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Why You Should Ignore Bad Press

August 9, 2011 by · Leave a Comment

042810Pave-11

Time for a little against the grain advice. The common response to bad press and criticism now is to face it head on, own up to the problem, take responsibility, and be as transparent as possible. The utopian approach is all well and good, but I believe that in many situations the proper response is to simply ignore the bad press and criticism.

Don’t Validate the small issues

Any time that you (your company) responds to a criticism you are validating it. If there is a criticism that is definitively unfounded then it’s OK to say that, but if the criticism is valid then the best response, at least initially, is to ignore. When you make a public response to a criticism you are validating the issue and giving the party making the allegation all the power. Unless the criticism is coming from an outlet with a huge following then ignoring will usually lead to the problem just going away.

Here’s an example: If your app has a bug that’s being discussed on a forum then you should work as quickly as possible to fix the problem, without trying to join the conversation. Once you fix the problem the forum’s users will see that and the tone of the conversation will change. They will suspect that you’ve heard their complaint and addressed the issue, but they won’t be sure. For all they know it could’ve been a temporary issue or something maintenance related. If the issue continues to spread to other forums, blogs, or social channels then it may be time to start rolling out the public relations campaign to respond The goal is to act quickly to resolve the issue to keep it from ever reaching the masses in the first place.

This Isn’t Always The Solution

If you have an issue that’s gaining widespread attention then you should immediately seek to gain control of the issue. If there’s a bug to be fixed then fix it and respond. If you have a business practice that others are maligning (right or wrong) then you should wait a couple of days, and if the issue is still there, you should formally respond. It’s OK to defend yourself. In today’s uber-politically-correct world people forget that they actually have the right to defend themselves. You don’t have to just sit back and take the criticism. If you want to fight the allegations then you absolutely should do that.

Bringing It Home

What’s your response when you start receiving bad press? Do you immediately respond? I’d love to hear your experiences!

Image credit: HPUPhotogStudent on Flickr

Filed Under: CEO, Marketing, Misc, Tips and Tools · Tagged With: , ,

Building a Bootstrapped Empire

August 5, 2011 by · 1 Comment

London Landmarks Pattern

A bootstrapped company can definitely grow to the point where million dollar revenues are common, but that’s not for everyone. If you intentionally want to keep your team small while maximizing both revenue and profit then a simpler route may be what I call “Empire Building”.

Empire Building is growing your revenue (and therefore profit) by acquiring other small, bootstrapped companies. This requires already having a product with substantial profit, probably at least $125k/year. Taking some of that yearly profit and investing it in other bootstrapped companies allows you to diversify your product portfolio and decrease risks related to a decline in your primary business, while increasing revenue and eventually (after the payback on the profit multiple) growing profits.

What Types of Acquisitions to Target

The types of acquisitions that make sense will vary between companies, but the targeted acquisition should definitely be complimentary to the abilities of your team and your overall manpower. It doesn’t make sense for a company with 5 people to buy a business that’s heavy on the administrative workload. If, however, you operate an affiliate marketing company with a couple of employees then adding a few new affiliate sites through acquisitions isn’t likely to be a burden on your team.

Things to Consider Before Making an Acquisition

Each acquisition is going to bring with it a management cost. You need to have a good idea of all of the management time, expenses, marketing effort, SEO effort, etc. that’s required to reach the stated profit. Due diligence is critical to being able to reach the same profitability for the target as the current owners. It’s always a good idea to get the sellers to agree to work with you for a month or so to help you get the acquired company functional on your end and on the road to similar profitability.

A different mindset is required when running multiple companies (or business, brands, whatever you call it). Your attention will be necessarily split between the companies, making it slightly more difficult to make progress on any of them. If your team is large enough for you to be able to assign product managers to each business then that’s a great solution. It’s easier to be the CEO of a company with 1 product making $200k per year than it is to have 5 products each making $40k per year.

Your Thoughts?

