Entries Tagged 'Startups' ↓

I’m back from 10-days in L.A. where my wife received her PhD in Psychology after six years of grueling work. Yes, Dr. Walling is now in the house.

I’m launching a decent-sized project tomorrow (about 22 person-months of work), and moving to Boston on Monday - thus the dearth of posts lately. But tonight, instead of doing something important, I’m blogging. Since I don’t have a lot of time I’m going to rattle off a few things I’ve been thinking about:

What’s New
I’m on a kick to increase revenue from a few of my websites. Aside from my ASP.NET Invoicing Application, I run a blog directory submission tool and an e-commerce site.

My blog directory submission service receives 900 organic visitors per month without fail, and has for 3+ years, but only makes around $60 a month. The same goes for my e-com site, except that gets around 5,000 organic visitors (it’s on the first page of google for some generic keywords), and closes only 3-5 orders per month.

Those numbers are despicable, so I’m on a quest to improve the conversion rate of both sites, and will be sharing that process with you in the coming months.

Looking for Suggestions
I’m looking for a term to describe something I’ve been thinking about: a software/web developer who uses his (or her) talents to build, buy, and leverage websites and software applications to create multiple recurring income streams. Sort of a cross between a webmaster, a Micro-ISV and a website flipper.

It’s like a Micro-ISV in that it’s one person, but the “products” he makes money from are not limited to downloadable software. The “products” can be software as a service (SaaS) applications, e-commerce sites, interactive learning environments…anything you would need technical skills to implement that provides real value for a group of people (i.e., not these crappy Adsense sites that clutter search results with poorly-written ESL content). This developer would typically have a portfolio of sites/apps he’s working on to stave off boredom and ensure a stable, recurring income.

I’m trying to describe that in less than the two paragraphs used above, and here’s what I’ve come up:

• Solo Entrepreneur (too vague)
• Solo Software Entrepreneur (too long)
• Web Entrepreneur (too lame)
• Internet Entrepreneur (also vague but my current favorite, even though it sounds like a term Dan Kennedy or Yanik Silver would use)

Yes, this is a somewhat random question, but I think I’m going somewhere with it.

Any suggestions?

A comment from Warren on my recent post Lessons Learned “Selling” My Micro-ISV brought up an important issue and a common misconception about NDAs:

Is an NDA even worth the time of writing it up?

Unless what you’re selling is worth the better part of a million USD, all you’re going hear from a lawyer is “it’s not worth taking it to court” (i.e. legal fees will eat everything before you get a bite)

A wise man once told me “We don’t write contracts for when we go to court, we write them to keep us out of court.”

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Those of you following the chronicles of my .NET invoicing product know that I purchased it about 16 months ago and after putting in hundreds of hours cleaning up the code and growing revenue, I offered it for sale to free up time for this blog and pursue another potential opportunity (that has since gone by the wayside, as these things are apt to do).

Within a week of my “for sale” post I received 20 email inquiries, sent out nearly that many NDAs, distributed 13 sales packets (including a detailed description of the product with all the relevant data, and a Google Analytics PDF) to those who returned signed NDAs, and spent about 10 hours answering questions via email. I set a deadline for offers to keep the process from dragging on, and by the time the deadline passed I had three suitable offers on my desk. Two of them were nearly identical, with a down payment and monthly payments.

The third was something I hadn’t expected.

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By the time I was 13 I had been selling candy and comic books to my classmates for almost 3 years. Though I did quite well, I was itching to try something bigger, and that meant extending my reach beyond the walls of Math class.

This was the late 80s, so resources were limited for a 13 year old living in the country. I ordered all of the free information available in the work at home section of the Penny Saver (a free newspaper consisting entirely of ads), and started going to the library twice a week to read up on entrepreneurship. I was searching for a business idea that I could pull off at 13, and after literally hundreds of books, booklets, and information packets I decided to publish my own booklet on comic book collecting.

“Smart”
Since I was seven years old I’ve been an avid reader. I consumed 2 or 3 books a week during my childhood, including a large collection of “crazy facts” books and the Guinness Book of World’s Records (every year). By the time I was 13 I’d been reading 2-3 books a week for 6 years, and the breadth of my knowledge was astonishing for someone my age.

I knew how the stock market worked, why Beta had lost to VHS, why Apple was losing market share to the PC, and how double-entry accounting worked (although I couldn’t do double-entry accounting). But I had no idea how to start a business. With all of my book knowledge about the business world, I had no clue how to execute an idea.

