My Life

The Information Overload Conference in NYC, July 15!

Jun 27

I just got word that I’ll be speaking at the Information Overload Research Group 2008 Conference in New York City on July 15th (though I’m not on the page yet… ).

This is the grassroots organization mentioned with RescueTime in the New York Times article “Lost in Email, Tech Firms Face Self-Made Monster” (well, it’s probably fairer to say that this is the article where RescueTime was mentioned with them!).

The conference looks like it’s going to be real interesting (and not just because I’ll be speaking there– I’m positively riveting!). If you’re in the neighborhood (or if you need an excuse to visit NYC), you should sign up (the conference only costs $150 and includes lunch– it’s a helluva deal). Brian Fioca, one of my co-founders will also be in attendance.

If you don’t want to go to the conference but want to grab a beer on the 14th, drop me a line!

Bootstrappers Beware

Jun 19

A lot of people are damn religious about bootrapping businesses. Especially nowadays when it’s so easy to start a software business– you just need a few hackers, Ruby on Rails, a cheap virtual server and you’re ready to roll, right?

Sure.

But just because it’s cheaper to start a software company, doesn’t mean that it’s that much cheaper to make it from when you launch a product to the point where you’re sitting back, drinking a margarita, and marveling at the recurring revenue machine you’ve created.

The way I look at it, there are three bars that matter to me.

1) Making enough money that the business brings in enough money to pay the overhead. Rent, servers, lawyers, whatever. Hopefully you keep this really lean.
2) Making enough money that the founders get an insultingly low (but still existent) salary.
3) Making enough money that the founders can take home roughly what they’d make if they went and got a real job.

Bootstrappers are woefully bad at guessing how long it’ll take to get over these bars.

Let’s look at everyone’s favorite example of bootstrapping: 37signals (whose products and philosophies I love, by the way). According to a recent post, it took them about 6 months to build Basecamp, with DHH spending 10 hours a week (they don’t mention how much time other folks invested, but let’s assume it’s 2 other people at 10 hours a week). It turns out that with a really popular blog, a very successful consulting firm, and all of the attention that they got with Ruby on Rails, it took them about a year to get to the point where they could give up consulting and work on it full-time. I assume that they were somewhere between the 2nd and 3rd bar (mentioned above) before they made the leap, though they might’ve taken a pay cut as a leap of faith in the growth that Basecamp was experiencing. DHH sez:

“It didn’t turn into a smash hit overnight either. We ran Basecamp for a year alongside our other obligations before it was doing well enough to pay all the bills and afford our full-time attention. Most good businesses didn’t become great ones within the 12-18 months that the poster boys of the startup lottery did.”

Amen!

I’ll give you an example closer to home. RescueTime (my baby) was on TechCrunch 3 times, LifeHacker twice, and add in a few thousand other blogs (of varying flavors and colors). We are a Y Combinator company, which gives us plenty of geek cred. We’ve been [edit for clarity] mentioned in an article on the cover of the New York Times, and have gotten mentions in PC World, US News and World Report, BusinessWeek, and more. More important than that, we’ve got happy users who seem to like telling their friends (the old fashioned kind of viral marketing!). I think most SaaS startups would feel very lucky to get this kind of attention– we certainly do. But for all of this attention, I really don’t expect to clear that second bar for many many months (we’re only a month or two into having an offering that people can pay money for, so give us time!).

Let me be clear about the type of startups I’m talking about– I’m talking about low-cost (or free) product companies with price points low enough that having a human being actually SELL the damn software would be inane. Whether it’s a payout of $.83 for an ad click or $24 bucks a month for BaseCamp– having a human being wandering around selling this stuff doesn’t scale, and chances are your founding team doesn’t consist of anyone who is a motivated (and skilled) software/ad salesperson anyways.

On the other hand, if your price point is high (generally requiring a more complex or premium offering) or if you have a services component (web development consulting, managed hosting, etc)– you’re golden… Or at least you have great potential to ramp up revenue fast (as you can justify a sales effort and fairly easily convert time into money). Of course, there are the obvious downsides– for enterprise software you have to build… enterprise software (capital intensive and damn ugly). And then you should expect to spend 60-70% of your cash on sales and marketing. If you go the services-heavy route, you’re simply selling time for money… You can make a nice business out of this (I ran a consultancy for 7 years which I eventually sold out of) but there’s virtually no equity to be built– no one wants to buy a consulting business.

In my opinion, if you aren’t prepared for 18-24 months before you actually get your first paycheck (either through savings, doing it part-time / half-assed, or seed funding) you’re setting yourself up for disappointment.

Speaking Tomorrow at the Six Hour Startup Conference

May 30

Tomorrow I’m speaking on a panel at the 6 Hour Startup Conference. It should be good fun and (hopefully) informative, so if you’re spinning up a new company (or pondering it), you should come on by. Here are two things I won’t be doing at the conference:

Pitching my own company
Reading bullet items from a PowerPoint deck

Here’s a great quote from a great blog post about conferences and meetups:

“Here’s what a speaker owes an audience that travels to engage in person: more than they could get by just reading the transcript.”

I’m not a stellar public speaker (and it’s more challenging to reliably deliver value on an unstructured panel like this), so I hope we can deliver.

It’s not what you say… It’s what they hear

Apr 27

Long ago, when I set up this blog I read a few primers on blogging. One of them suggested that you have a picture of yourself on your blog. There were lots of good arguments for doing it, so I dutifully hunted among my photos for a picture of myself. Turns out that I didn’t have too many (I tend to be behind the camera rather than in front of it).

I did find one that I liked. It was on a nasty old fishing boat on the Prince William Sound (in Alaska). A friend of mine had bought the boat and invited a few friends for an multi-day cruise. There was no running water. The bathroom was a 5 gallon green bucket (I’ll leave it to your imagination how we “flushed” it). At the end of the trip, I was scruffy as hell, but I’d had an absolute blast tromping around the rugged islands of Alaska. That’s where the pipe picture was taken.

As my blog actually accumulated readers, there came a trickle of negative feedback about the pipe, which has increased to a steady stream. Some people feel like I was trying to look serious. Or academic. Or rich. Or that I was just clowning around. To me, the photo had a ton of meaning. To anyone else, not so much.

For some reason, this made me think of one of my favorite posts on product/UX design. Here’s a quote:

“When I started working on Wufoo, I was definitely a bad designer. I thought I was hot shit and knew all the answers. I saw the user as a wild beast that needed to be tamed. He got in MY way. Use the tool the way I designed it, fool—not the way you think it should work [emphasis added]. Thinking back, I remember being angry all of the time.”

One of the big lessons (which I continue to learn a little bit more every single day) is that it doesn’t matter a damn bit what you’re saying (whether you’re “saying” it to a user with design or saying it with words or pictures on a blog), it matters what’s being heard.

So I’ve pulled the pipe picture in favor of a more recent one. Some people suggested that I keep it as a “schtick”, but I’d rather be known as “that guy who kicks ass with RescueTime” than “that guy with the pipe” (who actually never smokes a pipe).