Does your company plan to have multiple products, or do you focus on just one business? Is “Empire Building” a concept that makes sense to you? Would you be interested in a series about Empire Building?

Image credit: dimitratzanos on Flickr

Filed Under: Bootstrapping, CEO, Features · Tagged With: , , , , , ,

Yep, We Still Heart PHP

August 4, 2011 by · Leave a Comment

elePHPant

Ah, PHP. It’s been endlessly scorned by cool developers everywhere, but it’s still the backbone for the vast majority of websites. PHP is kind of like the boring accountant in the back room that no one really pays any attention to but is essential to running your company.  We all know the knocks that PHP has against it: weak OOP principles, syntax requirements, etc. I certainly don’t disagree with any of those facts, but they are minor issues to me compared to the benefits of using PHP.

Frameworks to the Rescue

The frameworks of the last 5 years have taken PHP to a new level. We use CakePHP for all development at MediaLeaf, but we’ve heard great things about Symfony 2 as well. Frameworks make it super-easy to build out a prototype app quickly. CakePHP has command line tools that will create your CRUD scaffolding (Create – Read – Update – Delete) for you. Frameworks take care of the chores that go into each and every development project, particularly items like database connectivity and interaction.

Huge Community of PHP’ers

The huge community of PHP developers makes it rather simple to solve any issue that you come across. A simple Google search usually will yield results. Failing that, you can turn to the countless PHP forums. The vast number of PHP devs nearly guarantees that someone has already solved your problem. The key is usually figuring out the best way to describe your issue so that you can efficiently search for a solution.

PHP is Standard

Most hosting solutions, both cloud and dedicated, have PHP as part of the standard installation. This usually means that your hosting provider will provide you support relating to the PHP install itself. For smaller companies without system admins (like us), this is ideal.

It’s Proven at the Highest Levels

PHP is the engine that runs Facebook, WordPress, and countless other very large apps. If it can work effectively and efficiently for those guys, then we shouldn’t worry about it at scale for our applications.

We’ve evaluated Rails several times and have yet to find a compelling reason to move. We’re certainly not interested in migrating any of our existing apps away from PHP, but if something clearly better comes along then maybe we would consider it for future dev projects.

Your Turn

What are your thoughts on good-ol’ PHP? Do you still use it or have you abandoned it? Which PHP frameworks do you prefer?

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Focus On Today’s Problems, Not Tomorrow’s

July 26, 2011 by · Leave a Comment

Four heads are better than one

Time and money are the most important resources that startups have to constantly account for, and focusing on the wrong priorities can delay or completely derail a startup’s potential.

Development Should Be Focused On Today’s Priorities

Don’t spend precious development time working on tomorrow’s problems. Scale only when you need to scale. Implement that sophisticated billing system only when it’s needed. Spending time proactively building out features means that you are making assumptions about your future success (and the problems you’ll face). Making those assumptions is a gamble that usually shouldn’t be taken.

Focusing on future problems also necessarily means that you’re ignoring what needs to be done today. An early stage startup should be focused on usability, customer development, and improving the MVP as opposed to scaling. Automating routine tasks in your backoffice should take a backseat to improving the reliability of the sales funnel.

Not Just Development

The same advice applies to all areas of the company, not just development. Marketing, business development, finance, etc. should all be focused on the problems at hand, the ones that matter now.

What’s Your Take?

How do you prioritize development tasks? Do you try to focus on the immediate issues that you’re facing? When do you shift from working on the MVP to scaling and that it entails? Comments welcome.

Image credit: Nic Mcphee on Flickr

Filed Under: CEO · Tagged With: , , , , ,

What’s Keeping Me Up At Night

July 18, 2011 by · Leave a Comment

I'll Sleep When I'm Dead

My wife and I are lucky enough to have a beautiful three-month old baby girl at home; that gives me ample time at night to think about business and changing the world. I tend to focus on issues within my company, but I also tend to think about global issues that we all face together. After getting the baby to sleep I tend to think very clearly about problems and sometimes have great insights about potential solutions.

