Noah Kagan built three multi-million dollar online businesses before turning 28. He also looks great in green. (Photo: Brandon Wells)
I first met Noah Kagan over rain and strong espressos at Red Rock Coffee in Mountain View, CA. It was 2007. We were both in hoodies, had a shared penchant for the F-bomb and burritos, all of which led to a caffeine-infused mindmeld.
It would be the first of many.
The matchmaker then introducing us was the prophetic and profane Dave McClure, General Partner of 500 Start-ups, which is now headquartered just down the street from Red Rock.
Mr. Noah has quite the start-up resume.
- Founder of Sumo, free marketing tools that help websites get more traffic (500,000 users)
- Founder of AppSumo, loved by entrepreneurs and moms everywhere (900,000 users)
- Employee #30 at Facebook, where he lost $170 million
- Employee #4 at Mint
- Previously worked for Intel (where he frequently took naps under his desk)
- Co-founder of Gambit, an online gaming payment platform and a multi-million dollar business
He also helped pour fire on both the 4-Hour Workweek and 4-Hour Body launches.
The purpose of this post is simple: to teach you how to get a $1,000,000 business idea off the ground in one weekend, full of specific tools and tricks that Noah has used himself.
He will be your guide…
For some reason, people love to make excuses about why they haven’t created their dream business or even gotten started.
This is the “wantrepreneur” epidemic, where people prevent themselves from ever actually doing the side-project they always talk about over beers.
The truth of the matter is that you don’t have to spend a lot of time building the foundation for a successful business. In most cases, it shouldn’t take you more than a couple days.
Think I’m joking?
We made the original product for Gambit in a weekend.
“WTF?!” Yes, a weekend.
In just 48 hours, some friends and I created a simple product that grew to a $1,000,000+ business within a year.
Same deal for AppSumo. We were able to build the core product in one weekend, using an outsourced team in Pakistan, for a grand total of $60.
Don’t get me wrong–I’m not opposed to you trying to build a world-changing product that requires months of fine-tuning. All I’m going to suggest is that you start with a much simpler essence of your product over the course of a weekend, rather than wasting time building something for weeks… only to discover no one wants it.
I know what you’re thinking: “Yes, Noah, you are SO amazing (and handsome), but what can I do this weekend to start my own success story?”
Here are the steps you can take right now to get started on your million dollar company:
Step 1: Find your (profitable) idea.
At this stage, you are simply looking for something that people are already willing to spend money on. So grab a seat and write down a list of ideas that you think might be profitable. If you’re having trouble coming up with ideas, try using the methods below to speed the research process along:
Review top sellers on Amazon. Find products that already have guaranteed customers, then build something complementary. A good example of this is Dodo making a gorgeous $60 case to buy for your iPad (which costs over $500, and over 5 million sold).
Think of all the things you do on a daily basis. Anything done more than once has potential for a product or service to improve the process. For me, one of those products was a mirror I could hang in the shower. It saves me tons of time while shaving, and now I don’t know how I ever lived without it.
Be cognizant of products you use and frequently complain about. Before Gambit, we were constantly asking our payment tool partners for certain features, yet our requests were always rejected. That was the impetus for us to create Gambit for our own games.
Check completed listings on eBay. This allows you to see how well certain products are selling. It’s also an easy way to measure sale prices of items and gauge the overall percentage of the market that’s receiving bids (i.e. in demand).
Look for frequent requests on Craigslist gigs. These listings are from people actively searching for someone to give their money to in exchange for particular services. Try searching for certain keywords (e.g. marketing, computers, health) and keep track of the total number of results displayed. Evaluate the most popular keywords and see if you can create a product or service around those requests.
Explore popular backed projects on on Kickstarter. People are already raising their hand for things they are interested in. What else could you do that’s similar?
See what people are wanting on Reddit. So many times in the DIY sub-redditI see people asking to buy what someone just made. There arehundreds of potential customers asking to give you money.
Listen here to help come up with more business ideas.
Step 2: Find $1,000,000 worth of customers.
Now that you’ve found an idea that people are willing to spend money on, it’s time to assess whether there’s a big enough pool of prospective buyers.
In this step, you’ll also want to ensure your market isn’t shrinking, and that it fares well compared to similar markets.
