I spoke at a San Diego TiE event two days ago. It was a panel of Software Entrepreneurs fielding questions about what the start-up life is like in software these days. Steve Bjorg from MindTouch was there. The two other panelist were Thomas Carter , Founder & CEO, Capital Window and David Desch, Vice President of Engineering and IT, Digital Force Technologies (he helped Sony launch their HDTV division). For me, the chance to speak at the event was well worth it. I had not a little bit of fun too. In every way, I was the anomaly up there. No success to speak of (in the monetary sense), no "team" and no inhibitions.
Aside from being fun, the event also helped me frame some thoughts I've been having about Product Development for the Web. I thought it would be a good idea to get them down on paper lest they suffer the fate of the fleeting.
This was a popular meme for the night. I said it early and it was repeated by the panelists and audience members throughout. For me the idea of building a product (and a company around that product) has always been to explore the strengths of your idea as quickly as possible. The only way to do that is to launch and see how it fails. When you see what's not working, you have a clearer picture of what is working. Instead of fixing what's broken, focus your attention on what works. The faster you find your flaws, the faster you move on to what works. This saves money and, as Steve Bjorg said on the panel, you "avoid dying a slow death."
In designing products for the Web, there are a few principles of development that can help you fail fast. They are:
- Figure out what your key performance indicators are before you start. Stick to them doggishly. They may be revenue goals or traffic goals. They may be relative goals depending on how large your initial reach is. Make them concrete and make them immediately attainable. Build the analysis of these goals into the product design and think about how your product design changes in order to specifically target these goals.
- On demand infrastructures
- Don't spend money on infrastructure. For us, that means putting our applications in the cloud. That helps us figure out how much on an accrual basis it costs to operate our product and therefore how much we should charge. In other words, keep you capital expenditures close to zero and stringently analyze your operational expenses as they relate to your reach.
- To-down online PR
- It's really easy to reach people who can give your product a nice initial bump. TechCrunch, ReadWriteWeb, BoingBoing. Those sites are all good at getting the word out to a massively interested audience. Their authors and editors are willing to hear your idea almost always. Reach out. Give them the scoop.
- Bottom-up online PR
- After your bump, make sure your product has the tools to go viral. That is, very definitely build community into your product experience. I can't think of a single product idea I've had in the last 10 months that did not have a social component central to the experience.
- Rapid Development toolkits
- Build an experience
I'm not the only one who has this idea. Markus Frind of Plentyoffish.com is the posterboy for it. His massively popular free dating site practically runs itself. He built it using the principals stated above and now his income exceeds his costs always because his infrastructure expands and contracts with his traffic. Revenues also expand and contract proportionally to traffic. He's found a sustainable business model in a dating product.
My hunch is that this model works well outside of dating products as well. While practically none of these potential sustainable ventures will yield the kind of revenues that would make a venture capitalist happy, they are easy enough to build and cheap enough to sustain that smart people with some time can make a sizeable passive income structure for their own product or suite of products.
Here are some principles of a sustainable product:
- Subscription model for non-free products
- You have to make money from the beginning. Cost of living aside, if your marginal expenses are more than your income in the first 3 months, then you're not on to a sustainable model. Consider a subscription model for products likely to have less enthusiastic or viral offerings. BTW, just because your idea is not viral, does not mean it's not suitable for a sustainable model. You just need to adjust your subscription price accordingly. The key is to get a customer and keep the customer paying over time. If you can make a sustainable product off of adwords and keep your product free to use, I highly recommend it. The arc of history bends toward free and open source. The sooner you get there, the sooner you stave off competition.
- Optimized for Search
- It's the absolute cheapest way to exploit the natural arbitrage that exists in deriving revenue from adwords. People come to your site on a cheap search term (which you, in fact, paid nothing for) and leave on a paid click. The return on investment is huge. Narrow your strategy to single terms. Dominate that one, make a sustainable funnel for that one. Then add another. Revisit your past successes periodically to see if they need tuning.
- Outsource expensive operations to the nodes.
- Customer service is a good example of this. Use the community to help others in the community. You don't want to spend time or money helping if you can avoid it.
- A good, sustainable product often does one thing and one thing alone. Paypal and twitter are great examples of this. Look at how astonishingly little those services have changed over time. A simple product design drastically reduces the operational costs inherent in otherwise confusing products. Make it simple or die on the vine. We're going for sustainability here.
I know it seems counter-intuitive to do this in today's market, but quitting your job makes more sense in today's market than any other time. You're starting at the bottom of an economic cycle. If you fail now, you've lost nothing. If you've succeeded, you have the greatest change to capitalize on that potential as the economy starts to improve over the next 18 months. What's more, someone who used to work for Yahoo! is probably trying to re-invent the business you're in. Ask yourself if your current company is sustainable. Then ask yourself if you can afford to jump ship.
