The Art of the WordPress Startup



The Art of the WordPress Startup
Art of the WordPress Startup
The Art of the
WordPress Startup !
A helpful guide to launching your company that
depends on WordPress.
Author: Sean O’Brien, Director of Sales & Marketing @ Pagely
Copyright © 2014 Pagely® All Rights Reserved
This eBook was written to provide advice for those creating a startup
utilizing WordPress in some aspect or manner. Nothing in this book
is to be considered legal or financial advice. Always seek the
consultation and expertise of an attorney or financial advisor for your
specific situation.!
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Table of Contents
The Art of the WordPress Startup !
A helpful guide to launching your company that depends on WordPress.!
Chapter 1: Answers to Common Questions!
Chapter 2: Startup Competition!
Chapter 3: Startup Pricing 101!
Chapter 4: Startup Marketing Budgets!
Chapter 5: Founder Fitness!
Chapter 6: Startup Tools!
Chapter 7: Founder Retirement!
Chapter 8: Starting Broke!
Chapter 9: Startup Advice!
Chapter 10: How to Get Press!
Chapter 11: Riches in Niches!
Chapter 12: How to Close a Sale!
Chapter 13: Founder Taxes!
Chapter 14: Finding a Co-Founder!
Chapter 15: Scalable Hosting!
Chapter 16: Founder Writing Skills!
Chapter 17: Wireframing!
Chapter 18: Adwords!
Chapter 19: SEO!
Chapter 20: Branding!
Bonus Chapter: From the desk of Joshua Strebel!
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WordPress is a massive and vibrant ecosystem with passionate individuals working solo, as
part of teams, or leading companies. In the 10 or years since its beginning the software has had
it’s share of critics and fans, but no one can deny it’s current dominant place as the de facto
publishing software on the web. As more players establish themselves and more niches are
exploited, the ecosystem will continue to grow. For those just starting out or even those that
have had some success already there is something in here for everyone. Starting and winning
in business use the same principles regardless if in WordPress or some other industry. Most if
not all of this content is useful to any business owner starting out."
My thanks to our talented team member Sean O’Brien who has shared 20 educational chapters
within to help you on your way. "
To your future success.
- Joshua Strebel, CEO Pagely."
Chris Lema!
Chris Lema is the CTO at Crowd Favorite. In his free time he writes,
coaches, and speaks at WordPress events. You can learn more
about Chris here.!
“Startups aren't easy work. They're a constant mix of emotional highs and lows
(more lows than highs), conflict, trade-off decisions (between hard and difficult),
and the joys of building something from nothing. It takes special people to step into
and enjoy the life of an entrepreneur.
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I know, I did it five times in a row. In four of the five cases, another company liked
what we had done enough to buy or merge with our company. But even then, the
pain of closing one down is easier to remember. That said, I wouldn't change any of
it for any other way to have spent a little over a decade of my life.
In the next chapters, you'll discover tips and tricks for just about every aspect of your
startup. It's a great read and one I'm sure you will enjoy.
But there's at least one aspect not covered in there that I will warn you about right
now. It relates to decision making and is, maybe, the single best lesson I learned
across my five startups. It's that we're all prone to confirmation bias - that we will
only see the data that matches up with what we believe. And in a startup, it's deadly.
So even if you read something in here that you disagree with, dig into it. Ask others
about it. Because what you may not agree with may just save your business, if you
learn from it. If you ignore it, you may learn that lesson too late.
And even if you don't find something you disagree with in this eBook, go out talking
to people - paying special attention to the opinions that don't agree with yours.
They're harder to hear, but will help you think, plan and execute better. Enjoy The
Art of the WordPress Startup.”
- Chris
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Matt Medeiros!
Matt Medeiros is a WordPress entrepreneur, podcaster via Matt
Report and co-founder of Slocum Studio. His interviewing skills
are second to none.!
“I grew up as a car salesman. My father was a car salesman and his father before
him. My family owned and operated dealerships for 50 years in our local community
just south of Boston. It was an experience that I wouldn't trade for anything else as it
relates to my entrepreneurial journey. We were a business built on values, trust, and
hard work. Families would buy their children and their children's children cars from
us. We had our employees go from the start of their careers to retirement under the
span of our ownership.
What does this have to do with WordPress entrepreneurship? Everything.
Launching a WordPress business means dealing with high competition and
innovative companies spinning up every day. More often than not, it's a David versus
Goliath scenario and nothing can prepare you for the roller coaster ride of being an
owner. Determination, hard work, and strong values can be your greatest asset in
this space. While we enjoy, up and to the right growth, don't shortchange your
strategy for the next 5 years.
The team at Pagely® understands this challenge better than anyone. My best advice:
Lead with your gut and invest in the people around you if you're in it for the long
- Matt
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Syed Balkhi!
Syed is an online marketer with design & development
experience. His work has been featured in The New York Times,
Wired, Yahoo, AMEX Open Forum, Mashable, Business Insider,
Huffington Post, and more. You can learn more about Syed here.!
“I started my first online startup when I was 12 years old. Like most businesses, mine
too was created out of passion. Over the last decade I have learnt that passion alone
is not enough to run and grow a successful business. There is a lot more to business
then just developing a product. You have to learn about pricing, positioning,
marketing, taxes, finances, and the list goes on.
When I started my WordPress business, the biggest advantage that I had was my
experience (all the past mistakes that I made) and my mentors. Simply
understanding the very basics of what goes into running a business can put you miles
ahead. Before launching WPBeginner, I carefully studied the market to see which
void I wanted to fill and what was my target audience. Instead of going after the
entire WordPress community, I decided to focus on the non-technical users i.e
I think the key reason for WPBeginner success was proper positioning and the
organic marketing efforts. Instead of spending my money on buying traditional
banner ads, I spent my time and resources into building relationships and becoming
part of the larger WordPress community. I attended dozens of WordCamps with two
main goals: build relationships with key influencers and try to connect with potential
customers and earn their trust by helping them unconditionally.
The return on relationships (ROR) from these WordCamps overtime has been
astronomical. I met my co-founder of OptinMonster at a WordCamp. I met a lot of
my employees at a WordCamp. By building all these relationships, I have learnt a lot
from other's mistakes. Trust me, it's a lot cheaper to learn from other people's
mistake than make your own. I wish I had a guide like this when I started my first
business because I would have avoided a lot of costly mistakes.”
- Syed
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Chapter 1: Answers to Common
So you’ve decided to create a startup and have
decided to build on top of WordPress.!
Maybe you’re building a web app, a dev shop,
design agency, or a pageview monster that
generates AdSense revenue. Regardless, if
you’re a first timer, you’re bound to have lots of
questions bouncing around in your head. The
title of this post is in reference to the first startup
book (The Art of the Start) I read back in 2004,
shortly after graduating from undergrad. It
answered many of the questions you may have,
but a lot has changed since then so consider
this an updated CliffsNotes version.!
Before we begin, please do not consider any of
the following legal advice. The following are my own observations and experiences. You should
consult an attorney for your specific situation. None of the links in this post are affiliate links. I
know that might sound crazy. Ok, let’s get to it.!