I use Google Trends, Google Keyword Planner, SEMrush, and Facebook ads when I’m in this part of the process. They’re great tools that help me evaluate the growth potential of my target market.
For example, let’s say you decide to build information products for owners of Chihuahuas (remember “Yo quiero Taco Bell”?). Here’s how I would check to see if there are enough customers:
- Search Google Trends for the term “chihuahua” and other similar words (e.g. poodle, dogs) for comparison:
With Google Trends you are just looking for relative significance. If you are targeting dogs this will show you which type of dogs are the most popular. You can do this in other verticals like should you build for Android or iPhone or should you put your software on Shopify or BigCommerce.
- Check out the term “Chihuahua” on Google Keyword Planner:
3. Alternatively try out the keyword on SEMrush to see how the search volume looks.
4. Lastly, look at the total number of people available on Facebook for dogs:
59 million. Not bad, not bad.
And for Chihuahuas:
1.6 million people. Score.
Some other groups you can think of targeting:
- Local cities (Austin, Boulder, San Jose)
- Narrow interest groups (disc golf, fat tire mountain bike)
- Demographics (Jewish people who live in South America, Indian people who live in Sydney)
You can also see if there is a large property that you can piggyback on, and funnel traffic from.
Paypal did this with eBay, AirBnb is doing it with Craigslist home listings, and AppSumo looks to the 100 million LinkedIn users. If you can find a comparable site with a large number of potential customers, you’ll be in good shape.
What helped me with finding $1,000,000 worth of customers for AppSumo was studying my successful competitors; specifically, Macheist. Their site did a Mac-only deal that generated more than $800,000.
Macheist shares their sales revenue publicly, but you can use your own business acumen on the CrunchBase or Angel.co to see which business you want to replicate.
For instance, you might research Airbnb.com, discover that they have a profitable and growing marketplace, then decide to create a similar service for RVs (like RVshare did).
I like to create a Google Spreadsheet of the key numbers for my competitors’ businesses. Below is an example of what that might look like for Macheist in their Mac bundles. [Warning to the haters: This may not be accurate, but I used these numbers just to get a rough idea of the business’ potential.]
Link to access the Google Spreadsheet for yourself
Step 3: Assess your customer’s value.
Once you’ve found your idea and a big pool of potential customers, you’ll need to calculate the value of those customers. For our example above, we’ll need to estimate how much a Chihuahua owner (i.e. our customer) is worth to us. This will help us determine the likelihood of them actually buying our product, and will also help with pricing. Here’s how we do that:
- Find out how much it costs, on average, to buy a Chihuahua (about $650). This is the base cost.
- See how much it costs to maintain a Chihuahua each year (i.e. recurring costs). Looks like it’s between $500-3,000. For this example, we’ll call it $1,000.
- Look up their life expectancy, which is roughly 15 years. This is the number of times they’ll have to pay those recurring costs.
Therefore, a Chihuahua’s average total cost of ownership is:
[$650 + ($1,000*15)] = $15,650
Damn… you could buy a lot of tacos with that kind of cash. Silly dog owners.
In any case, these owners are already committing to spend a LOT of money on their dogs (i.e. they are valuable). After putting down $650 on the dog itself and an average of $80/month on maintenance (a.k.a. food), spending $50 on an information product that could help them train their Chihuahua–or save money, or create a better relationship between them, etc.–does not seem unreasonable. Of course, the product doesn’t have to cost $50, but we now have some perspective for later deciding on a price.
Now we need to utilize the TAM formula (a.k.a. Total Available Market), which will help us see our product’s potential to generate a million dollars.
Here’s the TAM formula for estimating your idea’s potential:
(Number of available customers) x (Value of each customer) = TAM
If TAM > $1,000,000, then you can start your business.
Let’s plug in some basic numbers to see the TAM for our Chihuahua information product:
(80,000 available customers — 5% of Facebook #s) x ($50 information product) = $4,000,000
We have a winner!
Okay, obviously you are not going to reach 100% market penetration, but consider the following…
- This is only through Facebook traffic.
- This is only for one breed of dog. If you find success with Chihuahuas, you can easily repeat the process many times with other dog breeds.
- This is only for one product. It’s far easier to sell to an existing customer than it is to acquire new ones, so once we’ve built up a decent customer base, we can make even more products to sell to them.
