Apr 152011
 

Side Note: I’ve realized that my blog posts have become rather lengthy. I’ll try to include shorter articles starting with this one.

Finding co-founders and starting a business is difficult as it is, but starting a company with remote co-founders adds an order of magnitude of complexity. Jambool had 3 co-founders all living in 3 different cities. I lived in Seattle, Vikas lived in San Francisco and Nissim Harels, lived in Israel. You can imagine the difficulty in communication, coordination and overall function. Nissim worked with us several months on Business Plan #1 before he decided to return to academia. That left Vikas & I to execute on the rest of the product.

Coordinating with 2 remote co-founders is a lot easier than 3. But it was still an insurmountable task at that time. So how did we do it? Before I go into details I should stop you here and share with you my first piece of advice:

Do Not Start a Company with Remote Co-Founders

Why not? Quite simply, choosing a co-founder can be difficult to begin with and unless you know and trust your partner very well, then you will be signing up for unnecessary challenges and increasing the chances of failure. You have to make extra effort of discipline, over and above, the normal challenges of working with a co-founder. Nevertheless, working with a co-founder is still better than working alone. If you go down this route and decide to work with someone remotely, then these are my survival tips:

1. Establish a designated workspace

Photo courtesy of Flickr user Jóhannes G

We literally worked from our bedrooms for over 18 months. Technically I worked mostly from my breakfast table and Vikas worked from his guest bedroom that had a desk. Working from home takes incredible discipline. There are far too many distractions, and especially if you have kids or other family members around. Allow yourself to designate a work zone in a specific, consistent location in your home. If you step away, leave your laptop behind on your makeshift desk. That way you will not be tempted to slouch away to the sofa during the work day with your laptop and be distracted by your TV or something else.

2. Set regular sync-ups

Sync up regularly

Our routine was to get onto a Skype video call at 9am every morning. That forced us to be up well before that, but not necessarily dressed for business. Often these morning calls would last 30 minutes, sometimes 2 hours. And usually we would also set an end of day sync up to check on progress. These sync ups were good checks and balances to ensure that communication and progress was being made on both sides.

3. Set daily goals

Set achievable daily goals

One important agenda item of the morning sync up was to set an achievable daily goal. Whether it’s a piece of coding functionality, design document, updating a pitch deck, no task was too big to set an end of day milestone. Committing to a deliverable, forces one to work towards it when you know someone else is expecting that to be completed. It’s much easier to procrastinate if the next milestone is more than a day away, or if nobody cares about it. It also forced us to breakdown a task into day size chunks.

4. Document everything

Draw, write and share documents (Image from Flickr user mattyeo)

In a regular shared workspace, a whiteboard will suffice for expressing ideas and design. When your co-founder is remote, collaboration on ideas must still take place. In our case, before each major feature was implemented, a design document was written. We had pretty crude tools at that time, and would sometimes draw our UX designs on paper, scan and emailed to each other. Skype later added screen sharing and that worked really well. Use Google Docs, Gmail, Dropbox, or your favorite collaboration tool.

5. Travel often

Travel often

As much as your budget allows, travel to meet your co-founder as often as possible. Spend time working on your startup, but also spend time getting to know them outside of work. In my case, I would travel at least once a month pre-funding, and Vikas would come visit every month as well. We would stay at each other’s home to save on costs, and would usually end up working way past bedtime. Once we were funded, I was travelling every 2 weeks. Employees who travel up from San Francisco were invited to stay at my house. In the 2 year period that Social Gold ran as an independent entity, I found myself heading to Seattle’s Seatac airport every single week to either pick up someone or be flying out.

6. Work around other entrepreneurs

 

Surround yourself with like-minded people

Don’t work from your home all the time. Work from a coffee shop if you can. Especially one that is popular with other entrepreneurs. Simply being in an environment surrounded by like-minded individuals will have an amazing impact on morale. If possible, co-work with other entrepreneurs. I spent much time co-working with Ajit Banerjee, co-founder & CTO of Tracksimple, where we both worked from each other’s houses. It was not relevant that Jambool and Tracksimple had completely different business goals, but simply working with someone else was more fun than being alone.

