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Startups: Launch Early, but Launch Small?

Jan 25

One of the recent YCombinator dinners that we attended featured Joe Kraus (who founded Excite and then later JotSpot, which sold to Google).

Like all YC guests, Joe had piles of startup wisdom… One of the things that stuck out to me (which I’d never heard much) was when he said, “when we launched JotSpot in beta, we launched it to too many people.” Huh? Too many users? That’s bad?

But as I look at my current workday, there are times when I wish that we had fewer users.

There’s some common wisdom about usability testing: Beyond 5-7 people, you really aren’t going to get much new/interesting data. There are diminishing returns.

Similarly, in a beta test where you are trying to understand your market, figure out your users, hone your funnel, hunt and slay bugs, and make your product better, there has got to me a point at which you have enough users to get the data that you need. For us, given that we have a web app as well as an installable app for both Mac and PC, our need for a diverse body of testers (in terms of the technologies they use) is probably higher than most. But I have no idea what the magic number is.

But we opened it up. To give you an idea of the consequences of this, here’s roughly the amount of communication that I do in a given day:

3-8 emails from our contact form – I respond to every single one of these. Sometimes that results in a follow up email that requires a second response.
20-30 feedback emails. We have a tiny form in our app asking for any thoughts a user might have. Even though we say below the form that we can’t respond to all of ‘em (and we point them towards the contact form / support forum if they want a response) I read them all and tend to respond to some.
3-5 posts on GetSatisfaction, which weird forum-sorta-thing. We try to respond to all of these, and many times they require some ongoing discussion.

When you add all of this up, it’s a pretty tremendous amount of communication. Say it requires an average of 3 minutes to digest and/or respond to each entity (this is 7 days a week, mind you)… That’s about 2 hours and 10 minutes PER DAY. Every day. Not counting the times that some emails require that I involve the whole team in a solution/discussion. That’s a lot of time for a company where all of the founders really ought to be spending almost all of their time working on development. And, as an effectively bootstrapped company, we don’t really have the budget for support staff.

On the Brighter side…

Still, despite the “costs” mentioned above, there are some pretty huge advantages to launching early and openly.

First off, you get over the biggest early hurdle that can slow most startups to a crawl. I think all founders are terrified that when they finally launch their business, no one will want what they have. So they’ll find any reason to delay it. Maybe they should focus on patents? Trademark research? Clever and innovative stock plans? Business cards? Fancy spreadsheets? Business plans? Marketing plans? Anything at all that will allow them to delay the possibility that people don’t like your app. When you’re out there and getting buried in feedback, all of that other stuff falls away… It’s incredible how much it focuses you on your app.

Second, you get to test your inherent marketability. Do people like talking about you? Do they tell their friends? Do they blog about you? Does your app have any virality? A closed beta really doesn’t allow this.

Third (and most important), in the sea of people who reach out to you is (hopefully) people who LOVE you. We’ve gotten feedback emails that simply say, “I love you” (3 so far!). We get long essays from users talking about their time management strategies and how RescueTime has helped. Literally 1-3 emails a day make me walk on air. Reduce that number to 1 a week and I’m not sure I could manage to make the sacrifices I’m making now to push the business ahead.

Fourth, there’s SEO. No need to get into the nitty-gritty, but starting the campaign of building incoming links and pagerank is something you should start as early as possible.

And, of course, there are nebulous concepts like “tipping points” and marketing momentum… If you hear about RescueTime enough, maybe eventually you’ll try it?

On the balance, I don’t know the right answer… And I suppose it’s different for each startup. I’d love to get other folks’ thoughts in the comments.

Arrived in Silicon Valley

Jan 06

Joe, Brian and I have arrived in Silicon Valley unscathed, despite the monsterous storm blanketing the region. The trip was rainy, but thankfully the snow was fairly painless except for about a 10 mile stretch at the Oregon border.

We’ve settled into our furnished apartment and have shuffled it around to be dramatically more office-centric.