You should first educate yourself on the various types of company formations in your home
country. Here in the U.S., the main ones people seem to choose are sole proprietor, LLC, LLP,
S-Corp, and C-Corp. Then there is the tax aspect. For example, you can be a single-member
LLC but file as an S-Corp for tax purposes. Sounds confusing right?!
In general, if you’re looking to raise capital down the line or anticipate being acquired, then a CCorp is the common approach. In addition, filing in Delaware gives you certain advantages,
most of which have to do with way the laws for corporate governance are written in that state.
Most VCs and angels prefer to invest in a company formed in Delaware, and it makes
paperwork easier in an acquisition because the acquiring firm will most often be based there as
well and be familiar with their laws.!
You don’t have to pay state income taxes at the Delaware rate provided you don’t physically
operate there. So for example, you can have a C- Corp filed in Delaware and then operate in
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say Texas by filing as a “foreign entity” doing business there. That way you have the tax
advantages of Texas with the corporate governance advantages of Delaware.!
If you’re starting a web agency for example and don’t intend to raise capital or be acquired (at
least not for quite some time), you’ll probably want to have your attorney explain the
advantages/disadvantages of going with an LLC, LLP, or S-Corp. If you’re a freelancer, then
going the single-member LLC route is probably the most common approach. It has minimal
paperwork and filing fees, plus it keeps your taxes relatively simple. You file what’s called a
“Schedule C” and can even do your return via something like TurboTax Home & Business. If you
intend on having partners and don’t want to be liable for their conduct, then you can consider
the LLP approach. It’s commonly used for partnerships comprised of doctors, architects,
lawyers, and accountants.!
An S-Corp has more formality and compliance obligations than an LLC, with things like creating
a board of directors, annual reports, and shareholder meetings, whereas an LLC is pretty
informal and the requirements are minimal. Another striking difference is that with an LLC, profit/
loss can be allocated disproportionately among owners. With an S Corp, profit/loss are assigned
to each shareholder based on shares of ownership. One main advantage of an S-Corp over an
LLC is that if you do decide/need to convert to a C-Corp at a later date, it can be done much
faster and easier. Converting an LLC to a C-Corp can involve lots of headaches, time, and
The answer here depends on your personal preference and the type of business you are
starting. If someone tells you to “never raise capital”,!
then they’re an idiot. Try starting an electric car company or something like Amazon without
capital and see how that goes. Obviously some types of businesses absolutely require raising
funding and others do not. If you’re starting a web agency or a business that requires little
money to get off the ground, then you’re better retaining 100% ownership and running things the
way you like. However if you’re going into a field where scaling quickly makes sense to avoid
being squashed like a cockroach, then you’d better get your pitching shoes polished.!
Many studies have shown your odds of success are higher when you have a co-founder. Most
incubators and startup accelerators actually prefer you have one, but it’s not required. Ideally
you want a co-founder who has a complementary skill set. Apple was so successful because
Jobs and Wozniak were perfect complements to one another. Each was strong where the other
was weak. In addition, working as a team can be fun and it’s easier to get through the low points
when you are sharing them with someone else. Would you rather stay up all night alone and
crank out pitch decks, or do that with someone by your side? Speaking of which, in addition to
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being complementary in skill sets, make sure you don’t mind being married to your co-founder in
a sense. You’ll be spending a lot of time with them, and if you don’t jive personally, neither of
you will be having much fun.!
There’s a tendency for those with technical backgrounds to look down upon those who didn’t
choose computer science as their undergraduate major. I’ve been on both sides of the fence, as
I went to a Tier 1 undergrad for a BBA double majoring in finance and economics, with a minor
in information systems where I mainly took programming courses including VB, C++, and Java.
I’ve worked in some of the top rated tech incubators in the country, done consulting at the
world’s largest advertising firm, and co-founded a company that grew from zero to!
$10MM in annual revenue prior to acquisition. I’ve worked extensively with technical and nontechnical people for quite some time. I’m a Harvard (grad school) dropout, although I’m not sure
if that makes me a genius or a moron.!
Technical types oftentimes mistakenly have the attitude that MBAs and “business types” are
stupid. MBAs definitely aren’t stupid, as they account for more millionaires than any other
graduate degree. A whopping 12.8% of millionaires with a graduate degree held an MBA, more
than any other type including law, engineering, mathematics, computer science, and medicine.
In addition, the average salaries of “business types” at venture funded startups according to
AngelList meet or exceed those of engineers.!
But how can that be? The answer is simple. Great sales, marketing, and management/leaders
are extremely hard to find. Sure, the C student from University of Who Cares in business or with
an MBA from an unaccredited online school isn’t worth a dime. But neither is a crappy
programmer. The truth is that great people have tremendous value, regardless of their field of
study. And for the business/MBA types out there, be sure to respect your partner or employees
who are developers. Good developers are equally hard to find, and if you’re the creative “big
picture” type, you probably wouldn’t be able to do the type of work they do for extended periods
of time.!
If you think of someone on a car lot when you think of salespeople, then you’ve got it all wrong.
At places like Oracle, the salespeople are the highest paid in the company excluding the C-level
executives. Need proof? The average salesperson at Oracle makes $250K per year, with some
earning over well over $500K. But why would Oracle pay them so much? Because those reps
are paying for themselves many times over, and very few people are closers.!
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As the founder, you’re going to be selling all the time. Whether it’s to potential customers,
potential employees, or potential investors. So if you!
think selling is “below you”, you’re going to sink fast. In addition, you need people skilled in
sales if you want to scale up properly. From HubSpot to AdWords, talented technology
companies have employed salespeople to help them grow to substantial size. These are
companies with access to the best UI/UX people on the planet.!
As for designers, they are equally valuable. How many sites have you stumbled upon and
thought, “wow, they have great features but this UI makes me want to puke”. Probably more
than a handful. The other day I went over to HootSuite and almost had a panic attack. They are
one of the leaders in social media, but it sure doesn’t look like it. It is really that hard to have a
designer create a nice theme? Dave McClure of 500 Startups is famous for saying that the best
founding team consists of a hacker, hustler, and a designer. Considering he’s well on his way to
funding 500 companies, I’d say finding a better perspective would be fairly difficult.!
This typically doesn’t work out for a few reasons, but there are exceptions. The most notable is
that the best developers aren’t on Elance, so you’ll be picking from those who didn’t make the
pros for the most part. In addition, a freelancer/contractor won’t have equity or a vested interest
(keeping their job) to put their heart and soul into the project. So you’ve got a mediocre
developer who doesn’t have passion for the project, and you can already predict the results. You
can however hire a freelance dev on one of these sites to help build a working prototype to
show to other developers or investors, so you at least have something. However don’t expect to
find the next Zuckerberg using a reverse auction system. There have been some exceptions to
the rule and rumors have it that Kevin Rose hired a freelancer on Craigslist for $1000 to build
the first version of Digg, but stories like those are few and far between.!
Studies have routinely shown that emotional intelligence is the most important predictor of
career success, more than any other single factor. Prior to this finding, researchers scratched
their heads at the fact that average IQ people outperform those with the highest IQs a whopping
70% of the time. Now we know why. Why does this matter? Because emotional intelligence is
critical in being a good boss. You need to understand what motivates your employees and act
But what happens if you aren’t a good boss? Well, your employees will leave. There’s a good
chance your employees are getting job offers all the time without your knowledge. I probably get
one offer per month, and I don’t publish my email address, nor do I have my LinkedIn set to
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“seeking opportunities” or whatever they call it. The point is somehow recruiters and competitors
contact me, and I’ve purposely made it difficult for that to happen. Your employees will likely
have less barriers to being reached, and if you don’t treat them like gold they’ll be gone.
