The 5 Dollar Startup is intended for entrepreneurs to validate their assumptions before pursuing new ventures.
Disclaimer: This technique is used to validate assumptions for your business. Incorporation fees and legal fees are obviously not included in the $5. I explain each step in detail to show the purpose and value behind them. If you want to read the reasoning behind each of the steps scroll to the bottom.
Data that is supporting this methodology: Over the course of five days I created 30 Twitter accounts. Each of the accounts had different business models. Each reached over 1,000 (manually) targeted followers within 48 hours. Each account had an average sign-up conversion rate of 12.2%. This is as lean as it gets — with results. Below are four screen shots of some of the top performing test accounts.
Quick insight into Lean Startup:
Thanks to the lean startup movement, entrepreneurs of all ages can create a successful startup faster and more effectively than ever.
Lean Startup focuses on customer development because this is where most startup founders fail. Many times entrepreneurs will develop something under the assumption that everyone will throw money at them; “make it and they will come.” This allowed the lean startup movement to catch fire since it focused on proving that there’s need first for the product first.
However, there is one problem with the lean startup methodology. Many entrepreneurs cannot, or will not, spend the time “getting out of the building” to talk to customers. This is where The Five-Dollar Startup comes in. This process is done digitally, not physically.
Every entrepreneur should know how to utilize powerful free tools like social media to validate their hefty assumptions as fast as possible so they don’t waste their time or more importantly others.
The five-dollar startup is broken down into two quick lessons and five chunks.
Lesson #1: Twitter is a Startup’s Best Friend.
Always keep your account’s ratio of “following” to “followers” to, at most, 1:2. Remember that.
The five-dollar startup methodology is wrapped around getting in front of a large amount of targeted ACTIVE followers quickly. We will use Twitter as a large funnel to acquire customers.
Lesson #2: Your email address + your mailing list = your backbone.
When signing up for a new Twitter account (have at least 12 accounts), if you place a +1, +2, +3, or +100 behind your username, it will direct every accounts notification to the same inbox.
Example: These three email examples can create three separate accounts all forwarding to firstname.lastname@example.org email@example.com, firstname.lastname@example.org, email@example.com.
Create dozens of accounts and have them all available on your phone (Twitter’s app). This allows you to manually retweet and favorite all your own tweets, with a reach that you can control.
Only create accounts with topics you are interested in talking about and following people in you are interested in talking to. You will be “manually” talking to these people.
Lets do this.
Large amounts of followers are now used to trigger the advertising concept “Jones Effect” for other followers.
Jones Effect: If everyone else is doing this, I should also.
First, after creating your Twitter account you will buy 4,000 followers to turn on the Jones Effect for the people you will follow.
I am not a fan of buying followers but the outcome from this hack changed my mind and it will change yours as well.
This is NOT an ad for buying twitter followers. Fake followers usually referred to as vanity metrics are annoying and they are only intended to add “fluff” to your account. More than 2,000 of the 4,000 followers will fall off within 24 hours. (This is a good thing)
An example would be:
He will deliver the followers within a few hours. TURN OFF ALL TWITTER NOTIFICATIONS. You will get 4,000 emails if you do not.
Let your Twitter account cool for a few hours until the followers show up.
This time is used to create your landing page.
These landing pages are quick, easy, and free to set-up.
This landing page will be the “call to action” in your Twitter accounts bio and/or website link available below your bio.
Use high impact bio’s like: “Facebook for Dogs”, “Google for Mom Bloggers”, “SnapChat for Teams.” You get the point. Make your concept memorable to your followers.
The mentality behind good bloggers is building an audience without being too pitchy.
Always blog, tweet, post, and talk with the intention of gaining a loyal following instead of selling to everyone, everyday. You will get amazing early-adopters this way who do your marketing for you by spreading the word.
Fact: Nobody wants to listen to you talk about what you ate for breakfast everyday.
When people use the Internet, they want to gain something for themselves. You have to talk about things you think they would find interesting.
Example: Talk about lenses and photography if you have a video making company (thanks to Chris from @Wistia) People who like similar things, will like what you are selling. Let them figure out who posted the video, wrote the blog post, or tweeted.
Call to Action
At the bottom of your Twitter bio, enter your landing page URL for the targeted people you are going to follow. Save it. Bio URL Shown below.
The most important part, following the people you want as customers.
Twitter only allows you to follow 1,000 people per day.
This is exactly what you will do.
Target the people following similar companies and follow them.
In other words, go to the twitter account of a competitor or similar companies where the people following are your target demographic, and follow all of them.
Example: If you are an analytics startup, follow people that follow Google Analytics or Kissmetrics. If you are an ecommerce startup, follow people that follow Amazon or Zappos.
Stand on the shoulders of giants any time you get the chance.
The reason behind following these targeted people is to get them to look at your account’s bios where you will have the link to your landing page.
If you get traffic to your landing pages and direct messages on Twitter from people interested in your concept, you have validated your concept with hundreds — in some cases thousands — of people for five dollars.
Long Term Goal:
If you follow The Five Dollar Startup with multiple Twitter accounts the big picture is extremely powerful. By changing each accounts bio, user name, and landing page, after each “mass targeted follow” you can unfollow and re-follow a different targeted audiences. Span this across 30 different Twitter accounts, you are able to market to thousands of targeted Twitter users.
Your welcome. Now go validate your concept.
1. Create multiple accounts using the (+) hack. The accounts are meant to manually retweet and favorite each of your tweets to make them more attractive. Do this before promoting your tweets if you are planning on promoting.
2. Buy 4,000 followers to create the Jones Effect for the targeted people you will follow.
3. Create your landing page for collecting emails, and basic analytics on early-adopters.
4. Write a high impact bio that is memorable and link you landing page as your call to action for the targeted followers.
5. Follow up to 1,000 people a day, keeping you ratio at most 1:2, so following 2,000 and maintaining 4,000 followers. This will drive more organic followers.
6. If you get emails and a decent conversion rate or have conversations with people who are interested in your concept, than you prove that your idea is worth pursuing.
After overwhelming demand from our fans, The Five Dollar Startup “Final Push” experiment was executed multiple times in 2013 and 2014. I am happy to answer questions in the comments section.