Kalzumeus Software Year In Review 2013 | Hacker News Reader

Kalzumeus Software Year In Review 2013

kalzumeus.com

175 pointskayhi43 comments

A pedantic correction not for its own sake -- Patrick's meaning wasn't in any doubt -- but because I think it's quite interesting.

Not "bellweather" but "bellwether". A wether is a male sheep. A bellwether is a male sheep at the head of a flock, around whose neck a bell is hung so that you can hear where the flock is even when you can't see it. (The rest of the flock will follow its leader like, um, sheep.)

So a bellwether is a single thing whose behaviour is a leading indicator of that of a larger-scale bunch of other related things.

I appreciate how open this post is. The cash crunch section struck a cord. For anyone considering starting something on their own: build a buffer. Build a bigger buffer than you think you'll need.

I started three years ago, out of school. I'm not a hacker, and didn't have an immediately monetizeable skill. I saw an opportunity to build recurring revenues (through e-book sales with a partner) and pursued it as fast as I could.

The strategy worked. Those recurring revenues are wind under my wings, and gave me the skills to expand my business into other areas.

But man, that was a tough couple years. I was constantly short on cash. Historically, when people guessed my age, they guessed [biological age - 3]. Once in this rough period, people guessed my biological age!

2013 was the year my business took off. In the final six months I earned enough to pay off my loans from school, my taxes for the year, and build a savings buffer. That was from being almost bankrupt in June.

What a difference. I feel relaxed. People now guess [biological age - 1 or 2], so the decrease in stress must be having an effect. I look more rejunvenated to myself in the mirror.

I can see and pursue opportunities much more effectively. And it's all because I have a relatively small amount of excess dollars in a bank account. That surplus allows you to raise your head and look around.

Build a buffer.

Some time ago a HN member posted about maxims he uses to guide his life, and he ended up making a daily maxim site. This one came up yesterday, it's quite relevant:

http://www.maxims.us/build-superreserves/

It's good advice, and maybe build that buffer working contracts that might give you domain insight into markets you're thinking about working with.

And to extend the advice slightly, learn to live more cheaply...

Thanks, I should have pointed out the second part. I should have lived more cheaply than I did. I frittered away money here and there that could easily have tided me through a couple of short term crunches. And I could have more easily pursued several medium run goals had I had such a buffer earlier on through saving.

I've found tracking spending has made me a lot more conscious of where the money goes, and doesn't take much effort. My spending fell naturally once I knew where it was.

I also incorporated more of those hidden liabilities patrick talked about into a spreadsheet where I have an estimate of finances at month's end. Seeing my total net worth on this sheet rise has been highly motivational. It also helped me accurately assess what margin of savings I'd need at bare minimum.

Note: I tried mint, but found it didn't produce the same effect as entering data manually.

When I got very busy or stressed, one of my coping mechanisms was avoiding opening email, out of an irrational fear of finding more work or stress in my inbox.

Reading such a honest sentence triggers a lot of emotions at the same time. It helped me realise that I've really been guilty of this, and that it is now time for me to change.

I had no idea I would learn so much before I clicked this link. Great post.

Found an interesting comment from a guy called Fildo on patio11's blog:

Hmm,

that makes me wonder. 2013 was the first year I started selling my (desktop) software and I made a little more than you – without doing all the A/B testing and marketing dance. Makes me wonder if I should follow your path (originally I intended to do so) or if I should keep improving my product (adding more features).

The thing is that my software is not trivial and does some pretty complex things. Maybe that’s the difference? The retail price is about the same.

I’m pretty confused now.

The thing is, we believe patio11, there's no way to work out whether this poster is simply trolling or not. Making six figures in 12 months from a standing start working alone is very, very hard.

That said, I was surprised, initially, to see the total profit of $60k. Thinking again, I'd say the call he made was that BCC was never going to scale to any major extent. Instead, it's just background cash generation while he searches for a market/product with more promise.

I agree with your point: BCC is a niche market.

Though I wonder if BCC even has achieved its potential. I was surprised by patio11's statement:

I’m sorry, Bingo Card Creator does not support using clip art. Have a nice day.

