How to Create a $1M Web Business

Creating a company was never an easy task. In recent times the startup fever has been growing and spreading its passion around the world. One measurement of the growth of the startup scene is the proliferation of startup accelerators and incubators worldwide. According to TechCrunch sources in 2013 there were at least 170 worldwide.

The graphic bellow displays the massive growth the accelerated startup funding vs accelerator growth and shows the trend towards a global trend of startups.

startup accelerator growth source techcrunch

The startup world is massively innovative, disruptive, creative and at the same time competitive. It is a world of “do it fast, learn and change”. It incubates dreams of wanna be something, and dreams of getting successful fast and of course wealthy.

Noah Kagan is a personality that is a fantastic paradigm of the successful startup world. At 32, Noah Kagan is (or should be!) an inspiration to all would-be entrepreneurs and startups around the globe. A Business and Economics graduate from UC Berkeley, Kagan entered the world of work at Intel in 2004 as a marketing analyst and then joined Facebook in 2005.

He is credited with creating the marketing strategy for Mint, a company which has more than seven million users. This, all before he had been in the work place for even four years. But Kagan is not a renowned entrepreneur for this. He is best known for his ability to build $1 million dollar web businesses, sometimes in just a weekend. Gambit, his online gaming payment platform is a business worth many millions that was created in just a weekend.

AppSumo, his other major success was also conceived of in just a weekend, with the core product built by the end. Understanding the secrets of Kagan’s success with web businesses and modelling what you do on his approach could help you to succeed too.

Of his rapid success, and clearly an advocate of the lean start-up methodology, Kagan says:

“Don’t get me wrong – I’m not opposed to you trying to build a world changing product that requires months of fine tuning. All I’m going to suggest is that you start with a much simpler essence of your product over the course of a weekend, rather than wasting time building something for weeks… only to discover no one wants it”.

Without customers there is no business. So what should entrepreneurs do, if they want to achieve the level of success that Kagan has? Well, Kagan outlines four steps for building a one million web business in a weekend, and they are:

1. Find your idea

The key to this stage is identifying an idea that is profitable. An idea that won’t be profitable simply isn’t worth the time and energy. Kagan recommends brainstorming for this. According to Kagan this is all about understanding what potential customers might be interested in spending money on. Suggested approaches include looking at what top sellers on Amazon are doing for inspiration as well as reviewing eBay. Other options include thinking about what you whinge about with other products and services and coming up with ideas from that angle.

2. Find $1,000,000 worth of customers

An idea is all well and good but knowing that it will actually sell to enough people is critical. Step two involves finding enough customers to be able to progress, and understanding if the market is in growth or decline. Obviously markets in growth are those to go for. Kagan recommends using Google Trends, Google Insights and Facebook Ads, which all help to see the size of the market.

Where does Google Make its Money Google Adwords Infographic by Wordstream

3. Assess your customers’ value

Understanding the value of each customer is the next step in the process. This means reviewing what customers will be likely to spend, on average. At this stage you should be looking at how much customers already spend on similar products and whether they are likely to be able to afford to pay more… to you. The goal of this stage is to be able to set a price for your product or service.

Lean Startup Canvas Methodology source Harvard Business Review

4. Validate your idea

An idea may seem to be completely brilliant but without knowing whether people will actually buy what you plan to offer, there’s no point getting excited about it. That’s where step four comes in. Intuition is not enough. Steps to get there in validating your idea include setting up a basic sales page and seeing how many email addresses you are able to get from it. Kagan also suggests emailing some people that you know (maybe 10) and asking them if they want your product and to send payment. If a few people respond positively then you probably have a winner.

5. Launch your business

Step five if there was one, would be to launch your business, clearly. After all, you have an idea that is validated, customer interest, a large pool of customers and the ability to make $1 million. Don’t have plans for the weekend? You do now. Maybe like Kagan you can create a $1 million web business over the weekend if you really put your mind to it.

Startup Ecosystem Report 2012 Source by Startup Genome