If that's the case, I'm happy to issue a full refund, no questions asked.
There's a major difference between trying to scam someone and pushing the boundaries to validate (and de-risk) an idea. If our ideas are shit, I will never take someone's money for that (hence the no questions asked, full refund).
You realize that the title is obviously exaggerated and that I didn't gain $4000 on day one. I did however gain the kind of validation that eventually allowed me to gain $4000 in cash when we launched a month later.
For every person that has criticized this, I have had another one saying this is great. I also know for a fact that I'm not the first startup entrepreneur to do this.
I have already apologized to each and every one of our customers. I have also mended the relationships (AFAIK) to the extent that the "angry" customers would consider being customers in future.
Ultimately, I think that this was ballsy publishing this and being open about the pro's & cons of this. I'm not saying that this is the best technique ever and neither am I saying that everyone should follow this approach. I am however saying that it worked for us and I am keen to engage others on this topic.
Sure, I could have just done customer interviews without requiring CC details. I truly believe that this feedback is however still hit-or-miss and we might've optimized for the wrong thing thereafter. Paying customers' feedback is always better than the feedback from any kind of "free user".
Well, that's like reactive transparency. For some people this means that I / we have broken their trust and any future relationship is thus dependent on earning back that trust. Being open, honest and apologetic after that fact, helps with mending those relationships.
Just to be 100% clear: we never took any money for anything we didn't have. When we eventually opened the doors to our V1, there was actually something there and only at that point did we charge anyone's credit card.
1) The intention was always to produce the videos / content. And it still is too (we have just deprioritized this and tweaked the roadmap from our initial plan).
2) The customer interviews we had (along with the survey we did thereafter) gave us insight into what our founding customers really paid for and for the majority that wasn't the content.
This isn't excusing bad behaviour at all. In fact, I've been very up-front about the fact that this technique relies on deception and that I didn't like that bit.
I stick to what I've said though, which is that putting up a landing page with an e-mail signup and a "Request Early Access"-kinda thing is similarly deceptive. The only difference is that I actually asked for CC details. To that extent, I'm willing to do whatever I need to do to see my startup succeed.
This is obviously not for everyone and that's why I posted the quote from Lincoln.
Do I think that this technique can be refined? For sure. :)
One of the reasons for publishing this and being open about how this worked is to be a catalyst for a conversation around this, which would hopefully see a refinement of the technique.
You'll see in the article that Kickstarter or crowdfunding would not have validated this idea, as the difference between backing / pre-ordering / investing in a product versus purchasing a product is significant. To validate an idea, you need to know that you can actually sell it in a repeatable fashion. Kickstarter or crowdfunding is generally a once-off process, so doesn't give you that validation.
(I know that many Kickstarter projects that were successful have turned into longer-term, sustainable businesses.)
The reality is: Yes, angry customers are never good for business or brand building. Neither are bad reviews. Trust me when I say that I hate the fact that I had angered even one individual.
That said, I interacted with every one of the angry customers and explained the rationale behind the decision. I managed to resolve the emotion to the extent that they were appreciative of my explanation / reasoning and would even consider becoming a customer in future.
I (the so called "author") also bootstrapped WooThemes successfully to grow to more than 100k+ paying customers, 500k+ users, a team of 33 and 10-figures in revenues. :)
I don't agree. Whether you're a solo founder or have 10 co-founders, you won't succeed if you're building something that no one wants. You can get customer validation regardless of whether you have co-founders or not.
Talented people are also attracted to working on something they're passionate about and having the freedom to execute on that passion. :)
And not all businesses needs to be set up purely as a vehicle to an exit. Many businesses can instead operate as "lifestyle businesses" and earn great revenues / profits for years to come.
I've done both and I can definitely attest that outsourcing the technical bits of your new startup is beyond tricky. It is however not impossible. The point here is that taking a technical co-founder onboard isn't your only option; it's totally possible for you to get to V1 (by outsourcing technical tasks), generate initial revenue and hiring a developer (with some equity) instead (as an example).
I agree. I think the biggest consideration with this should be the potential opportunity cost (equity, control and the risk of future fall-outs) of taking on co-founders.
And in a similar vein to how I feel about bootstrapping vs external funding, I think if you can be a solo founder until V1, you can leverage that traction in taking on co-founders. That way your hands isn't forced and you don't necessarily have to sacrifice large amounts of equity.
I was also surprised to hear that music streaming was their #1 revenue channel.