
How we did over $1K in profit during Startup Weekend - dpearce
http://blog.awesomeinc.org/post/68864642042/trying-to-be-like-noah-kagan-and-succeeding-1k
======
genericuser
So if each member of the team worked for that entire 26 hours they worked 208
hours total. Because their version of 'profit' does not seem to factor in wage
for the 8 people involved. Their 1095 'profit' came out to a wage of just
under $5.27 an hour for each of the 8.

The amount made in the time period should not be viewed as a victory in this
situation. There may have been an educational or other victory for team
members, but the author seems to be celebrating a monetary milestone which
would of been greatly exceeded by working minimum wage jobs doing
telemarketing for an existing business.

~~~
rexreed
That was also my first thought. Kudos to the OP in that you managed to build a
product people wanted and paid something for. For creating something you could
sell. And then went ahead and sold it. And made a profit. That's better than
most wantpreneurs.

But you didn't do better than minimum wage. You could have just done a bunch
of TaskRabbit or Odesk or Elance gigs and for the same 26 hours ended up much
farther ahead.

What does that mean? Perhaps not much because it's comparing apples and
oranges (contract / service work vs. product sales). Or perhaps it does mean
that you need to understand the value of income (not just revenue) with
relation to time cost. That might actually be the biggest lesson here: yes,
you can build something you can sell. And perhaps you learned how hard sales
is, but how possible making a profit is. But most importantly, you learned
that not all businesses are worth it. And this one most certainly is not worth
it.

~~~
dpearce
You guys are right in that the total profit was probably nil for the weekend
(but that doesn't sound cool). However, you're not considering this is a
subscription service. The idea is that the work put in initially returns
revenue every month indefinitely. If the work this month returned $1K, then
the same amount of work next month should return $2K, etc.

That's how most monthly services work. It takes a lot of work up front to make
a product successful. You will almost always in fact be working for almost
nothing when you start a company like this. That's why people raise money. But
that initial work returns exponential value in the long term.

So yes, if you want to attack something you can attack the $1K in profit, go
for it. But you're missing the point. The point is that making money takes
work, and if you put in the work, you can make money doing anything. Like
selling Jerky. Imagine if you actually have a good idea.

~~~
genericuser
First off I think doing Startup Weekends is awesome (I believe the author
would approve of that descriptor), just focusing on turning a profit during
them I do not see as a worthwhile focus(with exceptions of course), and it
seemed to be the author's focus.

As per your point of recurring income. No, I am not taking into account
recurring income, because the author does not make it clear what the '267
subscriptions sold' constitute.

For instance he says: _And when I say “what Noah did” I mean exactly what Noah
did. Beef Jerky Subscription Service. Period. I “iterated” on the idea exactly
zero. Just ‘stole it’ and executed like crazy for two days, along with the
seven other people on my team._

However Noah [http://www.appsumo.com/sumo-jerky/](http://www.appsumo.com/sumo-
jerky/) required a 3 month minimum subscription with that 3 month period paid
up front.

Now in the author's post they mention they sold 3 month subscriptions however
the $5340 divides by 20 as exactly the number of subscriptions sold.

So did the author count the 3 month subscription as 3 subscriptions?

Did the author count it as 1 and not count $40 of the revenue?

Did the author do something else, there is not enough information for me at
least to determine how the recurring income would be handled next month. So
while you can estimate it would double, I do not feel safe making that
estimate.

~~~
dpearce
You're still missing the point. It was an exercise, or a "challenge" as the
author states. The point of the post is that sales are hard, and awkward, but
very possible if you focus on it. If you can sell jerky, you can sell
anything. That's the point. Forget the jerky business, it's just an example of
what happened to prove what people can do when they put the work in.

------
RokStdy
First: Good for you all for doing something. It's great that, rather than just
talking about how you're going to make the next 'instatwitairpalbook' you
hustled and produced something.

Second: But..... You produced something that you all don't seem to really care
about. I don't think that you have to be an evangelist to work on a project,
but I guess I just don't care as much because this is just an exercise for
it's own sake.

Third: and.... I'm reminded of how, in grade school (Primary school...Brits?),
we would have contests to sell cheap crap. Either wrapping paper, or knives,
or whatever. The entire point of these exercises is to have small children hit
up their family and neighbors to sell a bunch of crap so that the kid can win
a Huffy. This mainly relies on people feeling bad saying no to a cute (not in
my case, but generally) kid. Or like multi-level marketing. Basically you hit
up your personal network and then peter out.

------
drakaal
Good case study, but wrong conclusion.

There is only profit if you always have volunteer workers.

I think that it would be false to say you were cash flow positive.

