Continue Reading]]> Late in May, my wife and I will be leaving home with nothing but 2 carry-on bags to travel the world for an indefinite period of time. Below I’ll talk through a few of the reasons for “jumping ship” and talk through a few of the frequently asked questions, including what the heck I’ll be doing professionally.

Why long term travel?

The obvious reason to do this is because it will be amazing. Almost everyone I know loves travel, but at best manages to do it for a few weeks a year. Americans suck at traveling. Our average trip is a paltry 4.3 days. We receive 13 vacation days a year, but leave an average of 3 days on the table. 4 in 10 of us take 1 week-long vacation per year and use the rest here and there. 75% of us check in with work during our vacations. Short trips are fun, but tend to be challenging for exotic travel and certainly make it difficult to dig deep into a country/culture.

But there are a few non-obvious reasons to do this. A big one is that my recent career shenanigans have distracted me a bit from my lovely wife. When we leave, I will have spent 7 of the last previous 12 months in different cities than Alex. This thankfully included near-weekly visits, but that’s obviously not ideal. A year of travel will be an opportunity to spend time together that very few couples get.

And I really want to “de-screen”. For the last 5 years, I’ve been waking up and grabbing at the first screen I could get my hands on. After a quick morning routine, I hop on a laptop. I head to work and sit in front of a computer. I come home and often surf the web or watch a show. I fill in the gaps with a smartphone, catching up on Twitter, Facebook, and Hacker News. I won’t lie– when I break this routine, I feel pangs of withdrawal. World travel will force me back into the real world.

And finally, as one of my favorite travel bloggers puts it in a post about magical berries, I’m a little sad about the death of wonderment in my adult years. She puts it better than I could:

“The other day, I was lamenting to myself (and by extension, to my long-suffering husband) about the death of wonderment in my adult years. How there were now so many known variables in our lives, so many answered questions. There were very few decisions to make. Very little was new.”

This trip is going to generate a lot of unanswered questions. It’s going to add a mess of delightful variables. It’s going to force dozens of decisions per day. And it’s going to positively bury us in new experiences.

What about your career?

… The number one question asked by mothers everywhere.

I’ve been lucky to find myself in one of the few growth industries left in the states– software. I’ve done Y Combinator, raised a series A, run a few profitable companies, sold a few projects and have recently been running a new product initiative for an amazing company. I don’t have a concern that this trip will keep me from starting my next company, or make me less appealing if I decide to “go legit” and jump on with an existing company. For this, I feel insanely lucky. The only thing the separates me from the other unlucky folks with psychology degrees are my wonderful parents who kept me buried in bleeding edge technology at an early age. That’s LUCK, people. I was too daft when I was young to consider how special that was.

What will you *do*?

I’m not sure if I’ll work at all on the road. I have a few offers for some light consulting and could also help out a few non-profits. I’ve got some projects I’d like to monkey around with. I’d love to work on learning new languages (both wetware and software), to improve my memory, and more. I’ve got stacks of (digital) books I’m itching to read. I’ve committed to blogging throughout the trip and taking lots of pictures. I’m honestly not sure how much I’ll feel the itch to be productive on the road. We’ve got income from a few rental properties we own (we’ll be renting out our furnished Seattle house, too). Between that and savings, we won’t need to make any more money on the road, though it wouldn’t break my heart if we did. I’m interested to see how much of my identity is tied up in my output and whether that hole needs to be filled or not. Stay tuned on that front.

What about your life/friends?

To be honest, this is my biggest concern. I have a great life with great friends. I play pickup sports. I host huge potluck dinners. I love geeking out with folks (friends and strangers) at startup events in Seattle. It’s really weird to leave all of that behind. We’re hoping friends, acquaintances, and even strangers will meet up with us on the road to say hello. And we’re hoping to meet new ones. But I worry about “breadth versus depth” with friendships on the road.

Speaking of the road, where are you going, exactly? And for how long?

We’re not committing to a set amount of time. If we’re loving it, it could stretch to a year or beyond. If we’re itching to come back to the real world, we could cut it short.