Don't be discouraged by a failure. It can be a positive experience. Failure is, in a sense, the highway to success, inasmuch as every discovery of what is false leads us to seek earnestly after what is true, and every fresh experience points out some form of error which we shall afterwards carefully avoid.
A few weeks ago, I quietly disclosed that I was no longer continuing full-time operations of a company I started. While I did not say I was shutting Dandelife down, it was reported (by the Times and others) that the project was a failure. Interesting conclusion. I would argue the opposite. And so I shall.
Two-and-a-half years ago, I quit my day job at a company I helped found in order to found another company. The difference being the former was an agency and the latter a dot-com. Instead of working for clients and toward their goals, I was now in a position to make a product directly for consumers. I did this with the help of two close friends who helped me take the leap. Practically speaking, starting a company takes real concrete help, not just encouragement. I got a few months of money and a development partner. I got five great advisors. And within two months of taking the leap from a steady income and a loving work environment, I was in the solitary world of building a new company from the ground up. I told my wife that if the new company wasn't bringing in enough money to replace the old income in three months, then I'd quit and find a real job. It didn't make money. I didn't quit. I didn't find a real job. But that didn't matter. To make it work, I tinkered.
Tinkerers do so in so many different ways. My father-in-law has a garage full of junk parts, tools from a forgotten age, two refrigerators and a black-and-white TV. There is a clear path from the door to the fridges in an otherwise unnavigable space. My dad has an office with ash trays filled to the brim, a desk full of letters, stacks of magazines and newspapers in the corners and bookshelves on every wall. I can remember a basement in Cleveland that my best friend's dad inhabited throughout our childhood; he'd disappear for weeks only to re-emerge bleary-eyed and incoherent but holding a beautiful model airplane ready to fly, crash and repair.
Prior to starting Dandelife, I tinkered with code and graphics and built things in my free time that only I had any use for. My desire to build things could not be staved off.
When I started Dandelife, I found that those computer skills were great to have, but if I was going to survive on my own, I had to extend myself in new ways. I had to become different and I had to discover my other abilities on-the-fly. In short, I hacked at myself. I found ways to leverage my experiences for others. I consulted. I traveled. I spoke. I networked. I tested. I strategized. I learned as much as I could from as many people as I could. I made new friends. All of this was a part of discovering what my weaknesses and strengths were. Skills that were weak, I rebuilt. Those that were strong, I put pressure on.
In retrospect, I realize that I had done this kind of self-building (albeit under considerably less pressure) in all of my previous jobs. It was an onconscious thing. However in the fishbowl of foundership, self-improvement is always, always at the forefront of one's thoughts.
Such is life. By all outward measures, Dandelife has not been the success I set out for. I never got VC funding (tried, got very close), never got acquired (got even closer) and never made millions (not even close). Failure, as Keats intimates, is a factor for success. If in no other way than expanding and deepening one's own ability. What's more, I'm (still) having the time of my life.
If you want to see the new version of dandelife (it's actually got fewer features than the current dandelife) - I'd welcome your feedback now: http://stage.dandelife.com/
It's a staged version of dandelife. We stage our development here always before pushing it live when we're feeling confident in it. You can bang on it, but just keep in mind that it's not THE dandelife so anything you write there will be erased as we stage further developments.
As for the changes you'll see here, there is one major thing we got rid of: Streams. We kept flickr, twitter, livejournal and typepad integration (because you can publish your stuff to those sites), but we stopped recording streams. This means your streams data on the old site will be gone. If that's content you can't live without - let me know. I may put some more effort into creating an archive for specific users. But since that streaming data existed on other sites to begin with, I'm hoping it's OK to nix it. Either way, let me know.
The major improvements here are for reliability. The new site should be much faster and, given it's simplicity, much easier to use.
Your mission is to find bugs. When you find things that don't work quite write, respond to this post with your findings.
Again, thanks for being a very valuable member of this community. It pleases me to no end that you're a regular.
Steph and I saw The Curious Case of Benjamin Button last night. By the end of the movie, we were both bawling.
They say that when you become a parent, it's becomes harder to imagine your life before you had a kid. While I never exactly agreed with that statement, I know what it means. Life after a having a child is unimaginable without.
The Curious Case of Benjamin Button plays on that that theme throughout. Having seen it in Taos, upon leaving D back in Lincoln with Mom and Dad, made it all the more effective. It made us miss D more. It made us appreciate our parental emotions more. It made us cry like babies.
Afterward, we went to Wal-Mart to get some boots for walking around in. Then we came home and watched two episodes of "Life" on DVD. When we tucked ourselves into bed, we started talking about the movie more. The movie had an enormous impact on Steph who is usually not emotional. We stayed up for an hour talking about these feelings and then conked out exhausted from so much.
I used to think that I wanted to be a film director. The kinds of films that I wanted to make were those that showed people at their best. Someting to be inspired by. Trials and tribulations. Spirit overcoming circumstance. Good deeds trumping bad. Now, I know film-making was not in the cards for me. But will never give up being inspired by films like this. How could I?