[00:00] Rob: This is Startups for the Rest of Us: Episode 27.
[00:13] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
[00:21] Mike: And I’m Mike.
[00:23] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s new this week Mike?
[00:27] Mike: Just looking through the news and finding some interesting stuff, to be perfectly honest. [laughs]
[00:33] Rob: Yeah? Are we talking about that stuff today or is it unrelated to this podcast?
[00:36] Mike: Well yeah, we’ll talk about it, I’m sure.
[00:38] Rob: OK, cool.
[00:39] Mike: I’ve got some…I don’t want to call them growing pains. They’re more or less migration pains. I’m moving my hosting provider. The hosting plan I was on, you paid ahead yearly. So last year I kind of got to the point where I knew I was kind of outgrowing it and didn’t really want to stay there, because I was running out of disk space and a few other issues as well.
[00:59] But I couldn’t upgrade the system at all, and moving to something else would have been a real pain. So, at the time, I just didn’t do it. And I’m coming up on my yearly renewal again, so I’m looking to move, and it’s a nightmare. If you’ve ever changed host providers, it just sucks. [laughs]
[01:16] Rob: I have. You know, I’ve moved providers for just one website. Wedding Toolbox—I moved it from that dedicated box to my Dreamhost account. And even that…that was one site and one database, and that took me several hours to get all the configuration. You have multiple sites, right? I mean not just…that becomes a disaster.
[01:32] Mike: Oh, yeah.
[01:33] Rob: Yeah, that’s such a fiasco. It’s such a time suck, because that doesn’t do anything, you know? It doesn’t move you forward. No one notices. It doesn’t provide value. So that’s a bummer.
[01:41] Mike: And that’s the worst thing about it, though, is that if I were to start gauging my time against how much it would cost me to just leave it there, I mean, because the one I am going to move to is probably like $10 a month cheaper, which honestly, I am not really concerned about that. It’s more the scalability and everything else that goes along with it.
[02:02] But if I were to start logging my time against that as if it were billable, it would just be such a money sink.
[02:10] Rob: A fifty year payback option? [laughter]
[02:13] Mike: Yeah, something like that. I mean it’s just ridiculously high. There’s no way at all I would ever get the money back based on the time I spent and the money I actually save on that.
[02:21] But, you know, I gotta do it. I’m at the point where I really just don’t have any disk space left and they can’t upgrade the system.
[02:30] Rob: Yeah, web hosting is tough like that because it is so cheap that it throws your hourly monetization metrics way off. It’s like you said, you get a 50 year payback or something.
[02:40] But yeah, biting the bullet sucks. And you can either pull an all-nighter or you can spend two evenings and just hammer this thing out, or three evenings; whatever it takes you. But once you are done, and it’s up, and it’s clean…And of course you will tweak things as you get it up, and you will clean a few things up. It’s such a great feeling to be on that new plan and be like, “Oh, I have unlimited disk space,” or whatever your plan has. It really is a good feeling to know that you are not set up for several years down the line.
[03:10] Mike: Right. I mean one of the things that…you know, as I said, disk space is one of them. And I’ve only got like five gigs of disk space, which is fine for the most part, but I’ve started getting into things where I need a lot more disk space.
[03:22] And we actually started out using my host for the podcast that we are currently speaking about. It actually got the point very, very quickly where I was running out of bandwidth as well. So we ended up moving that over to your Dreamhost account to host the mp3 files for the podcast themselves. But it went quick. I was surprised how much bandwidth the podcast used.
[03:43] Rob: Yeah. Listen, anyone out there, if you start a podcast, be on something with unlimited bandwidth or as close to it as you can get. Because yeah, you had quite a bit of bandwidth, if I recall. And you and I were both like, “Oh, it will be years till you use that!” And it was month four or something.
[03:58] Mike: It wasn’t even month four. It was like week four.
[04:01] Rob: Oh, yeah. You were way…[laughs] There’s some big files! Even mp3’s, as small as they are. Yeah, it eats it up pretty quick.
[04:08] So hey, I wanted to mention our transcriber, or transcriptionist. I’m not sure what the correct word is. But I was emailing him a couple weeks ago. A guy named Bryan, he owns a company called TranscribeNow.net.
