My roof is leaking. In five places. Whoever thought it was a good idea to build a house with a flat roof should be forced to duplicate Google’s PageRank algorithm in assembler.

So I called a roofer, Fred, to give me a quote to fix this mess. His skin is like leather and his voice sounds like a cheese grater…signs of a good roofer in my book. And damn does this guy knows what he’s talking about.

Expertise is fascinating. On the web we marvel at the forward-thinking genius of Paul Graham or the design expertise of 37 Signals. But a lot of industries don’t have this.

People who put hot tar on roofs do not tend to talk about the passion they have for their trade.

But the first thing Fred did when he saw my roof was to get downright upset at the shoddy work. They hadn’t sealed a roof jack correctly, and had left the flange outside of the [insert technical sounding word here] so they had to seal it with [hot something or other] and it was a complete kludge. There were at least six other comments along this line.

To me it looked like a normal roof. To him it was an insult to his craft.

Fred gave me a few options for fixing the leaks – a cheap one ($400) that would fix a few things but may leak as soon as next year, a more expensive one ($2400) that would fix everything and last 2-5 years, and a brand new roof ($6300) that would fix everything for 20 years.

And the look on Fred’s face when he was giving me the options was like something you see when you hand a developer a legacy website that’s suddenly started crashing under the weight of its own processing. He opens the code and sees calls that don’t close database connections, no database column indexes, and a snarl of spaghetti he knows will to take a few months to untangle.

Sure, he can throw some hours at it and patch a few holes. But in the end the site will never scale and most of it will have to be re-written if anyone ever plans to take it big.

Passion translates into something incredible. It motivates co-workers, bosses, partners, investors and customers. People know when they’re in the presence of someone who really cares about their code/product/startup. Passion is impossible to hide.

If you don’t have passion for your code/product/startup everyone will know. It’s obvious you aren’t that into it, and people will not take you seriously. Without passion it’s impossible to convince people to believe in your vision.

Passion translates into being insulted when people don’t care about things as much as you do and are willing to hack a crappy solution together. It’s an insult to you, your product and your craft.

Whether you’re trying to get hired, promoted, funded or close a sale…passion wins. Ask Gary Vaynerchuk or Seth Godin.

I encourage you to show your passion for the one thing you care about most in your work. If doing so causes problems you’re in the wrong place. There is a home for people who are passionate about pretty much anything, you just need to find the partner/company/customer who is passionate about the same thing you are.

Fred shows up tomorrow to install my new roof. I have a feeling it won’t be shoddy when he’s done with it.

This morning Seth Godin published a post titled Debt, equity and a third thing that might work better. The third option he covers is pre-selling future income by offering someone $x of every widget you sell forever (it may be a sliding scale that decreases after x units are sold).

I was surprised by this, as I thought Seth was going to discuss another option I’ve seen used with great success: customer financing. That’s when you find one or more (future) customers that help fund your product development in exchange for input into the process and free or highly discounted use of the software.

This situation is so unbelievably advantageous to a startup it’s like strapping rockets to your running shoes. Not only are you getting financing with little risk, but with customer financing you have someone in the industry with a vested interest in your product succeeding.

This customer is going to give you feedback out the wazoo – which is something that’s really hard to get from most users. You’ll be able to improve your product to the point where a real company is using it before you launch.

Money and feedback from a real customer? These are two of the most valuable assets a startup can have.

The Details
It seems like it would be impossible to find someone to even partially fund development of an application. After all, who’s going to pony up a huge chunk of up-front cash to build an app they don’t own?

Here’s the deal: I work in the bootstrapped startup world and in this arena you don’t need $500k to build a product. Think 1-3 person teams who release v1.0 in 4-6 months (mostly SaaS startups and MicroISVs).

In this scenario, $5k or $10k goes a long way towards bringing a product to fruition. $10k can pay for a senior offshore developer ($15/hour) full-time for 4 months. Or all of your logo design, application and sales site design, HTML and CSS…and you’ll have several thousand left over for an epic launch party the day you go live. Do you know how many shots of tequila you can buy for $1,000?

I’ve personally had multiple offers of $10k to fund applications in this manner. The only reason I didn’t fire up my IDE and start writing code was because I wasn’t able to nail down the specifics of the market and how I would market them. As I’ve said before – market and marketing come before everything else.

At DotNetInvoice we’re in the process of talking with two companies who are willing to fund specialized version of DotNetInvoice for their niches. They will receive the exact functionality they are looking for at a reduced rate, and we will own everything and be able to re-sell it into their niche. It’s a win-win.

