The Customer–Funded Business: Start, Finance, or Grow Your Company with Your Customers Cash

WHAT INVESTORS ARE SAYING ABOUT THE CUSTOMER–FUNDED BUSINESS The Customer–Funded Business should be mandatory reading for every entrepreneur before even thinking about seeking angel or venture capital funding. Its also the perfect what to look for guide for the professional angel investor. I will be giving a copy to every startup that pitches me! DAVID ROSE, Founder of New York Angels , CEO of Gust; Author of Angel Investing As a venture capitalist, nothing is more valuable to me than getting first–hand market feedback from customers about their experience with a new killer product. The Customer–Funded Business expertly argues that the best and usually shortest path to developing that killer product is by getting customers to pay for it. By following the precepts of Johns book, and financing a business primarily from customers willing to be early adopters, entrepreneurs will have a much clearer and more persuasive blueprint about how to build the business, and therefore have a far easier time raising venture capital (and incur less dilution, too). BRUCE GOLDEN, General Partner, Accel Partners; Forbes Midas List of Top 100 Venture Investors I get sent, and buy, a large number of business books every year. The Customer–Funded Business is simply one of the best, most informed books I have read in a long time. Fascinating case histories of customer–funded companies all over the globe. A must–read if you are considering starting your own business, or funding a new initiative. DAVID GIAMPAOLO, Chief Executive, Pi Capital, London A book Id like to give to each of the founders weve backed. In this fascinating study of successfuland not so successfulcustomer–funded businesses, John Mullins distills the lessons learned into simple rules. A valuable and entertaining read for anyone seeking to build a capital efficient business. MICHAEL ELIAS, Founder and Managing Director, Kennet Partners

Why This Book? xv 1 Craving Crowdfunding? Pandering to VCs? Groveling to Your CFO?: The Magic of Traction and the Customer–Funded Revolution 1 2 Customer–Funded Models: Mirage or Mind–Set? Old or New? 39 3 Buyers and Sellers, but Not Your Goods: Matchmaker Models 70 4 Ask for the Cash: Pay–in–Advance Models 98 5 Recurring Revenue: Subscription and SaaS Models 125 6 Sell Less, Earn More: Scarcity and Flash Sales Models 153 7 Build It for One, Then Sell It to All: Service–to–Product Models 177 8 Make It Happen: Put a Customer–Funded Model to Work in Your Business 205 Acknowledgments 239 Notes 243 About the Research 267 About the Author 271 Index 273

JOHN MULLINS, PhD, an associate professor of management practice at London Business School, is one of the worlds most authoritative and best–known voices on the creation, financing, and growth of entrepreneurial ventures. A veteran of three such ventures, including one he took public, his previous books are the go–to sources on the assessment of entrepreneurial opportunities ( The New Business Road Test ) and on the creation of breakthrough business models (the widely acclaimed Getting to Plan B , with Randy Komisar). John is a frequent speaker to communities of entrepreneurs and their teams, CEOs of fast–growing companies, and investors therein. www.johnwmullins.com