A few months ago I announced that I was looking for a new home for Committed, my OS X app that sends you a notification when someone pushes code to a GitHub repository you care about. I’m happy to say that it’s finally completed and that Saul Mora and The Magical Panda have taken over development. Saul came out hitting hard too by adding 2-Factor authentication with his first release, which has been heavily requested the past few months. $4.99? A steal.
Last week at Mobile World Congress Nokia unveiled the Nokia X, their first foray into the wild world of Android devices. On the consumer side, the sales pitch has been an affordable phone with all the great Android apps you love, just with Nokia and Microsoft services rather than Google’s. On the developer side, which was the obvious target of announcing this devices at MWC, the pitch was that it should take less than a day to port an Android app from using Google’s services for things like push and in-app purchase to Nokia’s.
On the surface, expanding your product into a new market with minimal effort seems like a great idea. Once you dig a bit deeper, it may not be so easy to justify.
Let’s say you have a product like Glassboard. Its core functionality is wrapped in a server-side component that you manage. The API is the key to everything else. It handles accounts, billing, data access, and all the notifications you need to send out.
The other parts of the Glassboard platform are the client apps. In my case, there are currently three: iOS, Android, and the web. I ran Glassboard’s Android app through the Nokia X Analyzer and had a pretty clean sheet. My biggest issues was replacing Google’s Cloud Messaging with Nokia’s offering.
Here’s where we run into issues. Building a version of Glassboard that uses Nokia’s jars instead of Google Play Services likely isn’t that big of a hassle. The much bigger hassle is then adding support on the server-side to handle the Nokia services.
Now, the “just a day” pitch becomes much harder to justify. Not only do I need to update the Android app, I also now have a slew of C# tests and code to write so that I can pass notifications from Glassboard to Nokia’s servers in additions to Google, Apple, and Sendgrid (our email provider).
Who Is The Market?
Any time I have to add another code path to the API and server components of Glassboard I have to really justify the work that’s involved. There’s usually four things I consider:
- Who is the target market?
- What’s the current install base?
- What’s the potential installed base?
- Would you use this thing?
The target market of the Nokia X is what the industry considers “developing nations”. The politically correct term is emerging nations because there’s plenty of room to grow, but the main point is that the Nokia X isn’t going to be on the store shelves in the US, UK, or Germany.
With a brand new platform, the current install base is zero. That’s not necessarily a bad thing as every platform starts from nothing at one point. In many cases, there’s a first movers advantage you can take advantage of.
That first movers advantage depends of course, on the potential installed base. This one was a toss-up for me. On one hand, Nokia is poised to put this in dozens of markets with millions of potential customers at an affordable price. On the other hand, Nokia is about to get sucked up by Microsoft who could snap their fingers and kill this project pretty easily. That’s a big risk.
The final question is more personal than business. I have always built software for myself, so asking if I would use a Nokia X is an important question. I’m curious about the device and would like to give it a shot. Would it be my main Android device? I’m not sure. I marked this one as a “maybe” rather than a hard yes or no.
Can You Make Money?
Once you’ve answered those four questions, you should be able to answer the most important question pretty easily: can you make money on the platform? More importantly, can you make enough money to justify the extra investment of time and resources in supporting it.
With Glassboard, my current belief is that no, I can’t.
Glassboard lives and dies by the amount of people that pay for some sort of premium subscription through the service. Since we have zero outside funding, the amount of users we gain isn’t an important metric. I’m confident that I could add several thousand free customers to Glassboard’s active user base by porting to the Nokia X. I’m much less confident that I can convert a decent percentage of those into folks that would be willing to pay for the service on a monthly or yearly basis.
That’s one of the key differences in running your company as a traditional business. Being on every platform is great if you’re a venture funded startup. If you’re bootstrapping, however, growth isn’t necessarily a good thing unless the financials are there to back it up. You have to analyze each different platform as a liability and justify whether its worth pursuing.
