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How Patrick McKenzie built a small software business from nothing to the point where he could quit his full-time job, plus tactical advice for other small businesses on how to save time by outsourcing, automating, and eliminating low-value tasks.
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A SOFTWARE BUSINESS ON 5 HOURS A WEEK
Patrick McKenzie
The Problem: Making This Sucks
The Big Idea
$60 budget 1 week schedule Big Hairy Audacious Goal: $200 a
month
Bingo Card Creator – July 2006
7/2006 8/2006$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
Sales In First Two Months
Why Did It Sell That Much?
Version 1.02 – Now With Less Crashes!
7/2006 8/2006 9/2006 10/2006 11/2006 12/2006 1/2007 2/2007 3/2007 4/2007 5/2007 6/2007$0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$900.00
$1,000.00
Sales In First 12 Months
AdWords, Halloween, Google… Oh My!
7/20
06
8/20
06
9/20
06
10/2
006
11/2
006
12/2
006
1/20
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2/20
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6/20
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7/20
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8/20
07
9/20
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10/2
007
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
Sales Through Halloween '07
A Brief Aside About EMDs
• Mini-sites targeted at individual customer needs: $200 + $10 per year (~$500 for this one, for the domain)
• Exact match domains (“halloween bingo cards”.{com|net|org})
• Declining part of my strategy, but still print money three times a year.
• Why lease traffic when you can get it for free?
The Big Idea: Scalable Content Creation
7/20
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8/20
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006
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1/20
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3/20
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4/20
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5/20
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6/20
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7/20
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8/20
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008
11/2
008
12/2
008
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
Sales Through 2008
Make It A Web App
7/20
06
9/20
06
11/2
006
1/20
07
3/20
07
5/20
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1/20
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009
$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
$4,000.00
$4,500.00
$5,000.00
Sales Through 2009
Holy Cow. This Is My Day
Job.
7/20
06
9/20
06
11/2
006
1/20
07
3/20
07
5/20
07
7/20
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9/20
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1/20
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1/20
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3/20
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5/20
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7/20
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9/20
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11/2
010
1/20
11
3/20
11
5/20
11$0.00
$1,000.00
$2,000.00
$3,000.00
$4,000.00
$5,000.00
$6,000.00
$7,000.00
Sales To Date
Adventures Since Quitting
Five Quick Bits Of Advice
Charge More
Programmers consistently underprice. Double it, then go higher.
Avoid pathological customers by charging more.
Revenue is dominated by customers on most expensive plan spending other people’s money.
Recurring revenue is the best kind.
Make Web Applications
Faster iteration. Easier support. Dramatically higher conversion rates. Recurring revenue is the best kind. Better tracking of actual use than
MiniPeace.
Figure Out SEO
Free traffic from interested people = free money.
Single best thing you can do for SEO: create a reason why people who do not buy your software should cite your website anyhow.
Second single best thing: create a system which makes content at scale.
Optimize. Everything.
All factors in success of a software business are multiplicative.
A/B testing: 5% increase in conversion rate, once per month, is ~70% increase in revenue per year.
A/B testing is cheap & easy to get started with.
More advanced: funnel optimization, first-run experience, etc.
In Five Hours Per Week!?
Three Keys To Avoid Wasting Time
OutsourceAutomateEliminate
Stuff To Outsource
Web designWeb contentSelf-contained programming projects
Customer support
Stuff To Automate
Routine customer support tasks
Drudgery – license generation, keyword analysis, etc
Server maintenance/monitoring
Dashboard O’ Goodness
The Big Idea: Scalable Content Generation
Automate production of high-quality pages responsive to specific user needs, around a template and/or data source.
Outsource the production of text for those pages.
???? Profit!
Make One Page
Do It 941 More Times
… Without Going Spare
Live Demo Time
It Really WorksBaby Shower $6,870.00Halloween $4,230.00Valentines Day $3,600.00Christmas $2,520.00St Patrick's Day$1,890.00Summer $1,680.00Easter $1,470.00Cinco De Mayo $1,170.00Addition 1 To 10 $960.00
Thanksgiving $600.00Christmas (Seasonal) $600.00
Football $570.00Multiplication 1 To 10 $510.00
Mother's Day $450.00Back to School $390.00Periodic Table Of Elements $360.00
4th of July $330.00Spring $270.00Women Of The Bible $270.00
Winter $270.00Nutrition $270.00Geometry $240.00Autumn $210.00Careers $210.00Fraction Multiplications $180.00
• Total sales: $39,270• Total investment: $3,000• 251 activities / 942 have generated sales• Top selling activity: I didn’t even know people
did that.
And 226 More!
Stuff To Eliminate
Checking Google Analytics 37 times per day
Worrying about competitionDevelopment which does not meet demonstrable customer needs – see Lean Startup
Thanks for Listening
Blog at http://www.kalzumeus.com Slides will be posted. See @patio11 Send me email. I love chatting about
this. [email protected]