Retraining is expensive and time consuming, so you want to avoid that as much as possible.
Turnover is also a surefire way to kill morale. Nobody wants to work at a chop shop.!
Probably not, unless you plan on entering a business plan competition to win some cash. You’re
probably better off spending your time on developing your product, recruiting a team, and
raising seed money if you need it. It’ll be next to impossible to get a bank loan anyways, and
they’re the only places left that ask for a long winded 30 page document. If you’re planning on
pitching angels and VCs, then start researching how to create an awesome pitch deck.!
Probably not. Each type of company is different, so there’s no magic formula and the lessons
learned from a particular person’s biography may have limited use, even if they created a
company in your same industry. For example, the personal computer market looks a lot different!
than it did in the 70s and 80s, so reading biographies on Gates and Jobs probably won’t teach
you much about the current climate.!
If you want to read startup books for motivation and/or entertainment, then here are some good
ones to consider:!
• “The Lean Startup” by Eric Ries!
• “Mastering the VC Game: A Venture Capital Insider Reveals How to Get From Start-up to
IPO on Your Terms” by Jeffrey Bussgang!
• “Pitch Anything” by Oren Klaff!
• “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist” by Brad Feld &
Jason Mendelson!
• “Founders at Work: Stories of Startups’ Early Days” by Jessica Livingston!
• “Delivering Happiness” by Tony Hsieh!
• “Purple Cow” by Seth Godin!
• “Getting Things Done” by David Allen!
• “Influence: The Psychology of Persuasion” by Robert B. Cialdini PhD !
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Chapter 2: Startup Competition!
This chapter explains how to view, treat, deal with, keep tabs on, and even leverage your
The human brain dislikes ambiguity and
instead likes to have definitive answers to
questions. Oftentimes you’ll see blog post
authors take an extreme position, and
sometimes this is to entice click-throughs
while other times it’s to promote their own
product (this happens particularly on guest
posts). However, the best answers tend to not
be extreme positions, but rather somewhere in
the middle.!
If you’ve ever sat down with an attorney and
peppered them with questions, you’ll quickly
find that the beginning of most answers starts out something like “it depends”. That is no
coincidence. Attorneys are trained to think through all the various aspects of a situation and
respond in the most accurate fashion given all available information. Here I’ll try to provide the
proper answer, rather than the extreme one, about how to deal with your competition in the
startup game.!
At one end you’ll have those who say you should obsess over your competition, and follow their
every move. At the other you have those who say you shouldn’t worry about your competition at
all. The truth probably lies somewhere in between.!
You need to be aware of what they’re doing and keeping general tabs on them, but definitely
you should be more focused on improving your own product/service/startup. Whatever you do,
never assume you have “no competition”, and certainly don’t tell a potential investor that (hint: it
screams naïveté). You always have potential competition, whether it’s those currently in your
space, those about to enter your space, or even those that are indirect competition. Even if you
have a patent, it’s possible someone has done a workaround on your IP or has a similar solution
with their own patent albeit in a less elegant manner.!
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Well, that depends on what stage you’re at with your startup. Are you at the idea phase, MVP
phase, or scaling up? Understand that the optimal strategy involves doing different things at
different stages. In the idea phase doing lots of research is critically important. You need to
make sure you uncover as much as you can about the landscape, because you’re about to
throw yourself into a pretty significant commitment once you decide to go in a certain direction.
Do not take that first decision lightly.!
A good idea is to peruse your main competitors’ sites on the weekends for a bit (to avoid
distracting you during your workweek, which you should have 100% dedicated to your own
progress), seeing what they’re up to and maybe popping over to their blog and social media
feeds. Maybe set a weekly Google Alert on their company name or particular product names, so
you can be reactive rather than proactive on digging up the latest.!
This is equally important to how you should monitor your competition which we’ve discussed
above. So how should you treat/view your competition? In two words… with respect. Not the
kind of respect you give an 88 year-old trying to get past you at the grocery store (leniency). But
rather the kind of respect Tom Brady has for Peyton Manning. Even though bloggers are
covered by the same First Amendment protections with respect to defamation that journalists
are, if the plaintiff can prove negligence they are entitled to damages. So be careful about trash
talking your competition in blog posts and other mediums, as if they have the resources to sue,
your statements might end up being very costly.!
If it’s a serious competitor, you should respect their achievements and be honest with yourself
about their successes and weaknesses. If you are lying to yourself about them, you’re only
doing yourself a disservice. If you talk bad about your competition to current or potential
customers, just like talking bad about a mutual acquaintance (behind their back) to a friend, it
will only reflect poorly on you and/or your startup. Keep in mind that if your competitor grows to
substantial size, they may want to acquire you down the line, which is referred to as a “liquidity
event” and is often the whole point of creating a startup in the first place. If you’ve been snippy
or disrespectful, don’t expect a glowing valuation or even an offer of any sort. This sort of thing
happens all the time.!
In fact, your competition can make you stronger. The Harvard Business Review did a post last
year about how competition strengthens startups, and it was based on research of two million
companies launched in the UK between 1995 and 2005. It found that exposure to competition in
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the early stages actually increases the long-term survival prospects of a startup. So if you make
it to that 10 year mark, you might want to send your closest competitors flowers. One example
they cite is how Southwest Airlines began in the highly competitive airline industry which forced
them to develop an extremely efficient operation which still benefits them to this day, with lower
costs per passenger and better margins, making them one of the few domestic airlines able to
turn a profit.!
Absolutely. Have you ever noticed that there’s nearly always a Great Clips franchise located in
the same strip mall as a Walmart? Even though Walmart has their own chain of hair salons
located within stores, Great Clips knows that they appeal to the same audience and that some
find it odd to get their hair cut inside the actual store. In addition, they recognize that they can
beat them on technology by having better smartphone apps and that if you’re just going for a
haircut, finding parking near the Walmart front door can take longer than the actual haircut itself.
So they’ve leveraged the R&D that Walmart spent years doing on traffic patters and population,
and instantly put themselves in optimal locations.!
Absolutely. This happens to all startups in all industries. You may be tempted to be flattered, but
don’t be. Just look at it as part of the game you’ve signed up for. So what can you do if your
competitor keeps copying you? Keep your head down and keep innovating.!
For one, consumers tend to respect the company that goes to market first and they generally
give less thought to the company who is always playing catch up. In addition, you can utilize the
intellectual property available to you in your home country. Here in the U.S., if you’ve got a
catchy product name, trademark it. Have a proprietary design? Pursue a design patent. Have a
proprietary functional aspect? Pursue a utility patent. Even the “patent pending” status is
sometimes enough to keep your competitors at bay, as they will be afraid your patent might be
approved down the line and they would’ve spent considerable time/effort developing something
similar for nothing.!
