Media – Page 30

Jason Cohen on the perfect bootstrapped business

*standard caveat that the word “bootstrapped” is misleading and wildly overused

Jason Cohen gave a fantastic talk at Microconf 2013 on the perfect bootstrapped business.

Here are some other notes I found.

Here are my notes with highlights for my big insights; JC = Jason Cohen

most companies don’t build something people want
most companies don’t build themselves in a way that allows for bootstrapping
JC built 4 cos, all made or are making $1M+/year, all bootstrapped
now swinging for fences with WPEngine
lifestyle and bootstrapped are pejorative terms, Hiten Shah: “let’s call it self-funded”
goal: predictable profit every month, $10K+ income per month per founder
revenue models
- recurring revenue is the best way
- Kevin Kelly’s 1000 True Fans – he actually redacted, after getting feedback from musicians and artists that getting 1000 fans is REALLY hard
- Jason: get 150 customers; for WPEngine, asked 50 WordPress consultants on LinkedIn for an hour of their time, said he was building something for them, and since they were consultants and time was valuable, he was happy to pay for an hour at their current rate, 48 of them responded positively and NONE of them charged him!
- goal is to get 50 people to agree to give you $50/mo to solve their problem — even before you’ve built the product!!
- if you get 150 people paying $100/mo, you’re past $10K/mo
- cashflow: annual prepaid is key!! (more on annual prepaid here)
  - “2 months free if you sign up for a year”
  - 1/4 of WPEngine signups choose pre-pay
  - infinite marketing budget because cash-in exceeds all marketing spend
  - in general, raise prices
  - hack: have 3-4 price tiers, highlight middle one, have highest one be crazy high; call middle one the “business plan” so people w/ businesses will purchase that one
  - switched from 15 day free trial to 60 day moneyback guarantee; sales went up and people appreciated they “had more time” (Jason doesn’t believe in free trials; in both, a credit card was required)
market models
- almost all Microconf speakers sell b2b
- don’t do:
  - b2c…app users complain about $1.99 (versus $0.99), Gmail only charges $5/mo, just can’t make money
  - anything real-time – you always need to stay current
  - anything that relies on virality for growth
  - don’t solve a problem that only occurs once in someone’s life — e.g., weddings, events
- do:
  - focus on naturally recurring problems
  - finance, e.g., invoicing, reporting, billing; asked app developers how much they made – 30% made none; IT-focused apps made $1.5K/mo, finance-focused apps made $6K/mo
  - problems that change over time, e.g. digital marketing like SEO and Adwords, a/b testing
  - customer and technical support
  - build aftermarkets – eg, Apple App Store, Salesforce, Heroku
  - be in a big market
    - not for same reasons as VC, but proof that market exists
    - niches abound
    - can be a “me too” product and not have to be #1
    - have more room to change product, pricing
customer acquisition
- social media sucks – isn’t repeatable, always changing
- his blog has 40K readers, launch of WP-Engine led to only 2 sign-ups
- cos like Buffer can do it, have to be really good at it and spend a lot of time on it
- pay for visits
- CPC = MRR/25 (if avg $50/month in revenue, pay $2/click) – here’s his blog post on why
things are going well ($30-40K in monthly revenues), what happens next?
- you can sell it
- his second co, IT Watchdog, built product as contractor, client was making millions more, afraid they were gonna build and sell to other clients (no exclusivity), so client bought them
- raise prices – but can change clientele
- Thales – Greek businessman/philosopher, Aristotle regarded him as the first Greek philosopher
  - what is hardest thing? to know thyself
  - what is easiest thing? to give advice

Thanks for reading, y’all!

Jason’s definition of the perfect bootstrapped business: PREDICTABLE ACQUISITION OF RECURRING REVENUE WITH ANNUAL PREPAY IN A GOOD MARKET CREATES A CASH MACHINE

An essay all online writers should read, from Patrick McKenzie

Patrick is an inspiring entrepreneur and writer who generously shares what he learns. His writings have taught me how to be a smarter, more effective business person.

“Making Your Writing Work Harder For You” is one of my favorites. Please read the whole thing; in the interim, here are some of my notes!

calling it “content” often devalues it
write things which retain their value over time (less news-y, less sensational)
remove dates from your work
call your best work “essays” or “comprehensive guides”, not blog posts
build your best work into the core navigation of your site so it’s easy to discover
have a goal for each piece of writing; often, it’s to continue the conversation via an email newsletter
provide something of immediate value to readers for giving you their email
build a library of your best content that you can re-use and remix (e.g., a case study, data)
types of content:
- high-quality beginners’ guides (e.g., Moz’s beginner’s guide to SEO)
- next steps for intermediate learners
- dedicated task-oriented content (e.g., how to setup Rails on your new MacBook)

2 of my all-time favorite Reddit threads

Reddit was the original Secret. It continually reminds me that while we’re 99.999% the same, that 0.001% can be soooo fascinating…

Throwaway time! What’s your secret that could literally ruin your life if it came out?