Here’s our rough itinerary. Seriously, if you’re a friend, acquaintance, or just strange reader of this blog and would like to meet up, please drop me a note. Also, if you’ve got advice for long term travel, a destination that you think is life-changing, or otherwise want to geek out on travel, don’t be shy.

Late Spring/early summer 2013 – Morocco / Southern Spain
Summer 2013 – Czech Republic / Germany / Hungary / Croatia
Late Summer / Fall 2013 – Turkey
Fall 2013 – Nepal / Myanmar / Northern India
Late Fall 2013 – Indonesia / Malaysia
Winter 2013 – Southeast Asia (Thailand, Vietnam, Cambodia)
Late Winter 2014 – Central America (details TBD)
Spring 2014 – South America (details TBD)

Anyhoo, for those of you who follow me on Twitter or Facebook, expect less (but more exotic!) activity. For those of you who read the semi-annual posts on this blog, you might be out of luck for a while.

Continue Reading]]> I tend to disagree with 37Signals on a mess of things. Like a lot of successful internet pundits, they deal in absolutes and hyperbole. There’s no middle ground and there’s no “…well, it depends”. That’s just not as linkbaity. It’s probably not as fun, either.

But there’s one place where I wholeheartedly agree with ‘em– if you’re in the Freemium game, start charging for your software. Right now. Yesterday, in fact. Should you put a price tag on just any web service? Absolutely not. Kayak shouldn’t charge to find you a flight and (if the rumors about their success as a leadgen platform are true) Mint shouldn’t charge you to organize your personal finances. But if a big part of your revenue plan involves charging for premium services on top of a free product (freemium), you should start charging as soon as possible. Here’s why:

1. Price signals value. Where you set your price emotionally sets a value for your product. What that means is that amassing a gigantic pile of enthusiastic free users isn’t going to result in a big pile of paying users when you turn on your premium features (or worse, move some of the features behind the “pay wall”). In fact, it will likely piss off a lot of users who have grown accostomed to getting something for nothing. During the Y Combinator experience, I got a chance to hang out with Joe Kraus (founder of Excite and later Jotspot) and the fellas from Wufoo. Both had horrifying anecdotes about asking a bunch of free beta users to start paying for their software. The conversion rate was awful. When we first turned on our premium offering, we were struck by the same thing. We opened the floodgates for paying customers and found that almost none of our free users made the switch. So even with your pile of zealous free users, you’re starting from square 1 in the premium game– you’ve already convinced your current userbase that the fair price for your product is “free”.

   I mentioned this in the comments but I wanted to promote it up here as well. *”Take a minute and answer this two-part question:*

   “1. Is the percentage of African nations in the United Nations higher or lower than 65? 2. What is the percentage of African nations in the United Nations?

   This was one of the queries that Amos Tversky and Daniel Kahneman posed in their 1974 paper in Science called “Judgment Under Uncertainty: Heuristics and Biases.” It turns out that the answer you provide to the second question is heavily swayed by that first question. The average estimate for question two was above 45 percent. When question one was lowered from 65 percent to 10 percent, the average estimation of question two was dropped to 25 percent. ” Source (pdf)

   Your free beta anchors your perceived value at zero and it’s a bitch to climb out of that hole.

2. Speaking of Square one… You don’t know nothin’ about square one! Charging people money for software is a whole new set of skills that you quite likely don’t have. What do your paying customers REALLY want? What do you put behind the pay wall versus in front of it? What do you give your free users? What kind of free trial should you offer? Will a referral program work for your business? Does your value proposition resonate most with individuals or businesses? Big biz or small? Can you make adwords work for your business? What works on an adwords landing page? Will a salesperson be valuable for your business? Where do your leads come in? Telesales? Direct Mail? SEO? SEM? Viral/word-of-mouth? The problem with all of these questions is that the answers don’t transfer across markets very well. What might work great for my market/product might perform terribly for yours. The sooner you start investigating this stuff is the sooner you start being smart about your market.
3. Getting people to sign up for a free service doesn’t mean that you know they’ll spend money on it. There are lots of clever ways you can ascertain whether someone would REALLY buy your product. You can put up fake adwords ads, you can cold call people, you can throw up a permission marketing page and try to get attention for it, you can do a focus group, you can ask some pricing experts, and more. But nothing is a perfect substitute for having a buy button next to a price and seeing if anyone actually clicks on it. And they generally won’t. At first. So start learning!

