Growth Newsletter #248

In August 2022, tech YouTuber Linus Sebastian (Linus Tech Tips) launched a premium ratcheting screwdriver priced at $69.99, generating approximately $5 million in first-batch pre-sales with essentially no marketing spend.

While impressive, it took Linus 3 years to develop the screwdriver and nearly a decade to build his 16m subscriber base. Nonetheless, he leveraged years of audience trust to validate his product along the way and fund production through pre-sales.

This is a good segue into our first big concept.

The Era of the Audience-First Company

Here's our take: In today's market, building an audience first—before developing products—might be the safest startup strategy available (for most founders).

Let's consider a concrete example: imagine you want to build an AI marketing agency platform. Essentially, a single software that replaces the need to work with an ad agency. This hypothetical SaaS tool would solve the following problems.

Let's consider two paths to bring this product to market:

Traditional Path:

1. Develop MVP (3-6 months)
2. Test with beta users
3. Raise funding
4. Build out full feature set (6-12 months)
5. Launch and scramble to find customers
   ​
   ​Risk: By launch, market conditions have changed, competitors have emerged, and your feature set may already be outdated

Audience-First Path:

1. Build content/community around marketing automation expertise
2. Grow to 1,000-10,000 engaged followers
3. Launch a micro-SaaS product, small feature-set, 10x improvement in UX, quality, price
4. Generate revenue while learning exactly what your audience needs
5. Continually sell new products/features into your steadily growing audience
   ​
   ​Advantage: Rapid market feedback, built-in distribution, revenue while building

The economics have fundamentally changed. What used to be a negative—"That's not a company, it's a feature"—is now potentially a strength.

A Real Example: Consider content creator Kane Kallaway, who:

• Built a following of 290K+ on Instagram and 300K+ on TikTok talking about tech and AI
• Launched a YouTube channel teaching people how to create viral short-form content, reaching 100K subscribers in under five months
• Is now building an AI software (sandcastles.ai) that helps people implement the viral content strategies he teaches on YouTube

With each step, he's generating revenue while simultaneously building distribution channels for his next product. In a world where AI makes building easier, distribution becomes increasingly valuable.

To be clear: This doesn't work for every business. Deep tech, regulated industries, and complex B2B platforms still require substantial upfront investment & development.

Why Pre-Selling Beats Feedback Every Time

The second insight from our Linus case study is the power of pre-selling as validation.

Conventional startup wisdom says to get feedback before building. But there's a problem with this approach: feedback is free, and people are generous with positive reactions that don't require commitment.

Pre-selling is the antidote. When someone puts down money—even a small deposit—they're demonstrating actual demand, not hypothetical interest.

The difference between "that sounds interesting" and "here's my credit card" can’t be understated.

Pre-selling works particularly well when you've built an audience, but it's effective even if you haven't. Here's how to approach it:

When You Have an Audience (Even a Small One):

Direct pre-selling can work beautifully with just 1,000 engaged followers. You can:

1. Email your list to notify them of the product you’ve built
2. Drive them to a landing page (built with best-practices e.g. strong value prop messaging, social proof, product UI imagery, etc.)
3. Offer early-bird pricing or founder's discounts

The key is ensuring there's enough skin in the game—a deposit or full payment—to confirm genuine interest.

When You Don't Have an Audience Yet:

This is where the "service-first" approach comes in—something we call "manual before mechanical."

Case Study: DesignJoy founder, Brett Williams, built a productized design service where he personally handles all design work. Solopreneur design services might sound like small potatoes, but Brett claims to rake in nearly $1.2M/yr. While he hasn't chosen to build a product yet, he could fund development of a SaaS product through his service revenue if he wanted to.

Potential Pitfall Alert: The service-first approach comes with a major challenge—you can get trapped in service delivery. When you're spending 110% of your time fulfilling client work, when do you actually build the product? If you choose this path, be prepared to either:​

‍
          1. Cap client intake at a manageable level
          2. Hire help to run the service side while you build
          3. Use profits to bring on a technical co-founder​

Without this planning, many founders get stuck in "service purgatory"—too successful to quit, but unable to evolve into a scalable product. I know from personal experience. 🤦♂️

Addressing the Skeptics: Real-World Constraints

Let's address some valid considerations regarding the audience-first approach:

"Building an audience takes too long" Fair point—not everyone can wait 1-2 years to build a following. The answer? Start small and focused. You don't need millions of followers—you need 100-1,000 of the right people. Niche down aggressively. A newsletter with 500 enterprise CIOs is more valuable than 10,000 mixed followers.

"The audience-first approach doesn't work for deep tech" True—some technical innovations require significant upfront R&D. In these cases, consider a hybrid: develop your core technology while simultaneously building thought leadership in your space through technical content that attracts your ideal audience. Check out Nothing Tech. They've built a ~1M subscriber following on Youtube while developing an iPhone competitor.

"Pre-selling doesn't work for enterprise products" Enterprise sales cycles are indeed longer and more complex. However, we've seen founders successfully use "paid pilots" and “design partnerships” as a form of pre-selling—where a company pays a reduced fee to participate in early development, essentially funding your build while providing real-world feedback.

"Service businesses are fundamentally different from software" Yes—and that's exactly why you need a clear exit strategy if you're using the service-first approach. Define specific metrics that will trigger your transition to product development (e.g., "$300K ARR" or "50 active clients"). Otherwise, you risk building a service business that consumes all your bandwidth.

Actionable Steps to Implement These Strategies

For the Audience-First Approach:

• Identify your zone of expertise and the audience you can uniquely serve
• Commit to consistent content that demonstrates your knowledge
• Focus on one platform where your audience already exists
• Set a modest initial goal (1,000 newsletter subscribers, 5,000 followers)
• Start building micro-products or services while growing your audience

We developed the Demand Curve UNIGNORABLE course to help founders solve this problem. Keep an eye out, we may just open it back up. 😉

For the Pre-Selling Approach:

• Create a landing page that clearly articulates your value proposition
• Use AI tools to mock up a realistic UI/design of your product
• Offer limited early-access pricing (with meaningful deposits)
• Set a specific validation target (e.g., "We'll build if 50 people pre-order")
• Consider starting with a service version that you can deliver manually

👆If you’d a clear step-by-step guide on how to validate your product, check out the Demand Curve Growth Program. 25% off through April 30th.​

P.S. Shoutout to Soren Iverson for last week’s “Just for Fun.” Sorry for leaving out your much deserved attribution buddy!