Living with rats

One of the things that intrigued me most about the rat infestation of a New York KFC restaurant was reading about Robert Corrigan, the expert that was brought in to help clean up the mess. Corrigan (from nearby Richmond, IN) has been called "the Elvis of the pest control world" for the research he's done on the subject. An Indianapolis Star article describes one of the ways Corrigan achieved his expert status:

The key to Corrigan's success is understanding how bureaucrats and rats think. He learned about the latter during his graduate student days at Purdue University, when he once spent 30 days in a rat-infested barn in Indiana. He lived the nocturnal life of his subjects, watching them eat and reproduce. They crawled all over him. The more he watched the animals, the more he liked them.

As someone who's been terrified of rats ever since I saw the movie Ben as a little kid, the image of Corrigan living 30 days in a rat-infested barn makes me want to crawl into a fetal position atop the highest piece of furniture that I can find.

But it got me to think, how far would I go to become an expert in my field? I think a great web developer does more than just learn a few programming languages and try to keep up with the latest technologies. I thankfully don't have to live in a rat-infested barn, but what kind of immersion is necessary in order to become better at what I do?

  • Spend a day watching a novice users work with a web application so I better understand usability?
  • Ask script kiddies on IRC to hack my website so I better understand security?
  • Build complex applications that never see the light of day so I learn how to fully implement a particular technology component?
  • Work on a 5-year old PC and 33.6kbps Internet connection to learn how to optimize web pages?
  • Spend a day with my monitor turned off so I understand how a visually impaired person uses the web?

What do you think — what's the rat-infested barn of your industry?

Jenerous interview

I had the pleasure of being interviewed by Eric Mattson for Jenerous (formerly called marketingmonger) this morning. If you haven't heard of Jenerous, I definitely recommend checking it out. Eric started the project last year in an effort to interview 1,000 "leading marketers, entrepreneurs and other interesting people". It's a great undertaking, and he's got 100+ interviews with a lot of interesting people so far.

I'm pretty sure I'm not a leading entrepreneur yet, but you can listen to the interview anyway :)

Buffett doing what he loves every day

I'm a big admirer of Warren Buffett. Not just because he's a wildly successful businessman by any measure, but because he's so down to earth, practical, and maintains a high standard of integrity.

I recently watched an interview/documentary on CNBC about Buffett, and I recommend it for anyone who's even mildly interested in learning about the man. It's refreshing to see someone worth over $50,000,000,000 living in the same "normal" house he's been living in for decades, driving himself around town, and walking around without a bodyguard or entourage. His example speaks volumes in the context of our uber-materialistic culture.

Here's one of my favorite quotes from the interview:

I tell the students that come out here ... they're living better than John D Rockefeller lived. I mean they're warm in winter and cool in summer and they can watch the World Series. They can do anything in the world. They literally live better than Rockefeller.... Really getting to do what you love to do every day — that's the ultimate luxury. And particularly when you can do it with terrific people around you.

Below is the clip at YouTube, where you can find the rest of the interview:

And if you're in the mood to read more about the man, cuddle up by the fire with Buffett: The Making of an American Capitalist.

Now hiring

As I mentioned in my last post, the business is growing and there are more things that I'd like to do without time to do them. I've been using a couple people part-time for a while now, but their time is limited since they each have full-time jobs and we're somewhat limited on what tasks we can work on together because of it.

This has led me to think a lot in the past couple months about hiring my first full-time employee. Here are some of the questions I've tried to answer before deciding whether or not to take that step:

Do I want to grow?

My answer to this is not an immediate "yes". There are a lot of things that I like about being a one-person business, and there are a lot of headaches that come with having even one employee. I've had a number of recent conversations about this with a web designer and consultant here in town, and it's something that (at least for now) they've both answered "no" to. (You can read some of Ian's answer here).

The alternative to not growing is of course to deliberately hinder growth by not accepting new clients and/or tabling new initiatives. There's a lot of sense to that option, but I feel like that could be more detrimental in the long term — hindering growth could keep the business from being able to withstand troubled times, even though expanding too quickly could certainly cause problems of its own.

Do I want the additional expense?

From a financial standpoint, hiring an employee is a huge risk. Along with having to pay someone's salary (every two weeks on schedule), I'll have to pay benefits, buy them new equipment, and get a place for them to work. Roughly speaking, this means that my expenses are going to double. And if I can afford that, I naturally have to ask myself if I can just take that amount as additional income.

But really, the financial considerations are moot since if growth continues I'll have more work than I can physically and mentally handle. It's not an option for me to plan to work every night and weekend so that I can pocket the additional money.

Do I want to manage employees?

Something else to consider, which in some ways is more important than anything else, is whether or not I have an interest in managing employees. Skills that enable me to work well with customers and develop applications apply very little towards managing employees.

I know a lot of people who would feel completely out of their element if they had to write a review or talk to someone about poor performance. My worst managers have been those who didn't like their jobs, and I wouldn't consider hiring someone for a second if I felt like it would cause me to stop loving my job.

How many employees?

At Bottled Software, my first company, we started with five people and enough business to pay the salary of one. This is a gross over-simplification, but basically our thinking was that we couldn't land the type of projects that paid five people unless we had that many on staff. The strategy failed since we essentially increased staff before the business grew.

I've learned my lesson, and don't plan on repeating the mistake. These first few years are critical, and I'd rather err on the side of growing too slowly than growing too quickly. The only thing that makes sense to me at this stage is to hire only when revenue can support the additional expense.