Not a lot of people know this, but RescueTime was built in a part-time way– generally evenings and some weekends from time to time, on top of day jobs and/or consulting gigs. It’s a testement to technologies like Ruby on Rails and MySQL that we could pull this off. I am incredibly excited to see what we can pull off now that we’re working full-time on this thing with zero distractions. The good news is that we’ve literally had thousands of feedback emails from our users– so we’ve got a pretty good sense of where to go.

Stay Tuned!

Stealing Photos, Fair Use, and Business Models

Dec 19

I have a hard time getting high-and-mighty about the paparazzi crap that I see in grocery store lines, given that I can’t seem to tear my eyes away from the train-wreck controversies of online celebrities. I just…. can’t…. look…. away!

Over the past two weeks, one of the big memes in the echo chamber is related to stealing photos… It seems a small a capella band created a fun/goofy song about the Web 2.0 Bubble, set to the tune of Billy Joel’s “We Didn’t Start the Fire”. The video is a montage of photos of assorted Web 2.0 personalities, logos, etc. It’s cute. I’ll embed it below (note: this is the first time I’ve EVER embedded a YouTube video!).

IANAL, so I can’t really speak to whether this use falls under “fair use” and parody laws. I think the band in question truly believed that it does and did their best to make it right once they realized that they might be in a bit of a “gray area” (read their blog post here).

Regardless, what struck me was the strident and downright venomous response from some photographers and other “artists”. It sounds exactly like the venom spewed by real estate agents towards RedFin. It sounds a lot like some movie studios and musicians when they talk about what’s happening in their industry. These people aren’t angry at just this little a capella band. They are angry at the entire world for evolving past their business model. They’re angry about becoming obsolete. How obsolete they become depends on how well they adapt to the world– not how loudly they demand that the world adapt to THEM. Off the top of my head, here are a few things that are changing the business of professional photography:

Cheap startup costs. Used to be that a professional photographer had to invest thousands in cameras, lenses, and development equipment. It still isn’t cheap to have good equipment, but it’s cheaper.
Time and expenses of developing photos is greatly reduced (thanks to digital photography and Photoshop).
There is a growing pile of semi-pro photographers who are happy to give away their photos or sell them royalty-free for a few bucks.ne?
There are great marketplaces out there for cheap/good stock photography. iStockPhoto, anyone?
Print media is dying. Slowly, but it’s dying.
The global marketplace. For many photos, you just don’t need an onshore photographer. If I want a cool close-up shot of a keyboard and mouse, there are plenty of great photographers in Eastern Europe that have probably already have taken just such a photo and are delighted to sell it for a few bucks, royalty free.

Is the photography/stock photo business dead? Not by a long shot, and not for a long time… But clearly there’s a shakeup in the works.

Here’s that embedded video. If you haven’t already seen it, enjoy:

Evaluating New Product Ideas (focus on Tractability)

Dec 18

Evan Williams (founder of Twitter, fellow corn-fed midwesterner-turned-dotcommer, and someone I get to meet via YCombinator!) has a fabulous post on how to evaluate new product ideas. To sum up his excellent post, here is the matrix he came up with:

Tractability
Question: How difficult will it be to launch a worthwhile version 1.0?

Obviousness
Question: Is it clear why people should use it?

Deepness
Question: How much value can you ultimately deliver?

Wideness
Question: How many people may ultimately use it?

Discoverability
Question: How will people learn about your product?

Monetizability
Question: How hard will it be to extract the money?

Personally Compelling
Question: Do you really want it to exist in the world?

He follows the list by running through a few of his startups through the matrix to see how they fare.

I don’t know if Evan put it first on purpose, but I tend to think that tractability is the most important factor by an order of magnitude. Why? Because there is a pretty good chance that what you think you’re going to build and what you go to market with are radically different. Take a few minutes and ponder this outstanding quote from Fred Wilson’s “Why Early Stage Investments Fail” post:

“…Of the 26 companies that I consider realized or effectively realized in my personal track record, 17 of them made complete transformations or partial transformations of their businesses between the time we invested and the time we sold. That means there a 2/3 chance you’ll have to significantly reinvent your business between the time you take a venture capital investment and when you exit your business.”