The benefits to the customer in this case are many: for a tiny investment they get an app built where they have a huge amount of input, that will (presumably) be a commercial-grade piece of software and will be supported and expanded if the product is successful for years to come.

The majority of an application’s expense is in maintenance, so if a business can drop an initial deposit and never worry about construction costs and all that nasty maintenance stuff it’s an appealing scenario.

Why Don’t More Startups Do This?
Customer financing is not popular with startups because it’s hard. It requires selling, and selling is scary.

Most startups would rather live in a world where they don’t have to talk to actual people, definitely not customers, than to find out early on that their idea isn’t going to fly (or that they will have to make drastic changes to make it fly). That dream-world is called “pre-launch” and it’s fun to visit, but if you become a permanent resident you’re doomed.

The other reason it’s not popular is that many of startups don’t have “real” customers, they have imaginary ones. They don’t fix a pain point, they don’t fulfill an existing need, they just have an idea that may be the next Facebook but very, very likely will not. In that case you can’t really do customer financing.

(In that case you can’t even charge money for your service. But who needs revenue?)

The Drawbacks
Of course, there are drawbacks to customer financing.

For one this single customer may think they have more control over your product’s direction than you’d like to give them. They may want features that support a proprietary process that no one else in the industry performs. It’s up to you to either negotiate with them, or build the feature.

In this way, customer financing is more like consulting, which is not what you’re looking to do if you’re getting into products. But this drawback goes away pretty quickly. Once you have a viable product and some revenue, you’re in control. You won’t have to completely cater to this customer forever, and by doing this you’ll be harnessing the #1 advantage of products over consulting: leverage.

Another drawback is that you need to have all your legal ducks in a row. When selling into an industry you won’t want one of the industry players owning part of your company (companies will not want their competition to be able to look at their data) so you need to retain all rights to the app and the business, and you need to get this in writing.

Lastly, it’s a hard approach up-front. Selling is hard and most people (especially developers) don’t want to do it.

But the benefits are big: this approach will increase your chance of creating a real, usable product by at least 100%.

Business of Software is a conference organized by Neil Davidson and Joel Spolsky, and was held this year in San Francisco. The speaking line-up is a who’s who of software bloggers and authors, including Geoffrey Moore, Paul Graham, Dharmesh Shah and Joel Spolsky.

Overall the conference was well executed, the speakers were engaging and the opportunities to meet people abounded. The conference was the second reminder in just over a month that I need to get out of the house more often and meet other developers and entrepreneurs.

After getting used to hanging out with a few hundred people with a shared passion for starting “real” software companies, riding home on the train was a let-down as I realized the excitement of the previous 3 days was over.

There were several great presentations during the conference. These highlights focus on the key points I took away from my favorite talks.

Geoffrey Moore

Author of Crossing the Chasm and four other books, Geoffrey Moore has been thinking about high-tech product development longer than most of have been doing anything on a computer.

The key take-away is that product differentiation is how you make money, and neutralization (keeping up with your competition) is how you stay in the game. You have to focus on both neutralization and differentiation, but there is a no-man’s land “gap” in between them where your effort is totally wasted. In other words, being “best in class” is a waste of energy because it means you’ve expended resources to become the best among your peers, but you are not differentiated enough from them.

Geoffrey also talked through the product adoption cycle, but this was less applicable to the products I deal with as a Micropreneur.

Paul Graham

When I moved to the east coast in 2007 I made it a goal to see Joel Spolsky and Paul Graham speak at some point. I wound up seeing Joel, but I never caught Paul when I lived in New Haven or Boston.

Paul was the only presenter who didn’t use slides, and read from what looked like a tattered piece of binder paper he’d pulled from his back pocket. He spoke about 21 trends you should bet on, and 5 you shouldn’t. I won’t run through all of them (I’m sure he’ll publish them in essay form soon), but my favorites were:

Trends to Bet On (excerpt)

• Software
• Efficient markets
• Small companies
• Super good customer service
• Server based apps
• Open source
• The iPhone
• Design
• Real-time
• Founders

Trends Not to Bet On

• Credentials granted by institutions
• Business school
• The government changing
• Copyright
• Anything that depends on the restricted flow of information

Dharmesh Shah

Dharmesh’s talk was my favorite since he left me with a full page of to-do items. An excellent presentation from a brilliant guy.

He spoke about risk (development, market, financial and execution), social media, how you must create content (most likely through a blog) to win in today’s “search” economy. He also looked at calculating the cost of a customer acquisition (COCA) and a customer’s lifetime value (LTV), as well as the customer happiness index (CHI) which is a good indicator of how long they will stay your customer.

