UniversityTutor.com hit a little milestone this past week: 200 paying tutors!

At $10/month each this might not sound like a lot (and it really isn’t) but for me it was pretty cool because this was my original goal for myself way back when I first started the site, more than 2 years ago.

In fact, (this is really silly but) during that entire time I’ve had this little stickie note on my computer desktop with that goal written down:

When I started I thought it would take maybe 6 months tops to reach this.  Now it’s finally done – it only took about two years longer to accomplish than I thought it would! :)  (With some nice setbacks along the way.)

My daily stats dashboard:

I took the occasion to implement a change I’ve been thinking about for a while on the site: making the free account unlimited.

Below is a summary of the changes and some screenshots of the new signup process I recently deployed.

Old business model:

1. Tutor signs up
2. First 3 times they are contacted on the site it is free
3. After the third contact, I ask them to upgrade (conversion rate around 1.8%).  Those tutors who don’t upgrade can no longer use the site.

New business model:

1. Tutor signs up
2. Right after filling out their profile they are asked to choose a free listing or featured listing
3. Featured listing gives you top placement in search results, featured on the homepage, etc (conversion rate currently at 4%).

Main difference is that now you can keep the free listing forever if you want (you never get kicked off).  Instead, the incentive to upgrade is getting more tutoring inquiries with a featured listing (show up on homepage, first in search results, badge on your profile, etc).

Here are some screenshots of the new signup flow:

You can see all the benefits listed on the final signup page.  This is the most important one.

And here here are some examples of “featured” tutors:

Random thoughts on the change:

• I was sort of worried about making the free listing unlimited because it creates less of an incentive for tutors to upgrade.  But so far this looks like it was nothing to worry about – conversion rate to paid is actually better (need more data to say for sure here).
• I think the new signup flow where it asks them to upgrade from the beginning (but doesn’t prevent them from doing it later) is mostly responsible for this.  Tutors no longer have to wait for their “free trial” to expire for me to ask them to upgrade.
• I changed the wording from a “Free Account” vs a “Pro Account”  to a “Free Listing” vs a “Featured Listing”.  This wording change seems to work better here since “pro” is an ambiguous term, but a “featured listing” makes it clear exactly what they are paying for.
• I also added language to the page saying “Featured listings receive 4x as many inquiries as free listings on average” which is true (I ran some numbers).
• In large part, this new signup flow is modeled after the Sortfolio.com signup flow which I really like.  So they deserve a shout out here.

If you think about the freemium business model as a spectrum (crude diagram below), then this change is definitely a shift to the left (towards more free):

[100% Free -------------------- Freemium -------------------- 100% Paid ]

But it seems to have worked well here in earning more (ironically).  The tricky part about Freemium is where to draw the line between free and paid and the decision is different for every business.  I read a great piece of advice recently which said (I’m paraphrasing) “If your site benefits from network effects (basically that the value of the site grows with the number of users) then you should give more things away for free, and if it doesn’t benefit from network effects then you should make more things paid.”

That advice was helpful to me in this case – a tutoring directory definitely seems like it has some network effects.  I didn’t want to be losing those ~98% of tutors from the site who tried it out but didn’t want to upgrade.  This allows me to capture both groups and build a bigger site.

The site is growing even faster now that I made this change and it’s already over 220 paying tutors as I write this.  So this may turn out really well (too early to say for sure).  What are your predictions on this change?

Until next time, keep breaking free!
Brian Armstrong

P.S. To read up on the whole UniversityTutor story, you can view the category page here.

Can you imagine if someone made a robot that…

• fell on the floor and hallucinated for 8 hours a day
• constantly needed to be pumped full of dead animals parts and vegetables
• got addicted to various oils and lubricants
• had parts that were impossible to fix or replace
• day dreamed during work about other robots
• got heavier over time
• had about 4 good hours of work in it a day in between checking facebook and youtube videos

We are in trouble as humans I think.  Once machines get smart we’ll be obsolete quickly.

The good news?  About the time robots replace us, we’ll probably be able to upload our minds right into robot bodies.  Cheerful thought for the day…

Random thought for the day: for the next version of Apple’s operating system, they should really think about synching all your programs, settings, etc across ALL your computers.

Right now I carry a MacBook Pro between home and work every day because maintaining all my programs, files, and settings on two separate machines would simply be far too much work.  Why can’t those all be in the cloud?  I’d love to have the raw power and convenience of desktop machines at home and work – but the software underneath would have to all be the same virtualized computer or it would be too much of a hassle.

How many more computers could Apple sell if everyone who currently uses a MacBook as their primary machine went out and bought a desktop or two to complement it?

I wouldn’t be surprised if they are already working on this…

I like the idea of a business that creates building blocks.

In other words, your product may not be directly useful to customers, but it allows other people to create useful products.

Amazon EC2 is a a building block.  So is Apple's App Store.  So are Heroku, WordPress, Paypal, and a bunch more.

