Spencer Fry

Introducing Uncover

2013-05-08T14:37:56Z

It seems like forever since I've publicly launched a new startup and today I'm happily announcing that Uncover has arrived. Uncover is everything you need to start and run an employee recognition program for your company. This is an amazing day for me, and feels like a new beginning. Go sign up and then come back here to read the story behind the startup!

What is Uncover?

I'm glad you asked! First, a little backstory. In early February, I wrote down my thoughts about The State of Human Resources, which is an area I've been thinking about and involved in for ten years now. I ran Operations in my past businesses and always felt that the online tools for human resources, employee management and employee recognition were atrocious at best. It's laughable, really.

I've known for many years now that I'd eventually try to solve the problems I just mentioned. It would likely take five to ten years to solve, I thought, but I'd do it if I could find the right people to work with. I found those people in Mike and Jason and we've been humming along since early November, working on how to attack this market and what to build.

While I could easily write twenty pages about the ins and outs of what our plans are and where we're going from here, we'll keep that to ourselves as we expand toward those goals. For now you'll just have sign up for Uncover and follow us on Twitter to see how we grow.

Over the five years I have known Mike and Jason, having worked alongside them in the same office for the past year — only the past six months with the three of us together — one thing that struck me about them both is how much they care about their employees, the culture of a working group, and building a beautiful company. We're all like-minded in that regard. Honest, heartfelt caring.

In all of our past companies, we've cared about building a beautiful company as much as building a profitable company. We see our co-workers everyday, and their happiness always leads to greater success for your business and a far better time at work. Far too many founders ignore this, though, because they don't know how to solve for it. We want to help.

Uncover is everything you need to start and run an employee recognition program for your company. As a customer of Uncover, you can give your employees custom benefits to increase retention and improve your company culture. We have ten curated benefits categories for you to choose from, and within each category you select, your employees can pick the service that they prefer while we manage the entire process.

To give an example of how this works: as a customer of Uncover, you can select the Music category and for $10 per month per employee, they'll be able to choose between their favorite music service such as Spotify, Rdio, and iTunes. Offering Music is an example of something that helps create shared stories and experiences and brings your employees closer together. It's a small cost but makes a big impact.

The categories we have at launch are: Music, Movie Tickets, Books, Cleaning Services, Coffee & Tea, Experiences, Fitness, Food, Transportation and Travel. You choose the category you want to offer, how much, and sign up your employees while we manage the service for you. There's no additional work on your end.

You can also reward your employees for going the extra mile. When an employee goes above and beyond by staying late or working all weekend, you can reward them with something special. They're one-time thank you gifts that you can send along with a personal message.

We're excited to announce Uncover and let you know that Skillshare, SeatGeek, Fitocracy, TimeHop, Yipit, and others are extremely happy with it. We hope you sign up in turn, send us your feedback, and follow us on Twitter. I'm truly excited to share my new startup with you.

I Sold My First Code

2013-03-12T15:02:02Z

As I wrote in From Business Guy to Programmer back in April 2012, I wanted to shake up the business guy persona I had and contribute to the codebase of whatever my next project would be. I thought I'd share with you in brief the story of how in only one year I learned to code, started a company, and sold it.

The background

Throughout 2012 people have asked me what sparked my interest in wanted to learn to program and how it all came to be. I looked them in the eye and told them "it all started when I was on heavy painkillers lying in bed recovering from a tonsillectomy." For those of you who've had a tonsillectomy later in life, you know the awful feeling of helplessness, and for those of you who haven't, it's basically ten days of misery where you can't think, eat, drink or do anything for yourself. It's awful.

Somehow through the mind-numbing painkillers, I arrived at the epiphany that something in my professional life had to change. My tonsillectomy brought about the realization that I was tired of having to rely on other people. For ten days straight it was "mom" this and "dad" that. I felt out of control because there were simply things I couldn't do while laid up in bed. I knew what I had to do, but couldn't do it.

If you can program, you can push through the pain and build (almost) anything you can imagine without relying on other people. That's what I wanted. Not having to rely on other people was the key for me. I wanted to be able to take any idea I had on paper and turn it into a working prototype.

While recovering from that surgery, I had the idea of building an Application Tracking System (i.e. a "recruiting app"). Part of the reason for this was that the product and technology seemed fairly simple. I'd tried a lot of them during my days at Carbonmade and they were all terrible. It also felt like a great entry point into Human Resources, which is something I've always had my eye on getting involved with. I texted my friend of many years, Yaron Schoen, to see whether he'd be interested in building a product together. He said he was.

A quick prototype in two months

As soon as I recovered and made it back to NYC, I met up with Yaron and we talked a bit about what we'd make. We'd both used the available recruiting apps and we both agreed that they're terrible, that it seemed as though no product people worked on them, and that none of them were well designed. We knew that with a little effort we'd be able to come up with something way better.

But I needed to learn to program. So in February I jumped in (check out the Programming Resources I used). It took about two to three weeks to get the basic Ruby and Ruby on Rails syntax down. Not anything too complicated at that point, just being able to make a basic sign-up form, password reset, user pages, user system, platform for comments, and other steps for building a basic CRUD app.

Yaron was a bit surprised that I felt capable of starting on a basic prototype by the end of February — how can you blame him? I was visiting a friend in San Francisco for two weeks in March rather than going to SXSW that year, and felt as if we could get something stable enough out the door by the end of my visit.

By the end of March, we'd built what we thought was a usable first prototype for a recruiting app. I showed it to a dozen friends in early April and we had half a dozen using it immediately. They loved it. We didn't think it was all that great, though, and quickly got back to work on a new version of the product that would ultimately be the one we'd sell eight months later.

From prototype to reasonably decent software

With a half dozen active companies using our little piece of software, we felt confident enough to carry it over to the next phase. If you can't prove enough demand with a prototype then you should build a new prototype. Luckily, we had the demand to keep going.

Not only did we re-design it completely, but I also decided to start over with the codebase. I used what I'd learned over the first two to three months programming the prototype to build something a lot closer to Ruby on Rails conventions. As you learn more and more coding, you look back at how you did things only a few months earlier and laugh. Some of my code was that bad.

By July, we had completed the new version of what was formally known as Uncover and released it to our userbase. They loved it. We'd fixed all of the annoying bugs and idiosyncrasies, added new features, and had a handful of very appreciative users. We then went out and got another dozen companies (Harvest, Skillshare, WooThemes, SeatGeek, etc.) onboard to use our new software.

It went really well, and although there were still plenty of kinks in the software, it was better than anything else that was in the market. While our competition seemed to be focused on their app being able to do everything, we wanted to keep it minimal, clean and consistent. I think we accomplished this — and by the end of August, too.

Going after the bigger picture

Early on in our process, we already had higher aspirations for Uncover, however. From the beginning, we wanted it to be more than just a recruiting app. We wanted to cover the employee side of human resources. Yaron and I have always been fascinated by how employees are treated, the limited information they have access to, the terrible tools they have for managing their employment, and a lot more. We think there are a lot of more interesting challenges connected with existing employees than there are for people looking for work and recruiting.

As a simple thought exercise: if you're a company of fifty people, do you care more about the fifty people currently working for you or the next person you're looking to hire? As an employer you obviously care more about the people you have on staff already, and so did Yaron and I. We felt that if we could take the recruiting app we'd built and make it the pipeline into the greater employer/employee app that we wanted it to be, then we could be satisfied.

In October, we decided that we'd do some sketches and some prototyping around what we were more interested in: post-employment life rather than pre-employment life. We got a ton of interest — not only from company CEOs, but employees to whom we showed our app, and from investors too. But what was consistently getting in our way was that the world of pre-employed people and post-employed people is so drastically different. It doesn't make a lot of sense as one app. People just didn't get it as an app that bridged the two worlds, and neither did we.

So why did you sell?

I strongly believe that you can, and should, only focus on one thing at a time, something specific. We could have ventured down the recruiting app rabbit hole with fifteen awesome active companies (we hadn't yet tried for more) loving our product, but it's a small market, heavily dependent on sales, and there's a ton of competition.

All of these cautionary factors — apart from the small market one — Yaron and I were comfortable with, but to be perfectly honest, recruiting is just not that interesting. It's not intellectually challenging and both of us have reached a point in our lives that we're interested in bigger conquests. We're really looking to change lives, maybe change millions of lives.

So we got together, talked it out, welcomed Mike and Jason to the team, and decided to sell what we were then calling Uncover (now HireTracking) so that we could focus on our employer/employee app. (More on the new Uncover soon.)

It has been the biggest relief during the last year of my life to focus on a single problem rather than what we thought was a single problem but was really two distinct problems (pre vs. post). We've become razor focused, and we're producing higher quality work at a faster rate than ever before. I'm really looking forward to showing you what we've built.

For now I'll just say, though, don't get caught up in what you originally built, but focus instead on what it can point toward.

Short Q&A

I Sold My First Code

Startup Launch Checklist

2013-02-28T15:44:57Z

As I get ready to launch my new startup Uncover, my team and I created a GitHub Issues List of what we need to check off. From programming to last minute company tasks, we compiled a list of over fifty items. I thought I'd share with you some of the more general issues we thought to include (about half of our Big List). If you see we are missing something, please leave it in the comments.

Marketing Pages

Complete Homepage copy: One of the pages we left for last – and I know many new startups do – is the copy for the homepage. You need to write about whatever you're selling in a clear, concise and engaging way. If you can't quickly capture the interest of a visitor to your service then you're going to immediately fail. This leads to my next point.
Clearly define how our product benefits the customer (our unique value proposition): If the visitor to your service doesn't understand exactly what the value is to them and why they should use you then they'll hit the back button. It's as simple as that. In one sentence, you should clearly define your unique value proposition for the type of customer you want.
Contact page copy: For us it's a matter of making sure that we list all of the different ways visitors to our service can reach us. It's not enough to simply provide an email address nowadays. Lots of customers want to reach you on Twitter, Facebook, and other social networks.
Determine FAQ strategy and write it: One of the things I like to leave to the last minute is writing the Frequently Asked Questions. If you write it too early, then chances are your service will have changed and it'll become outdated. Writing the FAQ will also help put you in the mind of a customer right before launch. It's a great last-minute exercise in making sure your app is clear.
Determine content strategy for blog: This should probably have been done sooner, but you can only do so much with three people. You want to make sure you have a consistent voice and are writing blog posts that support the service you're trying to promote.
Do a copy sweep: I find nothing more distracting and off-putting than poor grammar and misspelled words in the copy of a newly launched startup. (I guess I'm setting myself up to get called out if I screw it up with my new startup.) It doesn't take much effort to send the copy to a few friends to review it before going live.
Write all email copy: Another pet peeve of mine is when the emails from a new service I've signed up for are too cryptic to understand. If you're going to send me an email, please take the time to make it an informative one, even if it's just a "thank you for registering" email with my login details. Hammer home your message.
Do some basic keyword analysis: Not every app is great for SEO, but if you think that people are searching with a problem you're solving, then you should do the keyword analysis and build your site's copy around it.

Modeling

Model our potential revenue: You should never found a company without a good idea about how you plan on making money. Even better, you should project how your potential revenue stream will grow over time.
Set monetary/sales goals: After you've modeled out your potential revenue growth, setting sales goals will give you a better understanding of when you can raise money on good terms or quit your day job and bootstrap. It's great to have numbers to work toward that aren't arbitrary. Knowing exactly how many users you need over a projected time frame helps to determine whether you're matching projections.

Sales

Set up a sales pipeline: Chances are that you know people who want to use your product. If you don't, then you might not be building the product that's best suited to you. Record the names and email addresses of likely users in a file and check them off after you've reached out to them.
Draft Case Studies: It depends what kind of service you're building, but before you go live you should be doing some type of beta test. During beta, ask some of your most dedicated users if they wouldn't mind doing a case study. Prepare a few of these to have on hand or to put on your marketing website when you go live.

Programming

Form validations: Form validations are one of those last-minute things that developers leave until the end. They're easy enough to do, but just not all that sexy. Don't forget to do them, as having an error on a form without a notification is a terrible user experience.
Complete a security audit: There have been a lot of security breaches recently if you're a Ruby on Rails app, so be sure to patch before going live. Go through the routine checks to make sure you haven't overlooked anything.
Schedule a QA/break me session: There's always some little snafu that can set you back and can only be found when you purposely try to break your app. Sit down with your team (and maybe a few friends) and do all the crazy things you can think of to break your app.
Check the site in various browsers: Oh, no! No developer wants to have to worry about Internet Explorer, FireFox, Opera, Safari, and Chrome, but you should take a look to make sure there aren't any glaring errors. Sometimes things can be cleaned up pretty quickly.
Get SSL up and running: If you're not using SSL then you're not trying hard enough. SSL is fairly inexpensive these days ($69.99/year from GoDaddy) and it's really not that hard to set up, especially if you're using a hosting service such as Heroku.
Audit our Admin section: You should have an Admin section where you can modify user settings and the like. Make sure that it's working and that you can do everything you want with it.
Set up our /blog and hook it in with Tumblr: If you haven't already set up a blog (as we haven't), set it up. I recommend Tumblr, because it's easy and you can get some virality through re-blogging. I also recommend setting it up at /blog rather than blog.app.com because of the Search Engine Optimization implications of having it in a folder rather than as a sub domain.
Set up Intercom: I love Intercom for seeing who is using your product. I've used it quite a few times, and have nothing but good things to say about it. It's only a small snippet of JavaScript, so get on it!
Set up CrazyEgg: It has been a while since I've used CrazyEgg, but I know that during a new launch it's good to see where visitors are clicking. Something might look like a link that isn't. It's easy to set up and they have a 30-day free trial.
Set up goal tracking: Goal tracking is easy to set up in Google Analytics. It's helpful because it allows you to know when visitors are completing individual actions.
Verify with Google and Bing Webmaster Tools: It's easy to do and supposedly gets your website indexed faster. Why wouldn't you want to do that?
Create a Sitemap and configure robots.txt: The more you help yourself with Search Engine Optimization, the better it'll help you. Setting up and submitting an XML Sitemap to Google and Bing will help them crawl you more efficiently.
Make sure we're catching errors with Airbrake: Airbrake is great for catching code errors that users might be running into. It groups them all and notifies you when an error occurs. Great for debugging early on.
Set up stats to track usage: Something that should go inside the Admin area of your app should be a record of your app's pattern of usage. Track whatever are the most important statistics for your app and list them here. When I was at Carbonmade, we built Pulse to track our statistics. You don't need to go that far, but high-level numbers are important. Up and to the right!
Audit our app's routes: If your app is programming in Ruby on Rails, and I'm sure many other languages that I'm not as familiar with, you can modify the routes of your website. That's like adjusting a name like "/users" to be "/members" or however you want it. It's important to practice good URL structure, but not before you're ready to go live, as things often change.
Set up 404 and 500 pages: It's not difficult to set up 404 and 500 pages, but it's important that you do so.

Miscellaneous

Set up RSS with mentions of app name: Through Google Alerts you can easily get notifications when your app is mentioned on the Web. I usually set them up for a variety of terms, not solely for mentions of our app's name but for surrounding industry terms as well.
Get all team members on the bank account: It's up to you, but usually with a small founding team of three to two people, you're going to want everyone to be on the bank account to be able to access it in case of emergencies.
Set up QuickBooks: I've been using the same amazing accounting firm for around six years now, and every time I start a new business they tell me to get on QuickBooks before things get out of hand. This time I'm going to listen to them.
Get all the @app.com email addresses set up with forwarding: Create a catch-all email address so that anything sent to your @app.com email address will go to a single address.
Sync Stripe with our bank account: If you're using Stripe for payments, you need to activate your account before you can proceed. It's easy, but requires a little bit of information such as your Tax ID # and the Social Security # of the person activating it.

Future Planning

Plan the next set of features after launch: You'll hopefully be knee deep in email and bug fixing during the first few days after launch, but you should also have a "what's next" plan for the following few weeks. I like to have something that's going to add a lot of value for the initial customers and take fewer than two weeks to ship out the door. That way you show them that you're iterating efficiently and quickly.

Launch Day

Add to various services around the Web: To help with SEO and to possibly get the word out, sign up your new app with Crunchbase, AngelList, StartupList, Listio and others.
Press Coverage: Every successful app has a great short term and long term press plan. However, right after launch you should ask yourself how much press you actually want. Do you want to reach out to blogs for coverage? Do you hope to get on Hacker News? Sometimes you might want to delay press coverage until you've had a chance to fix up the bugs.
Email friends and family: Last, but not least, you should email your friends and family about the new app you've built. Chances are that leading up to its release you've been so busy that you haven't had time to update them. Now's the time!

Programming Resources

2013-02-12T17:26:37Z

I started learning to program in earnest at the beginning of February 2012. Since then, I've compiled the programming resources that got me to where I am today. Various books, screencasts, online documents, and forums have helped me along the way. I've listed them in the order in which I read them over the course of my development. I hope you find them as useful as I did.

Learn Ruby the Hard Way by Zed Shaw 4/5

Learn Ruby the Hard Way is what I started with when I began programming. Ruby on Rails was my goal, but my friends urged me to start with at least a basic understanding of Ruby before venturing down the Ruby on Rails path. Ruby on Rails has a lot of "magic" in it and without first understanding Ruby, you'll have little idea of what's actually going on inside the framework.

The book forces you to type out all of the examples and not to use copy and paste. The idea is that simply by typing out the examples your brain will begin to acclimate itself to the programming language. There's no better way to learn than just to keep plowing through the examples. I definitely recommend this book as the perfect starter.

Agile Web Development with Rails by DHH 3.5/5

With most of Learn Ruby the Hard Way under my belt, I dove into David Heinemeier Hansson's book, Agile Web Development with Rails. It's a step-by-step approach on building a Ruby on Rails application. You're tasked with building a basic shopping cart / store application. Truthfully, in doing this I found things at once a bit dry and overly complicated at times. This exercise packs in so many different aspects of Ruby on Rails and programming (database theory, unit testing, security, AJAX, etc.) that I felt as if I was learning a little about a lot. That said, the book does give a great overview of what you will face as you learn to be a web programmer. I now think I should have made use of it later in the process.

Ruby on Rails Tutorial by Michael Hartl 5/5

I can't say enough about Michael Hartl's Ruby on Rails Tutorial. It's the best resource on learning Ruby on Rails that I've been able to find. After Learn Ruby the Hard Way, it's what I recommend that new developers open up and complete. Michael takes you through the process of building an early version of Twitter from scratch.

What I love about this book is that he treats the assigned exercise as if it's a real application that you plan to build as a project rather than just a tutorial. He introduces you to GitHub (for source control) and to Heroku (for hosting). You learn how to build a user system with registration, password reset, user profile pages, and more. It feels as if you're building something real, and along the way you're using tools that all web developers use.

After completing the Ruby on Rails Tutorial, I had the confidence to start building my own application with my friend and designer Yaron Schoen. It was amazing that within three to four weeks of starting to learn programming, and mainly influenced by Michael Hartl's book, I was able to build the beginning of our app – and it worked. If that's not a glowing endorsement, I don't know what else to say.

Rails for Zombies by Code School 4/5

Rails for Zombies is a fun interactive resource for learning Ruby on Rails. You begin by watching a video and then have to answer questions with code to unlock the next chapter. Code School provides an inline code editor for you to respond with. It's very professionally done and reinforces a lot of basic topics.

Having previously gone through DHH's and Michael Hartl's Ruby on Rails Tutorial, I found myself already knowing a lot of what was being taught, but the repetitiveness helped reinforce the concepts in my memory. It wasn't until completing this course that I fully understood, for example, Rails' Model View Controller relationship. I got it, but I didn't get it. Personally, I've always found that when learning something complex it can take several different approaches to the same topic before you feel fully comfortable with it.

RailsCasts by Ryan Bates 5/5

A lot of time you'll come across Ryan Bates' Rails Casts when googling a Rails question. He provides two tiers of screenshots: one paid tier ($9/month) and one free tier. The Pro tier gives you an extra screencast a week. His screencasts cover everything from debugging to authentication. They're top-notch, and I know plenty of advanced Rails programmers who continue to reference his screencasts, because he's always on the cutting edge. While the presentations tend to be very narrow in focus, they're extremely helpful if you run across the problem he's taking you through.

Team Treehouse 5/5

I mainly used Team Treehouse for their extensive HTML and CSS lesson videos. While they have a full course on building a simple Ruby on Rails application, I felt content to skip it after having completed Learn Ruby the Hard Way, Agile Web Development with Rails, and Ruby on Rails Tutorial. So while I can't speak for their Ruby on Rails tutorial, I can say that their HTML and CSS lessons are really stellar. They cover everything you need to know to get started.

Stack Overflow 5/5

I just can't praise Stack Overflow too highly. It's the go-to resource for developers looking for answers to their questions. Nine times out of ten, when googling a question you'll find it answered on Stack Overflow. Once you've graduated from reading introductory books and tutorials, you'll mainly have very specific questions that wouldn't really make sense to address in book format, but that are answered well in a resource like this one.

Introducing HTML 5 by Bruce Lawson and Remy Sharp 4/5

Any web developer worth their weight needs to be proficient in frontend development. I've dabbled in HTML and CSS my entire life, but never felt completely comfortable building a website from scratch. I'd mainly been a tinkerer up until recently. But I can now say that Introducing HTML 5 covers everything you need to know.

CSS3 by Jason Cranford Teague 4/5

What I really liked about CSS3 is that it is very visual, which is how I prefer to learn HTML and CSS. There are tons of examples and downloadable code. It also covers typography, color and layout along with standard CSS. That being said, best practices in HTML and CSS are constantly changing and often the best resources for CSS can be found on the Web. You may not need to pick up a print copy, but personally I like having it so that I can flip through it as a reference guide.

The State of Human Resources

2013-02-07T18:19:43Z

Back office work is one thing I've had a lot of experience in doing while running TypeFrag, Carbonmade and other companies. I've set up and managed payroll, benefits, and on-boarding employees more often than I care to remember. It's always a painful process that you put off to the last minute because you just don't want to deal with it.

Paperwork is distracting. For the most part, everyone who has ever dealt with HR as only part of his or her job has little more than a surface understanding of it. Unless you're in it full-time, you take it about as far as knowing what forms need to be filled out, signed, and handed in. Providers partly understand that you can't be bothered with the details, but also know that the less you know the more important their job is perceived to be.

It's always frustrated me that obfuscation, confusion, poorly worded, and terribly designed documents fill the time of back office administration. The government can only be blamed up to a point for their cryptic writing and regulations on a W-4, for example. Documents need to be filed in a certain way, and I get that. But someone or some company needs to come along and make sense of common human resources tasks — to alert me when I need to take action, alert me when I've made a mistake, and generally to make the process a whole lot easier for me to set up and manage.

Professional Employer Organizations

PEOs have emerged recently to tackle this problem. They claim to help you make sense of it all, but they're just another layer of abstraction that you have to understand and interact with. They haven't solved a thing. "All in one place," they say, but really it's only a few services (payroll and benefits for the most part) and you're simply trading one terrible user experience for another.

Additionally, many PEOs claim savings. "You'll save money on healthcare! We can get you a $750 healthcare plan for $450," a sales rep will tell you. What they don't tell you is that in many cases they themselves take a percentage of your payroll at 5% or higher. If you're a team of ten and on average pay people $100,000, then at 5% and $1m a year, you're paying your PEO a whopping $50,000. That $300 savings per employee per month on healthcare they pitched you turns out to only total $36,000 — a staggering $14,000 gap.

Now a lot of small companies around ten employees don't want to bother taking the time to run payroll and benefits on their own because they have the impression that it'll interfere with focusing on their company. That's true to some extent because it really is a pain, and nobody has taken the time to come up with best practices and help you through it. There's no Stack Overflow for healthcare and benefits as there is for programming. Maybe there should be? This allows PEOs, using shrewd sales shenanigans, to get away with charging 5% of payroll or higher because it sounds as if they've consolidated everything for you to make it easier. More realistically, however, most of the big players like ADP and Paychex have a PEO service as well as their traditional payroll and benefits services (did you wonder why?), because PEOs are just another way of spinning a marketing scheme in your direction.

What am I buying?

With payroll, benefits, and other human resource services, there's no sort of demo account you can try before you buy. For good reason. A hospital doesn't want you waltzing in with a Blue Cross Blue Shield demo account asking for service. That'd be costly and doesn't make a lot of sense.

With most web software, however, there's a try before you buy mentality — 30 day trials, 30 day money back guarantee, and so on. SaaS is famous for demo accounts, trial accounts, and other samplings of the product before you commit to it, but back office/human resource software wants you to fill out a form so a sales rep can get in touch with you. Sounds ludicrous in this day and age, when online business just isn't done that way.

I'm not advocating for a demo benefits card that I can take to the doctor to try out, but I do want to see behind and beyond the elusive login screen I'm going to get after signing up. What do I have to do to manage this thing? Show me what I'm buying into and what my employees are going to have access to. But no, many of these services don't even have a software interface and lots of things are still designed to get done over phone, email, and fax. Want to change your address? Please call us. And when you happen to get an email, it'll have six PDF files attached for you to print, fill out and return to them.

Purchasing Decisions

If you can't get a look inside any of these human resource systems, then how are you supposed to get an idea of what to buy? Sadly, you can't even compare prices on their websites without talking to a sales rep. Even then it'll take a week or more to get a "price quote specifically for you." Pro tip: They waive the setup fee for everyone. It's just another sales trick.

With no knowledge of price and sales, and buffeted by the marketing-speak plastered all over their websites, you're left to ask a friend. When signing up Carbonmade for payroll and healthcare, I sent an email to ten startup friends asking what they used and if they'd recommend it. I appreciated their advice, but unlike what you can find out about providers in most fields, there was little if anything to find out on the Web about these providers.

I thanked my friends for their recommendations, called and met in person with a few folks and went with the least sleazy sales person. I didn't feel like I'd made the best choice and it certainly wasn't the most informed, but I had no further courses of action to take. There are no best practices when it comes to human resource services and, sadly, nobody recommended any of them.

Obfuscation for Profit

In this industry, as incumbents rake in more and more billions every year, the industry continues to be broken. All costs are hidden behind sales forms, phone calls, and in-person meetings with sales reps. Unlike the consumer industry, enterprise human resource companies hide just about everything, as they hope to reel you in under duress, still poorly informed.

They claim very competitive — or even the best — prices because they believe that you won't have the energy to go out and find out for yourself. They're right for the most part. Those of us making these decisions early on don't really want to spend the time to get quotes from every service out there, and we're so dejected by the end that we're happy to just move on. Generally when we're looking for payroll and benefits it's because we need them immediately, and not because we need them three months from now with leisure to make considered decisions.

User Interface

We've come to expect at the very minimum a tolerable user interface with most Web services out there. Text should be legible, links should open new pages, forms should show error messages, and so on. Standard Web stuff. That's not the case with anything HR related whatsoever. When there is an interface, it feels as if they've been ported from Windows 95, and it wouldn't surprise me if some of them really had been.

No intelligent design choices have been made. Beautiful would be the last word you uttered when desperately navigating around a payroll system trying to add an employee. And don't even ask for any reports, as you'll get a PDF with so many unintelligible numbers on it that it'll make your head spin.

Why is this the case? Why hasn't beautiful, intelligible design made it into this industry yet? I think it's in part because of what I hypothesized earlier. Data obfuscation — i. e., confusion on an ugly, overcrowded screen — leads to poor purchasing decisions and companies feeling more indebted to these services than they really are. If only someone would enter this market focused on ease of use and customer service.

Employees

Lastly, I think the person getting the worst end of the stick is the employee. Employees are left as an after-thought by human resource systems. They're not the ones paying for the service, so ultimately it doesn't matter whether they feel that they're not getting good service, or service at all.

Employees' needs have been undervalued for so long that they've never known anything else. Of course it should be ridiculously difficult to get my paystubs and find out anything about my benefits package because that's how it's always been. Of course I should have to email my internal HR rep with questions when all they're going to do is pass my questions right back to Aetna.

Why can't employees go directly to the providers their company is paying for? Why isn't that part of the service? Shouldn't I be able to access my sensitive data from any device at any time without needing to go through an intermediary? Why can't I more easily see what my deductible is and book doctors' appointments through my healthcare provider's website? What about having my company's payroll provider help me pay my taxes? You've been sending me my paystubs in the mail, what about tallying them up and letting me know what I owe the government?

Sadly, in today's state of the market we can only dream.

Why and When to Learn to Program

2013-01-23T14:52:37Z

I can only share with you what worked for me. Everyone learns differently. The only thing without a doubt that holds true for everyone learning to program is that you must deeply want to learn. Need to learn. If you go about passively learning then you'll get frustrated and give up as soon as it starts get tough. A few hours a week isn't going to cut it. During your off hours won't be enough. Sure, you may walk away with a better familiarity with coding syntax and general programming concepts, but that's a lot different than learning to become a programmer. This article is not going to teach you how to program although there are some resources at the bottom that I used to learn, but much more on when and why to learn. I hope you enjoy it.

Preparing Yourself Mentally

Before diving in completely in the beginning of February, 2012, I'd had a handful of false starts learning to program dating all the way back to high school. I took a Visual Basic class in high school, enjoyed it, graduated in 2002 and entered college on track to get a Computer Science degree. Being on the computer was my life so naturally I felt that I should get a degree in something computer related, but it didn't last.

Programming didn't come easily to me as it did other students in my classes. I got frustrated when I couldn't get all my homework assignments to compile properly. I'd put off the assignment to the last minute and focus my time and energy on areas I did well in: other subjects in school and founding a successful startup during my sophomore year of college. I'd eventually switch majors, but failing to complete my CS degree left me with the feeling that maybe programming wasn't for me.

The problem with Computer Science then is that it didn't capture my attention as what I was building didn't interest me. Who wants to stare at a terminal all day just to get an algorithm to compile properly? Not me. I wanted to build real-world projects for the Web.

My head just wasn't in it. It wasn't until ten years later — 28 years old — when I figured out how to get over this hurdle. It's simple, really. You must have a project in mind that you want to see built. Not any project, but a project that you care so deeply about that nothing can deter you from shipping it.

There will be dozens of times during the development of your project and your learning to program, that you'll run into bugs that take you several hours to problem solve. If you're not one hundred percent dedicated to what you're building then you're going to get frustrated, annoyed, and discouraged from learning to program. You're going to have another false start that I am all too familiar with.

If you don't have a project in mind when starting to learn to program then I would give up now, save yourself the wasted hours of frustration, and come back when you do. You may be able to get through a tutorial or two, even build a shopping cart app, but the real learning comes when you're building your own thing, for you, and there's no tutorial to guide you through it.

Why You Should Learn to Program

You're reading this because something inside you said that you should learn to program. But before you take the plunge, ask yourself if you're learning to program for you or you're learning to program because you keep hearing that it's the hip new thing that'll put an end to your startup or job woes.

Whenever you're hanging around other startup people, "you should learn to program" is thrown around like it's the antidote to all your problems. I'm so tired of hearing: "If you only learn to program then your startup will be a success!" or "All the most successful startups were founded by engineers." The funny thing is that most people spewing these phrases around aren't programmers themselves. What kind of nonsense is that?

Really, you just have to ask yourself why you're learning to program. People starting to learn to code don't often ask themselves this question. "Because I want to be able to build my own things," is the standard answer to why, but I think you deserve to be more honest with yourself before putting thousands of hours into learning something. Are you learning it because you deeply have a need to learn to code or are you learning it because it's the popular thing to do?

Here's why I finally learned to code: I've been a web entrepreneur since I was eleven years old — for over sixteen years now — and the majority of the time throughout those years when I came up with an idea, I had to find a technical person to implement and co-found the startup with me. I grew tired of having to rely on someone else. Have an idea. Find a technical co-founder. It's a brutal, debilitating cycle, and I was fed up with it and myself.

This alone wasn't the only reason why I took up programming. I wanted to be closer to the product. I wanted to touch, feel, and make changes as needed without having to, again, rely on someone else. It sounds cynical, but at the end of the day you can only rely on yourself. Passing off the implementation of your ideas is like a bad game of telephone; you're not sure what you're going to walk away with. As I wrote in my previous article From Business Guy to Programmer, I wanted to be completely immersed in the project and be able to be involved in the entire process from start to completion.

