08
May
Aside

Funding “No-Idea” Founders

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A lot has been written about Y Combinator’s decision to allow founders to apply to the program without necessarily having an idea.

I think Vinicius Vacanti’s opinion is mostly spot-on and summarized well with this quote:

“And, so I thank Y-Combinator for helping to dispel the myth that to become an entrepreneur you need a moment of brilliance.”

You definitely don’t need a moment of brilliance and your first idea won’t be the only determining factor in whether you’re a success or a failure (eventually). But that’s pretty much as far as I can agree with this whole concept.

Whilst a moment of brilliance or a first idea doesn’t define whether you’re an entrepreneur or not, it surely neither warrants that you should be funded (i.e. risk other people’s money for you to figure out which of your ideas will eventually be successful).

This explains perfectly why the “money makes money” plays such a huge role here: if you’re funding someone without an actual idea, you’re taking a gamble. There’s just no reason to determine the founding team actually warrants that investment.

I’m open to someone convincing me that funding an entrepreneur without an idea is actually a rational, viable & generic decision that applies to all investors (and not just those with pockets that are inevitably too deep). Or we can all agree that this strategy is at best a calculated risk and semi-gamble.

24
Apr
Aside

Money Makes Money

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I read Ben Horowitz’ post about their investment in Instagram that made them a 312x return, turning a $250k investment into $78m. Most people would regard that as a shrewd business decision on Andreessen Horowitz’ part, but I think it actually comes down to money making money.

Andreessen Horowitz has raised a venture fund worth almost $3bn in the last 3 years. So for them to make a $250k investment represents 0,0083% of their total investment fund. Considering that Instagram ended up being a pivot from the business that they actually invested in, I’d argue that the $250k investment was a “calculated” gamble. Sure, you might argue they backed the entrepreneurs behind the original idea, but that too is a calculated risk / gamble at best. (I’d stick to this opinion regardless of whether or for what amount Instagram was eventually acquired.)

Compare that to Y Combinator that invests an average of $18 000 into approximately 120 startups every year. Or Yuri Milner & Ron Conway that puts $150 000 into any Y Combinator startup that wants it (via Start Fund). As of last year, Yuri Milner alone had a net worth in excess of $1bn (Wikipedia), so putting $150 000 into a startup represents small change.

Their respective returns on these investments are however a far cry from small change, making their investment status a goal for most other investors. Myself included.

Yet, these guys have a head start: they have bucketloads of money. Marc Andreessen co-founded Netscape back in the day. Yuri Milner created DST which has become a premier investor in so many awesome tech companies. And Paul Graham has become the leader of the whole startup community with his work with Y Combinator. So they deserve their success & all these new opportunities now.

The one thing all of them have in common now is that they had one big success as an entrepreneur; one big success that propelled their reputation into the higher echelons of our community & gave them the capital (or access to it) to make all of these investments. It only took one big success.

Ultimately I’d probably be able to make quite a bit of money if I had a $5m venture fund and I could invest $250k into 20 hot startups right now. You could too. Provided we’re not totally shit at making our picks.

Money makes money. And it only takes one, big success to get there.

12
Apr
Aside

V1 Release, 24 Hours & 7000+ Users

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24 hours after yesterday’s V1 release of our new product, WooDojo, and we have more than 7000 users already. I wanted to share some insight into how we managed to achieve this…

Not only was this a major victory for the team, but getting 7000 users for a brand-new product – one that nobody expected us to release – represents some major traction. This is also the kind of traction which I wouldn’t describe as being a fluke, but instead the culmination of truly getting to know our users and evolving both our product & marketing strategy over time.

This is how we did it:

1. Know Your Users

WooDojo wasn’t the result of a popular community request, instead we conceptualized a holistic solution for a bunch of minor problems / gaps that we had identified in the last 12 months. The trick here wasn’t to spot the gap, but to understand how our users would want to plug those gaps without us even talking to them about it.

A lot is made of customer development and validated product feedback these days, but in our case we skipped that step, because we felt that we had an intimate understanding of the problems our users were experiencing without them perhaps even realizing they were. We know our products & users inside-out, which meant that we could distill WooDojo – as a concept – over time and shape it into an actionable project.