I read about a small web design business in Nashville the other day and it sounds like we share the same strategy:

A challenge they faced as they grew was the expense hit that each of his early hires created had on the income statement. Expenses never grew in a straight line, but in significant steps as each new programmer was added. This created a major cash flow challenge. He met this by being very conservative in cash management. He never hired until he had the money already coming in to pay for the new employee. Also, he always keeps 90 days of cash reserves to cushion any unexpected downturn. During growth keeping this reserve took careful planning. Both of these tactics restricted his growth to some degree, but they also helped him to grow at a pace that he could afford to pay for.

What's next?

I've decided to post a job opening for a web developer in the next week or so. If you know someone who would be a good fit and wants to work on some exciting projects let me know.

I'm also curious to know what you think — would you hire in my situation? How do you want your business to grow?

One year old

Recursive Function is a year old now, and it's exciting to think about how far it's come in the last year. I think now is as good a time as any to provide an overview of the business, and reveal a little bit about what's working and what's not.

Custom Development

Developing custom web-based applications for clients has accounted for about 90% of revenue and most of my time so far. I've been very blessed in that this side of the business is healthy and growing. Even though I didn't put together any hard projections a year ago, I think it's fair to say that where I am right now has exceeded my expectations. I was pessimistic about my ability to find and acquire new clients, especially since the company is new and started as just one guy working out of his home office. It's not that I thought it'd be impossible, but I assumed that I'd still be struggling to find good clients and that more of my income would come from other sources, such as subscriptions from my web applications.

I've done work for a little over a dozen clients so far, and one of the surprising things is that only a few of them are businesses that I had any kind of relationship with before I started. I've worked on web development in the area for about 10 years, so I have a number of former clients and contacts at other firms that I expected I would be getting the majority of business from. However, most work has come from people I've met within the last year and a couple bigger clients are ones who weren't even a degree or two of separation away from pre-existing contacts.

I've not only been blessed with finding new clients, but with finding clients that I enjoy working for. My biggest clients so far have been startups, and they're working on some pretty interesting ideas with technology that I work with every day. I couldn't ask for more.

Generally speaking, I see that businesses are struggling right now to find good independent developers. And there are a lot of web-based startups stuck in the idea stage because they can't find any skilled, cost-effective developers to help them get running. As businesses' web development needs continue to grow and new startups are formed, I only expect this will provide more opportunities for the business in the future.

I don't mean to make it sound like everything has been rosy, or that it will be forever. It took about 4-6 months for me to hit my stride and find steady custom development work. And there's no guarantee that we're not at the edge of another bubble burst. But I'm happy with how things have grown so far, and am excited for things to come.

Formstack

I launched Formstack a year ago to some decent buzz, but it took a while to see any significant revenue. It grew slowly but steadily for the first 8 months, yet the last few months have seen a sharp jump in new subscriptions. I can go into this in more detail in another post, but I feel like that recent growth is the result of a site redesign, small marketing tweaks, and the introduction of a number of key features.

While revenues are slightly below what I hope for, the growth hasn't been very far off from my expectations. I had always suspected that growth would be slow in the beginning and would take some time before taking off. I've written before about the myth of the overnight success story — it's easy to look at a few popular web sites who seemingly sprouted up overnight, and think that's the norm. Yet it's all but a lucky few that find success that way. The rest of us need to keep working at it one customer at a time while constantly building and tweaking.

To illustrate further, here's a graph showing the number of paid subscribers over the last 9 months. Each dot represents the number of paid subscribers at a 2 week interval:

Continued growth won't be easy though. There's certainly a lot of competition as new form builder solutions are sprouting up and older ones improve their offerings. I'm also at somewhat of a disadvantage since I don't spend most of my time on this side of the business.

However, all things signal that there's a lot of potential and the site is still very much in the early stages of it's growth. I'm encouraged by the fact that I frequently get notes from customers who are thrilled to sign up, many who love how much it's simplified their work. I also have a lot of great ideas for growing the site, and certainly haven't lost any enthusiasm for continuing to work on it.

Ponyfish

This site has generated the most buzz of anything I've built, and made a handful of blogger's "top Web 2.0" lists. However, subscription revenue barely covers the cost of running the site. I'm not surprised by this — I don't think that a monthly subscription model is right for this service. The greatest evidence of this is that I'm pretty sure that I wouldn't pay for a subscription, and I'm in the site's target demographic. Furthermore, I've purposefully made it easy for people to use the site without paying or even signing up for an account.

I had higher hopes for the site from a financial standpoint, but I never built it because I thought it'd be a big revenue generator. I built it because I was desperately longing to use the service — everything else I'd tried beforehand had terrible success rates or was incredibly difficult to use. I saw that I could create the basic service for minimal effort, and it had a number of technical challenges that would be fun to tackle. So because of that I don't see it as a failure. After all, I get a free subscription :)

I haven't put a lot of development into it over the last few months, but continue to support it and plan to run it for a long time to come. But to be honest I'm not sure what's in store for the site over the next year. There are a number of key features that I'd really like to introduce, and some other business models I want to experiment with, but all that's contingent on my available time.

What's next?

This first year has been a very exciting one, and I haven't for one second regretted starting Recursive Function. It's certainly had it's share of challenges though, but I love what I'm doing and plan to do it for a long time.

As I've mentioned, I feel like I'm emerging from a bootstrapping mode where I built a business from scratch out of minimal resources. I'm entering a new phase where the business has a growing reputation and customer base, with resources at a point that I at least don't have to worry as much about where the next paycheck is coming from.

I'm confident that this next year will be even more exciting. I'm working on some interesting projects with clients, and have some new ones coming soon. I also have a lot of ideas that are clawing to get implemented, and I can't wait until they get out.

This all leads me to the question of how to manage the growth. I'll talk more about that in a couple days....

[Updated references to Formstack to prevent confusion about the name change]