Not only should you learn programming to build your own ideas and because at the end of the day you can only rely on yourself, but implementing your own idea will lead to a better product. It wasn't until I wrote code for my new startup that I realized how much of a better understanding you get. Something doesn't quite work as intended? Change it on the spot.

Whiteboards don't tell the whole story. You're fooling yourself if you think you can lead product from a whiteboard or paper and pencil. They're great for getting your thoughts down and imagining your product, but your developers will implement those ideas line for line, and let's be honest; those ideas are never right the first time around.

You'll be left with a subpar product with missing or overdone functionality, poor user flow, and general disarray than if you were implementing it yourself. Even if you go through multiple rounds of revisions with your developers, there's something about coding in the moment where you'll learn and be able to "feel" how functionality needs to be implemented.

Lastly, having the utmost respect of your team is the straw that broke the camels back for me. It's one of the most important facets to a successful startup and getting your hands dirty in code is what gets you today's ultimate respect. Without a doubt, your team members will respect you far greater if you were the person that not only had the idea, but also developed the first prototype. It doesn't matter if a year later you're not in code day-to-day and you've hired someone better than you to take over lead development, because you've earned your street cred.

Being able to build your own prototype and putting your energy into building rather than finding someone to build for you, will net you greater understanding of your product and the respect from your team going forward. These are all very powerful motivations for why you should learn to code. It's never just to be able to build your own thing — that's simply a byproduct.

What Language To Learn

The last bit I'll touch on is what programming language you should learn. Lots of people are very opinionated on this topic from "you must learn this language" to "it doesn't matter what language you start with." My opinion is that if you're fortunate to have friends that know how to program then you should learn to program in the language they're best in. While you shouldn't run to them whenever you get stuck, it will be helpful to have a friend to lean on during the most difficult times.

Now if you happen to have a friend who knows Ruby on Rails then I'd begin there as I did. The Ruby on Rails community is very helpful and supportive of new programmers. There are plenty of great resources, which I'll list out below, and the programming language is very intuitive compared to other languages I've had limited experience with.

The web development community for the most part has put their weight behind Ruby on Rails and as a new programmer I find it best to follow the masses. The more people learning a language, the more support and resources you'll find at your disposal.

Resources

Special Thanks

A special thanks to Matt Beale and Mike Potter who have been particularly instrumental in my development as a programmer. Two of the most talented and friendliest developers I know. Without these two guys I would have struggled a lot more than I did. There becomes a time when learning to code when you've exhausted all you can learn from tutorials where having someone to guide you is particularly helpful. Also shoutouts to Kyle Bragger, Kate Ray, Max Stoller, Tal Safran, Sarah Lensing and Steve Ellis who all lent me their support during my days learning to program and still do.

From Business Guy to Programmer

2012-04-12T22:34:53Z

Since I began writing several years ago, I've written exclusively about the business side of startups; my most popular articles being What's a Non-Programmer To Do? and How to Bootstrap among others. You wouldn't come here to read articles about the other side of things — programming and design — as that's something I had little to no experience in up until now. I didn't make things. I lived on what Paul Graham deems the manager schedule. All that changed at the start of this year. I got tired of having to rely on other people to get my ideas out there. It was my time to put everything on hold to learn to code, and I couldn't be happier.

Why the change of heart?

First, a little backstory. Back in what seems like forever ago, I started freshman year of college in 2002 with the full intention of majoring in Computer Science. Three semesters later, I founded a startup called TypeFrag — it's still around! — and completing my CS degree became impossible. Most people would have dropped out, as busy as I was with TypeFrag, but I chose to complete college by pursuing a far less time consuming major: Psychology.

Looking back at my decision to drop Computer Science for TypeFrag, I have no regrets. Life has been great. I've co-founded a handful of small businesses as a non-technical co-founder, TypeFrag and Carbonmade being the most successful. However, not being able to contribute directly to the building of my products often left me feeling empty.

While being a successful Business Guy can be tremendously important for the company, and has more impact than many developers and designers acknowledge, there are times when you cannot contribute to the product as much as you'd like. In the meantime, the makers seldom have a free moment, as a product can always be improved. A new design tweak here. A refactor of code there. The Business Guy is left with an internal struggle: wanting to do all they can do for the company but knowing deep down inside that pulling out a code editor or Photoshop would often be the most helpful thing they could do — and realizing they can't do it.

That's not to say that the Business Guy is never overwhelmed with work. And if someone says "you just gotta hustle more, there's always something for the Business Guy to do," yes, that's true, but I'm talking about relative value. Often one hour in code or design makes more difference than one hour in business hustling. Not always, but quite often.

It's at those times when an hour in code or design is what's needed that I've wished I hadn't stopped programming so that I could fire up a code editor and hack away. It's that feeling of always wanting to contribute to the most critical part of the company at any given time that has returned me to programming.

What are you doing to learn?

Since February 1, 2012, I've fully engrossed myself in programming ten to twelve hours a day, seven days a week. If you want to be good at anything, you need to put in the hours — and I have a lot of catching up to do. Did I mention how much fun it is, so much fun that ten to twelve hours often feel like two to three?

I plan to follow this up with an article on How I Learned To Program, but I want to get a solid ninety days in before I do. Since you probably read my articles because you're a Business Guy too, I'll leave you with the best advice I can give you if you're looking to get your programming up to speed: Figure out a project that keeps you up at night and instead of passing it off to another developer (or a technical co-founder), tackle it yourself. Hacking on tutorials will teach you syntax, but hacking on your own project will teach you how to program. More to come.

Are you putting your new skills to work?

After some time off after Carbonmade, during January 2012, I knew what I wanted to do next. In February I started pushing myself ahead so I could build the product. I've teamed up with an old friend, and talented designer, who felt the same pain point I did. Only sixty days later and we're beginning to test what we've built with a small group of friends. When its had some more time to mature, and we've been able to reflect on what we're learning, I'll share it with all of you.

Startups: Stress and Depression

2011-12-07T22:35:10Z

I don't think there's a more difficult or stressful job than being an entrepreneur. Doctors, scientists, and engineers are all highly skilled professions involving a lot of pressure, but as to stress level the difference is that for the most part emotions don't enter to what those specialists do because they're trained in a systematic process that keeps surprises to a minimum. Being an entrepreneur, though, has an emotional component to it that no professor, instructor, mentor or amount of reading can prepare you for. Even if they tried to teach you, they couldn't. You have to live through the emotional roller coaster to experience it and learn to handle it. Remember that if it proves too hard to get through it's okay to pack your bags, pat yourself on the back for giving it a shot, and do something else. We're not all entrepreneurs.

There's a Massive Stress Pendulum

I can try and put into words the highs and lows you experience when running a startup, but I'll hardly be able to do it justice. One day you're on the top of the world — you've hired the person you dreamed about, you received your first term sheet, you pocketed your first revenue, etc. — and the next moment the world feels like it's crumbling down around you — traction is slowing, you have to fire an employee, revenue is slowing, employees are losing morale, your shipping deadlines are not being met, etc.

You'd think that if things are going well, the highs and lows would at least balance out, but, sadly, even the highs themselves are lows because of the way our industry judges success. You haven't made it until you've been acquired or IPO. Creating a private ten-person company consistently generating revenue is "not successful enough" in the eyes of most people. (Kudos to Dennis Crowley for accurately measuring success.)

Because of this you then question yourself as an entrepreneur: "Things are great now, but for how long?" Entrepreneurs constantly second-guess themselves while projecting a façade that they're doing just fine. It's a scary thought, because obviously the entrepreneur who feels that way is not doing fine and needs emotional support from their friends, family, and loved ones. We all do.

You NEED a Co-Founder to Offload Stress

I use to think that after having co-founded two successful startups I wouldn't need a co-founder for my next one. I was wrong. You can be the most seasoned operator, but at the end of the day you need another shoulder to lean on.

When you're a founder, everything is on your shoulders. The responsibility is on you and the founding team alone. Without a co-founder to share the emotional side of running the startup, then, you're left to bottle things up inside yourself. That's not healthy and will negatively affect you as a person, which in turn will carry over to negatively affect your startup. You'll take your stress out on your employees, the product, your loved ones, and your friends, all because you didn't have a co-founder who could relate 100% with you about what's going on. Don't do this alone.

Side note: When picking a co-founder, you want someone emotionally stable who is generally more of an optimist that a pessimist. If you, however, are an extreme optimist like I am, you may want someone that's a bit more even-keeled to bring you back down to earth when necessary. And this works both ways. If they're feeling in a rut, you can pull them out.

Why Investors Back Second Time Entrepreneurs

It's well known that investors back second time entrepreneurs because they've done it before and know the ins and outs of running a business. I think that while knowing the process is great, and obviously second time entrepreneurs do have this down, investors should account likewise for the mental and emotional toughness that second time entrepreneurs now have. As in sports, a team with playoff experience is in a greater position to beat a team who's seeing playoff action for the first time. Sports commentators call these teams "mentally and emotionally tough" because they can handle the stress better and don't get stage fright.

That being said, just being a second and third time entrepreneur doesn't mean that you won't go through the same same highs and lows as the first time entrepreneurs. It just means that you're slightly better equipped at handling them. Often times being slightly better is all that's needed for an entrepreneur.

If I was an investor — and in ten to twenty years I hope to be — I'd look at the emotional toughness of the entrepreneurs I was investing together with their ability to execute, the market for the product, and the idea. How do they perform under pressure when the world is coming down around their ears?

Get Back to the Basics

An investor friend that will remain anonymous once told me that when the going gets tough, you have to get back to the basics: "Eat. Sleep. Drink. Fuck."

He's right. As entrepreneurs, we get caught up in the dailiness of our startup and think that if we can just squeeze one more hour into the day, this'll somehow increase our success. After having done this for what seems like forever, I can tell you that one more hour a day will do more harm than good.

What matters is that you get back to the basics — as my friend so eloquently stated — and focus on relieving stress. The hour away from work can greatly increase your productivity when you come back to the office more relaxed and fresh.

Use that hour to escape. For me, the only time I can disconnect my mind from my startup is when I go to the gym to play squash and to relax after the match in the steam room. Even when I'm sleeping, I dream of my startup, but thankfully I was able to find my escape, and know that I can go there when I need to.

Another thing you can do is to take time off — something that I struggle to do. Go some place without Internet and without cell phone reception. Being away from it all may take a day to sink in, but when there's no way for you to connect then you'll mentally loosen up and be able to fully relax.

Get a grip on your emotions. It'll pay off in the end.

Show. Don't Tell.

2011-11-16T22:35:10Z

With the emergence of more and more people wanting to be entrepreneurs, there are naturally more people pitching their ideas. There's nothing wrong with that when those pitches come with a prototype or something one can look at, but often they're accompanied by nothing but words. When I moved to New York and got into the startup scene in 2006, everything was a demo. Now everything is verbal and that can be a real problem when it comes to developing a workable idea.

Talking Builds Up Your Idea in Your Head

If a lot of what you're doing early on is spending time talking about your idea to others, you're going to end up convincing yourself that your idea is the next big thing. You will have built your own groupthink because the people you talk to will rarely (if ever) give you honest feedback. They'll just smile at you and nod. They'll tell you how good your idea is and that they can't wait to use it and know plenty of folks that would want to use it too. Nobody wants to be the mean guy taking the wind out of a new entrepreneur's sails.

What comes of this is that after you've gone out and told a few dozen people about your idea, you'll come away with a "can't lose" attitude. Then when you finally get around to building it, you won't objectively critique what's good and what's bad about it. You'll think everything is bound to work and you won't look at it closely enough. This can lead to a badly flawed product that has failed to anticipate rational objections.

Little is Learned From Talking

I strongly believe that early on — say between the inception of an idea and an initial prototype — nothing should get between you and the idea. Any influence from outside is a distraction and can be counterproductive. It's similar to doing A/B testing when your product doesn't have enough users to warrant it. There's just not enough data.

That doesn't mean that you shouldn't talk about process with people who are more experienced than you, but whatever a light bulb has lit up, you need to remain as uninfluenced as possible early on. The best thinking about your product will come from actually building it.

You’ll Get Better Feedback with a Prototype

You'll get a lot more useful advice from others when they can sit down with you for thirty minutes and discuss the prototype you've built than when they're just hearing about the idea. That's why most investors prefer a working demo to a slide deck. They want something they can play around with. Something tangible. They want to get a complete picture and nothing short of a demo provides this.

The other advantage to showing someone a prototype for the first time is that for you might have just gained yourself a new user! They couldn't have been a user if you were only talking about it. But now if they like what you've built, you've just added one more person to your user count. They can even tell a friend! Now you've got two users. Amassing passionate users early on is nothing to scoff at.

Talking Delays Building

This is the most obvious point, but it's true nonetheless. Every minute spent having coffee or lunch pitching your idea to someone adds up to hours taken away from building your idea. Not only are the hours away from your computer lost, but also there's the time spent getting back into the zone when you're back at the computer. Careful development requires painstaking thought, so time away from your desk shouldn't be taken lightly.

A side note to that: Some of my best thinking happens away from my computer and desk, so not all building needs to take place there. It's very effective to vary your surroundings early on (coffee shops, friends' apartments, friends' offices, etc.), because changing your mood and your environment can trigger new thoughts.

It’s Not About People Stealing Your Idea

Too often the only reason new entrepreneurs won't share their idea early on is that they're worried that people will steal it. Get it straight: nobody is going to steal your idea. I don't think I've ever heard a case of someone's idea being stolen pre-prototype. We're actually so bad at explaining ourselves at this stage — "you know it's like X hot startup + Y hot startup," we say — that it's never clear what there is to steal anyway.

Now That You’ve Built a Prototype...

Talk it up! But, still do that selectively. You want to confine the circle of your initial users (friends and family) so that you can squash any bugs and make tweaks while getting initial feedback. You only have so many chances — usually only one — to grab peoples' attention and if you go out and make a lot of noise too early, you may lose those people six months from now when you actually have something good built.

Furthermore, now that you've got a prototype built, your thirty-minute meetings with people will be exponentially more effective than just chatting with them. You can get real feedback on a real product — none of this "I think I'd use that" bs. You'll have a much better idea of what they think, and most importantly, you'll understand why they think that way.

Leaving Carbonmade

2011-10-19T22:35:10Z

Some of you know this already, but most of you probably don't. I've left the day-to-day operations of Carbonmade after four unbelievable years. It's bittersweet. I don't regret my decision — it was my time — but I certainly miss Dave, Jason, Mike, Kyle, and the rest of the folks at Carbonmade.

A Little Background Story

I "met" Dave and Jason while I was wrapping up the sale of my previous company TypeFrag in late 2006. They were running a two person design and development shop called nterface at the time. I got word from my friend Matt Brett that Dave would be the right person to design business cards for me. Boy, was I wrong. Dave, for one thing, doesn't do business cards.

In the course of our conversation, he upsold me from business cards to $50,000 worth of design and development work for a new startup idea I was pondering called Uncover. Being upsold from a $500 business card design job to $50,000 worth of work was the best thing that ever happened to me, because I met Dave and Jason, which led to my involvement with Carbonmade.

TypeFrag was sold in January 2007 and by late spring, most of the work on Uncover was complete. We launched it, iterated on it, and got just under five hundred users in the first month. Not so good. As I was slowly chugging away on promoting and iterating Uncover, Dave reached out to me in early August while I was on vacation about whether I'd be interested in joining nterface as a one-third partner and the Business Guy — the title I'd later carry over to Carbonmade.

Carbonmade was a functioning product that Dave and Jason had created in their spare time, but wasn't getting much tender loving care, as they had to continually push out client work to pay their bills. Soon after joining nterface, I started working on Carbonmade full-time while they banged out client work for the rest of 2007. It wasn't until early 2008 that we were all able to focus our full attention on it.

As stressful as those early years were — we were ramen profitable, but split three ways there wasn't much to go around — they were some of the happiest years of my life. The three of us had very distinct roles and together we could handle everything as a team. We kicked ass.

I don't want this article to be about the history of Carbonmade or too sappy, but I do want to say that there's nothing quite like working with truly great people. Dave is the best designer I know. Period. He doesn't get the fanfare that comes from hanging in celebrity designer circles, but the guy is a genius. Often times I wish I could see inside his brain to know how he looks at the world and design. I've taken a lot of what I think about product, marketing, branding, and design from spending four years with Dave – one year when we were roommates.

Jason is equally smart. His developer skill lies in the fact that he can build anything. If the three of us can conceive it then Dave can design it and Jason can build it. Anything Jason puts his mind to he can accomplish with near perfection.

What's Next?

I'm not sure what's next for me, but one thing is for sure, I will miss working with Dave and Jason. They impacted my life in so many ways, building Carbonmade together being only one of them. For now, I remain on the board and continue to be a part owner. I'm excited about some of the recent hires and the direction the product is taking. Carbonmade will be around for a long time, and I'm so excited to have been a big part of how it got to where it is today.

Ways to Acquire Users for Free

2011-06-29T22:35:10Z

At the end of the day, you have to build a service that people want to use or no amount of marketing or advertising will help. But if you are successful in building something people want — if you have traction and positive feedback — you will still need to make a serious effort to acquire users. Simply relying on the idea of "build it and they will come" won't fly in the oversaturated world of startups we live in.

Track the Source of Your Traffic

Before knowing where or how to acquire new users for free, you need to understand where your best conversions are taking place. The way to do this is by adding tracking code to your site: (1) what website a visitor is arriving from; (2) the click on the signup form; and (3) the completed registration.

The last piece of the puzzle is calculating the lifetime value (LTV) of each registered user. You may see a lot of signups by a certain type of user, but that cohort may bring in only half the revenue of another cohort that may provide fewer total signups.

This kind of data is especially valuable. You want to trace back to the web environments of your most lucrative cohorts, figuring out who they are and why they're converting better than other users. You can then start to target these users specifically. For example, if Carbonmade knows that wedding photographers in Europe convert higher than any other users, we can target where they like to hang out (forums, blogs, newsletters, offline, etc.).

The Viral Strategy

We're all familiar with the idea of viral user acquisition: Your current users invite other users to use your service. Foursquare and similar viral success stories (Instagram, etc.) do a great job at this by tapping into your Facebook, Twitter, and phone's contact list to get friends to join you through their "Invite Friends" tab.

You want to be able to track how new viral users are coming into your system. Specifically, you want to be able to measure conversion and measure the average number of invites users are sending out. If these numbers are high, you're likely to have a viral service and your chances of huge growth are imminent.

The viral strategy isn't without its problems, though. You'll have little control over your demographics, which could overburden your support. For example, Tumblr found itself exploding in the Philippines very early on — Tumblr is among the top ten most visited sites in the Philippines — and they had to hire a huge team to support them there. Another issue is server growing pains. Twitter and Tumblr were knocked offline for long periods during their early viral growth days.

There are worse problems than exploding growth — who doesn't want it? — but imagine not having the money or manpower to support it, leading to a decline in the quality of your service that causes people to jump ship, possibly to a competitor.

Create Micro Sites

A micro site is a landing page designed around a specific demographic and type of user. After you've tracked the source of your traffic (see above), you can develop these landing pages for users with the highest conversion rates. In my example above, we'd create a micro site for wedding photographers in Europe if they were our most robust cohort of converting users. Then we'd work our way down our list of LTV users and make landing sites for them.

The advantages of creating micro sites are: better SEO (you can target specific keywords for search engines); they're great for A/B testing; the page is more targeted so you're speaking specifically to a user group; and, if you do buy advertisements, you can funnel those ads directly to a specific page.

Give Away Something People Want

The most notorious practice of giving away something people want to encourage signups is found on gambling sites. Gambling sites all offer a "free poker bonus" for signing up and playing on their site. People see free money and they can't resist. This doesn't even end up costing the gambling sites much money either, as the "free poker bonus" isn't unlocked until you've added $50 or more of your own money to your account and played a certain number of hands. By then, the poker site is banking that you've become hooked and plan on adding lots more money, and they've made money in any case from the rake they take on every hand played.

Of course giving away money can hardly be a strategy for "acquiring users for free," but there are other things you can give away to attract them. Everyone loves free stuff. You can give away free paid accounts (see: Bootstrap Marketing), offer limited edition virtual goods such as icons, and special early adopter features. People love the feeling that they've received something exclusive that people after them won't be able to get.

What Are Your Competitors Doing to Acquire Users?

One very effective way to acquire new users is to monitor how your competitors do it. Take note of where they're receiving press from and what marketing they're doing. This just happened recently to us at Carbonmade. A competitor reached out to a prominent Canadian photography website that wrote a detailed article about us and asked if the site would cover them next. Touché! I have to give them credit for trying.

While this photography website didn't end up writing a piece about them, just as often a writer will want to paint a complete picture of what they're covering and include your service in a follow-up or future article. You know they're interested in your space if they've already written about a competitor of yours.

You also want to see where your competitors are spending their money. If you see that they're pumping money into a particular means of acquiring users, then it's likely that they've found a sweet spot. You'll want to get a piece of the action too before it's too late.

Transitioning to Paying For Users

Acquiring users for free is great when you're just starting out and strapped for cash, but as soon as you've got the metrics worked out to support paying to acquire users, you should. You'll still need to have optimized your service with free user acquisition before paying to acquire them.

Even knowing that every dollar you put in makes you two back, you'll need revenue or financing to fund acquisition. This is often a Catch 22 for bootstrapped startups, as you have to decide whether spending money on a new hire to improve your product will net you a greater gain than paying to acquire users. When you're first starting out, I think it's better to hire.

The reasons to pay to acquire users are fairly simple. For starters, you'll make money, but more importantly you'll prevent competitors from entering the market by increasing your market share. Free users are still the best to generate a positive ROI, but don't neglect what money can buy you.

Bootstrap Marketing

2011-05-11T22:35:10Z

A quick Google search for "bootstrap marketing" brings up a bunch of useless nonsense. The results are either in the form of "Top 10 Bootstrap Marketing Tips" or "Bootstrap Marketing 101" guides. They're outdated and uninformative — full of obvious suggestions such as: "you should blog" and "use Twitter to get the word out." Not to mention that all the ads are hurting my eyes. So here are some things you can do that won't cost you a penny and will hopefully give you an "aha" moment.

Let Your Users Market For You

Search Engine Optimization (SEO) is unquestionably a first step. I'll agree with anyone on that. If you rank well you'll bring in great leads on the right keywords. SEO is not dead and SEO should not be avoided; but given how competitive most search terms are these days, I'm seeing more of an emphasis on having your users to market your site for you rather than rely on SEO.

I'm not talking about the "email your friends" pop up or referral programs. You should aim to create a service that users will benefit from sharing a page of — their page. An example of this would be showing off a user's activity on the site in a way that benefits them the more often it's seen. This is an everyday occurrence for social network services such as Twitter, Facebook, About.me, Flickr, and LinkedIn, but what about sites without social networking components?

What we realized early on with Carbonmade is that one reason to have an online portfolio, among others, is to show off your work to your friends. (We had thought the main reason would be to get work.) Friends of artists tend to be artists, so placing a Carbonmade logo at the bottom of the page that redirects back to our homepage gets us signups. For example, a friend of Dave Gorum sees his portfolio and thinks: "How'd Dave Gorum get such an amazing online portfolio?" The friend sees the Carbonmade logo at the bottom, clicks, and signs up.

We don't have to plaster a garish advertisement on their portfolio alerting the viewer to our services. We only have to leave a logo at the bottom of the page. We now see more referrals from portfolios in our system than we do through all search engines combined.

Not only that, but search engine referrals don't even rank second for us, even though we rank first in Google for "online portfolio" and "free online portfolio." Facebook ranks second. Our users link to their Carbonmade portfolio as their website in Facebook, their friends see it, and their friends sign up.

One of my favorite examples of this approach to finding new sign-ups is Kickstarter. People who create projects on Kickstarter are extremely motivated to share their Kickstarter page with as many people as they can to get backers. Kickstarter needs to do very little to help fund these projects, because the creators of the projects will do the majority of this work on their own. I've backed nearly ten projects on Kickstarter, but never once from using their Discover Projects feature; in every case my backing came from seeing tweets and receiving emails about new Kickstarter projects.

This idea of creating a page — portfolio in our case, project in Kickstarter's case — that's worth sharing is all about motivating the user to derive benefit from sharing the page. Think about how you can create this benefit for users. Having them share the page with this in mind will be far more effective for you than a typical Twitter or Facebook button on the page.

Give Paid Accounts Away for Free

Something we've always done is given away VIP accounts — a paid account for free — to anyone we feature on our Examples page, to friends, friends of friends, or to anyone who uses our system in a really neat way. Since launching in December 2005, we've given away just under 500 of these.

We've even gone so far as to switch paying users to VIP accounts — I can think of at least a few dozen cases off the top of my head that we've done this for. Why? At the end of the day, we work on Carbonmade to make people's day rather than make a buck.

People might argue that this is cheapening the paid plan. We don't think so. It's strengthening our brand. When you put a smile on people's faces by treating them in an unexpected way, you've not only made someone's day, but you've also got someone who will sing your praises for years to come.

Sometimes you have to Issue Refunds

Having a relaxed refund policy is a bit of a double-edged sword, but it is important. In our Terms of Use, we have a strict no refund policy — and you should too — but sometimes you find yourself backed in a corner about issuing a refund. That's okay.

There will be situations when a user emails demanding a refund. You could play hardball, but at the end of the day, is it really worth the headache of fighting them for their $12/month (in our case)? With everyone in Twitter, Facebook, and blogging, is it really worth risking negative feedback? You can even skillfully turn the person into a fan by not hassling them over a few extra bucks.

You don't want to let people walk all over you, and there have been times when we've denied refunds, but for the most part you want to be liberal about giving people their money back. At the end of the day, if people are going to walk away from your business, you want them walking away on a positive note.

Customer Service That's Not Simply Lip Service

Excellent customer service goes without saying, almost. People confuse responding quickly and succinctly with having great customer service. That's a start, but it's not enough. Great customer service — something Zappos termed "delivering happiness" — is achieved only when you've not only answered someone's question, but also put a smile on that person's face.

How do you do that? Mike, Carbonmade's customer service guy — although we've dubbed him more appropriately "Morale Specialist" — answers all incoming Carbonmade email. The difference between reading Mike's responses and email responses from other companies is the Mike has this knack of being able to relate to anyone emailing in. I don't know how he does it, but he's genuinely moved by every email that comes in and knows how to respond sympathetically. Everyone loves Mike.

If you treat customer service as a chore and responding to email as something you simply have to check off your list every day, then you'll fail to capture the hearts and minds of your customers. And that's marketing. Mike leaves everyone who has emailed in happy that he was there for them and helped them through their problem; and — on more than one occasion — the person has asked to hang out with Mike. Find yourself a Mike.

Streamline Your Marketing Site

Companies love to tell you everything about their service, product or website on their marketing site. Do you think prospective users care about every single feature? No! You need only highlight a few things you do really well. It's a lot more powerful this way. Remember your high school English teacher telling you "less is more"? The same goes for a marketing pitch.

Carbonmade is a perfect example of this. If you visit our marketing site, all you see is "Your online portfolio." in big letters. Why? Because the vast majority of people landing on Carbonmade only want to know that we do what they're looking for.

For the minority of visitors to your marketing site who want a bit more of a taste, give them two things: (1) a live demo where they can play around with what they're getting and (2) some examples. You don't need to detail every feature. Your users can see them for themselves.

Showing Off That Your Website is Active

People want to know that the website or service they're joining is active and that the people making it are involved. Twitter does this by showing examples of people who are using it when you first sign up. We do this by posting real-time numbers of our statistics on the front page of our site.

Another way we do this is by featuring Carbonmade users on our Examples page. We pick great users in our system who make great work and/or use the features of Carbonmade well. We post those users and their work on our Examples page, and then send our notices on Twitter, Tumblr, and Facebook about new features. This shows both that we are active and that we are taking the time to look through peoples' portfolios.

Figure out a way to highlight the activity of people on your website and show it off to your community. There's little that's more off-putting than having a stale marketing site with infrequently updated content.

Building Your Founder Reputation

One of the things I pride myself on is being approachable. Being approachable doesn't only mean showing up at as many events as you can fit in — related: How to Network — rather it's in the vibe you give off. When I go to an event, of course I talk to as many people as I can to help spread our brand and get the word out, but more importantly I'm not pushy and I don't lead with it.

Both at offline events and online, I want people to know that they can talk to me about anything. I'll listen and I'll respond. I'm happy to talk about startups, your startup, my startup, or nothing at all about startups. I just love meeting new people and having great conversations. Not everyone has the patience for this, but it's led to many connections and new friends that have benefited Carbonmade.

As you begin to build up your reputation, more people will talk about you and your startup when you're not even in the room: "Oh, did you hear what Carbonmade did?" You want to be on the tip of peoples' tongues, whether they're other startup founders, press, or people in the street.

Startup vs. Company

2011-03-23T22:35:10Z

Wesley Verhoeve and I got into an hour-long debate at SXSW with two guys from San Francisco about the meaning of the word "startup." Their position was confusing. They tried to claim that they were currently working on a half dozen startups (what I'd term "projects"; a startup needs focused development), and as the dispute developed they also insisted that Facebook and Twitter were still startups and not companies. "You can't use the term for everything," I said, "just because it's an online product." Maybe it's a New York vs. San Francisco thing, but in New York we're building companies, not startups. Maybe it's because it costs more to live here, but we're trying to put food on the table, not be on the cover of Business Week.

Startups are Easy

Anyone with an idea can create a startup. I see this from email, my mentorship programs at Tech@NYU and TechStars, people I follow on Twitter, running into people at SXSW, and just around town at different NY tech events. I worked with two friends this past month to help them launch their startup — all in all about forty hours of work.

Startups are easy to conceive and launch, and oftentimes they attract a few hundred or a thousand users. Everyone's friends and families are on the Internet. We have large networks of friends on Facebook, LinkedIn, and Twitter. Friends are often supportive and won't think twice about trying out your startup. Getting them to stick around and invite their friends, well, that's another matter, and fuel for another article.

Not only is it easy to get your startup off the ground, it's also the cool thing to do these days, so we've got a hell of a lot of them. We Internet geeks are being profiled as "cool" in the mainstream press, girls are more interested in us than Wall St. people or lawyers (at least in New York), and our friends in normal jobs are jealous of our lifestyle. What happened to the days when I got made fun of for being on a computer all day?

These social intangibles are all contributing to more and more people creating startups. Not companies, though, that's too boring. That's too much like the day job we just quit. Let's just hack away on cool side projects, grab a bunch of funding, and see what happens. Umm… what can come from that, exactly?

Companies are Not Easy

My co-founders and I did not start Carbonmade to be cool, get girls, or make our friends jealous. Instead, our long-term vision for Carbonmade was to build a company. We wouldn't be pushing ahead in this way if we didn't have a commitment to steadily increase the size of our paychecks — and our employees' paychecks — as we grow.

What makes creating a company so difficult is that it's no longer a couple of people sitting around their apartment fine-tuning an idea. Those were the days! It's a team, all working together to solve a complex problem. Then if you're lucky enough to solve it, you have to sell, market, and support it. It starts to get scary.

Building a business is mind numbing when you think about it. You have to be a little insane to venture down this path. Your chances of succeeding are slim, and even if you do succeed you have to continue to innovate or you'll be obsolete in eighteen months.

I'm not writing this to crush the hopes and dreams of people looking to start companies, but a dose of reality never hurt anyone. Your startup will eventually need to make the jump into company land and then, damn, things do get tough. If you're not ready to face that reality from the beginning, it may be too daunting when the time comes.

Startup No Longer Means Startup

The word startup has taken on a new meaning. It once meant an early stage enterprise in the research and planning phases, but now it has come to be defined as the way one builds a company online. Even companies that have been around for five years, generate millions in revenue, and have fifty employees are continuing to use this word to describe themselves.

Well, I want the word "startup" back! You build a startup to test an idea and then you build a company to execute that idea. Let's get back to that distinction. No more romanticizing about how cool it is to be an entrepreneur. It's a struggle to save your company's life — and your own skin — every day of the week. When this bubble blows up — and it will — only the people who have been prepared all along to make a business out of their startup will survive.