Writing A Book

This is something that I’ve been working toward for a long time. This blog is part of the path. I tend to think a lot about what specific topic the book should cover. Should it be fiction or non-fiction? Should it be a business and marketing book or should it be something philosophical and mathematical (2 other passions of mine)? Recently I’ve been thinking that the book should be a detailed guide to startup your own bootstrapped startup.

SparkCDN

SparkCDN is one of the MediaLeaf companies and something that I’ve been working heavily on for a few years. What I’ve been struggling with lately is how to position the company in the market. Do we position Spark as a full-featured content delivery network or do we focus on one particular aspect, such as live event streaming? Content delivery is a large, crowded industry, so product positioning is critical.

Another Spark issue that I’ve been struggling with recently is the complete redesign that’s currently taking place. A lot of difficult design decisions have to be made that will directly affect the perceived value and it’s ultimate usability to our customers.

Google+ and Other Social Media

I’m always looking for new and creative ways to utilize social networks to help promote myself and my brands. That means thinking a lot about Google+ and the Facebook fan pages for my brands.

Global Issues

I’ve been thinking a lot about internet censorship lately. Governments are actively working out ways to filter (i.e. censor) internet content under the guise of intellectual property protection. This is a serious detriment to consumers and will ultimately stifle innovation. Read more about the PROTECT IP act.

What About You?

What’s keeping you up at night? Comments welcome.

 Image credit: Alice Hutchinson on Flickr

Filed Under: Blogging, CEO · Tagged With: , , ,

Christmas in July – 10 Free Startup Ideas

July 14, 2011 by · 5 Comments

counting days....

Our team at MediaLeaf is pretty small, so there are many, many ideas that we have that we know we’ll never get to. I figured I would do a public service post and just give 10 of these ideas away. These ideas are completely free and up for grabs. Some of them may have even been already attempted, but there isn’t any implementation popular enough for me to know about it. These are in no particular order.

  • Positive news aggregator. 99% (just my gut feel) of the news reported is negative. Positive news is a nice niche market.
  • Visual marketing email design app. The key here would be that designs could be exported to major email service providers.
  • In-depth email marketing analytics. Major email providers provide some basic analytics, but detailed reporting and A/B analysis could be extremely helpful.
  • Mobile app to take a daily picture of yourself. Would be able to show slideshows, flipbook-style animations of how you change over time. App would send notifications to remind you to take a daily picture.
  • Generic social profiles. Portable, pre-populated social network profiles for fictitious users. Useful for dev purposes on new social sites.
  • Hyper-local shopping. Mobile app to visually browse/search inventory at stores as you walk by. Promotions can help catch passers-by.
  • 3rd generation business directory. Aimed at online B2B companies. Would require being recommended by X number of users before being listed. Kind of like a curated list of popular B2B apps.
  • Weekly meal planner. Mobile app that would allow you to enter your favorite meals and help you decide how to plan your week’s meals.
  • Email reminder service. Would let you schedule recurring tasks to be emailed to you on a periodic basis. Would allow snoozing and reminding of tasks. Create recurring tasks simply by sending an email. Like followup.cc for recurring tasks.
  • Social media marketing conversation topics. Could be a private, paid mailing list. Each week would feature X number of conversation topics and advice.

Thoughts?

What do you think about the ideas listed? Interested in trying one or more of them? Have any others to add to the list?

Disclaimer: I bear no responsibility for the quality or viability of these ideas. It’s likely that a lot of people will see these same ideas, so if you see one you like then you should move on it quickly.

Image Credit: zophonias on Flickr

Filed Under: Blogging, CEO, Misc, Social, Tips and Tools · Tagged With: , , , ,

The Beauty of Recurring Revenue

July 12, 2011 by · 1 Comment

Graph With Stacks Of Coins

Recurring revenue (or rebilling, monthly billing, periodic billing, repeat billing, whatever you want to call it) is a business model based on charging monthly fees for a service. This term is most often applied to software as a service applications, but also applies to brick-and-mortar businesses such as insurance agencies and bank fees. Recurring revenue allows a company to grow revenues exponentially quicker than single-sale based products such as app-store purchases or trips to Whole Foods.

