Home Articles DIARY OF A START-UP (TRICKY TIX)

    DIARY OF A START-UP (TRICKY TIX)

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    DIARY OF A START-UP

    [‘Diary of a start-up’ has been temporarily moved over to WordPress in anticipation of blog integration on our own site, scheduled for November ’07. For now, track and comment on the progress of Trickytix at http://trickytix.wordpress.com]


    A little while back, a young Melbourne businessman by the name of Scott Handsaker contacted us with an intriguing offer. He and a few colleagues at web consulting company Huge Object were launching a new web company and were offering to provide us with a diary of the company’s progress as it unfolded.
    It’s certainly not the first time we’ve received this offer. However, such offers in the past have always been motivated by a quest for shameless self-promotion, with little benefit for readers. But Handsaker and his team offered to provide an extremely candid account of their start-up journey, with exclusive access to blog posts, photos, audio, video and, most courageous of all, financials. So we agreed. Enjoy the ride!



    FROM SERVICE TO SOFTWARE
    Scott – 11th May 2007
    How do you move from a services/consulting company to a software company?
    Not easily.
    For over 2 years now we have steadily built up a web consulting company, all the while thinking of the next big thing we could build. News Limited buys Myspace for $700 million, and Google grab YouTube for a paltry $1.6 billion. Even the weakest start-up can find a few million in funding to get off the ground, so surely a couple of smart guys sitting in Melbourne can come up with a winning idea that will sweep the world? It all seems so easy.
    It’s not.
    Ideas for new businesses and web applications fly through my head every day, but 2 years on we still haven’t started one. Two false starts in those two years, with neither progressing far past the planning and branding stages.
    If ideas were enough I would be a millionaire by now (and I’m not). Ideas are worth nothing on their own. Execution is where the sweet spot is.
    But sticking with a half way decent idea and then just building it is not all that easy either (hence our two false starts). It is probably easier to take the funding option from the start and focus exclusively on your idea, as that way there are no distractions. The move from a consulting company to a software company is a much more difficult path to follow, requiring more time, more adjustment, and more pain. Try looking at the invoice for the monthly office rent, then decide whether you are going to work on that website for your ASX listed client, or your unfunded, half developed start-up.
    Eventually, things have to come to a head. When I was 26 I decided I wanted to own my own company by the time I was 30. I made it with 45 days to spare, but only by chucking in the safety of a full time job and making the leap into the “I want to be an entrepreneur” mindset. The same definitive step needs to be taken now, so here goes.
    We have the idea, a successful consulting company, the cash reserves and a collection of enormously talented developers. So we are commencing development before we have a full business model sorted out. Before we have any customers lined up. Before we know what we are going to
    charge.
    Good enough is good enough, and we will launch something within eight weeks no matter
    what.
    That is our stake in the ground. Set the launch date, and work back from that to work out what can get in and what cannot. Once launched, we will iterate quickly to eventually build a product that everyone needs and wants.
    Our consulting business will continue to grow and develop, but we won’t be sitting here wondering what might have been this time next year.

    To weigh in on the evolution of TrickyTix, visit our forum.


    THE IDEA AND THE MODEL

    Scott – 20th May 2007
    Our new business is called TrickyTix. It is a web based ticketing solution aimed at small businesses and will exist online at www.trickytix.com.au.
    An event organiser or company will have the ability to visit the website and create a ticketing account for themselves. This account will allow them to then create events which people can purchase tickets for.
    The tickets for any event will be available for sale on the TrickyTix website, as well as on the website of the event organiser. Customers will be able to purchase a ticket using a credit card, and have the ticket sent to them via email or sms.
    The money for the tickets sold will be received by TrickyTix and held for a defined period of time. After deducting bookings fees and charges levied to the ticket purchaser, the remaining funds will then be electronically transferred into the Event Organisers nominated account.
    The fundamental business model is therefore one in which TrickeyTix take a small fee from the cost of every ticket sold.
    That is about as complex as it gets. There are a few small to medium companies out there offering a similar service, and one 900 pound gorilla.
    We believe our approach has a number of fundamental differences which position us to capture a previously untapped segment of the market, but I will go into much greater detail in future postings. Suffice to say, we are excited about the potential.

    To weigh in on the evolution of TrickyTix, visit our forum.


    BUILDING AWARENESS POST-LAUNCH

    Scott – 4th June 2007
    This afternoon I spent a few hours with Norman nutting out a sales and marketing plan for the launch of the product. Our strategy is one which practically guarantees that the product will not be bug free or feature rich upon launch, so it is hard to know how much to push the marketing in the first 30-60 days.
    We want people coming in and using the product and providing immediate feedback, but we don’t want really want to hit the front page of Techcrunch until we are a little further down the track. We need to get the balance right.