Hiring for a Boostrapped Company

2011-02-16T22:35:10Z

Creating jobs is my second favorite thing about startups, next to having customers using the service. What makes me qualified to write about the hiring process for bootstrapped companies? I hired three full-time people in my first company, TypeFrag (sold in 2007), and four and growing in my current company, Carbonmade. Throughout the past eight years, I've also assisted in hiring a dozen contractors, including web designers, developers, copywriters, and illustrators. Hiring for a bootstrapped company is an entirely different process from hiring for an angel or VC backed startup that's flush with cash.

Why's a Bootstrapped Company So Different?

Before I get into how I hire, let's think about why it's so different to hire for a bootstrapped company like Carbonmade than it is for a VC backed company like Foursquare, Quora, Asana, and the like. The difference is cash flow. While they have fat bank accounts filled with investors' money, we are only able to spend money as it trickles in from customers.

We work with the equivalent of $12/month investor checks, financed by our users, deposited to our bank account not at one time but across the month. Fortunately, we're getting a lot of those checks; but this approach calls for a ramp-up process that prevents you from filling all the positions you need at the start of your company. For example, we couldn't hire a "complete" team just to be in closed development for two years, as Asana was able to do. We have to do our best with what we have, and grow our team in proportion as our company grows with earned assets.

Hire for the Moment

Fortunately, Carbonmade started with a very well-rounded team of three: designer, developer, and an everything else guy. (See Three's Company and why I think three co-founders are better than two.) This meant we were able to get by with the minimum we needed to build a product throughout the initial phase of our development, but work began to get out of hand as we grew beyond a certain point.

When you're involved with the day-to-day in a startup, you'll know when it's time to hire your first person and for what role — hopefully around the same time the money lines up. You're running the equivalent of a machine and you can feel when a component in your machine is lagging behind the others. For us, the first pieces of our machine to start making those ominous overstressed noises were handling customer service and design.

Sure, we could have hired a customer service person from the start of our company if money hadn't been a factor — it was — but what would we have put them to work on? And, yes, we could have had a second designer helping us plow through user interface design, illustrations, layout, etc., but when you're first designing a product, a single mind making decisions gets the work out the door faster.

You shouldn't — and can't when bootstrapping — go out and hire for all the positions you'll need in the future. Do you really need that Community Manager when you have no users? What about that Head of Sales? Are you selling a product that's not ready? Is that System Administrator really needed when your service is only used by a few thousand users? My point is that there's a lot you can get by with working as a small team — there are even advantages in having one — and efficiency trumps everything early on. You'll know when your efficiency breaks down and when it's the moment to hire someone to keep your machine humming.

Hire Friends of Friends

Don't hire friends, but hire friends of friends. I've broken this rule with two of the seven people I've hired over the past two companies, but as a general rule I think it stands up well. While you can get away with hiring friends at a VC backed startup — the larger team will help the person blend in — a smaller, bootstrapped team ideally has one level of separation. Friends have a tendency to be distracting and to be more difficult to direct. Also, hiring a friend makes for a tricky situation if you have to fire them.

Hiring through your network is, and always will be, the best way to find people to work for you. Your friends, while they probably shouldn't be hired, will know and recommend people that you should hire. That's how we got Michael Sigler (via Pasquale D'Silva), Alex Penny (via Wesley Verhoeve), and others. You can assume that your friends are referring talented, good people — who are available. Being friends of your friends, they should prove to be folks that you can not only work well with, but also get along with.

Often a Contractor Will Do

There are plenty of jobs that you can get away with hiring a contractor for. Specifically, at Carbonmade, we've hired contractors to write copy for us, to help us prototype projects, design internal tools, to help code components of our video player, and other things. Contractors can be hit or miss, but they're far less of a commitment, and if things don't work out, it's a lot less money, time, and effort down the drain. They limit the damage if it's a failed experiment.

The only drawback to working with a contractor is if you're expecting to work on more than a small project. Larger projects require a contractor to be fully invested in the idea and to be able to see things through from start to finish. Not all contractors are built that way mentally.

Bringing contractors up to speed on long-term projects can also lead to problems. That's why, since we hired Michael Sigler, Mike Minnick, Kyle Fox, and Alex Penny, we ask our contractors only to work on one to four week projects. Still, early on in your bootstrapped company, contractors can be life saving.

Where's Your Jobs Page?

Carbonmade doesn't have a Jobs page. That doesn't mean we're not hiring. It's a combination of not having exhausted our Friends of Friends network and continuing to hire for the moment. We'll see if that shifts when we get larger, but for now it's been working just fine, and limits the number of incoming resumes that could slow us down.

Carbonmade: 2010 in Review

2011-01-26T22:35:10Z

Last January, I wrote a piece entitled Carbonmade: A Year in Review covering some of the things we did in 2009. While 2009 was mainly getting our ducks in a row as a company, 2010 was far more interesting: we added our first employees, moved into our own office, released a new marketing site, an update to our app, and a lot more. Read on for details.

First Quarter

At the start of 2010, we had a tad under 190,000 members and by the end of the year we had just over 306,000 — a 62% growth. Not shabby when you consider that 2010 was our fifth year of being in business, so in one year we nearly doubled our existing userbase. This growth was led by two major projects. The first was our new marketing site re-design that we released in March.

As Dave's roommate at the time, I never saw a man pull more all-nighters than he did during the first three months of 2010. He was determined to refresh the look and feel of Carbonmade if it killed him. It nearly did. To be clear: This was a re-design of our marketing site: homepage, examples, about, sign up process, etc., and not a re-design of the app itself.

It launched in early March and led to our biggest single sign up month ever: 13,232. We haven't surpassed that since, although we've been damn close on a few occasions and will certainly pass it during 2011. A few press articles coinciding with the redesign helped propel this number up as well. The biggest one was the first major piece on us entitled The Startup Story of Carbonmade, written by Chrissie Brodigan for Think Vitamin.

Along with the update, we launched a Progress page, which we've since replaced with a Why? page. The Progress page was a failed experiment Dave and I came up with late one night to allow folks to follow along with the progress of updating our app. Although it flopped, I still think the idea had some merit if executed correctly. We were just too small a company to follow through on it, as it was only Dave, Jason and myself at the time.

Second Quarter

While our new marketing site was a huge hit around the Web, we didn't have the luxury of getting to sit back, relax and drink margaritas on the beach, as we still needed to push through on an update to the app side of Carbonmade. Most of the second quarter of 2010 was dedicated to brainstorming, designing, and developing this update as well as looking for the right people to help us complete the update and move Carbonmade forward. We experimented with different contractors, but quickly came to the realization that we needed people in-house. Thankfully, we found them just as quickly last summer.

Third Quarter

In July things began to gather speed. Working nearly four and a half years as three people without any additional help had taken its toll. We needed fresh blood. Our first relief came when we hired Mike Minnick to handle all customer service emails and phone calls together with much of the community stuff. This released me from having to deal with nearly every email in our inbox. At 200,000+ customers at the time Mike joined, we were getting an email volume that you can well imagine. Hiring Mike was a life changer for me.

Next, we needed to give Dave some relief from designing every pixel of Carbonmade all by himself. We'd been looking for a full-time designer to work under Dave since 2009, but never came across the type of person we needed, one who could handle multiple design disciplines: UI, UX, marketing, and illustrating. It's a tough skill-set, and not many folks other than Dave possess it.

We found Michael Sigler this past August through an introduction by Pasquale D'Silva, an illustrator who had been hanging out with us in New York City and crashing on my couch. Sig fit right in, and by September he finished relocating his wife, his baby daughter, and himself from Portland, Oregon to Brooklyn.

Sig began working immediately with Dave on wrapping up our update to the app side of Carbonmade. Without Sig's help, I don't believe we would have been able to get our update out in 2010, let alone at the very end of September. The first 1,000 emails announcing the update went out on September 24, 2010.

Fourth Quarter

By far the busiest quarter in Carbonmade's history was the fourth quarter of 2010. Most of October was spent bug fixing — what a pain! — and managing our migration, which I wrote about in an article entitled Case Study: Carbonmade's Migration. Think Vitamin covered that in a piece entitled Incremental Rollouts: Lessons from Carbonmade's Migration.

Along with handling our new update, we did a few cosmetic tweaks to our site. We launched a feedback page designed for people who close their account, and replaced the Progress page — a failed experiment in that we never updated it — with a Why? page that did a better job explaining why people should sign up for Carbonmade.

On top of all the craziness, we moved into our new office by the beginning of October. Never having had our own office before, we didn't know the work that would go into outfitting one. We spent thousands and thousands of dollars to get things set up. I think we placed upwards of 100 orders on Amazon and Alice during October alone — many containing multiple items — for miscellaneous office supplies, from toilet paper to a crow bar.

Our rollout went really smoothly despite the hectic nature of it all, and everyone had access to the new Carbonmade by mid-November. The rest of that month and December — when we turned five years old! — was spent on beginning our next big plans for Carbonmade, which unfortunately I cannot let you in on just yet. Look out for the news in 2011.

On Focus

2011-01-19T22:35:10Z

My friend Vinicius Vacanti wrote an article back in August entitled How New Ideas Almost Killed Our Startup. I missed reading it back then, but it had a resurgence on Hacker News in late December, which brought it to my attention. His central point is that new ideas lead to "uninformed optimism," which in turn lead to "informed pessimism" and only the most persistent people will get to a "crisis of meaning" and break through. Those people who lack persistence and focus will keep reverting back to a new idea and "uninformed optimism" all over again. I wrote about this briefly in a article entitled Idea Shaping that urges entrepreneurs to focus on one idea at a time, preferably one you love. His idea, and mine, can be boiled down together to one word: focus.

What Causes Loss of Focus

Sometimes I find myself so focused that I forget to eat or drink. Often that same focus leads me to forego sleep or toss and turn because I can't shut my brain off. Other times, I find myself losing focus. I've tried to figure out why I lose focus, and after much thought and discussion I think it all boils down to: (1) not setting enough clear and achievable short-term goals, (2) letting my mind wander too often into long-term future goals, and (3) distractions.

Setting Clear Short-Term Achievable Goals

You can easily solve the problem of not setting enough clear and achievable short-term goals. All you have to do is look at your company and your product and outline "things I want to achieve within the next three months." This exercise should be simple for anyone. Next, take your list of achievable goals and rank them according to what has to follow from what. Some things clearly need to be done first before you can do others. Then take the goal at the top of your list and make that your single to-do item. Once it's done, cross it off and make the next item your only focus. Rinse and repeat.

Mind Wandering Too Often into Long-Term Goals

Long-term goals are a mixed bag: we need something big to build toward, but they can easily be distracting. Ideas like that are best brainstormed and then only revisited in detail every three months. As the year wrapped up, Dave, Jason, myself, and the rest of the Carbonmade team did a lot of thinking and strategizing about what we're doing in 2011. While this is a must-do exercise, we've done it, and now we've got to get back to work on the short-term goals. You can literally feel in your gut the distracting pull of planning too far ahead. It's 2011, so I don't even want to hear the word 2012 enter our discussions. Even anything other than a casual reference to the end of 2011 is a distraction.

Agonizing too much about long-term plans is the biggest cause of loss of focus. When you start prioritizing the future rather than focusing on building the best damn product you can, you'll start slipping. It's really why there's no room for an "Idea Guy" in a startup. Not only is it distracting to the production side of things, it's a role that has no place in a business that's still focused on building a particular product. Whatever he or she might be later, the Idea Guy in a startup should be an "Operations Guy" who should be mainly focused on adding and supporting production of your product.

Distractions!

My co-founder, Jason Nelson, hates distractions. He can't work with them. He doesn't even like programming any heavy-duty code at the office when others are around. That's why he usually checks in to the office around 4 o'clock and checks out early in the morning. Distractions are the immediate cause of lack of focus — the in-the-moment disruption that can pull you out of whatever tunnel-vision, Zen-like moment you find yourself in that gets your best work done.

I respect Jason not only for his work ethic, but also for the way he zones in on whatever he's working on by eliminating distractions around him. He knows he's susceptible to overhearing banter around the office — we all are — so he chooses to do what he needs to do to limit distractions in his life. We could all learn from him.

Building the Trunk, First

2011-01-05T22:35:10Z

When you think of Carbonmade, it goes something like this: "An online portfolio system for creative people to show off their work." That's fitting, as we do purposefully shove "Your online portfolio." under your nose on our landing page. That's what we want you to think of us as, and that's what we are today. At Carbonmade we think of our online portfolio as the trunk of the tree we hope to grow. As our trunk grows, it'll sprout branches (different Building Blocks), but you can't have healthy branches without a strong trunk. Without a strong trunk, you won't be able to build an ecosystem and have a shot at being a billion dollar company. Focus on the trunk.

Examples of Leveraging the Trunk

Think Apple and Facebook — both launched with a single stripped down product — Apple's operating system (their hardware was just a delivery system) and Facebook's simple social networking: messaging and, more importantly, photo sharing. Both focused all their attention on building their trunk and then leveraged their core product to branch out.

Apple's iPod, iPhone, iPad, iTunes, etc., are all successful because of iOS, which was built effectively on top of the knowledge they gained from developing Mac OS X (and earlier generations). Everything Apple develops today is tied back into their operating system — the trunk. I have a friend who worked as a developer on Apple's operating system team for over twenty years. Steve gave these guys more love than everyone else, and he believes in the trunk.

Facebook is an even better example, as when I first started using it during my sophomore year at Yale (2003) it was only a fragment of the product it is today. No Groups, no Events, no API, no News Feed, no Local, etc. They had a very limited userbase: college students, more specifically those at Ivy League universities, when I first signed up. They got an active core group of users before rolling it out to other colleges, then high schools, then mom and dad. It was only after they began to scale that they started to explore growing branches.

Keeping Everything Under One Umbrella

Mark Zuckerberg really believes in building a strong trunk before sprouting new branches. Without it, Facebook wouldn't be what it is today. You might argue that scale is what made Facebook's branches successful — not a strong trunk — but I'd argue that while scale is important, building out branches before you build out a strong trunk will lead you, and your users, toward getting lost in your ecosystem. Facebook will always first and foremost be a place to connect with friends, share photos, and read about what your friend is doing through status updates. The trunk is what's keeping Facebook together: Facebook's quest is to "connect the people of the world". Without that you've got a mixed message, which negatively affects your marketing and branding. You've got MySpace.

On the model of Apple or Facebook, Carbonmade's online portfolio system will always be the trunk of our ecosystem. How we play with it, what user groups we market to, and what branches we create will always tie back in with the basic idea: showing off your work.

Another example is 37signals. While 37signals is not using the same trunk approach that Facebook and Carbonmade use — everything under one umbrella — they still have a trunk: it's their brand, the design standards they've created to release features across products more easily, and their unified architecture (universal logins, etc.). This is another way of building an ecosystem, but I think one that'll never lead to a billion dollar business — something Jason Fried and DHH aren't interested in building anyway, so they say.

What's really interesting now at 37signals — and the reason why I've thrown them into this discussion — is that they just launched their new 37signals Suite. Likely it's something they've been planning since launching their second product. This is a way of re-unifying their products, with an emphasis on leveraging their success of Basecamp, their original focus. It'll be interesting to see where they go with this: Will they go a step farther and create an all-in-one product?

How Do You Build a Strong Trunk?

Building a strong trunk requires serious patience. Apple may have had its low points, but in its 35-year history (founded in 1976), they've never been as successful as they are today. It took a lot of patience, but they're finally in a position to change the world.

Too many entrepreneurs think that they need to rush to become overnight successes or they'll never get there. They think it's a sprint and not a marathon. Carbonmade has been around for five years as of December, 2010. It took us three years to be able to work on it full-time, and then another year and a half before we were able to hire our first two employees. Carbonmade is only at 1% of what it'll be in five years. Patience, my friends.

Other than having patience, you need to build a stripped down, functional product that is focused on a special type of user, but at the same time something that can still be used by a more general audience. That way you aren't discouraging anyone from using it.

For example, Carbonmade doesn't work all that well for writers, as our focus is on more visual work, but writers can still upload screenshots of their work with us, making our product usable for them. We're not discouraging writers from using Carbonmade, but we're not built for them. We can go back later and build out a template specifically for writers.

Focus on being patient while building a product that's specific but general at the same time — contradiction, I know, but you get what I mean — and you'll build up a successful base. Don't grow your branches too quickly, but perfect your trunk first, and always have this in the back of your mind: "Does this branch interfere with or enhance the trunk of my tree?"

What's A Non-Programmer To Do? (Advanced)

2010-12-08T22:35:10Z

Responsibilities change as the size of your organization grows. During the past few months, we've hired another web designer and a customer service guy. With these hires, and with Carbonmade's ambitions, my role has changed dramatically. I still do a lot of the stuff I outlined in What's a Non-Programmer To Do? but as our company as shifted out of the startup phase and into the small business phase, I've taken on new tasks that I wasn't familiar with before. Good thing learning on the job is the best teacher.

Hiring

One of the biggest responsibilities of any CEO is to recruit talent to work for you. Now that Carbonmade is large enough to start doing so, it has become a significant part of my role to find and talk to folks. Along with Dave Gorum, who has a great eye for spotting young, hungry, and talented designers, I've been having phone and in person meetings with people we're looking to hire.

The story of how we hired Michael Sigler is actually an interesting one. A friend of Carbonmade, Pasquale D'Silva, pointed me to Michael's work one day at our office. Immediately I liked the work a lot. I asked Pasquale for Sig's AIM (yes, we all still use it). Minutes later I was talking to Sig over AIM for well over three hours. We then chatted on the phone for another hour. Then Dave and he had a phone call for another hour or more that same day.

Later that evening I called him up again and booked him a flight to New York for the following itinerary: Jason, Dave, Sig, and I went out for lunch and dinner, he stayed in Jason's apartment, and I took him on a few-hour walking tour of Park Slope (where he'd eventually end up getting an apartment).

During the second day of his stay, we offered him a contract to come and work with us full-time. That evening everything was signed and about a month later his move to his new apartment in Brooklyn was completed.

Contracts

Everyone hates dealing with paperwork. That's a given. Part of my job has always been dealing with our law firm and handling all the paperwork that comes in and out of Carbonmade. Recently, with the addition of our new people, dealing with employee contracts, salary, and raises have come into play.

I worked with our law firm to tailor a non-form letter contract for our employees. We didn't want to work with a standard contract, but rather one that corresponds to what we stand for at Carbonmade. For example, we encourage side projects at Carbonmade, which goes against most employee contracts, which stipulate that anything you work on is owned by the company. That's bollocks.

Payroll

Although we hired one guy back in July (Mike Minnick) and one guy back in August (Michael Sigler), we signed them on as full-time contractors to begin the process of making sure that we meshed.

I also needed time to set up payroll, which the United States government doesn't exactly make it easy to do. I first looked at an all-in-one solution called Ambrose that was recommended to me by a friend. It looked appealing in that they would handle the payroll, healthcare, 401k, etc., but they charged a $3,500 set-up fee and $200/month per employee. Those aren't insignificant fees.

After nearly completing the process with Ambrose, I decided to look elsewhere. There are payroll services out there that charge a lot less and during my search I found Bank of America's payroll service. BoA is where our company banks. It turns out that payroll is free through BoA if you're a small business customer.

Setting up payroll through BoA is a pain in the ass, but after getting everything set up it's as easy as a click of a button to run payroll and then another click of a button to pay the taxes on that payroll. The hardest bit was filling out all the government forms that were prerequisites to setting up payroll.

A lot of accountants can handle setting up payroll for your company, but they typically charge $25-50/month per employee. It's just not the best use of your funds when filling out a handful of forms can get you where you need to be for free.

Investors

We're becoming more and more of an investor's darling: private profitable company with swanky new SoHo loft office and five full-time folks. We've got Private Equity and Venture Capitalists knocking on our doors. I love meeting with these folks — for the most part. They've got a lot of experience working with companies that are similar to ours and often even in thirty-minute meetings they are able to pass on a useful bit of advice.

Just the other day, I was given a great piece of insight about a better way to bill customers to reduce churn. It's a little something we're going to be applying to our new billing system that's coming out shortly.

You never want to close doors. While Carbonmade runs successfully without having ever raised a dime — whether from friends, family, or otherwise — keeping options open is as much in our best interest as in anyone else's.

Speaking Engagements

I've been fortunate to land a few speaking gigs this past year. I've given two guest lectures at NYU, been on a panel at Parson's, and another panel through Ultra Light Startups. I love speaking and engaging with the startup community. Maybe it's because both of my parents are professors at Yale that it's in my blood to share knowledge and teach other people, but I can't get enough of it.

Through my talks, people in New York have found out about Carbonmade and that's helped to spread the name of our company to potential hires, investors, and drive signups. I have to admit that I secretly hand out a lot of VIP accounts if you come and talk to me after the lecture, so maybe in the end of I'm actually hurting our bottom line. ;) Spreading good will, though!

Insurance

I've always been naïve about insurance. I'm the guy who doesn't get protection plans on his iPhone or his rental car. I like taking the position that if I screw up I'll be responsible for my own actions rather than paying someone to clean up my mess. Like I said, it's a very naïve point of view.

However, in our office lease, there is a clause that we need General Liability and Renter's insurance. That led me to reaching out to a bunch of different insurance agencies to grab quotes and vet. The first one I found was recommended by Harvest, but the broker there and I just couldn't get on the same page. He kept thinking Carbonmade was a social network and getting General Liability insurance for social networks I guess is a big hassle. "You are too risky!" he said. "But we're not a social network, sir." Oh well. On to the next one.

I looked around a bit and found three respectable outfits. I sent them all an email and played the "whoever gets back to me first with a reasonable quote" wins. I was surprised that it took a couple days for everyone to get back to me — I thought brokers would be faster to respond. Either way, I had two of the three folks find quotes for us. One came back more quickly than the other and offered us a great quote through Traveler's insurance so we went with that.

Now getting into a skateboarding accident in our office won't be such a big deal.

Office

Back in September 2009 we began subleasing an office with Harvest. At their and our growth rates, I knew that we would need to move to a new office sometime during 2010. I began looking for our own office to rent out as early as December 2009. You need to give yourselves a fair amount of time, as office rentals are much longer leases than apartment leases — ours is four years — and good spaces are harder to come by.

I love our building in SoHo, so when I heard a rumor from Anthony and Dane of Squarespace that they were moving offices sometime in 2010, I went to them to discuss the possibility of taking over their old space (on the fourth floor of the same building). Both of them were happy to pass it on to us with the condition that we'd take it over no sooner than when construction was done in their new place.

Not a problem. We were still only three people full-time during the first half of 2010, so moving into our own 2,400 sqft loft wasn't a priority for us… yet. However, as the year went by and Harvest's office filled up with new folks, we felt serious internal and external pressure to move into our new space.

Although Squarespace was moving as quickly as they could — contractors in New York sure take their sweet time building out office spaces — it was definitely a stressful time for me. We initially thought we were moving into the space on May 1st, only to be delayed all the way until the end of September.

I met with the landlord several dozen times to go over the terms of our lease, negotiate the costs, and generally ask him questions about renting in his building. Our landlords are great folks — a rarity in New York — so working with them has been an absolute pleasure.

Finishing all the moving arrangements and signing the lease felt like a gigantic burden lifted off my back. About six months worth of stress — would we actually move? — left my body and mind when I was handed the keys.

Office Supplies

I think we all take for granted the stuff that goes into outfitting an office, but we shouldn't. Jason and I tasked ourselves with outfitting our office with everything we needed. Just to rattle off a few of the over 75 orders we placed through Amazon (thank God for Prime): trash baskets, pens, coffee maker, tea maker, plants, phones, refrigerator, microwave, Bucky balls for our steel wall, a tool set, etc., etc.

I wanted to get beautiful desks for our new office, and I found a shop in Germany that made custom steel, wood, and linoleum desks that I just had to have. I spent countless hours dealing with their production and shipping, not to mention customs (the biggest pain of all: I think they thought I was reselling the desks), and delivery. If I had to do it all again, I probably wouldn't. I don't think it was worth the headache and (literally) hundreds of hours and dozens of emails to get the desks here, but I'm still happy that they're finally here and awesome.

Services

Signing the lease was only the first step in moving into a new office. Now I know why people hire office managers. Since we don't have one of those, I handled setting up our Internet service through Time Warner, our electricity through ConEd, our landline phone service through Verizon, our water service through Poland Spring, our office cleaning service through Four Star Cleaners, and monthly new shipments of supplies through Alice.

Financials

As we grow, we gather more and more useful information that we can start to act on. Information gathering is both useful and frustrating. On the one hand it's great and gives you insight into your business, but on the other hand you may not have enough of it to be statistically informative early on and/or you don't have the bodies to work on the results.

With new people we are finally able to start acting on a lot of the information that Jason and I have been gathering over the years. At nearly 300,000 users, we have a lot of rich information to work through. I've been working with a friend formerly at Goldman Sachs and now at the private equity firm Silver Lake who's helping us look at and analyze our data.

Just last week we ran a cohort analysis and put together phenomenal projections on what our company can achieve during the next three years — all based on a mixture of historical data and our roadmap.

Accounting

We have an accounting firm, but what they do really only sees us through the end-of-the-year work, with quarterly phone calls sprinkled throughout the year. The heavy lifting is done by me at the end of every month. I have to be sure from month to month that we don't overspend and can better plan out our hiring.

Things have only become more complicated as we've added new people, paid for new services, and acquired a lease with people subleasing from us. More money coming in means more money going out and more money to account for. It may sound funny, but watching and tracking our finances on a daily basis has caused me to develop a sixth sense about how much money we have, what our growth rate is, and how and when we can spend it.

Planning for the Future

Something I like more than anything is thinking about the future. It's one of the things I have the luxury of thinking about, as Dave and Jason are both heavily focused on the day-to-day product stuff. I like to come up with ideas for laying out our roadmap.

My particular excitement in this business is setting out projections and employee charts, worrying about long-term churn reduction, increasing life-time value, planning new features, thinking about big marketing pushes, and anything and everything that's three-plus months down the road.

Motivation

Leading by example is the best motivation, but oftentimes knowing when to chime in with something encouraging is just as good. Keeping up morale even through long and tough development cycles is a job in itself. Both designers and developers can get disheartened and lose sight of the big picture.

Even though you may not be the person who can actually jump-start Photoshop or TextMate to help them tweak the product, being there with them and cheering on their work can help a lot. Don't be too proud to order delivery food for your team at the end of a late night or pick up drinks and snacks at your local convenience store.

Case Study: Carbonmade's Migration

2010-12-01T22:35:10Z

One topic that's often overlooked — and certainly not much discussed — is what goes on behind the scenes when you launch a new update of your existing web app. While the bulk of the work is done in the months, or years, of development, the final weeks before launch — and the weeks following — are more hectic and draining than anything at the development stage. You've got to deal with testing, marketing, customer service, system administration, design touchups, and last minute bugs that only show their head after you've flipped the switch. A sloppy migration can really set you back — à la Digg — and a smooth rollout — à la Twitter — can gain you a lot more loyal customers. Don't expect to sleep.

How We Marketed Our New Update

An update is different than a spankin' new full bells and whistles upgrade. There's a lot of new stuff, but it's not of the same magnitude as when you're introducing, say, the iPhone for the first time. Steve Jobs presents a new update to i0S differently from the way he presents a new device, and we for our part don't want to overplay the significance of the update. Yes, there's a lot that's new, but still, an update has to be presented in a different light from introducing a whole new concept or else you're going to underwhelm your users.

With that said, there's still plenty to do. One thing we really wanted to do was to send a newsletter to our users. Before that we had never sent out a single newsletter or announcement, but this update was significant enough to warrant one. Together we worked out the gist of what we wanted to say in the newsletter and then hired one of our close friends, Angela Black, to craft the copy. She and Dave designed out and wrote up two newsletters: one to our Whoo! users (paying) and one to our meh users (free).

If we had had more people and time, we would have created a "What's New" page similar to what Twitter launched to preview their new update. A "What's New" page is great for existing users to get a sense of things that are coming in the new version. We tossed the idea around the office, but couldn't justify the time in relation to this update.

The Rolling Release: Generating Hype

As a tactic in marketing, and something that worked very successfully for us during the release of our new update, we slowly leaked the migration bar to users over time. This builds hype by generating the idea of scarcity. People want what they can't have — especially if their peers have it. That's part of what Dribbble, FFFFOUND!, Forrst and other invite-only communities bank on.

We first release the migration bars — with newsletter — to our VIP users. Our VIP users are people to whom we give all the privileges of a paid account without the cost. They're generally some of the more talented creatives on our website — folks we show off on our Examples page. This gets our new update into the hands of some of the more heavily trafficked portfolios on Carbonmade, which instantly gets us emails and tweets to the effect of: "I saw Nirrimi's portfolio. How'd she get it to look like that?" We haven't told anyone other than our VIPs that there's an update yet, so buzz begins to build.

Following the release to our VIPs — with a dozen or more bug fixes — we began releasing the update to our paying users at 1,000 person intervals. Your paying users deserve the update in advance of your free users, but only after things are working smoothly. The gap between the release to our VIPs and our paying users was a good four to five days, so that we could make sure we had time to deal with any critical bugs.

By the time you've rolled out your update to your VIPs and paying users, the free users are chomping at the bit. Many of them are so desperate for the update that they email in asking whether they will get access to the new features if they upgrade. But of course, we say. Then as we began to roll out the new update to our free users at about 60,000 newsletters and migration bars a day, we saw almost double our typical upgrade increase even though more and more of the free users now knew they could get the update anyway. This was certainly owing in part to the great new feature set in the update, but also to the build-up that preceded the expanding release. Steve Jobs knows he's going to sell more iPhones if they're not immediately ready for release when he announces them. Hype is the best marketing money can't buy.

Migration by stages also helps to fight any downtime or slowness that your web app might experience if you release to all of your users at once — 280,000 in our case. This was especially important for us, as we had introduced a brand new video encoder and image generator which re-built every video and image when someone migrated over.

Technical Bits and Bobs

I'm a non-technical guy, but I talked with Jason Nelson (our developer) over greasy diner food about the technical bits of Carbonmade's migration. Jason's approach to migrating old apps to new apps — as he states it — is fairly simple. Jason uses the concept known as MVC ("Model View Controller"). What MVC does is keep things loosely coupled by separating your UI from code and isolating the changes with versions. Here's how they work:

At the action level (within the controller) we do this by breaking out our code into versioned blocks. For example, when updating a project, we might have:

ProjectController->Update

if v1: old logic (it works - don't break it!)

but if v2: brand new awesome logic!

From our UI (the views), we specify what version of the update method we'd like to use.

For instance:

Taking this a level further, we scope entire view sets out by directory. Each directory specifies the versions of the code they're dependent on. When it comes time to migrate folks over, we just bind their website address to a different view directory with the new version of the app.

Example:

carbonmade/v1

carbonmade/v2

Cake (not just a piece of it).

Morale Specialist

When we asked Mike, our recently appointed "customer service and community manager," what he wanted his title to be, he chose Morale Specialist. Perfectly fitting. We knew we'd have a lot of people contacting us when we rolled out the update, so we had to be ready to receive everyone's requests. We didn't really change our customer service routine during the release of our new update apart from adding a 1-800 number for people to call.

We got about two to three times more emails during this time than we did before the update. Up from about 50-75 taps of the send button a day to anywhere between 150 and 200. Tweets and Facebook wall posts were also way up during this period as we leaked tidbits on the new features.

Gathering Feedback

As mentioned in "Technical Bits and Bobs," when everyone logged into their accounts, they were presented with a message bar at the top of their screen saying: "Thanks for trying out the new Carbonmade. Let us know if anything looks amiss. Or go back to the old version."

The "Let us know" text linked off to a feedback form where people could let us know what they thought or if they had any technical issues. We wanted to make sure they felt comfortable migrating over to the new update and that they could get in touch with us with any questions while making the switch.

We were also constantly checking Twitter and Facebook for feedback. As much as I like to talk about the drawbacks of social media, they can be a really powerful tool for gauging people's reactions when tied into customer service.

Gather up all the feedback (emails, tweets, and Facebook messages), compile them in Google Docs for everyone you work with to see and begin to sort through the messages. If you spot a bug, throw it in Basecamp, as we do in a "To Do" list, and alert your programmers. Otherwise, don't overload them with criticisms of the update. Keep their spirits up by sharing only the positive feedback.