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Lately I’ve spent a lot of time thinking about internet startups and entrepreneurial software developers (or as I like to call them, “developer entrepreneurs”).

And lo and behold, no sooner did I sit down to write about it than I received an email with my “prompt” for this post. It went something like this:

For several years I have been refining a business idea to be conceived as an Internet startup. I have met with numerous developers over time and even after they express support for the business concept, my challenge has been in persuading web developers in partnering in the opportunity as entrepreneurial venture.

Could you suggest to me an approach I could take to persuade Developers, to see such opportunities as business ventures instead of a project/job?

How should I go about selling the business concept enough to have development of the application without initial funds?

If you’re a non-technical founder looking for a developer entrepreneur, these are questions you should ask yourself. Having been on the developer side of the coin a number of times, here is my take.

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I started my .NET consulting firm with a $35 check for a business license and a drive to city hall. I didn’t worry about anything but writing code and meeting deadlines. I can’t say it was a bad way to go.

Until you have someone willing to pay money for your services, the tasks below are a waste of time. My advice is to be prepared to get the process started, but don’t rush out and spend hours researching and implementing these steps until you’re sure you have a viable business. And by a viable business I mean you have sales.

This advice is intended for someone looking to become a freelance software developer or web designer (or looking to start a small web design/development/consulting firm). If you intend to seek venture capital then move along…these aren’t the droids you’re looking for.

Disclaimer: I’m neither a lawyer nor an accountant. I have opinions on starting a business only because I’ve been through it once or twice. Please seek the help of a trained professional for help with starting your business. Also, the advice about business structure and DBAs applies only in the U.S.

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A few months ago I had a conversation with a successful friend of mine (by successful I mean 29 years old, self-employed, a six-figure income, and two houses in Northern California). He runs a software company.

We were discussing what it takes to be a software entrepreneur and in a moment of self-reflection he said “I’m not as successful as I anticipated. I thought success would be easier.”

One of the Smart Kids
When you’re young people throw compliments at you left and right.

Wash your hands, get a round of applause.

Tie your shoe, get a standing ovation.

Read the Guinness Book of World’s Records cover to cover…well, that will get you beat up by a 6-foot third grader named Chuck…but you get my point.

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When we left Part 2 I had fixed 23 bugs and released the next version, DotNetInvoice 2.1, to the existing customers. The release included a fix for every known issue. Customers felt supported, and a few new sales rolled in. Things were looking up until the end of the first month rolled around.

What Sales?
The funny thing (not funny “haha,” but funny like you feel after eating Sushi from a street cart in Mexico) was that after four weeks of sweating bullets, fixing bugs, and dealing with angry customers, sales were quite a bit below previous months.

Given the extensive conversations I had with the former owners I was confident their numbers were correct. But I could not for the life of me explain the sudden drop in sales.

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When we left Part 1, I had emailed the developer of an invoicing software package, asking if he would be interested in selling the rights to his product.

Negotiations
The developer and I began an email exchange that lasted nearly a month. I received screen shots of the revenue for previous months. I reviewed code samples and data models. I played with their online demo, inquired about their customer base, how many copies they had sold, and how much time they spent supporting the product. I put it all together and, using what I know about small software product valuations, made them an offer.

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My startup history goes back a few years.

In 5th grade I sold comic books to my classmates at a 30-40% markup. I was a voracious marketer; I handed out homemade flyers, created checklists so customers could see “at-a-glance” which issues they needed, and even started a subscription service. Whenever kids in my school had extra money the first thing they thought of was buying comics.

In 8th grade I sold candy at a 500-800% markup because kids couldn’t buy it within walking distance of school. I made money hand over fist, and quickly learned that you should re-invest your profits instead of purchasing DJ equipment that you think will make you cool, but will actually collect dust in the back room of your house because you never spend the time to perfect your cross-fade.

In high school I wrote a booklet about comic collecting and sold it through classified ads. Technically I broke even, but realistically I lost money on the 50+ unpaid hours I spent researching and writing. This was the first business I launched “in the wild,” and I learned a lot about what it takes to market a product in the real world (i.e., to someone other than my classmates).

During college I sold $5,000 worth of comic books on newsgroups and eBay (this was circa 1997, when eBay was still black and white and so slow you had to snipe 40 seconds before the auction ended or your bid wouldn’t hit the servers in time). This business funded my entertainment expenses for two years. I had many Silver Age books that were some of the few copies for sale on the internet at the time.

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