How Dane Maxwell Creates Businesses Out of Thin Air

persuasion

I want to introduce you to a successful marketer and incredible guy, Dane Maxwell. In the last quarter of 2012, Dane went on an impressive marketing campaign, letting people know about his training program, The Foundation. The purpose of The Foundation is to teach you the proper mindset and skills to build a software business in 6 months. One of the places he promoted The Foundation was in Pat Flynn’s website, Smart Passive Income. And that was where I first learned about Dane.

My mind was pretty much blown away by what Dane was saying about business and success. In fact, I was so tempted to join. The only thing that stopped me was my lack of time by being in medical school. The program will kick you out if you cannot keep up. And there was a very good chance I could not keep up. Not wanting to miss out on what Dane is offering, I decided to learn as much as I can by listening to his interviews and by reading his writings.

I have a confession to make: this article is written more so for me than you. I will summarize the essence of Dane’s message so I may refer back to this if I ever decide to start a software business (or any other new venture). But that should not keep you from benefiting from this.

First, Dane talks about the secret language of millionaires…

The Secret Language of Millionaires

Almost all self-made millionaires have something in common; they all speak the secret language of marketing and sales. If you think about it…

Marketing and sales are the most important aspect of any business.

Marketing and sales are the most important aspect of any business.

Marketing and sales are the most important aspect of any business.

Steve Jobs’ Apple would not be the powerhouse it is today if it could not sell its iPads, iPods, and other iGadgets. Wall Street would come to a complete halt without the selling of stocks, bonds, and other investments. Heck, even celebrities would not make their millions in salaries and endorsements if their products are not selling.

 Dane categorizes 4 types of marketers:

  1. newbie marketer
  2. minor league marketer
  3. major league marketer
  4. all-star marketer

Personally, I do not agree with him. There are really only two types of marketers: 1) amateur marketer and 2) pro marketer.

Amateur Marketer

The amateur marketer focuses on self at the expense of his customer. (In fact, he cannot even tell you exactly who his customers are. He does not know their demographics, their mindset, their problems, and anyone else about them.) He is only attuned to himself. He begins his business by asking, “What can I offer? What can I make?” And once he thinks of something, he locks himself in his room and makes it. When he finally releases his product, he crosses his fingers and hopes someone will buy it.

Most likely, the amateur marketer will fail. And when they do, their blame always falls on the externals, things he cannot control at the moment: lack of ideas, lack of money, lack of time, lack of experience, etc.

Pro Marketer

The pro marketer does not focus on himself. He focuses on his customers. He talks to his market to find out what it is looking for. Once he fully understands the market and its pains, then he seeks a solution. He can either create the product by himself, hire other people to create the product, or generate leads for someone else who already created the product.

The pro marketer will almost always succeed. The market has a need that is dying to be met. All it is waiting for is someone answer that need.

Remember the secret language of millionaires, because it will be important as you go build your business.

Second, Dane talks about the most important step of building a software company…

The Most Important Step to Build a Software Company

Dane has personally said that even if you do not join The Foundation, he has provided enough free information through his website and interviews for you to start you software company. And as I read through the reviews of the first Foundation, I am further convinced that you do not need to be part of The Foundation to build your business. For those who aspire to be the next Bill Gates, I will start you off with the most important step of building a software company.

Before I go into any further details, the very first question you should ask is:

Why build a software company over any other type of company?

Dane did not choose software companies because he is a techie or a programmer. He chose it for its business model:

  1. Automated selling. The traditional way of sending an invoice and then waiting for the customer to pay is out of the picture. Instead, when she wants to buy, she will enter her data into the payment system. Upon receipt of the payment, a statement is automatically sent to her. You do not have to lift a finger in this transaction.
  2. Recurring revenue. Instead of a one time payment, there is an monthly or annual fee to use the product or service. Basically, the customer does not own the product but rents it.
  3. No accounts receivable. You get paid before you provide the service or product. This saves you time as you do not have to chase down people to pay what they owe you.
  4. Providing a tool. Personally, I do not care too much for this reason. The thinking is that the people who got rich during the California Gold Rush were the tool providers, not the miners. If you are going to sell your software to businesses, it makes sense that you offer a tool. For example, if you are selling to tax preparers, sell them a software that allows them to prepare taxes in a more efficient and more painless way.
  5. Boundary-less. The last reason is from me. Basically, you want a company that can effortlessly sell anywhere, not tied down to location. So if your business depends on a physical location, most of your customers will be from the surrounding area. (Think dry cleaners.) But if your business is on the internet, anyone with an internet connection could potentially buy from you.

So let me explain the most important step:

Idea Extraction

Pretty much all the people who went through The Foundation thought this is the most important step. This is also the hardest step. Half of the people in The Foundation could not even attempt this before dropping out.

Basically, you are trying to find a need and fill it. You are not going to build your software company based on your idea of what is important. Instead, you are going to ask your target market on its idea of what is important. Therefore, you do  not need any ideas. In fact, it is best if you have no ideas. What you will need, instead, is boldness, because you will be contacting lots of people.

So what is a good market to target? The ones that can meet this criteria:

  • The decision maker is willing to talk. This is usually the manager or business owner.
  • The decision maker is reachable by phone, e-mail, or fax.
  • The business is profit-motivated. If you can somehow show the business how to increase sales or reduce expenses (directly or indirect), you will make the sale.
  • The business makes at least $50,000 per year. This allows you to charge higher prices.
  • There should be at least 1,000 business in the market throughout the country. You need a large enough client base to make the effort worth it.

With that in mind, you have to start generating leads. I would start out with getting e-mails because no one likes to receive cold calls. (When was the last time you enjoyed a telemarketer?) Send an introductory e-mail laying down the background and how you can benefit the recipient. If the decision maker is truly interested in what you have to offer, he will make time for the call. This will also increase the quality of the call.

If you cannot get enough e-mails, your only option is to start making calls. I would be very respectful of the person’s time. Ask if he can speak right now. If not, get the person’s e-mail so he can review your message at his leisure.

A typical e-mail conversion ratio is:

  • 20 / 100 will open and read the e-mail
  • 10 / 100 will respond to the e-mail
  • 2 / 100 will lead to a conversation

So be prepared to spend either time or money generating the leads. Because you will need hundreds, if not thousands, of them. A good place to start is Yellow Pages. I am not going to go into further details, but here is a good example of how to do lead generation with Yellow Pages.

When you finally get to talk to the decision maker, find out about the problems his business is facing and if a software could help with his problem. Again, I am not going into details about what you can say, but here is a good place for ideas. If many of the conversations reveal the same problem solvable by a software, you may have a viable idea on your hands.

P.S. I was going to write about all 6 steps of building a software company, but The Foundation’s website already did a very good job of detailing them. Why do extra, unnecessary work? If you want to find out more, visit its site for more details.

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Comments

  1. Lovely article Alex. I have watched all the interviews Dane has made and this is a lovely summary of the start up part. 🙂

  2. I have become enthralled with all that Dane has accomplished, ever since watching his interview with Andrew on Mixergy. After years of mulling over what to do as an entrepreneur, Dane has given me the answer.

    Good post Alex.

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