[04:21] And he just mentioned, he was like, “You know what? If you guys could mention me, I would appreciate it.” So we’re not getting any kickback or anything like that, but Transcribe Now, they do transcriptions of audio and video stuff. So I just wanted to send a shout-out to him.
[04:34] And then, I had a question I wanted to pose to you. I’ve had two people in the last week ask me about whether or not I’ve produced an audio version of my book: “Start Small, Stay Small”. And, you know, I had initial intentions of doing that, like way back in the day when I was writing the book. I was going to release it on Kindle in paperback and audio, just because you and I have a lot of experience doing that, and we have editors set up and stuff.
[04:58] And it basically became a time thing. I mean it’s going to take about 12 hours to read it, and it will probably cost…it will cost several hundred dollars to edit; probably $500.
[05:07] So I haven’t done it. I haven’t felt like the demand would be that high. And you and I actually talked about this before. But I had one person a few weeks ago, and then I had two people this week. One guy said, “I thought you had an audio version,” and then another guy said, “Are you going to do one? Because I’d like to buy it.”
[05:23] So I’ve been toying around with it again, and I’m just wondering what your thoughts were on it.
[05:27] Mike: Yeah, I don’t know. I mean gauging that sort of demand is just difficult. Because I think, in some way, you are probably cannibalizing sales from one of the different channels. I mean if you’ve got an e-book, and you’ve got a Kindle book, and you’ve got a PDF, and then you’ve got the audio book, I think sales of one are going to inevitably cannibalize one of the other channels. And I think gauging what the demand is, is just going to be difficult.
[05:54] I mean I don’t have any experience with publishing an audio book. I don’t know what the demand is for them. I know that for podcasts and stuff, I mean I listen to podcasts. I use the time that I have in the car or while I’m out shopping, or this or that, to listen to podcasts. Because generally, during the day, I don’t really have a whole lot of time that I can dedicate to them.
[06:14] So I can see how that would be helpful. I don’t know how much I would listen to something that I actually had to kind of really pay attention to, if you know what I mean.
[06:23] Rob: Yeah, that makes sense. I wonder…it’s tough. So I do listen to audio books and I do pay attention to them. I am kind of the opposite. I just wonder how many people are out there. I think your comment about cannibalizing other sales is probably a good one, because I think that if I release this thing and it sells enough to pay for itself, that’s not a guarantee that I wouldn’t have sold those in electronic or paperback format, right? I didn’t actually make money just by selling the audio version.
[06:51] I think the question is will I sell audio version where I otherwise just wouldn’t have sold anything? And I think that’s impossible to gauge.
[06:59] Mike: I think any audio sales that you get, let’s say you get 100 audio sales. That’s the maximum…obviously, that’s the maximum additional sales that you are going to get from that, if you are just taking a specific time span or something like that. But there’s some percentage of that that would probably have been book sales if you did not have an audio version.
[07:19] And exactly what that percentage is, I mean I don’t know. It depends on the price point. It depends on what other audio books go for. I have no idea. I mean maybe you throw it in with a bundle or something like that.
[07:31] Rob: Yeah, that’s what I was thinking. I think I’d like to offer it as a bundle. I think that would be a big plus. I also like audio books because the engagement is there, right? That someone is basically listening to me talk and read my own material.
[07:45] Mike: Who would want to do that? [laughs]
[07:47] Rob: I know! They are out of their mind! [laughs] I should reply to these three people and be like, “What are you thinking?” But no, I mean just like a podcast is so much more engaging than a blog, even though the audience may be 10% the size of those paperback sales. I think those people who buy it will feel way more connected to the material and potentially connected to my message.
[08:08] So I almost just want to do it because I think it will be fun, I think it will be cool to have an audio version, and because it was kind of in the original vision. And a gamble…it is a gamble. I could do it. I could spend 12 hours and $500 and just totally not make the time back or the money back. But that’s not too bad of a gamble, honestly, assuming I can find the time.
[08:30] You know, we’re recording this one week before the Business of Software conference, so I am certainly not going to do it in the next three weeks. But if I can find a long day, I’ll just crank it out, you know, in a single day or something.
[08:42] Let’s move on. You actually commented that you’ve been doing a lot more writing. Are you going to start publishing more posts coming off your summer hiatus?
