Our Startup Story

This topic applies to many spaces, and it’s one that has come up for 360|Conferences a few times. Our events are  often compared to barcamp style events, which are more often than not, free, because we’re usually far less expensive than most events, that charge.

I suppose on one hand it’s a compliment, since often those events are 100% community and usually entertaining and fun, if not informative. On the other hand though, it’s not a very fair comparison.

• Barcamps aren’t usually 3-4 days long
• They rarely include meals and/or parties
• They don’t often have SWAG (of varying importance for sure)
• They don’t cover any speaker expense

We recently had someone complain that we should still be charging $100 dollars for 360|Flex, our Flex Developer conference, because that was what we charged the first time.

That’s all well and good, except we lost money. $100 for 3 days, without it being completely a marketing event, with fun parties, good content, etc, is as we’ve found, unrealistic.

Barcamps are great, but they’re not a business. Barcamp style events are typically organized by local community members who want to do an event. The barcamp style event is very easy to get setup and has very few, if any requirements on the organizer. Barcamps rely on sponsors to provide things, like lunch, badges, parties etc. and if that doesn’t happen, that’s just too bad. “You didn’t pay to come, or you paid very little, what do you expect?” is often heard.

The organizer is most likely employed, and not relying on the conference to pay his phone bill let alone mortgage. His goal was to bring people together, which is awesome and applause worthy, but not a business.

Barcamps (like MashupCamp, startupCamp, etc.) don’t have defined speakers, and rely on people coming prepared to speak/present, and finding enough people to do so, the day of.

It’s hard to stack up against a free event, when the free event isn’t intended to be a business. Tom and I would love to do free events, but unless everyone wants to be schilled at 100% of the time by the sponsors we’d need to subsidize the event, it’s unrealistic.

I think comparing one event to another (regardless of whether they’re similar or not) is a bad practice to get into (and I often do it myself, I admit), when the real comparison is the value and ROI to the attendee.  Compare what attendees take away, compare what they get from the event. After all that’s the important thing. It’s not a ‘who gives more SWAG, or has the best parties’ contest, it’s who gives their attendees the most bang for their buck, that’s what counts.

It’s tough sometimes to keep that in mind, I admit.

One of the most difficult decisions a startup company will face is how to price their product or service.  Price it too low, and your business may become unsustainable.  It also may be seen as having little value if your price point is too low.  Price it too high and you could drive away potential customers.

The first thing to realize when pricing your product or service is that there is no such thing as an “actual” value of a product or service.  Everything deals with perceived value.  As a vendor, you have a perception of the value of your good or service.  The customer will also have a perception of the value of the product that plays a role in whether they buy or not.

Before moving on, let’s take a step back and talk about the US system of ethical capitalism.  Capitalism is by far the best system we have going on the planet for improving the quality of life for people on earth.  Unfortunately, capitalism in its purest form will not work if unethical people are involved.  In a capitalistic transaction, each party brings to the table something the other one wants.  In modern society, where we no longer have a barter system, one party brings money, and the other brings a good or service.  The beauty of this system is that the game is set up so that BOTH the buyer and the seller win in the transaction. The seller receives money which they want, and the buyer receives the good or service that they want.  If one of the parties starts to act in an unethical manner, both will end up losing in the end.  The seller will lose because people will stop buying from him if he’s perceived to have “cheated” people in the past.  The buyer will lose because he’s either been cheated, or because the good or service is no longer available.  Any business transaction is built upon the trust between the buyer and seller.  In the US, we don’t have a capitalistic economy, but rather a mixed economy.  We take the priciples of capitalism we like, but also add some government regulations such as anti-trust, and price-gouging laws to the mix because we inherently know that not everybody will behave in a purely ethical manner.

So, how does a seller make the decision of where to price a product?  In the seller’s mind, the thing they’re selling has some set value to them.  In the buyer’s mind, they also have a perceived value.

Some startups make the mistake of pricing their product at the level of customer perceived value.  They put themselves in the customer’s shoes and say something like… Ok, if the customer uses my product, they’ll save 4 days of effort on their side as opposed to doing it themselves.  Therefore, I should price my product at 4 days of the buyer’s salary.  This approach completely misses the subtle fact that a buyer will not buy a product unless the price is somewhere BELOW their perceived value.  The buyer NEEDS to feel like they’re getting a deal.  This also misses the fact that the buyer may not care about buying additional days.  They might be buying “cool” or “useful”, not necessarily something practical like “days of effort”.  They also might be buying something intangible like “prestige” as is the case when you buy a Ferrari, BMW, or Lexus.

