#1 š” Shoestring Club - Starting out with a problem and seeing the opportunity
How to build and operate profitable digital businesses from scratch
Welcome to the first edition of the Shoestring Club š Good to have you here!
In this first blast I am focusing on explaining the opportunity that exists (and why you should care) as well as working through one of my current projects Stayy as an example of how you might start out with a problem and end up with a business! Iāve also put a quick summary of learnings for each of my projects as a bit of a āstatus reportā so that you might learn from my mistakes and keep tabs on my progress.
In my next issue Iāll be starting a new project specifically for the purposes of this newsletter - so I look forward to sharing that with you.
Before we dive in - do you know someone who might enjoy learning about how to build digital businesses from scratch? If you do then hit the āshareā button below and send them the link!
š§ The opportunity
Long story short - three things are happening right now which creates an enormous amount of opportunity for people to create a digital business (or two).
The ongoing and parallel transition to a digitised and digitalised economy
So much of the world has turned digital and we see it everyday in the way that we buy clothes, order takeaway, book doctor appointments and yet so much opportunity still exists for new digital products and services - there are still restaurants without online ordering, bookings or websites š². This shift needs to be supported with products and services and helping organisations and individuals to do this is a great opportunity.
The lower barriers to entry to build digital businesses
Building a digital business has become easier due to the proliferation of tools, platforms and services that enable it. No-code and low-code tools in particular have enabled non-technical people to build digital products and services at a pace and scale previously out of reach. Importantly this means that profitable business models have been able to exist at a scale where previously they could not such as in geographic or product niches.
The pace of change that feeds disruption and generates āmarkets in the gapsā
Continued change and development not just with technology but an increasingly interconnected and globalised world means more dynamic relationships. This means the market is more likely to be in a state of enhanced volatility than equilibrium creating āgapsā that are opportunities for people that recognise them. This can be anything from identifying a slow moving incumbent to operate in a new market channel or looking for geographies and industries that have lagged behind the digital adoption curve.
āØ Problems are opportunities
Now you might ask how do you identify the specific business ideas to pursue given the broader opportunity explained above? Well the key is to look for problems that can be solved well by digital solutions - emphasis on well because it captures whether the customer desires a digital solution and that a digital solution is possible. This means thinking about whether the three factors outlined above are at play by asking the following about the problem youāve identified:
Is there a digital solution to the problem?
Can I build the digital solution?
Is there a market need?
This can look very different depending on the type of problem you are looking at and the goals that you have. For example if you have a bias toward learning you may just want to build rather than analyse.
š Worked example - Stayy
Stayy is a digital guidebook solution for vacation rentals that also has a āconciergeā feature that allows guests to order products and services during their stay such as take-home gift packs. The goal of the platform is to uplift the guest experience while increasing revenue for hosts - something I feel is a worthy mission given the strain the sector has been under.
ā Is there a problem?
The idea for Stayy was born out of frustration - having travelled to an Airbnb for a long weekend post lockdown (number 1) it became a little annoying to be thumbing through printed sheets that werenāt up to date and contradicted each other about the rules of the house and how to use certain appliances.
Reflecting on this a little later I realised that this was a pattern Iād seen in many vacation rentals alongside another problem Iād come across as a guest - easier ordering of breakfast hampers and the like when staying at high price point cabins. I saw these as a similar problem - the challenge of accessible and reliable information provision.
š± Is there a digital solution?
Clearly the answer to this is yes. Not just is there a clear digital solution but there existed a peculiar circumstance that while there was a high penetration of digital booking channels such as Airbnb into the sector there was a low penetration of existing solutions to this problem. This points to a āgapā in the market that I will explain.
š» Can I build it?
The answer to this was also yes. By stepping back from wanting to create a fully automated platform otherwise known as a āSoftware as a Serviceā or SaaS product for launch I was able to conceptualise a way to build my tool using no-code so that I could test my assumptions at a low cost (both time-wise and financially).
This involved a form that a host could submit (and update later if needed), a notification for me when it was submitted, and then a template on Carrd (a create no-code single page website builder) that I used and published changes to. It wasnāt pretty but it worked (actually I lie it looked quite nice but it was clunky).
š„ŗ Is there a market need?
Perhaps the most important part of this exercise from a business point of view is whether there is a market need for what you want to build (or have built). Working this out can be done in a range of ways (and is something you arguably need to keep testing as the market moves).
In terms of Stayy I had developed a hypothesis that there was relatively high digital uptake within the sector (vacation rentals) however the percentage of those rentals that were using the existing services for digital guidebooks was low due to the price and complexity of those offerings. In addition most of them did not offer the āstoreā functionality that I thought would be helpful. This gave me a clear feature set and value prop to test with customers using the āalphaā product I described above.
š They are everywhere
One thing that I have definitely learnt is that the problems that can become great opportunities are everywhere so your best course of action is to pick one that seems to be in a big enough market and start something. More often that not - just starting to research and try out new ideas will lead to more opportunities so go for it even if you reduce your hypothesis to the fact that you think the market itself is interesting - you can always launch a newsletter and see if the market agrees!
What problems are you currently seeing right now that youād enjoy working on? Leave a comment below.
š The status report
Each week I will give a small update on each project and include any learnings! This week will be largely descriptive.
š Aesko
My first company was a direct to consumer ecommerce company so when I had the idea for aesko I already had a mental model for how it would work and what I needed to watch out for this time. Things werenāt as simple back then to launch and scale ecommerce companies but they definitely are a lot simpler now. Now ecommerce might seem like a lot of work (and it can be) but I honestly believe that it is a great way to dip your toe into business - especially if you have found a really interesting problem and valuable solution.
Aesko is currently still in a soft launch phase and sales a steadily trickling in for our first product which is called āDreamā an organic extract sleep elixir that supports better sleep using natural ingredients such as valerian root and passionflower.
Ecommerce can be done with a pretty simple stack (and minimal) cost. My main costs and business components are:
the Shopify subscription which has everything I need for a store straight out the box
shipping costs which are pay as you go for now until I scale
the product itself which I leveraged a local contract manufacturer to produce small batches
packaging costs which were relatively low as I leveraged existing form factors and order through alibaba
time spent promoting on instagram and facebook as well as writing blogs
Something that has held true since my last foray into ecommerce is the value in partnering with other brands and individuals to build momentum. Iām currently pulling together an ambassador program and have already worked with a number of micro influencers and adjacent brands to promote the product.
š” Stayy
Stayy is the byproduct of an Airbnb trip post lockdown and a series of printed out but contradictory information sheets at the place we stayed. Fast forward through a no-code alpha product and onto a custom coded beta product Stayy is now in the market. Stayy is a digital guidebook solution that also allows vacation rentals to offer products and services for purchase during a guestās stay.
My primary focus for now has been onboarding new users to test out the platforms feature sets and help determine the future of the solution. My initial learnings are that the area of the market that I should focus on right now is vacation rental management companies and Airbnb coaches given the higher Lifetime Value (LTV) and marginal increase in Customer Acquisition Cost (CAC) to capture them relative to other customer segments.
š Ciao
Well I hope you enjoyed the first issue from the Shoestring Club. Please reach out if you have any feedback or questions!
Todd