7. Be completely transparent

Be completely transparent. Image from Flickr user P Shanks

This is perhaps the most important advice of all. There are a number of non-technical tasks that co-founders will work separately on when building your startup. These include a meeting with a customer, investor, potential hire, etc. Regardless of whether the meeting was successful, co-founders need to make an extra effort to over-communicate and be completely transparent. This requires a large effort to keep other in sync to replace the absence of hallway conversations. For example, always get on the phone immediately to debrief on how that meeting went and share that experience. It will keep your partner involved. Keep your IM program running all the time and let the other party know when you are stepping away for a short break. You can never be over-communicating.

Have you started a company with a remote business partner? What are some other tips can you share?

 

 Posted by at 8:19 pm
Apr 112011
 

So what exactly is a lifestyle business? A lifestyle business is a business that generates sufficient revenue that allows the owners the flexibility to comfortably adjust their work/life ratio. It sounds like surefire income but like any other business, the risk for failure is just as high. The phase of Jambool in building and monetizing Facebook apps is best described as a lifestyle business that allowed Vikas & I the luxury of having a lot of fun, earning an income and yet having the flexibility to take time off whenever we wanted just because we could. The following is the evolution of how Jambool’s 2nd business plan evolved into a lifestyle business and a top Facebook app developer.

Building on a repeatable platform

November 2007 was the turning point in Jambool history when we realized we were actually onto something big. When we built Hug Me, we wisely decided to build a generic gifting app engine so that we could launch other gifting apps based on other themes. By doing so it allowed us to launch new apps in the future simply by adding configuration and custom images.

Much of the rest of the month of November and December 2007 was a blur; we spent the month scaling out our systems to handle the surge in traffic, including switching dedicated server providers, adding memcache, tuning and partitioning our MySQL database. This was a far cry from a few months before when we were on the brink of shutting down. When we had time to think creatively, we scrambled to think of other clever specialized gifting themes so we could generate new clones of Hug Me.

We launched Send Good Karma and Smiles towards the end of December 2007 and watched usage sky rocket through cross-promotion between the 3 apps. Much like the name suggests, Send Good Karma allowed users to send virtual karma, such as Hope, Happiness, Peace, etc. Smiles allowed you to send funky types of smiles. Other than the icons, names and adjectives, the 3 apps were completely identical. It turns out a fair number of users who send virtual hugs would most likely send virtual karmas as well.

We repeated the formula, and launched additional gifting apps over the next few weeks, based on the Hug Me engine, that specialized in sending specialized emotions such as Wishes, Cheers, Massages, Spanks and the ever classic Fart You. If any conclusions can be drawn by the number of users who liked sending virtual emotions, then one can safely say that more Facebook users liked sending virtual expressions of flatulence than virtual cheers. :)

Early Monetization of Reach Apps

Now that we had a bunch of pretty viral apps, we decided to focus on monetizing them. We placed Google ads on our applications and found that it produced very little revenue. Next, we switched to using Facebook specific ad companies, such as SocialMedia and RockYou ads and saw revenue increased tremendously. The difference being that these latter types of ads cross promoted other Facebook apps, and kept the user in context on Facebook, whereas Google ads produced links that took the user away from Facebook.

Soon it became evident that our ad revenue increased because of the direct correlation between the number of Daily Active Users (DAU), and thus page views and revenue. The industry called these reach apps because they are extremely viral, reach a lot of users, but generate few page views before users bounce off distracted by something else interesting. By simply placing advertising within these apps, there was a high likelihood the users will click on an ad.

We generated about $3,000 in advertising revenue in November 2007 and $8,000 the following month from these apps and ad revenue steadily climbed over the next few months. Later on, we found other sources of monetizing these apps including a sponsorship by Time, Inc, to help build their fan base on their Health.com Facebook page by a partnership with Send Good Karma. Technically, we were profitable that first month as we generated enough to pay for the servers, and it certainly helped when we weren’t paying ourselves a salary. But that was about to change and not a moment too soon.

