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

I believe in the Customer-Funded Business Model. I've co-founded startups that were customer-funded and I've co-founded startups that were investor-funded and the customer-funded ones were so much more enjoyable. We could focus on what matters most and we didn't have to stress about investor expectations. We were free to make the right decisions for the business, for those in the business, and those we served.So, I bought this book.So, why did I give up on reading it?I started to read it and decided that I wouldn't get enough value from reading it to justify the cost. Obviously I'm not talking about the price of the book - I'd already paid that. Rather I'm talking about the pain of wading through 269 pages of what it is.The cover of the book is very attractive. The inside of the book is ugly. The fonts chosen, the header styles, the font styles on side quotes, everything about it screams of 1970s-era literal cut-and-paste page layout tools (I know - my mom used to do that kind of work). The cover page for each chapter looks like it was designed by a fourth-grader. It's literally a simple star with each point labelled with one of the models I'm told the author will eventually talk about with a screaming headline above it (e.g. Craving Crowdfunding? Pandering to VCs? Groveling to Your CFO? The Magic of Traction and the Customer-Funded Revolution"). Even though the font size for chapter text is relatively large, the line spacing is relatively tight, so the content feels very dense as you're going through it. Sidebars are almost humorously formatted with black headlines on a dark grey background and everything in a bold box. Although there are many subsections (I think in multiple levels, but it was a little hard to tell), the chapters are really long, making it feel like you go on and on and on without getting anywhere. It wore me out just to look at the pages, much less read them.But maybe the content would still be worth it? I can't say definitively since I only got through about 35 pages of it. Most of that was trying to convince me that the customer-funded model was the answer for every business. But then the author narrowed down the customer-funded model to exclude things like crowdfunding (even the Kickstarter kind, where customers are providing the funding to build your product) and bootstrapping (while more than just customer-funding, eventually needs to include customer-funding). But then, to have some interesting examples, the author broadens the definition of customer-funded business to included companies that raised huge amounts of VC funding (like Airbnb which has raised over $6B in investor funding). Why exclude crowdfunding and bootstrapping? Because there are already plenty of books about those approaches, so you wouldn't need this book. Why include VC-backed companies that started by running experiments that included customers paying (and thus partially funding the business)? Because otherwise there would be few examples that people could relate to.Then you have the issue of audience confusion. The author thinks everyone should read this book - entrepreneurs, investors, corporation executives, business school professors, etc. So sometimes he speaks to one of these audiences in one paragraph and another of these audiences in the next paragraph without making clear which lessons would apply to which audiences. At least the first part of the book is also very promotional - the author wants everyone to buy into his thesis and he hits you over the head over and over again with the same arguments for it. It's all very wearying.But surely there are some nuggets in there? I was hoping that the 5 customer-funded models he was going to introduce would be super helpful for entrepreneurs wanting to customer-fund their business. I was hoping that someone pursuing a given startup could consider which of the 5 might be the one (or maybe 2) to try in their business. But instead the 5 models name very broad business-models that could be described to just about any modern startup out there: matchmaker models (aka platform model or two-sided business model), pay-in-advance models, subscription models (including virtually all SaaS startups), scarcity models (which seems like a very narrow niche that has almost nothing to do with customer-funding), and service-to-product models (which again seems to be a long term business strategy as opposed to a way to customer-fund your business). Maybe these models would have actually met the goals I was hoping for from this book, but I didn't have enough confidence that would be the case to make the time and pain investment to find out.Maybe you have more patience than I do. Maybe this topic is worth it to you and you'll actually find incredible value from it. I can't speak for you, but as for me, I'm giving up on the book and counting my sunk investment in it as the part of my book-investing portfolio that's going to count as a loss. Thankfully I've had plenty of home runs to more than make up for it.

John has done it again! A book that I can relate to. I = a middle class aspiring Entrepreneur who is NOT living in Silicon Valley.The sexy model I see people following in the startup space is - get an idea, do a three months lean startup, get seed funded (or join a startup accelerator) and then look for series A. I see my Lean startup friends talking about number of visitors to their website, number of downloads of their apps, amount of money they have raised, etc. Everyone is out there to become the next facebook, sign up the whole world, go viral, and then figure out a way to make money! John Muller suggests a different model through this book - get an idea, find a customer, invest just enough in your business to win the first customer, scale based upon your customer's experience, bootstrap for as long as you can, then look for investment to accelerate your growth.John's books (my first one was  The New Business Road Test: What entrepreneurs and executives should do before launching a lean start-up (4th Edition) (Financial Times Series)  talks about Entrepreneurship for people who neither have an Ivy League education, nor do they live in Silicon Valley, where "ideas" perhaps get funded. This book presents the magic masala behind many Entrepreneurs outside the valley, specially in India. And that magic turns out to be the Entrepreneur's ability to somehow bootstrap their business from their customer's money. Being of Indian origin, I can vouch for the fact that such a strategy of using customer's money to bootstrap if the ONLY way to start a company in India (and perhaps for most places outside the US).Many thanks to John and hope to read more from him in the future.

It was very interesting learning about the 5 different customer funded schemes that the author identifies in his book. Being an entrepreneur, I believe this is a must read for anyone developing a new idea into a business. It is definitely crucial to validate your idea and business model with customers’ money before seeking to raise VCs’ capital. I don’t give it 5 stars because I found it repetitive at times.

Mullins describes 5 different models that companies have followed to launch using customer funds. He gives examples of each - mini case studies of firms you've heard about (in most cases). He shares why these models work, why they may or may not work in other circumstances. He then outlines what to look out for if you want to apply that model to your company - or to a company you may be investing in.Too many business books focus on a topic or a theme and then act as it if always works for everyone. John Mullins tells both sides of the story, and does a good job putting it in context.My only quibble (and it's a small one) is that he sees customer funding as a prelude to raising equity investment and dismisses bootstrapping as a method for only small companies. In my experience, some companies go that route, but many more use customer funding as bootstrapping and don't always stay small, but go on to create considerable wealth.Regardless of the next phase of growth, the details of these 5 models and when they work is a great thing for all entrepreneurs to know.

I've read both The Customer Funded Business and John's other book, Getting to Plan B. I loved them both and gained great insights and the needed inspiration to make changes. I read Getting to Plan B when my business was small (about $2M in sales). It provided a philosophy of thinking that allowed us to grow (with our hard work) by over 20% annually for the last ten years. During that time we radically changed how we earn our income and so much of our product mix. I grabbed this book as I was preparing for another round of growth. It has kept me from doing something I have been fearful of: reaching out to private equity for funding. While the speed of growth might be a bit slower, I am much more committed to building a great company than building a big company.

It explains what business people already know but cannot understand.

This book is chalk full of practical case studies from real life examples of customer funded businesses. Not many people know that large software companies such as Oracle & Microsoft got their start with customer funding, rather than VC funding. It's a great read for entrepreneurs, angel investors and VC's providing the pro's and cons's of the five key customer funded business models.

Todo bien

if you are willing to develop a real business for a startup or more conventional way, you must read this book.It gives unexpected perspectives to build a business, to identify what you can do and how - without external investment - at least in the beginning.I strongly recommend !

This is great book. Good insights and case studies, quick read. Definitely worth it. Most cases described in the book are not customer funded, though and were VC funded, sometimes straight from the start. It is not necessarily a bad thing, but makes the book title a little misleading.