Eric Siu breaks down three things every startup needs: a $1M addressable market, a scalable model, and solid unit economics. He uses AppSumo as an example, showing how switching from bundle deals to individual deals grew revenue from $300K to $3M.
Now the biggest parts of starting a business, one, do you have a $1 million market? Most people are doing small-ass markets that no matter how much you do, you'll never make a million bucks. Now the second part of that is, as you have a market that's big, what's the business model? So for instance, with AppSumo.com, I started as bundles. It was like, we're gonna do these bundles. And then after we do a bundle, we, I made basically $5 per bundle. And Andrew Chen, and this is where it came from, super smart guy, was like, let me just show you this 1-minute business model that's like, if you change it from bundles to individual deals, you'll make $25 a product. And that transformed our business from $300,000 our first year to $3 million our second year, just changing the business model. And that's the same thing I've seen with other people where, are you understanding the economics? And I go in detail and we have tutorials in the Million Dollar Weekend that shows like, here's your business model today. If you can make some adjustments on revenue dials, like maybe it's your average order value, maybe it's frequency, maybe it's an extra product, whatever that is, can this actually generate the million dollars that you want it to?
