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Unveiling Our Business Idea – What We’ve Been Working On

by Tony · 16 comments

First steps in starting a business

It has been 3 months since we told you about our grand plans to document our successes (and epic failures) in our attempts to start up a business while traveling.

Our goal is to not only generate enough monthly income in the next 12 months to free ourselves from the corporate life, but to also show you in detail the steps we are taking and have taken to get there.

We see this as a win/win for you. If we succeed, you get a great blueprint and chronicle of how anyone could carve out their own business. And if we fail? Well… then you get to at least see what NOT to do :).

We spent the entire month of May batting around ideas and having legendary brainstorming sessions. We even shared with you some of our best takeaways on how to have a successful brainstorming session.

But after all of that brainstorming, we had to pick an idea and actually test it out. That’s where things got scary.

But now that we have 3 months of work on the idea in our rearview mirror, we are finally able to share with you what we’ve been doing, what we’ve learned, and our next steps.

For today though, I want to introduce you to our business concept and the initial steps we took to test its viability.

Turning A Skeleton of An Idea Into A Business –  Our Concept

Fleshing out an idea

The idea of what constitutes a blog has matured in the last decade and you are now seeing people carve out sizable audiences for themselves and their passions.

These blogs have created powerful brands that have loyal audiences, but monetization of these sites is still fairly limited to digital products like webinars, ebooks, and online courses, or stock physical items like t-shirts and posters.

But this is starting to change. People are beginning to realize the powerful place content creators (i.e. bloggers) are putting themselves in and their potential to drive physical sales.

The problem with physical items though, is that creating something unique typically requires a large upfront investment for the blogger and/or a high price for the consumer. Additionally, there are few ways to gauge demand beyond stocking up on inventory and saying a prayer. Because of this difficulty, we feel that the strong brand capital generated by blogs is currently being underused.

This is where we come in.

A blogger with a strong brand would come to us with an idea for a customized product they want to sell to readers.

Maybe it’s a food blogger who wants a cutting board with their 5 keys to healthy cooking carved into it or a travel blogger who wants to create a leather bracelet engraved with their favorite quote. Whatever they imagine would be a unique and interesting item for their brand and we would work to create it.

The idea isn’t to sell any old product, but products that are unique and actually enhance their brand.

We named the concept Soovees, as in short for souvenirs. Since souvenirs are items purchased that have personal value (as they relate to a place or event), Soovees are what you purchase because of their connection with a personal brand you follow.

Soovees

Once the idea for a product is chosen, we would handle negotiations with suppliers to create a mockup of it and get an estimate of the order size that would enable discounts.

Why discounts?

The Big Idea

The Big Idea

Because the product has not been produced on a large scale (only a mockup), there is little upfront investment required.

With estimates in hand for the order size required for a discount (let’s say 100), we now enable the blogger to put the potential product up for sale on their website.

Their readers can buy it by just clicking on the “reserve” button we place on their blog, but nothing is purchased until the minimum order is reached (similar to how Groupon works). We record the payment information and contact info, but no one is charged until the sale is on.

Readers who reserve the product will share it on social media, as they need the minimum order to be reached in order to receive the product they desire. If the sale is activated (100 reservations), they also receive the discount associated with a group order.

For the blogger, they not only make money on a successful sale, but are able to generate a list of 100 readers who are willing to buy something from them (very valuable). They also could potentially have a list of the readers who tried to buy but weren’t in the first 100 orders. These readers are then great leads on other product ideas or even a second run of the blogger’s initial product.

Beyond being an additional revenue stream for a blogger, this is an opportunity to give offline value to their audience as they will be sharing a physical item with their readers that should be unique and beneficial.

Our Hypothesis

We had many assumptions in our business model, but a few big ones were:

  1. Bloggers are interested in selling physical items
  2. Audiences are interesting in buying physical items from bloggers
  3. The main resistance from bloggers to selling physical items are the upfront productions costs and uncertain demand

We set out to either prove or disprove these assumptions while spending as little money and time as we could. It’s all about efficiency!

You do not want to build the entire product from scratch without getting customer feedback, so we set out to get customer feedback as quickly as possible.