Assume you’re the buyer for a second.  If the price of something is exactly at or above what your perceived value is, you won’t buy because you don’t win in the transaction.  You either come out behind or exactly where you started out.  The default position for a buyer is to do nothing.  A buyer won’t be moved to act unless there is a strong feeling that they win in the transaction.  A buyer will perceive value in a product when they feel like they’re getting a deal.

While we’re pretending, let’s say that I’m in the market for a basejumping wingsuit.  I have some perceived value in my head of the fun I’m going to have while basejumping with that wingsuit and what amount of money that is worth to me.  Let’s say that the experience is worth about $2000 to me.  What’s important to note is that I won’t buy anything at or over $2000.  If I were, then my perceived value is actually higher than $2000.  In this scenario, the basejumping wingsuit store first looks at their hard costs for time, materials, and labor.  Let’s say they can build a nice wingsuit for around $500.  Their perceived value for the wingsuit is actually a bit higher than that, since they wouldn’t have undertaken the effort to begin with if it wasn’t worthwhile for them. The seller then has some flexibility in pricing their product from $500 up to $2000.  I probably won’t buy at the low end because the product will feel too “cheap” for me.  Since I’m taking my own life in my hands, I don’t want to buy a “cheap” wingsuit. I also probably won’t buy at the high end because I’m not getting a good enough deal.  In the end, I go with a $1500 wingsuit because I feel like I got a deal and I got a higher-end wingsuit so there’s some intangible prestige value to me there.  The seller also walks away happy from the deal since they just made a nice profit of $1000 from me.

This principle of buyer perceived value vs. seller perceived value can be seen starkly on display when you watch a TV infomercial.  In an infomercial, they usually try to tell the buyer what their perceived value should be.  They say something like, “All of these items…A $60 value, all for $19.95″.  They try to put a perceived value of $60 into the head of the buyer, but sell the items for their own perceived value of $19.95.  The buyer may or may not actually perceive the value to be $60 dollars, but that doesn’t stop the infomercial people from trying to put that idea into the buyer’s head.

I’ll leave you with a little bit of inspiration:
http://www.youtube.com/watch?v=6xlQdx9nCeM&feature=fvsr

I just got the final bill from a contractor who was rebuilding a retaining wall from the side of my house.  Imagine my surprise when the bill was $1K over and above the contract price.  We had a nice argument about it.  He said two things that I found out of place.  One was he said he did a good job.  The second was that I was buying his time as part of the project, and certain things took longer due to problems.

I’ll address these one by one.  First, I have no way to judge whether he did a good job or not.  In fact, I probably never will know.  I’ll know if he did a bad job because the wall will start to fall / shift / move in a few years.  But, unless I have some other skilled person come out and evaluate the work, I’ll never really know if he did a good job.  I don’t have the skills to judge construction quality.  It looks nice, sure, but if the web has taught us anything; just because it looks nice doesn’t mean it works.

Second, and the real meat of this post is what I was buying from him.  Was it his time?  No!  Was it a bunch of bricks?  No!  I was buying a wider driveway.  I was buying a wall that would not bend and drift to the wills of  nature.  I was also buying the ability to more easily shovel snow off my driveway.  I was also buying the ability to not scratch my car as I backed out of the driveway.  These were the primary motivators in my having the retaining wall rebuilt.

What does your business sell to customers?  What do your customers buy from you?  They may not be the same thing.  If you were going to get in touch with only one of these things, I strongly suggest that it is the latter.  With Flextras, I sell Interface Components for Flex Developers.  However customers are buying free time.  It may take 2-4 weeks for them to build a component comparable to the one they can buy from me for less than a day’s pay.  What will they do with the extra time?  Maybe work on other important pieces of the application, thus creating a happy customer.   Maybe they’ll step away from the computer and listen to their newborn child say “dada” for the first time.  Maybe they’ll go out on a long hike through the woods near the local park, stopping by the stream to have lunch with their latest love interest.  I’m not sure what they’ll do, but I want to give them the time to make it happen.

Why do your customers buy from you?  How does that differ from what you sell them?

Part of my goal is to do an almost diary-like coverage of me doing the startup.  Until February, I’ll still be part time on the biz and full time on my developer job.  I did, however, get a taste of what’s to come last week.

When John and I decided to do 360|iDev, we figured we should go to Macworld for a day.  We agreed to do a show and then 3 days later, Apple announced it was pulling out of Macworld.  We saw this as a great opportunity to talk to sponsors and developers to let them know that there’s a new show in town: ours.  John and I reg’d for the expo and John bought his ticket for Cali.  Now we needed a plan.  What would we do at the show?