Don't Have Downtime

If Digg had had fewer broken axles during their recent re-launch, the community backlash they received would have been far less severe. Those same users would have been just as upset with the individual feature changes, but they'd at least have had a website to play around with. They'd have explored and seen what Kevin Rose and the other product people at Digg had in mind for them. Instead, all they got was a broken website, which further compounded their frustration. "Not only is Digg broken, but I can't even access the new version," they screamed, further compounding their distrust and frustrations with the re-launch. Don't make this mistake.

Don't Rush

It can take a hell of a lot of restraint — something I'm not always the best at — to keep you from throwing up your hands and sending out the update early to all of your users. There's a big difference here between releasing early and often and releasing foolishly. You may be able to get away with a premature update when you have a few hundred or a thousand users, but when you've got people paying you good money for their portfolios to work, you have to be thorough when testing and not jump the gun a few days or weeks early just so you can breathe again.

If you do, you'll end up with twice as much work. You'll be more panicked and run into far more problems if you rush things. At a certain point we were "ready" to release our new update to our paying users, but chose to sit back and wait five days, during which we re-encoded everyone's video so that when the time came our video encoding machine wouldn't get swamped as everyone moved over, causing it to build up a long queue and be unviewable until all the re-encoding was done. A little foresight of this kind can save you face, time, and headaches. An extra five days after over a year in development is going to help you, not hurt you.

Don't Move Your Office Then

Since September of last year, we've been sharing office space with the crew over at Harvest — a New York City startup. Its been a great arrangement, but the size of both of our companies has doubled in the past twelve months and in the early part of this year we knew we'd have to look for a new home.

Having been friends with Anthony and the folks at Squarespace for a while now, we heard that they were moving to new offices around June 1st, 2010. They're also in our same building in SoHo, and as we love the area an easy transition into their old space seemed too good to be true.

Construction delays are inevitable, and as we were waiting for them to vacate their old space, we had our hands tied. We were in office limbo, just waiting for them to move out so that we could move in. June went by, July, August, and then finally in early September we got the news that Squarespace's old space was ours for late September.

At the same time we were going to be inaugurating an update to our portfolio app. Egads! While we were putting the final tests and debugs on our update, we had to deal with all the things entailed in an office move: furnishing the raw loft space, hiring a cleaning service, setting up Internet, getting the energy bill transferred over, a million Amazon orders, and so on.

This is not something that we could have avoided, but still, planning a move into a new office space is not something you want sloshing around the back of your brain when you're hunting down Internet Explorer bugs and pushing around last minute pixels. Thankfully, the move went okay and we were about to begin the rollout a few days before move day.

Don't Move Apartments

Carbonmade is made up of five full-time folks: Spencer, Dave, Jason, Michael, and Mike. In what can only be described as a freakish act of bad timing, Spencer, Dave, and Michael all had to move apartments during the month of September — Spencer and Dave only from one New York City apartment to another, but Michael from Portland, Oregon with his wife and daughter and all his belongings to NYC.

Michael, along with his friend Jim, took the first week of September to pack his stuff into a large Penske truck and then proceeded to drive across the country to his new place in Park Slope, Brooklyn. On his arrival, Spencer and Jason both went to meet Michael and spent the entire day unloading the truck. A productivity loss of about 10 days for Michael and 1 day for Spencer and Jason — all occurring within the final month before releasing our update.

Don't Hire New People

Having made the major move East, Michael only began working with us on September 15 — within 45 days of our update. Even though we couldn't have released it on time without Michael's help, there was the inevitable process of getting him up to speed that might not have been worth it if our team had been bigger already. However, in our actual circumstances having Michael's help was indispensable.

If you can possibly do so, you should put a moratorium on hiring new people during the few weeks leading up to a release and the few weeks after. It's not a great environment to bring a new employee into, and the time it takes to get him and her up-to-date is time taken away from focusing on a smooth release.

So Long, Carbonmade

2010-10-20T22:35:10Z

As the Business Guy at Carbonmade, I'm always thinking about business metrics, and particularly last week I was thinking about ways to reduce churn. Without taking metrics into consideration, you're building blindly, but with too much emphasis on data, you end up building a watered-down product. It's a fine line. However, at scale — Carbonmade's over 275,000 members — even a .1% reduction in churn can mean thousands of dollars, so it's worth exploring. The thing about reducing churn is that you first have to identify why people are leaving your service.

Start of the Day: Laying out the Spec

We're five people now, all working on different things, so one of the most difficult things these days is organizing the priority of our project queue. When it was only Jason, Dave and myself, we'd only be able to work on one project at time, but with the addition of Sigler, we're able to have two or more projects going at the same time. Juggling priority in our never-ending project queue is a new responsibility that comes from scaling your team.

Since our queue of projects is ginormous, adding yet another can throw people off — especially if you move it to the top. Therefore, I've taken to fully spelling out new Projects in mini Project Briefs — not as official as it sounds — usually only a few paragraphs long: an introduction to the feature, why it's important, and the scope. Actually writing it out helps prevent you from just shouting out every new idea that enters your head.

Here's the introduction I wrote for my Churn brief:

"Now that we have our new update out, we can eliminate poor video quality and other miscellaneous feature requests (for custom logos, big images, updated templates, etc.) from the churn discussion because now we offer everything they wanted. All those new features are working great and getting awesome customer feedback. However, we still need a better understanding of why our users cancel our service so that we can fight more effectively to reduce Carbonmade's churn rate."

That was followed by a full summary of what I wanted to build. The scope included the suggestion of a short survey asking our users — both free and paid — why they were canceling Carbonmade at the point of cancellation (very important). Was it because they were building their own website or did we not offer them enough space? Or was there a feature that we were still missing? People would answer the survey by clicking on the radio button that best corresponded to why they were canceling. They could then leave a few sentences in a form to go along with their selection. Not too complicated, but not overly simple — something we strive for.

All written up, I sent the email off to Dave and Jason to check out.

Middle of the Day: Chat over Coffee

Our conference room in our new office is still under construction, so Dave, Jason and I decided to walk down the street to Oro to grab some coffee and chat about what to work on next. It'd been a month or more since we last brainstormed because we've been heads down rolling out our new update.

They'd read my email earlier in the afternoon, so we began the discussion about whether we wanted to push this project to the top of our queue and how we wanted to implement it. We all agreed that we wanted to gather this data and that gathering data sooner rather than later was a good idea.

We discussed just how we wanted to implement the survey. Both Dave and Jason — to their credit — were not entirely stoked by the radio button survey approach. Both wanted to boil it down to a simple form field that the user would be presented with after clicking the cancellation button. Directing the user to type out their thoughts means that we'll get better data than simply letting them select an option, they argued. We may have to do more interpretation of the data, which means more work on our end, but the data will be better. We've all randomly clicked radio buttons on surveys just to get through the thing and this new approach would eliminate that problem as well.

We then argued a bit about whether we should present the form to both our free and paid users or just the paid users. Should we also ask users at the point of downgrade from the paid to free plan as well? We decided to take the Carbonmade approach of building the simplest solution first and iterating on it over time. We decided to roll it out for both free and paid users, but only at the point of cancellation — not the point of downgrading (for now). We could then expand on it if we were getting good data that we could act on.

End of the Day: Implementing our New Feature

A few hours later, we headed back to the office after discussing what we wanted to work on during the rest of 2010 — implementing our new comment form was only a small piece of our overall conversation. We filled Sigler in on what we had talked about, got his opinion on things, and then moved forward on knocking out the form by the end of the night.

Sigler got to work laying out and coding the HTML and CSS behind our Goodbye page. When he was done, Jason tied it in and we were live by that evening. We've already begun to sort through the data and it's really neat. Nearly everyone who cancels takes the time to write a sentence or two about why they've done so.

Here are a few of the more colorful ones:

"Just playing with your rear end. I don't need a portfolio."
"Had to remove portfolio images due to copyright issue... couldn't figure out how to change my profile to remove them...."
"No longer need carbonmade. but it was a great start for me and helped me get a few jobs. thanks so much!!"
"I'll create a new account with another e-mail and new portfolio, tks"

We're already able to take action based on these responses. Each response is tied to the person's former account, so we can look up their email address. We're able to email people — for example the person with the second comment — and explain to them how they could have removed their images. They may sign back up if we reach out to them and their problem is now resolved.

A good day at the office.

Down With Social

2010-08-25T22:35:10Z

I admit to having ridden the social media bandwagon from the start — mainly because I had to see how things would play out — but I've always been skeptical about its impact. Is anyone reading what you have to say? Do they even care? With so much information flowing, how can anything be absorbed? The same goes for social features accompanying products. Does friending and following add value to your product or is it a distraction? Value to me is measured in dollar signs — not pageviews and certainly not friend requests or follow count.

Don't Hire Social Media People

I'm going to offend a lot of people with this statement, but I don't think there's a place for a "social media" person (what some people refer to as a "community manager") in your company. Tweeting, Tumblring, Facebooking, blogging, etc., are all routine tasks that can be performed by any person out there with basic English skills and a friendly personality. The person doing this can also be the founder, a developer, a marketing person or the person that answers email. It's just not a full-time job.

The benefits of having someone dedicated to these tasks, whatever they may be, don't add up to a wise use of resources. As Leo Laporte wrote last week after he discovered that nobody was listening despite his tens of thousands of followers: "I was shouting into a vast echo chamber where no one could hear me because they were too busy shouting themselves. All this time I've been pumping content into the void like some chatterbox Onan."

At Carbonmade, we just announced our fifth full-time person, Mike Minnick, who has been handling emails and what nowadays constitutes social media stuff for us during the past few months part-time. Mike is great at his job. The impact Mike has had since he started working with us has been amazing, but it primarily comes in the form of quick and thorough email responses — something measurable — rather than in numbers of new followers.

Mike is atypical. He didn't go to college. Instead he toured the world as the lead singer of a Hardcore band called Curl Up and Die — it had a large cult following — and worked most of the past few years at a comic book store. He's covered in tattoos, but one of the nicest guys I know with a personality so charming that everyone (man or woman) who meets him falls in love.

But Mike wasn't hired to tweet for us. We hired him around a measurable need (responding to customers' emails) rather than a fantasy. That's what the concept that drives "social media" is. It's a fantasy that having 100 or 1,000 more friends or followers will bring you more business even though social networks are nothing more than echo chambers in which nobody is listening.

Not Every Product Needs to Be Social!

There's an obvious difference between social media and having social features on your website. The former is a marketing technique and the latter is a product feature. Social features certainly make sense on some sites, but, as with gaming mechanics, they are way overused, often incorrectly.

Carbonmade is evidence that every website doesn't need to launch with social features to be popular and successful. We're the largest online portfolio website with over 250,000 portfolios and counting — all without a single social feature. Madness?

We're not Facebook. We're not a social network and probably your company isn't either. We don't necessarily need or want our users talking and friending each other. Instead of spending valuable development hours on hooking in social networking features, we'd rather spend them on our unique product. You can only force-feed people the same features on every site before they'll all revolt: "Boring! I've seen that before."

Now with some products it makes sense: Foursquare, for example, because it is a social platform, with game mechanics their bread and butter. It makes sense for them because they are building toward exactly what they want to be: a social platform. They're not just tacking social features onto a product that doesn't require them. Please stop doing that.

On the flip side, I'm scared for Foursquare because their product really is only social, and with the launch of Facebook Places, there's little to differentiate them. However, they're very smart folks at Foursquare, and I'm confident they'll survive by figuring out how to reinvent themselves.

Measuring Matters

I'm happy to see more and more companies being built around the idea of analytics. Analytics have been around for a while — mainly analytics that measure web traffic, like Google Analytics — but now we're seeing another group of companies looking at measuring in a different way. Those companies include KISSmetrics, Chartbeat, StatsMix, Chart.io and others. I think these forms of quantifying are important.

Social media marketing can't be measured, at least not effectively. Spending money on social media marketing reminds me of the early 2000s, when you couldn't measure the effectiveness of banner ads. Everyone was spending on it without knowing what the outcome was. This trend ended up dying out when a more measurable and effective advertisement system came in: Google's AdWords. Companies began to be focused on click-through ratio and conversions rather than pageviews (the modern day equivalent of pageviews being followers/friends).

If I weren't working on Carbonmade, I'd be working on better ways to analyze and measure data effectively. Numbers don't lie, and there's a lot of incoming data that needs making sense of. I anticipate huge fallout for companies over the next 12 to 24 months because they were built around too many assumptions about the vitality of the social space and not enough concrete, measurable facts. Social media marketing, social features and game mechanics will prove to have been the culprits.

Idea Shaping

2010-08-04T22:35:10Z

"Good ideas are a dime a dozen" or "execution is everything" are popular phrases entrepreneurs roll off their tongues when asked, "Do ideas matter?" While I provisionally agree with both statements, it's just not so black and white. Both phrases are rather misleading. Ideas don't simply materialize out of thin air, and not every idea is worth your time. As popular as it is to dismiss the thought of coming up with a good idea — you know, because it requires sitting around, thinking and suspending activity — it's critical to focus on one idea at a time, preferably your "I'm in Love Idea".

One Idea at a Time

You should start by reading The Top Idea In Your Mind (July, 2010), written by Paul Graham just a few weeks ago. In it, PG writes: "I think most people have one top idea in their mind at any given time. That's the idea their thoughts will drift toward when they're allowed to drift freely. And this idea will thus tend to get all the benefit of that type of thinking, while others are starved of it. Which means it's a disaster to let the wrong idea become the top one in your mind."

I'll add my take from my experience. I know far too many entrepreneurs who try to take hold of too many projects at once. When you spread yourself too thin, your mind wanders to and fro, resulting in a bunch of half-assed projects. These people often hit the "reset" button when they've finally reached exhaustion — selling off their domain names and the remains of their half finished projects — only to do it all over again. These people have what I like to call "Entrepreneur's A.D.D." and it's really hard to shake. It was something I battled with early on. Thankfully, there is a cure for "Entrepreneur's A.D.D." and that's to fall in love with a single idea, what I like to call an "I'm in Love Idea". You'll know it when it happens.

"I'm in Love Idea"

In my social life, I've only been in love once and it didn't work out in the end due to long distance and bad timing. In business, I've been in love twice. Once with TypeFrag and now a second time with Carbonmade. Just as in your social life, when you meet someone great you get this gut feeling and your stomach fills up with butterflies, the same is true when an idea clicks with you. You fall in love. Your stomach churns and you can't sleep at night, all because you want to work on the idea so much — the equivalent being wanting to be with someone all the time.

If you're thinking "I'm not really into you", then you should pack away your thoughts and wait for the next idea. If you're at all successful developing your idea then you'll be fully involved with it for at least five to seven years. You don't want to be invested in something that you don't care about enough to commit to for that long. And most importantly, you won't be able to give an idea your best work and attention if you're not in love. Your relationship will suffer and, ultimately, die out.

Execution is Everything?

"Execution is Everything" is a common phrase among entrepreneurs, and I've even touted it in a lecture entitled Ready, FIRE! Aim that I gave at NYU this past Spring. However, there's a difference between executing on an awful idea and executing on an "I'm in Love Idea". Even though I'm not an active angel investor, I get pitched a lot of ideas by entrepreneurs — both readers of these essays and people I meet at events. I hear a lot of great ideas, but I also hear a lot of awful ones.

Awful ideas are usually imagined by someone who has been flailing around for some time looking for an "I'm in Love Idea" and doesn't have the patience to wait any longer. They just want to fool around. As with dating, that's fine for practice and you may improve your skills a bit, but no amount of perfect execution can turn an awful idea into an "I'm in Love Idea".

You might say: Well, the good thing is that web development is so inexpensive that the path you set down on with your awful idea may change a dozen times and several months (or years) later you'll come out the other end with an "I'm in Love Idea." False.

The scary bit is that any person working on an awful idea doesn't know it's awful or they wouldn't continue to work on it. Really, the only hope for them is that they luck into an "I'm in Love Idea" while they think they're already working on The One. They need an epiphany of sorts. Or maybe reading this essay will help wake them from their stupor?

While execution is far from everything — despite the nice ring to the slogan — a better way to phrase it would be that an "I'm in Love Idea" isn't going to do the work for you. You still need to get out there and make it work. On the other hand, an awful idea won't necessarily set you entirely back, but don't expect to get much more than some practice and experience out of it while you search for your "I'm in Love Idea".

On Writing

2010-07-14T22:35:10Z

People ask me why I spend the time to write essays. What's the value I'm getting out of formulating and sharing my thoughts? I don't have advertisements, so it's not collecting a paycheck at the end of the month — so why do it? Why do I think you should do it? I think as entrepreneurs getting your thoughts down in words can help you think through your ideas, help promote yourself and your product and lead to good networking opportunities. But first a refute of this newsletter hubbub...

On Newsletters

As Mathew Ingram of GigaOM writes in an article entitled "Is It Time to Stop Blogging and Start an Email Newsletter?" a group of folks — mainly in the NYC entrepreneur community — have moved away from blogging and into writing newsletters. Jason Calacanis was the first to do this back in 2008 in what he said was a way to combat abusive comments he was receiving. Through newsletters, people could comment directly to him, but not to everyone reading his posts. Problem solved.

Nobody followed his charge until recently when Sam Lessin shutdown his blog and launched Letter.ly as a newsletter service where you can charge for your content although at a modest price. "So, yes - the old is new again," Sam writes.

I just don't buy it.

Information is meant to be consumed. It's meant to be free. It's meant to reach as many people as humanly possible, shared, and discussed. A wall around content — paid or otherwise — is destined to crumble. You need look no further than Jason Calacanis who when he really wants to get his voice out there re-posts his newsletter to his blog.

This newsletter "movement" if you can really call it that — only a few folks are really doing it — and I'm guessing even fewer are subscribing, has all the makeup of a passing phase. I have lots of respect for Sam, Michael, David, Andrew, and others that have switched to writing newsletters — they're all friends — but I'd be surprised to see them stick to their guns on this. If they truly value what it means to write then they'll be back to publicly sharing their content once again.

Is Blogging Dead? Not Exactly

I think that in a way blogging is dead. I don't consider spencerfry.com to be a blog. It's a collection of essays. Blogging in the traditional sense — snippets of your thoughts on X, Y, and Z — has been replaced by Twitter, Facebook, and Tumblr. Almost anything paragraph size can be squeezed down to 140 characters.

If people are going to sit down and read what you have to say then you have to formulate something worth reading. With so much content floating around these days, if you want your writing to be read then you've got to take up an interesting topic, thoughtfully formulate your thoughts, and back up your argument. All that takes more than 140 characters and, if done well, is worth reading.

Thinking Through Ideas

Most of the time when I sit down to write an essay, I don't have a clear picture in my mind of what I'm going to say. I've got a topic I want to talk about and a stance, but there's always wiggle room for me to formulate my thoughts. Writing everything down assists me through my thinking process and gets me to make strong calls on a topic. If it's in writing then when I click "submit," I have to be 100% behind it.

The process of thinking through my ideas usually starts with a basic outline of what I'm going to be writing about. It begins with a title (although this normally changes), headings for the various sections, and a few scribbled thoughts under each heading. I then begin with a basic introduction (what appears below the topic) and then flush out the paragraphs under each section.

By the time I'm done writing an essay, I've thoroughly looked at all angles of the topic, done my research, pulled in outside sources, and exhausted my Google search bar looking for relative material on the topic. This process helps cement my thinking and I think fleshing out your thoughts systematically like this will help you too.

Educating Your Readers

Not only does writing down your thoughts help you formulate your ideas, educating the readers of your writing is extremely worthwhile. 37signals in the chapter Promoting Through Education of their Getting Real book notes that "You can give something back to the community that supports you and score some nice promotional exposure at the same time."

Sharing is caring as the expression goes. And caring is rewarded through getting your product and your name out there, the comments that further the discussion of your piece, the emails you'll receive from readers, and the people you meet who have read your writing and just want to introduce themselves as readers. I blush every time.

Networking (Online)

An essay I wrote back in April, 2010 entitled "How to Network" gives some basic tips about how to successfully network yourself offline, but networking online is just as important for an entrepreneur looking to make a name for themselves and their product.

Writing well-thought out essays means that you have something to say outside of 140 characters, earns you respect, and puts you in contact with interesting people. A lot of fans of my writing have since become fans of Carbonmade. We've even been pitched partnerships, made friends and been written up because of it.

Tweeting, Facebooking, Tumblring, etc., are all well worth your time, but I've found that nothing garners quite a following like a well-thought out collection of essays. Just read Paul Graham if you don't believe me. If you want to stand out from the crowd you first have to set yourself apart by drawing a line in the sand about where you stand on what issues.

Freemium Model

2010-06-16T22:35:10Z

Because the idea of a freemium business model is fairly new, not too much has been written about how to approach it. We know what it is: You give your service away for free, acquire as many customers as you can, and then charge for premium features. Sounds simple. But the freemium business model is far from simple, and there's a lot to think about. I've compiled my thoughts about how you might go about implementing the freemium model for your startup.

What Is Freemium?

Before I go any further, for those of you who don't know what the freemium business model is, let me explain. The more traditional profit generating business model for the Web is through advertising, but with advertising payouts being smaller than they once were, freemium has come along as a solid alternative.

Fred Wilson first articulated the idea of freemium on March 23rd, 2006 in a blog post entitled My Favorite Business Model. Here's a snippet: "Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."

A good example of that is Carbonmade. It is free to sign up for our "Meh" account, which comes with 5 projects and 35 images, but you can choose to pay $12/month for our "Whoo!" account, which gets you up to 50 projects, 500 images, and the ability to display video. Our free plan brings in the customers, and when they run out of space or find that they need video, they'll upgrade.

Freemium is different from the Software as a Service (SaaS) business model of free trials, which is also popular. Free trials are different in that you give away the fully featured product for a limited time (usually 30 days) and hope that by the end of the trial the customer is committed enough to pay from then on. Companies like 37signals and Squarespace are big proponents of this model over freemium. (Squarespace actually ditched the freemium model a few years back in favor of the free trial.)

Why Freemium?

There are three main reasons why using the freemium business model is good: (1) giving your product away for free indefinitely will give users time to think about upgrading; (2) there's a viral benefit; and (3) there's a network benefit because the more people you have using the product the more added value.

First, the added time that you wouldn't otherwise get with the free trial business model can give users time to decide whether or not they want to upgrade. They may be perfectly satisfied with the free plan for several months, or years, until one day they find themselves needing the extra space or expanded features. Carbonmade has been around for nearly five years, and every so often we find users upgrading to a payment schedule after having spent more than 1,000 days on the free plan. That's an upgrade — not to mention those after shorter extended periods — that we'd never have had if we'd followed the free trial model. We would have scared off the user who wasn't ready to commit to $12/month.

Second, the viral benefit stemming from a person using your free service can be substantial. They may not be interested in upgrading, but the friends they tell about your service may be. We track referrals that our current users bring in, and that category amounts to a large portion of our new users. On the bottom of every portfolio there's a Carbonmade button that can be clicked on by viewers. These people in turn may sign up.

Third, whereas the benefit of giving users extra time to decide and viral benefits are the most directly visible perks of freemium, the added network benefits are less obvious. Many people fail to realize the other verticals you can bring into your product when you have a large network of users. I wrote about this in an article back in December, 2009 entitled Building Blocks. New verticals can open as you bring more people into your network.

Can you Build a Significant Business?

Critics of the freemium business model say that you cannot build a significantly large business (think IPO or billion dollar acquisition) by employing it. That's clearly not the case if you look at successful companies such as Skype, Pandora, Dropbox, LinkedIn, and Flickr. All of these businesses use the freemium model and have hundreds of millions of dollars in revenue, with Skype rumored to be going IPO shortly.

It's true that these are all consumer-based businesses, which is important to note, because only consumer-based businesses can attract the millions of users needed for a 2-5% conversion rate to pay off. There just aren't enough businesses out there to sell your product to if you use the freemium model with the expectation of converting only 2-5% of them to a payment schedule.

Segmenting Free from Paid

The most difficult issue when setting up a freemium business is in figuring out the product segmentation. First, if you give too much away, there won't be any reason for your users to upgrade. An example of this is Feedburner, who only had two thousand paying customers out of 500,000 when they were sold to Google – far lower than the average 2-5% most freemium companies see. The standalone free product was good enough for most users, because all they cared about was how many subscribers they had and were gaining over time. Feedburner gave away too much.

Second, if you don't create compelling features that are aligned with how free users are using the product, then nobody will care to upgrade. Offering better support and expanded analytics are not compelling enough features for upgrading. At Carbonmade we give away more space (very compelling), but also video and domain binding support (everyone wants their own URL) with more paid-only features in the works. Running out of space is the most compelling of our motives to pay, and the easiest to segment. Dropbox is also very successful employing this model (2 GB for free and $9.99 for 50 GB). It's natural that users are going to run out of space and find themselves needing to upgrade.

Third, and one of the most important features to keep on the free side, is anything viral that will spread growth. You do not want to confine sharing or promotion of your product by your users to the paid plan. An example of this from Carbonmade is that everyone who signs up – free or paid – is given their own URL to promote their portfolio. Our competitors charge for a clean portfolio display, but our facilitation of personal URLs encourages our users to share their portfolio links with their friends, who in turn see a beautifully displayed portfolio and sign up by clicking the Carbonmade button at the bottom of every free portfolio.

Startup Metrics

At the launch of your startup, you want to be measuring all of your users' activity insofar as it's possible. Dave McClure, in a widely discussed series of slides entitled Startup Metrics for Pirates, goes into some good details on what to measure. If you're not tracking what your users are doing, then you're basically building blindly. You won't know where to take the product and how to price things going forward.

The most important number for you is your conversion rate. The vast majority of freemium products have a 2-5% conversion rate. You'll want to tweak what you offer until you're comfortably over 2%. The only way to successfully reach that rate is to track what's being used in your app, how long customers are on the free plan before upgrading, how long they then stay on the paid plan, what the churn rate is, where users are coming from, and so forth.

One thing to keep in mind when figuring out your conversion rate is to compare your overall paid users to a cohort consisting only of your active users. Taking every user that's ever signed up for your product is not a good indicator. A user who hasn't used your product in two years shouldn't factor into the equation. I like to compute conversion rates within cohorts of 30 day active users, 60 day active users, 90 day active users, and 180 day active users.

Freemium Business Pricing

Figuring out pricing is one of the issues entrepreneurs worry about most when employing the freemium business model. It doesn't have to be so worrisome. First of all, I suggest launching with a premium plan from the beginning. This establishes the understanding of your users from the beginning that you're segmenting the product. It'd cause a revolt if a year down the line you strip features away from the free plan to implement a paid plan.

When thinking up your pricing point, you should think about what you would pay for your own service. Most products are built by entrepreneurs who looked for a comparable product and didn't find anything good on the Web, so they built it themselves. What would you be willing to pay if you had been able to find the product?

Once you've arrived at a number, make sure that it's on the low end of what you'd be willing to pay, as it's much easier to raise prices than lower prices. The reason for this is that when you raise the price and protect all of your current customers from the new price by grandfathering, they feel as if they got a deal for being early adopters and will be really happy. If you were to lower prices on them, they'd feel as if you somehow cheated them. This may go against common sense, but it is the prevailing thinking when it comes to lowering or raising prices.

So you should start low and see how many people you can convert. If you are seeing a good conversion rate then you can begin to inch up prices and test to see how these new prices fare against the old ones. You want to really push the envelope as high as you can. Keep in mind that you need to factor in your competitors' price points and whether or not your users know they exist, but with all that said, don't be afraid to raise prices according to what the market will bear.

Platforms are for Suckers

2010-06-02T22:35:10Z

Twitter last week announced they'd stop allowing 3rd party developers to embed advertisements in their streams. Bummer. First they released native mobile clients, now this. Facebook isn't any different. They're forcing developers to use their payment system and taking a larger slice of the pie. Then there's Apple's closed iPhone/iPad system. Who wants to deal with these headaches? No doubt it's easier to get off the ground, but I'd rather put my weight behind a standalone product and not rest the fate of my business on a platform.

Story: The Pains of Building on a Platform

I had my first taste of building on top of someone else's platform when I started TypeFrag back in December, 2003. TypeFrag was built on the back of Ventrilo, a piece of software that we licensed, resold, and built an entire web app around. It was a waking nightmare, as we had no control over the technology. Ventrilo was coded and run by a single individual who was as slow with his updates as he was in responding to the development community's requests. We were the largest Ventrilo host, but we didn't have any leverage.

About a year into TypeFrag, as Ventrilo began to become really popular, they raised rates on us and everyone else. That sucked. We had no control over its development and little to no influence on new features, and that left us with very few options. When a new version did come out, we were not given any advance notice and had to quickly re-write our control panel code and re-deploy the new server code to our dozens of remote servers around the world.

The constant awareness that you're relying on someone else is enough to drive you bonkers. We were left with no option but to build our own software as a fail safe. We hired full-time developers and began building GameComm — voice software we could fall back on if Ventrilo was to bite the dust.

Eventually, back in 2006 we failed at building that software, and shortly after that, in early 2007, I exited TypeFrag and GameComm. I just couldn't deal with the idea of not having control over our product. Until you have your employees and your own welfare riding on the whims of another company, you cannot know how terrible this feels.

The Why

The granddaddy of all reasons, and the only one strong enough in itself to refute any contrary opinion, is that at any time Twitter, Facebook, etc., can make any change to their Terms of Service that their heart desires, leaving you high and dry. It's worth repeating: At any time the API developer can change their Terms of Service, leaving you with no leg to stand on. None.

In any developer's agreement you ever sign on for, there's a little clause hidden in unreadable English saying that the company can change its Terms at any time for any reason whatsoever. If you don't like it, that's tough. Twitter laid that out clearly enough: "Twitter may update or modify the Twitter API, Rules, and other terms and conditions, including the Display Guidelines, from time to time at its sole discretion by posting the changes on this site or by otherwise notifying you (such notice may be via email)." Twitter is not alone. All API developers include a clause like that.

You cannot rest the fate of your business and your personal livelihood on top of another person's platform. Do not be in denial about this. Ad.ly's Business as Usual blog post is a perfect example of this. They got completely screwed by Twitter's change of Terms of Service, but are acting as if things are all fine and dandy. They're not. Simply walk away if your business is threatened by any signed agreement.

But a Web Browser is a Platform!

Every web application is built on top of a web browser. We're all at the whim of Firefox, Safari, Chrome on the browser side and Windows, Linux and Mac OS X on the operating side. That's a given. There's nothing we can do about that. But as platforms they're much more stable and continuous than API's like Twitter. As web entrepreneurs, we have to adapt to the new technologies, specifications, and so forth, but these are not going to changing overnight, and the market dictates what changes a lot more.

Let's table the discussion that it's as dangerous to build on a web browser than it is to build on the back of Twitter, Facebook, Foursquare, and others. That argument is irrelevant. I got chided on Hacker News for neglecting to say that our businesses are built on "ever-changing" web browsers and operating systems, but really that's simply diverting the issue away from the more worrisome platforms.

But VCs are Investing in Platforms

Plenty of VCs are putting money aside in their funds to invest in platforms like the iPhone, iPad, Facebook, Twitter, and others. fbFund, for example, is a $10 million fund set up by Facebook and Accel Platforms to invest in startups building on the Facebook Platform. This is a win-win for Facebook, because even if they don't make back any of their money, these startups directly add benefit to Facebook as a whole by producing quality apps. But who else wins if these apps can't trust Facebook not to change its Terms?

Another example of a fund gambling on platforms is Kleiner Perkins and their $100 million iFund for iPhone applications. Back in 2008, Kleiner Perkins bet that the iPhone would sell so many devices that there would be a lot of money to be made in the Apple marketplace. When this investment was announced in March, 2008, it struck me as odd. Venture capitalists are looking for exits: either acquisitions or IPOs. How the heck is an iPhone app going to realize either of these outcomes? Maybe as a talent grab acquisition (see Twitter's acquisition of Tweetie), but certainly not as an IPO.

Just because VCs are betting on there being money in building on top of platforms, that doesn't mean that it's a smart move for you. Some of these are hot technologies, and VCs are willing to take the risk with a small portion of their fund, but I wouldn't bet my shirt that this is a winning strategy in the long-run. Investment is going to start slowing down for platforms if it hasn't already. Chris Dixon's comment after Twitter's announcement really sums up my feelings: "Twitter is like a drunk guy with an Uzi killing partners left and right. Expect investment in ecosystem to drop significantly."

