Some of you may know and others may not, but I have been involved in a side project for some time now (for those that did not know, it should not come as any big surprise, after all don’t most peeps who work at a startup get involved in a side project or two? I mean most of those that I know are involved in at least one on the side. I guess we are “startupaholics”). Anyways, back to the topic, sorry for the digression.

My side project has been something that I have been working on for awhile, and like all projects, it has gone through many iterations and has not launched yet (yet being the operative word). Throughout the process, we have vetted the concept, then idea, then prototype with various levels of people; from VCs to Angels to other startup CEOs. Everyone (for the most part) really dug the idea, but they wanted to see something more tangible, something more than just a prototype, they wanted to see a live product in action.

The first time we heard this, we just dismissed it as a cautious VC who does not want to take a risk on a relatively unknown commodity, not to mention we did not fit their investment strategy (in other words, we were small potatoes to them and they could not get the kind of return they would be looking for on the amount we were asking for). So on to the next and the next and the next (if you have not gone through this process before, trust me, it is not easy nor is it quick. I am learning the hard way.) and we started to recognize a pattern in the responses. Like I mentioned previously, everyone saw the value and completely got what we are doing and thinks it has good potential, but they all said the same thing: build it and launch it and get back to us. After hearing this for the umpteenth million time, it finally hit us. We needed to just get over the fear of launching without investors and figure out a way in which we could do it on our own.

We finally started believing what we were hearing and figured out a way to get a simplified version of the product built an launched. It is safe to say that if enough smart people are telling you the same thing, then maybe, just maybe, they are on to something. In our case they were, it just took us a bit longer to realize it. So if you are out there pitching your product and you start getting similar responses, I implore you to listen closely to what they are saying, they just might be saving you from a lot of headaches and disappointment. If they say build it and launch it, I say go for it, what do you have to loose?

I leave you with this, it comes from a conversation I had with a local CEO (paraphrased of course) “would you rather have 20,000 pissed off users that are mad because you are all the sudden charging them for something that they were getting for free? Or would you rather have 0 customers and a product that has not launched?” Guess which one we chose?

When launching a web based startup (or I guess you could say for any startup really), you want to keep the barriers to entry (what could potentially keep a customer from using your product / service) as low as possible therefore eliminating any and all reasons someone would not use your product / service. From an easy registration process to making the product free or have a nominal cost, these are all the things you consider when creating your startup and product.

But what about the barriers to entry for you, Mr. / Mrs. Entrepreneur? Common thought these days are (now this is my own opinion that has been formulated from talking with startup CEOs, Angel Investors and VCs and of course all that I have read, and that must be the truth right?) that the costs to starting your own startup have come down dramatically since the late 90s and early 2000s that you do not need millions of dollars to get up and running. Hosting costs have come down, you can outsource the development, the list goes on and on. Because the costs have come down, investors are no longer investing in an idea and a power point presentation (well, I guess there are exceptions to every rule, but rule of thumb is that they are not), they are looking for that idea to be implemented. They want to see that you have been able to take the idea and create a product and business around it and show some growth. Show that not only you could launch a product, but people are using it. This is all fine and good, but all of the aforementioned accomplishments take money, isn’t that what you are going to the investors for? I mean, if you have taken your idea, built the product and company, launched it and are gaining customers, what do you need their money for, the hard part is over.

Wrong, the hard part has just started. You need to scale your customer base so you can generate revenue. After all, I am going to bet you got into your venture for the purposes of making money, not for it to just be a hobby (although some people do create products as a hobby but if the products are successful enough those hobbies become businesses and those businesses need money). So even though the barriers to entry have gotten much lower as it pertains to cost, you still need money to grow your business. If you can take your idea, build it out, launch the product and show some growth, the investors then seem to be more willing to join the dance with you. If your product blows up like say, Twitter did, you will have investors lining up willing to give you money like boys waiting their turn to dance with the prom queen at prom (again, just my speculation as I have not built something like Twitter, but that does seem to be the case).

So although the barriers to entry to starting your own startup have gone down, they have not gone away. It still takes a good deal of money to launch your company, but not as much as it used to. So then, unless you happen to have some extra money lying around (if you do, let me know), you are going to need some investors, what do you do? I suggest asking friends and family as a start, you may be surprised at what they are willing to do.

I have been reading this great book on word of mouth marketing titled (did you expect it to be titled something differently?) “Word of Mouth Marketing” by Andy Sernovitz. It is a fantastic read so far, he lays out some fairly basic ideas that you can implement immediately and at no to low cost and start improving how your brand is received in the public’s eyes. It is the low to no cost that caught me by surprise, I just assumed that marketing meant tons of time, a whole boat load of money and teams of marketers to get out there and promote your brand.

I was recently talking to a guy that heads up a startup here locally, and he was telling me how they are spending ungodly amounts of money on each user just simply to get them to sign up. I mean the cost of customer acquisition on the whole was through the roof, and technically this was just the cost to get a user to sign up to use their product, not the cost of retaining the customer. After I had a moment to think about it, the number did not surprise me that much, I mean it was part of marketing and marketing costs a ton, at least that was my general thought.

According to Andy though, that does not have to be the case. Word of Mouth Marketing can be very inexpensive and actually much more successful if implemented properly. Andy has devised four rules to follow for WoMM, and if you can manage to follow these rules, you should be able to see the magic of WoMM working for you. So what are these rules you ask (once you read them you are going to be like, that is so simple, how can that possibly work)? Well here they are:

1. Be interesting
2. Make people happy
3. Earn trust and respect
4. Make it easy

Seems easy enough and makes total sense. Put your users to work for you, but you have to make it worth their while and you have to be transparent with them to gain their respect. Who would have known that it did not cost you your first born child to build market awareness and have a marketing team at your disposal that live and breath your product?