What I Learned Bootstrapping Folyo in 2011

folyo2012

2011 is the year that I finally took the plunge and launched my own project, Folyo.

Folyo is a private job board that helps startups find amazing designers, and I officially launched it in September. So far it’s helped several companies (here’s an example) find great freelancers, and quite a few designers are now using Folyo as a source of interesting projects.

It’s the end of the year, so I thought I’d reflect on a couple things I learned in the past couple months:

Don’t skip the MVP

The List, the first incarnation of Folyo

MVP stands for Minimum Viable Product, and it simply means the most limited possible version of your product that is valuable to people. Or, as Eric Ries puts it:

The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.

The MVP is especially important for bootstrapped startups because of the “least effort” part. When you don’t have outside funding, every resource counts (actually, that’s true even if you do have funding, but you know what I mean), and you can’t afford to spend time and energy on a dead end. This is why it’s so important to validate any new product or idea as quickly and cheaply as possible.

Folyo’s MVP was an email newsletter simply called “The List”, and in fact it didn’t even have its own domain. From June to September 2011, I registered as many great designers as I could to the newsletter, and then contacted startups and incubators to suggest posting job offers if they were looking for designers.

Technically, The List was as minimal as possible, and it cost me nothing to create and manage (apart from my time). I hooked up a Wufoo contact form to MailChimp to manage designer subscriptions, and as for job offers, I simply forwarded any Wufoo submission to Posterous to automatically create a blog post for each job offer.

Unlike Folyo, The List was free, which means I didn’t validate a business model. But at least the experiment did indicate that there was a need for such a service, since quite a few companies posted projects and found designers through it.

So after successfully running the newsletter for about a month I started working on its successor, which would this time be a “real” web app.

Know when to outsource (or not)

Hacker News freelancer threads, a great source of talent

One thing I struggled with early was deciding if I should try and do everything myself, or hire someone. I had already started learning Rails, and to be honest I could even have chosen to do everything in PHP.

But after talking with my friend Sean from Bushido, I decided to hire someone. What he helped me realize was that knowing when and how to outsource was a valuable skill in itself, and one that (unlike coding) I had no experience in.

So my reluctance to hire a coder wasn’t due to perfectionism (as I was telling myself), but simply to being afraid of venturing into new territory. Once I got over that fear, I realized that this new skill would be extremely valuable to learn, and hired Jonathan Bryan (whom I originally lured in with the promise of working on a completely different idea, Talkbee).

This proved to be a good investment, as not only did Jonathan do a great job, he also became my own private Rails tutor. Turns out that when you’re paying someone by the hour, you don’t feel bad about asking dumb questions.

Since then, I’ve become confortable enough with Rails to implement new features myself, and I’ve gone back to my self-sufficient ways. But I have no doubt that hiring a developer to get things started was the right move.

Start small, start local

My new strategy: start local

This is something I only understood very recently.

Back in December, I got a chance to hear Brian Chesky (co-found of AirBnB) speak here in Paris, and one thing he said really stuck with me. He told the audience how he’d once mentioned to Paul Graham (of silicon valley incubator YCombinator) that most of their users were in New York, and Paul answered: “well, what are you doing here then?”.

Brian then explained how they’d organize meetups and parties for their early users, just to get their feedback and create a sense of community between them.

The lesson for me was that even if your ambitions are to take over the world (with AirBnB certainly seems intent on doing), you’ve got to start somewhere.

Folyo is an international site with an international audience, and there’s no reason why a company from Brazil couldn’t use it to hire a designer from South Africa.

However, I now realize that it’s going to be much easier for me to find clients and get traction here in France first, simply by virtue of physically being here, and having connections here.

So I think that even in the age of globalization it’s important not to skip steps. Start by dominating a niche (which could be local, an online community, a specific market, etc.) and expand from there.

Blogs are not your friends

If TechCrunch was honest

Blogs like Techcrunch, ReadWriteWeb, or Mashable write about startups, so if I tell them about my startup they’ll write about me, right?

That’s basically what I used to think before realizing how wrong I was. Those blogs don’t write about “startups”. They write about 1% of startups (and I’m in the 99%!).

I contacted most of the biggest blogs, and do you know how many of them ran a story on Folyo? None.