One of the most exhilarating parts of running a business with a recurring revenue model is watching the number of customers grow month to month and the seeing the corresponding growth in projected monthly revenue. A business that brings in just $500/month, but adds about $300/month will be seeing over $4000 in revenue monthly inside of a year. This kind of growth is entirely possible (and common). Imagine where that business can be in 3-4 years. This may not raise the eyebrows of too many venture capitalists, but it’s a bootstrapper’s dream scenario.

The Recurring Revenue Growth Model

Running a recurring revenue business lends itself nicely to financial modeling and forecasting. Understanding a few variables will let you accurately forecast where your company will be in X months.

Key Variables

Churn rate – The percentage of customers that cancel their recurring accounts each month

Growth rate – Two possibilities here; either the number of users that your company grows by monthly or the percentage of growth, whichever is the most consistent month-to-month.

There’s a big difference between growing by a consistent percentage each month and a static number of accounts. Growing by a percentage, assuming your growth rate is higher than your churn rate, will yield long-term growth to your company. Conversely, if you grow by a static amount, e.g. 100 accounts per month, then your churn rate will eventually neutralize your growth. It may take 3-4 years for the churn rate to catch your growth, but it will happen.

Recurring vs Non-Recurring Sales Comparison

It’s pretty easy to see why recurring revenue is better than non-recurring revenue. For illustration purposes lets assume that company A sells a service for $5/month and company B sells a similar product for $15 single use. Here are a few observations that result from comparing the two companies.

  • Company A will need to have customers hang around for at least 3 months to match the revenue generated by company B, per customer.
  • Company A only has to make a sale once per customer. Company B has to make the sale every time a customer wants to use the product. Advertising costs clearly fall on the side of Company A.
  • All things being equal, company A’s total monthly revenue will quickly surpass that of company B, assuming that company A’s churn rate isn’t overly poor.

Your Turn

Do you have a business that generates recurring revenue? What kind of churn rates do you have?
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Filed Under: Bootstrapping, CEO, Features · Tagged With: , , , , , , ,

Starting A New Social Media Campaign: Content Strategy

June 2, 2011 by · Leave a Comment

 

SparkCDN

One of MediaLeaf’s companies, SparkCDN, has been around for a few years, but hasn’t really had a social media campaign. I’m getting ready to put a campaign into place, so I thought it would be interesting to document the thought process here on the blog.

The first thing I had to do was come up with my “requirements” for the campaign; the things that I want to make sure are included and emphasized. There are lots of different ways that a social media campaign can go, so setting up some ground rules is an important stepping stone, and one that will vary a bit by industry.

Quality Content

The most important part of planning a social media campaign is simple: quality content. You have to give followers and fans something compelling to keep them as part of your audience. The last thing you want to do is have a Facebook fan page that puts out boring content, or even worse, no content at all. So a steady stream of quality content has to be the Number 1 priority.

Quality content is kind of a big bucket, so we have to break that down a bit.

Social Media Streams

We plan to utilize Facebook and Twitter , as well as LinkedIn. I’ve never really spent much time with LinkedIn, so that’s going to be a new challenge for me. I think SparkCDN is a good fit for a LinkedIn audience because it’s our first business app. The business-oriented audience there coud easily prove more interactive than the Twitter/FB audience.

I plan to use Twitter for interaction with potential leads and customers, as well as for doing competitive research. The Facebook fan page will be primarily for news and announcements as well as interaction with fans. Facebook isn’t a great platform for discovering potential leads, so it’s relegated to more of a community role than a discovery role. LinkedIn will be more interesting. I’ll try to establish a presence in related groups and start communicating with potential leads.