By all measures, it appears that we have a million dollar idea on our hands. Now we can move on to the final step!
Step 4: Validate your idea.
By now, you have successfully verified that your idea has that special million-dollar-potential. Feels good, right? Well, brace yourself — it’s time to test whether people will actually spend money on your product. In other words, is it truly commercially viable?
This step is critical. A lot of your ideas will seem great in theory, but you’ll never know if they’re going to work until you actually test your target market’s willingness to pay.
For instance, I believed AppSumo’s model would work just on gut-feeling alone, but I wasn’t 100% convinced people wanted to buy digital goods on a time-limited basis. I mean, how often do people find themselves needing a productivity tool (compared with, for instance, how often they need to eat)?
I decided to validate AppSumo’s model by finding a guaranteed product I could sell, one with its own traffic source (i.e. customers).
Because I’m a frequent Redditor and I knew they had an affordable advertising system (in addition to 100 million+ monthly users), I wanted to find a digital good that I could advertise on their site. I noticed Imgur.com was the most popular tool on Reddit for sharing images, and they offered a paid pro account option ($25/year). It was the perfect fit for my test run.
I cold-emailed the founder of Imgur, Alan Schaaf, and said that I wanted to bring him paying customers and would pay Imgur for each one. Alan is a great guy, and the idea of getting paid to receive more customers was not a tough sell? The stage was set!
Here’s one of the emails w/ Alan when we launched
Before we started the ad campaign, I set a personal validation goal for 100 sales, which would encourage me to keep going or figure out what was wrong with our model. I decided on “100” after looking at my time value of money. If I could arrange a deal in two hours (find, secure, and launch), I wanted to have a return of at least $300 for those two hours of work. 100 sales ($3 commission per sale) was that amount.
By the end of the campaign, we had sold more than 200 Imgur pro accounts. AppSumo.com was born.
I share this story because it illustrates an important point:
You need to make small, calculated bets on your ideas in order to validate them.
Validation is absolutely essential for saving time and money, which will ultimately allow you to test as many of your ideas as possible.
There are two simple methods for rapidly validating whether people will buy your product or not:
Drive traffic to a basic sales page. This is the method Tim advocates in The 4-Hour Workweek. All you need to do is set up a sales page using Unbounce or WordPress, create a few ads to run on Google and/or Facebook, then evaluate your conversion rate for ad-clicks and collecting email addresses. This is how we launched Mint.com (see one of our original sales pages here). You are not looking for people to buy; you are simply gauging interest and gathering data.
[Note: With Facebook advertising, $100 can get you roughly 100,000 people viewing your ad, and about 80 people visiting your site and potentially giving you their email addresses.]
Email 10 people you know who would want your pseudo-product, then ask them to send payment via Paypal. This might sound a bit crazy, but you’re doing it to see what the overall response is like. If a few of them send payment, great! You now have validation and can build the product (or you can refund your friends and buy them all tacos for playing along). If they don’t bite, figure out why they don’t want your product. Again, the goal is to get validation for your product, not to rip off your friends.
Of course, there are other techniques for validating your product (like Stephen Key leaving his guitar pick designs in a convenience store to see if people would try to buy them). However, I’ve found these two methods to be super efficient and effective for validating ideas online.
No need to get fancy if it does the trick. Here’s a few ideas below in case you are not a dog lover.
Bonus business ideas for you to do today
For the people that just NEVER have a great idea. Here are 5 ideas that you can do today. Don’t worry, every business has competition and has been done already. If you’ve never heard of the company already providing this specific service, it means you have an opportunity!
- Virtual eBay merchant. Pick up stuff from your friends and neighbors houses. Sell it, then give them 50% of the profits (I really want this).
- Reduce credit card transaction fees. These companies take 3% for doing very little. How can you fix that? What other companies are taking high margins that you can beat?
- Tinder specialist. Many wealthy guys don’t want to spend the time creating a profile, texting and arranging dates. Do this for them.
- Virtual Reality Realtor. Go sell to local realtors the ability to have 3D / VR tours for them to offer to their clients. On the flip side, you can charge the consumer to go and take tours of houses on their behalf.