[08:50] Mike: Yep. My wrists are starting to feel a little bit better. I’ve been having some wrist issues, just carpel tunnel syndrome, I think, more than anything else. I’ve tried to really lay off of the mouse quite a lot.
[09:02] And I’ve considered trying to switch over to using the mouse left-handed. Man, that is so hard. [laughs]
[09:06] Rob: Yeah, it is.
[09:08] Mike: I mean I can understand how people who are already left-handed can do it and it’s easy for them, but man, it’s just really hard to completely relearn that sort of thing. So I basically just decided to stop using the mouse nearly as much.
[09:22] The interesting part is I can use a keyboard. I can type, but I tend to use the mouse a lot because I edit a lot, move around, and I switch back and forth between different applications and stuff. So my hand is almost always on the mouse anyway.
[09:35] I’ve got a bunch of articles that I’ve been writing. I think I mentioned last week, while I was in the airport in San Jose, I was there forever. So I actually got, I think, three articles written while I was there.
[09:47] Rob: All right, well lay ‘em on us! That’s SingleFounder.com, folks. Keep your eyes peeled. Very good. Anything else? Any other updates before we move to articles?
[09:57] Mike: Yeah. Actually, I’ve got two more things real quick. One is, I was very surprised at this. I went out and I bought a new monitor last week, and I bought the brand new Dell U3011. It’s like a new 30 inch monitor. You know, 2560×1600 resolution.
[10:13] Rob: Nice. Wow.
[10:14] Mike: And I ordered, I think, on Thursday. I was expecting it either tomorrow or Wednesday. And I noticed this morning that FedEx still shows that the monitor has not shipped. The order has been placed, and obviously, Dell knows about it and FedEx knows about it, but it’s just not in FedEx’s system.
[10:29] So I called Dell this morning and I said, “Where is this?” And they’re like, “Oh, here’s your tracking number!” And I was like, “I know, but where is it?” [laughs]
[10:37] And so they went back and started looking through everything, and they said, “We’re not sure where it is. We think it’s still on the dock, but we’re going to get you a new one. We’re going to give you a replacement and we’re going to overnight it to you.” I’m like, “Sweet.”
[10:49] Rob: Wow! That’s impressive.
[10:50] Mike: Yeah, and that’s why I mentioned it, because I was very impressed at the level of customer service. Because I have to be honest, I would not have expected that from Dell. I really would not have. But I was very pleasantly surprised, I’ll say. So I figured I had to share that.
[11:04] Rob: You didn’t even have to blog about it and rant about them or anything?
[11:06] Mike: No!
[11:06] Rob: Hey, did I ever tell you my Dell story? This reminds me of it. It was probably almost two years ago. No, it was a little over two years ago. I ordered the laptop I’m speaking on now. There was something similar to that. There was a shipping mix-up and it came, and I was pissed. And it took like two or three weeks to get there, and my other laptop was out of commission and I was working on some old box. So I was pretty fuming.
[11:29] But I let it go. I’ve been a Dell man for like 10 years. Then I did my 12 hours of upgrading everything, I got on the new laptop, and 30 days later the hard drive crashed.
[11:39] Mike: Oh, yeah. I remember you telling me about this now.
[11:42] Rob: And I was fuming! Because even if they replace a hard drive, it’s like, “Oh, another 12 hours for me to move all the data!” So it got taken care of, but again, it was a big long process. And so I blogged about it.
[11:52] I put just a post, like, “Dell is dead. Love live the king,” or something like that. And Dell, the next morning I got a phone call and there was a guy, and he said….I think he called himself, like “I’m a fixer.” And I said, “What is that?” He’s like, “Let’s just say I’m top-tier tech support.”
[12:06] Mike: [laughs]
[12:07] Rob: It was such a trip! It was like something out of Pulp Fiction or something. And he’s like, “I fix things that are broken.” And he’s like, “Here’s what I’m going to do.” I’m going to have this overnighted to you AM. It should be there by 6:30 in the morning.” You know? And he just started talking. And he’s like, “Here’s how I’m going to take care of it. I’m going to have your data moved. I’m going to have this,” da, da, da, da, da.
[12:23] And sure enough, it just went all went away, suddenly. And he was like, “If anything goes wrong or if you need anything from me in the next year or two, here’s my 800 number. You call me direct. This rings to my cell.”
