect.

I should mention that while I have had much better ideas since (as well as
lots of worse ones), none have ever had that magic quality. All I can say is
look for ideas that allow people to discover the eureka moment themselves
after 30 minutes. Once you have this you almost can't fail to raise money.

~~~
alphapapa
How do you get them to sit there for 30-45 minutes while totally confused?

And can't you give some vague idea of what your...fantastic idea was?

~~~
danieltillett
You give an entertaining talk :)

I wanted to avoid going into details as it is unlikely to be of interest to
anyone here, but the actual idea eventually ended up as U.S. patent 6,737,253
[1].

1\.
[https://www.google.com/patents/US6737253](https://www.google.com/patents/US6737253)

~~~
alphapapa
So do you. :)

I see. Well, that is not my area of expertise, but it sounds interesting, even
if I don't understand it. So you turned that idea into a product or service,
and made a business of it? Did you sell it for research or forensic or medical
or...? Sounds like a good story, though maybe one you'd have to be in the
field to understand the details of.

~~~
danieltillett
I actually sold it twice to two different companies. The first time was when
it was just an idea and when they passed on it (but after they had given me
enough money to prove it) I sold it to the second company for 100x more. At no
point did I ever have to give up any equity.

The rather ironic thing is I actually came up with a much better idea [1] to
solve the same problem, but I was never able to make any money from it. I am
far more proud of the later idea, but it did not have the same magic.

1\.
[http://www.biomedcentral.com/1471-2164/10/344](http://www.biomedcentral.com/1471-2164/10/344)

------
yeukhon
Author has good advice, all come down be a good sales person and act quick.
Business is business, don't tango around, enough foreplay is enough.

Though I question 1) whether he already have a very strong network connection
to begin with, and 2) looking at some of the most successful companies today,
many of them were free product.

~~~
alphapapa
Well, think about it: selling frobnobs to average consumers at a profit margin
of 1% is difficult and risky. But if you can sell fribfrob-as-a-service to the
corporate executives that run bigcorps that already successfully sell frobnobs
to average consumers, pooling large sums of money together in corporate
coffers, then you can do a lot less selling for a lot more profit.

It's like running a landscaping business: you don't go to the poor side of the
tracks and offer to mow small lawns for 50 cents. You go to the people who
live by the country club and offer to mow big lawns for $50.

~~~
yeukhon
I guess so. If your product is expensive (for example, running "big data
analytic" it makes sense to target at big corporate users, whereas companies
like DropBox were competing with other big SaaS or on-premise solutions and
they had to gain popularity via average consumers by offering free service at
the beginning.

------
justinsingh
Okay, so you reach failure. Now what are some tips & guidelines for optimally
assessing your failure?

------
jdsampayo
Title should be "...from $100M to $400M"

~~~
hobr
In the first paragraph the author states: 'I started a company called Trace3
with $100 and grew it to over $400 million in revenue'.

~~~
x0054
The article it's self is very useful, and I think the advice the guy gives is
totally on the money. But to be fair, the article does not cover how to go
from $100 to the first million. That's the really tough part. Going from 1
million to 10, and then to 100, and so forth isn't a walk in the park, but
that first step is always the toughest.

~~~
replicatorblog
"The first billion is a helluva of a lot harder..."
[http://www.bloomberg.com/bw/articles/2014-11-05/t-dot-
boone-...](http://www.bloomberg.com/bw/articles/2014-11-05/t-dot-boone-
pickens-drake-doesnt-need-an-mba-to-make-a-billion-dollars)

------
fredgrott
anybody think that maybe the $100 was the incorporation fee?

