The real issue, though, is that ever since Google acquired FeedBurner there’s no human support so when something like this happens you’re on your own. It’s an interesting twist on the problem of trusting your data to the cloud, and one that has left me spending several hours trying to figure out the problem (a problem that began out of the blue).

In any case, I apologize for the inconvenience. Things appear to be back to normal.

Too many factors come into play when looking for a name and it’s almost impossible to decide on the right name once you’ve stared at the same list for a week straight. This is the kind of thing that keeps you up at night, even after you’ve made the decision.

And asking opinions is fine, but more often than not the people you ask are not in your demographic:

“Hi Mom. Things are good, thanks. Hey while I have you on the phone, what do you think I should call my enterprise level encryption engine?”

About two months ago Patrick Thompson, a member of the Micropreneur Academy, was in search of a name for his speed reading eBook reader for the iPhone. We emailed several times about the process he followed to find his optimal name, and given his creative approach I wanted to share it here.

As an aside, his application launched last week and you can find it at http://www.quickreader.net/ or in the iPhone app store under the name “QuickReader.”

The Approach
A while back Patrick contacted a handful of Academy members and asked for opinions on potential product names. Our task was to choose a few names we liked from a long list of ideas. From this data he culled a short list of potential names – around 40 – and put a survey on Amazon’s Mechanical Turk. He got the idea from these two links: here and here.

He asked people to view a screencast of the application, offer suggestions for the name and give their feedback on the app. He received 29 responses and paid a total of around $7.

With a successful test run in his pocket he put out a 14-question survey looking for 500 respondents. He paid $.055 per survey (including Amazon’s $.005), and had 50 respondents in the first 3 hours.

The Findings
Five days later Patrick had 250 responses and enough information to decide on a name, but let the survey run because he was receiving solid information from the other (non-naming) survey questions, as well as leads who were interested in being notified when the app launched. At the time of this writing he’s at 460 responses.

While the purpose of the survey was to choose a name for his application, he (wisely) took the opportunity to also ask about demographics. Among other things, he found that:

• A slight majority of respondents were female
• Nearly 75% were between 18 and 35
• 63% were in North America; 20% in India
• 28% of respondents were in his target market (meaning they owned an iPhone or iPod touch)
• 25% of respondents had ever read a book on a mobile device (not bad!)
• More than half had an interest in speed reading
• 21% volunteered to beta test and provided their email
• 20% asked to be notified when the app was available and provided their email

Obviously the population taking the survey was skewed towards a younger, technology savvy audience. But it’s close enough to his target market to work.

Regarding the product name, which was the original purpose of the survey, a list of 40 names was given to each respondent was asked to choose up to 3 names. While QuickReader wasn’t the top name for the entire population, it was a close second among people that had an interest in speed reading and 3 of the top 5 overall names had the word “quick” and “read” or “reader” in them. And QuickReader works well for some of Patrick’s future plans for the app.

The top name overall, throughout the survey, was iReadFast. While he decided not to use this for the product name (as it doesn’t fit well for a general e-book reader), he did grab the ireadfast.com domain name to use as a blog or education site in the future. I’m surprised the name was available.

Lessons Learned
Overall, Patrick said that using Mechanical Turk for the survey was a great experience and obviously quite cost effective. It cost him $27.50 for 500 responses ($.05 per respondent + .005 per respondent for Amazon’s cut). He was able to decide on an app name. He found out something about what devices Turks use and their attitudes about reading and speed reading, and he got a list of close to 100 e-mail addresses of people wanting to be notified when the app launched.

And finally, here is the advice he provided from his research and first-hand experience:

• Always do a small trial or 2 of your survey task before you start the real one
• Try to make it interesting for the Turk
• Providing a link to a screencast of the app was a good idea (the Turks enjoyed it)
• Provide a confirmation code in your survey, on the final thank you page, once they have answered all of the questions. This is what the Turk enters in a form at the end to prove that they took the survey.
• Executing the survey in an external survey site, rather than doing the survey directly in Amazon’s form, allows you to use the built in reports of your survey provider (rather than just getting the excel data.)
• Keywords are important. When you publish your task, try to add as many relevant keywords as possible.
• Even if your goal is narrow (e.g., selecting a name), use the opportunity to find out more about your potential users and market.
• Always have a question asking how you can improve the survey.
• Pay Quickly. It annoys Turks when you don’t.
• It’s addictive. It is hard to keep yourself from constantly checking to see if new results have come in.

Conclusion
Patrick’s search for a product name demonstrates a creative approach for Mechanical Turk. He invested a few hours and around $20 and wound up with a name he knows is a good choice for his market and a nice list of prospects to notify about his launch.

The reason I like his approach comes back to my desire to measure and quantify marketing. If there’s one thing wrong most people miss about marketing, it’s measuring and tweaking everything: your message, your copy, your videos, your tagline, even your price.

And while you can’t easily tweak your product name, Patrick took the next best approach by measuring in advance instead of thinking about it for week and going with a gut feeling. Quantifying these kinds of things will improve sales and, trust me on this one, will allow you to sleep at night.

P.S. I did a written interview a few weeks ago for LocationIndependent.com. You can find it here.

Making Open Source Convenient: JumpBox – A startup focused on making it dead-simple to get started with open source applications, they create virtual machines completely pre-configured to just start and go (including versions that runs on Amazon EC2). If you’re having trouble installing an open source app, JumpBox is your answer.

What a Startup is Really Like – Another great Paul Graham essay. My favorite points:

• 12. It’s Hard to Get Users. If you make something where the challenges are mostly technical, you can rely on word of mouth, like Google did…but with other types of startups you may win less by features and more by deals and marketing.
• 17. The Value of Community. A surprising number of founders said what surprised them most about starting a startup was the value of community [hanging around other people also starting a company]

A Story of a Launch Disaster…Fast-Food Style – While the truth of this tale is dubious, it’s still a good story of doing the unexpected to thwart your competition.