Do you know how many had a real, live human reply to my email to tell me they were not interested? None.

Do you know how many sent me an automated rejection email? None.

I can only imagine my emails are collecting virtual dusts and spiderwebs in a big pile of unread messages from other hopeful young startups. Next time I feel like contacting tech blogs, I think I’ll write to Santa Claus instead. I’ll have a better chance of getting a reply, and having my wishes come true.

So the lesson here is: if your communication strategy sounds something like “1. Create cool product. 2. Have TechCrunch blog about it. 3. Profit!”, I have some bad news for you…

People don’t care much about you either

Woohoo! 11 people, a new record!

Startups suffer from a strong case of survivorship bias. The startups that we do hear about are the ones who are successful at, well, making people hear about them.

The logical fallacy goes something like this: Every startup that I know of, I hear people talking about it on Twitter. So if I launch my startup, people will talk about it on Twitter!

The problem is that you’re not considering all the startups that you do not know of, precisely because people are not talking about them on Twitter (or Facebook, or blogs, or podcasts, and so on).

And the bad news for you is that your startup will very probably fall into that last category. Meaning you’ll quickly be faced with the very harsh reality that people just don’t care about your startup.

So your job as a startup founder is not just to create a great product, it’s to do that and then make people care about it.

Or alternatively, make people care about something, and then once you have their attention, try to sell them your product. That’s what I’ve been doing with Folyo by writing  guides and blog posts to help drive traffic to the site. Sure it’s a ton of work, but at least it’s fun (provided you like writing), and so far I haven’t found a better way.

Free products attract users (or at least they should)

On the net, apparently there's such a thing as a free lunch

Folyo charges companies to post an offer, but is completely free for designers. And although I’ve struggled to find paying clients, I’ve had no trouble recruiting designers to join the site. There’s about 300 of them so far, and I even reject most of the applications to preserve a high quality.

My strategy to recruit designers to Folyo? Simply ask them if they want to join, one by one, via Dribbble or Twitter. It takes time, but most people accept (and are in fact grateful for hearing about the service!).

So if you run a free service and still have trouble attracting users, I suspect you’re not offering something valuable enough, or maybe you’re not solving a real problem.

Run a marathon, not a sprint

You and your competitors

If I people had invested money in Folyo, or I had employees depending on me to feed their kids, I’m pretty sure I’d be a nervous wreck right now, obsessing over conversion rates and business plans.

But since I didn’t, I feel no pressure at all. If this thing works, great. If it doesn’t, oh well. In fact I’m pretty sure the site could even go down for a couple days without affecting things much either way.

That doesn’t sound like the usual party line of working 80-hour weeks, eating instant ramen, and sleeping in the office (although I do those last two things, because I love ramen and work at home).

But I’d much rather start slow and small, and make mistakes when they don’t really matter, instead of burning through cash, energy, and people going in the wrong direction.

Hard Stats

State of the art accounting technology!

As an experiment, I’ve decided to be open with how Folyo is doing (at least for now). So here are some facts:

  • Development costs: $2,640
  • Ad Campaigns (StumbleUpon & InfluAds): $640
  • Revenue since launch: $1,870
  • Average monthly income: $623
  • Net loss: $1410
  • Number of designers: 306
  • Number of paying clients: 28
  • Refunds (i.e. clients who couldn’t find a suitable designer): 7
  • Average number of projects per weekly newsletter: 2.3

As you can see, there’s some good and some bad. The good is that I’ve got revenue and users, which is more than a lot of startups can say. At $623 per month, it’s not a salary but it’s already a sizable source of income.

The bad is that I’ve still got very few offers: I average 2.3 per week, which is a far cry from my target of 10 offers per week. And I’ve also not recouped my initial investment yet (to say nothing of the time spent instead of working on client projects, of course).

Enjoy the ride

It sounds cliché, but I think it’s important. You should enjoy what you do, and not just be thinking about the day when you get bought out by Google and can retire to Costa Rica.

Folyo gives me a reason to get in touch with great designers, and learn about exciting new startups. I’ve got people thanking me every week for the service, and users from all over the world.

Even if it never made another cent, I’d keep running the site just because I enjoy it. And I think that in itself made Folyo a success in 2011!

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