Maybe he was joking. Clip art seems to be a feature straightforward to implement, IMHO should have been part of the feature set to begin with.

Seems like it would be a support headache to me. So much can go wrong with random uploaded images on the way to the printer.

The straightforward implementation of clip art would be larger than BCC in complexity, be used by almost no one, and not appreciably increase sales.

For example, you have to create a UX which allows non-technical customers who largely do not understand the file system metaphor to upload 25+ images, edit them, scale them to bingo card box size without making them look terrible, and then successfully print in greyscale.

Maybe I significantly underestimated the workload to implement such a feature, especially with good UX. I personally consider it a good feature to differentiate BCC from its competitors. Though I am not sure if you can say such a feature won't increase sales. I guess you may have done some market research on it, such as doing survey among users.

I (obviously) don't know your business, but the fact that the clip art / images question is part of your standard operating procedure gives me the impression that it would be used by quite a few of your customers. You may be right that it wouldn't improve sales numbers.

As to the UX, I was under the (possibly mistaken) impression that in today's day and age, most users on the internet, technical or not, understand the filesystem metaphor just fine. They send photos and other files over email, facebook, and other media frequently.

I was under the (possibly mistaken) impression that in today's day and age, most users on the internet, technical or not, understand the filesystem metaphor just fine.

Did you see Google's video where they asked people what browser they use? Many used Google, sometimes using Yahoo.

Different markets have different potentials.

I found it interesting that in one breath you lay out your plan to land enterprise sales and in the next speak of the poor quality of the underlying code base.

A good lesson for software developers, you don't need NASA hardened code to make money.

"MarkDev"? Assuming its the same thing, I've been calling this "dev-marketing", in the same vein as "dev-ops". Much better than calling it "growth hacking".

(In the future, everything will be prefixed with dev- because software is eating the world (TM), until eventually everything is software and we can drop the prefix again.)

and call ourselves elopers?

One caveat is that "developer marketing" already exists as a term representing the effort to market a product/technology to developers for adoption. (ex: developer evangelist)

Right, but "dev-marketing" is a different word than "developer marketing".

patio11, no idea if this is applicable in Japan, but in certain conditions here in Italy (you work as an independent consultant), you have to pay into Social Security rather than the Italian equivalent. This saved me a bundle of money, but it's not a widely known fact, and I didn't realize it before I found an accountant that knows how to deal with financial stuff for US persons living in Italy. Worth looking into for other Americans living abroad. I found that H&R Block had an office near the US base in Vicenza with a guy that knows both systems pretty well. It was a very happy discovery for me, because I've always felt that the US-based guys were just kind of guessing about how things worked with my living abroad.

Yeah, I pay into Japanese SS and am exempted from the US version due to the US-Japan Social Security Totalization Agreement. Figuring this out was not exactly trivial for me, and absolutely mystified the local clerks in Ogaki.

Thanks for the great write-up.

You state that your mailing list is far more beneficial for yourself and your readers than your blog, because it allows a more personal relationship. This bears the question: How would you start such a mailing list from scratch without a blog? Or do you think a blog is still the first step? I mean, somehow, you have to be known for your skills and there must be some sort of desire to sign up for it.

Your mailing list is not necessarily "advice on conversion optimization" but more "patio11's take on stuff". I, at least, am in your mailing list, because I'm interested in what this patio11 guy in particular (with your skills and your background) has to say about things.

How would you start such a mailing list from scratch without a blog?

Say one (or more) interesting thing publicly, promise more interesting things in return for signing up for the mailing list.

It's certainly easier to bolt things onto a platform than to build a platform from scratch, but everybody starts with +/- nothing, so having nothing should not deter you from starting that.

Stormpulse seems interesting. Enterprisy but not the run-of-the-mill CRUD application, so probably more fun to make.

Patrick - have you considered selling BCC?

I suppose like all businesses it is on sale for the right price, but I haven't given much thought to actively attempting to sell it beyond "I don't think the standard going rates for small Internet businesses would value this highly enough to make me want the lump-sum of money more than I like owning it."

Have you considered that selling BCC would give you more time for Appointment Reminder?