[12:35] It was obvious they had seen my blog post. I said, “Why did you contact me?” And he said, “Oh, someone in corporate said that I should contact you.” So it was funny to know that, you know, they are monitoring the blogosphere. So I thought perhaps you had posted about this or something.
[12:50] Mike: Maybe this was preemptive.
[12:51] Rob: Yeah, maybe! [laughs]
[12:52] Mike: You know, that’s got to be it. Michael Dell follows my blog. That’s it.
[12:55] Rob: That’s what it is! Yep!
[12:56] Mike: Him and Stevie J.
[12:58] Rob: SingleFounder.com!
[13:00] Mike: Anyway, the only other thing I wanted to mention is, because of all this Entity Framework stuff that I’ve been going through and learning, I’m a little concerned. And it’s not so much about the Entity Framework. It’s just more the fact that the product I’ll be talking about more as the episodes go forward, and as we get more into that 8-12 week guideline that I’ve been giving you, and we’ll probably give you for quite a while…
[13:19] Rob: 8-12 weeks! [laughs]
[13:20] Mike: [laughs] One of the things that concerns me is that part of the code that I have. I basically have all the middle tier done, and I have a scripting language that I wrote into the product.
[13:31] And it concerns me just because it basically pulls data out…the idea is to pull data out of the database and then kind of massage that data, because it is a scripting language, and then turn around and execute that scripting language through the engine.
[13:45] And I’m just looking at the Entity Framework saying, “Yes, I understand how all this stuff works and how you are supposed to do everything,” but then I’m looking at what I’m doing with the data that I’m pulling back and it’s just…it’s kind of a little scary because I’m looking at it and thinking to myself, “Am I going to have to rewrite part of the guts of my core scripting language in order to accommodate for that?”
[14:05] So I’m just not sure about how that’s going to turn out so far. So I’m a little worried.
[14:08] Rob: That’s a bummer.
[14:10] Mike: Yeah, it may turn into like 12-15 weeks. [laughs]
[14:13] Rob: Well it’s a bummer when underlying technology like that impacts what you are doing. Obviously, sometimes it can’t be avoided.
[14:19] Mike: I mean there are ways around it. I could take everything that I’m pulling out of their…because my scripting language takes an XML data feed. And then I could take everything out of the Entity Framework, turn it into an XML feed, send it into my engine, and then turn around and convert it back to an XML feed and do something like that. I don’t know. I’ll have to figure something out.
[14:39] Rob: Yeah.
[14:42] Mike: I guess on with the show. What’s new this week? What do you want to talk about?
[14:46] Rob: The first article I would like to chat about is a new post by Jason Cohen. And it just went live today as of this recording. And it’s basically called: “It’s time to nut up or shut up”.
[14:57] You know, he says, “I’ve been lecturing you about how to build on successful bootstrap businesses for a few years, and I had some successes in the past.” I mean he’s obviously been pretty damn successful in my opinion. But he says, “I can’t rest on my laurels. I gotta start the next one.”
[15:10] So he’s basically started this company called WP Engine. And he calls it “Fast, secure, scalable WordPress hosting.” He said they have about 50 customers. And it’s high-end, right? They are hitting the high-end of the market. It’s $50 a month, I think is the basic for one WordPress blog. But it’s like super secure, ultra scalable, ultra, you know, all the stuff. I mean if you have a big blog or something, they’re making it the place to go.
[15:33] So I just want to kind of toss this around, because I think it’s an interesting idea. I mean I think there’s a lot of potential here. Jason said he’s going to blog about how they got the first 50 customers and the whole process as they go.
[15:44] I get a little nervous, because I can imagine doing this myself. And, you know, Jason is kind of a personality, right? He’s online, he has popularity, and that makes me nervous! Like, I don’t want him to screw up and make a bad decision, because then everyone points and says stuff.
[16:00] But I guess that’s just the way it goes. And I guess he’s good enough to just handle it. I was imagining myself doing this and it kind of made me nervous. Like, I wonder how transparent I would be with a new product like that, because you and I talk about our products. I talk about Wedding Toolbox and stuff like that, but I am not like super ultra transparent with everything I’m doing, because I am making mistakes behind the scenes. I had an AdWords account and it didn’t do that great, you know?