First Steps

First steps for Soovees

Our first task was to identify blogs that had built strong brands.

We judged these brands not only on Alexa rankings or page views, but on metrics which hopefully are more indicative of an active and engaged audience: average comments per last 10 articles, size of email subscriber list, and social media presence (# of Twitter followers & Facebook likes).

After generating a list of 50 blogs that we felt would be a good fit, we then set out to refine our message.

We emailed a draft of our introduction letter to a few friends with large blogs and whose opinion we greatly valued. Based off of their initial feedback, we tailored two separate emails and sent each to 10 different bloggers.

Why did we email two different versions of our pitch and why didn’t we email all 50 bloggers?

Because we are big believers in testing everything. By only emailing 40% of our list and sending out two different emails, we were able to track our response rate to each email. This led us to radically change our message over time and improve our response rate as we continued to iterate our pitch.

Next Steps

So now you know what we have been working on and the reasons why we think it is important.

Next week, we will take a harder look at how we tested our messaging and adapted our pitch based on feedback. We’ll also show you some of the tools we used to make our business website and to track initial responses at no cost.

We have learned a lot in the last few months about how to communicate a business idea and how to test feedback, so we hope you are as eager to hear our results as we are to share.

Now we need your help!

Do you think our concept has potential? Do you think it could be changed for the better? Do you think it is a total flop and that we should go back to the drawing board?

Be honest and please share your thoughts in the Comments section below!

About Tony
Quit his job to try actually following his dreams for once... and is currently loving it. He is working hard to to make this life-style permanent by writing about his adventures and brainstorming money making opportunities with his partner-in-crime, Meg.

{ 15 comments… read them below or add one }

Caroline @ Traveling 9 to 5 September 19, 2012 at 3:04 pm

I admire your bravery!

Starting a new business is scary and its even harder to put out your ideas on the internet to be judged. Good luck – you know we are here to help you two succeed! My thoughts will be coming via email instead of trying to fit it all in the comments section!

Reply

Tony September 19, 2012 at 10:39 pm

Thanks, Caroline!

What helps is that we already have a few months of info to work off of… we already have the opinions of many of the 50 large blogs we contacted so we know that some general thoughts are. Sending those emails was definitely more than a little terrifying!

But we’re big believers in the idea of failing quickly. The people who tend to succeed in business are those that are process oriented more than outcome oriented. As long as you are doing everything you can to get a positive result, the endgame isn’t as important.

So hopefully people will bring on the criticism!

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Sam September 20, 2012 at 8:36 am

Hey Meg, I think this is a very cool business model! If you can get a bunch of blogs to simultaneously sell a bunch of souvenirs, you have something that might be quite profitable!

I think the biggest difficulty will be dealing with tight margins. The personalized souvenirs will be expensive from the producers due to small batch sizes, and then the profit needs to be split between you and blogger. You will have to make it up in scale, which will be tricky with the sticker shock. The catch there is that the effort you put into setting up each blogger relationship and sale won’t scale. If you can find a way to efficiently manage products on lots of blogs simultaneously this could be a great business!

One suggestion to get over stick shock is to create an aura of exclusivity. In addition to putting a minimum purchase (the 100 example above) on each sale, why not also put a maximum on it? People like things to be special. Let only 150 people buy the custom cutting board, and they’ll be more comfortable with the cost.

-Sam

P.S. Check out Seth Godins marketing blog, it’s very helpful for small internet based businesses. He’s also written a lot of cool books. Good luck!

Reply

Tony September 20, 2012 at 11:07 pm

Thanks, Sam!

That’s a great idea about exclusivity. Instead of a minimum or maximum, we could just set the # at 100. The sale needs 100 to be activated, but only 100 will be sold. If there is a large amount of support above the 100, we and the blogger could offer the product again, but no longer at the exclusive discounted price. This would help with Margins and allow blogs to test out the popularity of unique product ideas.

Scaling this would definitely be a concern. We want to do everything hands on for the first few products to prove the model and to learn where issues may arise. Ultimately though, we envision creating a backend marketplace where people who have the ability to make unique items (large manufacturers or even people from Etsy) could post their services and connect with bloggers who have a large audience. Then our secret sauce would be the ability to manage individual group sales and handle the logistics.