Get People To Build on You

While I hope I made it clear why you shouldn't build a company on top of another platform — no control, no assurances, no input, your fate is in their hands, it's limiting, and so on — you should make it possible for others to build on top of you. You should have an API. You should encourage developers to integrate pieces of your app inside theirs. This'll create new exposure to your product and increase your stickiness (the more services relying on you, the larger your reach). No qualms here on that score. Just don't be the sucker trying to build a profitable and sustainable business on a single platform.

As a Hobby

There's nothing wrong with building on top of another platform for a hobby project. You want to build something quickly, you want to take advantage of a large pool of users, and you want make something fun. If you're successful, you'll gain some reputation, make people happy, and have something neat to share. Just don't do it at a business.

Under the Radar

2010-05-19T22:35:10Z

My friend Anthony Volodkin of Hype Machine once said to me: "Tech coverage is nice for showing your mother." I couldn't agree more. Anthony's Hype Machine is a bootstrapped company, like Carbonmade, with little coverage from tech publications or mainstream press. We were having dinner and the topic of why we like it like that came up. Then last week it came up again with another set of entrepreneurs. I want to expand on those two conversations here.

Tech Coverage Can Help, Sometimes

Tech coverage is almost impossible to say no to. And why would you? Human beings are programmed to (1) want external feedback and (2) be talked about. If TechCrunch, GigaOM, etc., want to cover your startup, then you're going to be thrilled and sure as hell going to provide them with answers to any questions they may have — within reason.

Tech coverage alone, however, has little to do with your success — almost nothing in most cases. There is the occasional company that it can truly make a difference for. An obvious example today is Foursquare, which has been the media's darling the past year, appearing in every tech publication and most offline publications too — like the New York Times, Wall St. Journal, and others.

Arguably, Foursquare would probably have gotten to where they are today through the quality of their product and their team alone, but still, hundreds of thousands of their 1.2 million reported users must have come from these write-ups. For them, without a doubt, tech coverage has played a huge role in their growth. Foursquare's success relies on huge numbers of people — it's useless if none of your friends use it — so every one of those new eyeballs is a potential customer. That's just not the case for most startups.

Other companies like Carbonmade and Hype Machine rely very little on social networking. These products work as well with one user as they do with ten million. Not only do we not need a large network of users to be successful, it's also the case that the tech audience has little reason to use our products. Coverage may lead to a few hundred signups from interested entrepreneurs wanting to know how our product works, but they'll be in and out by the end of the day.

Carbonmade, Hype Machine, and ninety-nine out of a hundred startups out there should instead be going after press inside their market. For example, Carsonified — one of the leading design blogs — wrote about Carbonmade a few months ago and the signups from that article drove returning users. Publications in which the readership is made up of the same people who would use your startup is where you need to be focused. Don't go out of your way in search of anything else.

Overhype Can Be Deadly

It's like being the popular kid in high school. The spotlight is both good and bad. You'll get the pretty girls, invited to all the right parties, and looked up to as the cool guy. But with that special attention you end up spending more time maintaining your superfluous rep than studying and improving your future self.

When you're running a startup you can easily slip into caring more about the image of your company than its inner workings. An example of this is when a company announces a round of financing and everyone applauds their "success." What success?

Last week when this topic came up over dinner, we talked about one company in particular that raised money riding the hype of the hottest new thing: location based services (LBS). While their product wasn't even near ready yet, on all the tech blogs their name was being lumped together with the other companies in that sector. This was partly due to the sector they're in and partly because of the list of investors they'd attracted.

When their product was finally released, they had a flood of new users trying it out. Sadly, the product needed a lot more work, and all these excited new users were disappointed and turned off. It's just like going to see an overhyped movie and being disappointed that it didn't deliver. You're more upset now, because you'd played it up so much in your head. If you had simply gone and seen the movie with no expectations, then you'd be focusing on the good rather than the bad.

This company is now struggling to stay afloat under all the extra pressure of the hype. They have to constantly innovate to try and shake off the stigma of an under-whelming product, which puts a lot of stress on the team.

Staying "Stealth"

Besides the struggle to live up to overhype, there is the constant threat of copycats if you get too much tech press. Just look at what's happening to Groupon and Gilt. Their hype (well deserved) has led to hundreds of copycats in the United States and overseas. These copycats are little threat to Groupon and Gilt these days, but there are plenty of smaller startups that may not fare so well with added competitors.

It's now considered best by many startups not to disclose that they've received funding. They want to attract less attention. Given how quickly you can build a product and raise money these days, it's better to keep things low key for as long as possible.

People come up to me all the time thinking that Carbonmade is a little side project or just a part-time thing. "You make money on that?" they ask. "Just enough to get by." I respond. Why invite more people into your space? Check your ego at the door. You don't need to talk about the 1.5 million you raised, the 10 employees you have, or the swanky new downtown loft you're renting.

How to Bootstrap

2010-05-05T22:35:10Z

In my 10+ years of running Internet companies, I've never raised a single dime, yet I've still gone on to sell three profitable companies and am currently on my fourth, Carbonmade. Bootstrapping is something I'm very familiar with, so I've gathered together some thoughts that should provide you a step-by-step process of going from idea to product to profitability. I have nothing against raising money — angel or venture capital — it's just not the process I'm most familiar with. How to bootstrap goes hand-in-hand with how to run a lean startup, so expect some crossover below.

Idea Generating

Idea generating is only slightly different when you're bootstrapping than when you're looking to raise money. The only important difference is: if you're planning to bootstrap your idea must have built-in revenue generating functionality from the get go. Building Twitter is off the table. You can't wait to hit scale before turning on the revenue features. That's why ideas around Software as a Service (SaaS) are so effective for bootstrapped companies, because you only need one customer to reach revenue — and, with inexpensive hosting costs, probably only a dozen or two to reach profitability.

Bootstrapped companies can't afford to wait around to reach a network effect. You need to start generating dollars as early as possible so that you can quit your day job or put a stop to the draining of your bank account as soon as possible. Bootstrapping startups don't have the luxury to wait around. So when generating an idea for your startup, toss out everything that doesn't involve charging a fee for at least some of your clients. Leave the ad revenue and crazy business model revenue streams to the startups with venture funding. That's just not your game to play.

Team Building

You can either come up with the idea first or the team first. I think it's fine to do it in either order, but it's probably best to come up with the idea before the team. Then you can build a team around the idea. When bootstrapping, you need to find a team that's willing to work for nothing and spend their off hours with you, so finding these types of people can take some searching. You're far more limited in your choices.

The worst thing you can do is work with people who can't comprehend the idea of bootstrapping. You need to work with people who understand that their nights and weekends are going to be fully dedicated to building a product. They'll be working two jobs, not one. You need to explain to everyone you depend on how a bootstrapped company works: Revenue generation is slow at first, though steady, and it could take a year or more of hard work before they can quit their other job and work full-time on the company. But the advantage here is that after a few months off the ground you'll have a clear sense of how soon that day can come. Another advantage of a bootstrapped company on the SaaS model is that it's really easy to calculate your cash flow.

It goes without saying that the people you work with should have complementary skills to your own, but the bootstrapper's "slow but steady" mindset is just as important to the health of your company. You'll find a lot of people may not be comfortable with this approach. Weed those people out as co-founders when you're bootstrapping a company. A one and done approach won't work here.

Off Hours

Almost every bootstrapped company begins as an off-hours tinkering project. That's true of Carbonmade, which Dave built for himself first; that's true of TypeFrag, which I built over the course of a week during my sophomore year in college; that's true of 37signals' Basecamp, true of Anthony's Hype Machine and lots of other companies.

The good thing about bootstrapping is that you don't need to spend a single penny outside of server costs and you can even do most things locally before having to pay any money on a server. Your biggest expense is time, and that's why off hours are so important.

Consult on the Side

The way we started Carbonmade, the way 37signals started, the way Harvest started, and many other startups too, was by first running a consulting shop. We ran a design consulting company called nterface that Carbonmade grew out of. It's great, because the money you're bringing in through client work tides you over while you're waiting for your startup to grow.

Carbonmade was live for nearly 18 months before we started working on it full-time. During those first 18 months, we were taking on lots of client work to pay our bills. The great thing about consulting through the early months is that you can take on fewer and fewer jobs as your revenue builds up. For example, you may need a dozen large projects during the first year and only two or three during the second year. That was the case for us.

I know of other successful bootstrapped companies that during the first year would take on a single client project for a month or two, charging an appropriate amount, and that would give them just enough leeway to work on their startup for two or three months. Then they'd rinse and repeat. They did this for the first year and a half before making enough money to work on their startup full-time.

There's No Need to Rush

When you're bootstrapping there's no rush to get things out the door, even though that's all you hear these days. I know people talk about iterating quickly, and that's all well and good, but when you're bootstrapping and not meeting anyone's deadlines but your own you can take your time to better perfect your product before every release. In my opinion, you should strive to be more Apple-like and really think things through. If you don't take money from an investor who will demand quick new product releases, you can take the time it needs to perfect things.

The first few iterations of your product are everything, and bootstrapping through this beginning phase can allow you to take your time and think through everything. If you're too worried about getting off the ground quickly, then you're bound to make a mistake.

Building Organically

Bootstrapping a company allows you to grow it organically. We at Carbonmade always refer to this as incubating your project. We like to release something, let it sit, feel and gauge the reaction, and then move on from there. You don't have this kind of freedom when you're not bootstrapping, because you're desperately trying to ramp up as quickly as possible.

I've heard stories of companies acting too quickly on initial feedback only to undermine themselves going forward because the feedback was from the wrong user group. For example, if only web designers had given us feedback in the early days of Carbonmade, demanding more precise tools for editing the look and feel for their site, we would have never realized that our market is far more broad: the masses of creative people who don't have a build-it-yourself skill set. We would have limited Carbonmade to a smaller group of people and never have gotten as big as we are today.

Making That First Dollar

Bootstrapping is all about making that first dollar. When I launched TypeFrag we didn't get any sign-ups for the first week and this got us very worried — my partner and I almost threw in the towel — but about five days into it we got our first bite. Then another. Then three the next day. And more and more. Sign-ups began to pile up well beyond what we had anticipated.

All this money coming in meant we could begin to lay out our plans. If no money had come in, we would have had to drastically change directions. Revenue validated our idea, and as every dollar came in we got a better sense of our cash flow and could plan the future development of TypeFrag more accurately. We were able to quickly figure out that people wanted PayPal, so we add that and saw even more money come in. Your first dollar validates your product, your business model, and everything else.

When Investors Come A Calling

As soon as you make that first dollar, investors are going to start making inquiries. That's a good sign! It means you're doing something right. They're not scary guys and most of them are really nice and great people to meet with! Even Jason Fried, the man who is well known for scorning investors, says in 37signals' 13th podcast that it may even make sense for your bootstrapped company to take investment after you've gotten off the ground. I completely agree, as long as you know exactly how you're going to put that money to use. Furthermore, the outcome you anticipate you'll get from taking money needs to be well beyond what you anticipate doing without it.

My advice: Consult with a select few people you really trust who aren't tied too closely to your company and see what they have to say. Try and find someone who has raised money before and had a successful outcome or two. Share everything with them and see if taking that $2.5 at a $10m valuation makes sense. Can you put that $2.5m to use to make your company worth at least 10x more than it's worth today in three to five years?

How to Network

2010-04-21T22:35:10Z

A substantial part of my job — and the job of any CEO and face of the company — is to be out there and get to know as many of the right people as possible. You do have to worry about the fine line between attending to networking and spending too much time away from production, but if you're in it for the long haul the networking you put in will help you immeasurably in the later years of your company. Here are some basic tips about how I've successfully gone about networking in New York.

How to Introduce Yourself

When I first arrived in New York in Fall, 2006, I spent a lot of my time going to as many "meetups" as I could — like the New York Tech Meetup. After working up the courage to approach people who were mostly a lot older than me — I was 22 — I'd open with the terrible line of "Hello, I'm Spencer. What do you do?"

I actually thought that this was a perfectly acceptable opener until one time I asked two women slightly older than myself, and got scoffed at for asking that question. I was taken aback. "What? That's not an acceptable question at a networking event?" Of course I knew it wouldn't be a good opener in a bar, but here? Their point was that I should get to know them first and what they do would come out in good time. And really what people do isn't the most interesting thing about them — only a part. I thought it would be different from a social event, but it really wasn't. Point taken.

Since then I've always approached anyone I've ever met at a networking event or just in life by trying to get to know the person first. If the two of us get along and the conversation is good, what they and I do will naturally come out. It's the single best piece of networking advice I can give you: Get to know the person.

Find Shared Interests

After you've gotten to know the person and you've fallen into an easy rapport and take an interest in each other, the conversation will naturally lead to what you're both working on. (You are at a networking event.) After the small talk, you'll want to find shared interests.

Any kind of overlap between your company and the other person's always makes for better conversation. It's hard for me to fake interest in a biomedical company — and you shouldn't ever fake interest. However, I have to overcome my lack of knowledge in the field and recognize that a small biomedical company could and probably does share interests with Carbonmade. Find those common threads and chat about them.

Ask Questions and Listen

You should lead with questions. However, being the person leading with questions can sometimes backfire because the person you're asking may not understand conversation etiquette enough to realize that at a certain point they should return those questions back to you. I've been caught numerous times nodding and saying "uh huh" to someone who wouldn't shut up. That's the drawback of this approach, but you'll learn something along the way and figure out soon enough if this is someone that you want to spend time getting to know. Sounds harsh, but someone rambling on about what they do and not caring about you is a strong indicator of a failed potential friendship.

Be Well Read and Add to the Conversation

If the person or group gives you time to talk, make sure you're up to speed on current tech happenings. You can be up on everything you need to know by reading Hacker News, Daring Fireball, ReadWriteWeb, GigaOM, and TechCrunch. The day's or week's news always gets into the conversation, and not knowing what's happening will give the impression — not undeserved — that you're not involved in the everyday life of the culture you're hoping to become a player in.

It only takes a half hour to an hour a day to skim the headlines and pick out the important stories, and over time you'll get even faster. You work in technology, so you should be interested in this material anyway. Not knowing during the course of last week, for instance, that Apple banned the Flash-to-iPhone compiler is evidence that you've been on another planet.

It Matters What You Do

I'll be blunt: If you're working on a successful company, people will want to hear more, but if you're working on a silly idea that nobody cares about then you're going to have a much harder time networking with people. Most people will be turned off if your company is "currently in stealth" and you can't talk about it or if you're not doing anything and just here to meet people. At least work up an idea that you can share with people.

There's an interface between the success of your company and your personal success as a networker hoping among other things to promote your company: they grow each other. The more interesting your idea and story, the more people will be interested in hearing about it. That's how we got the Carsonified story. This should go without saying, but I've met too many people who failed to understand this basic concept because it seems too circular to be meaningful.

Get to Know the Right People

I'll be blunt, again: There are lots of people who attend networking events all over the city and you can't meet them all, so you'll need to spend your time getting to know the right people and not just anyone. If you don't make some sort of selection and target the people you find most interesting, or the ones who could help you out the most, then you could keep going to events with the constant feeling that you'd been in the wrong place at the wrong time.

Be proactive and go up to the people you want to meet. It may be nerve-wracking at first, but the more you do it the easier it gets. More often than not you'll find that these people are happy to meet you and chat. After all, no matter how successful they are already, they'd just stay home if they weren't interested in meeting people like you. When people approach me, I'm always excited to meet them — it always feels great that someone wants to talk with you, and I'm sure it will be in my case for a long time to come. You shouldn't be shy about it. Just make sure you're not spending all your time talking to people who can't help you along — unless of course you're talking for reasons unrelated to business!

You've Got Your Base!

Here's the best part about putting in your time networking during the first few years: Once you've established a solid base, you no longer have to spend a lot of time going to networking events! (Though for reasons I've explained it's sociable to keep involved to a certain extent.) Why? Because your network of friends will introduce you to people over beers, coffee and dinner. These meetings will be a lot more intimate and they'll involve people you know you'll want to spend time getting to know.

These days almost everyone I meet is a friend of a friend, which makes it a lot easier and means I have to spend a lot less time going to networking events. It's a lot more self-selecting and the hit rate of making new friends and a good networking contact is a lot higher. But, as with anything else, you need to spend your time establishing your base!

Ready, FIRE! Aim Guest Lecture

2010-03-31T22:35:10Z

Professor and CEO/Managing Director of FirstMark Capital, Lawrence D. Lenihan, invited Danny Wen and me to guest lecture this past Wednesday at his NYU class "Entrepreneurship For The New Economy" aka Ready, FIRE! Aim. Other guest lecturers include Seth Besmertnik (Conductor), Alexis Maybank (Gilt Groupe), David S. Kidder (Clickable), Marc Cenedella (TheLadders), and others. We were in esteemed company to say the least. Embedded below are the slides I prepared, graciously designed my business partner Dave, with explanations following.

Hi, I'm...

The least interesting of all presentations — the opening "Who am I?" slide — but also necessary when talking to any group that doesn't already know the answer to the question. Here I briefly touched on having recently graduated from college, how I was always interested in entrepreneurship and started my first major company when I was a sophomore, called TypeFrag, and won first place and $75,000 in a business plan competition during my senior year. Basically, that's everything you can find on my CrunchBase profile.

TypeFrag, Uncover, Carbonmade

Leading into this slide I give a bit more background on the three larger companies I started. Beginning with TypeFrag, I mentioned how during 2001 I noticed a need in online video gaming when people were beginning to shift from typing to their teammates to using voice communication. To address that need, TypeFrag was built and marketed.

It's all about finding needs and building out products around that need. Having sold TypeFrag in 2007 and having just moved to New York City, I found it difficult to find and share good restaurants, bars, and clubs with your friends, so I built Uncover. This was before Yelp really made it big. But in the process of building Uncover, I met Dave and Jason — who were also designing and developing Uncover for me — we clicked, and I joined them to take Carbonmade from a side project to our sole focus.

Carbonmade

I talked about the story of Carbonmade here. Most of that can be found in my 100,000 Users and So Can You article, our About page, and the recent coverage we received from Carsonified. The story in a nutshell: Dave built a basic custom CMS for himself, his friends bugged him to let them use it, we added user registration, and then started building up the product slowly and thoughtfully. We then started making enough money through Carbonmade to stop taking on new consulting gigs.

The Numbers

This was a simple run-through of Carbonmade's numbers.

The Trifecta

This slide is an abstraction of an earlier article I wrote entitled Three's Company, where I talk about why I think three co-founders is the best group. The simple reasons are: (1) with three people it's easier to mediate situations, (2) you have three people who are masters of their own domain (design, code, and business) and take leadership in it, (3) and you delay hiring, which is the hardest thing any successful company can do, but obviously a good thing as long as it's possible.

DHH's Quote

I pulled the quote: "If you're not working on your best idea right now, you're doing it wrong" from a recent debate between DHH and Jason Calacanis on This Week in Startups. DHH argued that 37signals is the best idea he has, and he'd only sell and move on to something else if he came up with a better idea. I think it's less about the idea and more about how you execute on the idea, so I go to discuss:

EXECUTION

You can have a great idea, but if you execute poorly on it then you won't get anywhere. There are plenty of people that come up with great ideas, but can't get past that. It's far better to have a decent idea and execute really well on it. You can then branch out from there and turn a decent idea into a great one.

Be Human!

Being human, friendly, and genuine are all easy things to do and often overlooked. Somehow people have it in their heads that they need to be "professional" and speak to their users like a robot to launch a real business. Customers these days want to feel as if you could be their friend. Simply look at Zappos' success in branding and marketing if you need an example of why this is true.

KABOOM!

If you do make a mistake, you need to own up to it. We made a mistake in January, 2008, when we lost 5,000 user accounts because of a faulty database writing to a corrupt backup. Egads! We created a specific page documenting exactly what had happened, apologized profusely, and gave the affected users extra space to compensate for their loss. We didn't try to sugar coat anything. We fucked up and we admitted it.

Cash Flow

I love Alan Shugart's quote "Cash flow is more important than your mother." It's beyond true. Cash is the lifeblood of any company and if you run out of cash then you're simply forced to shut down your company and move on. Running out of cash is the last thing you want to do. But revenue is not the only thing, you need to turn your revenue into profits, and have reserves in the bank for rainy days.

OOPS

Like any other startup out there, we've made mistakes that weren't just the kind of customer turn-off I mentioned before. Our biggest mistake was that we lost an entire year on Carbonmade because we spent it working on a second product in 2008. It was only at the end of 2008 that we realized we should be focusing on Carbonmade full-time. Also, we were too overreaching in our goals for the new version of our app and since have had to drastically reduce its scope. Both of those factors together have led us to being too slow to get new things out.

Simplify.

Always distill your product, copy, and marketing down to the barebones. Your product should never be muddled with features, your marketing message should be clear, and less is always more. We've severely limited our users' features, because although we may lose a few people who want more customization, we've gained far more who just want something that gets their work online quickly, with no quirks and complications.

Uncover's Silver Lining

You should never be afraid of failing, because out of most failures there's a silver lining. Be it lessons learned, mistakes you won't repeat, or, in my case, people you meet along the way. I met Dave and Jason through working on Uncover, and although I lost nearly $100,000 in its development, Carbonmade would not be around today if I hadn't started Uncover.

Attracting Normals

2010-03-24T22:35:10Z

To the best of my knowledge, it was investor and entrepreneur Chris Dixon who popularized the term Normals (Caterina Fake suggested “muggles”) to signify your everyday person. His theory (paraphrased) is that your business will never be a huge success unless your userbase includes a vast majority of Normals. Early adopters are good for initial traction and launch buzz, but until you attract Normals, you'll never get past that first reaction. Early adopters are also fickle and will quickly jump ship when something "hotter" comes along.

What exactly is a Normal?

A Normal is maybe not an everyday person in every way, but has limited Internet knowledge. They certainly don't read TechCrunch, they haven't heard of RSS feeds, they probably don't have a smart phone or at least don't have many apps installed, and although they surf the Web a lot, they have little clue what a web browser really is. Another telltale sign is that instead of going directly to web pages, they use the search bar. You know these people if you're reading this blog.

What is an early adopter or techie?

If you read this blog, you're probably a techie, with the exception of my mom and dad (they're Normals). I'd define techies and early adopters as people with smartphones, readers of tech blogs, anyone on Hacker News, people in the startup scene, users of Foursquare, Gowalla, HotPotato, Plancast, and many other "hot" startups that haven't yet reached the Normals.

Why is it more important to reach Normals?

The simplest reason is that Normals make up far more than 99% of Internet users. If you fail to reach the masses then you'll simply fail. You can be the hottest startup on the block with 100,000 active early adopters, but I'd trade every one of those users for Normals in all cases.

Another reason, often overlooked, is that Normals stick around a lot longer and are far more loyal than early adopters. When they've settled on a service choice — and it's usually one of the first they come upon — they're less likely to shop around as long as everything is going okay. This isn't the case for early adopters, who by definition are always looking for the best big thing.

Besides positioning yourself to attract a larger part of the market by going after Normals, who are loyal in themselves, their friends are Normals too, and that propagates the cycle of adoption. While early adopters are great at getting the word out to their friends, those friends are other early adopters in most cases, so the circle remains closed.

Focus on Normals!

At Carbonmade, we've focused all of our efforts on attracting everyday people who may not be the most adept Internet users. That's why we don't support HTML editing or too many advanced features — our product is designed for easy on-boarding — easy in that we boil all of our features down to simple-to-use components.

But beyond keeping your product easy to use, your startup won't be capable of attracting Normals if it's not in a space that you can imagine they or their circle would be interested in. A great litmus test for this is asking a Normal if they'd use your product and getting a "no" answer followed by "but my niece, nephew, friend, etc." would. You don't have to be able to attract every soul on earth, but if everyone you talk to knows at least one person who would use your service, then you're on your way to reaching Normals.

This has proven true with Carbonmade. Everyone I've talked to about Carbonmade knows at least one person who would use it themselves: everyone has creative friends or family members eager to use an online portfolio. A good exercise is to put your startup to this test and see how you fare.

Now there are certainly plenty of cases of reaching early adopters first before the Normals follow in their path, e.g., Twitter, but I'd argue that this is a more difficult and time-consuming approach. It's also more likely to require outside capital. When you have to force your way into the Normal scene, this often requires marketing dollars that lean startups can't afford to spend.

Carbonmade's Progress Page

2010-03-10T22:35:10Z

Dave, Jason and I have released our new Carbonmade marketing site. You can take a look at it here. On it you'll see a Progress page that we've created for people to follow our journey creating the new version of Carbonmade. Here's how we came up with the original idea and some thoughts on it.

What is it?

Before I get into how we came up with it. Here's little brief bit about what exactly it is. The idea is that we're a team of brave explorers traveling up a mountain face (i.e. the new version of our app). During our journey to the top, we'll be documenting our trip by providing everyone following along with journal entries on the new features of Carbonmade. You can subscribe to our journey by four different means: Twitter, Facebook, RSS, and through a Progress specific newsletter. It'll be light-hearted and fun to follow along to.

How'd you come up with it?

While Jason has been working on the new version of our app with Grant during the past few months, Dave and I have been spending time working on planning and redesigning our marketing site. For those of you not familiar with that term, we use "marketing site" to refer to everything outside of our portfolio app. Meaning, the Homepage, Examples page, Progress page, Sign Up page, etc.

The main reason we wanted to spend some time redesigning our marketing site is that it's been a while since we refreshed our brand — over fifty months to be exact — and we thought a little spring-cleaning was in order. Dave and I brainstormed a bunch on what we wanted to do and Dave began designing some beautiful mockups beginning in December.

However, January went by and while a lot of progress had been made, we came to an agreement that we weren't thrilled with the idea of just refreshing our brand. It's necessary, but it's not something we felt would really excite our current Carbonmade members and we wanted to do something for them too. Yes, we now accept yearly billing — an often-requested feature — but we wanted to give them a little taste of what's to come.

About three Wednesdays ago at around 2 AM, Dave and I were on the phone talking about how to market this thing. What exactly was our new marketing site? Just a brand refresh? Ugh. Let's try and come up with something a bit better we thought. I was even struggling to write the newsletter that we were going to send out, because there just weren't any guts to it. We also concluded that if we were to get an email from a company to check out their new marketing website and all it did was look different then we'd shrug our shoulders and say "cool, but who really cares?" We didn't want this to happen with Carbonmade.

It was at this point at around 2 AM that in the midst of things I came up with the idea of creating an Advent calendar like system for Carbonmade to show off what's coming in our new version. I described something to Dave that was a cross between these holiday calendars I use to receive as a child and the popular MacHeist system. Although we'd later scrap the MacHeist elements of the Progress page, we ran with the Advent calendar idea and a twist on that is what you see today.

To my knowledge, no other web app has ever used a Progress page to trickle out upcoming features to their members as a way to promote their new app. Will it be successful and generate buzz around our new app by continually attracting people every new update? I hope so, but only time will tell. I'll certainly write a follow up post when the Progress page is complete and your explorers have reached the top of the mountain.

Do you think this'll work? Can it backfire?

It's too early to tell if our Progress page will be successful in drumming up buzz around our new version, but I have to believe that it'll do more help than harm. From the moment the idea was hatched, the one thing that we've been wary of is to not confuse new users to Carbonmade who hit the Progress page before the Sign Up page.

Dave spent a lot of time designing our new marketing site to funnel new visitors to the Sign Up page rather than the Progress page. We don't want these new people to see the Progress page and think "I'll just wait to sign up when the new Carbonmade app is out." That'd be bad. Really bad.

We're currently running Crazy Egg on our marketing site, so this should give us a sense of things as we collect more data. As long as our new marketing site brings in the same amount of new sign ups as the old site (hopefully more) then I'll deem it a success. Again, as we just released it, it's still too early to tell.

The other worry is that our competitors will now be fully aware that we're working on something new and will have a heads up on all of the new features. While this may be a small cause for concern, I've always felt that it's in the execution and not the ideas themselves.

Passive Income

2010-02-24T22:35:10Z

I had lunch last week with Dave, Danny, Shawn, and Andrew (who was graciously visiting us from Canada) and the topic of passive income came up. All of our startups grew out of running consulting companies — Andrew is still in the midst of one — and all agreed that passive income beats the ad sales and consulting world a hundred times over. Below are a few of the topics we talked about.

What are the advantages?

Although running a subscription based startup has its own share of stress — and it doesn't necessarily get any easier as the business reaches profitability — it's a different kind of stress from the worry about where the next dollar is coming from and whether or not you can make payroll. Ad firms and consulting companies are constantly fighting for rich contracts to keep them in operation. It's a real stomach churner.

The financial crisis of 2008 and 2009 led to a lot of consulting and ad revenue based companies having to cut their employees, because they wouldn't be able to make payroll otherwise. I have personal ties to a few consulting firms that dropped nearly 75% of their staff. They're all in the midst of re-hiring now, but 2009 was a real scare to their business model. When the financial times are good, they're great, but when they're not, they're a little sketchy for anybody depending on them.

The advantage of passive income from a subscription model is clear: Once you've been in operation for a while, you can accurately predict where you're going to be over the next six months, year, two years, etc. You don't want to rest on your laurels, but it's likely that you're never going to take in less revenue next month than you did the previous one. There's typically an upward trend, no matter how slight, as long as you calculated correctly in the first place and your market is out there.

The knowledge that, say, you made $50,000 in subscription revenue last month lets you sleep at night. As long as you keep your server infrastructure up and your product alive and kicking, you'll hit new revenue highs every subsequent month. That's totally unlike the consulting business or ad sales business where every month is a gamble. Talk about being Stressed Out.

What are the disadvantages?

The only disadvantage I can really see in creating a subscription-based model that brings in passive income is when you want to scale to something huge like Google. Recently Aviary, for example, did away with their paid subscription plan in order to reach more people.

It's true that putting in a pay wall means that fewer people will use your product, because there are a lot of cheapskates out there who won't pay for Internet goods. I'll refer you to David McClure's article The Internet does NOT want to be FREE... It wants to GET PAID on Fucking Friday. A brilliant piece by the former Director of Marketing at PayPal.

But there are other ways to reach scale. You can have a free version that brings in the masses and just upsell the unique features to paying customers. You can explore other verticals, as I suggested in Building Blocks. Whatever you do, as long as you have passive income you can buy time to build out the scalable pieces of your business and live with fewer stress related "where's the revenue going to come from?" nightmares.

How can you start getting passive income?

To get passive income, you need to build a subscription-based business or sell some type of Internet good — maybe it would be themes, like WooThemes, or virtual goods, like Zynga. Something that's tangible, something you can create once and then perpetually sell. You need to create a product that doesn't require you to feed it resources (e.g., written articles) or increase your pageviews to make more money. It's as simple as that.

Updating Carbonmade's Finances

2010-02-10T22:35:10Z

On the first of every month I spend much of the day updating Carbonmade's finances with last month's data. I've got what I think is a good process down after years of doing it, so I thought I'd share it with you.

Get the Data / Back up the Data

The first task — and by far the least fun — is logging into all of our payment services to download last month's data. All either come in a PDF or Excel format and all are difficult to locate. Why do payment services make it so difficult to download statements?

These are the five services we use:

American Express — Credit Card
American Express — Merchant Account
Paymentech
PayPal Merchant Services
Bank of America Small Business

All of them allow you to more or less easily download a copy of your statement except for PayPal. PayPal makes you log in to their website, browse to the history tab, select the dates, select the format, and then wait for them to generate and e-mail you a statement. It never takes more than ten minutes, but it's a pain. Why not simply generate the monthly statement automatically?

I then rename all five documents — because they download with weird names like "MSAF_1.pdf" — to easier-to-read names like "AmEx-CC-2010-01.pdf" for January 2010's American Express Credit Card statement. I then back up everything offline and with Dropbox.

Update The Books

The geeky accounting do-everything-myself side of me has always loved Excel. And while a company of our size should probably — although that's up for debate — use something like QuickBooks, I stick to what I know and love.

A friend of mine who is a bit older and runs a rather large group at Ernst & Young spent a very long weekend with me a little over a year ago to help get Carbonmade's finances in order. We went back to almost the first day we began accepting payments — nearly four years ago — and got everything in order.