    TrickyTix’s Scott Handsaker (left) and Norman Aquino nut out early strategy
    Yellow Pages? Waste of time for our model, and would take too long.
    Radio and TV? Don’t have the budget.
    Advertising? Maybe – depends on the publication.
    Blogosphere? Yes please.

    So the mix we have come up with is an attempt to strike a balance between the need to attract people from day 1, but not so many that we can’t focus on product development (which is the aim for the first 90 days).

    0-30 days (first month)
    • Media Release (multiple)
    • Pay Per Click (PPC)
    • Organic Search (link building)
    • Direct Mail (postcard campaign to selected niche market)
    • Blogosphere Buzz
    We are an online app, so I think it is right that 60% of our efforts (PPC, link building and blog buzz) are devoted to building awareness to customers that are online. It is effectively a “soft launch” strategy, but that’s what we need.

    To weigh in on the evolution of TrickyTix, visit our forum.


    HIRING THE RIGHT PEOPLE

    Scott – 13th June 2007
    Finding the right people for your start up is crucial, and this is especially true with a technology orientated company. You want developers who are ridiculously smart – people who spend their leisure hours trying to problem solve rather than relax in front of the box.
    Have we got the right people?
    Our database consultant got bored on the long weekend, and so decided to build himself a robot. He hooked it up to his GPS system, and as I type it is currently mapping out his bedroom.
    I think we found the right guy.

    To weigh in on the evolution of TrickyTix, visit our forum.


    TO START OR NOT TO START

    Scott – 19th June 2007
    Marc Andreessen (he of Netscape fame), posted yesterday on reasons Not to do a Start-up. It makes for great reading, and it made me think about why I decided to go down this path.
    Marc begins with covering some of the positives of a start-up environment:

    1.
    The opportunity to be in control of your own destiny
    2. The opportunity to create something new
    3. The opportunity to have an impact on the world
    4. The ability to create your ideal culture and work with a dream team of people
    5. Money
    While my motives have ebbed and flowed with time, my primary motivations are a healthy dose of 1, a dash of 3, and a side serve of 5.
    This quote from the article sums me up perfectly:
    “you get to succeed or fail on your own, and you don’t have some bozo telling you what to do. For a certain kind of personality, this alone is reason enough to do a start-up.”
    My career history is marked by “nose bleed pace” rises up the corporate chain, followed by spectacular flame outs. I would rise just to the point where I either completely fecked up, or hit an internal executive who didn’t think it was up to me be explaining why their particular strategy was a pile of poo. I’ve never been sacked (perhaps I wasn’t trying hard enough), but I’ve seen the writing on the wall twice now.
    To quote Andreessen again, in a post on hiring right:
    “Driven people don’t tend to stay long at places where they can’t succeed, and just because they haven’t succeeded in the wrong companies doesn’t mean they won’t succeed at your company—if they’re driven.”
    True words indeed.

    To weigh in on the evolution of TrickyTix, visit our forum.


    AN UPDATE ON THE DEVELOPMENT SCHEDULE

    Scott – 1st July 2007
    I read back over my first post and wonder where the time went. To quote myself from May:
    “Good enough is good enough, and we will launch something within 8 weeks no matter what”
    Welllll…good enough is good enough, but you still need to have a functioning product to launch something. This coming Friday the 6th of July was our original launch date, and we acknowledge we are going to miss that.
    Setting the deadline in the first place was still a great idea, and it has worked well for us. We have made a lot of progress on the prototype, while still churning out a hell of a lot of client work. But the 6th of July will come and go without a launch.
    Reasons for missing the launch?
    1. This is our first web app, and to be honest the 8 week timeline for development was a bit of a guess
    2.Developing an app while completing client work in parallel means resources are pulled out of development at inopportune times. The extra time will allow us to get the business better prepared for the first customer, including sorting out the pricing model (a subject of a future post).
    A new launch date has been set internally for the 27th of July 2007, and we are now re-focused on getting a prototype out the door on that date. This first cut is likely to be a closed door beta (invite only), so sign up at TrickyTix if you want to help test.

    To weigh in on the evolution of TrickyTix, visit our forum.


    SO CLOSE I CAN SMELL IT…
    Scott – 7th August 2007
    I haven’t blogged for a while, as I was waiting for the newly minted Australian Anthill website to go live. Now it is here, I hope to be able to share our ups and downs as we attempt to grow a brand new business.
    So where is the prototype I hear you ask?
    It is close. Real close. If it was a freshly baked loaf of bread, you would be able to smell it rising in the oven right about now.
    Whilse our regular consulting work has taken priority many times over the development of Trickytix, if we are honest with ourselves we have also neglected to properly embrace the notion of constraints.
    The team at 37Signals put it best in their e-book Getting Real:

    There’s never enough to go around. Not enough time. Not enough money. Not enough people.

