The cheapest way to discover if a startup will make money

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The cheapest way to discover if a startup will make money

Posted on Apr 12, 2012

The big man at the door glared at me for an uncomfortably long time. I stood there, the bright light shining in my face. He then moved to the side and motioned me in. The club was dark and huge. Loud minimal house music boomed all around. People jumped up and down everywhere. At the windows, several people sat, looking dazed and drugged.

Somewhere in this berlin club was an American and I had to find him. All I knew about him was his name and how he looked, but from a 60×60 twitter icon.

So I wandered around for a bit, then walked up to the bar and got myself a drink. I looked around and tried to figure out which of the people here could be this guy. Some guy that looked similar caught my eye. I held his gaze and was about to wave when he gave a suggestive wink and did a thing with his tongue that made me realise he likely was not the person I was looking for.

I had waited for 30 minutes when someone tapped my shoulder. I turned around and saw him. Same face as on twitter, but with spiky red hair and two metal loops in his nose. He hugged me in that typically American manner, which I stiffly tried to respond to. He ordered more drinks and offered me a tablet of something I assumed was ecstasy, but I politely declined.

His eyes were red. His head jerked around a lot when he spoke, and he seemed overly excited about everything he said. He stated off with a long monologue about Berlin. Then he told me about his new startup, which apparently had already hit $20k/month in revenue 3 months after launching. I asked him how he did it so fast, and he tapped his nose, winked and said:

“This was not my first idea. This was about the 7th idea. I went through 6 ideas within a space of 6 weeks, and discarded all of them. Then I came across this one, which is not even a new idea. It’s something that already exists. I guess that’s why there is so little competition. Everybody thinks it’s already done 100s of times. That’s why nobody does it!

But you are probably curious, how did I go through 6 ideas in so a short period of time? I will tell you the secret right now! When I get back from the toilet”

He walked away and disappeared into the dark tunnel that led to the toilets. I sat waiting for him. After about 10 minutes, a tall muscular girl with spikes around her neck sat herself down beside me and draped her arm around my neck. She looked straight at me and informed me that she would be taking me home tonight. She then fished out a dog leash from her pocket and dangled it suggestively in front of me. I tried telling her that I was having a meeting, but she was very insistent. We then had a long discussion where she told me about her fashion line for Goth Brides. After about 45 minutes, she jumped up and disappeared. I sat there for another 15 minutes before deciding that the American was either dead or had gone home, so I better leave too.

As I was leaving, I saw the tall girl with some guy on her leash. I hurried out, and was struck by the bright sunlight. It was daytime on a sunday. I decided to walk home, following the river bank. People jogged across, mothers pushed their babies. I smelled of smoke and sweat.

Shortly before I arrived home, my iphone rang. It was the American.

“Meet me for lunch”.

We met at a noodle place. We sat at the round center table, picked from the menu that had only 3 items, and fresh Vietnamese noodles were served to us in huge round bowls. The American had a huge grin on his face as he told me what happened after he had left me. I’ll skip all that and jump straight to the secret he had forgotten to tell me.

“So, basically, to validate a startup idea, all you have to use is twitter. Create your brand name on twitter. In the description field, write your 1 or 2 sentence pitch. Spend time picking the brand name and then the pitch. Afterwards, find a famous person on twitter who belongs to your target group. For example, nerds or women, or mothers, or joke-lovers. Whatever you define as your target group. Start following the followers of this person. If you get a follow-back rate of 10% and above, then you have a good idea. If your follow-back rate is lower than that, then you have a bad idea.

This method allows you do several things:

  • Pick a brand and logo that appeals to your market

  • Simplify your idea down to 1 sentence

  • Select who your target market is

  • Find out if your target market is interested in your service at all

And all of this is completely free. You can do this in a single afternoon. Where you have high follow-back rates, you are likely to have a business. That’s it. That’s the big secret that led me to the idea that’s making me $20k a month and allowing me do all this”

He raised his arms and gestured out to the city, to Berlin, to Europe. We sat there and finished the noodles. He then jumped on his bicycle, waved to me and rode off. I resumed my trek home in the summer sun. Birds tweeted.

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