Psychotactics Blog: Sean D'Souza: How To Run A Successful Business

1000 True Fans: Why you should temporarily ignore the "1000 True Fans" concept—if you want to get ahead

The 1000 true fans concept seems to follow a simple multiplication rule.

If you have a thousand fans and they buy $100 worth of product in a year, you earn $100,000. Which sounds perfectly fine when you're doing the multiplication, but it falls apart in reality?

Where are the flaws in the 1000 true fans concept? And what if we went down from 1000 to just one? Just one? As in “zero to one”? Let's find out.

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I want to earn $250,000 a year,” said a client to me, “and I have a strategy to do so.”

Ever run into a situation where someone says something to you, and you’re not sure what to say next? Well, this was the case when a client brought up the idea of earning $250,000 in the year that was to follow.

“I’ve read this article about how you get 1000 true fans,” she said. “And I’ve been a fan of other people’s work and I’ve paid $250. Hence, all I have to do is get a thousand people to pay me $250, and I will easily reach my goal.”

If you’re shaking your head disapprovingly, you’re not off the mark

The 1000 true fans concept was based on an article written in 2008, and it quickly gained intense interest because of the easy multiplication process. The author suggested that you didn’t need millions of fans or buyers. All you needed were a thousand. Then, out came the multiplication that could be done without the need of a calculator.

And I quote:

Here’s how the math works. You need to meet two criteria. First, you have to create enough each year that you can earn, on average, $100 profit from each true fan. That is easier to do in some arts and businesses than others, but it is a good creative challenge in every area because it is always simpler and better to give your existing customers more, than it is to find new fans.

Second, you must have a direct relationship with your fans. That is, they must pay you directly. You get to keep all of their support, unlike the small per cent of their fees you might get from a music label, publisher, studio, retailer, or other intermediate. If you keep the full $100 of each true fan, then you need only 1,000 of them to earn $100,000 per year. That’s a living for most folks.

A thousand customers is a whole lot more feasible to aim for than a million fans. Millions of paying fans is not a realistic goal to shoot for, especially when you are starting out. But a thousand fans is doable. You might even be able to remember a thousand names. If you added one new true fan per day, it’d only take a few years to gain a thousand.

See how easy it was to do the multiplication?

Except for the part where it says “more feasible to aim for a thousand, rather than a million”. That’s the part that most people quickly gloss over. All of which brings to an interesting juncture. Or preferably, three points to consider if you’re into this kind of maths.

1- What do 1000 true fans really mean when related to conversion?
2- Why it’s better to aim lower—a lot lower.
3- How to expand your fan base, even while adding limitations.

1- What do 1000 true fans really mean when related to conversion?

Two months ago, I started up an Instagram account. To avoid any kind of instant growth, I told no one about it. Even though we have tens of thousands of subscribers on our list, and a subset of buyers, I kept mum to make sure the growth would be based purely by people finding the account and then becoming a follower.

Approximately two months later, I have 65 followers.

Let's say I keep up the work, and the followers increase and multiply. Instead of just 365 odd followers, I might have twice as many followers within a year. It might seem possible to attain a fair number of followers through simple persistence.

Yet, there's the obvious problem both of us are painfully aware of, aren't we?

A follower is not a buyer as an Instagram influencer Ari found out to her surprise. With 2.6 million followers, she believed she'd easily be able to sell a large number of shirts. To her—and the brand's surprise—she wasn't able to make the minimum of 36 shirts.

Is this kind of result the rule, or rather the exception?

Whether you have 65 followers, or 2.6 million, the real benchmark is the first paid conversion. Until we get the client buying a product or service, they're the equivalent of window shoppers. Until you can get that person into the “store” and get her to buy something, you don't have a buyer.

If the benchmark “true fans” is about having people who buy, then all you have are window shoppers, who aren't really buying anything. And sorry to be a teeny bit cynical, but experience tells us that you often need even greater numbers to get a thousand people to buy.

Five thousand? Ten thousand? Or is it fifty thousand? The numbers aren't relevant because conversion doesn't work predictably.