The sales and marketing team (or you as the founder in the beginning) is usually the most in
tune with this. If your competitor has feature XYZ and you’re constantly losing sales to them
because of it, you’d better put your ego aside about “copying” them and start plugging that hole
in your sales funnel before the leak gets unmanageable. Is there something “Competitor X”
does really poorly? Great, figure out a way to work that into your pitch without naming your
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competitor or throwing them under the bus. The key is to do it in a way that seems natural and
allows your potential customer to connect the dots which they often will.!
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Chapter 3: Startup Pricing 101!
This chapter focuses on how to figure out the optimal price for your product. It takes an
approach based on economic theory and then follows that up with guidance for testing
So there are a few approaches often
discussed in the blogosphere that you can
take here. One approach is to use your “gut”,
but that doesn’t make much sense, as you’ll
typically over or under value your product
one way or another and sell yourself short.
How can you sell yourself short if you over
value/price your product? We’ll get to that in
a minute.!
Another is to take a look at your competition
and price yours somewhat close to their
closest offering. But this will likely fall short
as well. Why? Because your product will be
perceived differently by the end user due to a
number of factors. Maybe your design is better and hence your perceived value is higher.
Maybe you’ve been featured in a ton of major publications and hence your homepage has the
icons of all the major hot spots in your field, so you’ve established better social proof than your
competitor and can therefore charge slightly more. Maybe your reputation on Twitter sucks and
you can’t charge nearly as much because of that. The possibilities are endless.!
The point is there are a ton of factors that determine perceived value to a potential customer
and you are likely not a perfect clone of your closest competitor, so you will each be able to
extract different prices, even if your products are very similar (we’ll assume your startup built on
top of WordPress is not selling a pure commodity like petroleum). So what does that leave us
with? Economic theory.!
Remember that economics 101 class you skipped in college that had the subtitle “Intro to
Microeconomics“? Whoops. Probably should’ve have shown up for that one. Oh well, I’ll save
you taking night classes at community and bring you up to speed. It was one of my majors in
undergrad and I did pretty well in it, so you’re in good hands. If you’re saying to yourself “I know
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what he’s going to say... supply & demand, I already know that” then you’re off base. Economics
is more complicated than that. That’s why they offer a Nobel Prize in it.!
When most people think of economics they think of what’s called macroeconomics. It deals with
the general economy, with topics such as GDP, inflation, unemployment, international trade and
more. It also deals with supply and demand but not in the way we’re worried about. What we
want to try and understand here is price elasticity of demand, which is the measure of
responsiveness of the quantity demanded for a good/service to a change in its price. Did I catch
a niner in there? Say what?!
Price: What you’re charging for your product or service. This is the price you’ll be showing on
your landing page and what customers will see on their credit card statements. Forget about
profit and costs for the moment. We’re only concerned right now with figuring out how to find the
price that will maximize our revenue/sales.!
Elasticity: How changing one economic variable (in our case price) affects others (in our case
quantity demanded, aka how many units you’ll sell).!
Ceteris Paribus: Translated from latin as “with other things the same”. In other words, keeping
all else equal or unchanged. Why is this important? Because if you’re going to test how different
price points affect the amount of units you’ll sell, you can’t be changing other variables. In other
words, don’t redesign your landing page the same day you try a new price point. You won’t be
able to determine if the increase or decrease in sales was due to your change in price or design.!
Law of Demand: States that as the price of a product increases, the quantity demanded will be
reduced. Conversely, as the price of a product decreases, the quantity demanded will be
increased. There are only 2 types of products that violate this law, Veblen and Giffen goods. An
example of a Veblen good would be the Bugatti Veyron. Because it costs over a million dollars,
more people want them because they’re harder to come by. Think extreme status symbol luxury
products. An example of a Giffen good would be rice. As the price of this cheap staple food
rises, people can no longer afford to consume more expensive non- staple foods alongside it
(think Chicken/Beef/Pork/Seafood), so they end up buying more of it (in this case rice). Picture
the dad in a household in rural Mongolia saying something along the lines of “Rice has gotten
so expensive that we’re no longer going to have rice & chicken for dinner, we’re just going to
have rice.”!
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Alfred Marshall: The baller/shot-caller who came up with all this price elasticity of demand stuff.
Had the Nobel Prize in economics been around back in his day, he probably would have locked
it up around 1890.!
Okay, so now that we understand the basics of economics, what do we do with this newfound
information? It’s pretty simple. We want to find what’s called Optimal Pricing, which means
finding the price that maximizes your revenue. If you clicked over and started sweating when
you saw all those scary equations, you’re probably not alone. So let’s do this in baby steps.!
All we want to do here is figure out how sensitive our customers are to price changes in our
product. At one end of the spectrum you have products with high elasticity, meaning consumers
are very sensitive to price changes, and at the other end you have products with low elasticity
which are sometimes referred to as inelastic. Let’s look at an example for each end of the
spectrum, keeping in mind that most products fall somewhere in between.!
So if the pizza shop owner tries to charge $3
per slice, they’ll only sell 1 slice, so revenue is
$3. If they only charge $1, they’ll sell 9 slices
and revenue will be $9. But neither of those
prices maximizes revenue. In this case, the
optimum price is between $1.50 and $1.75 a
slice. Both yield the highest overall revenue at
$10.50 (7 slices sold at $1.50 provides the
same revenue as 6 slices sold at $1.75). Here
at Pagely, we’re in the web hosting business,
where customers are pretty price sensitive (high
elasticity) according to research, since we’re
likely in the “mature” phase.
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Notice that if the station owner charges $1.10/gallon, they’re going to sell a little over 5 gallons.
If they jack it up to $1.90 (nearly double), they’re
still going to sell 4 gallons. Now look back at
the pizza graph above and figure out what
happens to that poor soul if they try the same
trick. Their demand plummets and they sell
way less. That’s why sales of things like
gasoline and medications remain pretty steady
in a recession, whereas non-essentials like spa
services and expensive restaurants watch their
sales tank. People need some things more
than others. Another inelastic product would be
public transit fares. If NYC raises the ticket
prices, people will still buy them because
oftentimes they have no other way to get to
Here are the revenues derived at each price point for our gas station owner:!
• $2.50/gallon x 3 gallons = $7.50!
• $2.40/gallon x 3.25 gallons = $7.80!
• $2.30/gallon x 3.4 gallons = $7.82!
• $2.20/gallon x 3.6 gallons = $7.92!
• $1.90/gallon x 4 gallons = $7.60!
• $1.30/gallon x 5 gallons = $6.50!
• $1/gallon x 5.5 gallons = $5.50!
Now that you understand price elasticity of various products, you can probably make an
estimate of which side of the spectrum your product falls. Do people absolutely need it? Will a
change in price affect the number of units you sell by much? We don’t need to do any fancy
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equations here or solve for the actual coefficient, but we should understand how our potential
customers will react to price changes and set our expectations accordingly.!
The best thing to do here is to first run some A/B tests with a tool like Optimizely and figure out
which type of landing page works best, given whatever prices you have set initially. So maybe
design/layout A converts at 10% and design/layout B converts at 5%, so we know A is better and
we now just want to figure out what price will maximize our revenue using design/layout A which
we have decent confidence in. If you’re further along in your startup and have already done A/B
testing, then that’s good news.!