I don't believe that to be true. BCC is very close to running itself at present. Selling BCC would mean a lot of effort to make a clean break from it -- for example, my bookkeeping system is inextricably entangled it it at present ("It sounded like a great idea in 2008!"), so I'd need to rip that out, set up a new bookkeeping system, teach my VA how to work that, sanitize the DB backups, etc. Also, selling it is likely to be a protracted process -- there would need to be contracts/escrow/technical assistance/etc.

There is, of course, a nuclear option to shut down transactions, EOL the product, and shut down any support other than FAQ/T1/"Here's how to request a refund check." That's probably less work to set up than selling it.

Excellent read! I always enjoy seeing these and am so appreciative that you put them out there. Was 2013 not the year where AR went crazy and called a bunch of people in the middle of the night? I remember reading about that and being impressed with how you handled that situation, but if that wasn't in 2013.... then, sigh, time flies.

Also, I'm almost positive "asterix" (vs asterisk) is used tongue-in-cheekly, right? Just making sure...

I might have retold that story in 2013, but off the top of my head I think it was back in November 2011 or so.

The great thing about being a good writer is people assume your spelling mistakes aren't! Maybe I'll eventually level up to Shakespeare Tier, where words come into being just because I liked the sound of them.

As always, thanks for a great writeup.

I think I speak for everyone when I say that I'm enormously appreciative of your writing, and the internet would be a whole lot duller without you around. More importantly, our wallets would be a whole lot lighter without you around as well. And I say this as someone who doesn't directly do dev-marketing.

Patrick, thank you for another enlightening writeup. Sometimes I feel the HN crowd take the honesty and transparency of these 'internet-famous' entrepreneurs for granted.

Posts like these have been a great source of inspiration for running my own startups and whilst each individual business is different, I have gained immeasurably from them. Thank you.

I've also learned from a few others who have written on this subject:

http://www.startupclarity.com/blog/bootstrappers-2013-year-r...

Having had a similar business to appointment reminder in the past and not getting the traction I was looking for, folded too quickly (after 6 months of operations) and I still regret the decision.

I applaud Patrick for keeping that business around for long enough to get paying customers and even trying to penetrate the enterprise world.

Patrick, besides the SEO ninja skills you applied to appointment reminder for inbound traffic, did you reach out to others via any outbound marketing?

A couple questions about the virtual agent if you're inclined to answer.

How did you choose that company? How much does it cost? Can she also do phone support or only email?

I had heard from a few friends that they had good experiences with VAs from the Philippines so I googled something generic and found Pepper. This was years ago. I tried them out and they were adequate for my needs.

I'm on the "20 hours for ~$300 a month" plan. This is, FWIW, within striking distance of what you'd pay to hire a college graduate full time, but I find it easier to go through a company to avoid the headaches of that.

The VAs are pretty amenable to doing anything reasonable with a computer, which includes phone support. I haven't asked for it, both because I don't offer phone support for Bingo Card Creator and because the US workday would mean anyone offering it from the Philippines would have to be up very late at night, which I do not feel is a reasonable thing to ask of freelancers/employees under most circumstances.

Thanks for detailed response.

Is this a typical cost for VA's, or is there a way to save substantial money compared to hiring a US employee?

If you hire directly you can find competent employees in the Philippines with good english for around $2/hour USD.

It seems like Pepper have raised the minimum plan to 40 hours/month.

http://www.peppervirtualassistant.com/pricing.php

Great post! I enjoy reading these, thanks for making the info public. I have one question: Is it not very risky to angel invest in only 1-2 companies per year? I thought you needed to invest in around 5-10 in order to have a decent chance at finding the 'hit' business as most of the others will fail.

Thanks for taking the time to write this up, Patrick, it was worth the read. Hope your goal for looking after yourself better this year is achieved successfully! :)

I'm intrigued that you have a person named Sugar working for you.

Some people in some countries on the "periphery" (I'm not quite sure what the right term is, but places that use English for some things without it really being native) of the English speaking world sometimes adapt English words for names in interesting ways. My son goes to nursery school with a boy named Happiness Prosper.

Sounds like a 17th century English puritan ... http://www.slate.com/blogs/the_vault/2013/09/13/puritan_name...

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