John and I do one offline marketing campaign per 360|Flex.  We print up a bunch of oversized postcards and mail them out to Flex User Group Managers.  They hand out the fliers and we give them a free pass or two to raffle in exchange for them hyping the event.  It works out great for us and for the UGs as well. Then that’s it for marketing. We never really go anywhere to promote our show.  We never really pound the pavement so to speak.  We’re blessed to have a community that loves us, so word of mouth pretty much takes over from there. With 360|iDev, we realize that wasn’t going to happen.

When we did 360|Flex Europe, we assumed our US brand would carry over and we’d have to do little work.  We were wrong.  It hurt to be wrong, but we learned a valuable lesson: Don’t think you’re brand is as recognizable as Mickey Mouse.  Success in one market does not in any way, shape or form guarantee success in another market.

Therefore, for 360|iDev, we realized we’d have to do more.  We put in our order for our traditional oversized postcards for attendees, but our Daneen, our marketing gal, got smart.  She pointed out that it would be better to print the sponsor cards in a matching fashion vs a ghetto inkjet print job done at home.  With these two pieces of collateral, this time we’d have to hit the streets and find people to give them too.  Find people who would not only attend the show, but also possibly speak or sponsor.

Last Thursday, John and I walked into the Moscone Center with a handful of general info cards and sponsor cards.  We were walking towards the main expo hall.  Along the way, we passed tables full of attendees awaiting to get into the expo hall.  Initially, we walked right by them.  LOL  Like I said, John and I are new to this in-person sales stuff.  :)  It hit me, “Crap, we need to be giving these people the attendee fliers.”  I make John pull over, grab the fliers and turned to the people.

Now, the people were oblivious to me.  I was just another goob in a conference shirt (a 360|Flex polo) standing with fliers looking in their general direction.  I probably looked no different than any other Apple Fanboy standing around.  Inside though, was a whole different story.  I so desperately wanted to turn to John and say, “Here’s the fliers.  Go give ‘em out!”  It was that initial fear of rejection we all have regardless of what the task is.  The butterflies were a fluttering and the sweat glands were in the process of dumping all moisture they had in reserve.  I’m sure if I stood there much longer and doted on it, I would’ve not done anything.  I would’ve talked myself out of doing what we came to do: “These people probably aren’t even iPhone developers.  They wouldn’t want one of my fliers. I bet some might even get mad for me spamming them in person!”

After a few moments of inner arguing and turmoil, I said, “Oh shut up and suck it up will ya.  There’s work to do.”  With that I stepped to the nearest table and started handing out fliers.  I worked my way around to all the tables near the main expo hall.  There was maybe 40 of them spread about.  I walked up and dropped a handful of attendee fliers on the table.  I gave a smile to those that looked up at me.  You know what, not one person gave a bad vibe.  Quite a few actually said, “Thank you” as I put the fliers there.  “Thank you” is usually reserved for when you do something nice for a person, not when you’re trying to sell them something I thought.  Thing is though, if they are an iPhone developer or want to be one, they’d need some help getting their A-game on.  This conference of ours will help them do that.

I think that’s the aspect of sales I need to take more to heart.  Sales isn’t about being the sleazy used car salesman portrayed in movies.  Sales is all about attitude, which should one of helping.  John and I aren’t criminals taking people’s money and returning nothing in return.  In fact, we’re the opposite.  We take a lot less money than our competitors and we give as much, if not more, value than them in return.  We’re a value and we here to help our customers.  It is our duty as a business to make them aware of what we offer and how it can help them.  They, in turn, can then decide whether they see value in that offering.

After handing out the fliers to those on the tables, it become readily apparent to John and I that we grossly underestimated the amount of fliers we’d need.  Luckily, we had another 2800 back in John’s hotel room.  LOL  It was very cool to walk around and seeing people carrying/reading our postcards.  It gave a little more pep to our step as we hit the expo hall.

The expo would be a completely different beast.  Dropping the card on the tables involved a smile and fast movement.  In the expo hall, we’d need to sell the show.  Luckily, I had John with me.  I’m not quite sure how people start a business on their own. I’d be too scared to do most of the crap that’s needed.  John and I though, if nothing else, genuinely enjoy each others company.  We started out a bit timid.  As the day wore on though, we realized everyone was very positive about the show.  This lifted our spirits and helped us keep going after 6 hours of walkin around.  We did have two sour pusses: 1 – “What’s in it for me?” attitude from a marketing gal no less.  (I feel sorry for that company) and 1 – “Uh yeah, thanks.” as he folded up the flier to trash it.  The high points came when we approached vendors/dev shops and they already had our postcard from outside! w00t!!