We’ve been at this for almost two years and I have very few big regrets. But my biggest regret as an entrepreneur is not starting on the path of charging customers sooner. It’s taken us about a year to get pretty good at it, but we’re still learning new stuff about our customers every week (we’re pretty darn grateful to have customers who are generous with feedback).

Some additional fabulous reading on the topic of when to charge can be read on Sean Ellis’ blog here. Sean basically contends that you shouldn’t charge at all until you are certain you have product/market fit. In the comments, someone expressed concern that product/market fit isn’t real until there’s a price attached to it. Here’s Sean’s response:

I agree that price is part of the process of figuring out if you have product/market fit. I’m basically starting with the price of zero. If people aren’t that disappointed to see the product go at zero cost, then we already know that any cost above zero will very likely also result in people not being that disappointed to see the product go. Once enough people consider it a “must have” at zero cost, then the next step is to figure out a price that generates the most revenue for every thousand people that try the product.

This is an interesting thought, but I’m not convinced. I remember hearing that Wufoo and Jotspot both had pretty passionate free/beta users. I could be wrong, but I’d wager that they would’ve had a solid number of folks who would state that they’d be “very disappointed” if they had to give up the product. Nonetheless, they came up pretty empty when asking these users to start paying up. The difference between product/market fit for a free product and product/market fit for a $5 product could be a lot farther than you think. It might be a few iterations or it might be a whole new product.

But where I think Sean is absolutely right (to be fair, I think Sean is brilliant– you should subscribe to his blog!) is that you need enough customers to be able to measure and improve your product. If you can’t acquire/retain 100 paying customers, perhaps you should stick with a free/private beta.

Continue Reading]]> A friend/contrarian Tweeted the following that I though was worth a discussion (the 140 character limit of Twitter quickly got too painful for me).

“What’s wrong with this world: Twitter is making $4mil per year yet is valued at $1bil. #newmath”

I think this is an important thing to talk about– it’s certainly something that would have resonated with me before I raised money from investors, but now falls pretty flat. I have two quick points to make about it, then I’ll wait for Marina to attack me in the comments.

1. Valuation does NOT equal market value for the company. Founders don’t like to give away a lot of equity when raising money (nor should they!). So, to bring the #s back to earth, let’s pretend that I have a seed stage idea with a little promise/traction that I’d like to raise $1m for. During the fundraising process, there is NO discussion about what the company is WORTH. Instead, the discussion is about how much equity I want to sell (say 25%) and how much I think I can get for it ($1m). This establishes a post money VALUATION of $4m (i.e. 25% of the company is worth $1m, so 100% is worth $4m). No one is saying that anyone who buys companies would even DREAM of buying it at a price of $4m… We just need a mechanism to decide how much equity the founders get to keep if we want to raise $1m. We could fix this offensive math by either selling stock in a company based on the market value (what someone would buy it for), but I think you’d find that good entrepreneurs are not interested in working for free/cheap when they own a tiny percentage of their “fairly” valued company. This model scales all the way up to Twitter. The conversation is more about how much founders and previous investors own after they raise their big rounds than “So, whaddya think we’re worth if we put this puppy on the auction block?”

2. Supply and demand. There are two markets here. One is the scarce (and not always rational) market of GOOD entrepreneurs/startups. If an investor wants a stake in startup that’s growing, they have precious few opportunities to do so. This market has VERY little to do with the current cash value/revenue of the company (at the early stage), but instead is based on the size of the market/opportunity, the entrepreneurs involved, growth patterns, long-term market trends, and how much competition there is for the deal. If Ev Williams punted Twitter tomorrow to start a new startup, he’d get huge valuations if all he had was a sketch on a post-it note, just because there are very few opportunities to work with a guy who has made VCs rich in the past (i.e. had an exit). And because the upside of a successful exit/IPO is so high it makes sense to buy the opportunity at that cost even if Ev’s post-it note probably wouldn’t sell for much on the open market.

