Podcast Summary
Expecting to make a software company more valuable as an info marketer is unlikely to succeed: Focus on becoming a true software entrepreneur or continuing to build an info business, as creating sticky software requires significant investment and expertise.
Starting a software company as an information or service marketer with the expectation of making it more valuable or achieving a better exit multiple is generally a poor decision. According to Alex Schmozzi, the founder of Acquisition.com, this approach is unlikely to result in a successful exit or the development of sticky software. Schmozzi argues that most info-gurus have failed to achieve significant software exits, and those who try to run both their information business and software company often end up with a mediocre result. Instead, individuals should focus on becoming a true software entrepreneur or continuing to build their information business if they lack the necessary expertise and resources to create successful software. Software development is a complex and expensive process, requiring significant investment and expertise, and it's not as simple as creating a course and expecting customers to stick with it.
Understanding the software industry's challenges: To succeed in software, have industry knowledge, take risks, and have resources to launch a product, while focusing on customer retention and spending growth.
The software industry is a high-stakes game with intense competition, and the likelihood of success for individuals or businesses in this field is relatively low. The future value of a company is determined by the discounted value of future sales, and the likelihood of those sales occurring. Software businesses, which often have high annual churn rates, are considered service businesses and may not generate the high multiples that other industries, like insurance, can. To succeed in software, one must have a deep understanding of the industry, be willing to take significant risks, and have the resources to get the initial product off the ground. Ultimately, the key to building a valuable business is to focus on keeping customers and increasing their spending over time.
Focus on creating a valuable solution for customers: To build a successful business, create a valuable product that solves a specific problem for customers and differentiates itself from competitors.
Creating a successful business involves more than just having a good idea or building a software. The value of a business lies in its ability to generate consistent revenue and growth, which comes from understanding your customers' needs and providing them with a valuable solution. It's essential to recognize that potential investors are intelligent and experienced, and they won't be easily swayed by a subpar product or a high valuation without substance. Instead, focus on creating a product that solves a specific problem for your customers and differentiates itself from competitors. Additionally, leaving positive reviews and sharing this podcast can help spread the word and support entrepreneurs in their journey to build successful businesses. Finally, be aware that most software products never get bought, and it's crucial to avoid creating "bullshit software" that doesn't add value to your customers or your business.
Trying to add software to a service business without a true competitive advantage can lead to failure: Focus on making your service business stickier and expanding your customer base instead of creating a weak software business
Trying to create a software business as an add-on to a service company, without a true competitive advantage, can lead to failure. Software is a competitive space, and potential acquirers are not likely to be fooled by a tacked-on software solution. Instead, focus on making your service business stickier and expanding your customer base. If you're not a tech company at heart, then don't try to compete in the tech space. Most software businesses don't sell for high multiples, and most of them don't sell at all. The ones that do are those that have achieved product-market fit and are growing rapidly. So, focus on what you do best and build a valuable service business. Don't waste time and resources trying to create a software business that may not succeed. Instead, look for ways to expand your service business, such as buying similar companies, finding affiliate partners, or running more ads. Remember, potential acquirers are not stupid, and they won't be fooled by a weak value proposition. So, play to your strengths and build a strong, valuable service business.
Focus on providing value and building strong customer relationships: Regularly use software yourself, tell others about it, fulfill promises, avoid shortcuts, and provide value to build a successful business with a loyal customer base.
Building a successful business takes time, effort, and dedication. The speaker emphasizes the importance of regularly using a software yourself, telling others about it, and fulfilling your promises to customers. These actions lead to a strong customer base, positive reputation, and ultimately, financial success. It's important to avoid trying to cut corners or thinking there's a shortcut to success, as this can lead to dissatisfied customers and a lack of growth. Instead, focus on providing value and building strong relationships with your customers. This will lead to a business that runs smoothly, with consistent growth and a loyal customer base.