2. Build on what you have

Before WooDojo was released, we had two things: 1) an audience of almost 200 000 users; and 2) our existing product line. Each of these represents a validated & viable distribution channel for new products. With WooDojo we leveraged both of these.

WooDojo compliments our existing product line perfectly by augmenting & extending on the feature sets that we have released in the past. This means that the product has an inherent appeal for each & every member of our existing audience. We could’ve obviously released something completely unrelated to our existing product line and audience (and thus hoped that they’d still pick it up), but I doubt we would’ve had the same kind of traction.

3. Go beyond what you have

We had always envisioned that our existing user base would be our main audience for the V1 release, but we also knew that WooDojo would appeal to a whole new audience: the audience that didn’t want to use our existing products. WooDojo is “vendor-agnostic” in that regard and enhances **any* WordPress installation, so with this release we’re targeting a market much bigger than our existing audience.

4. Free & Easy

As things stand, WooDojo is a free product, which of course means that traction & adoption will be much quicker than if it were a paid product. We’ve implemented the classic freemium model and have a clear monetization route, which we’ll flick the switch on in the next couple of weeks.

I think what’s important with freemium is firstly that the core product is & will remain free, but also that we already have the revenue model figured out (based on our experience implementing a similar model for our other products). So it’s not like we’ve made a huge time investment releasing something that we don’t know how we’ll make money from it.

5. The Surprise Factor

The fact that we didn’t do any customer development before the release, meant that no one expected yesterday’s release. From what we’ve seen, this has elicited the “Wow! WooDojo looks fantastic!” reaction from our, unexpecting users. If we had announced or even teased the release beforehand, we would not have had that surprise factor and were unlikely to get so many of the “Wow!”-type reactions, which obviously means the viral appeal of the release would’ve been less.

11
Apr
Aside

Celebrating A Team

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Delegation isn’t something that comes easy for me. But as such things go, running a team of 23 talented individuals means that you either sink or delegate (swim). So delegation has been an evolving skill for me in recent years; one that I believe I’ve gotten considerably better at through all the practice.

Today I’d like so celebrate a major, personal victory as the result of excellent work by a team. Woo’s release of WooDojo represents one of our finest hours; not because our V1 release is the best in history (probably not even ours), but because this was a team – and not a management – effort.

As a management team, we gave the team only two things: 1) the roadmap & direction of our strategic journey; and 2) a very raw concept that barely resembles WooDojo in its V1 state today. The brilliant execution of these these two elements is testament do the fantastic work of the team to distill our concepts & strategic notions into digestible, action items.

For me – as co-founder – this is reward of the faith & trust we’ve put into our team to take us to greater heights. We have given them the platform & safety net; all they need to do is shine. And how they have just done that.

04
Apr
Aside

Learn To Code

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I’m learning to code. Again.

I used to love programming in high school and it was that love that lead me to get involved online, teach myself web designing & some intermediate PHP and eventually develop the product that became WooThemes.

And then I stopped coding to focus on running a business. Which made loads of sense at the time of course. Heck, the business started to grow at an alarming rate, there were new challenges everywhere and the team we were hiring had more time to refine their coding skills. So mine became obsolete and I justified not coding by saying / believing that my time was more profitable spent elsewhere. Big mistake. Continue Reading →

03
Apr
Aside

eCommerce Comeback?

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“eCommerce” is one of those pre-2000 Dot Com bubble-related words, that lost most people a lot of money. And whilst the concept of buying things online have continued to grow + evolve in recent years, it seems that eCommerce itself has never been able to shake that pre-2000 bad vibes & stigma.

In the last 8 years, search traffic is down drastically and doesn’t look like it has quite recovered. News mentions are however steadily on the rise, which seems to mirror the success that eCommerce platforms have been experiencing of late:

Square is revolutionizing the way retailers accepts payments and have managed to obliterate the gap between online & off. Shopify continues to lead the way with some impressive stats from 2011. In the last couple of months we’ve seen some even simpler platforms launch (Gumroad, InspirePay, Goodsie) – some of pockets full of VC backing – to make the process & experience of selling stuff online even easier. Going into the WordPress vertical, I can also say that within only 6 months, WooCommerce have become a significant part of our business & overall revenue.

If I had a few eggs left, I’d put it in this basket.

15
Mar
Aside

What’s the value of an idea?

