How I pre-sold $300k in enterprise software with just an idea

Summary: I pre-sold $300k of enterprise software with only an idea and $0 in marketing expense (outside of my time). It cost us $30k and 3 months to build software that was loved by the customers. At product launch, we had a 10x return on our investment. We used that capital to fuel future sales and product development efforts.

Cover your cost of development in sales BEFORE you start development. Sell First, Build Later.

I often hear founders claiming they can't sell until they have a product. "I'll feel a lot better when I have a product to show...It will be easy to sell once we have a product...". I am engineering-minded and I had a tendency to fall victim to that thinking. I have built some of the best products that no one has ever used, and I have built okay products that people used often. I prefer the latter. I now view a fully built product is a liability for early sales more often than it is a benefit.

It is easier to sell the idea of a product than to sell an actual product. Ideas are flexible; products are not. Redesigning an email is a lot easier than redesigning your product! 

Whenever possible, I encourage teams to fully prove the market fit and seek sales before building a product. 

A few years ago, I was contracted to help bring a new B2B software product to market. The product was an extension for an IT monitoring platform that would be used by CISCO UCS admins. Relatively niche product with a traditional, enterprise customer base.

The company had previously over-engineered products that did not sell well. The company wanted to change that. They sometimes spent hundreds of thousands of dollars building software that no one used; other times they had success. My job was to ensure they built a product that fit the needs of the customer, but I took it a step farther.

My proposal: we don't build anything until we secure enough orders to cover the cost development. 

The company was a strong engineering team, but not a strong marketing team.  We  -- I'll refer to the company and myself as "we" --  had confidence in how much it would cost to create ($30k) and would take us a month or so to build. We set 3 months to prove that the market wanted it. If we couldn't cover the cost of development, we wouldn't develop it. Fortunately, we secured $300k+ in preorders before writing a line of code.

We found our leads through free channels (LinkedIn, Twitter, Reddit, referrals from existing customers, guest contributions on content). We announced the upcoming release and solicited feedback from the community.

We offered an early access program to anyone who wanted to provide input. We implied that there were limited spots in the program, but we would have taken anyone! The benefit of implying there were limited spots was it provided us the opportunity to "screen" potential participants. We used the screening process to perform a candid customer discovery interview. The participants were disarmed because it felt like they were applying and not being solicited. 

I knew very little about the potential customer needs and I was honest about it. With each conversation, I learned more and applied it. I used the language discovered in prior conversations to establish credibility in future conversations. By the time we were ready to launch, we had marketing copy that we felt confident presenting to the masses. 

We established price by asking two basic questions:

1. “At what price point would you consider this product so cheap you would question the quality of the product?”

2. And “at what price point would you consider this product so expensive you would never consider buying it?”

Some people ask 4 questions to get middle bounds, but I was fine getting close enough with those 2 questions.

We collected detailed feedback from every conversation and fed it to the product team. We were careful to not react too much to a single data point. We used spreadsheets to track responses to common questions and any other notable insights. Our prospects felt like they were shaping the direction of the product. We did not hard sell.

Note: Nowadays I would recommend using a free tier of a product management tool like ProductBoard to track features and insights.

As we started developing the product, we started to share mockups and screenshots for feedback. Sharing visuals was not as helpful as sharing the idea of the product. Once there was something that appeared to be built, people’s responses were a bit more negative and targeted at the smallest of details. Not because the product was bad, but because it’s easier to critique someone else’s work than the idea in your head.

The framework for converting feedback into preorders was:

1.  Ask: What do you expect from this product? 

2. Ask: What would you pay for a product that did all of those things?

3. Ask: If we build that, will you buy it? 

4. Inform: Let's move forward in the process assuming we will deliver so there will be no obstacles in our way when the product is ready.

5. Create: We then build it and prove that we checked every box on their list. This way, the customer is selling to themselves instead of you selling to them

Other than my time, we spent $0 on lead generation and outreach.

We didn't use any fancy tools, or buy any lists, or run paid advertising campaigns. When the conversations advanced to feedback on specific features, we used simple mockups to visually communicate between prospects and our team.

In summary, here are the tactics we used:

1. Establish an early adopter persona

2. Participate in online communities where our early adopters hung out

3. Contact existing customers, partners, and others in our network that may know early adopters

4. Offer an early access program with limited spots

5. Interview each participant. Use interview feedback to guide feature development and future sales efforts.

6. Move participants forward in the sales motion assuming the product will be built

7. When sufficient funding is secured, start development.

I wasn’t around long enough to see it, but I believe the product went on to generate $1M or more in revenue in the next year or so with minimal additional development effort.

You may not be creating something in this exact space, but you can probably apply this to approach to your domain. Just remember: Sell First, Build Later

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