CrossLoop – Mom calling you for tech support? Send her to CrossLoop, affordable online computer help.

Coolest Business Card Ever – How am I not stealing this design right now?

Know Thy Audience – And look at creative funding sources.

How to Avoid Being Outsourced or Open Sourced – Pointed out to me after my post about competing with open source competition.

The highlight of the day was that I finally had the pleasure of meeting Jeff Atwood of Coding Horror and Stack Overflow. We’ve emailed several times over the years but never had the chance to meet face to face. And yes, he’s as smart as he sounds on his blog and podcast. And a super nice guy to boot.

Wireless Internet
Given Joel’s recent rant about trouble with wireless internet at conferences, I thought it comical that there was no wi-fi available for conference participants (and no way to get a hard-wired connection). AT&T must have seen a spike in usage in that are of S.F. as everyone pulled out their iPhones to check email and Twitter.

Topics
Let me start by saying that Joel Spolsky is an outlier. Like him or not, the guy is a genius. He knows how to capture peoples’ attention in both his writing and his presentations.

The conference opened with a keynote from Joel on power vs. simplicity. It was an examination of UI complexity and a more thorough treatment than a post I wrote on the subject a few years back. And of course Joel’s presentation included his typical humor, twists and entertainment value. Joel is all about entertainment, which makes you want to pay attention to everything he says. So much that it was a tough transition when Joel left the stage to make way for the next speaker.

After the keynote we heard talks on Python, iPhone development, FogBugz (Joel again, though this time in his less entertaining “demo mode”), ASP.NET MVC (from Scott Hanselman who also knows how to work a crowd), Stack Overflow (Jeff Atwood), Qt (a language that runs on Nokia phones), Android and jQuery.

Re-connecting
I work from home and since I live in Fresno I don’t get out much. The 7 hours of driving (round-trip) was tough to justify simply for tech content, but the bonus of the day was connecting with several developers including a guy I worked with in 2001, a developer of a former client, someone I had never met, and of course, Mr. Atwood.

Closing Thoughts
It’s easy to forget the impact of face-to-face contact. I sit in front of my laptop for days, nay weeks on end and never see another person who is remotely interested in technology. The conference was a well-needed reminder that there are other alpha-geeks in the world, and that being around one another generates excitement and energy that is impossible to duplicate in any other forum.

The conference was also a wake up call that I need to get out from behind my desk and make these face-to-face connections more often. So I’m in the process of booking speaking engagements over the next several months on how developers can launch and market their first product.

If you’re affiliated with a group in California who might be interested in a free speaker, please drop me a line.

Yes, Twitter and Facebook are the darlings of the media for the time being, and it seems no one gives a rip about blogs anymore. That hot topic of yesteryear is now a fad of the past, much like Chia pets and Snuggies. Wait, you haven’t heard of a Snuggie? Be really disappointed you missed out on that one.

Where was I? Oh yes, blogs. They’re over. Done. Kaput. They are so 4 years ago…

But wait…actually, they’re not.

A Weeding Out of Sorts

What’s happened as the press has turned its attention to the next big thing is that the long-tail of blogs, the thousands of new blogs created each day by non-techies looking to announce what they ate for lunch has waned, and they have now gathered on Facebook or Twitter to talk about that important second meal of the day…among other critically important topics.

And that’s why now is a fantastic time to start a blog.

The masses have grown weary of the blog “fad” just as they grew weary of the “email” fad in the late 90s, the “internet” fad in 2000, MySpace and Friendster in 2007/2008, and how they’ll grow tired of the Facebook and Twitter fads in 2010 and move on to something else.

The good news is that once the fad is forgotten you’re left with the people who are serious about the medium and who provide original ideas worth spreading. There are still millions of blog readers out there looking for high-quality content, and with fewer new blogs launching and more and more blogs being abandoned in favor of Twitter and Facebook there is more room for new, high-quality writing than there was two years ago.

It’s almost like the clock is moving backwards to 2004/2005 when blogs when there was much less noise in the blogosphere, but a smaller audience of commited, early adopters.

I’ve been posting more and more recently, and my audience has grown faster than at any point in this blog’s history. People, and especially the web-savvy audience, will always seek new thoughts and ideas…the fewer people who are creating them the easier it is to build an audience.

The Permanence of Blogs

Several bloggers I follow have moved to Twitter and are no longer updating their blog. That’s a mistake. When Twitter dies down what then? Blogs are not like the fads I listed above; they will be around with or without the unwashed masses.

Blogs are not reliant on a network effect, they will always be exceptional at spreading original, thought-leading ideas, interacting with customers, and receiving crazy rankings from Google, which is known to love how blogs are structured and constantly updated. In addition, the rise of Twitter has, if anything, increased the need for new content since many tweets are simply outbound links.

The web is going to stay the web for the time being, and blogs are a major foundational piece of how the web works because they plug into its core – blogs are, after all, just websites. Websites that constantly thirst for new content.

Whereas MySpace, Friendster, Twitter or Facebook could close up shop tomorrow and they’d be forgotten in a few months (a couple have been forgotten already), blogs will be around forever. Or at least as long as there is a thirst for original content and interactions beyond having to follow someone, friend them, or communicate in 140 characters or less.

Because someone has to continue creating original content and ideas. What are all these tweets supposed to link to?

Two days later I received a postcard that read:

Dear Robert,

We want to say ‘thanks for being our customer.’ And we mean it; our saying so is not simply some social nicety. It is a pleasure to be of service to you. Please give us a call if we can be of further service.

Cordially,

[Manager's name]
[His phone number]

How likely am I to call him when I need my next service?

Cliches are so tired you don’t even notice them. Postcards from service stations are boring. And so are beta mailing lists, product blogs that don’t have an original voice, and sterile business-speak in your launch email.