Remember that term we defined above, ceteris paribus? This is where it comes into play. If
you’re going to experiment with different price points to see which one maximizes revenue, you
need to try and make sure you’re only playing with one variable at a time (in this case price). As
you test various price points on your landing page, make sure you are keeping all else constant
in your business as much as possible. That means no layout or design changes while testing,
no pursuit of major press coverage, and no fiddling with your AdWords budget and bidding.
Ideally you want to isolate as much as possible. Otherwise you’ll be confusing correlation with
So take a period of X months (depending on how much traffic you get) and try adjusting your
price for statistically significant periods of time. In other words, if your website gets 1000 visitors
a day, you can likely get some good test data in a week at a certain price point. If your site gets
10 visitors a day, you may need to test for weeks or months at a certain price point to feel
confident in your data. While testing various price points, take notes of any events that happen.
Did some blogger happen to write about you during a particular week that was beyond your
control and might have spiked your sales? Make a note of it so you remember to consider it
when analyzing your data. If you have a subscription driven business, use something like
Recurly to track your stats in greater detail so you know you’re using accurate data in the event
your admin dashboard/tracking is less than awesome.!
Make your product as inelastic as possible, meaning customers will be unable to live without it,
so you can charge more without killing demand. Google and Apple have done this by creating
entire ecosystems that revolve around their products. Are you an Apple user and have spent a
ton of time building up your iTunes library and have finally gotten iCloud backup just the way
you want it? Apple has just made their product more inelastic because you’re still going to want
the next iPhone even if they jack up the price. In other words, make it so your customers cannot
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survive without your product/service. Here you are increasing the “stickiness” and “switching
costs” of your service.!
If you’re running a SaaS, like so many do, offer different types of plans at different price points
that appeal to a variety of users. Let them pick which one suits them best. If Pagely only had
one plan, we’d probably see a dip in signups. How many plans do you need? Most startups tend
to go with a number between 2 and 5, and it varies by industry. Figure out how many customer
“types” you have and then create a corresponding plan for each one.!
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Chapter 4: Startup Marketing
This chapter focuses on how to figure out how much to spend on marketing and gives examples
of what other types of companies are spending as additional guidance."
I often get asked this question because I’m the
director of sales/marketing here at Pagely® and
have co-founded a few companies that have done
between hundreds of thousands and millions in
annual revenue (that doesn’t make me too cool for
school, it just means there’s a chance I know what
I’m talking about). And surprisingly, it’s not just first
time founders; even seasoned entrepreneurs still
don’t have a gauge for what their competitors and
those in their industry are spending, or even what
they should be allocating to help promote their
brand. Many are jaded and think that “advertising
doesn’t work”, “advertising is for big companies
with big budgets”, or perhaps aren’t patient enough
to allow the proper time for the ROI to kick in.!
Do you think GEICO (their name really is all caps, that’s not for emphasis) saw an immediate
return when they started running those TV ads? Do people really whip out their laptop or tablet
and start getting car insurance quotes while watching TV? Maybe now more than before due to
the second screen trend, but most people see the commercial and continue on about their day.
But what’s the first brand that comes to mind when you think of car insurance? If you’re like me,
it’s GEICO. So they’ve got great “mind share” and when people like me do go to get a car
insurance quote (often when we’re not watching TV), we typically check GEICO and maybe
even check them first. Did you even know their acronym stands for Government Employees
Insurance Company or that Warren Buffet’s Berkshire Hathaway fully owns them? Maybe not.
But they’ve pounded it into your head that if you want to save 15% on car insurance, you should
check them out. ***In a separate piece down the line in this series I’ll talk about branding efforts
vs direct response, but for now let’s stay focused on how much to spend on marketing. Each
topic warrants its own article.!
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Before we begin, one final anti-marketing comment you’ve likely heard blowhards say is
something along the lines of “just make a great product like Apple, and you won’t have to spend
anything on marketing”. That is a pile of nonsense. How do I know? Because despite Apple
making great products (even if you use Android and hate Apple, you can at least admit they
have a cult-like following) they still spend a ton of money on marketing. During fiscal 2013 they
spent a whopping $1.1 billion on advertising. Wait a second, did you say billion with a B? Yep,
and that puts them among the top spenders overall. Remember all those TV commercials and
billboards you saw last year? Not cheap.!
Okay, now that we’ve established that even those companies with cult- like followings spend a
decent chunk of cash on marketing, let’s dive a little deeper. The first thing to understand is that
you shouldn’t be asking “what amount”, but rather “what percentage”. First of all, your company
is hopefully growing if you’re thinking about ramping up marketing spend, so using a static
amount is suboptimal. Second, it’s much easier to compare and benchmark yourself against
other companies both in your specific industry and in business in general when you talk in
It’s important to understand what large companies spend on marketing for a few reasons. First,
you might be competing with them directly or indirectly, so it gives you a snapshot of your
competition and comprises one aspect of competitive research. Second, since data on your
competitors that are startups is often hard to get (e.g. you likely aren’t publishing what you
spend on marketing), knowing the percentage that large companies spend will at least give you
some idea in the event you can’t dig up much on the startups in your vertical. Remember, public
companies often disclose their exact revenue and ad budgets, so you’re getting the data straight
from the source. Finally, if you hope to grow to be as large as them someday, you’ll know what
you’re in for should you become a conglomecorp as well.!
What’s the best data source to get a pulse on what big companies are spending as a
percentage of revenue? The CMO Survey of course. It’s run by a professor at Duke University
which means it’s probably more accurate than what you’ve read on forums and heard being
spread around your co-working space. We’re talking reliable sources, accurate analysis, and
imagine this... fact checking!!
So what did the latest CMO Survey reveal? The latest edition was reported in August 2013 and
found that the mean (average) marketing budget as a percentage of revenue/sales was 7.8%.
When broken down by industry, we get even more interesting findings.!
• Consumer Packaged Goods (think P&G) = 8.7% • Communications Media = 10.8%!
• Mining & Construction = 2%!
• Transportation = 6.1%!
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• Energy = 10%!
• Manufacturing = 4.5%!
• Retail/Wholesale = 8.3%!
• Tech/Software = 12.5%!
• Banking/Finance/Insurance = 9.9%!
• Consumer Services = 5.3%!
• Service Consulting = 5.4%!
• Healthcare & Pharmaceuticals = 7.8%!
I’ve emphasized the “tech/software” and “service consulting” categories above since they’re
probably the most applicable to most of you launching a startup on top of WordPress. Notice
that even consulting businesses which tend to rely on referrals still spend more than 5% of
revenue, while even more surprising tech/software firms are spending the most at 12.5%. So
this is one range of figures to keep in mind, roughly 5-12% (assuming none of you are starting a
mining operation).!
The SBA put out an article in 2012 that gave the following guidelines for small businesses:!
• 2-3% for run-rate marketing!
• 3-5% for startup marketing!
They note that the above should be adjusted for the industry your business is in, its current size,
and phase of growth. Remember that industry data we dug up above? Use those metrics to
adjust your number upward or downward. They go on to say...!
“As a general rule, small businesses with revenues less than $5 million should allocate 7-8
percent of their revenues to marketing. This budget should be split between 1) brand
development costs (which includes all the channels you use to promote your brand such as your
website, blogs, sales collateral, etc.), and 2) the costs of promoting your business (campaigns,
advertising, events, etc.). This percentage also assumes you have margins in the range of
10-12 percent (after you’ve covered your other expenses, including marketing).”!