Another great quote:

“My friend Dick Costolo, co-founder of FeedBurner, describes a startup as the process of going down lots of dark alleys only to find that they are dead ends. Dick describes the art of a successful deal as figuring out they are dead ends quickly and trying another and another until you find the one paved with gold.”

Given that you have a 2/3 chance of having to reinvent your business (or, as Costolo would put it– you have a 2/3 chance of your first dark alley being a dead end), what could possibly be more important that tractability?

Bootstrap Design for Geek-Powered Startups

Dec 15

One of my brethren at YCombinator sent out a request to the 2008 Winter Founders list a request for information about design services for his startup. He and his co-founder, like many YC founders, are hackers.

In my career I’ve been a web designer (although I’m only moderately good at it), I’ve hired web designers (for a consulting firm I used to run), and I’ve hired contract resources for design services. Recently, of course, I’ve been doing all of the design work for RescueTime (Time Management Software for Lifehackers, if you’re new here!). In most cases, I was generally dealing with extremely tight budgets (by Seattle or Silicon Valley standards), so I figure I’m uniquely qualified to answer his question. Rather than keep the answer confined to a relatively small mailing list, I figured I might open it up as a larger blog post. So here goes.

First of all, I should stress that I think a UI designer should be baked into your organization as early as possible. Most startups are building software for “normal people”– and programmers are notoriously bad about empathizing with how normal people interact with software. Hell, most of the designers I know are bad about empathizing with how normal people interact with software. If you’re one of the rare startups that’s building products for geeks-only, then you might be able to get away with limited designer involvement. But for most, the idea of “slapping a coat of paint” on an ugly application is a recipe for confused users and poor conversion rates (whatever your conversion event happens to be).

Second of all, I should stress that usability testing should be baked into your organization from day one. Watching people in your target demographic interact with your software is a priceless experience (and doesn’t have to cost an arm and a leg). Most entrepreneurs get sensitive around their creation and find all sorts of excuses to avoid getting negative feedback about it– don’t fall into this trap.

Finally, let me emphasize that when I talk about designers, I am ALWAYS talking about UI designers, NOT graphic designers. Sure, pretty websites are nice… But artists are a dangerous breed, and are often tempted by the design equivalent to “guitar solos”: Swanky web forms that have so much CSS goodness that they no longer look like web forms, links that don’t look like links, buttons that don’t look like buttons, etc. Any chance to be unique is an opportunity to confuse users. At the end of the day, a lot of audiences don’t think web UI is actionable unless it’s a form element, a beveled button, or a blue hyperlink. You don’t want Jakob Neilsen designing your site, but you want a designer who will sacrifice aesthetics for usability if the need arises.

So, onto the resources.

Logo Design

As a startup, the first thing that you’ll need is a logo. I am a bit of a logo nut (and designed the RescueTime logo myself). I do believe that a good logo can be powerful, but when money is tight and time is scare, here are a few ways to get an interim logo:

LogoMaid – LogoMaid is a collection of 4400 watermarked logo templates. You can get non-exclusive logos for $25, and exclusive logos for $199 and up.

LogoMarker – If you’ve got to have a unique logo, this is your cheapest option. It’s basically an online logo construction kit– you can try it for free. $99 gets you the logo in a high-quality vector format.

LogoLoft and LogoWorks – Not custom enough for you? Well, LogoLoft and LogoWorks are trying to commoditize custom logo design. Presumably they have an army of underpaid designers ready to design to your specifications. Packages start from $99 and go up from there. The more you spend, the more designs you get to chose from, the more different designers get involved, and the more revisions you get… Basically, by spending more money you can reduce risk that you hate what they give you.