Thanks for the amazing feedback! We need lots of opinions and yours are so helpful. We will definitely check out Seth Godin!

-Tony

Reply

Meg September 24, 2012 at 2:58 am

Thanks Sam! Tony already responded on behalf of the two of us regarding your feedback for SoVees, but I wanted to personally shoot you a note to thank you for your valuable advice. It is greatly appreciated! :-)

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Stu September 20, 2012 at 11:14 am

Hey guys–

Solid idea. I have a contact who may be able to help you on your quest to success. Drop me an e-mail.

Happy travels–

Stu

Reply

Tony September 20, 2012 at 11:13 pm

Stu!

Been awhile, bud.

We’ve seen the pictures of Drew on facebook… he’s huge! Hope you all are well and I’ll shoot you an email to follow up.

Thanks!

Reply

A Lady in London September 20, 2012 at 12:14 pm

Congrats on finding an idea you love and turning it into a business! I wish you all the best!

Reply

Tony September 20, 2012 at 11:16 pm

Thanks!

There’s a big difference having an idea and having a business… but we’re having a grand old time trying to make one become the other!

Thanks for the support and if you have any additional thoughts later we’d love to hear!

-Tony

Reply

Chris September 20, 2012 at 12:51 pm

I think it sounds like a really interesting idea with lot’s of potential, plus love how you have found a way of addressing the age old problem of ‘How do you make money from a blog’.

I guess the the only concern I have is for you guys. Is there really enough margin in this for you to make a profit? Just getting paid for your time isn’t a business, its a job!

If you combine the consulting part (at the beginning of the process) plus all the organizing of getting the product made and to the customer, it could take a lot longer than you think. So you will really need some good systems and help (at least one virtual assistant) so that you only get involved in the things that only you two can do. That way you can focus on getting more blogger clients plus have time to enjoy a beer and swim in the pool 😉

Reply

Tony September 20, 2012 at 11:24 pm

Chris… you just get us. The key is always to find more time to enjoy a beer and swim in the pool!!!

We actually have a longer term vision of creating a marketplace for custom creators to connect with bloggers. The blogger brings the brand + audience and the creator brings the product creation know-how. Our value would be in the creation of the marketplace and the ability to host group sales on individuals blogs.

This first run is actually our minimum viable product. We want to prove that the model works. That blogs want to try it, will actually make money, and will even enhance their brand.

Your point is dead-on. Scalability is a huge issue. We have heard stories of people who don’t have a plan upfront on how to scale getting swamped by the work and becoming prisoners of their own success. Not a terrible problem, but our goal is to make our lives easier, not more difficult :)

For margins, the key will be if we can create a product for a blog where the initial limited sale has excessive demand. At that point, you could remove the group discount and enjoy larger margins. These are all assumptions though that we need to prove!

Thanks for your great insights!

-Tony

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Noah September 21, 2012 at 2:19 pm

Great idea and a a hip, catchy name too! Souvees FTW!

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Tony September 21, 2012 at 11:17 pm

Thanks, Noah!

Since you’re in the middle of startup city, we’d love your thoughts. The name is all Meg… can’t you tell?

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Lindsay September 21, 2012 at 2:55 pm

I saw this today and it reminded me of your business idea. Different, but along the same lines. https://lostcrates.com/ Have you seen it before? Looks very interesting.

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Tony September 21, 2012 at 11:21 pm

I love that you thought of us! Great connection as we were actually initially inspired by Quarterly.co, which does the same thing as lostcrates, except on a quarterly basis.

The main difference in our proposed business model would be that with a subscription, lostcrates and quarterly.co need to select only blogs with mammoth follower lists in order to guarantee enough income. We think our model would allow all blogs to test out an idea and let their readers tell them if the idea is good enough to be made. Democratizing product curation, if you will.

Would you ever think of signing up to get a subscription from a service like this if the right online personality was in charge of curating items?

Really glad you saw the similarities though, as we really believe this will be the next big trend for monetizing blogs with powerful brands.

Reply

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