But if you can get out from behind the corporate veil and talk to your customers like a real person, whether you’re a one- or a hundred-person company…you will create something people want to talk about.

It’s actually pretty easy. Talk to your customers, in writing, like you talk to a good friend. Don’t use cliches, jargon or acronyms. Be succinct. Write like you talk, not like how you think people want you to write.

It was just a postcard, but now six people have seen it, and I’ll be calling him the next time I need service.

This episode’s Micropreneur is Thomas Kjeldahl Nilsson who recently launched his online mind mapping software ThoughtMuse.

==

Rob: Hi Thomas. Thanks for taking the time to appear in the Spotlight. Can you tell us a little bit about yourself?

Thomas: My name is Thomas Kjeldahl Nilsson. I’m a 31 year old Norwegian software developer. By day I work in a small startup specializing in mobile software. On nights and weekends I work on my own product – ThoughtMuse.

Rob: Tell us about your product, including when it launched and some info the size of your user base.

Thomas: ThoughtMuse lets you create and share mindmaps. Mindmapping is a visual, tree-like way to structure thoughts and ideas. This is very useful for thought processes like brainstorming, planning, outlines and design. Mindmapping can also be a great study aid; mindmapped notes aid memory recall.

ThoughtMuse is a SaaS (”Software as a Service”) product – the tool runs entirely in your browser, and your mindmaps are stored online. Mindmaps can also be published, so they can be shared with anyone online. Basic accounts are free, additional premium features are available for a small monthly fee.

I formally launched the product in late July 2009, after running a beta for a few months. The site currently (as of September 2009) has a couple hundred registered accounts, and a handful of paying customers.

Rob: When & why did you decide to build and launch your own software product?

Thomas: ThoughtMuse is my first product, and I started working on it roughly half a year ago (march 2009).
For years prior to that I thought about software entrepreneurship and the importance of working on your own stuff, and I read tons of stuff by Joel Spolsky, Paul Graham, Erik Sink and 37 Signals. I had some vague product ideas, but I never got started on anything concrete.

Last winter I found myself with a big burst of inspiration, and I channeled that into starting this project.

Rob: What inspired you to pursue this niche?

Thomas: I think you have an advantage if your product “scratches your own itch”. This helps with motivation, and makes it easier to get started with a concrete project. I’ve mindmapped heavily for years, and I wanted a focused, convenient way of editing and saving my mindmaps across different computers – both at work and at home. Other web-based mindmapping services exist, but none of them were quite right for me. So I built my own.

Rob: What has been the hardest part of the development and launch process?

Thomas: Developing and launching the initial product was actually the easy part. The hard part turned out to be plugging away on marketing, maintenance, polish and new features after the public launch. Customers won’t flock to a new product all by themselves – you have treat the process like a marathon, not a sprint. I knew this intellectually, but it didn’t really hit home until after launch.

Rob: What has been the most time consuming part of the process?

Thomas: The most surprisingly long-running task turned out to be setting up the company infrastructure – ie. company registration, bank accounts, accounting…. I was new to all that, and the process turned out to be more drawn out and complicated that expected (I’m in Europe, so your mileage may vary!).

Rob: What has been the most unexpected part of the process?

Thomas: At the outset I estimated five to six months of work to develop and launch the product. I worked for a set amount of time each week, did almost no all-nighters – I just steadily plugged away on it. And it actually launched roughly on time! This was a pleasant and gradual surprise (I was initially afraid the schedule would slip quite a bit).

Rob: Which marketing approaches have worked for you and which have not?

Thomas: Blogging, social networks and Adwords have been most effective for me so far. I’ve tried other approaches as well, but they haven’t done much for me yet. This may change later on, though.

Rob: What are your top three tips for someone wanting to launch their own product?

Thomas:

1. Set constraints; timebox your work. You want to keep your product rough but malleable. Get it out in front of users early, iterate on it as quickly as possible. Avoid feature-creep until you know what will pay off. “Perfect is the enemy of Done”.
2. Set a sustainable pace. You don’t have to conform to the stereotype of a young, caffeine-fueled startup founder working in eighteen-hour stretches. Organize a schedule that you’ll be able sustain long-term. You’ll get there in your own time!
3. Network with other entrepreneurs. It’s a good way to exchange advice, project feedback, and encouragement with others in the same boat. This improves both your product and your morale, and is especially important if you work alone.

Finally, along the way I wrote up some lessons learned on my blog – readers might find some useful tips there.

Rob: How has the Academy helped you get from square one to launch?

Thomas: The Micropreneur Academy has been useful in several ways. The information is well presented and synthesized which saved me tons of research, since I didn’t have to spend as much time pulling information from lots of different sources.

Also, the Academy forum is a great way to network with other entrepreneurs!

Rob: In hindsight, is there anything you would have done differently or anything you wished you’d known before getting started?

Thomas: Specifically, I would probably have started serious work on marketing much earlier. Like Eric Sink writes: “Marketing is not a Post-Processing Step”.

More generally, I wish I’d started something on my own much earlier! There are lessons I only learned because I actually created my first product. Years of reading and thinking just isn’t the same – not by a long shot.

Just go for it!

Rob: Inspiring words from a man who knows how to launch.

My first reaction is that becoming a freelance developer (or starting your own consulting firm) can also be a lot less conducive to launching a product. Instead of being able to justify a somewhat fixed salaried workday, you find yourself working longer and longer hours as client demands increase. In addition, freelance development requires a lot more mental energy than being a salaried employee. Mental energy that can’t be spent launching your product.

The next step after becoming your own boss is to realize that you only get paid when you work. When you take a week off you get squat. So even if you raise your rate dramatically, you discover that you have to be constantly working, in addition to having no leverage. Bah – that isn’t what you signed up for!

But that’s an aside.