Together we built an Excel file to handle Carbonmade's finances. It now automatically calculates an Income Statement, a Balance Sheet, and a Trial Balance all based on the monthly data I input. We separated all the different expenses into their own sheets (e.g. Software, Web Hosting, Revenue, Merchant Fees, etc.) and created a Cash sheet to project our cash flow.

I now simply have to take the charges from our American Express Credit Card statement and fill them in on the corresponding sheets. I then take those and copy them over to the Cash sheet to get an idea of our cash flow for the month, which also takes into account the concluding cash balances from the previous month.

Update the Total Signups Projections

My friend Vadim Tsipenyuk — formerly of Goldman Sachs — and I crafted a fairly simple spreadsheet to calculate our Last Twelve Months (LTM) growth. You input the new signups for the month and it projects out your LTM Growth (Compiled), Monthly Growth (Compiled), LTM Growth (Signups), and Monthly Growth (Signups).

It's not all that sophisticated, so it doesn't take into account future marketing launches or new releases to your website, but it does handle the basics fairly well. You can also adjust the percentages if you know in advance that you're going to be releasing a new version of your product in two months and you anticipate gaining an additional 10% in customer volume that month.

Update the Paid Signups Projections

Our paid signups projections spreadsheet is a bit more sophisticated than its total signsups projections counter-part. Vadim also helped me set up this additional spreadsheet, on which I input our Subscriptions (New), Subscriptions (Cancelled), Invoices (Billed), and Invoices (Paid) at the end of every month.

With those four pieces of data, it projects:

Net Subs
Total Subscribers (Cumulative Net Subs)
Implied Growth in Total Subs
New Subs / Last Month's Total Subs
Churn Rate (Sub Loss / Last Month's Total Subs)
Total Invoices / Cumulative Subs
Paid Invoices / Total Invoices

Update the 6 Month Budget

The kingpin of them all, the 6 Month Budget, helps us plan our hiring and marketing. As I've always said, "cash flow is king" and once we've got an idea of our revenue from our Paid Signups Projections, I input that and our various expenses to get a sense of our cash flow.

Revenue I project out:

Service Fees
Consulting (we still have a number of web hosting clients from our consulting days)

These are the expenses I detail out:

Merchant Fees
Web Hosting
Office Supplies
Software
Telephone
Fax
Internet
Marketing
Mailing
Lawyer
Accountant
Healthcare
Office Rent
Apartment Rent
Food & Drink
Other Expenses
Payroll

Taking all this together, I can project our cash flow over the next six months and see when and where we might hire new people or spend extra money on marketing. I'll also go in and add certain expenses at future dates. For example, I know I'll spend $1,500 for SXSW in March, and then our bill with our accountant will come due in May.

Off to the Accountant

I'm not a certified CPA, so at the end of the day I send everything off to our accountant to do things right. I mainly do the stuff I've discussed above to get a better sense of what we're spending our money on and how much we're making. Consulting that information and doing simple projections with it gives me a much better ability to make day-to-day decisions and long-term decisions.

Good Sportsmanship

2010-02-03T22:35:10Z

On Saturday, January 30th, Wired ran an article entitled "Google's ‘Don't Be Evil' Mantra is ‘Bullshit,' Adobe Is Lazy" — reportedly words from Steve Jobs' mouth at an Apple Town Hall meeting that same day. Meant for Apple employees' ears only, his words leaked to the press rather quickly.* This got me thinking about talking smack in business.

Pros

Everyone loves controversy. People will listen to your every word as long as you're berating someone or something. This nonsense doesn't end in high school or college. Our society's obsession for bad mouthing other people is sickening, but is nevertheless part of human nature. Right or wrong.

This behavior leads to a polarization around a topic and a deep-seated love of your side and hate for the other (Democrat vs. Republican, Microsoft vs. Apple, etc.). People become emotionally invested. And if management is leading the charge then this often leads to your employees' having a deeper commitment to crushing your competition. Steve Jobs obviously said what he said in an effort to motivate his troops for battle.

Motivation is one thing that can come out of smack talk; another one is transference onto your customers. Your customers are your front lines — they're the people in the trenches supporting you and the more loyal the customer the harder they'll fight for you. In Apple's case, these are termed "Apple Fanboys". Being an Apple Fanboy myself, I certainly sided with Jobs and began defending him as soon as I heard him call Google's mantra "bullshit" and Adobe "lazy". "Go Steve!" I shouted.

The most obvious part of any controversy is all the press you'll receive. All press — good or bad — is still press and the press is having a field day with Steve Jobs' comments. Now you've got Adobe defending themselves publicly on their blog and articles flying this way and that. Well done, Apple. The iPad will sell more units now.

Cons

The obvious con is that nobody wants to come out looking like an asshole. That's why most smack talk is behind closed doors. You don't want to be that guy or that company that takes the low road. Unless you're as established as Apple, Google or Microsoft, those kinds of words can bite you in the ass down the road.

Whenever I'm asked about Carbonmade's competition I simply point out our differences — some in their favor, some in ours — and let you decide. I've been explicitly asked in interviews "But how do you really feel?" but I've never sunk that low. I'll let our product and our 200,000 customers do the talking.

Other than coming off as an asshole, I don't think there are any other clear disadvantages. Well, maybe if you end up wrong. Then you look like even more of an asshole. But with three advantages and only one disadvantage, why not start slinging mud? I'm going to continue to be the bigger man, but I can see why Apple, Microsoft, Adobe, Google, AT&T, Verizon and others are quick to point out their competitors' faults — there seems to be something there.

*Reading Material

This is what Steve Jobs reportedly said about Adobe:

About Adobe: They are lazy, Jobs says. They have all this potential to do interesting things but they just refuse to do it. They don't do anything with the approaches that Apple is taking, like Carbon. Apple does not support Flash because it is so buggy, he says. Whenever a Mac crashes more often than not it's because of Flash. No one will be using Flash, he says. The world is moving to HTML5.

On Google:

On Google: We did not enter the search business, Jobs said. They entered the phone business. Make no mistake they want to kill the iPhone. We won't let them, he says. Someone else asks something on a different topic, but there's no getting Jobs off this rant. I want to go back to that other question first and say one more thing, he says. This don't be evil mantra: "It's bullshit." Audience roars.

Adobe's CTO Kevin Lynch responded:

Adobe supports HTML and its evolution and we look forward to adding more capabilities to our software around HTML as it evolves. If HTML could reliably do everything Flash does that would certainly save us a lot of effort, but that does not appear to be coming to pass. Even in the case of video, where Flash is enabling over 75% of video on the Web today, the coming HTML video implementations cannot agree on a common format across browsers, so users and content creators would be thrown back to the dark ages of video on the Web with incompatibility issues.

Carbonmade: A Year In Review

2010-01-27T22:35:10Z

I initially thought about writing this piece for our company blog, but as that's mainly for product news, announcements, and marketing, I've decided to write it for the more entrepreneur-oriented audience that reads this blog. A lot happened behind the scenes for us in 2009, and I want to share it with you.

First Quarter

At the start of 2009 we had just around 85,000 members and were turning to Carbonmade full-time. As outlined in 100,000 Users And So Can You, while we were working on our company full-time by the beginning of 2008, we were also working on a separate product that we later abandoned in order to work on Carbonmade full-time.

We mainly spent that first quarter brain-storming and prototyping what we planned to do for the next iteration of Carbonmade. A lot of time was spent brainstorming and less time was spent actually building. But things would change drastically on the product front by the end of the first quarter. Dave began working on design comps and Jason began building out the code to support Dave's creations.

It was also around this time when we started to get involved in social media. We built out our Twitter and Facebook accounts. We started getting in touch with bloggers, holding contests for free upgrades, and generally getting more involved with our community.

Second Quarter

The biggest thing we did product-wise, which really only took a day, was introducing domain binding. That meant that customers could use their own domain to display their portfolio rather than username.carbonmade.com. The simplest of features, but fantastic for growth. We had an amazing quarter financially and continued to grow.

In May, Dave came to New York City to visit me and brainstorm. We went through a lot of the decisions we had made in the previous months and set aside a lot of them. We were over-complicating the entire process and coming up with too big of a vision for our next iterative release. We needed to bring something phenomenal, but a few features would be better set for the follow-up release.

Dave and I also did our first public demo by participating in the New York Tech Meetup Demo Pit. It was a fabulous experience. I think we talked to a couple hundred people, handed out an equal number of business cards, and got a few dozen e-mail follow ups. People were unbelievably impressed with Carbonmade, and it seemed like everyone in the room wanted to use the product or had a friend or family member could use it.

We were stoked.

Third Quarter

The third quarter involved a lot more development and design. There was constant brainstorming and back-and-forth about what to do, how to approach things, and where to take the company next. We were starting to see some massive growth both on the free and paid accounts, and things were really starting to come together. We had to make some serious company decisions.

I floated the idea of having our office in New York City and having Dave and Jason move out here. As I had spent the past three years building a substantial network in the New York City entrepreneur and investor circles, it made sense. They seemed open to the idea, so I asked Danny and Shawn if we could sub-lease under their office space opening up in September. They loved the idea.

In late September we moved in.

Fourth Quarter

Moving to a new office meant that Dave and Jason would have to move to New York City. Dave began coming here two weeks out of every month, beginning in early October. It was an interesting transition. Dave had been without a real office for many months at that point, and found working in one a big improvement. But there was getting used to the busy-ness of NYC and the shock of transition that we hadn't completely taken into account.

The first visit was mainly a wash work-wise, but during the next one we were working harder and better than ever before. Dave and I were able to go over everything in person, and it was an amazingly time-saving experience. Our conversations lasted half an hour, and we got more accomplished than we used to manage in our regular four-hour phone conversations.

We stripped back a lot of the features that were holding us back and generally got everything down to a more manageable amount of work and complexity. But it was still more than we could handle. Then one day in November, Dave and I talked about hiring someone to help us take on that task. Within 48 hours we had everything wrapped up and agreed that our new employee, Grant, would start on January 1, 2010.

Our next big decision came when we decided to put our new version on hold to re-design our marketing site. We started the re-design in the beginning of December and plan to release it any day now. The reason that we decided to put the app design on hold and work on the marketing site was that Dave was getting burned out on that, we wouldn't have Grant until January, and Grant's job is to work on completing our app with Dave. So everything just made sense. So now we'll soon have a fresh new marketing site and be able to devote the rest of the first quarter of 2010 to wrapping up our new app.

P.S. We also turned four years old in December!

Stressed Out

2010-01-20T22:35:10Z

Lately I've been really stressed out with work. The last two weeks have been the busiest I can recall. Last week was especially strenuous, with over ten business meetings and Grant in New York for the week to work with us here. I'm trying to maintain a balanced life, but it's difficult right before a release, and some Carbonmade stuff is getting close. Here's what I've been doing to try and stay sane.

Eating Healthier

I've never been a habitually unhealthy eater, but I sometimes have given in to temptation and convenience. Not eating healthy is one of the worst things you can do if you're trying to maintain your energy levels. If you eat too many fatty foods, carbohydrates and sugars, the quick energy boost you get will quickly fade and you'll be worse off than before. You've got to maintain a balanced diet of fruits, vegetables, and healthy proteins. Easier said than done.

For most of the month of January I've eaten vegetarian, with the occasional piece of chicken or turkey. It's not hard for me to eat vegetarian in my office, as Dave, Sahadeva, Matt, Shawn, Karen, and most everybody in our office shies away from meat. What's hard has been making sure I get enough protein, so I've been trying to eat a decent amount of tofu and I've been nibbling on healthy protein bars after the gym.

Working Out

This past week I only made it to the gym twice, but the week before I was able to escape from the office around six times. Going to the gym has always helped me reduce stress and kept my body in tune. I sleep better at night. I feel better about how I look. Best of all, it's one of the only places where I don't think about work at all.

About half the times I go to the gym it'll be for a squash game followed by some light lifting. The others times I'm either running on the treadmill or using the elliptical machine. I'm not really into lifting weights — it bores me and I don't want to bulk up — so I prefer to do some core exercises after the cardio. I follow that up with a five to ten minute steam and a cold shower. Nothing is more relaxing than the steam room.

No Alcohol During January

A group of six us (Mike, Phineas, Naveen, and others) put alcohol on hold for the month of January. The main reason was that my friend Jake has to be on medication for three weeks and can't drink alcohol because of his prescription. We joined him as a gesture of support. Well, that decision has turned out to add to my stress levels, but overall it's been better for me.

I've never been a huge drinker, but typically I'd drink a couple of beers about four times a week — and more heavily on the weekends. Not having a drink has added to my stress level in some respects, as it's hard getting used to being at a bar or a music show with everyone around you drinking but sticking to water yourself. Overall, though, I've been sleeping better at night, getting just about eight hours, which I need. Also, I'm waking up more refreshed and ready to go. Both sleeping more and waking up fresh all the time are welcome changes.

Unplugging

One thing I need to work on is unplugging myself now and then. Having an iPhone the last few years hasn't helped. At least before then I wasn't constantly bombarded with e-mails and only a touch away from an Internet browser. Who really wants push notifications incessantly?

The advantages of unplugging once in a while are obvious, but for me it's very difficult to do because I handle all the e-mail that Carbonmade receives, and part of our pledge is to deliver the best and quickest customer service we can. However, it's been nearly a year since I've taken any kind of vacation. I've got to figure out some sort of compromise to relax, but there isn't a lot I can do until we hire more people to help out. That's running a startup for you.

New Responsibilities in 2010

2010-01-13T22:35:10Z

My most popular essay to date, with over 12,500 pageviews, was What's A Non-Programmer To Do? which outlined my day-to-day activities. As my job is always changing, I thought I'd add some of the new responsibilities that have further expanded my role in 2010. It looks to be a huge year for Carbonmade and with it new tasks for me to take on.

Hiring

As I announced on December 9th, 2009 in Carbonmade's First Hire, we've hired a new guy named Grant Blakeman to help us out full-time over the next few months. It's starting as a contract job, and we'll discuss further along whether or not he'll lengthen his stay with us or move on to other things at the end of this first term.

The hiring process is something I'm familiar with, as I did all the hiring for my last company: one designer and two software engineers. I think I take a far different approach to it than most. Most companies announce their job availabilities on their blog or Jobs page. I usually just reach out to people I know and see if they'd be interested in working with my company. So far I've been four for four in hiring, so naturally I still believe in my approach.

I start by sending out a short e-mail to gauge the interest of the person I have in mind. Because I know these people in some capacity I usually know beforehand whether they'd be interested. Dropping hints helps. I then talk about what we're looking for to see if we're on the same page. Then we discuss numbers, and we're done.

I understand that as we begin hiring more and more people, this process probably won't work forever. We'll run out of people in our network who happen to be looking for jobs. For the time being, though, I hope to be able to continue to hire through our network. I already have a rapport with these people, so things tend to go more smoothly.

People Management

While Grant is the first person we've worked with on Carbonmade, we plan to hire more people in 2010. With that comes new responsibilities — the biggest one being aware of everybody involved and keeping the team moving forward. I don't mean holding their hand or coddling them, but making sure that we're on the same page and that everything goes smoothly.

Dave is mainly directing Grant, as Dave is our Creative Director and Grant is a designer and therefore falls under his auspices. However, there are other sides of management that are more behind-the-scenes. For example, Dave and I had long discussions about what exactly we'd have Grant work on and how best to handle things.

Other more specific things for me to do are: (1) making sure employees are happy day-to-day, (2) getting them paid, (3) handling their accounting with the accountant, (4) dealing with the contract and negotiations, (5) making sure they understand the overall vision of the company, (6) getting them healthcare, and (7) helping them acclimate themselves to our work patterns and our culture. You want everyone to be comfortable and make transitions as smooth as possible.

Office Management

With Jason moving here in May and at the rate Harvest and we plan to hire in 2010, we are going to outgrow the office space we share with them sometime this year — sadly enough, considering we just moved here in September 2009. I've begun working out the details of finding us an office of our own, and it's much more of a time sink than you'd think.

Not only will finding a new office take a lot of time, but I'm anticipating all of the details surrounding the lease and maintaining the office to take up a big chunk of my time during 2010. There will be buying furniture, paying the lease, hiring the cleaning service, paying the electricity bill, handling any legal work, working out sublease contracts, buying food and drink, and the general maintenance of things that will inevitably crop up. Danny Wen has clued me in to most of these headaches.

Meetings

It's just the nature of the beast that as your company grows, more and more people want to talk to you and meet with you. Meeting new people is something I always find value in — and I'm a sucker for saying yes to nearly any meeting. While I took a lot of meetings in 2009, in January alone I'm finding myself taking 2-3x more meetings a week than before. Just this week alone I'll have nine scheduled meetings (three lunches, one dinner and five coffees).

I don't regret having any of these meetings at all, because it's part of my role as Carbonmade's CEO to meet as many people as I can, within reason. It's actually one of my favorite parts of the job, but it is definitely time consuming. I love talking about Carbonmade, spreading our brand, and meeting amazing people. 2010 is definitely our year for making major moves, and the more people I can meet, the better.

Partnerships

Along with the increase in meetings due to our company's increased exposure, I'm getting more and more partnership requests. I actually had a really interesting meeting with a company a few days ago about the possibility of working with them. Things are certainly heating up, as our userbase continues to grow substantially month after month.

It's nice being the company being pitched to rather than having to go out and pitch to other companies for partnerships: being the largest online portfolio website certainly has its advantages. I've always been a proponent of doing things in-house for as long as you can, but as we grow I need to come to terms with the idea that we may need to work with other companies, because we simply won't be able to do everything ourselves.

Investors

While it's up in the air whether or not we take on any funding, I'm beginning to meet with more investors. And if we do, it'd be a large round — we're well beyond any type of angel or seed funding. I'm beginning to have more meetings of the “getting to know you” variety with investors rather than the pitch variety. I've met with four of the best-known venture capital companies in New York on that basis over the course of the past month.

I usually go into these meetings laying out what we've accomplished, what we're currently working on, what we plan to work on, and — if we were to take money — what we might do with it. I don't give details about our revenue or anything too specific, but I do paint a nice picture of everything. They come back at me with a lot of great advice and “let's talk specifics down the road when/if you plan to take on investment.”

We're focused on getting our new portfolio application out and have everything we need to do that, so we don't need their help right now. We plan to rethink the wisdom of bringing in investors once we see the numbers that come back after our new launch. The best-case scenario is that we can do everything we want to do without taking a penny.

Newsletters

It's been over four years, and we've never sent out a single newsletter to our customers, whether updating them on our progress or simply to engage them. I plan to change that in 2010, beginning with a newsletter I'm sending out to our Whoo! members sometime in the upcoming week or two.

I'm actually ashamed that we haven't taken a more proactive stance toward engaging with our customers with newsletters or surveys. We do engage them over e-mail, but I think we can do a much better job of informing them about what we're working on and keeping them up-to-date. This newsletter will be the beginning to something I hope to do more frequently (opt-in, of course).

Press

We've generally avoided talking to the press, because we didn't think we were ready for that kind of attention quite yet. Things are definitely changing in that area for 2010. I've already done a few interviews this month that should be appearing online shortly.

I'm no longer trying to keep us hidden from the press. I'm now fully supportive of whoever wants to interview us, write about us, etc., whereas before I generally said that we weren't quite ready to be under the microscope, please check back later. Please e-mail me directly if you want to write about Carbonmade.

Disclosing Your Finances

2010-01-06T22:35:10Z

Prominent startups such as Balsamiq and others like Squarespace and 37signals (to some extent) have been open about disclosing their revenue — and in Balsamiq's case also their profit. I'm not sure whether that's such a good long-term strategy and I'll argue why below. You've got to be careful that you're in the right position to share these confidential numbers, and I think that for anyone else the disadvantages outweigh the advantages.

What's the Advantage?

The obvious advantage for anyone is that as long as your numbers are large enough to talk about then you're going to generate buzz when you release them. You'll in fact get a lot of good press and praise for being so open. On Sunday, January 2nd Peldi Guilizzoni (Founder of Balsamiq) posted his company's 2009 revenue ($1.6 million), profits ($1.1 million), number of transactions per month, average revenue per transaction, and cash flow. You can't get more detailed than that. In under 24 hours his blog post received over 200 re-tweets, there were over 140 comments spanned across his blog and Hacker News, and over 250 up votes on Hacker News. That's a lot of attention.

Balsamiq isn't the only startup to share their finances. Squarespace shocked people when they released their figures earlier this year in Inc Magazine, reporting revenue of $269,545 in 2005 and $2.2 million in 2008 — a 723.3% increase. Nobody knew the jump was so big, and now it's known that they are running away with their market. Even 37signals, who as far as I know had never disclosed their revenue, mentioned kind of nonchalantly in their third podcast what they were generating with their new Haystack service (now known as Sortfolio).

But who are the people who care about this information? Only two sorts of people really care about these figures: (1) other entrepreneurs who want an inspiring story to motivate them, and (2) potential acquirers whom you could interest by other means. Who doesn't care? Most of your customers or potential customers, who don't fall into either of those categories.

Suffice it to say that I don't think that the press you're going to receive outside the entrepreneurial community is enough to justify exposing your finances to the public. There are just too many disadvantages in doing so. I don't think it's going to significantly move your bottom line. I'd actually like to see how many referrals Peldi Guilizzoni generated from his post. I doubt too many.

What are the Disadvantages?

What do these three companies have in common? They're all self-funded startups that are all leading their respective markets with no immediate competitive threats. There's no better small business software company than 37signals, Balsamiq is clearly leading the wire-framing and mockups business, and Squarespace has a chokehold on providing managed website building tools. They have nothing to lose. But suppose they had major competition?

One disadvantage of disclosing assets would be if you're a startup hoping to raise money; even bootstrapped startups consider fund-raising after they get their feet wet. I can assure you that openly talking about your revenue if it's not mind-blowing is going to turn off investors. If you show that your company did $100,000 a year in revenue last year and increased to $150,000 this year, then fewer investors are going to be interested in chatting with you. That's just not enough growth. As soon as you publicly reveal your finances you're looked at differently than you were before.

Jason Fried and many others have argued that many startups don't try to generate revenue from the beginning because that prejudices their valuation when they do try to raise money. The investor can look at your numbers when the time comes and get a true valuation of the company rather than making up ballpark figures based on speculation and spreadsheets. I completely agree.

Another disadvantage is that your competitors know exactly how much you're making. If I know that one of my competitors is making $2.5 mil a year I can work out a lot of information from those figures. In Balsamiq's case they included everything but the kitchen sink, so I can see nearly everything I need to know.

You might say: "Well, how is that information going to help you surpass them?" For one thing, you may be seen as less as of a threat if your competitor doesn't know how much revenue you're generating. I'd bet that most companies undervalue their competition, so they may not try as hard in certain areas to combat them. Why give them the motivation of knowing how much you make? Additionally, it may spawn new competitors who see how well you're doing.

The third disadvantage is that it may be off-putting to your customers. In the case of Carbonmade specifically, our customers are mainly creative people who don't make a lot of money (for the most part), and shoving our finances in their face isn't the most neighborly act. It can also make you seem impersonal and corporate — which is why so many bank ads say they're small and user-friendly. Yes, publishing our revenue could show that we're a healthy and thriving company that's not going away any time soon, but I think there are more subtle ways to express this.

Don't Do it

I am all for being open about your business. You only have to read through my essays to see that. Carbonmade even boldly shares our user count on our homepage (many won't even do this), but I don't think the advantages outweigh the disadvantages when it comes to sharing financial information.

If you do decide to publish your revenue, only do it if you're well established and far beyond the startup stage, like Balsamiq, 37signals and Squarespace. Don't do it if you're hoping to raise money or if you're not (or not certain that you are) the leader in your market. These three companies are the exception to the rule.

Life Plan

2009-12-30T22:35:10Z

I've had a life plan thought out for a while now, and with 2010 only two days away, I thought I'd let everyone know about it. This is what I plan on doing over the next fifty years of my life — basically, until I retire. I like thinking about the big picture because it gives me a horizon to drive towards even if in all probability I'll fall a goal or two short.

25-32: Carbonmade

Most startups have a short shelf life. I've been fortunate enough to be a part of two with atypical life spans. TypeFrag was founded by me in 2003, later sold in 2007, but it's still alive and kicking and doing well after over seven years. Carbonmade was started in December 2005 and is now four years old and counting. Realistically, however, only the last two years belong to Carbonmade because before that it was only a side project.

In venture capital circles, most successful businesses that receive funding have a seven to ten year life cycle before they either have to go public or be sold off. While I'm not anticipating Carbonmade going public, and while we haven't raised any capital, which might make these numbers seem irrelevant, I do foresee something major happening at some point over the course of the next seven years, which brings me to 32 years of age.

What will happen? Who knows? But I truly believe that we are capable of building a one hundred million dollar business in our market. We've got the talent, the user base, the growth and the game changing ideas to make that happen. So realistically I can see myself completing the Carbonmade chapter of my life by 2017, or at least having a reduced role at that point.

32-33: Chef School

I've always had an interest in cooking — and eating — since I was a little child. There's also obvious synergy between entrepreneurship, startups, and cooking. You'd be surprised to know how many of my colleagues appreciate the art of cooking and eating well. Maybe it's because cooking is part formulaic, part creative in the same proportions that the startup mentality requires.

Something I've always wanted to do is spend a year in France at cooking school. I've done a lot of traveling but can't say I've lived in another country long enough to really get the feel of the place. I didn't do junior year abroad or take a year off for travel after college. It's something that I feel is missing from my life. How can I be so sure that America is the country for me if I don't have the experience of living somewhere else?

33-40: Unknown Startup

While you could say I've "played it safe" with both TypeFrag and Carbonmade, I'd like to shake things up a bit and come up with a game changing technology startup like Jack Dorsey's Square. It wouldn't necessarily have to be a hardware startup, but something where I flip the script on how business is being done, or maybe something in consumer technology. I haven't thought long or hard about any anything definite yet, but I've involved myself with a network of highly intelligent and successful entrepreneurs in New York whom I would hope to work with on this startup. Let's hope at least a few of them are free around the same time and have similar ambitions.

On a more personal note, it seems likely that I'll get married and have kids during this time of my life. While you can't anticipate those things or really plan them out, I anticipate that this'll be the time for me. Can't wait to take the little one into the office and teach him/her about startups. :)

40-50: Apple's CEO

Being the CEO of Apple is my oldest and wildest dream. Since I started using computers I've always been an Apple user, and then my love of technology, entrepreneurship, management, and developing cool products has made me a huge fan of Steve Jobs and everything he's accomplished.

I hope that having three startups under my belt — especially my "Unknown Startup" that will change the game — will put me on radar for running a large company. Why would I want to run a large company, you may ask? Well, I'm one of those people who like to put a check next to life's accomplishments and don't like to repeat things more than twice. I'll have done the small <1,000 employee startup and I'll be hungry for more. You've got to set goals and push yourself to realize all that you can achieve.

50-Retirement: Venture Capital and Investing

While I plan to do angel investing throughout the rest of my life, starting as soon as the present day, I would like to try my hand at really getting into the venture capital business. I think my experience being around Internet startups my entire life — seeing lots succeed and even more fail — will help me spot early stage startups.

I'd like to give back to young and hungry entrepreneurs who share my passion for startups. I also think it'll help me stay young and active to be around the spirit of these young people. I'll open my venture capital business in New York City, which will certainly be the nation's capital for investing in internet entrepreneurship by the time I'm 50 — which is 25 years from now, 2035.

Picking Your Co-Founders

2009-12-23T22:35:10Z

A friend of mine who'll remain anonymous is battling the demons of having a less than stellar co-founder. This person isn't sure what to do at this point: should they ride it out or part ways? They've asked me to write my thoughts on picking co-founders based on my experience. I've started half a dozen successful startups dating back to 1995, but will share stories of only my two most successful here.

Co-Founders of Convenience

I don't have any math to support my assumption, but based on my experience and the experience of many people I talk to, first time entrepreneurs tend to find themselves thrown together with co-founders of convenience. Meaning, they didn't go person-to-person with a specific checklist of co-founder requirements, expecting that somebody would turn out to be just the ticket. They simply stumbled upon one or more people — read Three's Company for why I think three co-founders is better than two — who were willing to try the experiment with them.

The same thing happens in love: You're not likely to marry your absolute dream girl or guy. Those paragons just don't happen to go to the parties you go to. You simply meet someone you connect with on a few basic levels and then as you get to know the person better you either stay with them for the long haul or you don't. Co-founders might as well be married, considering the amount of time we spend together arguing, planning, laughing, and staying awake nights, staring at the glow of our monitors.

Blind Luck

So that's what it's like when you're starting out. But after you've started your second or third or fourth startup, you may now have a pool of people that you know and trust to start your next startup with. Until then it's simply blind luck. When you're on your first startup, you're untested and your network is small and anyone willing to take the chance of co-founding with you is probably in the same boat. Therefore, you're basically going into it with no idea whether your chemistry and complementary skills will align properly down the road. How well will you work together? Do you have all the skills between you to get things done? Time will tell.

I want to tell my friend, who is on his first startup, that there are guidelines for picking a good co-founder, that it's not simply luck. But, sadly, I believe that as with anything you do for the first time there's a lot of luck involved in the outcome. Sure, "beginner's luck" exists, but it's still luck. I don't know the success of online dating, but I have to imagine the odds are scarily low. What's really scary, though, is that it's undoubtedly better with online dating, where you're being presented with more information: photograph, description, likes, dislikes, work, characteristics, and even psychology test results if, for example, you're on OkCupid. I wish I had all that information when finding a co-founder for the first time.

Story: TypeFrag

During my freshman year of college (2002-2003), I was a computer science student at Case Western Reserve before transferring to Yale. During the end of my first semester I founded a company called NetFusion (still around today) that provided web hosting, game server hosting, and Ventrilo hosting for computer game players. I "met" both of my partners online in a game of Counter-Strike. The three of us founded a Counter-Strike team together before founding NetFusion.

This partnership didn't last long, mainly because of huge arguments we'd have during our Counter-Strike matches that would carry over to the business. Amazing, huh? We let a computer game dictate our business decisions. About six to nine months later our company (and Counter-Strike team) split in three, each of us taking a third of the company. My part was our web-hosting clients.

The three of us meeting was pure luck and we never vetted each other's skills before founding the company, but we were all ambitious and wanted to start something.

Anyway, I was kind of upset that I gave the Ventrilo hosting business to my partner and kept the slower growing web host. (Ventrilo is a VoIP service primarily used by computer gamers.) I soon sold that off to Atlantic Metro and looked for a partner to help found a new Ventrilo host.

I was now a sophomore at Yale, and still a computer science student, but I didn't really know many programmers there. I remembered that I had met a guy named David Grampa in my C++ Database class who I use to play Counter-Strike with. I had his AIM name lying around and reached out to him. I had no idea about his computer programming talents, but I knew he (1) liked computer games, (2) had used Ventrilo and (3) had to be at least a decent programmer.

I reached out in December, 2003 over AIM and was quickly able to convince him to start the company with me. I literally had met David twice or three times during our lecture class, but had never hung out with him outside of class and had no clue about what he was like as a person or his experience with web development.

Reaching out to David was like going on a blind date with a girl that you knew absolutely nothing about except that she was indeed a girl. This was the second time in my life where I'd gone into a co-founder relationship without vetting the other person beyond "Are you interested in doing this? Yes? OK, let's do it then." This relationship did last nearly five years, though.

Story: Carbonmade

Carbonmade was the first time in my life as an entrepreneur that luck wasn't 100% involved in picking my co-founders. It was still completely random that I met them, but we did at least build up a six-month working relationship before we agreed on becoming partners. However, we never saw each other face-to-face until after signing the papers.

I hired Jason and Dave, who were running a web design firm, to do a large project for me right after I sold TypeFrag. I actually reached out to Dave back when I was still working at TypeFrag and asked him to design some business cards for us — a job he rightly declined — through a mutual friend of ours, Matt Brett.

Luckily when I approached Dave and Jason again six months later, they had just wrapped up a project and were looking to sink their teeth into something big. I pitched them my idea and we ran with it for six months. During those six months we got to know each other rather well over e-mail and phone. We also chatted a lot about my past experiences as an entrepreneur and what I had accomplished.

Both of them were thinking about how to take their two-person design firm to the next level. They also had this little side project called Carbonmade that was rather neat, and asked for my thoughts about that. Then one day Dave approached me about being a one-third partner in nterface (their old design firm) and Carbonmade. We still hadn't met each other in person, but I accepted.