[16:22] I guess, how much does that impact someone’s credibility if they make mistakes? The answer is probably “it depends,” right, how many mistakes they make? [laughs]
[16:31] Mike: [laughs] Well it depends on whether you are successful, ultimately. I think that’s really what it comes down to: whether you learn from your mistakes or not. So I think that’s more it than making mistakes.
[16:43] Because everyone makes mistakes. And you and I have discussed this in the past. As much as some people seem to think, “Oh, we don’t make mistakes. We make the right decisions. We make intelligent decisions.” Well, that’s garbage. I mean everybody makes mistakes. Everybody adjusts for what they are doing based on information that you learn when you are out in the field.
[17:01] And, you know, you have to. You have to do something and then make adjustments. There’s no way around it. And what is key to being successful is learning what things are not working as quick as you can so that you can change them and not go as far off track as you probably could.
[17:20] So I don’t know. I mean I’m looking at the WPEngine.com website right now, and I don’t know. It’s interesting. I’m sure that he has leveraged his contacts to talk to a number of different people and get them to put their blogs there.
[17:34] I think that that’s probably a good way to go. I mean he’s basically just leveraging his…I don’t want to say popularity, but his reach.
[17:42] Rob: Right, his audience. And that’s what some of the commenter’s on his post said, because he basically said, “I’m going to kind of man up and do it myself, and build a business, and show you that I can do it, or show myself.” You know, he’s kind of just talking like, “I’m going to really do it.”
[17:55] And then people on the comments were like, “Well, it’s not really fair, because you have an advantage, because you have this whole audience thing.” And he’s kind of like, “Well…” You know, they were kind of just bouncing it back and forth. And it was an interesting discussion—is it truly a level playing field if he’s kind of utilizing his audience?
[18:09] Mike: I think it is, though, because there is nothing to say that you can’t build up that audience yourself. I mean, what has he done? And I’m not trying to minimize his past accomplishments, but I’m talking specifically about his blog. I mean he’s created a blog by writing a bunch of posts. And sure, he sold his, you know, previous companies, and that’s gotten him some notoriety and gotten some people to listen.
[18:32] But there are other people out there, and I don’t want to call this person out just to call somebody out and say, “What has he done?” But, you know, Jeff Atwood, if you look specifically at him, he’s got a blog and he’s got well over, what is it, 100,000 subscribers or something like that?
[18:48] Rob: Yeah. I think he’s at 150,000 now. That guy is nuts. He’s awesome.
[18:51] Mike: Right. As of two, three years ago, he had not started a company, he had not sold a company. Whereas, you compare him to Jason Cohen and you look at the subscriber numbers. I mean basically, all they are doing is they are continuously writing, they are continuing to be intelligent about what they write about, basically just gathering audience over time. There is nothing that says that anybody else who has half a brain couldn’t do the same thing.
[19:16] As long as you are a reasonably decent writer and you have intelligent things to say, people are going to listen.
[19:22] Rob: Yeah, I think it’s hard, man. Because, like, Jeff Atwood has 150,000. Jeff Atwood is my friend. I’m not sure if I’m his friend.
[19:31] Rob: No, but he and I have emailed several times, and he’s offered me advice, and we’ve chatted about stuff. Dude, I mean he was super consistent. He and I actually started our blogs within a month or two of each other, and we used to…back when we were both nobodies, not that I’m…back when we were both nobodies, I’m still a nobody, we used to link back and forth to each other’s posts, and we were kind of up and coming programming bloggers.
[19:52] And he just kept…he was so consistent. He was like two or three times a week, and I was like once a week, or once every 10 days. And so he had consistency, and his writing has a different style. Honestly, he’s a better writer than I am. He always had fantastic, focused, niched content and basically worked his ass off. I feel like Jason Cohen has done the same thing. His businesses give him initial credibility, but you read the stuff he writes and it just makes a lot of sense.
[20:17] That’s why we all read his blog. He’s been gaining a thousand RSS subscribers a month for a year. I mean, it’s insane. He really hit a high trajectory. I would kill for that. I think I put on 500 or 600 in a month, once, and that’s my peak time.