Since the revenue split between the team would not make minimum wage I can't
even give you a "pass" on you all taking Minimum wage and the company being
ahead the difference.

This is a nice proof of merchantability, but it doesn't equal profit.

------
raney24
As being a part of the team, I think the point of the start up was to show
that anyone can do it, it being making that green show up. You just have to
hustle. We took something we enjoyed (perhaps was losing it's joy by day 3 but
still a ton of fun) and we turned it into a venture that anyone would be
willing to work that half day / month for that profit. We weren't trying to
revolutionize start up weekend or show other teams that profit is the only
thing that matters. We were just trying to fulfill Noah's challenge
([http://www.appsumo.com/sumo-jerky/](http://www.appsumo.com/sumo-jerky/)) and
show that if you hustle you can make it.

------
danso
I think this is a great writeup and so I apologize in advance for what is
going to sound like a bunch of armchair criticism...but why is _money_ \-- or
_profit_ the primary metric here?

There are lots of cool wins here. Putting together a "rockstar team", as the
OP says (i.e. building relationships), hustling, and just plain going out on a
limb and trying something halfway crazy. Those are all good ways to spend a
weekend, young or old.

But making $1000 for 26 hours of work, with most of that money coming from the
seller's personal network? That's not a headline-worthy achievement, nor is it
a real measure of success. 44 hours between 8 people is a _lot_ of work-hours,
nevermind the opportunity cost of the recovery period the next day. The main
problem, of course, is that the sales came primarily from the personal
network, which is not a real indicator of anything when the time period is
just a few days of sprinting.

So while I again commend the OP for taking the time to write down thoughts and
reflections...I think there should've been _more_ reflection on how reliable
these conclusions are. "Acquiring customers is ALL that matters"? Matters for
_what_? Making a nominal amount that matches a number (1,000) that looks good
in a headline? I agree that people can obsess with things like website domain
and styles too much...but that's different than concluding that customers
don't really care. I've seen unremarkable Kickstarters become huge because of
well-written pitches and a lot of time invested into the pitch video. You
can't really say that user/customer experience doesn't really
matter...especially if your sample size is your personal network in a period
of days.

Another thing to consider...what about the ongoing costs? It's one thing to
ramp up to get customers...it's another to service these customers who,
presumably, have to be managed during the lifetime of their
subscription...That's another potential opportunity cost.

OK, one more complaint. I think this bullet point is really specious:

> _Determine what works and focus on it… this takes discipline. We started off
> with low hanging fruit — close friends and family._

The OP describes a telemarketing type situation...which, I have to say, is
something I regret not doing enough of because my friends who've spent
summers/years doing telemarketing as a temp job are some of the most easy-
going, well-balanced people I know, due to their ability to take rejection.
However, they've been doing it _long periods of time_...doing a weekend of
cold calls is not quite the same thing for building that tough skin. And you
don't get discipline in a sprint, but continuing to do the work after the
euphoria is over.

OK that was more complainy than necessary...Again, great writeup by the OP
(putting yourself out there is never trivial) and hope to see a follow up in
2-4 weeks

------
stevewilhelm
Most of the lessons learned by this 208 hour exercise could have been learned
by spending one hour talking to a seasoned salesperson.

~~~
omegant
I can´t agree. THE most important thing is not what they learned, but how they
learned it. They went out and did the difficult stuff, they started selling,
and kept doing it till the end. The point is to sell, afterwards you´ll be
able to improve your technique and the theory behind...

------
jbkkd
I'm not sure what a beef jerky subscription is. Are you going to send them
Beef Jerky daily/weekly/monthly from now on?

~~~
raney18
Yes, we send them jerky monthly from now on.

------
dangayle
This seems like a very low ceiling ($$$) business, which I always find "meh"
at Startup Weekend. At Startup Weekend Missoula, a lady was selling compost
bins with worms. Another team worked the whole time on a project that would
_at best_ make $70,000 a year. Both of those are great individual businesses,
as is selling beef jerky, but they're not the next Facebook.

~~~
untog
_Both of those are great individual businesses, as is selling beef jerky, but
they 're not the next Facebook._

Who's to say that Startup Weekend is only for the "next Facebook"?

~~~
dangayle
It should at the minimum strive to create a business that could potentially
support the team working on it? $1000 profit from 8~ people working 2.5 days
isn't scalable to even the size of their team, let alone anything bigger.

~~~
clogish
This comment leads me to conclude that you don't actually understand what
Startup Weekend is about.

~~~
dangayle
From ([http://startupweekend.org/about/](http://startupweekend.org/about/)):
"Startup Weekends are weekend-long, hands-on experiences where entrepreneurs
and aspiring entrepreneurs can find out if startup ideas are viable."