Ok, so the SBA is telling us a range of 2-3% if we’re established and as high as 7-8% for those
with revenue less than $5MM. Since the SBA might not exactly be keeping their finger on the
pulse of the true “startup” scene, we should also consider one other data point, Sean Ellis. Sean
(cool name) is probably the best known pure marketer in the startup scene. A couple years back
he did a great post talking about product vs. marketing spend and when to make the adjustment
of funneling more cash into marketing (hint: once your product rocks). Towards the end of the
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piece he talks about how he’s seen companies split spend as high as 80% marketing / 20%
product in cases where the product was dialed in and the marketing ROI was positive.!
As with anything else, it’s hard to throw out a good exact magical number as my
recommendation for your startup, because it’s impossible without knowing your industry,
margins, and competitive landscape among other things. However, the above guidelines are
likely helpful in setting what % of revenue it is you feel comfortable with.!
This piece focused on advertising/marketing spend as a % of revenue because that’s a question
that I often get asked. Before closing, it’s important to point out that the most important thing is
to first determine what the lifetime value of your customer is on average (and by customer type
if you have multiple types), and then figure out what your cost to acquire them is. If you can get
things dialed in where for every $1 you spend on advertising/marketing you’re getting greater
than $1 in return, then you should scale up those initiatives as high as you possibly can. Now
that I think about it, that topic warrants its own article as well, stay tuned.!
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Chapter 5: Founder Fitness!
This chapter focuses on a topic that is largely ignored in the startup community. How excellent
physical fitness can help both you and your startup achieve more."
Over the past 20 years much research has been
done demonstrating that our mental health can
affect our physical health. There are well
documented studies showing heart disease for
example is affected by a number of psychological
(mental) factors. On the flip side, treatments that
are primarily psychological such as relaxation,
meditation, and visual imagery have been
demonstrated to help with things such as easing
symptoms of disease, managing arthritis, and even
chronic long term pain. So if having great mental
health can prevent and treat physical ailments, what
can physical health do for your brain? Well, quite a
Sounds ridiculous right? But it’s the truth. Whether you’re doing traditional hacking, growth
hacking, or hacking your way to chess grandmaster, being in great physical shape will improve
your mental edge. Let’s take one notable example. The inspiration for this post came while
watching 60 Minutes the other night. They had a segment on Magnus Carlsen, oftentimes
referred to as the best chess player of all time (he recently beat Bill Gates in 9 moves at just
over 1 minute).!
He mentioned that being in top physical shape was the only way he could concentrate for hours
and hours on end, in order to avoid “psychological lapses”. By being able to concentrate over
longer periods of time, it enables him to maintain high standards of play over extremely long
games and even at the end of tournaments, while energy levels of his competition have
plummeted. So while his competitors are spending all day at the chess board, he’s hitting the
gym, and beating them because of it and not in spite of it.!
Playing chess at a high level involves a lot of the same mental tasks required of creating and
running a company. Whether it’s planning, memory, focus, or probably most important... mental
endurance, they all benefit you as a startup founder and hence your company’s performance.
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You don’t have to start bodybuilding and drinking protein shakes all day, but doing 30 to 60
minutes of any type of exercise (particularly aerobic) will improve your mental performance.!
Your first thought is likely “but i don’t have time to exercise”. That’s just an excuse. How do I
know? Because both Jeff Bezos (founder of Amazon) and Marissa Mayer (CEO turning around
Yahoo) likely have a lot more on their plate than you and they still find time to get a workout in.
Think of all the lines of business Amazon is in, and how complicated running a company of
$75B in revenue and 100,000+ employees is. Think of how much work it would take to turn
Yahoo around. I get nautious just thinking about that one. Yet both of these busy world- traveling
CEOs understand what many people don’t. That even though exercising takes up maybe 3-6
hours a week, you actually get more done than if you hadn’t exercised. Mayer regularly runs
marathons and Bezos is in such great shape that some speculate he’s nearly fit enough to be
an astronaut.!
It’s easy to forget that all that matters is output. Here are two examples illustrating this fact.!
When I worked in-house at a subsidiary of the world’s largest advertising agency WPP, I noticed
that some people barely did any work at all. In the 8-10 hours they might have been at their
desk they might have gotten 3-4 hours of actual work done. Whether it was sitting on Facebook
or gossiping with colleagues by the water cooler, there were endless ways for people to kill time
and yet senior executives were never worried about how much people were getting done. These
employees were “in the office” and hence “must be working” in their mind. It was always the
people who “worked remote” that they assumed were slacking off or not putting in a full day.
However, those people were often getting more done because they didn’t have any distractions
and because they felt they had to prove they weren’t out windsurfing. So the perception was
actually the opposite of the truth.!
You might assume that by spending 3-6 hours a week exercising that you’ll get the same
amount of work done you do now, but minus 3-6 hours worth. So if you’re putting in 50 hour
weeks you’ll end up with something like 44-47 hours of output. However, research has shown
that isn’t the case. In fact, your output will likely be higher than the 50 hours you’re currently
working, even though you’re only working 44-47 physical hours. Sounds too good to be true,
It isn’t. From politics to religion to UI/UX we often talk about many topics, have opinions, and
worse yet, make decisions that are based on zero facts and make no sense at all. It’s important
to start making decisions purely based on real research. That means ignoring what the
commercial for that new GNC supplement tells you it’s going to do, or that X is true because Y
told you so or you read it on some random’s blog created with Ghost.!
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Wikipedia has an entire article (with citations of real research) explaining all the benefits that
physical exercise has on memory alone (more RAM in your brain means more money for your
startup), and that’s just one aspect. You can improve your spatial memory, ability to learn new
information, consolidation (converting memories from short to long term), and even retrieval. In
addition, a peer-reviewed study published in the Journal of Occupational & Environmental
Medicine by professors at Stockholm University showed that employees got more work done
even while putting in less hours, due to the additional efficiency achieved by being in better
physical shape.!
So instead of sitting at that laptop for 12 hours a day with 2 of them down the drain due to
“spacing out”, carve out an hour a day to do some exercise (preferably aerobic if you’re seeking
mental benefits) and start spending 10 hours (takes time to shower and change) on there
actually doing work. And even if you measure your output and it’s only the exact same as
before, at least you’ll decrease your chance of Alzheimer’s, live healthier, and you know, won’t
die as early. That’s kind of important too.!
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Chapter 6: Startup Tools!
This chapter focuses on tools you can take advantage of to help get your startup up and
running, or even improve its efficiency if you’re already operating successfully.!
If you’re just starting out then you definitely
need an accounting system of sorts.
Previously QuickBooks would be the de
facto choice, but nowadays there are many
others most of which are newer and easier
to use. If you’re going with the LLC route
and keeping things pretty simple, then you
should take a look at Outright which allows
you to track your income and expenses, and
more importantly creates your schedule C
for you and even provides guidance as to
what you should be paying for your quarterly
estimates (assuming you live in the U.S. and hence those go to the IRS).!