[20:32] So I think there’s more to it than just being a good writer and just having some good content. There’s a lot of consistency and a lot of other stuff, but you’re right. I hate to say anyone could do it, but anyone who works hard enough and had certain skills could do it.
[20:45] Mike: Right. I think along with that it’s just a matter of focusing on building that audience, because I don’t see it as being a lot different than what angel-funded and VC-funded companies do. They basically go for eyeballs, and they try and get as many people using their product as humanly possible.
[21:03] That’s the same thing you would do with building a blog. You would try and build up an audience as quickly as you can and as big as you can, and then you figure out how to monetize it.
[21:13] That’s what all these startup companies do because they don’t know exactly how they’re going to make money, they just have an idea that they know a lot of people are going to use. They’ll figure out how to make money from it later. You can do the same thing with a blog, if you are so inclined.
[21:26] I certainly don’t want to make people think the only reason to have a blog is to make money. There are a lot of other reasons to have a blog. I certainly don’t have my blog to make money off of it, although I probably could if I really wanted to. But I also don’t pour a ton of time and effort into my writing or my blogging in order to get massive numbers of followers so that I can then turn around and make money from them somehow.
[21:51] But if I had 150,000 subscribers, I’m pretty sure I could figure out how to turn that into a gold mine. It just depends on how much effort and time that you’re willing to put into building that blog audience.
[22:06] Rob: Yeah, I agree. I think building a blog to that order of magnitude is like doing a startup. It’s a part-time job. I wouldn’t say it’s full-time because I know Atwood did it on the side and I know that Jason Cohen has done it on the side as well. But it’s not something that you just do on and off for six months. It’s 10, 20 hours a week for a year to get the ball rolling.
[22:25] WP Engine, I’m kind of interested to see if it flies. They have 50 people using it. I imagine if it becomes the name in WP hosting they could have something here because WordPress is so popular these days. My prediction is that it will be successful, but I don’t know, I have a hard time imagining it will be a multi-million dollar company. I guess at 50 bucks a piece that’s a lot of customers to sign up.
[22:47] Mike: Well, he’s also got a $500 a month plan.
[22:51] Rob: Oh, nice.
[22:53] Mike: Yeah. [laughs]
[22:54] Rob: We’re in the wrong business, man. We don’t have any apps that are a $500 a month plan.
[22:57] Mike: I think he’ll do well with it.
[22:59] Rob: I think Jason’s the kind of guy that anything he does, it’s going to succeed in one way or another. He’ll either pivot and do something else, I mean, I just don’t see him shutting it down, especially with the team they have working on it. It’s not like it’s going to fail, you know, they’re going to go belly-up. They’ll figure something out and make it work.
[23:19] Mike: One that came out this past week, the Stuxnet worm, did you hear about that.
[23:24] Rob: I didn’t.
[23:24] Mike: Interesting. If you don’t really pay attention to security you might not have heard it. But the Stuxnet worm is basically this Internet worm that went out, and it targets manufacturing hardware.
[23:36] More specifically, I found this one extremely interesting because it was targeting nuclear reactors and it infected a bunch of them. Iran is one of the countries who people have been theorizing that they were targeted for this.
[23:51] Symantec Corporation, I guess, looked into the code itself and said that it would probably take a well-funded team of five to 10 individuals at least six to 10 months to build, and that was a conservative estimate. So whoever built this worm, it was probably a very, very well-funded either private group of individuals or government entity.
[24:11] I thought that this was interesting, not really because of the political ramifications around this, but because if you’re targeting something like a nuclear reactor with viruses or worms and things like that, I could see a very viable and probably very lucrative business springing up around building software that fights against this sort of stuff.
[24:33] What do you think? Because these machines that are being targeted are running nuclear reactors, and one of the goals of the worm was to modify their behavior in almost imperceptible amounts that would basically screw up the things that they’re working on.
[24:48] Rob: Wow, that is pretty scary.
[24:50] Mike: What’s even scarier is that, after running three times, it deletes itself. So the idea was that it would have gone in, screwed stuff up, and then self-deleted and you never would have found it. The damage would have been done, and you would have no idea why.
[25:05] Rob: So it’s like terrorism through a virus essentially, right? They’re trying to get something to explode or have a core reaction.