Simplifying Towards Profitability
This isn’t the first time I’ve had to do this sort of liability analysis with Glassboard. When I acquired the service, it was available on two additional platforms: the Kindle Fire and Windows Phone. I made the decision to kill both of these products for many similar reasons that I’ve opted not to tackle a Nokia X version at this time.
In the case of the Kindle Fire, the active user base wasn’t nearly enough to justify the continued investment. None of our premium customers were using the Fire version and that version also wasn’t equipped with any existing in-app purchase functionality, which meant I’d need to write more code myself.
That decision turned out to be the right one. I believe we’ve gotten maybe two total complaints about pulling the Fire version in the three months since it occurred.
The Windows Phone version of Glassboard was similar to the Fire in some aspects. The active user base wasn’t anywhere near the iOS or Android apps, but a decent chunk of the server components were already there. I’d have just need to add support for in-app purchasing to start upselling users to premium, which wouldn’t have been that much effort.
Ultimately the decision to kill the Windows Phone version came down to quality. It was not a good app. Given the small user base and the amount of time I felt it would take to make it an app I would be proud to showcase, pulling it from the shelves was the right move.
We get a few requests for a Windows Phone version a week still, so I believe there is some sort of market there. Whether they’re willing to convert to paid customers remains up in the air.
Focus on the Financials
As enthusiasts, it’s hard to avoid to allure of the new shiny. Updating an years old app to look and feel like an iOS 7 app makes sense as someone who loves to play with the latest stuff. Spending those days or weeks doing that conversion may not make financial sense if the product isn’t making enough money to justify the development time.
The same can be said for services such as Glassboard, and perhaps at an even higher level. With a freemium model, you have to think about every move in terms of its ability to convert free customers to paying ones. Free users are loss-leaders. If you have too many of those loss-leaders, you may have a popular product, but you don’t have a successful business.
∞ Posted on March 05, 2014
If there is one thing I don’t think I excel at as a business man, it is making money. That’s probably not a good thing to admit publicly, but it’s reality. In fact, I’d argue that I’ve gotten worse at making money in the past several years as the third-party software market has bottomed out. Making money was hard enough selling $25-$40 products. Try doing it when your most expensive app is $4.99.
The first step towards recovery is admitting you have a problem, and this is one that I am working on this year as I am steering Glassboard towards its next phase of life. I have to. This was December and January’s membership revenue and operating expenses:
I won’t share the exact dollar amounts, but yikes, right? If there’s any solace in those numbers, I was able to make a decent amount of progress between December and January in cutting costs and raising revenues.
Making money is harder than it seems. Most people assume you put a product out and people instantly find and support it. The reality is that for most products, they first struggle to find an audience, and secondly struggle to find an audience that’s willing to pay.
I have an inherent advantage by having a decent online following, which gives me nice starting ground of users to sell my wares to, but that’s by no means a guarantee of success. The goal of making money is to convert people outside of that base into paying customers. That is a problem I’m hoping to solve sooner rather than later.
So, how do I get good at making money? There’s a few different ways I can approach it.
Use Someone Else’s Money
This is what I’d argue is the ‘standard’ way of doing things when you are running a multi-platform service such as Glassboard. You spend a decent amount of time building a pitch deck and shopping it around to a variety of venture capitalists who will hopefully provide you with enough money to give you the resources you need to grow.
This is the least appealing to me for a variety of reasons.
For one, raising money is a full-time job and any time I spend running around begging people to write me checks is time I’m not spending on the product. Second, I don’t see it as a good fit for the type of business I want to run. Venture capital is for people who want to grow something to Instagram or Tumblr levels. Getting funding for something that VC typically (and insultingly) refers to as a “lifestyle business” is far harder. Glassboard, by design, isn’t designed for those insane levels of scale.
And finally, I’m personally averse to the whole racket of venture capital. Entrepreneurs are the new labor, especially when old guys with money are funding the sweat of someone who gets to put “founder” on their business card. I’d rather not participate in that.
VC is a nonstarter.
The easiest way to make money is to spend less of it so that your monthly profit-loss is heading in the right direction. By cutting costs, it’s easier to approach the break-even or profitable point.