Our first paycheck

Vikas last took a salary when he left Amazon.com in early 2006, and by late 2007 his once patient wife had given him an ultimatum to get a real paying job within a few months. When it became clear that we would be generating enough income to support the operations we decided to pay ourselves a salary of a whopping $2000 a month. Our first paycheck arrived in our bank accounts on January 31, 2008, just days before Vikas hit his 2 year anniversary of having no income and when the ultimatum expired. If we had waited another month to experiment on the Facebook platform we may not have continued down this route.

Beginnings of Virtual Currency monetization

In early 2008, a new kind of monetization technique started to gain popularity on Facebook. This was the concept of Offer Walls in which Cost Per Action (CPA) based advertising allowed end users to be rewarded with virtual currency in exchange for performing an action, such as subscribing to Netflix, filling up a survey. The advertiser would pay for each completed action, and the revenue would be shared with the ad network and the game developer.We introduced virtual currency on our gifting apps and it did provide an additional channel of income through the use of Offer Walls. We were selling virtual emotions for virtual currency. The portion of revenue earned through virtual currency was still lower than straightforward CPA ads. Unsatisfied with the performance of how virtual currency worked in those apps, we decided to think of new apps that would have virtual currency built in from the start. My next blog article will describe the birth of these engaging apps.

The global reach of Jambool Apps

By January 2008 we had all but abandoned the Social Collaboration site (Business Plan #1). Jambool the Facebook app (Business Plan #2) company was up and running and we had about a dozen Facebook apps all clones of Hug Me. These reach apps propelled Jambool into the Top 15 app developers later that quarter by number of users. Over the lifetime of Hug Me, Send Good Karma and Smiles, they attracted a total of 14 million unique users, most of it during the first 6 months of launch. Facebook acquired 100 million users by August 2008 and one could comfortably say that one in 10 Facebook users that year had used a Jambool app by then. My hypothesis was confirmed by a pseudo-work/holiday trip I took to Brisbane, Australia in February 2008, when I met some friends of my friend Noel, half of his friends had used one of our apps. The moment of recognition was still overshadowed by having to explain what I really did for a living. Uhh. yeah I write apps for Facebook that allows you to send virtual hugs to your friends.

The reach of Jambool apps expanded far beyond Facebook users when we took a portion of the revenue earned from Send Good Karma and Hug Me to make micro-loans on Kiva. Over the life of these apps, Jambool made almost 500 loans totaling almost $13,000 to small businesses around the world. Everytime someone spent virtual currency on our apps, we contributed into a pool of funds for Kiva. This was our way of indirectly translating virtual karma into real world goodness.

Time for an exit?

The early success we had with these apps attracted a variety of attention. Aside from partnerships from other apps for cross-promoting apps, there was more serious inbound interest to acquire our apps and also the talent. We could’ve taken an early exit, made back some of our lost income and moved onto something else. We decided against selling out, as we were having a lot of fun being in control and even getting some attention from the press.

Within a year’s time from the launch of our very first Facebook app, we did eventually decide to abandon the Facebook app business and pivot onto something else. At the peak of our success, it seemed unthinkable to wake up one day and decide to abandon the easy income, the flexible lifestyle and being one of the recognized names in your field. But that is exactly what we did, and more on that in a future blog post.Early ConclusionsUp to this phase in our Business Plan #2, there much of the success was quite accidental and the business had not grown long enough to draw major conclusions, but nevertheless there are early takeaways about a lifestyle business:

  • Build a platform - if we didn’t build a generic gifting engine we wouldn’t have been able to theme Hug Me and branch out to other apps. Send Good Karma ended up being more successful and recognized than Hug Me.
  • It’s still hard work – While most of the time it was fun, there were still many late nights spent scaling the technology and sweating about the loss of users and income.
  • Have fun – We were having a lot of fun thinking up new apps and riding the Facebook app fever. This was probably more important than seeing your revenue grow.

If you’ve built a tech lifestyle business, how it evolve? I’d love to hear your stories.

 Posted by at 7:58 am