Carsonified

Update: I’ve added a few more web apps to the list at the end.

My last post on Web Mission stirred up a lot of discussion so I’d like to expand on my original thoughts.

My main point was not that going to Silicon Valley to build relationships is a waste of time or money. Everybody knows that making friends and nurturing connections is of the utmost importance and I’m 100% supportive of that.

Also, if anyone is participating in Web Mission because they’re trying to establish a specific relationship with someone in the USA - more power to them.

So what’s the problem?

Getting the message right

What bothers me about Web Mission is that it sends out this message:

“Web apps need to emulate the Silicon Valley model: Funding, quick growth and exit by acquisition or IPO.”

I disagree. And I also don’t think that that’s the message we should be sending out to the UK Web industry.

David Heinemeier Hansson doesn’t agreed either and makes the point in his post Are you sure you want to be in San Francisco? I think this quote is particularly relevant:

“It [being in Silicon Valley] takes away much of the urgency to make money that I think is critical to build sustainable businesses. It gives you too many resources to be satisfied building simple tools for niche markets. Everything becomes about catching that huge wave.”

There’s glory, money and fame to be made in California but the problem is that only a tiny percentage of web apps will ever find it.

More of us should be focusing on building simple, focused, small-team web apps that meet everyday needs. Am I saying we should kill our dreams of changing the world? No. But we all need to admit that YouTube, Facebook, Bebo, Google and Twitter just aren’t the norm.

Instead of desperately trying to create the next phenomenon, which is highly unlikely, why not aim for something that’s definitely achievable?
If you have a team of two or three and you bring in $1M in revenue per year, I’m guessing you’ll be pretty damn happy with your earnings. And to do that, all you need to achieve is 2000+ accounts at $40 per month. With those kind of numbers, you just don’t need mass adoption.

We’ve done it. So can you.

As I’ve said before, we spent $45,000 on building DropSend. It now brings in profits of over $200,000 per year, and we don’t even have someone working full time on it.*

YouSendIt, our biggest competitor, has raised at least $10 million in funding. I don’t know how big their team is, but I’m willing to bet it’s at least 20 people. So immediately, they’ve created a huge amount of pressure on themselves to generate large revenues. With all that funding and all those mouths to feed, it’s a completely different game.

Could they crush us because they’re throwing more money at the problem? Possibly. But we’re more agile and can react much quicker. Even if they squeeze us out of the market someday, we can easily launch another niche-market web app and quickly become profitable.
I’ve got nothing against taking big risks and betting big, but sometimes it just doesn’t make sense. We’re currently enjoying a lot of profit from DropSend for almost zero risk or stress. Which model is better?

Too simple?

I can see the comments already: “Ryan, you’re naive. It’s not that simple.”  Well, maybe not all of the time, but you know what, most of the time, it is that simple. Build your app on a smaller budget, with a smaller team, focusing on a smaller niche, and you’ll be profitable much more quickly.

With the advent of cloud computing and storage, it’s much easier to build more than one app with a small team. If you build three applications and two of them are mildly successful, you’ve got a great business on your hands.

There’s just no need for being TechCrunched and trying to reach the mass market.

I’m sure someone will say in the comments: “But Ryan, you’re an edge case. You’ve become friends with some of the big names in the Valley and that’s why DropSend is successful - you’ve received a ton of exposure.”

Here’s my answer: 99% of our paying customers have never heard of Web 2.0, TechCrunch or any of our events. They’ve just googled ‘Send large files’ or someone has sent them a file via DropSend so they decided to give it a try.

The bigger question

The real issue I’m getting at here is this: What does it take to make you happy?

Money is important to being happy, I’ll admit that. You need enough cash to live comfortably and feel secure. However, I think it’s dangerous to assume that your company needs to bring in a huge amount of revenue in order for you to live the good life.

Take a minute and do a little exercise with me. Imagine logging into your online banking and seeing a deposit of $10 million - right after you’ve been acquired or sold all your shares.

How do you feel? What would you do with the money? Buy your dream house? Pay off your debts? Get that Audi R8 you’ve been dreaming about? Send your kids to private school?

OK, now imagine you’ve done the things on your list. How do you feel. Any happier? I’d be willing to bet that you won’t actually feel much happier than you do now. You might feel nice for about two months, and then you’ll be itching to do something else.
Happiness isn’t found in being the next company to sell for $100 million. So that’s the whole point - you can have a small web app business and still enjoy the good life.
No Silicon Valley needed.

They’ve done it too

Here’s a list of great web apps that are small, successful, profitable and happy - all without emulating the Silicon Valley model:

BlinkSale
37signals
FreshBooks
WeLoveLocal
Flexiscale
Remember the Milk
Fogbugz (from Joel)
Campaign Monitor
Nozbe
ActiveCollab

There are a ton more, obviously. Please add them in the comments and I’ll update the post.

* I plan on changing this as soon as I get off paternity leave, I’ll be going back to work full time on Carsonified’s web apps. We’re hiring a full-time developer and we’re hoping to start on our third web app quite soon.

I’ve noticed that TechCrunch is fully supporting Web Mission ‘08 and I just can’t hold my tongue any longer.

Web Mission exemplifies everything that’s wrong with the UK and European web start-up scene.