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Not much apparently.

Consider some of these trends:

In principle I agree that execution is ultimately keen for any idea. A shitty idea with brilliant execution > a brilliant idea with shitty execution. Always. But that perception does devalue a good idea and ultimately the effort & brilliance required to make a shitty idea work, makes for a much riskier journey.

Given how easy it is to “have an idea” and get funding for that idea these days, I fear that too little emphasis is being placed on the value of the foresight that a true visionary offers when they have a really great idea.

Good ideas will also be a viable business. If you can generate good ideas, you’ll always find yourself there or thereabouts.

12
Mar
Aside

The “run-of-the-mill”, “not-so-ambitious” Startup Idea

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I read Paul Graham’s latest essay – “Frighteningly Ambitious Startup Ideas” – over the weekend and found myself wondering how many prospective startup founders were lapping up his every word. Heck, I found myself thinking nostalgically about solving some of the world’s biggest problems and making billions from it.

But when the initial excitement waned a little, I realized that a case needs to be made for the “not-so-ambitious” startup ideas. Founding a billion dollar company sure is an exciting prospect for any entrepreneur worth the title, but the law of averages dictate that only a handful of us will be able to do that in every generation. That however doesn’t rule out that you can build a company that is worth a million dollars.

I can tell you that WooThemes is neither an overly ambitious startup, didn’t possess the sexiest startup idea when we started and we’ll in all likelihood never get remotely close to a billion dollar valuation. As far as things go, we’re a pretty run-of-the-mill type startup.

That has however not deterred us from building a great business that has paid our salaries (and then some) for more than 4 years now and we’re still going from strength to strength. On top of that, our success has spawned a whole bunch of other opportunities across the board.

My advice: Don’t be blinded by chasing the frighteningly ambitious startup ideas. It’s definitely not a bad idea to pursue a lesser idea, smaller opportunity and less profitable / significant market.

20
Feb

Bootstrapping: Don’t reinvent the wheel. Hack instead.

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I’m a firm believer that perfection doesn’t exist and even less so for a new startup. When it comes to startups, I think the “Done is better than perfect” mantra fits perfectly. And if a startup holds that mantra close to heart, it should result in something that resembles Mark Zuckerberg / Facebook’s “The Hacker Way”.

WooHacking

I can remember when we were working on WooThemes V1 (back when the mothership was still easy enough to handle & we could DIY everything), we had to create a membership & payment processing backend. This wasn’t something that we could create from scratch (we didn’t posess the skills), so luckily we weren’t tempted to do so.

This meant that we had to look for alternatives, which lead us to using aMember instead (aMember wasn’t so sexy back in 2008). We ended up hacking this into the rest of our installation and over the years, we kept the hacking going, adding more & more less-than-ideal code to it.

We kept this going for about 3 years, until we ripped aMember out completely in August last year and replaced it a brand new user dashboard (which we developed from scratch). The problem was that the new user dashboard took us 16 months to complete and as things stand now (6-odd months later), the dashboard isn’t 100% what we’d like for it to be. Yet.

This is however already enough validation for our initial decision not to pursue a custom-built backend when we launched: it would’ve resulted in us delaying Woo’s V1 launch by 16 months. Continue Reading →

16
Feb
Aside

The Mothership is broken. And you can’t fix it.

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WooThemes has become a Mothership. A team of almost 20, more than 150 000 users and revenues / profits that most business owners would approve of. This is fantastic of course until the engine breaks, because I’m not necessarily able to fix the engine and neither are my co-founders.

See – as WooThemes has grown in the last 4 years, we’ve become this specialized unit and well-oiled machine. We’ve built out what started as a little (cyber)spaceship into an ominious mothership. We shaped & moulded the mothership according to our own strategic notions, market forces and popular demands from our users. The mothership is unrecognizable from the spaceship it was when we first launched it into space in 2007.

How Things Change

When my co-founders & I founded WooThemes, it was representative of our personalities, ambitions, personal cash reserves and of course: our skills.

4 years later, WooThemes only represents our personalities and ambitions (individual & combined). Our personal cash reserves aren’t necessary anymore (as the business has its own now), but the important thing is that the WooTeam has grown to such an extent that the collective skills now eclipses our own as co-founders. Continue Reading →

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