I'm not denying that it was a great exercise, but not a great exercise in
building a business. It's not a hackathon, you're supposed to be learning how
to build the framework for a sustainable business.

------
raney18
Hey guys, All great points and thanks for commenting. As the author of the
post, I wanted to address a few things:

\- First off, yes, if you add up the hours we spent on this business over the
2 days at Startup Weekend, we probably made less than minimum wage (although
you may be discounting the fact that we played some wicked sick ping pong
matches during our breaks, which were often longer than they should have been
:). As someone with a MS in Economics, I completely understand opportunity
cost and fully realize that we could have all worked at McDonald's for 2 days
straight and made more money (ie. profits). However, as @dpearce acknowledged,
driving up profits wasn't the point of the exercise. The point was to try to
start a recurring revenue business as quickly as possible and hit a goal of
generating over $5K in revenue and over $1K in profits (not a goal that we
set, but one that Noah Kagan set for us here: [http://www.appsumo.com/sumo-
jerky](http://www.appsumo.com/sumo-jerky)).

\- A secondary point was for everyone on the team to get comfortable with what
I believe is the most difficult part of starting a business - sales. I've
mentored dozens of startups and watched many of the struggle through the
customer development stage because they don't want to ask customers for money.
They would rather tweak the product, build a logo, add features, etc,
etc...all things that might add marginal value, but shouldn't happen until
you've validated that you have paying customers. These things also don't
involve rejection...so they are easier in most people's mind. In just 2 days,
everyone on our team was responsible for dozens of sales and I watched
confidence rise from each team member as they made a sale (confidence that
cannot be acquired by doing anything else BESIDES ACTUALLY closing a sale
yourself...it feels good and then you want more of that feeling). Yes, this
exercise was an extreme - as we didn't even really have a product before we
sold it - just a simple landing page and a paypal account...but nonetheless it
accomplished the goal of improving our team's confidence and abilities when it
comes to sales.

\- This wasn't mentioned in the original article and my bad for not publishing
it. But, out of 267 total subscriptions, about 150 of them are unique (some
bought 3 or 6 months subscriptions and we counted those orders as 3 or 6 total
subscriptions)...This means that if we can retain those 150 unique customers
each paying $20 / mo, we'll do $3,000 in revenue each month...this equates to
about $600 - $800 in profits each month for doing about a half days worth of
work to fulfill the orders (now we're talking close to $200 / hr... which is >
than minimum wage (even if the recent strikes result in increasing min wage to
$15 / hr...geez, could that really happen?? :)). Granted, $800 in profits per
month is not a ton of money, but it's not a bad side gig for my younger
brother (and fellow team member for this project) who is currently in college.

\- Lastly, this project was a ton of fun...Our team was awesome and we learned
a lot about what it takes to sell, move fast, and work together. This is
really the point of a Startup Weekend event - learning something and meeting
new people.

Thanks again for the feedback and comments guys! If you have other questions,
hit me up.

~~~
alabut
Thanks for the writeup! I've done a couple of Startup Weekends and never
thought about doing a subscription service, especially not for something I
only ever eat on road trips.

Since you plan to keep the subscriptions going, I'm curious about how you plan
to follow up with this project:

* do you plan on returning profits to the team?

* if so, is it evenly divided, or are individual sales tracked to the person that closed them? The latter could be the beginning of an affiliate system.

* also, would each team member get the full profit of each sale, or would you take a cut of their sales? The margins might be thin but could be interesting for the work-at-home types.

* have you learned more about sales or products during this time? i.e. did this fire you up to do sales for other existing products, or did it give you ideas for different subscription-based businesses? I can see product ideas for this - e.g. a "healthy pack" kind of offering, where you choose from jerky, nuts, dried fruit, and other Paleo-friendly road trip food, which you upsell to existing customers and hopefully make the offering more enticing to new ones - but don't see how the sales lessons scale if you tap out your friend network within a single weekend, unless you do the Amway kind of thing and just keep finding new sales people that sell to their friends.

* what's your long term plan? Do you plan on putting in more work into this?

I can think of several scenarios for the last point: to do no work and just
let it ride as free money while you work on other projects; to do occasional
weekend sprints of work with a team; to do little bits of work by yourself
every day, like 30 minutes each morning.

I'd personally be interested in trying to learn other aspects of business that
could make it grow, especially content marketing. I.e. would a blog about
jerky be worth it in terms of sales? What kind of writing could you come up
with that felt authentic? What kind of a time sink is it? Would it build a
returning audience or be linkbait for Google? Would random people from adwords
convert at all? Could you convert office managers that stock the office
kitchen, or do they all use other services like Amazon? Etc.