If you plan on creating a more formal company structure such as an S- Corp or C-Corp, then
you should definitely check out Xero, which is neat in that it they help you find an accountant in
your geographic region who is trained in their system and can be linked as the accountant to
your profile. That way instead of passing papers or PDFs back in forth, you can both log in to
one system and look at the exact same information.!
Providing benefits can be a pain and thankfully there are better solutions now than ever before.
On the payroll side, a recently launched startup ZenPayroll is making it both affordable and
aesthetic for the first time ever. They are currently expanding across the country so hopefully
you’re in one of the states they support. Even if you run a single-member LLC and it’s only you,
with their pricing you can put yourself on payroll for $29/mo at current rates and have taxes
taken out of your checks just like if you worked for the man.!
If you’re looking to do more than just payroll, then Y-Combinator backed Zenefits is another
great option (which also integrates with ZenPayroll so you can be a true Buddha). It helps you
with all those other pesky things like managing health insurance, 1099s, worker’s comp,
retirement plan administration, and more. In addition it can help with more HR type stuff like
tracking paid time off, employee on- boarding/off-boarding, I9s and more.!
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If you’re planning on doing recurring billing at scale, then I recommend checking out Recurly.
Building your own billing system can take up a lot of time/effort, and it’s best to have really
granular data on your subscriptions. How long does the average customer of Plan A last? How
many invoices went initially uncollected last month? How many did the system capture by
sending out an email reminder? In addition to answering questions like that, it will allow you to
have nice pretty data to show in the event you go to raise capital or get acquired. No VC or
diligence team wants to spend their time combing through your own homegrown billing system’s
data, or worse yet, having to run calculations and figure out things you should have been
tracking in the first place. Yes using a provider like this will cost you a small piece of your
revenue each month. But this is one example where thinking big picture is probably a good idea.
Penny wise, pound foolish, or whatever that saying is in the UK.!
If you plan on selling or products or services in person, then I highly recommend getting a
Square reader. And if you need to cut those all important things called invoices and you’re not in
a subscription based model so Recurly doesn’t cover them, then get set up with Freshbooks
and enter invoicing nirvana. It integrates with Outright (discussed above) as well as many other
great web apps you’ll be using. It can do recurring or one-off, whatever you choose, and can
even accept online payments within the invoice via their integration with PayPal.!
These suck in general to do but you might as well make them less painful for everyone involved.
No, Skype is not a good solution if you’re going to be talking with serious business people.
There are infinite things that can go wrong and you’ll look like a cheapskate trying to talk to the
CIO of XYZ who thinks that Skype is for calling your grandma in Florida. So get setup with
UberConference and start making conference calls like a pro, without making everyone
download a bunch of crap to their laptop. You can actually see who’s talking and if you set it up
right, their bio and information so everyone knows who else is on the call.!
If you’re going to be managing serious CPC campaigns on AdWords, then I highly recommend
downloading the latest copy of AdWords Editor by Google. This powerful software runs locally
on your laptop/ desktop and lets you do changes at scale with ease. Need to adjust 1000 ads at
once in various ways? Done. Need to quickly scan 1000 ad groups? Done.!
If you want to get nice pretty monthly or quarterly reports on your AdWords campaigns (among
other things), then check out Raven Tools. If you’re running an agency of sorts you can white
label their stuff and your clients will think you’re a genius.!
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If you truly need some startup equipment such a laptops or monitors, then I suggest looking into
the Barclaycard offered by Apple. It allows you to get $2K or more in items with 0% interest for
18 months. During that time you just make the minimum payments which are typically pretty
small. I don’t advocate running up debt for non-necessities, but if you truly need a monitor or
laptop to help get your work done and have better immediate uses for your cash (e.g. marketing
budget), this might be a viable option.!
And while we’re talking about credit, as a founder make sure to keep your credit score in top
shape. That means you should be monitoring it fairly frequently with something like Credit
Karma. It’s like without the awful commercials and bait-n-switch tactics. It
really is free. They make money sort of how does.!
Ah, the dreaded CRM. Well guess what, it’s time to stop using Excel, Zendesk, or whatever
other crazy workaround you’ve been using for inbound leads. Getting a CRM is one of the most
important things you can do to increase your closing/tracking of inbound leads. Here at Pagely®
we use which is run by a really nice guy named Steli Efti who personally helped us
come on board, and they’re another Y- Combinator alum. They also have an API you can do
cool stuff with.!
Google Apps. It’s the only logical choice in my mind. Yes they got rid of their awesome free
plans, but their service is well worth the $5/mo per user or whatever they’re charging these
days. And keep in mind one “user” can have multiple email aliases, so the pricing is even better
than it sounds. Think of a user as a mailbox and an alias as an address.!
You’re going to be building a mailing list right? Well I personally find MailChimp to be the most
robust email marketing solution and I’ve tried them all. You may not think of Atlanta when you
think of killer startups, but ATL delivers on this one.!
If you’re looking to pursue a trademark then I recommend starting with a search on
Trademarkia. From there, you can decide whether to use their services or hire an independent
IP attorney. Each has its own advantages/disadvantages. LegalZoom and Rocket Lawyer are
other resources but much like Trademarkia, just know that they should be considered a
resource and not the only resource. One service I haven’t personally tried but have been
meaning to is newly launched Lawdingo. They instantly pair you up with a lawyer they’ve vetted
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and make the connection so you can begin chatting and cut to the chase without spending
hours reading Yelp reviews or trying to find a phone book that hasn’t decomposed.!
If you plan on getting contracts or documents signed, then you probably want to check out
places like DocuSign, EchoSign, and HelloSign. Oh, and if you need an inbound fax number for
those pesky old-timers who insist on faxing you agreements, get a free number from eFax. That
“free” page is hard to find on their site and you have to know it’s there to find it. It’s like the
secret menu at Olive Garden or In-N-Out. And if you need to send outbound faxes for some
crazy reason (and once a year you might), I highly recommend HelloFax.!
Need to buy something really expensive like that swanky domain name you’ve been saving up
for? Use and you’ll be able to sleep at night. I’ve personally wired them tens of
thousands over the years and they always do a great job. You pay them, they hold the cash in
Escrow, and the seller gets paid when you notify them you’ve received the goods (or vice versa
if you want to sell something high-end like office equipment). Need proof? Warren Moon
recently was scammed out of $200K trying to buy Miami Heat tickets. If he had only used, as the tickets never arrived.!
If you’re planning on having a mobile app, whether free or paid, then you should definitely hop
over to App Annie and see if their reporting tool is something you’d benefit from. As far as
marketing and more detailed analytics, there’s also MobileDevHQ whom recently dropped their
If you’re feeling overwhelmed or down in the dumps, then hop over to either Matt Report or
Mixergy (or better yet, both) to get some inspiration. Watching videos is more fun than reading
books and you’ll often learn things that founders wouldn’t reveal in print form, since it’s off-thecuff. Both Matt and Andrew do a great job and each caters to a specific type of audience, with
Matt being more on the WordPress focused side and Andrew on the general startup space.
You’re better off watching ten different hour long founder stories via video than spending ten
hours with one founder’s book.!
