The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future (16 page)

Jen and Omar followed the $100 Startup model: Focusing on the specific combination of their unique skills, they made an interesting product that other people also valued. They gave their
customers what they wanted without hiding their real lives: Their website contains blog entries on their home life, complete with cat photos—but doesn’t go into all the details of making prints that most customers would find irrelevant.

They chose a marketable idea and were encouraged by their first day of sales. They kept costs low, bootstrapping out of their tiny apartment and not borrowing a single dollar. As the business grew rapidly, they regrouped, taking stock of what was working (make more maps) and what wasn’t (stop going to the post office all the time).

Most important, instead of thinking about it forever or filling up a binder with projections, Jen and Omar took action.

S
cott McMurren sat in his office at a TV station in Anchorage, Alaska, looking out at Mount McKinley. The day job was in media sales, where he knocked on doors around town, recruiting advertisers for the station. He also hosted a travel show, something he enjoyed but didn’t expect to lead to a full-time gig. Gary Blakely, a buddy of Scott’s, had been pestering him for a while about a business idea, but Scott wasn’t into it. When two years of Gary’s hammering merged with Scott’s fatigue from doing the same thing every day, he finally gave in and said, “OK, let’s give it a try.”

The idea was to create coupon books for independent travelers coming to Alaska. Every year, more than a million visitors show up on the state’s doorstep, eager to see Denali National Park and other attractions. Some tourists arrive on cruise ships or guided tours, but many more put together their own trip. As is often the case, the consumer problem and the business opportunity are related: Alaska is a nice place during the summer, but costs are always high. Almost everything in the state is more expensive than the rest of the U.S. to start with, and some travel companies charge even higher prices to visitors. (A common joke is “Welcome to Alaska … please hand
over your wallet.”) The coupon book would be an antidote to high prices, but it would have to provide real value instead of offering the typical, minor discounts available elsewhere.

That’s where Scott came in. Since he already had the state contacts through his day job in media sales, all he had to do was get them to commit to a discounted offer, typically a two-for-one deal in which the second night or second person was free. A natural salesman, Scott positioned every deal to grow into another one. When he encountered resistance from a vendor who was reluctant to discount, Scott pointed out that other companies were going along without objection. The implied message was, “Everyone else is doing this. You don’t want to be left out.”

Once they had proved the benefit to the vendors, the next step was to prove it to the people who would buy the coupon books. You might think Scott and Gary would price the books low to sell as many as possible (comparable products in other places sold for $20 to $25, usually supported by advertising or kickbacks from the vendors), but they had a better idea: price the books at $99.95 and make the value proposition extremely clear. The books contained deals for helicopter flights and tours that cost as much as several hundred dollars, as well as hotels that retailed at more than $100 a night. Why
wouldn’t
people pay $99.95 for a product like that?

It was the ultimate follow-your-passion business, combined with a perfect transfer of skills from a job to a microbusiness. Scott had the insider knowledge about the local travel industry, along with a way to leverage the deals to ensure they were all high value. Gary was the production guy, handling everything associated with getting the product together in addition to all the Internet work and the banking. For fifteen years and counting, the TourSaver coupon books have been their primary business and source of income.

Why is the TourSaver offer so compelling? Because it delivers immediate benefits superior to its cost, with an attractive pitch: “Buy this coupon book, use it once, get your money back. Then you have more than a hundred other uses as a bonus.” Scott frames it like this: “Just do the math! Using a single one of the 130+ coupons in the book will save you more than the cost of the book itself.”

Another way to think of it is like this: Scott and Gary created an offer you can’t refuse. If you were traveling to Alaska and planned to enjoy some kind of sight-seeing opportunity, there’s almost no reason why you wouldn’t want one of their books.

A few years ago, I ran my first marathon in Seattle. I’d love to tell you I ran strong to the finish, but by mile 18 I was wiped out, focusing entirely on putting one foot in front of the other. As I trudged along in the final hour, I spotted a volunteer handing out fresh orange slices on the side of the road ahead of me. Tired as I was, I made sure to change my position, slow down, and gratefully accept the gift. The piece of fresh orange was an offer I couldn’t refuse—even though it was free, I would have gladly paid for it if I had the money and was in the right frame of mind to make a transaction.

Two miles ahead, I saw another volunteer handing out a different gift: halves of Krispy Kreme donuts. Unfortunately, this offer did not excite me (or any other runners I saw) at all. I’m no puritan and have eaten more than my share of donuts over the years, but three hours into the longest race of my life was bad timing for a sugar rush. The offer was unattractive and a poor fit for the context.
^*
A compelling offer is like a slice of orange at mile 18. It’s a marriage proposal from the guy or girl you’ve been waiting for your whole life. An offer you can’t refuse is like the $20,000 Bonderman Fellowship offered every year to graduating seniors at the University of Washington. The fellowship has very strict rules: Take our money in cash and travel the world on your own; don’t come back for eight months. Oh, and once in a while send us a quick note so we can tell your parents you’re alive. If you guessed that hundreds of students compete for the fellowship every year, you’d be right.