In terms of his question about becoming a freelancer, by far the most challenging part of becoming a freelancer is finding work. To ensure a steady stream of gigs (and income) you can’t just jump in and expect to pull jobs from Elance and Craigslist. Those are low-dollar meat markets and you’ll be lucky to pull in more than minimum wage since you’re competing against people halfway around the world.

A better approach is to focus on your strengths and from there determine the method(s) that will work best to differentiate yourself from every other the freelance developers around the world.

My Experience

Back in 2002/2003 I spent hours writing a sales letter and emailing it to 15 local design firms, offering my services as an outsourced development staff (I coded in PHP, .NET and Java at the time). I combed my local Craigslist daily and responded to posts looking for freelancers, and I kept an updated resume on Craigslist, Monster, Dice, Guru, and Elance.

I spent well over 100 hours over the course of a couple months, and all of this resulted in exactly 1 contract amounting to about $10,000. This was good, but I quickly realized I wasn’t going to make a full-time living (in the U.S.) with that approach.

A friend of mine runs a small consulting firm and he made 1000 or so cold calls last year. That approach may or may not be for you. He keeps his people busy so it obviously works for him, but I don’t have the verbal salesmanship nor the fortitude to make that many phone calls.

Writing and Launching

What finally broke the door open for me was starting this blog. Actually, it wasn’t starting the blog, it was sticking with it for a year. I invested around 500 hours during the first year and absolutely no one was listening.

Then a strange thing happened. Through a series of events – (a) I figured out my market and (b) came out of the Google Sandbox – my traffic and subscriber numbers increased dramatically over the course of a few months and I began receiving requests from people asking if I would do freelance development work for them. I increased by rate nearly 30% in 3 months due to the amount of work coming my way.

Sticking with my blog had completely changed the game for me.

Another thing that brought in a very nice contract was an article I wrote for asp.netPRO. The article took me 10 hours to put together, I got paid $500, and got a $30k contract out of it. Not a bad deal.

I also received several development requests when I launched a Micropreneur venture called FeedShot (which I later sold). FeedShot became popular right out of the gate and I received several requests for freelance work the few weeks after it launched.

Moral: Do Something Publicly

Every public artifact I created (this blog, articles, launching a new site) incrementally increased my credibility, and increased the number of development requests I received. In the end you have to invest time to build your name. In my case, and I’ve heard this is typical, it was years.

But the way I looked at it I was either going to invest 500 hours on my blog, or make 1000 cold calls.

In the end you’ll need to find your gifting and figure out a way you can use it to do something people will notice.

• If you can write, write articles or blog
• If you code, become a high profile contributor to open source projects
• If you enjoy speaking, start speaking at user groups

Anything relevant that you can do in public will increase the chance that someone will come to you looking for development work. And that’s the position you want to be in.

The Micropreneur Academy Product Showcase is a place to showcase these products (currently eight are listed – there are at least that many not yet added).

I will be adding many more in the coming months as members launch their products and request to be included in the showcase.

The problem is, your market is most likely not the people who read Digg. Nor the people who read TechCrunch.

And if it is, you’re in for a tough ride. This audience is fickle, moves quickly, and looks at a lot of sites for about five seconds before clicking the back button. If you do get the big swarm of traffic run the stats on how many visitors stay longer than 5 seconds…seriously.

When I’ve been on the front page of Digg more than 90% of that traffic has stayed on my site for less than 5 seconds. That’s not a market, that’s a drive by.

When you receive 50,000 visitors from one of the major media sites you will be lucky to convert five sales. Five measly sales. That has to win for the worst conversion rate ever.

The reason? They are not your market.

When looking at your marking plan you should actually be thinking:

If I could get on the front page of [small-but-very-focused-niche-website].com…

Find the website(s) where your real market – the people who will actually buy your product – hang out. The competition will be less and your conversion rates will be orders of magnitude higher.

“That’s ridiculous!” I would think, “How can you find a market for something before you build it?”

Years later I’ve realized that the single most important factor to a product’s success is not the founders, not the marketing effort, and certainly not the software itself.

Nope. It’s whether there’s a group of people willing to pay for it.

I’ve developed a saying. It’s short and witty and it even kind of rhymes:

Market comes first, marketing second, aesthetic third, and functionality a distant fourth

Actually, it’s long, dull and kind of boring…but it’s true. Oh, so very true.

Market Comes First…

The product with a sizable market and low competition wins even with bad marketing, a bad aesthetic, and poor functionality. Think QuickBooks, Palm, IE5.5 or any niche product you’ve ever seen that looked like it was written by a six year old but sells hundreds of thousands of copies.

You can sell garbage to a hungry market and make money. Of course, someone will eventually come and eat your lunch if you don’t improve your product (the three examples I listed are in a world of hurt these days). But that’s an entirely different blog post.

Luck is the Exception

Something occurred to me the other day as I was mulling through this statement – it doesn’t take luck into account. Startups like Hot or Not, Plenty of Fish, Facebook apps where people throw sheep, and Twitter apps where people throws @shp.

Startups where no one really understands why they became so popular; they just caught on. Like a pet rock or a hula hoop.

In these cases, the market doesn’t matter because luck trumps everything. With luck on your side you don’t need money, good marketing or a solid product. You just need to be lucky.

You either luck out that your idea goes viral (which happens to maybe 1 out of 10,000 startups?) or that your idea is so brilliantly conceived and executed that people clamor to find their wallets because you’ve solved their problem so well.

Either way it’s a complete crap shoot – you don’t know your application is going to be wildly successful until it happens rather unexpectedly. The guy down the street with the same skill invests the same amount of time as you have and he has 1 million users after 3 months; you have 12, one of which is your sister.

Why would someone roll this million-sided die when there are approaches with a much higher success rate that provide nearly all of the same benefits?