The circumstances of my ending up with these two co-founders were still pretty hit-or-miss, but even so, this was far and away the most vetted out of all of my relationships. We worked together for six months on a project, got along well, and we complemented each other's skill sets. I know that this relationship will last a long time, and maybe even result in another startup down the road.

If The Shoe Doesn't Fit

The good thing about starting an Internet company is that things happen at a relatively quick pace. You'll know within a few months — maybe even weeks — if the two or three of you aren't getting along. If things aren't going the way you hoped they would, you can always part ways, move on, and start something else. You may find yourself distraught and discouraged, but it's better to end things early and try again than to waste years of your life trying to patch things up.

I really lucked out with all of my co-founders at TypeFrag and Carbonmade. You may not be so lucky. However, it only gets easier with time and experience like so many things entrepreneurial. Just keep at it, try to meet as many people as you can, and in the long run, even though luck never stops playing a role, you'll be in a better and better position to combine luck with experience.

Building Blocks

2009-12-16T22:35:10Z

The other day I had lunch with my friend Phineas Barnes and we chatted about Carbonmade, startups, and other things. One topic that got us excited was the idea of building a service that captures users for one thing then to build out multiple verticals for those same users. Therefore — regardless of initial exponential growth — when you combine the verticals down the road, all the layers stacked on top of each other stimulate exponential growth. (Note: Phineas wrote a follow up piece entitled "Building Blocks (and customer love)".)

Getting Out The Door

If you try and do too much and extend your service across all its potential verticals from the start, then you're going to be mediocre at a lot of what you're doing and best at none. That's a bad way to get your foot in the door. It's a lot harder to market a suite of services than it is to market one. With Carbonmade we're able to tout ourselves as the best (and recently biggest) online portfolio service for creatives. That's a simple and sweet message that is aligned with our slogan: "Show off your work." If we tried to tackle, say, building five things for creatives from the start, then our message would get jumbled, our service would be confusing, and marketing would be a lot more difficult.

When you have a successful product to springboard from, you can then start to explore other verticals around the same market where your users (most likely) have multiple interests. GoDaddy exemplifies this, with their aggressive up sell process. They've used this springboard approach to make them astonishingly successful. While GoDaddy started off being simply a domain registrar, you can now buy web hosting, SSL certificates, domain monitoring, DNS management, etc. Those are all products that complement the domain you initially set out to buy.

Expanding to Multiple Verticals

To be successful, you should take the approach of building a basic product, but with multiple verticals in mind as you go along. I'd be lying if I said that Carbonmade was started with anything but building a kickass portfolio in mind. However, as you begin to develop out the product, you can see other places to take it and other up sells your users may be interested in. You only have to look at a few of our competitors to see where they took things.

If I were starting a company from scratch, I'd try and come up with an interesting service that could successfully offer other things to its users as soon as possible after the initial build. It's tough, I know, because you want to be focused on building a great product, but at the same time there's only so much you can do around that product to continue to improve it. A vertical that Flickr got into after launching their initial product was offering a printing service — a perfect complement to their photo-sharing app.

Together We've Got Killer Exponential Growth

Now that we've got multiple verticals to build out, creating a simple service such as Carbonmade is even more attractive. If you can somehow successfully execute a handful of verticals that your users are interested in, you can build an amazingly successful company. Added together, you'll be growing at exponential growth rather than linear growth. You've got, say, 100,000 users using your main product, then say 25,000 using each of the five verticals you've built out, then you've got 225,000 users instead of 100,000. If you're growing at 10,000 new users a month and if you count each vertical a user dabbles in as a new user, you can look at it as growing at 22,500 users a month and not just 10,000.

Of course it's better yet if each of your verticals has a fee attached. Users that pay you for one thing are less likely to shop elsewhere if they already trust you and your brand. That's why I get my SSL certificates from GoDaddy along with my domains. You can really start making some serious money if you funnel your paying users into other for-a-fee parts of your app.

Oh, the opportunities!

Carbonmade's First Hire

2009-12-09T22:35:10Z

This is the story of how we went about hiring Grant Blakeman (portfolio) for Carbonmade. Grant is the first person we'll be working with, apart from an intern we had this past summer. (To be precise: Grant is working for us under retainer for January and February. And while he will not be officially employed full-time, he'll be putting in an average of thirty hours a week, spending the rest of the time on his own projects.)

Getting to Know Grant

If it weren't for Twitter, we would never have gotten to know Grant. Dave is part of a joke community on Twitter called Favrd (recently shutdown) where people post jokes and others star them if they like the joke. You rise through the ranks if you receive more stars than other people for a given day.

One day Grant came across Dave's jokes and began following Dave — because Dave is a very funny guy — and Dave followed him back because he liked Grant's work and thought he was an interesting character. This happened back around June, 2009. At that time, Dave posted Grant's portfolio into Campfire as someone we might be interested in working with down the road.

Dave and Grant continued keeping in touch over Twitter during the past six months. Grant started following Jason and me on Twitter more recently. We exchanged friendly @replies and started interacting over Twitter. Grant began reading my blog and I began reading his too. But Twitter started it all.

Reaching Out

Dave, Jason and I discussed bringing a fourth person on as early as eighteen months ago. Back then it wasn't financially possible for us to do so. And then, even when the money was there, we decided we wanted to release our new version before we brought someone else on. However, over the past month we came to the realization that there's never a right time to hire, you just have to pull the trigger and go for it.

On Monday, November 23rd, Dave and I met in our conference room and went over how things were progressing. Everything was really going well, but there's just so much to do that I brought up hiring someone now instead of waiting until our updated app was out. We chatted about it for a while and tossed a few names back and forth. After a few hours we decided we'd reach out to Grant first.

Here's the e-mail Dave and I crafted in the conference room:

And then of course we just waited to hear back.

A Short Phone Call

Grant responded later that evening after we had left the office. He was interested, but wanted to hear more. He wasn't sure if he could commit to a full-time gig right now because he's working on his own projects. Grant is a very driven guy, interested in entrepreneurship and building web apps — like us — and that's one of the reasons we liked him from the beginning.

The next day was Tuesday, November 24th, and at this point I felt like it'd be best to give Grant a call, tell him a bit more about Carbonmade, and walk him through what we were looking for. I filled him in on how the company was founded, what we're working on behind the scenes, and a few long-term ideas we have.

I also told him that we didn't have any specific deliverables in mind. We were looking for someone who could work alongside Dave to tackle a slew of different things every week. When you're building a web app, it's difficult to contract out chunks, because everything flows together. It was never a question of a narrowly task-specific job description.

Grant seemed very upbeat and enthusiastic about working with us. He and I also discovered that we had a mutual friend, Andrew Hyde, and shared the same views on a lot of things. It was really great talking to Grant on the phone. We clicked immediately.

Contract Negotiation

We didn't talk at all about compensation during our conversation over the phone. But at the end, I casually asked him if he could send me a ballpark figure of what he hoped to make and send it to me over e-mail sometime later that day. He said that'd be fine. A few nerve-racking hours passed by and then I heard back.

We exchanged a couple more e-mails. We agreed that he'd start working on January 1st — enough time for him to wrap up the projects he was currently working on — and we also agreed on the compensation. He'd spend January and February working with us and then at the end of February we'd see how everyone felt and go from there. We certainly hope to work with Grant for a long time!

Signing

I mentioned at the very beginning that we had hired an intern back in June. At that time we had our law firm write us up a contract. Thankfully, they wrote it in template form so that we could re-use it. I located it on my computer, read over it again, and thought of a few changes that I wanted to make specific to the type of employee Grant would be.

I fired an e-mail off to our lawyers on Wednesday, November 24th -- the day before Thanksgiving, knowing that I wouldn't get a reply, but hoping they'd see it Friday or the following Monday. I heard back from them on Monday. We talked through the changes and the next day I had a copy of the revised contract for Grant all ready in my e-mail box.

I sent two signed copies to Grant that evening.

See You in New York

Grant will officially be a part of Carbonmade on January 1st and we couldn't be more excited. This is another major milestone for us: previous ones this year having been Dave moving to New York — with Jason to follow in May — and us working out of an office in New York rather than our apartments.

We're flying Grant out to New York sometime in mid-January to spend a week with us. I'm really looking forward to meeting him in person, hanging out, and getting a lot of work done. Hopefully he falls in love with the city and never wants to go home.

That's the story of how we hired Grant Blakeman — and another chapter closed for Carbonmade. Next up: Launching our new app — now sooner rather than later.

Work Without Borders

2009-12-02T22:35:10Z

Until September 2009 I spent my entire entrepreneurial career — dating back to 1995 — working out of my house, apartment, or dorm room. My life changed entirely when I started working out of our office in New York. Then Dave joined me in the new office a month later, with Jason to follow in May 2010. Here's why I'll never go back to working alone in a cramped apartment, hundreds of miles away from my business partners.

Working Out Of My Apartment

I graduated from college in May 2006, and at the time I was working on my startup TypeFrag (founded in 2003; sold in January 2007) full-time with my partner David Grampa. We also had two full-time employees working on our development team. It was a busy time in our lives. David was in Cleveland, I was in Connecticut but moving to New York in October, while the other two guys were both remote: one in Philadelphia and one in Louisville.

The four of us were all working in isolation. David wanted to set up shop in Cleveland, but I was convinced we could continue to work at a distance and see how things progressed. I was dead set on moving to New York City, which I felt was the Silicon Valley of the East. I figured I could make all the right connections there — which turned out to be true — and I also thought it made more sense to build our company there.

I moved on October, 2006 and began working out of my apartment in midtown Manhattan. Everything was great. This was my first apartment and I was away from home for the first time — my dorm room in college was actually only a five minute walk from home — and I felt free and productive working in New York.

I made good use of the opportunity and went to a lot of New York networking events, but I made my first mistake by having my "office" (i.e. a large desk and computer chair) in my bedroom. This continued for nearly a year and a half. I'd wake up, roll out of bed in my boxers and t-shirt, collapse onto my desk chair, and get to work. I'd forget to shower, brush my teeth, or eat anything until late in the afternoon. Then I'd usually head out to some sort of event, come home, and sit back down at my desk.

Life was passing me by awfully quickly. I didn't really start exploring New York and everything it had to offer until about sixteen months later, when it began to dawn on me that I was spending 90% of my waking hours in my bedroom.

So I moved my desk into the living room. At least then I'd have a 25-foot walk to my desk and I'd be forced to walk by the bathroom and kitchen, where I might take notice of the opportunities they afforded. This was a big improvement, but I had further distractions: my roommate or any guests he had over would come through the door right by my desk. The television was also in the living room and I couldn't very well keep him from watching.

I experimented with going to JELLY! and working out of New Work City, but it just wasn't for me. When I'm working around people, they need to be working on projects like mine (mainly web apps) or I get distracted quickly. Too many people were working on too many different sorts of project and I just couldn't focus.

I needed a change.

Moving To Our Office

I met Danny Wen and Shawn Liu when they presented Co-Op back in November, 2008 at the New York Tech Meetup. I was actually sitting next to my friend Dylan Fareed of ArtLog when I saw them present Co-Op. I told Dylan I thought it was a neat project, he agreed, and said he'd introduce me to Danny and Shawn after the Meetup, as Dylan had met them before.

Danny, Shawn and I grabbed Japanese curry at Curry-Ya — a terrific little spot in the East Village — and became instant friends. Fast-forward to around May, 2009: Danny mentioned that Harvest was thinking about getting their own office (instead of a shared space) and wanted to know if Carbonmade was interested in sub-leasing under them.

Obviously I was very interested. Working out of my apartment was really starting to get to me and I was getting less productive — it was taking me twice as long as before to get things done. I needed a change of scenery and the chance to work alongside people. I'm a "people person," so to speak, and isolating myself in my apartment was taking its toll.

We worked out the details, Danny and Shawn got a beautiful space in SoHo, and we were slated to move in July. Of course, construction delays cropped up and we didn't actually get to move in until September, but c'est la vie. I was content to wait until September, but still champing at the bit. It's really all I thought about this past summer. I think I must have bugged Danny about it so much that he was regretting having Carbonmade share the space. ;)

Face-to-Face

The first week I was in our new office, I was more productive than the previous month altogether (time:work ratio). That's not to say I didn't do the same amount of work, I just did it a lot faster. I'd get to the office around 9 and I'd get down to work. I'd then leave at a reasonable hour like 7, having worked a full 10 hours. In my apartment, I'd maybe have worked from morning until midnight to get the same amount done. But now when I left work I wouldn't touch Carbonmade stuff except for e-mails. It'd allow me to recharge and feel fresh for the next day.

Dave then arrived in New York around mid-October and we started working across from each other. The first day we went over things in our conference room — what a great room to think it! — and we accomplished more while brainstorming in there for one hour than we had during our typical three hour phone conversations a few times a week before we had the office.

It really helps to be face to face with a person: reading someone's body language and knowing you have their full attention just can't be done over the phone. When you're thinking over complex situations, your mind easily wanders and it helps to have that other person there to pull you back into focus.

We live together when Dave is in New York, so in the apartment we'd also chitchat once in a while about Carbonmade stuff, which you can't even think of doing when it's just phoning. We also continue to meet in the conference room whenever either of us has something important to discuss. What a change!

We drastically altered the nature of our new product (soon to be released) for the better in every way, and this was only because we were able to work things out face to face. It was a big transition for us to be able to do this, but we're both really happy we did. We've nixed a lot of bad ideas and are now focusing on what we think will work out best.

More to Come

I don't think you need everyone in the team to work out of the same office. Obviously, companies like 37signals and Harvest do very well working half their team remote, but I think you need that home base, and the founders need to be there. I don't think either company I just mentioned would argue with that. 37signals' Jason Fried and David Heinemeier Hansson are both in Chicago, and Harvest's Danny Wen and Shawn Liu are both in New York City.

Our third partner Jason Nelson is moving to New York this coming May when his Chicago lease runs out. And Dave will likely switch from his Chicago commute to living in NYC full-time starting next summer. Once we have our core in NYC, I think we won't necessarily need others to be here with us, although it would obviously have its advantages.

I'm just happy that I'll never have to go back to working out of my apartment again.

Are You An Entrepreneur?

2009-11-25T22:35:10Z

It's the week of Thanksgiving, so I thought I'd keep things light — you'll be full of turkey, mashed potatoes and stuffing, so nothing too heavy. Here are five traits that I think are the most important an entrepreneur can have. Not saying you don't need others, but I do think you need these. Please suggest your five in the comments.

Self-Motivation

Those without self-motivation need not apply. You won't have a boss or be on a strict 9 to 5 schedule when running your own startup, so you'll need to be able to get out of bed even when you don't feel like it. A lot of the time working for myself is motivation enough, but there are days when I hate my alarm clock and don't want to work. Still, I jump out of bed knowing I've got things to do. You have to push yourself.

There's an upside, though. The more work you put in, the more successful you'll be and the more money you'll make, all other things being equal. Instead of spending those extra hours putting in more work for your boss, every extra effort you make directly benefits you and your company.

Having a self-imposed regimen is difficult for a lot of people. It's a drastic change from a 9 to 5. I know people in New York who moved from finance jobs into their own startups and ended up in the soup. The difference between the most inflexible jobs in Corporate America and a free choice of working hours was just too much. They thought Goldman Sachs was a pressure cooker, but found out that holding yourself accountable is even tougher than being held accountable by others.

Persistence

You're going to hear "no" a lot when running a startup. But successful entrepreneurs are persistent people and hardly ever think the word "no" is the last word. What they hear instead when somebody says no is "get back to me again shortly." They readjust in response to events and keep as many doors open as possible.

There's a great story that Fred Wilson tells about how Avner Ronen of Boxee got funding from Union Square Ventures. Avner met with USV for funding and was turned down. He started sending them status updates every month, and finally showed them a realigned product with 100,000 users. USV was investing in Boxee a month later.

Many applicants lacking in persistence would have heard USV's critiques and their refusal to invest and gone a different route or given up altogether. Avner was persistent and realigned his product. He had heard "get back to me again shortly" from USV instead of "no." Entrepreneurs have a knack for making good use of bad news.

Plays Well With Others

An entrepreneur is self-employed but not a "lone wolf." I think working well with others is one of the most undervalued skills of any successful entrepreneur. Way too often I see hotheaded founders thinking they know best in every situation. That's just not possible. And even when they do know best, they need to introduce their thoughts tactfully and not run a train over other peoples' thinking.

If you want to build something large and successful, you'll need to know how to delegate tasks, step aside for others that know more than you, and generally be more of a leader and less of a know-it-all. Nobody likes the kid whose hand is up to answer every question the teacher asks. The kid who only raises a hand with something worthwhile to share and lets others have a turn is making a better impression — especially on the teacher.

I think being sociable in daily life translates well – in most cases – into being able to work well with others. Most successful entrepreneurs can handle themselves well in public, have lots of friends, and generally don't mind taking an active role around people. They relish social situations, make people laugh, and generally people like their company.

Attention To Detail

I don't just mean spotting the ambiguous phrase in your copy. That's part of it, but entrepreneurs need to be constantly paying attention to everything going on around them. You need to be able to take in heaps of information, sift through it, and come out with a better understanding of the whole picture.

This begins with experience. If you don't know what to look for, then it's hard to be attentive to detail. I've outlined what I do in What's a Non-Programmer To Do? but it goes well beyond that. I'm talking about thinking from a macro perspective and then seeing how detail can be brought to bear on it. A few examples of what I'm talking about:

You need to be able to spot sentiment among your users. What's the underlying consensus about your product? How are the people feeling who may not be telling you their feelings in so many words? What does this mean for where you should take your product?
When you speak to experienced entrepreneurs, how do they feel about your product? Most everyone is nice to your face, but are they really impressed by what you're doing? Do they think it can succeed? Why or why not? What can you learn from your peers? Or are you just going to take they have to say at face value?
You receive a complaint from a user. Is there a pattern here? Can you hear something in what they're saying that may not just be specific to them? Is there something in the overall reception of your product that needs fixing, something that may have been unwittingly implied in the complaint?

I think a lot of running a startup requires a grasp of psychology — reading the nuances of what people say and do. I'm not saying that because I have a Psychology degree. You just need some skill in figuring out what other people are thinking, and why, and a lot of that skill comes from experience, not from classroom generalizations about how people think. Pay attention to everything that's in the air.

Quick Thinking

You'll get derailed if you can't think on your feet. A lot is going to be thrown your way and again and again you'll need to be able to turn thinking into action quickly. You rarely have time to run an A/B test or a model in Excel. You need to be able to make decisions with your gut.

Stephen Colbert exaggerates to make a point when he says he thinks with his gut and not his brain; and while I don't advocate ignoring your brain, there's something in what he says. You'll come to plenty of forks in the road where you just need to go with what feels better. (Isn't that what Yogi Berra meant when he said "When you come to a fork in the road, take it"?)

I was at the Master of Fine Arts talk at SVA with the Founder of WordPress Matt Mullenweg last Thursday, and he talked about how WordPress doesn't have a five year roadmap. There's just a feeling they get in their gut that naturally moves the product forward to a new stage whenever they've completed a segment of what they want to do.

Three's Company

2009-11-18T22:35:10Z

Nivi and Naval of Venture Hacks wrote an article last Thursday entitled "How to Pick a Co-Founder" that provides lots of useful advice and also argues that two co-founders is better than three. Having founded startups in all three ways — solo, with one co-founder, and with two co-founders — I'm going to provide my take on things and argue that three co-founders complementing each other's skill sets is ideal for today's Web startup.

Triumvirate: The Power of Three

The word "triumvirate" is Latin for "of three people" and historically a triumvirate was a political system led by three powerful individuals. In Roman times triumvirates always led to civil wars, but Antony and Caesar did even worse after they got rid of Pompey, and for me three has been the ideal group size. In a three person founding team you've preferably got (1) a person to write backend code and do system administrative tasks, (2) a person to design and write frontend code, and (3) a person to handle the day-to-day operations of the business (see "What's a Non-Programmer To Do?").

There's a lot to do in a startup, so having three people rather than two or one should make things go more quickly. If you designate specific tasks, then you'll get better results across the board, too. Neil Patel talks about "dividing and conquering," which perfectly fits in with my triumvirate analogy. With three people you've got more things that you can divide and focus on.

One of the most difficult transitions is going from the founding team to your first hires. I experienced this with TypeFrag when we hired two full-time programmers, and it's something I'm about to go through with Carbonmade as we begin the hiring process for our first full-time employee. Hiring is not an easy process. Having three people can buy you more time, as three people can share the workload for longer.

Along those lines, two people can only put in, say, 12 hours a day for a total of 24 whereas three people can put in a total of 36 hours. These simple figures don't lie, and may help your team avoid being burned out too early on.

Too Many Chiefs, Not Enough Indians?

A common argument against having three or more co-founders is that with three there are too many people making decisions. "It's hard enough to get two people to agree, let alone three," many people argue. Having worked for nearly five years with one co-founder on TypeFrag and now three years and counting with two co-founders on Carbonmade, I think the "too many chiefs" argument is easily refuted in many co-founder situations.

Here's how I see it: If you and your single co-founder don't agree on something, there's no third party to mediate. You're left in a deadlock with nowhere to turn. Having only one other partner with TypeFrag often led to good ideas being left on the table, because neither of us would budge on some important decisions. We were both stubborn. We'd even try and pull friends into the mix to help us settle disputes, but friends are never impartial. Anyone I'd bring in would argue my position and anyone he'd bring in would argue his.

Having a third co-founder to mediate any important decisions is crucial for ending deadlocks and allowing your startup to move forward. Major decisions don't come up every day, fortunately, but it's important to have that third person there when they do. True, with one co-founder you could have an advisor trusted by both parties to help mediate decisions, but without a salary, or large equity stake, most advisors don't live the day-to-day part of the business and won't really be up to speed on things.

Neil Patel argues that with more than two co-founders you'll "notice that you will waste too much time making decisions and bickering over small things." That has certainly not been my experience. With Carbonmade, all small things are left to their department (Dave on user experience, branding and design; Jason on server infrastructure and code; and myself on everything outlined in "What's a Non-Programmer To Do?"). So small things are never an issue.

When anything game-changing comes along, I want time to be set aside for decision-making, and I don't see any advantage in keeping that time to a minimum. When there are three people involved it's easier to get through any deadlocks, so I'm not sure time is even lost. But no matter what, I wouldn't call spending time on big decisions a waste of time. Dave, Jason and I may be more fortunate than most people because Carbonmade is profitable and has no investors to date, hence we are free to take our time making careful decisions; but maybe if we hadn't taken that time we wouldn't be here today.

The Equity Dilemma

There are a few small disadvantages to having three co-founders instead of two. The main one is that your equity distribution is 33.33% each rather than 50% each. But the thing to remember here is that equity is meaningless unless you're bought out or you parcel out year-end distributions to shareholders.

As I argue above, I think that with three co-founders you're more likely succeed long-term, so I'd rather have 33.33% equity in a company that's going to see a buy out or be profitable enough to give distributions than 50% in a company that's less valuable. It's the same dilemma you have to think through when you're giving away 20% of your company to investors: will my smaller equity share yield me a bigger return in the end? You can never say for sure, but after all people take on investors because they believe the short-term personal sacrifice is worth it.

Whatever Floats Your Boat

The problem is that it's impossible to know whether things will work out between the two (or three) of you without trying it. That's why once you've found a group of people you're successful with, you're more likely to start up your next company with a similar co-founding/management team, or even the same one. You've successfully gone through it before and there are no more learning curves: you already know each other inside and out.

Whatever size team you choose, you've got to be fully comfortable with your co-founders. It doesn't matter whether it's with one other person or with two, if the vibe of the group is off then you're not going to go far. It's foolish to think that a complementary skill set and shared ambition is enough to get you through. It may get you past the early stages, but when times get tough — and they will — you need to know that the two (or three) of you can stick it out together. Revenue and user growth will help reconcile you at first to almost any bad chemistry, but in the long term there will be trouble.

If you're starting a new company with one or more other people for the first time and you see any personality conflicts or even divergence of vision developing, you need to break ties early. Anything small early on will fester and turn into something huge down the line. Small disagreements can be smoothed over for a while, but major differences in opinion or drastically different work styles may stand behind even the early signs, and should not be ignored.

So I'm not saying that having three co-founders will resolve chemistry problems. You can only mediate so far, so make sure you feel comfortable in your new partnership. Don't catch yourself feeling that you have to hold back your emotions, thoughts, or creative ideas. Leaving something you care about unspoken will typically lead to blow-ups down the line.

Story Time With Carbonmade

2009-11-11T22:35:10Z

Customer service is often an after-thought, but not for guys like Craig Newmark (craigslist) and Tony Hsieh (Zappos) who built their businesses around it. At Carbonmade, we deeply care about all of our customers and helping them the best we can, regardless whether they're paying or not. Here are three unrelated stories, involving a Carbonmade customer, a competitor's customer, and a guy who just happened across our service.

Story: Emily Hanhan, "Overbilled"

Emily Hanhan got in touch with us on January 22, 2009 because she was mistakenly being double-billed. Emily first paid for her Whoo! account through PayPal, then switched to credit card. Somehow PayPal — but we take full responsibility — failed to cancel her PayPal subscription when she switched payments.

She wrote us at 12:54 PM on that Thursday, and I quickly responded with an "I'll look into this for you" at 1:13 PM and contacted Jason over Campfire to help me look into the problem. We found the root cause, and Jason got back to Emily at 3:34 PM after handling the refund and manually cancelling her subscription. He wrote: "I also looked up all the transactions made via PayPal. Believe it or not, we actually incorrectly charged you $96! Practically a crisp $100 bill."

Instead of refunding the $96, we rounded up the refund to $100. It was our mistake and even though $100 is only $4 more than she was "owed" we felt like it was a better gesture to round up rather than nickel and dime the refund. Again, it was our fault and she was kind enough to contact us directly rather than submit a chargeback request through PayPal.

We thought that was all we'd hear from Emily.

Jason and I both have Google Alerts set up for any blog or website mention of Carbonmade and the next day we stumbled upon this article in Consumerist entitled Carbonmade Quickly Responds To Error, Fixes It In Less Than 4 Hours. Emily had written to Consumerist about her billing fiasco, but thankfully only had amazing things to say. Here's a snippet:

Having had a fast response from Carbonmade when I had an unrelated question a few months ago and not having much hope in Paypal, I emailed the main Carbonmade contact email at 12:30pm today. Not only did I get an email back 20 min later saying "Hey, we're looking into it," but by 3:30pm, they emailed me with an apology, explanation, and a Paypal refund was processed through. Not only that, they found that the mistake had occured not six but eight times, a $96 refund. Except they rounded it up to an even $100 for my troubles!

While we know $4 is not much, considering the state of the economy, I was not only impressed by the small act of generosity, but the quick response of this company.

I remember blushing when reading through the Consumerist post (and the comments). Here's one comment: "My heart goes pitter-patter when I hear of good companies like this. Yay, Carbonmade!" I remember being so proud.

She also wrote us privately: "Hey, I should be thanking you! Seriously, the way you handled the issue was fantastic, more than I could ask for. Even before today, I've recommended your site to many of my fellow design folks. But today just solidified what a great site/company Carbonmade is! :)"

What a fantastic moment.

Story: Ruth Kalinka, "Tea With the Competition"

On September 15th just after we moved into our new office, I tweeted out from the @carbonmade account asking if anyone was in the area and wanted to grab coffee or tea and chat Carbonmade. Ruth Kalinka lives in Philadelphia, but happens to find her way to New York City every so often, so she favorited the tweet to respond to when she was next in town.

On October 7th I received an e-mail from her asking if the offer to meet up was still on the table. Of course. Not thinking twice, I went to check her portfolio only to find that she wasn't a Carbonmade customer, but in fact was using a competitor of ours, ViewBook, for her portfolio. A little shocked, I asked her why she was using ViewBook and she responded: "Perhaps you can show me how I can do the same even better with Carbonmade?"

I was up for the challenge. Although I felt a bit odd meeting with someone I had expected to be a customer of Carbonmade, I went into our chat over tea at Oro Bakery ready to make my pitch. Also, simply to hear why she found ViewBook useful would be valuable to me.

I came away understanding why she was using ViewBook, and thinking maybe I had secured a new customer. She wrote me after our meeting: "Thanks so much for meeting up on Thursday. It was great chatting with you and finding out who's behind Carbonmade. I'm excited to see what's next for your company (and my portfolio)!" I didn't try to push Carbonmade on her. We just chatted our way through a bunch of different topics: her career as a freelancer, Carbonmade, ViewBook briefly, her experiences with clients, and other things.

All in all, I was able to make a connection with Ruth, share my experiences, and (hopefully) gently convince her of the benefits of using Carbonmade. She now often interacts with our @carbonmade account and is a friend of Carbonmade in more ways than one.

Story: Stewart Mackenzie, "Fire Drill Service Test"

Stewart Mackenzie's story is funny, because he's not a customer and I don't think has any intention of being one. However, "I wont forget you cause of it ;) my best wishes to you guys!" was the conclusion of an e-mail correspondence with him.

Stewart read my piece two weeks ago entitled What's a Non Programmer To Do? and wanted to test my customer service response time: did I really practice what I preach? That evening at 9:50 PM Stewart wrote an e-mail to support@carbonmade.com with the subject line "firedrill service test" and the body: "This is a fire drill for the customer service of carbonmade."

Now I happened to have my e-mail open at the time — as I often do — clicked the reply button as quickly as possible and in under a minute wrote back: "Hi Stewart. :) Told yah I'm fast." Then for fun I told Jason in Campfire to respond too. He added two minutes later: "Spencer told me some alarms went off. Do we need to call the fire department?"

He naturally got a kick out of it and responded three minutes later with: "awesome, really really awesome." This was a riot and Jason and I had a lot of fun with it. We continued to toss e-mails back and forth with Stewart. Asked him about how he'd heard about us, what he was working on, etc., and ended the correspondence as friends. I gave him my personal e-mail address and told him to contact me any time with any entrepreneurial questions as he's a fellow entrepreneur working on a startup with his wife. We didn't gain a customer, but we gained a friend and now have a great story to share.

Finding the Needles in the Haystack

2009-11-04T22:35:10Z

We share offices with Harvest and often rib each other when our competitors come out with something new. With the release of Haystack last week by 37signals, who have only produced small business software until now, it was my turn to take a few in the ribs. Haystack is self-proclaimed to "find the right Web Designer for your next project" and has a bit of a portfolio twist to it, but it really doesn't worry me.

The More Competitors The Merrier

There's a lot to worry about when running a startup, but worrying about your competition is one of your least concerns. Competition means your market is big enough to support multiple companies. If you find yourself with a new competitor — or hopefully multiple competitors — it's time to rejoice, especially if they're venture-backed.

If a Venture Capitalist is backing a competitor of yours, you know you're working in a large market with a lot of upside. VCs generally give their first consideration to the quality of the team, but they also take market potential very seriously. A bootstrapped startup on the other hand may not worry about market potential as much, they just see a niche and hope to create a market as they go along. (That's true to a certain extent, anyway.) But VCs always worry about the market, hence VC backing for a competitor proves the market is out there.

I'm not advocating that you completely ignore your competitors. We don't. But if you're looking to them for key ideas and not focusing on your own product and your own users, then you're going to be a step behind. Typical things I look for in a new competitor are: who is behind it and what have they done before? Here are a few more things to keep in mind:

Teams of two or fewer who are moonlighting aren't a cause for concern initially — until they start bootstrapping for real. A team working in their off-hours won't be able to compete with you if you're working full-time. If they do come out with something innovative, you'll have enough time to react.
If the competitor's product is simply a carbon copy of ours, then I'm delighted, not worried. I can name a couple dozen Carbonmade copycats off the top of my head — teams that even copy our layout options and color schemes. They'll always be playing catch-up and are hundreds of thousands of users behind us. They tend to grab a few thousand users and then give up. You rarely see a second version from these people.
Has this new competitor been successful with something else? This can be cause for minor concern. At Carbonmade, I was initially concerned when Krop released their portfolio tool after doing such a good job with their creative job market, but then again that was just a validation of our market size. (Side note: Krop was actually an early advertiser on Carbonmade before they launched their portfolio tool.) Haystack falls into the same category as Krop as it too was launched as another product by a successful team.

