Would you be willing to say how you came up with it? Was it in a problem domain you were solving for yourself, or was it something you had to research on before tackling it?
Luck and it's in a domain I'm indirectly in. A friend of a friend said:"It would be nice if X existed." At first, I didn't want to do it. After a few days I thought that it would be interesting to do some PHP coding (this was in 2006) and tried a few things. I posted the prototype in a forum related to the niche, the first 100 users came, they gave suggestions and I kept improving it and it kept growing.
Only after 5 years did I turn it into a business. Until then, it was something like a project for me as a student.
So, there really was no formal process. I did a few things right, I learned a lot along the way, but there's nothing to copy or to model. It was mostly luck and an opportunity I took.
Edit: I once read: "The perfect time to start a company that is successful in 2013 was 2007" or something in that sense. This is what happened. I took this opportunity. I would do things differently today, but to be honest, I have the same hard time as everybody else to come up with a new business and a viable idea. Because everything changed since 2006. So what I did right back then wouldn't work now, process-wise.
Still, I did a few things right I guess that are still valid in 2013. Mostly: I concentrated on important things, I do customer support myself, I listen to people, I'm friendly, I help people solve their problems. I care about them, about their privacy and do everything to protect it. I write emails that take me 30 minutes if it's necessary. Why? Because I only get a handful of emails per day. It's not scalable but then, it doesn't have to be. I do some SEO and rank well for my niche keywords. About 50-70% is word of mouth.
What I don't do: I don't have a blog, I didn't integrate any social network crap, I don't use Google Analytics or any other fancy third-party application that must be included via JS. I use Piwik that I check occasionally (sometimes every week, sometimes only every few months). I don't have big metrics. My most imporant metrics are: Money earned per week/month. Amount of active (paid) users. Signups per week.
Edit2: My product has nothing to do with PHP and doesn't target IT people. Just in case this is misinterpreted. I mention PHP only, because people on HN hate PHP that much and sometimes forget that it doesn't matter if it's PHP or anything else, as long as it pays the bills. PHP is fast, PHP is reliable and I get shit done in PHP. That's why I use PHP.
Firstly congrats on both delivering genuine value to ppl and making a nice living from it :-)
> I don't use Google Analytics or any other fancy third-party application that must be included via JS. I use Piwik that I check occasionally
I'm not trying to be a dick, genuine question, I thought Piwik was a JS include? Or do you feed it web server logs or something?
I ask because I currently run a niche site that is doing very well. I'm currently turning this into a general purpose platform for others to use. For the former site I just went with Google Analytics, but for the latter I'm now trying Piwik and am curious about other peoples experiences.
Piwik is a JS include, but it is on my own server. My statement wasn't accurate: I don't use third-party external hosted JS files.
Why? Security, privacy, performance. GA is probably relatively trustworthy in terms of security, but you never know. Privacy: Gone with GA. Performance: If the included library isn't far away, it's faster.
So, Piwik is good enough for me. I recently installed it on a VPS but from the same hoster in the same location. The performance is still slick, but a tiny bit of work is now off the server and security-wise it's better to have as few third-party libraries and applications running parallel to my web app.
The most limiting thing was that I rent a managed server that doesn't allow too many custom things. Piwik is relatively ineffective memory-wise in generating reports over months or years, if you have traffic like me (about 50K visitors per week or so).
The managed server would always kill the process, because it consumed too many resources and took too long. Never found a work-around. Now, on the VPS, I can do whatever I want and that helps.
This just as a warning if you're planning to run Piwik in an environment that might have limits in resource allocation.
Feature-wise, Piwik is totally perfect. As mentioned before, I don't track many metrics anyways. It's just a reference for keywords, which keywords converted, where people come from.
That are interesting questions, thanks for asking:
Do you think you could do it again?
Let me answer it first in a clumsy-sounding way: I want to be able to do it again, because I want to think of myself as someone who did a few things right and didn't ONLY have a ton of luck.
I think the knowledge I have helps me to do it again. I think that I have a few values and advantages that will enable me to do it again. Namely: I can distinguish between between good and crappy ideas. I can evaluate ideas relatively quickly and tell if I'd do them or not. I'm still down to earth, don't buy the hype and focus on stuff that seems to be a viable long-term business opportunity.
All these things I just listed are also big disadvantages: I dismiss many ideas that might be feasible as utter crap. In fact, I think most ideas are really bad. Even successful ones. Unfortunately, I feel that I can't see problems in a lucid way. For me, for almost everything there's already a solution, which is dangerous thinking, because I don't easily try and start new things. I'm a bit complacent in this way.
