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.
This is deception which and walks a fine line between legit and fraud. It doesn't matter what you think about who should do this or not - someone will attempt to emulate it, and they will end up in prison for taking money and not producing anything. It degrades the reputation of entrepreneurs everywhere who are diligently trying to build their businesses the RIGHT way.
The fact that you brag about it so boastfully is atrocious to be honest.
>The fact that you brag about it so boastfully is atrocious to be honest.
I didn't find his post to be bragging 'boastfully' at all. It reads chiefly informative and at times positively surprised. He found a technique that seems to work pretty well and he informs us about it.
I think your opinion is too harsh. Imagine yourself to be the customer of this website. You come across something you like so much you're willing to pay for it and you make the commitment to actually do so. Sure the revelation that the product does not exist yet is disappointing, but he also didn't take your money yet, and his website already convinced you that the product is going to be what you're looking for.
Since no-one reads newletters properly, I bet at least one of your "customers" thinks they are paying for access to some videos which they will intend to watch at some point in the future, and will be pretty pissed in the future when they discover they've been paying for months and those videos are still not available.
The shady part is doing the pivot without doing another opt-in. It's a classic bait ("Subscribe to get access to videos") and switch ("Continue paying to get access to a community and the promise of plans to make said videos in the future").
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).
No one does, this is the internet. They found something wrong with your project and they're going to jump on it like flesh hounds. No one's going to mention a small detail like that you never took anyone's money or even that you never had malicious intent.
These are Hacker News commenters, prototypal white knights eager to show off their perfect moral compasses, disregarding any opportunity for reflection or relativism.
I wonder how many of these people have actually built something and made a living from it? Or tried? Or spent months building something only to find out no one wanted it?
No, it is not something I would have done, but I really understand the need to have some idea of what's going to work, and could see how one might go too far in pursuit of that.
I have done all of those things and I maintain the view that there is no reasonable justification for deliberate deception in commerce. A fortiori amongst startup entrepreneurs, who should be doing their best to foster collegial relationships with one another based on mutual trust and confidence - ironically, one of PublicBeta's own goals.
You realize that the title is obviously exaggerated
For someone who is hearing of you for the first time, combining the subject matter under discussion and your admission of obviously exaggerating your post title makes you come across to me like a habitually deceptive person IMHO
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.
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.
I applaud you for being so open and transparent. Although I personally feel that the line was crossed, your openness to see a refinement in technique is refreshing. There are just too many "entrepreneurs" these days justifying their practices by saying that it works and it's completely legal. For me there are 3 responsibilities (in the same order) to any entrepreneur/business:
1. ethical responsibility
2. economical responsibility
3. legal responsibility
To say that something is completely legal does not make it unethical. So I do hope we can find a better way. The false advertising that companies put out makes me sad but it's also an opportunity for businesses to be honest with their customers.
Question for you though: You mentioned you received numerous signups signalling their interest. Could you have conducted your interviews with them instead? From the story, it seemed to me like the key point was identifying the needs of the customers. Of course, the ones who placed their credit card information are the ones most interested which filters them out from the rest.
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".
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.)
We don't have any data, but "would not have validated the idea" is ... perhaps not 100% accurate?
People do manage to "kinda/sorta" validate their ideas by getting email signups. Granted, it's less accurate than actually collecting CC details, but it does provide some indication. And kickstarter involves actual money, so perhaps it gives you a better idea than email, even if it's not quite as good as getting their CC. Maybe that tradeoff is worth it in terms of openness with your future customers?
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.
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.
Oh, well since you didn't like it, that's ok then. Wait, no it's not; it's horrible, indecent advice. Good business is being honest with your customers. Count me among the ones who would never turn over money with scumball tactics like this. Do your domain research, spend a few months making an MVP, and sell it in a working state. Give your early adopters premium pricing so they stick with you through the early churn. I wish your customers the best, as they're in for a rocky ride turning money away to such a scammy businessman.
I was also surprised to hear that music streaming was their #1 revenue channel.