The point being made here isn't that you can't get very far by throwing random figures at a wall

Even the woman who wanted to earn $250,000 a year, had her figures off by quite a bit. To reach that $250k, she's likely to have expenses of at least another $50,000.

That means she's got to earn $300,000. But that's the income before taxes. If she lives in a country where you pay just 33% in taxes, she'd have to earn about $400,000 to take home her desired profit of $250k.

Even if you were to halve that sum, and then halve it again, the prospect of getting a foothold in business seems to feel impossible. And yet it's not as hard if you lower your sights, but how low should you go?

Should you drop from a thousand to a hundred? Or a hundred to seventy-five, maybe even fifty. The answer is, you should go lower. The best number to start with is, just one client.

One? How are you supposed to get anything done with just one?

2- Why it's better to aim lower—a lot lower.

The problem that seems to arise from the concept of thousand true fans is almost always the same.

The problem is that those aiming for one thousand, rarely have even one client. With all those figures flying around, it's easy to slide into fantasy land, without considering the first client.

The first client isn't likely to be the bedrock of your fortune, but it helps to have one before you start getting into multiplying numbers.

Almost without exception, the magic number is one when it comes to entrepreneurship

Which, in theory, seems simple, doesn't it? If a thousand buyers seem slightly unattainable at this juncture, surely one should be easy. Yet, it's not, for most entrepreneurs. I remember starting as a cartoonist back in Mumbai (it was called Bombay, back then).

I was just seventeen, still in college and looking for my first client. Back then, if you could draw, you also had a vast array of magazines, newspapers and other periodicals that were not only thriving but would willingly pay you for your work.

The problem was getting your foot in the door

One of my earliest cartoons was published in a magazine called Eve's Weekly. That one cartoon gave me the courage to go knocking on the next door. In a few months, I'd managed to not only get more work with Eve's Weekly but also in other magazines and newspapers.

The income I earned managed to pay for my college education (which, admittedly isn't as astronomical as in first world countries). It also gave me enough money to buy myself a 100cc motorbike.

When we got to New Zealand fifteen years later, the very same principle applied

The quest was never to get lots of clients. If anything, we sought out just a single client when it came to cartooning, and later a single client when we moved to marketing.

The barrier was extremely low, and it worked. It's clear there's no way to earn a fortune from that one client alone and yet having a single client should be the goal, and here's why.

Most of us never get started because the bar is too high

Getting a single client gives you just enough confidence to get you going. The key to business isn't skill or even knowledge. Instead, it's confidence. Most of us start with fancy titles like “yoga teacher, artist, life coach, etc.” when in fact, we're still right on the bottom rung of the ladder.

A single client lets us get paid some amount of money and gives us just the boost to keep going. Reaching for a thousand clients all at once, in comparison, freezes us in our tracks. Years pass and we find ourselves no further than we were at the start.

The question we fail to ask ourselves is: do we have ONE client?

And if we do have that one client, was it just a fluke? Were we able to get the client to come back to buy another product or service? This question is important because once we have that client, we can find out a bit about what works, and what doesn't.

We can get a testimonial, and if you're brave, some feedback on how you can improve. All of which takes us to the second client, then the third. You're still a good deal away from a thousand loyal fans/buyers, but two or three suitable clients means you're able to cover your expenses and stop eating ramen noodles.

There are ways to speed up the process, of course

You don't have to throw one rock at a time into the lake to make a splash. If you head to places where clients are actively looking to buy, it's not hard to find a hundred, even a thousand new clients almost overnight.

The book, “Good night stories for rebel girls” found 13,454 buyers, and if you're interested, generated $675,614. Another book, “Food City” earned a modest $32,000 but still managed to get 274 buyers.

“Daniel and Ismail”, is a book about two boys, one Jewish boy and the other Muslim, who become friends on the soccer field. That publication got an even lesser number of buyers topping out at 115, but it's still 114 more than one.

If you get a thousand or ten thousand all at once, that's a magnificent stroke of good luck and strategy. However, even giant companies like Sony or Apple or Pilates didn't start with thousands. They didn't do this oversimplified maths. Instead, they sold one radio, or one custom-built computer; one client at the exercise class.