Whether you think Twitter is or ever will be worth $1B is immaterial (I think it will, for what it’s worth). The real question is, should an an early stage investor buy stock in a company with a valuation that doesn’t reflect current market value of the company? I think the answer is a resounding yes– if it wasn’t, you’d have a lot fewer startups in the world.

I think the solution for the disconnect is to stop equating the phrase “valuation” (especially when talking about early stage startups) with market-value in your head. We back into those numbers in funding negotiations to make sure that entrepreneurs have the cash resources they need and enough equity to be motivated by the upside at the end of the rainbow.

And, remember: don’t be held back by common sense. There’s a great quote about an insane idea being a necessary but not sufficient requirement for startup success. Early stage investors have been in the business of funding companies without revenue forever, and the smart ones seem to make a lot of money doing it. Monetizing Twitter on a grand scale right now seems insanely hard. But a LOT of smart pundits were saying that the search market was a dead end when Google started spinning up. Markets change, smart people innovate, and magical things happen…

Continue Reading]]> As a business with public contact information, we are inundated with sales calls. The process generally runs roughly like this:

1. We get a phone call from a number that is often “blocked” for caller ID. We’ve learned to screen those calls. Some leave a voicemail, some do not. If they aren’t blocked, we’ll answer the call, and we’ll generally get blasted with a run on sentence. If it’s a short introduction, I’ll politely decline. If it’s a long monologue, I’ll hang up.
2. We get a followup email from the caller describing their service. They will ask for a 15-30 minute introductory discussion/presentation. Depending on how good the email is (in terms of grammar and presentation), I’ll drop a reply saying that we’re not interested or ignore it entirely.
3. I’ll often get a 2nd email saying something like, “when would be a good time to follow up with you. How about I drop you a line in 3 months to see how things are going?” Um, no thank you.
4. The really well-trained salesfolks will often also say, “Do you know of anyone else who might be looking for our services?” The answer to this is always no. I’m not going to make an introduction (which is often tantamount to an endorsement).

5. I don’t want to be a jerk to salesfolks. I’m sure they are by and large good folks and are just trying to do their job. But we NEVER BUY ANYTHING THIS WAY. Between a few Google queries and a few “lazyweb tweets or emails”, I can drum up a short list of vendors who are thought well of by SOMEONE, and perhaps can get a list that are actually recommended by people that I know and trust. Why would I ever buy from the salesperson who happens to be calling me? Even if they were introducing me to a class of software/service that I wasn’t aware of and really wanted, the first thing I’d do is thank them for the info and start googling.

   As people get smarter about searching and social networking (and thus social recommendations) go mainstream, I continue to wonder at the future of outbound lead generation via phone/email.

   So, I’ve got a new canned response in Gmail:

   Thanks for your inquiry.

   RescueTime does not respond to unsolicited sales requests and we’d prefer to not receive them.

   When we’re interested in software or services, we prefer to do some combination of searching on the Internet and asking trusted people in our network for their recommendations.

   If you’re interested in earning our business, your best bet is to serve the customers you have well so that when we ARE looking for what you offer, you’ll be highly recommended in our network and across the web.

   Thanks for your understanding.

   Cheers,

   -Tony Wright, founder of http://rescuetime.com

   http://blog.rescuetime.com (company blog)
   http://tonywright.com (personal blog)

   ]]> http://www.tonywright.com/2009/how-we-handle-sales-calls/feed/ 10 http://www.tonywright.com/2009/quick-thought-on-hearing-brad-feld-speak/ http://www.tonywright.com/2009/quick-thought-on-hearing-brad-feld-speak/#comments Thu, 26 Feb 2009 17:55:38 +0000 http://www.tonywright.com/2009/quick-thought-on-hearing-brad-feld-speak/

   Continue Reading]]> I saw Brad Feld speak last night at Beer, Brad, and Boulder (you can see the recorded stream and chat here) and was really struck by something that he said.