- Rich person apprentice. Rich people have more money than time. Go see what has been on their to-do list for longer than a week OR see if they have investments they are interested in and want someone to do the research.
- Home Automation Expert. The number of “internet of things” devices is growing rapidly and more people want their houses totally connected. Own it.
Btw, if you are looking for additional resources and support in creating your own business, check out this course that’ll walk you through it..
The Final Frontier: Killing Your Inner Wantrepreneur
We made it! You officially have a $1,000,000 idea on your hands and you know for a fact that people are willing to pay for it. Now you can get started on actually building the product, creating your business, and freeing yourself from the rat race!
I can just see it… You’re all nodding and thinking, “Hey, this Noah guy is pretty snazzy!” (Sorry ladies, I’m single.)
So, what now?
– You are inspired. Check.
– You want to do something. Check.
– You get a link to a funny YouTube video, then you open up Facebook. Check.
– Suddenly, everything you thought you were going to do goes down the drain. Check.
– I softly weep. Check.
Don’t let this post become another feather in your Wantrepreneurship cap. Just follow the steps and start working towards your $1,000,000 business! Remember, you can start laying the foundation for your product without building anything.
All you need is one weekend.
P.S. Once your biz website is up and running, make sure to use Sumo to get more customers, make more $$$, and eat even more tacos.
The Tim Ferriss Show is one of the most popular podcasts in the world with more than 900 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.
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539 Replies to “How to Create a Million-Dollar Business This Weekend (Examples: AppSumo, Mint, Chihuahuas)”
Awesome article. I’m going to use this when developing our product and service offerings. Thanks Noah.
What examples of suedo-products do you have for ebooks?
This is indeed an inspiring read. Neat 4-Steps in creating a successful million-dollar business. All you need is one weekend. Awesome!
I have a buisinesss idea and cent percent confident about its success. But I am not a techie and I don’t have any tech friends. So what should I do?
My idea is basically obtained from observing other successful models. So it depends on how early I start.
What should I do? In the article you mentioned about Pakistani Outsource. Just curious.
Love this info. But where do the Facebook info screenshots come from? Is that something available from within Facebook or is that coming from Google analytics?
Big fan, picked up your book a few months ago and have been trying to implement those principles and teachings to make a shit load of money. Besides reading the book I enjoy your blog and podcast. That is where I began to further research Noah Kegan and AppSumo. You guys same a lot of the same principles and feelings about starting businesses. But I recently bought the appsumo course and feel like if i rewinded time, I would not have done it again. Great information but it is nothing but information. I would much rather suggest people just youtube/google noah kegan and they will find all the stuff in this course rather than pay $600+ for it.
Tim or community,
When utilizing Facebook to identify a potential market, do you need to go through the process of creating an ad to get the data? The link provided sends you to FB’s advertising page but I am not seeing where it will allow you to view that kind of data.
Noah – thanks for being on the show. Appreciated all the the time saving tips! TextExpander is my tip back to you.
I’m late to the party, but as a newly single mom who worries every day about providing for my daughter, I can’t tell you how much I appreciate this.
Thanks for sharing your thoughts about entrepreneurship.
If you wanted to create a product would you need to patent it first before creating advertising?
Noah Kagan’s validate product has a need by search traffic or Clay Collin’s build audience 1st then presell 2nd to validate approach. Any opinions from those who have tested both?
[Moderator: link removed]
Inspiring and motivating article on picking up the pace, knuckling down and just doing it.
After all what is the alternative?
Staying where you are in a job barely tolerated, dutifully putting in your 40 – 50 years and in the end hoping that you’re healthy enough to enjoy some of your retirement… I think NOT!
Thanks,I’m trying to get more traffic to my niche sites and will try these tips.
Can you please explain how can I use Facebook Ads to research my niche? Where do I go and what do I do?
I’m grateful that I came across this post.
The biggest question pops in my head is: He said ” $1,000,000 worth of customers for AppSumo” but How do they make profit from Appsumo whereas it provides all plugins for free?
Has anyone answer for that?
– You are inspired. Check.
– You want to do something. Check.
– Metal Gear Solid V comes out. Damnit..
So, it’s been four years. How is everyone doing? Any new millionaires? Scorecard please!
PS. You had me at tacos.