There are ways to speed up the process, of course

There will be a time when you can expand that fan base so that it gets into the tens, hundreds and even thousands. It could happen in one fell swoop and one Kickstarter campaign. Or it might take a few months or several years. However, starting with just one is doable.

Start with one.

And then as your numbers expand, you can go either way. You can sell as much as possible, or restrict the numbers. Not surprisingly, the second method is less stressful and still very profitable.

3- How to expand your fan base, even while adding limitations.

One of the reasons we have cameras today is because of one man's asthma.

Before 1913, cameras were bulky, had curtains and stands with massive glass plates—the kind you see in the old movies. However, one man, Oskar Barnack, who loved to travel and take photos was also plagued with the issue of lugging around a massive camera.

In what can only be described as a side project, he invented a smaller, more portable still camera, about the same size as most cameras today.

In doing so, he was instrumental in creating one of the most desired cameras of the 20th and 21st century, namely, a Leica. If you were to look through some of the most famous photos of the last century, a Leica is the camera used to take those photos. Leica lenses and dedication to mind-boggling quality soon made them some of the most lusted-after cameras ever.

What should a company do when it has a cult following?

Most companies would instantly cash in on that success, open new factories, and ensure the supply kept up with demand. Leica decided otherwise. Take, for example, the launch of a model called the Reporter.

A company would be likely to produce thousands of cameras, but instead, there are just 450 units available. At any point in time, Leica could have chosen to cash in on the thousands of fans concept, but instead, pulled back.

This kind of logic puts us squarely at odds with the conversion concept

If most of your clients are not going to buy, then doesn't it make sense to sell as much as possible when the going is good? The answer is yes, at first. You do the best you can to ramp up your income because increased income means you are creating a buffer of revenue for yourself.

However, in time, having limitations cause a fan base primarily because of the constraints themselves.

It sounds odd that limitations lead to an expanding fan base because rampant growth is the norm

If you're Facebook, you want to sign up as many people as possible. If you're Apple, you want to double your iPhone sales.

If you're Dyson, the vacuum cleaners need to fly through the door. And that sort of model of selling more or doubling, trebling, or quintupling your clients is a known way to success. What's relatively less known is how keeping things under check create a smaller, but just as engaged fan base.

We stumbled into this concept quite by accident, of course

At Psychotactics, we could only take 35 people in a workshop room. We could only manage about 30 people per online course. Restrained by our limitations, that's where we started. Over time, however, we realised that 16 people at a workshop or about 16 people on a course didn't dampen demand.

If anything, we could increase prices and courses filled up in 24 hours, and sometimes 20 minutes. Working with fewer clients made life a lot less stressful for us, and it allowed us to give them obsessive attention.

Which isn't to state that everything you do should be restricted

Clients can buy several of our products at any time and in any quantity. However, they tend to be lower-priced products, which get clients more eager for premium offerings. All of which happened slowly, methodically, and allowed us to live a comfortable life.

What's important is that the goal might have been to grow as quickly as possible, because we're all exposed to that level of insanity. Yet, there's an entirely different pathway that doesn't require you to have a thousand fans, or even a few hundred.

A friend of mine runs a marketing coaching business

He has just 25 clients, each of whom pays him $2000 a month. And if we slip back into multiplication mode, we realise that's a hefty $50,000 per month, or $600,000 a year. You might not be surprised to know he has a waiting list as well, and while keeping things very small, he's doing just fine.

It's not an overnight story either

It's taken him several years to build up his group, and because he can't manage any more than 25, he's been restricted as well. It goes to show that you don't really need a thousand fans or 26 million followers.

Instead, it would help if you had a single client, that turns to two, which turns to four. Given the right offerings, you can turn your product or service into a business that's only moderately demanding and still live a very good life.

You could take a line from someone like Peter Thiel, co-founder of Paypal who said: “you should take your 10-year life plan and ask, Why can't I do this in six months?” Or you could take your time, restrict your audience and still do very well indeed.

You could have a 1000 clients or just 25. It's your choice.