By the end of the day, I was exhausted and exhilarated.  We talked to a ton of people and got the word out about 360|iDev.  It’s shaping up to be a great conference.  It was also a great preview of what’s to come for me.  Hitting a deadline for your FT job is a nice feeling, but nothing compares to working your butt off all day to support your own business.  If you haven’t tried it yet, you gotta do it.  I’m just sorta bummed I can’t do it again until the end of the month!

For those that have already forgotten, yeah that’s like everyone, Cuil launched in July 2008.

No one cared.

Cuil launched, and didn’t work, results sucked, the site went down, etc. As launches go, it was a dud.

Being stealth in general, is LAME, IMHO. No idea is that revolutionary, and hello! Cuil was a search engine! Stealth just raises the bar high, higher than you probably want. How about you embrace the web, stop being so secretive? Get the community behind you?

Techcrunch has a good write up on Cuil’s loserness.

From time to time Tom and I have thought to keep something underwraps, save it up for a big announcement, etc. It always blows up in our faces, without fail. Some one will call us out “I was going to blog about your event, but you had no sponsors up” or something like that, when in fact we had sponsors, but were waiting to announce on a certain day, whoops!

This is short and it’s my take, but don’t be stealth, and don’t be lame, and don’t rely on hype to define your value. Be worthwhile, and be something people will want to use. Don’t be a 33mil money trap, “Google killer”, don’t be an anything killer! Just be. Be good, be a venture that meets a need, not a venture looking for a problem.

Buh bye Cuil, it was an uneventful life, and you’ll be remembered… ok well you won’t, but thanks for all the fish.

I was flipping through my news aggregator and came across this post on SlashDot. Some guy is wondering if part time IT jobs exist.  While the post doesn’t relate to the purpose of this blog, one of the first comments in there struck a nerve in me.  The quote worthy of note is:

It takes more than one person to provide something of value.

This is the absolute most ridiculous thing I ever heard.  During the course of my life, I have met plenty of people who have provided value as an indvidual.  I remember working as a “Sales Associate” at Waldenbooks.  As you might expect, such a retail job had tons of turn over in employees. During my 8 year “tenure” there, I worked under many different managers.  Most of them were easily forgotten.  Except one!  Kristen was the last manager I worked under.  She lasted the longest.  She was also the most organized person I’ve ever known.  She got the store “in shape” for the company, while using less than her company allotted man hours.  That alone is worth something to a company.  However, she went above and beyond just that.  Her organization guided us associates employees to work more efficiently and make better use of our time.  Instead of the haphazard meanderings of the “next step”, we knew where we were at and what had to be done.  There was a lot less frustration about the job and the store.  Although I don’t know numbers, I bet that led to better customer service, which led to more sales.

The vast majority of businesses start as single person ventures.  I find it hard to believe that such ventures would grow if that venture provided no value.  So, when you sit down to think about your business, be sure to consider what the value proposition is.  Be sure to communicate the value succinctly.  Be as direct as possible.  Research your competitors.  What do they offer?  What is their value proposition?   How will you be different?  Don’t assume that your prospects will know; tell them all about it.

When I accidently started DotComIt, I never thought about any of this stuff.  Survival was just dumb luck.  It wasn’t until recently I started to look at this stuff seriously.  The Flex Show podcast is a DotComIt brand.  What is the value proposition?  We help developers learn Flex on their own time!  How do we do it?  By releasing mp3s of developer interviews and screencasts of code tutorials.  They can download–through iTunes or elsewhere–and listen or watch on their own time.

What is the value proposition of Flextras?  We save Flex developers time.  It will be a lot cheaper to buy our interface components than to try to build and test a similar component.  How do they know our component will work for their app?  They will be able to download our developer edition at no cost and test it out.  The Developer edition will help prove to them, to their boss, to their client that the app works in the context of their application.

Traditionally DotComIt has only done consulting development for small businesses.  What was the value proposition there?  We delivered on time and within budget.  Sadly, I never knew this was the value proposition until I recently took a long hard look a the business.  But, consistentcy and reliability is one thing that kept bringing people back.

When you are planning out your idea; be sure to ask yourself.  What is the value I’m going to bring to my customers?  How is that value different from my competitors?