I love the idea and I’m going use the method with my business that I started two months ago thanks need the help
4 months into my own startup I feel as if articles such as this are very worthwhile, but leave out a big chunk of the most important part of the business cycle. The actual sales test section is two sentences long. Facebook ads can drive traffic but at a high cost that rarely leads to an actual conversion. If your startup has unlimited budgets for CPC advertising that’s great but many bootstrapped “side project” startups can’t flood Facebook with money for the first six months of their business. What about the methods these successful startups used to gain exponential organic growth. A detailed post on that is one I would like to see.
this is amazing we need a 2015 version!cheers
Pure GOLD still useful in 2015. Thanks Noah and Tim!
Noah & Tim, My name is Firmino, I’m Brazilian and live in Rio de Janeiro, relatively close to Cidade de Deus (cited in Tim’s 4-hour-work week book). First off, a big thank you! My country is a place where does hardly anything work but this idea is so broken down that I’m fired-up and I’ve just begun to cook something up. Way to go!
Tim & Noah,
Awesome post. Reading stories like these is what helps me overcome the “wantrepreneur” problem. I have a quick question that I hope someone can shed some wisdom on:
Creating a successful, lasting online business requires doing market research (like mentioned in this article), developing an attractive website, and most importantly marketing your product or service effectively. There are so many courses and start-up businesses out there, (like the one mentioned in this article from appsumo), that offer coaching on how to start an online business. I assume there are so many due to the high number of people that get excited reading articles and success stories like this one, go out there and give it a shot, and realize it’s not that easy..
I am willing to go through the trial and error journey to owning a profitable online business, but I want the best tools to help me get there and have a strong foundation of knowledge. These blog posts are great and inspire me, but I feel I need a deeper knowledge and understanding. I would love to find a course or classes that teach the fundamentals of web development, marketing, and web research; there are so many courses out there from start-ups or gurus, but there are also universities and colleges that offer these digital marketing courses. So I guess my question is what would you suggest? Is it worth investing the time and money in one of these courses to have a sound basis of knowledge?- Or is it better to spend that time in actually going through the process of creating a business and learning from trial and error with help from blogs like this?
Thanks for any help you can give me. You guys rock.
Did you figure it out? 😛
I think I did a wrong way, cause I import the stock first using just instinct rather than finding a niche. My difficulties are now selling out our products, anyone with this experience?
[Moderator: link removed]
So, I feel I have a great idea but this article left one thing out building the product. I feel I have a product that could sell for a 100 dollar profit but I don’t know how to get it manufactured. How do go about outsourcing everything? What’s the next step?
Thanks for that Tim. Im in the process of validating my idea so this post is perfect for me right now.
Hi about if my solution is a physical product? I validated the above, do I start with a prototype? anyone with experience with physical products? How to apply a low cost process and secure my idea?
Great post with actionable insights. Thanks
I love business
How do you misspell the heading in the article and work in journalism???
I followed Noah’s steps and made several mistakes. Learn from them so you don’t make the same. [Moderator: link removed]
Can you share it so I can read? Thanks
Orange is the new black. Thanks for the post, learnt some great stuff
Hello Noah, Tim I accept the challenge (even date is totally gone) but I would need your permission to take this article and make it a short ebook and see what happens.
P.S. For this challenge I would apply it only in Mexico which I’m from.
I’m going to test your idea this weekend. I’m an entrepreneur already and your post inspires me to create the lifestyle I crave. Financial freedom to travel the world. Wish me luck!
How do I find the available people on facebook for (x)?
Such a great post which looks to have stood the test of time (judging by the dates of the posts in this thread). Definitely had me racking my brains over the last 24 hours to find a starting point, hoping to get things moving soon. Thanks again!
I’m usually totally lost in any area until I get a big picture summary. This post is so good that not only do I understand the basics of starting a business, I understand it well. This may be a life-changing post that will put my idea(s) into action. Thank you!
Just saw this post, amazing really.
I’m pretty good at the technical implementation of all items mentioned in the article but I don’t yet have a million dollar business idea I can execute. I’d be interested in partnering with anyone that would like help execution the plan. Hit me up!
hey man I think that I have a good Idea on mind but I don’t know how to start I need help ’cause I don’t have much Idea about some things and you said that you’re good in some on then, so if you can we can start talking and we can see what we can do
You are a very courageous man Tim Ferriss! You pursue so many of your interests and choose to publicly share them with the world. So generous. Your podcasts are very informative, and your info on your blogs are great. The stuff about depression really helped.