[25:12] Mike: Something like that. I mean, a lot of it’s speculation at this point. But I found the business implications behind that of finding a new business… I mean there’s a whole market right there that’s almost emerging before our eyes.
[25:26] Rob: Yeah, I was going to say, do you think Symantec or someone’s going to do something about this? So folks, whoever puts out virus-scanning software right now, doesn’t it seem like they’d be on this?
[25:36] Mike: I don’t think they will.
[25:38] Rob: No?
[25:38] Mike: The reason is because for the same reason that no other large company does that sort of stuff. They will find a small startup company that starts that business. They’ll find the market leader and then they’ll buy them. That’s what will happen.
[25:52] Rob: Ah, got it. So that’s what you’re saying. That’s your new idea, 10 to 12 weeks, right?
[25:54] Mike: [laughs] Yeah, right, right.
[25:56] Rob: That would be brutal.
[25:59] Mike: Today’s listener question is from Jason Billingsley. He writes, “Rob and Mike, at the beginning of this year, before I found your podcast mind you, I started looking into building a website to create a revenue stream.
[26:11] After seeing Sortfolio.com from 37 Signals, I thought this kind of site could be beneficial to small graphic design firms and freelancers. I did my research, putting up a quick test site that received a promising response, then went to building out the site.
[26:23] What I’m facing now is huge competition in PPC, which is cost ineffective, and the fact that for the site to succeed it needs to reach two separate audiences: people who hire graphic designers and the graphic designers who will pay to be listed on the site. Neither party finds value in the site without the other, especially designers who pay for a listing and get no new work from it.
[26:43] I thought a freemium model was the solution to this problem, but I’m not so sure now.
Do you have any insights into building these audiences concurrently, or have I run into an inescapable paradox of micropreneurial death? Love the podcast. Keep up the good work. Thanks, guys.”
[26:58] Rob: Yeah, this is painful. Trying to build up a network effect as a micropreneur, as a solo entrepreneur, is ridiculously hard. I always recommend against this actually. Unless you have an audience already, whether through a blog or something, it’s just too hard to even build up one side of this fence, unless you have venture capital or a team who’s focusing on this thing.
[27:20] If you see eBay when they were building their network effect early on in ’96, or anything that launches today where they try to get two sides of the coin, they have entire teams dedicated to this. There’s just no chance that you’re going to do it unless you already have one side of that coin.
[27:35] If you look at 37 Signals, they already had at least one side of that. They have 120,000 readers or something at their blog, or 120,000 subscribers for that matter. A whole heck of a lot of them are designers. And I would imagine a whole heck of a lot of them hire designers, frankly. So they just had the instant network effect.
[27:53] It’s the same thing Joel did with his job board. But trying to start a job board just with no blog and no audience or anything takes a lot of money and time.
[28:01] So from the sound of it, it sounds like we have a couple things going on. You’re a single founder. You’re trying to do a network effect startup, which is going to nigh impossible as a solopreneur. And it sounds like, Mike, did you hear that it was differentiated from Sortfolio at all, because it seems like it’s kind of a “me too” thing with Sortfolio.
[28:21] Mike: It did sound like that.
[28:22] Rob: Yeah, so if it’s the same business model and it’s just for smaller designers or it’s cheaper or something like that, that’s another strike against it. It doesn’t sound like there’s much differentiation there. So that’s my take on it. It’s just my opinion, but I think this one’s not only an uphill battle, I just think it has the odds stacked highly against it. What do you think?
[28:43] Mike: I think the first thing, I should just probably actually mention the URL to it, because that might help out a little.
[28:49] Rob: That would be good. Then I could actually look at the site, yeah. [laughs] What is it?
[28:52] Mike: It’s www.graficio.com. I think you’re right. As you said, there doesn’t seem to be any real differentiation between this site and any other site where you would find graphic designers.
[29:09] Rob: I think the difference is Sortfolio says web designers and Graficio says graphic designers. I realize that’s a subtlety, but Graficio is more for print designers.
[29:21] Mike: Right.
[29:22] Rob: I think that’s the big differentiator. I’d imagine there are going to be a lot of graphic designers on Sortfolio. They’re going to go where the network is. In addition, there are going to be more web designers online. I mean, I know graphic designers are online certainly. But if they really are only print designers and don’t consider themselves web designers, it’s going to be an even harder market to reach than what 37 Signals went after.