Read the rest of this entry »

Every company is desperate for good PR - we all want (and need) to get coverage in the blogosphere, television and printed press. So what’s the secret? How did 37signals get a 4-page feature in Wired? Why is Zuckerberg being interviewed on 60 Minutes?

37signals, Facebook and others aren’t spending money on advertising so how are they getting this coverage?

The answer is pretty simple, actually. They’re remarkable companies. They’re different and they’re not afraid to talk about it.

One of my favorite quotes is “Marketing is the price you pay for being unremarkable” (Robert Stephens, founder of the Geek Squad) and we really believe that here at Carsonified.

We’ve been fortunate to get coverage on TechCrunch (Amigo launch, FOWA Miami Panel, FOWA digg announcement, FOWA Pownce announcement, FOWA Miami Panel (again), Web Apps 101, DropSend sale 1, DropSend sale 2), New York Times, Read Write Web, GigaOm and an upcoming TV show on a major UK network.

I recently got an email from a UK production company who came across my article on A List Apart about our 4-day workweek. They want to do a television show where I go in and ‘fix’ a company with whose culture sucks. Our 4-day workweek, Idea Week, nice gear, and relaxed environment make us special. The production company believes that our company culture is remarkable, therefore worth doing a television show about.

And we don’t even have a PR company.

I’m not trying to brag about our media coverage. I’m simply pointing out the power of being a small, yet remarkable company.

I love that - being different is more exciting and it helps you get coverage in the media. What more could you want?

Why not spend some time today brainstorming how you can make your product, service and company remarkable? Just doing a good job isn’t enough any more.

I just picked up a copy of Seth Godin’s book Small is the New Big and it’s already sparking ideas in my head. Definitely worth picking up.

I love this quote:

Consumers have more power than ever before.
Treating them like they don’t matter doesn’t work.

What he’s essentially saying is that you’ve got to respect your customers. Don’t ever try to bullshit them. Ever.

I’m tempted to shovel a little BS almost daily with DropSend support queries. For instance, our desktop uploader used to not work with our Business Plan. When I would get an email saying “Why doesn’t the desktop tool work with the Business Plan?” it was tempting to say “We’re working on it and it’ll be ready shortly.” The truth was, however, we weren’t even close to working on it. We had a million other things to do first. A couple times I gave people that answer but I knew deep down that it wasn’t actually true.

So I started respecting people by telling them the truth: “I’m really sorry, but it’s currently not compatible with the Business Plan. Unfortunately, it’s not a priority to get that fixed. I’m really sorry for the inconvenience.”

The funny thing is that people would usually respond with something along the lines of “OK, thanks for letting me know.” They just wanted the truth. (Once we finally updated the uploader tool to work with the Business Plan, those emails stopped coming in - should’ve done that sooner!) :D

We asked one of our customers to pay an invoice and this is part of the email we got back. It’s so absurd that I had to laugh. I’ve bolded the funniest part:

Italy 90 days from the end of the month the invoice was issued in

Finland, Norway, Sweden Net 30 days

Denmark Net 35 days

All remaining EMEA countries Net 45 days (UK is one of these.)

To request payment terms shorter than the standard noted above, complete relevant lines in the template and email it to your Finance Director for their approval. Once the FD has approved, forward this template along with the FD approval to your BU VP and your CFO Staff VP for their approvals.

If you need to be paid before these date, you need to fill the form.

I don’t even know what a ‘BU VP’ is and we sure as heck don’t have a ‘CFO Staff VP’! They’re making it so damn hard to get paid promptly that I’m sure most people give up (including us!). Sheesh.

This just seems wrong - why can’t you pay your bills on time (within 30 days), like everyone else? This strong-arming is just bad business.

I’m helping put together an invite list for a discussion with Steve Ballmer (CEO of Microsoft) here in London on October 1st.

Microsoft approached me because they wanted to invite folks who don’t always agree with Microsoft and their online strategy. It should be an interesting discussion and I’m hoping it will generate some great conversations.
There are only 10 seats left, so if you’d like to attend, please email me (ryan at this domain) and I’ll let you know if we can get you in.

Here’s the schedule:

• 09:30 - 10:00 Arrive
• 10:00 – 10:10 Lars Lindstedt, Microsoft:  Introduction
• 10:10 – 10:45 Brent Hoberman, lastminute.com, mydeco.com: What makes a successful web start-up
• 10:45 – 11:30 Steve Ballmer, Microsoft: The Online Opportunity
• 11:30 – 11:40 Panellist introductions:
• Saul Klein (Index Ventures / Seedcamp)
• Cary Marsh (mydeo.com)
• Ben Way (Making Rain / ViaPost)
• 11:40 – 12:15 Panel discussion – The Future of Web Entrepreneurship and Q&A, chaired by Ryan Carson
• 12:15 – 13:00 Lunch

I couldn’t help but laugh when I saw this poster at the airport in Copenhagen:

That’s the myth, isn’t it? Bigger is better, therefore every company should be bigger. Bullshit. Maybe if more companies stayed small and focused on quality, instead of revenue growth, the world would be a better place.

By the way, if you own a business and you can only read one book this year, make sure to pick up a copy of Small Giants: Companies that Choose to be Great Instead of Big

P.S. Before I get torn to pieces in the comments, let me say this: I understand that certain companies need to be big in order to function. Visa is a good example: the more places it’s accepted (which means they need to be bigger to support the business), the better.