Because high-growth startups are where the cool kids hang out. We dream of being the next startup poster boy or girl that gets mentioned on TechCrunch.

You won’t wind up on the cover of Fast Company for writing a waste management application. But you can build a very lucrative income if people in the waste management industry need your app.

The Startup Lottery

I need to stop here and say this: with a “hot idea” startup the odds are overwhelmingly against ever getting funding, much less having a liquidity event that puts money in your pocket. Your reward for success needs to be enormous (enough to never have to work again) because your odds of success are probably 1 in 10,000 if not worse.

If you accept that and realize that the 80 hour weeks for a year (or three) at sub-market wages are worth the gamble, then go for it. There is a ton of excitement and fun along the way, and a genuine passion and pride in building a startup like this…but it’s a bad decision like buying a lottery ticket. The odds are very much against you, worse than any bet you can place at the race track.

But there are still those who go for the VC-funded “hot idea” startup. Aside from the cool factor why might we pursue it?

I know a handful of people – including myself – who have reached for the startup life. Each of us did it for one, maybe two startups (you can only do so many before you burn out). Not surprisingly, none of us “made it.”

Based on conversations with these friends the reasons given for pursuing this path are the same ones I gave back when I started pursuing this road with a couple Yale MBAs. They fall into two categories:

1. The “lottery” factor of hitting it big and cashing out
2. Benefits you get from owning your own business (passion for what you’re building, being in control, excitement, etc…)

The first reason implies that you’re going to do something with the money you make. My guess is you would either plan to stop working and retire to Tahiti, or continue working only on projects you enjoy.

But why not do one of those right now without working like a dog for three years with the odds completely stacked against you? Why not take a route that instead of having a 1 in 10,000 change of success has maybe a 1 in 100 chance of success and can bring you to the same ends; provide you with a life where you could take off when you wanted or work on projects you enjoyed?

There are many ways to get there that don’t involve VC funding: Micropreneurship is the route I’ve chosen, Joel Spolsky’s done well with a traditional software company and 37signals has done well with a non-traditional software company.

Even someone you may not have heard of like Stephane Grenier makes a good living with a real software product that fills a market’s need. He’s probably not going to sell out for 10 million dollars, but he’s doing all right and has all the benefits you’d expect from owning his own business: passion, flexibility, freedom, etc…

The common thread to the examples I’ve named above involve one thing: finding a group of people willing to pay for your software.

Back to Basics

Fast Company would have you believe that the “million users in 3 month” scenario is the best way to build a startup (because it makes a good story and sells magazines).

But the way the vast majority (dare I say 99.5%?) of all businesses in this world that succeed in the long-term – be they large or small, high-growth startup or lifestyle business – is to find a market that is willing to pay them money for something.

That something can be dry cleaning services, invoicing software, hosted salesforce automation, or a blueprint for how to launch a software product on your own…what matters is finding a group of people who need your something more than they need the money you’re charging for it.

How do you find those people? I’ll be talking about that in a future post.

But once you find them, provide your product with no hassles at a price where you make a healthy profit and you’re set.

Do that, and your marketing plan won’t need luck.

Why would someone buy your product when it has an open source competitor?

He didn’t answer it in his presentation, but if I remember correctly he said that to a college student, who tends to have a lot of time and little money, a product like Eric Sink’s Vault (which runs $299/license) is an enigma.

Why would someone pay $299 per user when there’s a perfectly suitable alternative available for free?!

Time vs. Money

At one point during college I had $6 in my checking account. This lasted for about three months.

I remember riding across campus, about a 15 minute ride (each way) to save $.50 on a slice of pizza. This is inconceivable in my life today. Back then, time was abundant and money was scarce.

Then I graduated and got a job. At a salaried job making $80k plus benefits your time is worth around $55/hour. Suddenly that ride across campus to save $.50 doesn’t seem like the smart money decision it once was.

And thus it is with the majority of open source software:

Open source software is free if your time is worth nothing.

I’m bracing my inbox for emails from disgruntled Gimp users explaining how charging for software is bad, commercial software is evil, and my mother dresses me funny. But I don’t buy it.

I’ve used mainstream image editors like Photoshop, Paint.NET and Gimp; some of my best friends are mainstream image editors. And when I saw Gimp I almost went blind. Children were weeping; fruit was bruising. The UI could kill small animals.

Are there exceptions in the open source world? Absolutely.

When an open source project gets enough talented people working on it, it can become a downright masterpiece.

Firefox rocks. WordPress is awesome. Paint.NET rules. And Linux is pretty cool, though the lack of drivers and ease of use as a mainstream desktop OS after all this time is still a disappointment.

And yes, I know about Ubuntu. I also know that every friend to whom I’ve recommend it has run into major compatibility issues or complete lack of drivers. Ubuntu is free, after 6 hours of research and command line tricks trying to get your laptop to connect to your network.

Have you ever tried Gimp? Or the admin control panel in Zen-Cart? Or tried to install a Perl or PHP module that didn’t come out of the box? I’ve been a web developer for 10 years and I cringe when I see that I need a module that’s not included…there goes two hours of my day searching, configuring and installing dependencies.

As a developer I’ve probably had contact with 300 open source projects, components, and applications. I estimate 80% of them required substantially more time to install, use, or maintain than commercial counterparts.

But depending on the price and feature set of their commercial counterparts, sometimes it’s worth using the open source app and sometimes it’s not. $299/user for Vault vs. $0/user for Subversion? It depends on how badly you need live support and guaranteed bug fixes.

The Differentiators

The areas that kill the most time when consuming open source software are:

• Installation process
• Documentation
• Support
• Usability

I’m sure we can all point out a handful of open source projects that have decent documentation and decent usability. The vast majority do not. Even fewer can be installed in five minutes or less, even by an experienced software developer.