Some things that are cool about building a "platform" or building block like this:

1. You're higher up the food chain
   The guy who makes a great iPhone app makes $100 thousand.  The guy (Steve Jobs) who makes the the App store makes $100 million.
2. You make other people rich
   If you make a great toaster, you can be proud of yourself in the sense that people enjoy your product and you've made their lives "richer" in some abstract sense.  But if you create Google Adsense, you've made a bunch of people richer in a very literal sense – they can buy groceries this week with the check you sent them.
3. It's the easiest sell in the world
   Telling someone "hey if I bring you an extra $100, would you give me $10 of it?" is the easiest pitch in the world.  When you make good building blocks they sell themselves.

In short, a good way to make money is to help other people make more money.  Could your business work better as a building block instead of a direct-to-consumer product?

Until next time, keep breaking free!
Brian Armstrong

Had the pleasure of meeting Tony recently for lunch. Really enjoyed this post he put up:

http://www.tonywright.com/2010/rethinking-f-you-money/

Totally agree that the mythical 6-10% return is not being achieved by many these days, and that the real pay off of selling a business can come from the credibility – not the money.

Definitely food for thought, Brian Armstrong

I’ve seen a few startups recently who want to have their customers sign contracts to get started.

The logic being that you can guarantee recurring income for your business (for the length of the contract) or you’ll have some recourse if the person fails to pay.

But there are two flaws with this thinking:

1. If your product is actually good, customers will stick around whether you have a contract or not
2. If the customer owes you less than a few thousand dollars, it’s not even worth your time to sue them

So if you are left with a contract that you’ll never enforce, why even ask for it in the first place?  All you’re doing is creating a hurdle to getting new customers to try your product.

Google Adwords is a good example.  Most agreements in the advertising world are still done with paper contracts, but Google decided to let anyone start advertising on Adwords in just a few minutes with no up front cost or contracts.

If you fail to pay your Adwords bill, Google isn’t going to sue you for $500.  It’s not worth their time.  They simply shut down your Adwords account until you pay your bill.  If two years later you are finally ready to try Adwords again, hey – no hard feelings – you can just pay it and your account is instantly re-enabled.

When I see an internet company asking for contracts up front, it feels like their product must not be very good – otherwise why wouldn’t they just let me try it knowing full well I’m likely to stick around?

Brian Armstrong

P.S. I certainly don’t mean to imply all contracts are bad.  For independent contractors, real estate, anything involving larger sums of money, etc it can make perfect sense.  But most internet companies are charging relatively small sums of money per person.  

P.P.S. Another way to look at is "what would it cost you if the customer doesn’t pay?"  Most internet companies have low marginal costs in their products (ad space, some CPU time, etc).  If you’re in a high margin business you can afford to give away all sorts of "free trials" in the form of people not paying after signing up.  It’s often worth it just to get your product in the hands of more people.

P.P.P.S.  Most companies (including Google) still make you agree to a "Terms of Service" by clicking a checkbox.  Don’t confuse this with a contract though.  The terms of service is usually there to prevent *you* from suing them, not the other way around, and it’s a sufficiently small hurdle that it probably won’t affect your signup rates.

Gotta have a little fun with it :)

I recently put up a project on 99Designs.com to get UniversityTutor redesigned.

I put up a $795 prize and got 46 entries from a half dozen designers

Most of the designs weren’t very good, but one designer stood out and I awarded him the prize.  His name is Jack Herbert and he is in the UK.  Below you can see the screenshots of his final design which I selected.

These are just photoshop images right now, so I’m spending the evening next few days turning them into CSS on the real site.  It should be launching soon.

Main takeaway: there is just no reason not to have a decent design for your web business these days.  For a reasonable price you can get some great design work done.

Until next time, keep breaking free!
Brian Armstrong

This is unfortunate. I no longer have access to the Google Group I use for support http://groups.google.com/group/feedmailpro on FeedmailPro.com.

It seems there is a known bug with Groups where people are getting unsubscribed. This happened to me, which in itself is no big deal. But when I re-subscribed by emailing the +subscribe address for the group, my ownership of the group disappeared!

This means I can’t moderate incoming messages and no new members can be added. The group is currently orphaned, without an owner, and there are pending messages waiting from customers that have gotten no response. I can’t even delete the group to recreate it since I’m no longer the owner.

I’ve posted to the Google Groups support forum to see if anyone could help. But it looks like they are swamped and I haven’t gotten any reply.

Googlers, can anyone out there help? Has anyone had better luck with an alternative platform for Q&A and customer support?

Former Google Group Owner,
Brian Armstrong

Here are a collection of questions you can answer to come up with business ideas. These are taken from Paul Graham’s excellent article on the subject which is worth reading if you have the time.

Sit down with a cup of coffee and force yourself to write out 10 answers to each of these questions.  Even if you think they are silly, force yourself to write 10.  You’ll be off to a good start.

• What do I find intolerable?
• What luxury can I turn into a commodity?
• What big companies solution could I make easier to use?
• What will kids in 10 years look back on and not believe about how difficult our lives were?

Photo by annais