How do you obtain demographic info from Facebook??
I go from page to page but everywhere Facebook asks for your info to create an ad but doesn’t *give* you any info.
How do you do it?
Men i’m in the same point like you, finally did you find the way to get this information ? let me know if you found the way .
HEY EVERYONE HOW DO I GET STARTED WITH CREATING AN APP. I HAVE A GOLDEN IDEA JUST NEED RESOURCES OR GUIDANCE. RECOMMENDED DEVELOPERS, HOW DO I PROTECT IT , ETC.
Very useful and motivating post. Thanks for posting.
I skimmed the headline and now I am a millionaire several times over, thank you Noah.
hey men ca you help me with some dudes ? it seem that the post works with you so I want to know if the post work with me , I could be great, thanks
Thanks for sharing your thought. I like it very much. I think anyone who wants to get success in any business, he need to do hard work with proper planning of everything. What is his business model, marketing strategy, team and how much he can invest in that business. Budget is very important for every business. He needs to decide initially, where he should invest first and last.
hey gusy I’d like to know how can I see the numbers of person who wants something on facebook like He said in the step 2
hey guys someone can say to me how can I know how many people search a word or when can I see how many people search some kind of word or term, I want to know the number or people ’cause I want to make the number like Noah ? I have a business on mind so I could be cool if someone give me a hand thansk guys !
Yes. You either gotta find a profitable idea or make it profitable. IN both cases you would need to explore the market by using business portals like IndiaBizClub
very nice blog i appreciate thanks for sharing this blog
WOW! I don’t think an article has ever inspired me to start my own business as much as this one has!
Indeed. A great business is about solving a problem for the society, the more you solve, the more money you gain. Facebook ads, Google Adwords and lots more advertising platform had given us an awesome chance to reach out to people, the right people where our business / services could help solving their prob, in exchange for the dollars.
Thanks for the awesome post. Let’s create a million dollar business. 🙂
Big fan of this. Now I need to put this to action. At least I drink Foursigmatic coffee
I would love to see this post revised for 2017 to see if you have any new insights or tools to recommend for achieving this.
Thank a lot, will helpful
How do I find the Facebook audience definition? I do not see a link for it and no clear results on google search.
I have been obsessed with you lately. Well, your content. After recently picking the 4 hour body back up and reading the whole thing I discovered your podcast and started re-reading the 4 hour work week. It was that book that pushed me to train for and complete 3 open water (ocean and lake) triathlons 8 years ago. Good stuff!
This post is very helpful and got me thinking again about one of my favorite ideas. Let’s call it a journal/workbook for simplicity. If you have a business idea that is a product, how would you go about finding a reliable business to produce and distribute it? Seems simple to accomplish, but how do you make sure you are creating a quality product and paying a reasonable price. Any tips on this would be awesome! Thanks so much.
Great article, adds a lot of the thinking business consultants do even on a C-Level.
My question is, how do you find developers who actually build your service. You mentioned Pakistan but from my experience I can’t imagine them to build a great infrastructure and a complex service without anyone who controls/tells them exactly how to do it.
Do you have any advice on that topic?
I built my business [Moderator: link removed.] by these guidelines more or less.
Do you need to patent or create a provisional patent for the idea or product or website you have in mind ?
hey Tim, thanks for this! I think u deserve the Nobel price 🙂
I need to know more about this opportunity. And i really appreciate to be a milliner with in a-week
If only ”Step 1: Find your (profitable) idea.” was true. How can anyone know if it’s profitable or not, before tries to sell it and see if the margin (if there is one) is sustainable, more so when it’s going to scale up? I’m not saying don’t try, but assuming it’s profitable just by having a business plan is a sure way to a very likely disappointment.
Loved this post. So much so that this is my first comment ever, lol. Will come back to this.
I haven’t finished readying ur book
Hey there it awesome to read and explore your blog my friend. Keep creating like this! Thanks for sharing.
Incredibe article. Exactly what I am many others need to close shop at Wantrepreneur Depot and get actual things done. Thanks!