This is the way I have been approaching Glassboard so far into my tenure. The existing service had quite a bit of fat on the edges that could be cut without impacting the service in a negative way. Some of the things I did were:
- Negotiate a new plan with Sendgrid to account for how much email Glassboard sends on a daily basis (well into six figures). This 30 minute meeting shaved over $1000 a month off my monthly expenses.
- Disable email on any board that has over 200 members on it. There are not many of these high traffic boards, but they accounted for a heavy portion of our email traffic. I’ve had maybe 2 complaints about this since I changed it six weeks ago.
- Optimize Glassboard’s Azure Cloud Services to dynamically scale the amount of instances it needs based on how much traffic is coming in. This shaved about 40% off the CPU costs on my monthly Azure bill.
There’s still plenty I can do to cut costs, but that only solves a small portion of the equation. None of the remaining items on that list are on the low-hanging fruit/quick win list.
The far more interesting opportunities are actually increasing the monthly revenue.
For apps increasing revenue can be done by raising your app’s cost, adding advertisements, or inserting some sort of in-app purchases. Every app is different, so it’s hard to offer a single prescription for success to everyone. I can only speak to my use case.
For Glassboard, this is the hard nut to track because I’ve got tens of thousands of users who have been using a service for free that I have to figure out how to bring revenue in from.
One of the first things I did was lower the cost of a Glassboard Premium subscription from $50 a year to $25. There was no science behind this decision other than me personally not being willing to pay $50 a year for the service. $25 sounded much more reasonable for the existing offerings.
I also added the yearly premium subscription to the iOS app as an in-app subscription, so that it’s easier for people to support the service.
Neither of these changes set the world on fire. I sold more Premium subscriptions in two months than Glassboard sold in its previous two years of existence, but it was also at half the price.
The more interesting metric I discovered was how many people weren’t even aware Glassboard had a paid offering. Since people primarily access it through the iOS and Android apps, they had never been prompted to pay for the service. I had more than a few complaints from people about adding the premium subscription as an option in-app. These are the folks I assume will never be customers.
There’s still plenty of existing users to try and convert to paid, but $25 a year is a hard sell in 2014 when $1 apps are seen as the new Premium. The next phase is experimenting with different business models and ideas as I try to get better at making money.
I’ve got a few ideas. Now to just build them out and measure the results.
∞ Posted on February 26, 2014
A few years back I took the time to convert this fine site to use Jekyll, a blog engine that generates HTML from a few Terminal commands I throw at it. Previously I was dropping $50 a month on a WPEngine account that I was mostly happy with, aside from the price and maintenance that it required. I’m all for doing less when it makes sense. Running a self-hosted Wordpress intallation in the past 2-3 years just doesn’t make sense to me.
One of the biggest tradeoffs of switching to Jekyll has been simplicity and access. When I want to write a post on this site, I have to do the following:
- Launch Terminal.
- Update my git repository to make sure I have the latest code base.
- Run a Rake command to generate a new post and open it in Sublime Text.
rake post TITLE='My Great Post'.
- Back in Terminal, I generate a new copy of my blog
- And then
rake publishto rsync everything up to my hosting provider.
The fact that it takes 4 steps to get to the most important step, writing, is one of the reasons I find it so difficult to write anymore. My previous workflow was far simpler:
- Launch MarsEdit
The barrier to creating a new post is high because of these extra steps, but also limited because of the platforms. The only way to manage my Jekyll installation is from a desktop computer with Terminal access, Ruby, and a boat load of Ruby gems. There’s presently no sensible way for me to manage and create content for this site using my iPad or iPhone, which is seemingly the one that is with me most of the time. Instead I have this haphazard way of trying to remember to write posts by creating a note in Evernote and then praying I’ll remember to take action on it when I get back to my desk. You can imagine the success rate that has.
Technology should be about eliminating these hurdles and making things easier. I’m still not exactly sure why I decided going from three steps to seven seemed like a good idea, but here I am shaving a few yaks so I can publish this on the Internet.
∞ Posted on February 24, 2014