How to Compete Against Open Source

As a commercial software vendor you have to focus on your key advantages over open source software:

1. Save Your Users Time. Ensure a painless installation process, top notch documentation, top notch support, and a minimal learning curve for getting started using your application.
2. Market Hard. You have a marketing budget; odds are high your open source competitor does not. If you can position your product well and build a reputation for good documentation, support and usability, you will sell software.
3. Focus on Features for Your Demographic. Your open source competitor is going to win when it comes to college students, hobbyists, and other groups where time is worth a lot less than licensing cost. You will have an edge with business users since time is highly monetized for entrepreneurs and enterprises. Build features for people who are likely to buy your product.

You will find more success focusing on your strengths rather than your weaknesses.

Remember: while you’re not going to win a feature race against an open source competitor, you’ll do even worse in a price war.

Hierarchy of the Successful Independent Software Developer – Freelancer -> Consultant -> MicroISV -> Micropreneur.

“Failure” Nike Commercial – “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan

Things I Learned the Hard Way – Several related posts from Derek Powazek. Titles include Unsolicited Advice is a Valuable Clue, Save the Touchy-Feely for the Redwoods, Someone’s Always Listening and Never Piss Off the Sound Guy.

The Funniest Amazon Reviews Ever – 1,255 of them.

“The Office” ERP Parody – An exceptional parody of the British version of The Office. For a while I was trying to figure out if some of the actors were from the original series.

If you’ve been writing code for years you’ve likely formed opinions that don’t quite hold true in the world of entrepreneurship. This lesson covers a handful of realizations that you will come to at some point during your transition from developer to entrepreneur.

Realization #1: Being a Good Technician is Not Enough

In The E-Myth Revisited author Michael Gerber talks about the archetypes of running a business. They are: entrepreneur, manager and technician (discussed in more detail here).

The entrepreneur is the dreamer, the visionary, and the creative mind.

The manager is the person who thinks about return on investment (ROI), near-term success, and productivity.

The technician gets the work done. She follows the manager’s guidance and is concerned about today’s success.

95% of developers are comfortable, and probably excel at, being technicians. This means you’re good at writing code, producing something tangible, and cranking away on each task, moving one step closer to launch date.

But it takes more than a technician to run a successful business. It’s critical to look ahead into the near-term and determine which features or marketing efforts will provide the best ROI (manager), and to think out a year or more to determine the long-term direction of your business (entrepreneur).

The first step is to determine your goals and objectives (we discuss this in depth in the Academy).

Without planning, organizing, systematizing, outsourcing, and marketing, all things you will shy away from as a technician, you will never make it past the $25/hour pit you see many one-person companies fall into.

Realization #2: Market Comes First, Marketing Second, Aesthetic Third, and Functionality a Distant Fourth

The product with a sizable market and low competition wins even with bad marketing, a bad aesthetic, and poor functionality. Think QuickBooks in the early days, or any niche product you’ve ever seen that looked like it was written by a six year old but sold thousands of copies.

In the same market, the product with better marketing wins. Every time.

In the same market with equal marketing, the product with the better design aesthetic wins. Sure, a few people will dig deep enough to find that the “ugly” product has better or more functionality, but the product that wins is the one that has the best looking website and user interface.

Functionality, code quality, documentation…are all a distant fourth. I know this sounds sacrilegious, but unless you’re marketing to software developers – they can be an exception to this rule – your order of importance is market, marketing, aesthetic, function.

Realization #3: Things Will Never Be As Clear As You Want Them to Be

Writing code is cut and dry. There are different ways to accomplish the same thing, but in general you know how you want your application to behave and you just need to get it there. Your constraints are constant – the compiler behaves the same way it did the last time you compiled.

By comparison entrepreneurship, especially the marketing side, is never this clear.

Even the foremost marketing experts in the world are not sure whether people will buy a new product. People with 20, 30 and 40 years of experience still have to take their best guess at what will succeed. They have to try things out and adjust as they go. They often do small roll-outs to test audiences and adjust the product or the message before unleashing it on the world.

You will have to do the same and it will involve a lot of guesswork at the start, which is a hard pill to swallow when you’re used to making decisions based on fact. Instead, you have to take your best guess, then measure and tweak.

And then do it 20 more times until you succeed.

Realization #4: You Have to Measure & Tweak

Like me, you’ve probably visited hundreds of startup websites in the past 6 months. Each one had about three seconds to sell you on their product…three seconds to convince you to click a link that wasn’t your back button.

You will soon be on the other side of the equation, and you will have three seconds to sell someone on your product. And you know what? You’re going to fail. A lot.

Your early conversion rates are going to be abysmal. So low you’re going to email your web analytics provider asking if there’s a known bug in their conversion report. You’re going to wonder why no one is trying your demo, watching your product tour, or buying your product.

This is why you have to measure and tweak. You have no chance of achieving an optimal marketing message on your first try. So you have to observe your visitors’ behavior and change pricing, headlines, screenshots, buttons, and a number of other factors…and watch how they behave when you do.

Realization #5: You Will Never Be Done

Finishing a software project is a great feeling. The night you roll the new bits to the production server is indescribable. The feelings of relief, joy, accomplishment…are some of the most rewarding parts of developing software.

And you’re never going to feel that way with your product.

Sure, you’ll have releases and milestones. And you’ll feel good the day you launch a new version.

But you will never feel “done.” You will always have a list of features, marketing tests, potential partnerships, and new markets to take care of.  And while the journey is itself a gift, never having the feeling of completion is something you need to get used to.

The idea of building an application and sitting back to collect a check is, unfortunately, a pipe dream. You have to continually invest in both your product and your marketing in order to remain successful.

This post is an excerpt from the Micropreneur Academy, an online learning environment designed to get one-person web startups from zero to launch in four months. The full article includes 11 realizations and a worksheet.

Top 200 Blogs for Developers – I’ve moved from 40 to 88. I need to increase my posting schedule.