Overall, Dharmesh’s talk was filled with behind the scenes metrics from his company, HubSpot, and actionable points for SEO, Twitter, and social media.

Kathy Sierra

“Don’t build a better [X]. Build a better user of [X].”

Give your user a better experience out of the box, as they are learning, and once they are experts with your product. Doing so will build loyal fans and create powerful word of mouth.

Joel Spolsky

Joel’s talk was the same one he gave at StackOverflow DevDays, which I attended and enjoyed about a month ago.

His basic premise is that building new features really does add value to your product. Simplicity is mostly a way to avoid looking like you’re releasing a product that lacks features. Adding features without making the product too complex creates real value for your customers and produces revenue for your company.

photos by http://www.flickr.com/photos/jmpk/

Yep, that’s me (photo by jmpk).

Somehow I allowed myself to get talked into doing the Pecha Kucha at the 2009 Business of Software conference in San Francisco (seriously though, I want to thank Jeff Atwood for convincing me to go through with it).

Pecha Kucha is 20 slides, 20 seconds each…in 6 minutes 40 seconds you are done. And it’s twice as hard as it sounds.

I hope to share a video of the talk with you in the coming weeks, but for now here are a few resources I mentioned during the talk that I want to provide to anyone interested.

Overview
The presentation was titled Marketing is Design: Three Words that Increased Sales 1000%, and was based on an a post from about 8 months back.

Given the terse nature of the Pecha Kucha I focused the talk on the point that you should always be testing, and talked very briefly about how Google’s Website Optimizer allows you to do that quite easily. I also included some examples of smart companies and individuals who test.

Slides
Available here
(note: they are timed to automatically flip every 20 seconds).

Links

• Google Website Optimizer
• Getting Started with Google Website Optimizer
• Google’s A/B Testing with Gmail
• Frank Lutz

Screencast
I recorded a screencast that I mentioned during the talk. It’s for anyone who wants to setup an A/B test using Google Website Optimizer. It’s a lot faster than you think; you can setup your first test in under 5 minutes.

Apologies to those who read this blog via RSS. For about two weeks no new posts were showing up in my RSS feed, then last week old posts were marked as new with multiple rows of links added below them.

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.

Product naming is hard.

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.

Hot off the press, hear the hosts of the Startup Success Podcast interview Mike Taber and I about the Micropreneur Academy. You can download the MP3 here.

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

Work Less, Get More Done: Analytics for Maximizing Productivity – Patrick McKenzie is the embodiment of Micropreneurship; his focus on marketing, metrics and outsourcing is nothing short of impressive. This is a great post on how working hard is not a defensible advantage.

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.

On Monday I attended Stack Overflow DevDays in San Francisco. Joel Spolsky and Jeff Atwood are hosting this series of one-day conferences as a way to get alpha-geeks out of the office to hear experts talk about new technologies ranging from Python to ASP.NET MVC. It was the best $99 (including lunch and coffee) I’ve spent in quite some time.

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.

These days you can’t throw a brick at your computer without hitting a story about Twitter and Facebook (and each time I read one I find myself with the urge to throw a brick at my computer).

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?

We just moved to Fresno, CA and I’m looking for a new mechanic. I needed a smog check to get my car registered and went to the closest place – a Shell gas station about 3/4 miles from my house. The mechanic was very nice and the service was prompt. It was a pleasant experience, but nothing remarkable (I didn’t even mention it to my wife).

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.

The Micropreneur Spotlight is a look at a Micropreneur Academy member who has launched their product.

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.

A few weeks ago a Micropreneur Academy member asked about getting started as a freelance developer since freelance development can be more conducive to getting started as a Micropreneur.

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.

As many of you know, the Micropreneur Academy launched in April and several great applications have emerged from the members (a few were launched before the Academy, a few during, and a few are launching in the next month or so).

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.

When I talk to people who are thinking about launching a software product, whether a high-growth or Micropreneur endeavor, from time to time I hear that if they could get to the front page of Digg or get a mention on TechCrunch that they would be “set.”

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.

I’ve heard for years about the importance of finding a market before building a software product.

“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.

At some point in the past year I watched a video of an Eric Sink presentation and he asked the following question (he said it was asked of him by a college student):

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.

Startup Marketing Advice from Balsamiq Studio – With the startup success he’s achieved in the past 18 months, Peldi seems to know what he’s doing.

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.

You’ve probably realized by now that software development and entrepreneurship are two very different things. Software development is a tiny subset of the skills an entrepreneur needs to launch and operate a successful software or web startup.

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.

The Future of the Web is Small – A case for Micropreneurship.

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.