Are you working on the next thing or happy enough with this success?
I'm happy with the success and I'm working on expanding the existing business. But sometimes I feel like being on a plateau. No matter what I do, the business simply grows with a small linear rate.
A couple weeks back, I didn't check my analytics and metrics for 2 months or so. Nothing changed. My SEO rankings improved over time by doing...nothing. The amount of active people increased a bit, by doing nothing.
This is a good thing, but it also feels like there's nothing I can do to make it grow faster. I'll try a few things in 2014 though.
Anyways, I'm in a super-comfortable position. I can take vacation whenever I want (and I do), I make more money than I spend, I make more money than in my old 40-hour-week job, I don't have to think about money at all. If I want, I work 4-5 hours a week and still get paid fully. This is the perfect situation to start something new.
So, as I said, I'm happy with my success, but it's also boring sometimes. I want to start something new and I know that the fruits I enjoy won't last forever. I don't know what's gonna happen in 10 years, but I feel like I need a second business to be less dependant on my first one.
While I was still in university writing my final thesis paper, I came to the conclusion that, once I graduate from university and got a regular 40 hour per week job, there wouldn't be much time left to work on my project.
The basic question for me was: How do I keep maintaining and improving the website with only the bit of revenue I got from ads and donations? That was maybe 300-500 bucks a month.
The answer was: I couldn't. Not with what I had in mind for my project. It wasn't enough to pay a programmer, an app developer and someone who writes educational articles for the project.
I was just the average IT student back then. Not much sense for business. I mean, I thought about how I could make money from it once in a while. I still have a list on my computer ideas to earn 10,000 euros with my project that I once wrote. Freemium for example, a standalone desktop application, and other ideas.
After a long thought process and endless discussions with an older friend, I came to the conclusion that literally change my life: I had to start charging people for my product. All of them. No freemium nonsense and all that other crap that was in my list.
Being the altruistic student, I anticipated that people would be disappointed. I could almost feel their soon-to-come disappointment and asking them for money was something that didn't fit my world view for a long time. It was hard to accept that I'd lose people. Sounds stupid in hindsight, but that's how I felt.
With this conclusion, a new feeling emerged that got deeply engrained, which I consider a fundamental thing for doing business:
If people don't value what you have to offer, they're not worth your time.
So, even if people were disappointed, it wouldn't be my fault. After all, I offer a truly great service and it should be worth a couple bucks a month.
Despite my newly won enthusiasm, I went ahead and wasted another nine months, before I finalized my decision. I had very sophisticated tactics for sabotaging myself. I got this braindead idea to rewrite everything from scratch in a newer technology to have it maintainable for years to come. I thought I'd have to offer more content, more articles, more whatever. It was madness. And nonsense.
Another friend brought me down and he said: Look, you have a great product as it is. Just charge for it. You don't need anything else.
So, a few days after my graduation and about 4 weeks until my first real job began, I send an email to all my users, telling them that my product would cost a euro a month, starting in 30 days.
I hit Send and thought that I'd either wreck this thing totally, lose many many people, lose my project I spent five years on to improve, or that it'd be a good thing after all and I could continue running and improving my project.
Merely 7 days before several thousand accounts expired, I finished the last line of code on my payment processing.
Two weeks later, I had 20,000 Euros in my bank account.
I have a site that contains the banking information and a custom number (order number or billing number) that people must put in the wire transfer. It's generated like that XYZ, where X = some random number, Y = zero-padded userid, Z = increasing number for that account. If a user visits this page, a new order is created in the background with status "unprocessed", or the same order number is used again, if it wasn't "completed" by an incoming wire transfer before.
At first, I used an online banking tool where I copy&pasted all incoming wire transfers into my web application, which would regex for all ordernumbers, do a little plausibility check (incoming amount equals the amount that was set when the order was generated; user has open orders) and set the order to "processed" and extend the account by the according amount of months.
Now, I use a VPS where I installed an HBCI client (AqBanking). It's relatively easy to set up and once a day, it fetches all new wire transfers via cronjob and sends them via cURL to my web app where the same regex and plausibility check happens that I used before.
It feels a bit weird to store your banking PIN on a VPS, so make sure the VPS is properly secured.
The VPS sends me an email whether or not everything worked and that's it.
Most days of the week, there's no problem. Sometimes, you get the wrong amount from people, some people don't put the order number, some people confuse the bank number (BLZ) with the order number and so on. In these cases, the regex parser fails and tells the reason in the email. I then process it manually. Some people think that wire transfers work instantly or that they are also processed by banks over the weekend (which is not the case). I have a few email templates to answer these requests if necessary. Fortunately, it's not that much effort and most of the time, there's no manual work to do.