    That’s a good thing.

    Instead of freaking out about these constraints, embrace them. Let them guide you. Constraints drive innovation and force focus. Instead of trying to remove them, use them to your advantage.

    Constraints are limitations that actually improve the likelihood of a successful outcome. While we have embraced a number of important ones (restricted budget, small development team, tight deadlines, no wireframes just jump straight into the User Interface), we may have built “too much” software for the first prototype.
    That is not to stay that the first cut will be a perfect, bug free solution (far from it!). But it may do some kind of cool things that it didn’t really need to do for the first launch. Your customers won’t thank you for spending 4 hours to make the background of an element light up when it is dragged and dropped on the screen, if by doing so you miss your ship date.
    But enough of that, and back to what I promised the Anthill guys I would blog about. Everyone wants to know what things cost, especially if they are considering making the leap into self-employment themselves.
    With that in mind I will get my next post out by the end of this week, with details of what it costs to build a prototype web application in Australia. Development costs, hardware and software, legal fees, accounting fees, trust companies, food, beer and everything in between.
    Keep in mind we are boot strapping the initial build from our own cash reserves (no VC funding at this stage), but we are an established company and so have tried to do things properly.
    Therefore:
    1.If you are a freelancer in your bedroom thinking of building your own app, yes you can do it cheaper than what we have (divide our cost by at least a factor of 5).
    2.If you are a business unit within a large ASX listed company, hire 30 more people, multiply our cost by a factor of 25 and spend the next 18 months building your product. You too will miss ship date.
    See you next post.

    To weigh in on the evolution of TrickyTix, visit our forum.


    THE COST OF BUILDING A WEB APPLICATION IN AUSTRALIA

    Scott – 11th August 2007
    One of the great things about the Internet is that people have started sharing some great information about their products and processes. It is now possible to find out what some of the leading web applications cost to build, and therefore make a good guess as to what it is going to cost you to build one.
    Some costs of other web applications are shown below (US$), with the numbers taken from Read Write Web.
    Dropsend: $48,012
    Freshbooks: $20,000
    Maya’s Mom: $70,000
    Mobissimo: $60,000
    Wesabe: $200,000
    The numbers above suggest that angel financing (or your own cash) should be all that is required to get a prototype out the door. Anyone asking for 7 figures off a VC without having anything to show for it is trying to run before they are walking. Any VC happy to give out that kind of money without first seeing a prototype, well my contact details are here!
    If you ask Guy Kawasaki however, building a web app can be done even cheaper. In a tribute to that post, the following numbers are supplied from our experience in building TrickyTix. All financial figures are in Australian dollars.
    1. 2 The number of external developers we added to our existing team of 5 in order to create the right set of skills.
    2. 0 The number of finalised business models we had before commencing development (although we did have a broad understanding of how we intended to make money)
    3. 0 The number of documents (functional specification, scope of work, business requirements, business plans, change management requests, risk registers,) we wrote before starting building our app.
    4. $6,500 Legal costs for trademarks and terms and conditions (x 2). We didn’t skimp on this, and went and found ourselves a firm that specialises in IT, IP and fast-starting companies.
    5. $500 We spent approximately $500 registering domain names.
    6. $2,500 Accountant fees to be spent on setting up two new companies. One to run operations, the other to hold the IP.
    7. $60 We used Basecamp to project manage the entire development, as well as manage task allocation.
    8. 4 By the time we push the prototype out to test, 4 months will have been spent building the app.
    9. $1,000 Time spent developing the logo, colour palette and typography. All done in-house.
    10. $4,200 Money spent on User interface and the design of both the website and the application. Again, all done in-house.
    11. $6,500 Development costs for the front-end of the application. As with any modern web app a significant portion of that was spent on javascript, with 1 specialist contractor brought in to assist where required.
    12. $9,000 Where there is a front-end, there is usually a backend. Think databases, think scripting, think geek. Half the costs here were spent getting in a specialist contractor, and the other half completed in-house.
    13. $0 When you use open source software, the licence fees are pretty sweet.
    14. $450 per month Dedicated server to host the application. There are cheaper options, but this should suffice for now.
    There are other fees still to come (merchant account for one), but it won’t be much higher than what is listed here. In the final wrap up, we end up with:
    $30,710 to develop a prototype web application in Australia.
    I have tried to account for in-house development at wage cost rather than actual consulting prices, but to be honest there is probably still a lot of “sweat equity” unaccounted for.
    So what do you think – has the price come out lower or higher than expected? Anything you think we have failed to take into account?

    To weigh in on the evolution of TrickyTix, visit our forum.