Should you sell your viral app?

January 24, 2011

Congratulations! Your app went viral. Your traffic is growing exponentially. All the tech blogs are writing about you. Now what?

We live in amazing time when an application built by one or two people can quickly reach hundreds of thousands of users with no marketing budget. The applications achieving viral growth tend to be very simple and launch without a monetization plan, in most cases a side project gone horribly right. On the other side of the spectrum are highly monetizable products that don’t go viral. The question that remains to be answered is whether you can have both a monetizable product and viral growth.  Can a viral app become a business, or is it best to cash out early?

The most notorious viral app was ChatRoulette, which quickly reached 400,000 unique users, but traffic levels are now below ¼ the peak and dropping. Andrey Ternovskiy, the 18-year-old founder, turned down several million dollar offers for investments and buyouts. Last week, he admitted some regrets to FastCompany:

“After I declined the offers, I realized it was very difficult to execute something myself. I think I would accept the offers now, because I’m much more educated about it.”

So it was interesting to see, a more recent viral sensation, go up for sale last week. The site’s for sale page boasted 259,000 users, 5.1 million visits and 1.5 million entries. It was sold for an undisclosed amount less than a month after it’s first coverage on TechCrunch. Mark Bao, also 18-years-old, claimed he didn’t have time to focus on the site, but it’s likely he saw a fad and knew when to cash out.

Those in Seattle are well aware of Cubeduel, an app launched January 12th which lets you vote on who you’d rather work with. 50,000 votes were placed the first day. They had so much traffic that they were temporarily offline due to LinkedIn API limits. Regardless of downtime, Co-Founder Tony Wright claimed “hundreds of thousands” of ranked users only 3 days after launch. I’m eager to see what happens to Cubeduel. Will it be another fad? Will they monetize? Or will they choose to cash in?

It’s almost like we choose an app to go viral every week.  While writing this, an article is published on TechCrunch about what will probably be the next viral app. received 20,000 unique visitors in 8 hours.  Alex Tew previously created the infamous milliondollarhomepage, an example of a viral product that made money; it took a whopping 4 months to generate over $1 million.  He has some good insights into how the speed of viral growth has improved due to social media.“Ideas spread even faster because of social media,” said Tew, “Whereas before, the distribution power lay more with the news media and blogs back in 2005. If I had done MDH today, I might have made $1m in 4 weeks rather than 4 months.”

Should viral apps be sold? Did make the right decision? What do you think Cubeduel should do?



On Small Business Taxes

January 17, 2011

During political campaign season, it’s very common to hear politicians on both ends of the spectrum talk about their support for small business. I used to be satisfied by these statements, but now that I run a business of my own, I have to say I’m surprised by the investment of time and/or money required for licensing and taxes.

If you think your personal tax returns are complicated, get ready for some fun when you have your own business. First, you have to figure out the appropriate registrations (Washington Secretary of State, Washington State Department of Revenue, City of Seattle, Federal EIN, etc).  The overall process is poorly documented, and individual resources are disconnected. Then you have to keep track of all the various deadlines and paperwork that occur throughout the year, especially federal deadlines like paying personal estimated quarterly taxes and returns. For a small business with enough resources for professional financial support, this is just part of doing business. But a new small business probably doesn’t have these resources, or could benefit a lot from investing them elsewhere, and all the paperwork becomes a huge distraction. While it’s completely understandable why these requirements exist, I cringe every time I finish a form that says I owe $0.

If we want to see more small business, there should be a focus on supporting new small business. We should be helping new entrepreneurs dedicate their time and limited resources where it is needed the most: on establishing and growing their business. When they’re spending days navigating a system that ultimately results in a $0 bill, it’s a waste of everyone’s time and resources, including the government’s efforts to collect nothing.

To all my fellow entrepreneurs, I hope you get all your 2010 tax requirements swiftly, and get back to business.


Did You Grow Last Year?

January 10, 2011

I left Microsoft to embark on a one year experiment. 12 months later, much is still up in the air. I thought we could launch a product within a few months, and either gain traction or fail by the end of the year. While LazyMeter is almost in beta, it’s clearly taken longer than planned. This week, a few friends naturally asked how I feel about the first year of my experiment, and whether I have any regrets.

Life is good. I’m thrilled with the product we’re building, our LLC had significant revenue from consulting, and for the first time in recent memory, I can say I’ve grown. I’ve left my comfort zone, networking and returning to code, and I’ve rediscovered things I love to do like writing. This was very different than the years I spent distracted by things like salary, levels and promotions that now feel meaningless. While I couldn’t figure out the source of my dissatisfaction at Microsoft, I now realize I had to leave because I was waiting instead of growing. Looking back on the past year, I’m not upset with the opportunity cost, or things taking longer than planned. I’m thrilled that I no longer feel stuck and have made steps in the right direction. When I look to the future, I have countless options. I’ve never been closer to where I want to be, and I’m figuring out where I want to be at the same time. Leaving Microsoft to found a startup has been nothing short of a successful journey, no matter where I end up.

A critical component of happiness is continual growth. We should always try to make progress towards our goals. You don’t need to achieve your goal, but you do need to move towards it, even if just turning in its direction. While it’s easy to dream big for the future, these dreams are often intimidating, so it’s no surprise that so many New Year’s resolutions are abandoned. Each New Year’s, we look to the future, but we should start with the past. Specifically, we should ask ourselves whether we grew. Meaningful New Year’s resolutions are in response to this question.
This New Years, I suggest you resolve to grow. It’s fine if our New Year’s resolutions are lofty and unrealistic.  Dream big.  What really matters is whether we make positive progress towards our goals. If you’re not proud of your progress – if you feel stuck – then this is the year to make a change. I really enjoyed Marcello’s Open Letter to the Seattle Startup Community because it both sets goals for 2011, and appreciates the progress made so far towards the vision – have you made the same analysis for your life this year?