I didn't adjust the system for the coming IBAN stuff yet. Have to look into that.
I heard that before and my sibling-poster is correct: You have no idea what my product is, so you can't say anything about the price. If my product were MP3s, 5 bucks per MP3 wouldn't work.
Anyways, your point is not totally invalid. I did a mistake when I changed from free to paid. I started with 99 Cent per month. The goal was to convert as many users as possible. This worked well. Only about 10-20% stopped using my service. However, it made future price increases harder.
Some people would pay more. For some people the service delivers a a lot of value and they'd probably pay 10 bucks a month. However, there are also quite a few people for whom 2 euro is the limit, especially since the long-term costs would explode for them.
And I can't experiment with pricing. The niche is too small to have this go unnoticed. I know, because I tried. Either I increase it globally for everybody or not. To be honest, maybe I didn't find the perfect pricing point yet, I don't know. But it's okay, because I can live quite comfortably.
Couldn't you make different levels of subscriptions? So find a new idea to improve you product, and have only those with Gold membership be able to use it. This way you don't make and enemies with the old subscription, but you can still convert more to the more expansive price tag.
I thought about that as well but I have a luxury problem:
There is not much to improve. In the space I'm operating in, the software, as it is, can be considered more or less complete. I mean, I can always add features, but the core mechanics, the way it works, the way it delivers value and the value people expect from the software is more or less complete. There's not much to add that improves the perceived value for people in such a way that they'd be willing to pay more for it.
But the fundamental idea is right: There must be some additional thing that's good for people, that people want. There's also related products, added benefit, whatnot. I won't do Gold membership, but I might be able to sell different things that complete the offering for some people.
Compare this to Microsoft Office. Word is for writing stuff. It's more or less feature-complete. Sure, you could add some stuff, but most people are happy with how it is in its basic edition. So Microsoft offers also Excel and PowerPoint. They are for very similar people, they complete the offering, but they're totally different. A "Word Gold" wouldn't make any sense.
One more thing: Whatever I add and whatever pricing change I introduce comes at a cost. Introducing tiered-pricing (3 wiggles for 2 euros, 7 wiggles for 4 euros etc.) for example has benefits, but it also increases complexity and decision making. I'd do this for my next project, but for the current business, I'm also a bit stuck in the current userbase with decisions I made in the past.
I might offer my service in English as well next year. That's going to be an opportunity to experiment a little bit and a way to grow the business.
An interesting tactic that I see repeated by successful bootstrapped internet businesses is to really dig into the pain of their current audience. You've got this group of thousands that have proven to pay for things on the internet. You are in a position of trust, since you provide them value already.
What are their other pain points?
That is the question I'd be studying them to answer.
Thanks for your advice. I probably didn't dig deep enough into the pain points. But I know what you mean. I gonna try something and go from pain points to product ideas. I mean, I talk to people and ask for feedback, but maybe I'm asking the wrong questions.
Is your product of use to companies as well as individuals? If so you may be able to produce a "company" account at a much higher price point, offering the same functionality but with extras such as multiple logins, Google Apps integration (which provides SSO for free for companies that use Google Apps) more logging, usage reports and more.
Also consider patio11's favourite trick of offering people a 10% discount if they pay for 12 months up front - this can massively increase your cash flow.
Nope, it is consumer-oriented only. There's not even a remote chance a company want to use it :)
Cash flow is not an issue. While not everybody pays for 12 months in advance, I do offer that option and some people use it. The disadvantage would be that there are legitimate reasons to NOT use my service a couple months per year and come back later. So by offering a discount for 12 months up front, it might lead to more people asking for refunds or general customer dissatisfaction. I could think about a service-branch that fills these couple months off, but generally speaking, it also increases perceived complexity.
You got me thinking, but I'm reluctant, because it's not as easy as writing that email patio11 recommends :)
I think it's very mature to respect users like you do and don't experiment on them with new pricing/structuring ideas. That's one thing I don't like about Google - they keep reinventing their services (basic consumer stuff like gmail, youtube) and they put all those irritating notifications about it (some of which require actions/decisions), which are a cognitive burden.
It serves users in a certain niche. They enter some data, it runs some algorithms and outputs the data in a different way. Also, it educates users on the overall niche topic.
Look, what it does, is not that important. You wouldn't learn anything from it about running your own business :)
It's consumer-oriented, it costs 2 euro a month, it has several thousand users.