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How AppSumo was built for $50

Noah Kagan
Noah Kagan

October 11, 2014

Behind the scenes of how I started AppSumo and what you can learn from it

One of the most common questions people ask me is how I built AppSumo.

Instead of repeating myself, I'll show you every single step from the idea, validation and getting my first 200 customers ("sumo-lings”).

It’s the action steps we’ve been using to help 2,000+ people start their own businesses with our How to Make a $1,000 a month Business course.

Before AppSumo, the #1 problem I found during my last business was getting customers, and it drove me crazy.

I decided I wanted to help web apps get customers. I like marketing (did it for Mint.com), the daily deals distribution method was popular, Dropbox and other web apps were growing, and there wasn't anything like this online.

In true “wantrepreneur” fashion I created a website to collect emails from friends and see if I could start a business helping companies get new customers.

AppSumo's First Landing Page

My good friend Paul's face on the landing page.

I started A/B testing landing pages and wasting precious time (sound familiar?) until a friend slapped me in the face and said ...

“Go validate that people actually want this thing, NOW!”

Validation is CRITICAL so you can save time and money to see if your idea will turn into an actual business.

To validate that I could actually help companies get new customers, I started finding web apps that I knew people were using. Then I would see if I could sell the premium versions of those apps to people.

As a frequent Redditor I noticed people were using imgur a CRAP ton and that there was an imgur Pro account. So I figured I could sell imgur Pro at a special price to Redditors.

Lots of imgur links on Reddit

Look at all these pics on the Reddit homepage using Imgur.

Here’s the email I sent to Alan, the founder of imgur, to see if he’d do a promo with me.

Noah's email to the founder of imgur

My first sales email for AppSumo!

He said "SURE!" After emailing a few times, he agreed to be paid $7 for every Pro version I sold (normally $29), and I would get the rest of the profit.

If I could sell 200 of them then I felt comfortable that this could be a real-real business.

So I had a product to sell but no customers or site. Hm ...

To get the customers, I cold emailed one of the founders of Reddit and invited him to breakfast.

I bought him breakfast and plainly asked if he would provide some free ad space since we were promoting something valuable to Redditors. He generously agreed.

Lesson learned: People like bacon and it can’t hurt to ask for something. You’ll be surprised what you can get (especially if you're providing value).

Here’s one of the ads:

AppSumo Ad on Reddit

One of the first of thousands of AppSumo ads.

“Of course there needs to be a site,” I thought.

In retrospect, I could have just directed the ads to a PayPal page or Eventbrite to save time while still validating this idea.

But I found some PHP registration code online and used my $12/hour developer to connect that code to PayPal.

Here’s what I emailed him:

My email to my $12/hour developer

Muhammad is da man!

I found this developer through a referral of someone who already worked with him. If you’re trying to find a developer now, I HIGHLY encourage you to validate your idea before you start looking. Much easier to convince someone to work with you if you have something successful vs. promising bananas for the developer to be your code monkey.

Here's what we whipped up:

The first AppSumo site

We've changed quite a bit since then :-P

The reddit ads went live and then ... MY FIRST DOLLAR CAME IN!

AppSumo's First Dollar

I'm rich!

We talk about the “Velocity to $1” in the HTMA1KB course and I will tell you, it’s real. Once you get that first $1 it’s insanely satisfying and changes your whole mindset about your business.

Then I manually sent the buyer the codes to redeem their imgur Pro account. Yes, I was extremely sophisticated:

Noah sending the first code to the first customer

Always be ghetto in the beginning

Once I hit my validation goal of 200 sales, I realized this has the potential to be a business and AppSumo was born.

Through starting and growing AppSumo, I've learned a lot. I've taken everything I've learned and figured out a repeatable formula to creating successful businesses.

Have you tried starting your own business and struggled?

Or have you just been too scared of starting because you might fail?

If so, we want to help you.

With our How to Make a $1,000 a month Business course, we have the support system and the steps you need to take to start your own profitable business.

We’re helping over 2,000 people and here’s just some of the success our students have seen:

HTMYFD Student showing results

Another HTMYFD Student showing results

There are 700 open spots for the How to Make a $1,000 a month Business course. Join now.

How To Make a $1,000 a Month Business Monthly Plan

  • Interactive assignments teaching you everything from failure to validating your business.
  • Access to a proprietary online web tool to help make sure you are on track.
  • Access to the online wantrepreneur community.
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