   In response to the question: "How broken is venture capital?" he said (paraphrasing, among other things): "It's not broken, but it is saturation.  It's absolutely cheaper to build companies nowadays, but it's not necessarily cheaper to build them and scale them.  Venture Capital is still necessary to scale businesses from the prototype stage, but no longer quite so valuable to get to that prototype stage."

   (note: this is a test using Posterous to automagically post to this blog– sorry for the brevity!)

   Posted via email

   ]]> http://www.tonywright.com/2009/quick-thought-on-hearing-brad-feld-speak/feed/ 0 http://www.tonywright.com/2008/value-or-viral/ http://www.tonywright.com/2008/value-or-viral/#comments Tue, 20 May 2008 03:13:47 +0000 http://www.tonywright.com/2008/value-or-viral/

   Continue Reading]]> I can’t help but think that the startup world is a bit drunk on the concept of viral distribution. Distribution is a huge problem for startups, so I suppose that I can’t blame them.

   First of all, I want to point out that I think viral distribution freakin’ rocks. It’s amazing. It’s awe-inspiring. If you can build virality into your app, do it– and do it early. What I’m focusing on in this post is when a startup is presented with a choice of “viral or value”. Either in the very earliest days when deciding what idea/problem/space to pursue (“We really love this idea, but this OTHER idea has soooo much inherent virality!”), or when making choices about features and initiatives in your startup (“THIS would make our users happy, but THIS would really bring in the new eyeballs!”). While we all like to go on about all of the hats we wear as entrepreneurs, it’s damn hard to be maniacal about making your users happy AND be investing time and energy in distribution.

   So, as I watch myself continue to back-burner features at RescueTime that have viral/SEO potential, it occurs to me that it’s probably worth running through my thoughts on WHY. Thus this blog post. You can run through my thoughts with me.

   “It’s easier to build a great business on top of an existing viral engine than it is to build virality into an existing business”

   This was said to me by a hacker who was working with a team on a “stealth viral business”. At the time, I found myself nodding. You can’t throw a rock in Silicon Valley (or Seattle) without hitting a startup that has tried to staple on a viral loop to their application or service. “I know!” Manager X says. “Let’s add a tell-a-friend bucket to our app. And we need to widgetize it. Oh, and we should probably make a funny video about it! Then we’ll explode!” It turns out that viral loops are HARD.

   But, as I think about it, I can name something that’s a LOT harder, and that’s building a product that people really want. In fact, I can fairly readily name off a long list of Facebook Apps and widget companies that have, with fairly minimal effort, built apps that are viral. I can’t as easily name off companies that have created great products that people love over a long weekend of coding. Products are HARD. Virality is, comparatively, much easier.

   Another point to illustrate this– Top Facebook Apps are hemmoraging active users (some have lost 30-40% from peak). Presumably, these app creators are alarmed. I can imagine small teams huddled over a table frantically running through how they can make their apps more fun, more useful, more real. Here is an army of smart and well-financed people who are trying to add a great product onto an existing viral loop. I don’t think many of them are having a lot of success.

   Virality Isn’t New

   It’s important to note that virality isn’t new, especially if you argue that word-of-mouth is the same thing. For the purposes of this post, I’m talking about the type of virality that Andrew Chen (who is one of my absolute favorite bloggers) defines as:

   “I tend to think of Viral Marketing that include both systematic and unsystematic ways that your current customers acquire new customers… In some of these cases, the virality has been “built-in” to the system – for example, but chain letters explicitly promise you something in return for sending on a letter, as do Multi-Level Marketing systems like Tupperware. These incentives and systematic design are originated with the intent to propagate a viral process.”

   In the standard word-of-mouth model, you have:

   1. User tries product.
   2. User loves product.
   3. User evangelizes product to everyone they know.
   4. Some subset of those preached to (greater than 1) tries the product.
   5. Rinse, repeat.