Spark Blog

The company blog is always an important piece of the social media puzzle. The trick is deciding what to do with the blog and what types of content to produce. It’s nearly impossible for most companies to produce content on a daily or semi-weekly basis, so you have to be a producer/sharer of interesting semi-related content. There are a couple of companies that do a great job of this, Flowtown and Kissmetrics. Neither blog is overly centered on the product itself; they are centers of information for the entire industry.

I plan to do something similar with the Spark Blog. I plan to do things like industry interviews, share tips and advice that can help media producers, and more. The goal is to be a valuable resource for the entire livestreaming and streaming media industry. We’ll probably even throw in some customer profiles and best practices for the app as well.

I’ll put up another post soon talking about branding in social media.

What are you thoughts? Do you plan on social media campaigns in detail before launching them? What does your planning process look like? Comments appreciated!

Filed Under: Case Studies, CEO, Features, Social · Tagged With: , , , , , , , , ,

What’s With the Weak, Unoriginal Startups

May 26, 2011 by · Leave a Comment

Casino Royale

Scanning TechCrunch recently feels like reading the same articles over and over. “MyCoolStartup is Groupon/Zynga/Open Table for Teeth Whitening/Salons/Car Service”. There are 2 reasons that startups like this annoy and disappoint me.

First, ideas like this just seem unoriginal to me. I don’t like the idea of framing your idea in terms of others that have already been done. If that’s how you have to explain your idea then you’re in trouble already. I realize that framing your idea in these terms is common for coming up with your pitch to VC’s. I, however, don’t care about VC’s, so that reasoning is lost on me.

Secondly, startups like these are basically like playing slot machines. You put a bunch of hot startups on one wheel, a bunch of industries on another, and pull the lever to randomly choose one from each. Then all you have to do is come up with a name for your “GroupMe for Golfers” startup. The problem is that these startups are typically so specialized that they are doomed to failure. Instead of being the Open Table for tennis court reservations I’d rather Open Table. Small ideas typically lead to small successes. Think bigger – don’t lock yourself into one industry or market segment.

This isn’t a condemnation of individual startups or their founders. I am all for picking an idea and going for it; I just don’t like to see startup founders set their sights too low.

Filed Under: CEO, Tips and Tools · Tagged With: , ,

Firing Unprofitable Customers Is Your Job

May 19, 2011 by · Leave a Comment

You're Fired!

Not all customers are created equal and each customer has a different cost associated with them. The costs can be any number of things: cost of materials, work effort required, system resources, customer support burden, and so on. You have to keep all of those things in mind when evaluating your customers and when you’re looking to reduce costs. A CEO should be obligated to review profitability per customer and fire customers that are consistently, intractably, unprofitable. If there’s no way to monetize the customer further then they should be let go.

It is quite possible to have customers that are unprofitable, even in a web-based business. Here’s an example. Suppose you’re a software-as-a-service (SaaS) company and that your only operating costs directly affected by the customer are your manpower (for customer support) and processing expense. If your top pricepoint is an unlimited pricepoint then a customer can burden your system by using an abnormally large amount of resources (lots and lots of data, for example).

2 Options for Firing a Customer

1. Tell the customer. This is usually going to be the best method for firing customers, but it may not always be the right way to go. It’s always the best from a customer dignity standpoint.

2. Don’t tell the customer. If telling the customer what’s happening can hurt your business image then you shouldn’t do it. As an example, if you are a service provider that relies on performance and capacity then you don’t want to publicize to the world that there are some customers that you can’t handle profitably. The negative publicity around your core values can be devastating. In these cases it’s best to just let the customer know that their account has been closed, or given them a date that it will be closed.

This is topic that doesn’t get talked about a lot, but it should. A company is in no way obligated to accept every customer that walks through the door or clicks a signup button. There is a lot of profitability to be gained from pruning away unprofitable customers occasionally.

Do you or have you fired unprofitable customers? How do you communicate it to them? Comments welcome!

Filed Under: CEO, Tips and Tools · Tagged With: , , , , , , ,
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