Paymo Time Tracking – A well-designed, free time tracking app with one of the coolest screenshot galleries I’ve seen.

Academic Earth – Video lectures, mostly math, science and entrepreneurship from Berkeley, Harvard, MIT, NIH, Princeton, Stanford and Yale.

Cool Lip Dub – Flagpole Sitta by Harvey Danger – The startup life. “We did this video one night after work. We are a company called Connected Ventures, a group of friends who work for: Vimeo, CollegeHumor, Busted Tees, and Defunker.”

The Beatles: Rock Band – 09.09.09. ‘Nuff said.

Bob Walsh’s new book The Web Startup Success Guide comes out next week.

This book is for software developers who want to start successful web businesses and includes interviews with Joel Spolsky, Eric Sink, Guy Kawasaki, and David Allen. The book covers everything from viral marketing to pricing to alternatives to traditional business structures.

And smack dab in chapter 4 there’s a review of our very own Micropreneur Academy.

The release date is July 20, but you can pre-order your copy today.

I picked up Pamela Slim’s book Escape from Cubicle Nation a few weeks ago. It’s an in-depth look at the process of moving from a salaried position into entrepreneurship.

Several chapters rang true with my experience, namely the ones with great titles like:

• I have a fancy title, steady paycheck, & good benefits. Why am I so miserable?
• If it is so bad, then why am I so afraid to leave?

Pamela is a long-timer blogger and in this book she continues to do an excellent job of exploring the mental and logistical hurdles one faces as you leave corporate employment for the wide open spaces of entrepreneurship.

You Must Unlearn What You Have Learned

I’m in the process of buying a house. The listing for the house we made an offer on last week has 45 digital photos that I would like to share with family and friends, but they are hidden behind a questionable JavaScript interface.

Using my advanced knowledge of web hackery (i.e. View Source), I grabbed the list of each image URL and put them in a text file. And the following ten seconds made a huge difference in how I spent the next 20 minutes of my day.

I copied the first URL into my clipboard and began to paste it into my address bar when I (for the hundredth time) realized that this is exactly the kind of task that appears to produce something, but is completely rote and repetitive. It would be simple (and fun) to write a Perl script to do the fetching, but that would take around the same amount of time.

So I sent the task to my virtual assistant (VA). It took me exactly 90 seconds to get the request to him, and within 24 hours I had a zip file of the images. It took 20 billable minutes and at $6/hour the 24-hour wait was well worth it.

This morning I realized I needed an image for one of my websites, and a change to the CSS. I’m not a great designer but I could have designed something in about two hours. I could have also made the CSS change and tested it in a few browsers in about an hour.

Instead, I opted to send these simple tasks to someone else at the cost of $15/hour. I wrote up an email and the task will be done in the next day or two.

• Time spent: 10 minutes
• Time saved: 2 hours, 50 minutes

I just received from a woman named Amy who lives in Canada. She has experience with multimedia and podcast editing. I contacted her because the editing process for the audio versions of the Academy lessons takes 60-90 minutes per lesson. Two lessons per week is 2-3 hours that I’m going to outsource to her for $15/hour.

She will likely produce a better finished product than I can.

How Much Can You Really Gain?

These are trivial examples of what I call drip outsourcing, outsourcing small tasks as I perform my daily work. Drip outsourcing has become invaluable to my productivity.

If you total up the three instances above it only amounts to 6-7 hours. But I do this constantly, every day. Before I start any task I think to myself “Could one of my contractors possibly do this?”

Over the course of a month you can easily save 20-40 hours without much effort. These days I save 60-100 hours a month.

This ties back into a topic I’ve spoken about previously: when it comes to your product should you build it, buy it or hire it out?. While you don’t have to (and should not) hire out every aspect of your product, I cannot imagine handling every detail yourself (or within your team).

The roadblock that so many entrepreneurs encounter as they try to launch is thinking they, or one of their co-founders, has to perform every task necessary to get their product out the door.

Just for kicks I’m going to spit out an incomplete list of tasks needed to take a web-based product from idea to your first week after launch. Here we go:

• Niche Brainstorming & Mental Evaluation
• Niche Evaluation
• Niche Selection
• Product Selection
• Product Architecture
• Functional Design
• Database Design
• Graphic Design*
• HTML/CSS*
• UI Development (AJAX/JS)*
• Business Tier Development*
• Database Development*
• Creating Unit Tests*
• Creating UI Tests*
• Manual Testing*
• Fixing Post-Launch Bugs*
• User Documentation
• Installation Documentation
• Sales Website Site Map Creation
• Sales Website Copywriting*
• Sales Website Graphic Design*
• Sales Website HTML/CSS*
• Sales Website Programming*
• Sales Website Payment Integration*
• Product Delivery (via email, link on site, etc…)*
• Setting Up Email List
• Setting Up Domain Name & Web Hosting
• Setting Up Email Accounts & 800 Number
• Setting Up Analytics
• Pre-Launch Search Engine Optimization
• Pre-Launch Pay-Per-Click Set-up
• Initial Social Media /Viral Marketing*
• Pre-Launch Video Marketing
• Pre-Launch Partnerships
• Launch Press Release*
• Pre-Launch Email Marketing
• Pre-Launch Blogging or Podcasting
• And probably a few others…

That’s a list of 37 tasks ranging in duration from 2 hours to a few hundred.

You’ll notice many have asterisks next to them. These are the tasks that will be easiest to outsource – the tasks that require a technical or common skill that’s not specific to your product.

Outsource your product architecture? I would consider it only for small applications.

Outsource your graphic design and HTML/CSS? Every time…

Avoiding This Roadblock

The best way is to to start small, gain comfort with a contractor, and gradually increase the amount you outsource.