Some excerpts:

I run a cake business. I charge people hundreds for wedding cakes… Every last one is made using Pilsbury cake mix I buy for $1 a box at Walmart. I suck at baking. Every time I’ve ever tried to make a cake from scratch it sucked. But baking is like.. My whole deal. My friends all call me the cake girl.

Two and a half years ago I was in dire financial straights, so I sold my home to keep my struggling business afloat. I neglected to tell the owners that they have an 800 sq. ft. bunker on the property that I built about seven years ago. The bunker that I’ve called home since I sold it. The entrance to it is well-hidden, but I still come and go very early/very late in the day.

What is your biggest secret desire that you are ashamed of telling anyone?

I work as a nursing assistant at a retirement home, and the one thing I’ve always wanted to do is break a bunch of residents out. Something like a Ferris Bueller’s Day Off kinda day where me and about a hundred old people have an awesome day. Give them something to enjoy so close to their ends.

I want to be a house husband. All I want to do in life is write my novels, cook, clean, keep the finances, keep a nice house and fuck my wife when she wants.

Mihaly C. on how to achieve flow and why you stop feeling hungry or tired

Great talk from Mihaly Csikszentmihalyi (yeah…I had to just copy and paste this one), the man who invented the concept of flow.

Some brief notes and two useful screenshots for y’all:

ecstasy is an alternative reality
when we view monuments of the past (Chinese temples, Greek stadiums and theaters), we are really viewing places designed to elicit ecstasy (eg, you go to a sports stadium to feel moments of ecstasy and bliss)
the nervous system can’t process more than 120 bits at a time, which is why we can only process 2 people talking to us; when in flow, so many of those bits-slots are focused on the act that you literally cease to exist — you stop feeling hungry or tired, you stop paying attention to what’s around you (I bet some people get like that just playing Flappy Birds, though)

Flow diagram (flow comes when you are skilled at doing something, and are challenged by your current task; not enough skill and you feel anxious; not enough challenge and you feel bored)

Happiness stays fixed at 30% (despite society’s increasing income levels, self-reported happiness has stayed constant; this may be due, in part, to the relativity of happiness — if everyone’s income is higher, my relative income hasn’t changed)

Kevin Kelly on the rise of nerds and the Third Culture

I’m a recent admirer of Kevin Kelly’s writing. This article, where he explains the emergence of a third, “nerd culture” (in addition to the science and art cultures), is thoughtful and inspiring. Below are some excerpts and my reactions.

—

Science as the outsider culture:

When we say “culture,” we think of books, music, or painting. Since 1937 the United States has anointed a national poet laureate but never a scientist laureate.

Ironically, science continually creates tools that enable new art forms: radio, TV, computers, smartphones.

But it’s no longer just science vs art. A third culture has emerged, driven largely by computers.

It’s a pop culture based in technology, for technology. Call it nerd culture.

Nerds now grace the cover of Time and Newsweek. They are heroes in movies and Man of the Year. Indeed, more people wanna be Bill Gates than wanna be Bill Clinton.

(I think there is growing backlash against this “nerd culture”…if anything, it’s a sign that nerd culture is crossing that chasm and people are feeling transition pain)

Cultures create new jargon. Let’s “google” something. The language of text messaging.

Science is the pursuit of truth. Art is the exploration of humanity. Nerds are about novelty and creation.

Scientists would measure and test a mind; artists would contemplate and abstract it. Nerds would manufacture one.

This nerd culture builds tools, ignores credentials and admires crazy.

C. P. Snow had imagined a third culture where scientists interacted directly with artists. Nerd culture is both a step towards that vision, and something entirely different.

A really good dynamic computer model—of the global atmosphere, for example—is like a theory that throws off data, or data with a built-in theory. It’s easy to see why such technological worlds are regarded with such wariness by science—they seem corrupted coming and going.

But it will only grow, because computers and internet.

As large numbers of the world’s population move into the global middle class, they share the ingredients needed for the third culture: science in schools; access to cheap, hi-tech goods; media saturation; and most important, familiarity with other nerds and nerd culture.

“The effect of concept-driven revolution is to explain old things in new ways. The effect of tool-driven revolution is to discover new things that have to be explained” – Freeman Dyson

I disagree with Kelly on the following:

Indeed, raw opportunity may be the only thing of lasting value that technology provides us. It’s not going to solve our social ills, or bring meaning to our lives.

It seems clear to me that the manifestations of technology (the internet, mobile phones, cheap PCs, home appliances) have made Joe- and Jane-citizen richer, smarter and more comfortable. Computer simulations of cancer-fighting drugs…accurate pricing data for third world farmers and fishermen…vast libraries of digital books for schoolchildren around the world…these are all examples of how technology addresses social ills.

(it may just be semantics; for example, Kelly might mean that even the world’s fastest computer is worthless without a competent user, and the computer itself is the product of human minds and hands)

Kelly ends with this beautiful thought:

The culture of science, so long in the shadow of the culture of art, now has another orientation to contend with, one grown from its own rib.