We were on a bike ride from one end of the island to the other, just a few weeks back. It was the four of us on our way back from lunch by a small airfield: my wife, two great friends, and me. This wasn’t the joyous kind of ride where you’d find yourself looking at the sights and soaking up beautiful architecture (at least not for me). This ride had one purpose: travel a nine-mile trail in an efficient way.
Just this past week, I realized I’d had a glaring error in my thinking on that ride home. And this nine-mile, 34-minute trek perfectly demonstrated it. It was actually my wife who helped me to understand what I could have done better in that moment. I asked her for permission to use her criticism of me for this post. She quickly obliged.
Every great business is built around a secret that’s hidden from the outside. A great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator. 
I’m impatient. I seek speed and efficiency to a fault. About a mile into our ride home, I noticed an unconventional path. And frankly, I just wanted to get back to our rented home in Oak Bluffs. I wanted to move on to more exciting plans. Path “A” was conventional and well worn; it’s how we got there. Path “B” was new and improved; let’s call it product x. Product x was riskier, faster, and more picturesque. As we cycled home at 9 – 10 mph, I looked back at the crew and pointed to product x. In a moment, I tried to sell it, but they didn’t immediately see the value in it. They leaned towards the incumbent product, path “A”. I observed their hesitance, I scoffed, and I took off on my own. The path allowed for higher speeds, less traffic, and fewer gusts of ocean wind.
In short, I didn’t sell them; I didn’t win them over. And because of this, they didn’t join me on the journey. But more importantly, they weren’t able to tell others about the picturesque, faster, newer product x. Founders who launch products in media, software, or commerce often run into the same conundrum. A product that doesn’t sell on its own isn’t a good product. But to move a product into the “sells on its own” category, you need to earn that slow and grueling first 100.
Without a strong group of early adopters, you will not efficiently achieve the attention of the masses. The first 100 are the foundation. Without the support of the 100, the masses will not adopt. Made famous by Simon Sinek, heed the diffusion of innovation theory: the early majority will not try something until someone else tries it first. Brands are judged by this early majority.
Jason Lemkin is a widely known investor and tactician in the SaaS space. He has his understanding of SaaS growth down to a science. He knows how to evaluate products based upon their customer acquisition efficiency and revenue trajectory. I loosely apply some of his beliefs to retail because the core message is essentially the same.
You’ll have brand equity probably as early as $1m in ARR. As soon as you have 100 happy customers or so.Protect it zealously. In the end, it’s how most non-early adopters choose which apps to use and buy.
The Law of the 100 is everything, whether you’re building a service or a retail brand. Have you ever heard a music fan cite Beyoncé’s Beyhive? Without the strength of an impassioned audience (a hive), brands are left to the devices of phase two or three tactics throughout the phase zero period of growth. Impassioned audiences matter.
- Phase zero: collect interest
- Phase one: build word of mouth influence
- Phase two: utilize paid channels
- Phase three: consider paid endorsers; tip into the mainstream
Another quote from Zero to One stands out when I consider brand equity discussions: If your product requires advertising or salespeople to sell it, it’s not good enough: technology is primarily about product development, not distribution. So how do we overcome this hurdle while short on time, cash, and temper?
Consider something that you’ll read throughout 2PM. If you’ve built a great product, you’ll need an audience. And if you’ve built a captive audience, you’ll need a great product. The most efficient way to build the audience is before you launch the product. But that luxury doesn’t always exist. For product marketing veterans, harnessing brand evangelism is a part of the post-launch process. Word-of-mouth influence is what drives growth as long as consumers observe authenticity in the message.
By building a community of impassioned believers, they spread a brand’s messages without you ever spending a dime on Instagram, Facebook, or Google. This means that relationships are often 1:1 in the beginning. Brands often try to sell one single member of the potential 100 at a time. Whereas marketing is typically seen as a funnel, building the first 100 looks more like a handshake line.
Last week, Brooklyn’s Greats Brand released an ultra-limited edition Axelrod shoe; 100 pairs of the premium Italian-suede sneaker sold out in under 17 minutes.
To achieve this type of sales velocity, brands must be trusted. But they also have to take demand generation and word-of-mouth marketing very seriously. The Greats Brand did a great job of this with their recent product release:
- Secured a popular niche media collaboration.
- Barely tweaked an existing product to appeal to an established audience.
- Earned media placements after the collaboration announcement.
- Surveyed established audience, just 48 hours before the product hit their online store.
- Collected thousands of phone numbers for hyper-efficient, targeted text marketing. This is 1:1 communication at scale.
- Texted numbers. Counted a short wave of product page conversions.
A barely-tweaked product garnered over $200,000 in earned media for Greats Brand and the product sold out in 17 minutes. Successful commerce companies and vertical brands generate an authentic happiness and sense of community with their customers. A common retail error occurs when product founders focus on the validity of their products alone.
A product is a journey. An early customer is not just a buyer, they are part of that journey. In Zero to One, the author communicates: an early customer is a secret holder in your product’s conspiracy to change the world. Remember the cycling allegory? My critical failure occurred when I assumed that the product alone (the new path, speed) was more important than the friends and family who were with me (the happy 100 customers). I was impatient, and to me, product alone was more valuable than the collective.
When DNVB No. 118 popped up my radar in January 2018, it became very clear that Atoms understood the power of 100 principles for vertical brands. The D2C shoe brand (still in pre-launch) initially kicked off with the help of Product Hunt. Through a short survey, Atoms places you into a queue of now more than 9,400 potential buyers. In the first month, if even 1/3 of the waitlisted consumers buy the shoes upon their release, Atoms will gross $500,000. Their current upside potential? Close to $2 million in revenue on day one.
Atoms now has the opportunity to convert these early adopters (who are paying full price) into evangelists who will find the young company their next 10,000 believers. And all of this on just $560,000 in seed funding.
Will Atoms outlast the early hype cycle? Potentially. They do have their detractors. But few physical product brands are as well-positioned to generate critical early revenue.
For products primed to grow without paid channels, speed must take a back seat to a type of validity that is only gained by amassing a passionate, vocal, and protective 100. The best brand managers would have done what I did not, in that moment: (1) convince the cyclists to join the journey of product x, (2) let them lead the ride, and then (3) watch as the collective attracts more to the team.
By Web Smith | About 2PM