Close But No Cigar

So as I say, Haystack falls into my to-be-concerned-about category because of who is behind it. But at the same time it's different enough so that I can brush it off after a brief look-through. Haystack so far is simply a means of finding a new web designer, and that's not too worrying. They have implemented limited portfolio-like features and could, if they chose to, spend some time building out an online portfolio system, but I don't think that's the direction they'll take.

As Jason Fried wrote when introducing the product, “So there's another question we've been hearing a lot: ‘Can you recommend a web designer to help us with a project?' Now we'll have an answer to that question as well: Haystack.” They built Haystack to divert all the requests they were getting for web designer recommendations. I don't think he envisions the product being any more than a tool for offloading those requests. It also serves as a supplement to their job board.

Apart from that, in the end I think Haystack fails to produce real value for the job seeker and is more of a giant advertising billboard. My evidence to support this claim is that at the moment there are several companies listed there that have no intention of taking on designers work. They simply want their brand shown off. Many of these companies aren't even doing consulting work any more; like us, they did that in the past before releasing their own products.

Haystack is also choosing to charge web designers instead of charging the people who are hiring. And, as anyone who works in the creative arena knows: The best designers aren't going to pay for references because they have jobs coming in all of the time while the poorly-established people don't have the money to spend, hence you'll be left with the designers of middling quality. For this product to be truly successful, you need to be able to attract the best creative people. But don't get me wrong: they're still going to make a killing on this product.

Is Carbonmade Going to Compete With Haystack?

In my earlier article, 100,000 Users And So Can You, I mention in the second to last section that we spent all of 2008 working on a second product that we ended up scrapping. We even had a successful private beta. Well, that product would in fact have been a direct competitor for Haystack. So at least behind the scenes Carbonmade is a closer competitor to Haystack than it seems to be.

It's been very interesting for to me to see how 37signals chose to tackle the same problem that we came up against: it's just not that easy to find a web designer out there. Like 37signals, even now we get a dozen e-mails a week from people hoping we can recommend a designer to them even though we stopped doing consulting nearly two years ago. Their solution is a lot different from how we chose to tackle the problem. A lot different. I don't think there's necessarily one right or a wrong way to approach this challenge, but I don't think either that they've taken the best approach by any means.

I won't comment on the solution we came up with, but I will wrap up this article by reiterating my earlier point. Having competition is a good thing. Besides its validation of market potential, it allows you to see how other people tackle the problems you face yourself. This is not threatening, it's informative.

What's A Non-Programmer To Do?

2009-10-28T22:35:10Z

I wrote a comment for Hacker News back in August in response to a guy's question about what a non-programmer should do in a startup. My response received 164 up votes and is the tenth most popular comment of all time. In this article I add some depth to most of my previous twenty bullet points.

Product Development & Road Map

As the business guy, you've got to look at everything with a big picture mentality. Think macro, not micro. I've got to think about what we can do today that will bring us to where we want to be in six months, one year, two years, maybe further along. You don't want to spend all your time thinking too far in advance (dreaming, in other words), but you definitely need to have some sort of road map.

Luckily, everyone on our three-person team thinks about things in a different way. Dave and Jason are meticulously focused on the present — they're doing the daily design and development on the new Carbonmade release — whereas I'm looking toward the post-release phase. Dave often says that he can't let himself think about the future or he wouldn't be able to focus on the present development. This isn't to say that I'm not involved with the day-to-day on our new product release, or that Dave and Jason aren't involved in our road map; but we all need our focus to be on different areas.

So while Dave and Jason are concentrated on getting our new release to market, I can take a more macro approach and focus on what's next. We'll then come together, go over my plans, and decide jointly where we want to go from there.

Managing Cash Flow & Budgeting Bills

I've told a lot of entrepreneurs that I think managing cash flow is one of the most important challenges. Sadly, this is something you learn over time and with experience. It's really instinct — knowing whether $500 is better spent, for example, on marketing or development. It can't really be taught.

At Carbonmade, I routinely break down our expenses in Excel and create quarterly budgets based on our projected revenue, payroll, merchant fees, and expenses. I don't project beyond three months, because that would be irrelevant for us. I work with Jason to estimate our fluctuating server costs and other expenses.

It's my job to give Dave the thumbs up on a new MacBookPro purchase or respond to Jason's request for a better DNS solution. (Side note: We're about to make the switch to DynDNS.) I've got to make sure we don't overspend and that we plan our budget accordingly. For example, upgrading our servers may be better put off until next month, and I need to make that decision.

Since I handle our budget and cash flow, paying our bills is a natural progression from that. While we use AmEx for most purchases, especially the big ones like server expenses, I write all of our checks — from payroll to marketing expenses to office rent — when a credit card doesn't make sense. I keep the checkbook for the company and make sure that every bill is accounted for.

Customer Service

Providing excellent customer service singlehandedly transformed Carbonmade from a side project into a profitable company. I can confidently say that, as pro-active customer response is the most significant “update” to our product we've released to date. When Carbonmade began, we were still a full-time consulting company, and we didn't have time to respond to our customers. As the company began to grow, I stepped in and made it my initiative to handle all incoming e-mails right away and add a human touch.

The first thing I did was go back and respond to a backlog of about six months of e-mail, apologizing for our silence and explaining why we didn't respond. In the same e-mail I would ask if anyone still needed help. Most people were very understanding when I explained our situation. From that point on, I never leave an e-mail unanswered when I go to sleep and I make sure to answer any new e-mails that accumulated while I was sleeping before I shower and brush my teeth in the morning. Throughout the day I answer all e-mail as soon as it comes or at least as soon as I can get to it.

Now, you shouldn't do what we did and not answer e-mails the first six months. You should be on top of this from day one. If I e-mail a new startup and don't get a response in a timely fashion, it's really a turn-off. It's not a lot of work and should be a priority, especially early on.

Investors

Probably because we are a self-funded company that's never taken financing, we get a lot of investors reaching out to us. While we're not opposed to taking financing at some point, we're in the unique position of not needing it right away, if ever. And that's really attractive to outside investors!

The e-mails from investors come in weekly, and while I haven't taken any meetings to date, I do take the time to respond in every case and to answer any questions they have. We're focused on pushing out our new version, so I tell any investor who e-mails me that while we're interested in meeting at some point — if that's what we decide to do — we're pushing any meetings back until after our new release.

And if we do decide to meet somebody, I'll be the guy there pitching our company, listening to what they have to say and answering any questions. It's going to be a lot of work and I'm not necessarily looking forward to the distraction when it happens. While we're not opposed to financing, we want to see how our revenue projects after our new product is released.

Incoming E-Mail

We don't just get customer service-related e-mails, we also receive lots of partnership requests, e-mails from investors, sales-related e-mails, marketing opportunities, etc., and I handle all of these. Timeliness matters here too, but it's generally not as important as with customer service e-mails. I try to get back to everyone before the end of the day, but these e-mails usually take longer to think through and write. With customer support, I've seen every question a thousand times (literally), so that's a lot easier for me to do quickly.

The trick to answering these e-mails is not to close the door on any opportunity. Keep everything open to discussion. Be friendly and don't shoot anyone down. If you're presented with an “opportunity” that's totally ridiculous, then you just politely decline, but there's no reason to be judgmental.

Social Networking (Facebook, Twitter, etc.)

I wrote an article on how I use Twitter for business entitled Let's Be Friends two weeks ago, so the details are in there for you to read if you're interested. Social networking has definitely impacted our business and allows our customers to reach us outside of e-mail. It's the kind of experience that feels far more personal and allows us to publicize our brand in a way that blogging and answering e-mails do not.

Marketing (AdWords, Text Links, Banners, etc.)

Marketing has definitely taken over my life the past few weeks and will continue to do so for the rest of 2009. Carbonmade barely spent a dollar on advertising until a few weeks ago when I began experimenting with Google's AdWords and banner advertising on various websites. I'm in the process of building out our brand.

While I'm waiting until the next version of Carbonmade ships to go all out on marketing, I'm beginning to test the waters with various ads and see what performs best. I have learned for example that: You need to run Google AdWords for at least 30 days for their algorithm to work to your advantage. Most people don't know that your cost-per-click will decrease as Google AdWords learns more about your account. So you should get started early with a budget of at least $5/day to begin feeding data into your account.

Accounting

I know a lot of startups spend very little time on their own accounting. Although we could just hand over our statements for every quarter to our amazing accounting firm, I prefer to input everything into Excel myself. (I don't like any of the recent accounting programs out there. There are just too many unneeded features.)

Every Monday I take a few hours to input all of our expenses and revenue from the previous week into an Excel template I created a few years back. This way I can easily do our budgeting and cash flow. People think I'm crazy to bother with this, but I think they're crazy not to. I have a clear picture of every dollar and cent going in and out of our company from day to day, and this really helps me plan our road map.

Legal

Working with lawyers is not an inborn talent. If you don't know what your needs are in advance, you can spend a lot of money needlessly. If you don't do your preparation and carefully outline everything you think you need before going into a meeting, you'll lose time, which is in turn billable hours.

Luckily, Carbonmade is my 5th LLC, so I have a lot of experience dealing with lawyers. I don't go down side alleys and don't need a lot of explanation from our lawyers, because I've done it all before. For those of you who lack this experience, it's just a necessary business growing pain, and I promise you it gets easier.

One of the main things you'll learn is that there are many legal things that you can take care of yourself, hence don't need to get your lawyer involved. I'm fortunate that my law firm Hodgson Russ taught me early on “how to use a lawyer,” explaining what's worth calling them about and what I can do myself.

But you can't operate without your lawyers. First and foremost you need to set up an Operating Agreement between you and your partners. This is often overlooked early on, but it is the single most important document you can have your lawyers draft. I mean good, experienced lawyers: I nearly got burned in one of my early startups as a result of having a Yale law school student draft my Operating Agreement rather than a real law firm.

Next, there will be lots of miscellaneous paperwork: filing your company with the state, writing Terms of Service, perfecting your Privacy Policy, having your lawyer look over key contracts, writing up templates for contractors and personnel, submitting your trademark, etc. Whenever you think you've got a breather from writing checks to your lawyer, another stray item turns up. But these are necessary evils.

Networking Events

One of the major responsibilities of the “business guy” (or girl) is to get the word out about your company by meeting people in your community. This is especially important early on. Usually you can coast after you've met the right people because they'll introduce you to new people and you won't have to be quite as active discovering a community. It's kind of like the investor thing: once you have a good core group of friends around you, people will want to be introduced to you rather than the other way around.

I moved to New York City in September, 2006, not knowing a soul in the entrepreneurial and tech communities. For an entire year and a half I attended as many events as I could, including the NY Tech Meetup, which was a lot more tight-knit back in the day, and any other event I could find on GarysGuide.

It took about six months to become confident in myself and my pitch, and to figure out how to best interact with the people I wanted to know. It then took another six months to a year to find my way into what you might call the inner circle. Now I know everyone in NYC, or if I don't know them I know at least one person who does.

It's a time thing and something that your business guy needs to go to work on early. It would be nice to think that we could all be lone wolves, superior to the occasional indignities of networking, but the fact is, most of us need to reach as many important people as we can.

Blogging

While I don't update our blog as often as I'd like to, it gets quite a lot of traffic — especially when we post an interview with a top designer. Companies handle blogs differently. Some write a lot about the nuts and bolts of their current operations and others simply post company updates. I take the second approach with Carbonmade, because I don't have time to do anything more with the blog at this point. I do send out interviews every so often, so that makes up for it somewhat.

I won't linger over the importance of blogging. It's fairly obvious these days that writing blog posts gets people talking about your company and brings them to your website. Keep in mind, though, that there are now more and more avenues for achieving these goals.

Market Research

You have to stay up-to-date with what your competitors are doing. Carbonmade has a lot of them. Make sure you sign up for all of their services, keep their RSS feeds in your blog, and subscribe to all of their newsletters. It's easy work, honestly, because mainly you just want to keep tabs on them. If you're doing a good job yourself you won't have to worry about spoiling your day feeling envious or resentful.

Since Carbonmade was the first online portfolio around — and is now the largest as of Monday, October 19, 2009 — we've got a nice head start over our competition. We've never had to look to others for ideas. We generate plenty of those on our own. However, it's important to be able — as quickly as possible — to spot anything your competitors are doing that's attracting customers away from you. Is there a small feature or a way they do something that's giving them an edge somehow? You've got to find those.

Writing The Copy

While Dave wrote the initial copy for all of Carbonmade, I've since gone in and added a Frequently Asked Questions, taken over the blogging, re-written our About area, and put in other stuff. It's important to keep the site fresh and add to your support documentation as things change. Even though Carbonmade is three years old, I still find myself adding a new question every few weeks.

You don't have to be an expert writer to keep your startup's copy updated and fresh. Just write clean sentences that make sense and aren't too wordy. One of my rules is not to over-think anything. Just write it how you'd say it and then go back and revise later. Some of our FAQs are one-line answers and that's fine if one line does the trick.

Dave and I still collaborate on the bigger pieces, as he's an excellent writer. Recently, Carbonmade was featured as a case study by Microsoft and Dave and I worked together to piece together the final copy. This was after Jason and I were phone interviewed by Microsoft for the rough copy they put together.

Advertising Requests

While Carbonmade doesn't accept advertising any more, there was about a one-year period during 2008 where we sold a small ad on the right side of our portfolio listing for supplemental income. We've never put advertisements on the actual portfolio pages, but our search seemed appropriate enough.

We'd get inquiries from lots of different brands looking to buy out this space, so I'd keep a simple Excel file organized with their name, length of the campaign, and the price. Since we only sold one ad at a time, it wasn't difficult to keep track of. The difficult bit was sorting out the real advertisers from the pretenders. Nearly half of all the inquiries were a total waste of time.

Merchants

If you accept credit cards or PayPal for your web service, you know the headache of dealing with merchants. It's probably the least satisfying part of the job. We're fortunate to have worked with Chase Paymentech since our beginning, which has been a breath of fresh air for me after having worked with Authorize.net and others.

What I do in this area is to handle all the communication between our company and our merchants. There was a lot of paperwork when we switched LLC names last year, and then last month we changed our business address, so I had to update that and get things squared away there. I also get monthly statements from them that I read over, input into Excel, and file away.

With PayPal, it's mainly logging in, generating monthly statements and making daily withdrawals into our checking account. PayPal doesn't have an option to do this automatically, so it's just an annoying task that I have to do daily so that our money doesn't pile up in our PayPal account. Their savings account is rubbish. We use ING Direct for that.

Phone Calls: Incoming and Outgoing

While we chose early on not to provide phone support for our customers due to the time drain, our phone number appears on credit card statements. I'll get about a phone call a week from a customer who goes to my cell phone routed through Google Voice. It's typically a parent asking about the charge, me asking whether they have a son or daughter who's an artist, them saying they do and then being pleased that we're helping their kid show off their work.

I also like the idea of CEO Office Hours that Jason Fried introduced over at 37signals. It's definitely something I'd like to do at some point in Carbonmade's future. It's just tough to lock myself into a set of hours each week to take calls.

I find myself having to place phone calls on behalf of our company for the most random things. Just the other day I was talking with our health insurance provider to change some routing numbers. It's random, but I'm on the phone a few times a week.

100,000 Users And So Can You

2009-10-21T22:35:10Z

This is the history of Carbonmade from its start in early 2006 up to our reaching 100,000 registered users in March 2009 and how we got there. It’s not a story of rock stars and energy drinks; just three guys working on something they enjoy and grinding it out every day. When Carbonmade started, it was nothing more than a small tool for Dave to update his portfolio. Today it’s a healthy, thriving business supporting the three of us full-time without any outside investment.

Before Carbonmade

The stars were first aligned in 2004, when Jason and Dave began working together formally, having founded a small design studio called nterface. They’d dabbled on projects together as early as 2001 as freelancers. Jason was working out of San Francisco and Dave was in Chicago. Jason has since moved to Chicago. They did a lot of great design work for bands, popular websites like Scribd and MerchNow, record labels and other websites: see Dave’s portfolio for more of their work.

While Dave and Jason were making a name for themselves running their design studio, I was running a startup out of my college dorm room at Yale called TypeFrag, founded in 2003 and later sold in January, 2007. I was a brash nineteen-year-old when I started it, but it wasn’t the first thing I’d done. I’d been running Internet startups since I was eleven years old and I have some stories to tell if you happen to be in NYC and want to grab a beer. Just to name a few:

A small ISP I started back in 1995 as a summer job was shut down after a run-in with the FBI. Apparently our servers were compromised and government computers were hacked using them.
A few years later, I was running some web hosting servers out of my parent’s house on the Yale campus (my parents are professors there and this was before I attended). I was forced to shut that down after a phone call from the IT department on the night of the Oscars. They thought our house’s bandwidth usage was my mom, a film professor, running some sort of Oscar-night website.
Then came Game Communications. My business partner at TypeFrag and I entered a business plan contest at Case Western Reserve University (where he was a student) and took the first prize of $75,000.

That all sounds great, but I was never truly happy with what I was doing until I met Dave and Jason and began working on Carbonmade. Carbonmade just felt like home. I’ve always been fascinated with art and design — my grandfather having been a full-time painter, my father a painter on occasion, and my mom a film professor. I had an artsy childhood to say the least.

The Early Carbonmade Years. How’d We Get Started?

In early 2006, Dave came up with the idea of creating a simple tool to enable him to manage his personal portfolio. We all know the pain of having to keep things updated manually. So Dave designed and Jason coded the first version. Although it was originally conceived just for Dave and a few of his design buddies to use, we opened Carbonmade up to everyone after many requests. “Who the hell would want to use this,” we thought. We were amazed.

At the request of many of our new users, we released two quick bursts of updates: one two months after Carbonmade was first introduced and one six months after that. The first consisted of minor bug fixing and tweaks. The second had some more significant features: we launched Whoo! a paying plan at $12/month. (Originally everything was free, but server costs add up in a hurry. We just hoped to offset those costs.) The other two things we added were captions for images — for which we’d had many requests — and a strategy for building up our extremely popular portfolio listing. The portfolio listing was originally just for us to be able to track the few dozen people who were signing up, but it quickly grew into something unwieldy.

How’d We Market Carbonmade?

A few bloggers started sharing Carbonmade with their communities and growth began to pick up: there were 3,504 portfolios on August 7th, 2006, when Tom Coates wrote his review (the first detailed description). Our appearance was much the same then as it is now, though. It’s fun to look back at how ahead of the curve Dave’s design was; some people think Carbonmade is less than half a year old.

Throughout most of those first couple of years, we never imagined that Carbonmade would reach 1,000 portfolios, let alone 100,000. But things really picked up quickly, and it was all through organic growth. We’ve spent only a few thousand dollars advertising Carbonmade.

Organic growth is funny. People we never thought would use it are using Carbonmade. We figured we’d get illustrators and photographers, but we had no clue going in that makeup artists, architects, fashion models, and landscape artists would use it too. We have an incredible variety of creative people from all walks of life. How could we anticipate that São Paulo, Brazil would be the city where we’re most in demand? And that half our traffic would come from overseas?

We are very fortunate to have enthusiastic people using Carbonmade. It shows once again that if you build something that people enjoy using and care about, it’ll market itself. We benefit from the people using Carbonmade sharing not only their portfolio but their positive experiences with their friends. Creative people are likely to be friends with other creative people who turn out to need portfolios themselves, and this creates a rapidly expanding circle. Unlike users of Facebook or Twitter, our users derive a direct benefit from showing off their portfolio, which in turn is free marketing for our service.

I also attribute our success to our commitment to making sure everyone has a good experience. We constantly say: “This thing is big. We’re no longer just building it for Dave and his friends. We’ve got hundreds of thousands of people to worry about.” It’s what keeps us up at night. It’s no longer about what’s best for us, it’s what’s best for our users. I hope that doesn’t come across as bullshit, because it’s the truth.

Then There Were Three (2007 and 2008)

Fast-forward to 2007. It’s funny how small the world is. Dave and I actually first talked back in 2006 when I asked him to design some business cards for TypeFrag. He declined the job. I was later able to convince Dave and Jason to design and develop Uncover — a Yelp-like restaurant and bar review website geared toward nightlife — and we all just clicked. Uncover proved difficult to get launched and slowly fizzled out. But I had met Dave and Jason, so it all worked out.

Our working relationship developed out of the camaraderie we felt working together on Uncover, and I began doing odds and ends for Carbonmade unofficially in 2007. I then joined nterface officially as an equal equity partner and the “everything else” guy in January 2008. It might have happened months earlier, but we put off the legal stuff until the start of 2008 for accounting and other reasons.

When I joined nterface in 2008, we were still doing client work to make ends meet (and working on a second app — more on that later). But after drastically overhauling our attitude to Carbonmade — within a very short period of time — we changed our little side project into a legitimate business. Since then we’ve become profitable enough through Carbonmade to be able to focus all our efforts on its development.

While from time to time we released a few changes in 2008 — most significantly portfolio search and PayPal as a form of payment (PayPal really helps for International customers) — 2008 was sort of a lull for us, except of course for our amazing growth. We just didn’t get all that much done on Carbonmade.

Why were there no significant updates? Well, making the transition from doing client work to a small startup (even wrapping up a few small projects) takes a large shift in attitude and takes more time than you might think to get adjusted. (It’s also something I hope to talk about in 2010 at SXSW with Danny Wen if our panel gets approved.) We still did put in thousands of hours of behind-the-scenes work. There was also adding a third person to the mix, which naturally took a while to get used to, as well as Jason’s move to Chicago. These all presented new challenges.

However, the biggest thing that held us back was that instead of going all out on Carbonmade, we decided as a group to create a second product for creative people. We spent the first nine months of 2008 developing this. We put so much time into it that we even have a working beta that’s been seen by, and praised, by a dozen or so of our close friends. However, none of the three of us were satisfied with how it turned out. And above all, we didn’t enjoy working on it. Not only that, we’re only three people and that’s hardly enough to support one product, let alone two. So that was a mistake.

All wasn’t lost, though, as we did a lot of research and development for this product, and we’ll be able to incorporate parts of it into Carbonmade. We learned a lot, and, best of all, we found our calling, which is to continue to develop Carbonmade. 2008 was a year of transition and self-discovery for us, and we’ve emerged with renewed purpose. Sometimes you can trust your instincts, other times you have to learn from your mistakes. Now more than 100,000 people have spoken. Carbonmade is our future, and nobody could be happier about that than we are.

100,000 Users and Beyond (2009)

As I mentioned earlier, by the end of 2008 we felt that Carbonmade was our future and we needed to focus all of our attention on that. We reached the benchmark of 100,000 users in March 2009, and we’ve continued to grow at a fast pace, with 158,000 users as of this publication — nearly 10,000 new users a month.

While our good fortune continues, we are working at a fever pitch on our new version. It’s taking longer than expected, but we don’t subscribe to the "Release Early, Release Often" philosophy. Admittedly, we’re perfectionists to a fault, but when you’ve got 158,000 pleased users, you can’t simply disrupt things with a series of bells-and-whistles updates just to follow a silly motto. You have to take your time and do things right or you risk upsetting a lot of people. But more on that in another article.

We’ve got a fancy new office with the boys and girls of Harvest, Dave has moved to New York City, Jason is coming in early 2010, and things are picking up quickly. We are now more accomplished than ever before, and hope to get out something new and significantly different shortly. Keep your eyes and ears open — and, of course, remember that successful companies are not built overnight.

Let's Be Friends

2009-10-13T22:35:10Z

I signed @carbonmade up for Twitter back on March 19, 2008, mainly to protect our trademark. I didn't start tweeting, though, until the second half of 2008. I didn't really get into it daily until 2009, when I realized Twitter could be all about communicating quickly with lots of mentions of your brand. The following is what I learned along the way and the process of how I got there.

Search Made Things Easy

The difficulty of finding and interacting with followers all changed when Summize was introduced. Summize, for people who don’t know, was the precursor to Twitter Search. Before Summize, I had no way to find @carbonmade members. It was like talking into a void and hoping that someone would hear you.

I caught wind of Summize around a month before Twitter acquired them in July, 2008 and began to use it heavily. Through Search, I could follow prevalent topics around our brand — something I wasn’t able to do earlier. The keywords I mainly followed were "carbonmade" and "online portfolio". I could certainly have searched for other keywords as well, but I focused mainly on these two.

There's always the devilish side of your brain that says you should search out your competitors and interact with people who mention their name, but I could never bring myself to drag them through the mud. I'd rather compete on other things. That said, it is beneficial to scope out what people are saying about the other guys, but I don’t do that obsessively.

Publicizing Your Twitter

I never feel comfortable promoting anything social media-related like our @carbonmade Twitter account until we have a strong presence. Otherwise you potentially scare off customers, because of how small and unestablished you look. It’s one of those reasons I’m against having forums on your website until you’ve got a large userbase, because otherwise it looks barren. (I’m actually against having them at all, but that’s for another article.) But even without promotion, after a period of searching, following, and interacting with our members on Twitter, our account slowly began to grow.

After acquiring several hundred followers, I thought it was time to introduce Twitter to our everyday Carbonmade members who are (1) either on Twitter and haven’t tweeted out the word Carbonmade or (2) haven’t signed up for Twitter yet. The only way to reach these people was to publicize our Twitter account on our blog, link it up directly in our sidebar, and put it in the footer of every email we send out. (I also include a link to our blog in every outgoing e-mail.)

The first two ideas — blogging about it and linking it up directly in your sidebar — are not necessarily novel, but I think my idea of putting a link to Twitter in the bottom of every email is to some extent, at least as recently as early 2009. Your members don’t always read your blog, so it’s hard to ensure that everyone is going to see it in the sidebar. That’s why you have to put it in your outgoing emails, which are typically read all the way through (especially support/sales e-mails). It was around January of 2009 when I thought to do this and I could simply feel the effect it had on our user count (this was before TwitterCounter and similar services).

Timeliness Counts

Even with Twitter Search in place, and being able to go to the website and search for keywords, it was still a cumbersome process that wasn’t very time efficient. You had to search, open up a new window with the person’s tweet, follow them, reply to them, and repeat. Lots of windows and lots of clicks. It consumed an hour a day or more and I was desperately searching for a better solution.

I experimented with the built-in searches through services like CoTweet (web browser), Twitterfon (iPhone), and Tweetie (iPhone). None made this approach simple. I actually handled our Twitter account entirely through Tweetie’s iPhone app for several months, but typing on an iPhone and keeping track of everything that was being said was no picnic.

I began to fall behind on tweets, as we were getting dozens a day, and if I skipped one day then I’d have twice the work to do to catch up. Don’t even think about skipping a Friday and a weekend and trying to catch up with everything on Monday. I’d be looking at a hundred tweets that I’d have to follow and reply to if I did that.

The introduction of Tweetie’s desktop app for the Mac solved all my problems and made things so much simpler. Tweetie allows you to save searches and when you re-open it, you’re automatically placed where you left off. Genius. It made all the difference, as I wouldn’t have to perform a search and scroll down to the person I last replied to.

Now, you should use this method until you’ve reached about 1,000 to 1,500 people following you on Twitter. I suggest you change your practice after your account looks something like "Following: 1,254, Followers: 1,400." At that point what I did was unfollow all people I was following (e.g. 1,254) excluding myself, Dave and Jason — my two business partners — and anyone else who works on or for Carbonmade. Your account will look more authoritative and people are more likely to follow you if your ratio of followers/following is impressive.

No matter what tool you use, and regardless whether you start unfollowing people at around 1,500, the single most important thing to do is to stay on top of tweets. To have any success at all, you need to make this a part of your daily routine, an activity set aside for several times a day. Why? Because these unassuming people who have just tweeted out “carbonmade” don’t know you’re paying attention. So contacting them three days later with a “Hey, John, thanks for using Carbonmade. I hope things are working out well” is far less effective than grabbing their attention within a few hours of their having shared their Carbonmade portfolio with their followers.

Case Study: Paying for Followers

I often debate with friends about the best way to use Twitter for business. One thing we often discuss is whether paying for followers is a smart move or not. Jason Calacanis, CEO of Mahalo, was the first to take the side of “yes” when he proposed paying Twitter $250,000 to be on their Featured User List, which brings in several thousand new followers a day and is hand-selected by the brass at Twitter. While this was mainly for show, Jason had a simple point: The more followers you have, the more people your message will reach — especially with re-tweeting — and this is valuable for any brand.

Paying for followers is a gray area for me as I’ve always been one to play it strictly above-board. So while you’re not hurting anyone by using a service like TwitterCounter to buy advertising space, you are artificially inflating your followers count, which seems somewhat shady to me. The idea behind paying for followers is that the greater your follower count, the easier you’ll be able to accumulate new legitimate followers who see that thousands of people are following you and then conclude that you must be an authoritative source.

You can only debate this for so long before someone tries it in the spirit of research. One of my friends bought $300 worth of advertising on TwitterCounter, which yielded him close to 3,000 new followers — some bots, but others simply new Twitter users looking for accounts to follow. He reported positive results: His follower count is now trending upwards at a greater rate than it ever was before. So I’m hesitant about advising you do this, I do think it’s something to consider seriously.

Case Study: Chat

For the past six months, I’ve been starting impromptu chats with @carbonmade’s followers by tweeting out something like: “Join the party! Chatting still at http://drop.io/carbonmade/chat. Come chat with me and win a free Whoo! upgrade.” Eric Friedman beat me to the punch in discussing why you should talk to your customers and let them talk to each other, using my chats at Carbonmade as his example. He summarized my position well: “Many companies have two way communication via blogs and comments — but there is something powerful about a real time chat where you actually get to interact with the folks behind a business.” Try it out. I think you’ll see positive results as I have.

Case Study: Contests

After many successful months starting chats through Twitter, I got the idea – mainly inspired by SquareSpace’s #squarespace Twitter iPhone challenge earlier this year – to giveaway a free Whoo! upgrade if people completed my sentence. For example, just last week I tweeted out “Tweet out ‘You should sign up for @carbonmade because...’ and win a free Whoo! upgrade. Feel free to be creative about it. ;)” I’ve done this three or four times now and always get great responses. My favorite from last week was by @jfcorcoran tweet that linked to a hilarious Caddyshack video of the infamous gopher: “You should sign up for @carbonmade because it make you feel like this!”

This has the obvious effect of treating your loyal @carbonmade followers to a free prize (an upgraded account), gets their creative juices flowing, and exposes your brand to people on Twitter who follow them but may not have heard of you. Since most people follow and are followed by people who are similar to them, in our case it’s likely that we’re reaching more creative folks who follow these people.

Value

One of peoples’ main gripes about Twitter (at least early on) was that it adds no value to your daily life – and could be seen simply as a procrastination tool. While there may be some truth in that, it’s a lot different for businesses. A clear example of Twitter being exceptionally good for business is what has happened at Dell. Dell reported back in December 2008 that it had made $1 million in revenue through Twitter. And then more recently The New York Times reported that by June 2009, Dell had earned $3 million by this means.

While those figures are larger than your average business is making on Twitter, they should give you an idea of how effective marketing on Twitter can be. For Carbonmade, although it’s more difficult for me to quantify how much we’ve earned, I do know that we’ve signed up a few hundred people who must not have had a clue what Carbonmade was before hearing about us through Twitter. We track all signups from the twitter.com URL in our backend.

Not only are we gaining more users through Twitter, but we’re also interacting with our members in a way that was never previously possible. I spend plenty of time each day — as mentioned previously — replying to people’s questions and interacting with them. This near real-time interaction allows me to be more living presence than a simple e-mail address. This translates into more loyal members, because they see you as more of a person and less of a company.

The final value it adds is the quick snippets of information you can send out that can be re-tweeting to hundreds or thousands of people who may never have heard of your brand. This is easily measured too by following the number of re-tweets your brand gets and will be even further clarified when Twitter releases their new re-tweet mechanics.

Conclusion

If your business is just starting out and is not on Twitter, I understand that this may not be your primary focus. You’ve certainly got more important things to worry about. But as soon as you’ve amassed a fair amount of users and have people to interact with, it’s clearly a must. The constant real-time updates, getting to know your users on a more personal level, and the shaping of your brand are all augmented through Twitter.

Just make sure not to get lazy. As with blogging, you need to keep producing content and interacting with the people that follow you. Keep your activity up and make sure to do it with a smile on your face and treat it like fun, not work. Nobody wants to hear from a corporate Grinch.