A Geek’s Guide to Finding a Business Model by David Weekly

by David Weekly

Business is Learnable If you’re smart enough to program, you’re smart enough to start a business. (the opposite may not be true)

If you’re smart enough to program, you’re smart enough to start a business.

(the opposite may not be true)

Why Business? It’s another lens through which to understand the world. Systems of the world: Biology Astronomy Chemistry Physics Politics Psychology Economics Storytelling

It’s another lens through which to understand the world.

Systems of the world:

Why Business? It is not a good way to get rich quickly. But it is a good way to be in control of your destiny.

It is not a good way to get rich quickly.

But it is a good way to be in control of your destiny.

Why’d I Start a Business? My History: Started Coding @ 5 Online @ 10 Professional Work @ 15 Pro Engineer @ 25 … what now?

My History:

Started Coding @ 5

Online @ 10

Professional Work @ 15

Pro Engineer @ 25

… what now?

Why’d I Start a Business? Options: PhD in CS Tedious, 4 years, marginal gains. MBA Exciting, fun, 2 years, some skills & network. Start a Company Exciting, immediate, lots of new skills .

Options:

PhD in CS Tedious, 4 years, marginal gains.

MBA Exciting, fun, 2 years, some skills & network.

Start a Company Exciting, immediate, lots of new skills .

Why’d I Start a Business? The Shocker…? Zero opportunity cost.

The Shocker…?

Zero opportunity cost.

Zero Opportunity Cost? Even a Failed Startup Teaches You: How to hire, manage, and fire people. How to structure a plan, test hypothesis, grok a market. How to write a business plan. How to structure finances. It’s better than business school. And it qualifies you for management.

Even a Failed Startup Teaches You:

How to hire, manage, and fire people.

How to structure a plan, test hypothesis, grok a market.

How to write a business plan.

How to structure finances.

It’s better than business school.

And it qualifies you for management.

So…Opportunity Cost? $80,000 engineer salary versus Two years of $0/year then $130,000 manager salary

$80,000 engineer salary

versus

Two years of $0/year then $130,000 manager salary

Be Bold Trying Is Good. So be bold .

Trying Is Good.

So be bold .

Business Preparation I got ready to fail. (good thing, too…)

Selected Failures BotBlock.com L0K8.com

Results? Fancy Technology Didn’t Win.  Simple Projects That Addressed Needs Did. Premature Optimization is the Root of All Evil. The Media Loves Failure.

Fancy Technology Didn’t Win. 

Simple Projects That Addressed Needs Did.

Premature Optimization is the Root of All Evil.

The Media Loves Failure.

The Answer I had been helping groups with wikis for years. But they weren’t fancy technologies. So I didn’t think there was a business. But I got tired of helping friends set up wikis. They should be able to do it themselves! … as easily as making a peanut butter sandwich…

I had been helping groups with wikis for years.

But they weren’t fancy technologies.

So I didn’t think there was a business.

But I got tired of helping friends set up wikis.

They should be able to do it themselves!

… as easily as making a peanut butter sandwich…

Humility In two weeks, my weekend project had more attention than my year-and-a-half old project.

In two weeks, my weekend project had more attention than my year-and-a-half old project.

1 st Business Model: Ads Wikis are mostly text… so should be good for AdWords? … but... Very wide diversity of communities = low CPM. 100,000 users/mo 10 pages each $1 CPM… $1,000/month

Wikis are mostly text…

so should be good for AdWords?

… but...

Very wide diversity of communities = low CPM.

100,000 users/mo

10 pages each

$1 CPM… $1,000/month

2 nd Model: Vertical Communities We built vertical wiki communities: Red Sox, Chronicles of Narnia, The O.C., Home Improvement… Advertise in niches = High CPM!  … but… building communities is hard. Especially when you’re not a member, and especially when you try to grow a lot of them quickly.

We built vertical wiki communities:

Red Sox, Chronicles of Narnia, The O.C., Home Improvement…

Advertise in niches = High CPM! 

… but…

building communities is hard.

Especially when you’re not a member,

and especially when you try to grow a lot of them quickly.

3 rd : Consumer Subscriptions $5/mo/wiki = no ads People paid!  … but… Consumer subscriptions usually have 1-5% conversion. So we’d need to be signing up 350k – 1.5m new groups a year to be a million dollar business. Gack.

$5/mo/wiki = no ads

People paid! 

… but…

Consumer subscriptions usually have 1-5% conversion.

So we’d need to be signing up 350k – 1.5m new groups a year to be a million dollar business. Gack.

4 th Model: Education “ Great work in Chicago!” ??? Very helpful & energetic demographic. But it’s hard to build an empire from 5 th grade teachers’ pocketbooks.

“ Great work in Chicago!” ???

Very helpful & energetic demographic.

But it’s hard to build an empire from 5 th grade teachers’ pocketbooks.

5 th Model: Enterprise SaaS Our native model (subscriptions) … applied to people who could actually pay (businesses) … and who find us valuable (productivity) A proven business model:

Our native model (subscriptions)

… applied to people who could actually pay (businesses)

… and who find us valuable (productivity)

A proven business model:

The Catch? I’m not good at Enterprise Sales & Marketing.

I’m not good at Enterprise Sales & Marketing.

Humility The Branson / Buffett Model : Hire someone to make you rich. … so I did: Jim Groff Sold 1 st Company to Apple for $XXm Sold 2 nd company to Oracle for $XXXm … and now PBwiki. 

The Branson / Buffett Model :

Hire someone to make you rich.

… so I did:

Jim Groff

Sold 1 st Company to Apple for $XXm

Sold 2 nd company to Oracle for $XXXm

… and now PBwiki. 

“ Know Thyself” Know your strengths, Route around your weaknesses, Know that you will fail in the short term And that this is the path to long-term success.

Where We’re At Millions of users/month 800,000+ communities 50,000+ businesses Teams at half the F500 More content than Wikipedia 30 employees … and rapid adoption by lawyers and for projects . (the experiment continues)

Millions of users/month

800,000+ communities

50,000+ businesses

Teams at half the F500

More content than Wikipedia

30 employees

… and rapid adoption by lawyers and for projects .

(the experiment continues)

Lessons Learned Wrong-Thinking: Networking is for losers. If you’re smart, people will find you. If you write clever software, you’ll become rich and famous. Delegation means you couldn’t figure it out. Right-Thinking: Use the scientific method: Hypothesize, Experiment, Measure, Evaluate, Repeat. Expect to be wrong. Stick to hiring A -people. ( A s hire A s, B s hire C s, and A s get 100x more work done than C s)

Wrong-Thinking:

Networking is for losers. If you’re smart, people will find you.

If you write clever software, you’ll become rich and famous.

Delegation means you couldn’t figure it out.

Right-Thinking:

Use the scientific method:

Hypothesize, Experiment, Measure, Evaluate, Repeat.

Expect to be wrong.

Stick to hiring A -people.

( A s hire A s, B s hire C s, and A s get 100x more work done than C s)

David E. Weekly [email_address]