Outsourcing is a learned skill, and you’re likely to screw it up your first time around. Start with non-critical tasks and be very specific in how they should be executed. At first it will seem like you could do the tasks faster than the time it takes to assign them, but as you get to know the person you’re outsourcing to it will quickly begin to save you time. If it doesn’t, then you need to look for a new resource.

Hiring a Virtual Assistant (VA) is a great way to get started with almost no financial commitment and a low hourly rate (around $6/hour overseas, $10-20/hour in the U.S.). I have a few VA’s I use for various tasks, and I’ve had great luck finding them on elance.

Graphic design and HTML/CSS are also great ways to dive in. Graphic design is nice because it’s not complicated and what you see is what you get. It’s either good or it’s not. I’ve found design to be much easier to outsource than programming.

Finding decent designers is a little more challenging – elance is a good route, but asking around is an even better approach. Unfortunately I don’t want the designers I use to become overbooked so I can’t mention them here (I do provide contact info for all of the companies I outsource to inside the Academy).

So take a risk this month: outsource your first task and see where it takes you. When was the last time a single tool or work habit offered the opportunity to save 20-60 hours in a month?

I’m asked pretty regularly about the best way to start a physical product e-commerce site, or whether that’s a good way to get started selling online.

One major benefit of selling a physical product is you don’t have to build anything; the work is all in finding a supplier and putting up a site. This is great because you avoid the 200-400 hours to build something.

But there are two downfalls of selling physical products compared to software:

1. Unless you manufacture something yourself you are a commodity, which means price is a major issue. No matter where you go, any supplier you find will already be in use by someone else. If they aren’t, within 6 months of your success you’ll likely see someone else selling the same product on eBay for less.

2. As a result, margins are tight. If you want to stock products yourself (I am vehemently against this), you will need a garage or other large space, thousands of dollars in up-front inventory, and you will spend hours packing boxes and running to the post office…this is not work for a Micropreneur. The better route is to find a drop-shipper who will ship directly to your customers once you’ve made the sale. Which is great, except at that point your margins are slim…think 20-40% gross profit.

As a developer you have the ability to build/hire out/buy applications and websites, where the margin is huge and you have something unique. Whether you’re selling invoicing software or performance management software your gross margin is going to be close to 100%.

But with sunglasses, paper lanterns and beach towels the margin is much smaller.

Case Study – JustBeachTowels.com

Using JustBeachTowels.com as as an example, I purchased the site because of the #6 Google ranking for the term “beach towels” and because it was priced way below its potential. I added a shopping cart and found a beach towel dropshipper (surprisingly hard to find), and sales were around $100-200 per month. Gross margin was about 30%, which meant a whopping $30-$60 per month in my pocket.

So I spent time honing PPC, SEO, a new design, a new cart, finding more dropshippers…and I finally hit on the big low price guarantee revelation I wrote about in my blog. Sales shot up starting the next day and that month sales were in the low four-figures. I was pleased to say the least.

Except that four-figures in sales resulted in just a few hundred dollars in net profit after cost of goods sold.

Not bad…except I took in nearly 100 hundred orders to attain that number and I either had to place all of those orders myself or have a Virtual Assistant (VA) handle the order processing. The dropshippers are not very high-tech and don’t have a way to integrate programatically with their ordering system so every order has to be placed manually.

And even at $6/hour for the VA, the cost to place 100 orders manually through a shopping cart was close to $200. No big deal, I still made a few hundred bucks, right?

Except the shopping cart (shopify.com – awesome hosted cart) charged a percentage of sales that wound up totaling about $80. And credit card processing fees took another 3%, which left me with a net profit of around 10% of my gross revenue.

From a blockbuster month of sales I made just over 10% net profit.

Why Digital Products Are Superior

This was a big lesson for me. I had spent a lot of time coddling and growing this website and all I got was a lousy 10%? This was compared to my digital product sites like DotNetInvoice, where an increase in sales results in darn near 100% of the money hitting my bottom line as profit.

It was that moment I decided to focus my effort on digital products exclusively given the huge difference in profitability.

I sold justbeachtowels.com in January of 2009 and made a great return on my investment with the goal of investing the funds into my next digital product site. Though I haven’t acquired anything yet (I have my eye on a few), the return on those funds will be much higher with a software product or SaaS website.

This is not to say that you should never go into physical products; I’m sure there are exceptions to my experience, and if you stumble on a crazy deal as I did you would be foolish not to acquire something below market price. But to build a physical product e-commerce website from scratch would require much more time than it’s worth given that we can build and sell software at higher margins and with less competition.

And I didn’t even mention returns and lost shipments…

11 Pound, Two-Headed Laptop Rears Its Head(s) – Lenovo has released a massive laptop with two built-in screens (a 10.6-inch screen that slides out of a 17-inch screen). As a dual monitor user at home I have a tough time working at full capacity in coffee shops, but at 11 pounds I’d need to hit the weight room before I could lug this thing around town.

2.38 Pound, 10.2-inch Laptop – Netbooks had quite a year in 2008. Some say they’re a fad; other say they’re an alternative class of notebook and they have staying power. Bottom line: they’re cheap, light, and come with up to 6+ hours of battery life. Aside from the small screen and 95% keyboard, most of what I do these days when I’m on the road could be done on a Netbook. Imagine, a laptop you could open on an airplane and not hit the seatback in front of you.

A Look Back at the Internet ‘96 – A short walk through the Internet Archive. Check out the awesome background on Pepsi.com. Makes Fresno Web Design look like something out of 37Signals.

JournalSpace Crashes; Out of Business Due to Lack of Backups – Another sad story. If you haven’t setup no-touch backups for your personal system, check out Mozy.

8 Core CPUs on The Horizon – Even with 2.3 billion transistors and 8 cores, Intel says they “will be able to maintain the power envelope of its current Core 2 processors.”

The iPhone as Web Server – I’m racking my brain…trying to figure out a use for this.