Custom development by a designer of your choice – Of course, you can always hunt up a designer of your choice… I’ve seen identity packages range from $1500 to $500,000, and your value mileage will most certainly vary (read up on the history of the Nike swoosh– quite a bargain there!).

Web Design Templates

Web design can be a bit spendier than logo design, depending on what you want to build. A lot of startups will need custom application design, but many might be able to get away with (or at least start with) a web template. Purchased templates usually consist of a layered Photoshop document, an HTML file, a CSS file, and maybe (god help you) a couple of SWF (Flash) files. Some will come with all of the necessary template files to play nicely with Blog/CMS systems like WordPress or Joomla.

TemplateMonster – TemplateMonster is the big boy on the template block, offering almost 13,000 templates that are searchable and sortable. Like LogoMaid, they offer a cheap version if you don’t want exclusive rights to the design ($50-70) and they also offer exclusive rights (which can cost you thousands).

Open Source Templates, Open Design Community and OSWD – These guys have quite a few fewer templates, but heck– they’re free… Yay for Open Source!

Custom Web Design

Custom web design work can range from cheap to ridiculously expensive. As programmers who are hopefully fairly familiar with web technology, you can probably get the most bang for your buck with an individual consultant rather than a firm. Of course, the more you need (graphic design, HTML/CSS, usability analysis, SEO, copywriting, etc), the less likely you are to find a single person who can TCB. If SEO is a big part of your marketing plan, make sure your designer knows enough about SEO to not paint you into a corner (send ‘em to SEOMoz for a primer).

Individual web designers with some experience under their belt can cost you $35/hr to $95/hr on a contract basis. If you are organized and can find a resource with vouched-for work ethic and responsiveness, you can do very well finding resources in secondary markets (midwest or southern USA) or offshore (eastern Europe or India). However, if you can afford it, a designer who is local and can/will meet with you is valuable. As a rule, the cheaper they are, the busier they are. You’ve got to sling a LOT of pixels at $35/hr to make a good living in most major markets.

Make sure you find someone who has experience doing what you need. If you need a complete application flow/design, finding a freelancer who has only built “brochureware” web sites is not your best bet.

SitePoint MarketPlace – The SitePoint marketplace is an excellent resource to find hungry freelancers. For $10, you can post an ad describing what you need and you’ll be buried in responses. The last time I did this for a designer (XHTML/CSS), I got 5 good responses for ridiculously low rates, and about 30 responses from people who either had higher rates than I wanted to pay or had crappy portfolios. Of course, I had two different designers flake out on me (one for a legitimate reason, one just fell off the map). That’s another risk of cheap individual consultants… They are oftentimes not very businesslike.

XHTMLized – If you find a good designer who has lackluster XHTML/CSS skills, these guys are a godsend. For $249 (assuming you can wait 7 days), they’ll take a Photoshop doc and turn it into GREAT front-end code. You can have them do more than one page, but it’s oftentimes good enough to just take a design that has most of the styles/elements you’ll be needing and turn them loose on it. There’s lots of competition in this arena, and Smashing Magazine has an excellent writeup about the alternatives.

Elance and Guru.com – These sites allow you to post a need and get a bunch of quotes from hungry designers and design shops (oftentimes offshore). There’s no obligation. It’s VERY important to clearly define what you want and what deliverables you expect to receive to make sure quotes are accurate.

Design Employees

This is the area where I have the least experience (at least in terms of markets like Seattle and Silicon Valley). From what I can tell, a FT web designer (Photoshop, xhtml, css) can run anywhere from $45k to $95k per year. Obviously, this can flex if you’re generous with stock options, which might be worthwhile for some startups.

I hope that helps some fellow bootstrappers out there. I’m a firm believer of taking the shortest path to testing your startup idea in a real market– these resources should get you there faster if you don’t happen to be a pixel-slinger. But at the end of the day, there’s no substitute for having someone on your core team be passionate about great user experiences.