   Think Google, Apple, Microsoft (in the early days), etc.

   In the viral-focused model you have:

   1. User tries the product.
   2. As part of trying the product, they (sometimes unwittingly) tell everyone they know about the product.
   3. Some subset of those victims tries the product.
   4. Rinse, repeat.

   Think Facebook Apps, chain letters, tupperware parties, Geocities, and Hotmail. Or, let’s roll back to another web investment mini-craze– the SEO/Vertical Search business. Any SEO/user-generated content business is inherently viral. User creates account. Some subset of new users create a page of content. Content gets indexed by search engines. The new page brings in some traffic. Eventually, that user-created page converts a visitors to a content creator. Rinse, repeat.

   Paul Graham (“ah, yes– the obligatory PG quote”) talks about the concept of getting upwind of revenue:

   “In Patrick O’Brian’s novels, his captains always try to get upwind of their opponents. If you’re upwind, you decide when and if to engage the other ship. Craigslist is effectively upwind of enormous revenues. They’d face some challenges if they wanted to make more, but not the sort you face when you’re tacking upwind, trying to force a crappy product on ambivalent users by spending ten times as much on sales as on development.”

   What I THINK he’s also advocating for is the concept of getting “upwind of distribution”.

   It seems to me that when you remove the “user loves the product” step, you’re failing to solve the CORE problem that needs to be solved to build a great company. If you can’t create and maintain unique value with your widget or Facebook app, you’re doomed to experience the same fate as chain letters, mood rings, and GeoCities. You might well be able to get in and get out (with millions of dollars in your pocket) before you “jump the shark“. If your startup has a user-generated-content component, you might be able to amass enough SEO-fodder to make a healthy living on advertising, but that has its own challenges.

   Hopefully you’ve got some grand capital-efficient plans to get it in front of your target market (WE do– we haven’t even gotten started at this front). But if your wondering why users aren’t coming to your web site, chances are you have a product problem– not a marketing problem.

   ]]> http://www.tonywright.com/2008/value-or-viral/feed/ 1 http://www.tonywright.com/2007/apple-making-microsoft-look-like-the-good-guys/ http://www.tonywright.com/2007/apple-making-microsoft-look-like-the-good-guys/#comments Tue, 02 Oct 2007 18:25:50 +0000 http://www.tonywright.com/2007/apple-making-microsoft-look-like-the-good-guys/

   Continue Reading]]> http://www.appleinsider.com/articles/07/10/01/nokia_launches_anti_iphone_campaign_amid_controversy.html

   “In the meantime, the whole iPhone mess is garnering national recognition from the the mainstream media and slowly snowballing into a public relations nightmare for Apple. The New York Times recently ran a piece that quotes Apple spokesperson Jennifer Bowcock as saying those iPhone owners who are experiencing problems following the recent iPhone update should “purchase a new iPhone.” And overseas, the Guardian syndicated Gizmodo’s updated recommendation to its readers, which is “Don’t Buy” an iPhone…”

   I wonder if Steve Jobs is going to give everyone another $100?

   ]]> http://www.tonywright.com/2007/apple-making-microsoft-look-like-the-good-guys/feed/ 0 http://www.tonywright.com/2007/most-amazing-sexist-quote-o-the-day/ http://www.tonywright.com/2007/most-amazing-sexist-quote-o-the-day/#comments Wed, 22 Aug 2007 21:08:53 +0000 http://www.tonywright.com/2007/most-amazing-sexist-quote-o-the-day/

   Continue Reading]]> “The “single most underappreciated fact about gender,” he said, is the ratio of our male to female ancestors. While it’s true that about half of all the people who ever lived were men, the typical male was much more likely than the typical woman to die without reproducing. Citing recent DNA research, Dr. Baumeister explained that today’s human population is descended from twice as many women as men. Maybe 80 percent of women reproduced, whereas only 40 percent of men did.”

   This article–and the speech it’s quoting from– are just plain awesome.

   ]]> http://www.tonywright.com/2007/most-amazing-sexist-quote-o-the-day/feed/ 3