Wednesday, November 4, 2009

Steady profits of a startup are not sexy, zillions of users are.

I really enjoyed the piece written by Jason Fried a while ago for their Signals vs Noise blog where he criticized the industry for having a "too low bar for success" in the startup world.

I've added a comment to Jason's post and would like to repost it here to highlight some of the problems with media coverage, users and profits of a startup.

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Here goes, my 2 Euro-cents:

I think Evernote is a great business and have a great app, but their up-front costs had to be big – just like Phil said – they have very high fixed costs – especially engineering and management salaries – they have teams for very different apps – Web app, Windows app, Mac app, iPhone app,... etc. It’s like having several apps in one and just one point of sale.

What Jason is trying to say (and I agree 100% with him) is that most of the startups have to figure out way to earn money quickly and profit quickly in order to survive.

My application, Nozbe is a typical bootstrapped startup where I needed to have fixed costs down to minimum in order to profit quickly and be able to re-invest later.

Sure, if I had the money Evernote did (from VC) I’d start with doing all the native apps around Nozbe right from the start, but since this wasn’t the case, I had to embrace the constraints and start with my web app, later invest in developing an iPhone app, later invest in doing a great re-design of Nozbe (Nozbe 2.0) and now I’m investing in a desktop app that will sync with Nozbe.com.

At each stage I have to watch out in order to maintain my fixed costs at a reasonable level and not hire too many engineers so that they eat all my revenues. These are tough calls one has to make.

After all, 37signals is now a 15-man operation and it all happened over time because both Jason and David had to watch out the bottom line and make the decisions NOT to hire so many people right from the start.

My company was a one-man shop, now we are 3 people and 2 more are coming and there are freelancers who also do stuff for us on a per-project basis.

There’s nothing wrong with Evernote – more power to them. Just in a bootstrapped startup environment one cannot invest so much money upfront and has to watch the bottom-line very closely in order to keep rockin’ and rollin’.

I just think that for media 1M users is a better headline even if it’s followed by just $79k/m.

I don’t have 1M users, but I love my app, users and I’m profitable by a large margin so that I can call my “lifestyle business” a “great success” by my own standards… and I’m mature enough to realize that my kind of success won’t make it to the headlines of the New York Times but who cares?

After all, what’s so spectacular about a guy from Poland in Central Europe who is developing a productivity web application that helps people mostly from the USA (across the pond) get stuff done so much that they actually pay for it (some even pre-paid for 3 years in advance!) and he’s passionate about his job and productivity and loves every minute of it… and he’s earning a lot more than a good programmer’s salary in the process?

Yes, I know, average, boring stuff. No media coverage here. :-)

Questions: Which startup or web app you've used recently impressed you not by media coverage but by actually offering a great value for a reasonable price? Which web app has improved your life recently? Did you learn about it from the mass media or from a fellow blogger or a friend?

--> me I'm Michael Sliwinski and I'm an entrepreneur who's also the...
.. Founder of Nozbe.com - a time and project management web application
.. Editor of Productive! Magazine - a global PDF publication on productivity
.. and a blogger as well as a producer of a weekly 2-minute Productive! show.

Monday, November 2, 2009

F1 Pit Lane - Iterate Quickly and Focus on the Essential

Yesterday I watched this season's last Formula 1 Grand Prix in Abu Dhabi. I'm a big Formula 1 fan, love the races and especially now when we have our own Robert Kubica as one of the drivers.

Although I really dig F1, the races can very often appear boring, especially when there is no rain, no crushes, no major breakdowns... just like it was yesterday, but if you take a closer look, what's happening on the race is always at the fastest pace, greatest speed.

And almost everything is being decided in the Pit Lane - the place where the drivers go to change tires and tank fuel. And they do it all in less than 10 seconds!

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That's right - it takes less than 10 seconds to tank tens of liters of fuel and change 4 tires. Incredible. And it's something all the industries should be watching and learning from.

Just think about it.

The mechanics are not wasting their time. They don't do anything unnecessary like washing the car or chit-chatting with the driver... nope, they need to get the car back on the track as soon as possible.

The F1 pit lane reminded me of the August's Nozbe 2.0 launch when we had to get the app ready as soon as possible.

We've been working very hard the past half of the year to get the 2.0 version ready and when we decided to launch exactly on August 11th, suddenly we knew we couldn't get all the features right on time.

We simply focused on the essential features, on the most important stuff to get the new shiny Nozbe 2.0 out there as soon as possible.

... it's because there is never enough time to get everything right.

We launched on August 11 and not all the users where really happy, because some features from Nozbe 1.0 were missing but what happened is that we embraced this fact and iterated quickly and guess what? Everyone was falling in love with Nozbe 2.0 and appreciated our effort.

Yes, we might have waited a little longer, or tried to "perfect" the features before the launch...

... but following this logic we wouldn't have launched very soon, as there are always things to "iron out" and "make perfect" and by launching fast and iterating quickly we also found out which features were the most important to our users and where we should improve the most.

Everyone should be learning from F1 Pit Lane.

Not only in a startup world - in most of the industries, it's better to launch a little early and iterate later with live user feedback. It keeps you in the loop with what your users really want and helps you stay ahead of the competition and bond with the users even more.

Someone once said: Things are never perfect and shipping is a feature.

Questions: Are you launching early or waiting till things are perfect? Even if you're not an entrepreneur or startup owner, in your life - have a look - where things could have been launched or started off quicker?
 
--> me I'm Michael Sliwinski and I'm an entrepreneur who's also the...
.. Founder of Nozbe.com - a time and project management web application
.. Editor of Productive! Magazine - a global PDF publication on productivity
.. and a blogger as well as a producer of a weekly 2-minute Productive! show.