[29:46] Mike: I would actually disagree with that, because I think that if you specifically target print designers, any company that needs a print graphic designer, I don’t know of any place out there where you could go to find them. Yeah, you can go to Craigslist or Monster.com or Dice and find people that way.
[30:02] But I would seem to think that if you were to kind of try and make this into an actual micropreneur business where you are going to target people who are specifically interested in a print graphic designer, which you are essentially putting a niche in the market, saying, “I’m only going after the print ones. If you are looking for a web designer of any kind, that’s not we do.”
[30:23] But I think you could probably zero in on, you know, like magazines, for example. Any magazine that is looking for graphic designers to help with, you know, either images, or image manipulation, layout, or anything like that, and specifically go after magazines.
[30:38] Magazines are just an example. You could also say: “We only…we kind of cater to people who are looking for print designers who deal with a specific type of marketing collateral, whether those are brochures, or flyers, or what have you.”
[30:53] So I think that that’s probably the way I would go. The other thing that I might seriously consider is, because of the fact that this is really a chicken and egg problem, I don’t think that you can charge for this at all upfront. I think that you almost need to make it free for a while and then switch over to starting to charge people for putting them together.
[31:14] Rob: Yeah, I’ll agree with that.
[31:16] Mike: I don’t like that idea, to be perfectly honest, because I think it puts you in an uncomfortable situation, where it used to be free and now it’s not, and how do you justify making it a paid service when before it wasn’t?
[31:28] Your justification is, “Well, it’s got a network effect now, so it’s actually worth it. You come here for your graphic designers, so it’s obviously worth it for you to do so. And if it’s not, then you don’t have to come here anymore.”
[31:41] But if you can get enough graphic designers who are going to the site to look for jobs, and you are pairing enough of them up for free, after six months or 10 months or something like that, if you are able to turn it around and you’ve got the sustained traffic coming in, you could start charging people. Or you could find other ways to allow them to collaborate somehow, and you charge them for that collaboration.
[32:02] I think that once you get the traffic, there are ways to figure out how to make money from it. But you’ve got to get the traffic first. And I think charging is a barrier to entry to that.
[32:12] Now the problem with that, of course, is that you have to fund the business until it gets to that point, and that almost makes it more of an Angel/VC startup sort of scenario. It depends on how big it gets and how quickly.
[32:24] Rob: Yeah, I think now that I’ve looked at the site and everything, I hear ya. I wonder if there are resources. I might have to go to Google and type in “find a graphic designer”. But that’s the first thing I would do, is try to SEO this and get to the top result for terms like that—“find a graphic designer”.
[32:39] Because if you bring the buyers, the sellers, meaning the graphic designers, they will flock to you, absolutely. I mean that’s what happens in any market. And so, if you can focus and either use AdWords, which is not a sustainable strategy, I bet, in this case. It looks like there are a lot of AdWords for it.
[32:55] But if you can SEO for that thing and you can get several thousand people a month, and they are clicking on and hiring these designers, then you will have such little problem contacting graphic designers and saying: “We’ve already sold $100,000 or $500,000 worth of work, and we already get 10,000 or 20,000 uniques a month looking for these specific things.” Then it’s a no-brainer, and it’s like sign up for $50 a year, or $100 a year, whatever you are going to charge.
[33:21] So that’s what I would focus on, is, like Mike said, making it free for the designers. It looks like you have a reasonable seed right now of designers. I mean, obviously, you want to build that up. It doesn’t look like it’s just totally empty at this point.
[33:33] If you continue to build that for free and just try to use network effect, and blogs, and contacts and such, and then use all your paid resources to actually bring the buyers, I think you are going to be a lot better off.
[33:46] Mike: So thanks for the question Jason, and I think that about wraps it up for today’s episode.
[33:53] Mike: If you have a question or comment, you can call it into our voicemail number at 1-888-801-9690, or you can email it in mp3 or text format to email@example.com.
[34:04] Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. If you enjoyed this podcast, please consider writing a review in iTunes by searching for “Startups”. You can subscribe to this podcast in iTunes or via RSS at startupsfortherestofus.com.
[34:18] A full transcript of this podcast is available at our website: startupsfortherestofus.com. Thanks, and we’ll see you next time.