Unless you’re going to be meeting clients on a daily basis or absolutely need space for your
team to work beyond say your local co-working space, renting an office isn’t typically necessary
during the beginning phase. Another thing to keep in mind is that a dingy unimpressive office is
almost certainly worse than no office, so I recommend waiting to rent/ buy until you can afford
something you’re proud of. Your potential customers don’t want to show up to a rat hole, and
neither do your employees. In the meantime, if you need to meet with current or potential
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clients, get yourself a Regus Businessworld membership so you can rent their Class A
conference rooms on the fly. You’ll have the same view and location as those on other floors
spending thousands per month with long term leases, and you’ll just be paying for the room by
the hour and be on your way when you’re done, client impressed and contract in- hand.!
If you’re planning on flying solo and never hiring employees, then I highly recommend looking
into Fidelity as they are one of the few that allow you to run a SEP IRA as well as a Solo 401K. I
won’t get into the details of the tax advantages that allows, but let’s just say that having both in
your arsenal maximizes the amount you can put away and minimizes your tax liability. I say
“flying solo” because the Solo 401K is designed for companies without employees, otherwise
you’d need a general 401K and have to comply with ERISA rules which sound scary.!
If you need to find all the broken links on your site (and who doesn’t) then you should checkout
Integrity if you’re running a Mac. It is a simple free program and does just that. Those of you on
Windows should check out Xenu’s Link Sleuth which does the same thing. If you want to go a
little more advanced with spidering tools, then you should download a free copy of Screaming
Frog SEO Spider which has a few extra bells and whistles, and is available for Mac, Windows,
and even Linux. If you want to reliably track your organic rankings, then something like Authority
Labs would be an excellent choice.!
If you’re going to be managing a bunch of social media profiles (and you probably will), then
you’ll want some way to reliably blast your message out to all 3 or 4 of them at once. The
cheaper option would be something like HootSuite and a more polished option would be
something like Sprout Social. There are many other types of social media tools out there, but
this section is focused mainly on tools to simply blast out your message in a bunch of places at
once and track the results of that action.!
Maybe not the sexiest of tools, but one you’ll probably be spending a fair amount of time with.
Here at Pagely® we run Zendesk while others swear by Freshdesk. To each their own.!
In closing, I’ve said it all and have done the best I can, so hopefully I earned your pageview with
this one. I’m sure I left some categories or particular tools out, but hey, nobody’s perfect. Leave
a comment below with any tools you recommend that the readers should check out and I’ll give
them a look myself if I haven’t already.!
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Chapter 7: Founder Retirement!
This chapter is about something you’re all hopefully working towards and should be thinking
about...retirement. However, people who create companies tend to be the worst at retirement
planning and investing, for a few reasons:"
• The assumption that putting all your money into your company is the best strategy,
foregoing contributions to any type of retirement plan.!
• Lack of corporate 401K and access to the investment advisors that come along with it (it
can also be spelled adviser, both are correct).!
• Attitude of “I can found a company; I can do anything myself”.!
Before we begin, none of the following should be
considered official financial or legal advice. I do
hold a degree in both finance and economics, so
I tend to know what I’m talking about in this arena
so take what you want from this post and ignore
what you don’t like. This chapter will mostly apply
to citizens of the U.S. because that’s where I live
and studied.!
Let’s address the first point first. It’s fine to put a
lot of your money into your company, I’ve done it.
The trick is to not put all of your money into your company. Why? Well, a few reasons. One is
that your company could fail for a number of unforeseen reasons. People think they’ll have time
to play “catch up” but the bus will have passed you by, because if your business is in the
disappearing phase you’ll be plenty busy doing other things and will be using whatever cash you
have to stay afloat and keep the lights on. !
Even big companies can disappear fast. The Huffington Post recently did a story on ten brands
that will disappear in 2014. Among those listed are J.C. Penney, Nook (launched in late 2009),
LivingSocial, Volvo, and even Mitsubishi Motors. Forget about those for a moment, remember
MySpace? At the peak if you had told its founders their company would basically disappear in a
couple of years they would have told you to go see a psychiatrist. The point is that if it can
happen to these established brands, it can happen to your company which is probably a lot
smaller, and depending on your industry, maybe faster than you could imagine. Just like you
should always be allocating a certain % of your revenue to marketing, you should always be
allocating a certain % of your income to retirement.!
And I haven’t even touched on the concept of compounding interest, which means that while
you’re poking fun of your friends working “for the man” in corporate, they’re piling up interest on
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top of interest in their 401K. That’s why most advisors will tell you the #1 key to retirement is
starting early. Albert Einstein called it the “the greatest mathematical discovery of all time” due to
its power. There’s a great article about it in-depth here, but the one example they cite is that if
someone aged 20 makes a one-time $5K contribution to their Roth IRA and earns 8% average
annual return, if left untouched that $5K will grow to $160K by the time they retire at age 65. But
if they waited until they’re 39 to plop that $5K down, it would only grow to $40K by the time
they’re 65. So those 19 years of waiting cost you $120K, ouch. This is one of the rare cases
where the Rolling Stones were right, time is on your side.!
Now the second point, lack of access to corporate 401K and investment advisors. When you
work at a big company you get handed paperwork during on-boarding and part of it is to signup
for the company 401K. In fact, some places have auto-enrollment which means the default is
that they start taking a piece of your check each month (from gross, not net) unless you opt-out.
So it’s like forced retirement savings. On top of that, you don’t have to do much except fill out
some pretty easy paperwork. Setting up your own retirement as a founder is a pain. Do I go with
SIMPLE IRA, SEP IRA, Traditional IRA, Roth IRA, Solo 401K, Keogh Plan, or ESOP? Even
once you pick an investment vehicle, and if you’re really slick a combination of more than one to
create a bulletproof tax shield, you then have to pick a provider. Some providers handle one
vehicle but not the two you want and so forth, so it’s like a very long easter egg hunt setting
things up. Because of this, many founders perpetually put this process off year after year.!
In addition, someone who works at big corporate will be paired up with an investment house like
Fidelity or Vanguard, and then given a phone number to call where they can get basic advice on
what they should do in terms of investing. What you should do depends on a number of factors
like your goals, the current investment climate, and of utmost importance your age. If you’re 63
and want to retire somewhat soon, the advisor would likely keep your portfolio largely out of
equities because if the market tanks like it does every X years, you’re SOL and if you get
canned during that same recession it’s possible you’ll be 68 working some minimum wage job
after having lost the bulk of your nest egg. It happens so often there should be a law against it,
because no matter how many times that sob story plays out on 60 Minutes each recession,
people continue to play equities like it’s blackjack and the house always wins.!
Now the final and maybe most important, is what I call Superman Syndrome. Founding a
company is really hard, and if you have success you feel invincible. You think you can do just
about anything. Who needs an investment advisor or high-priced tax attorney? I can just Google
stuff and pick stocks on my own. Well I have news for you, unless you’re Warren Buffet, you’re
chasing your tail. My one finance professor who had a PhD from Columbia said that most of the
people who pick stocks were on a “fool’s errand”, and that water cooler pickers are like sheep
running blind. Why? Think about it for a moment. When the market is hot (like right now) and
way up, everyone is talking about what stocks they’re putting in their portfolio. So they’re buying
at high prices. And guess what they do when the market starts to tank or already has tanked?
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They liquidate. So they’re buying high and selling low, which is the worst strategy ever no matter
what asset class you’re talking about.!
I can say this with high confidence. When really really smart founders exit at a high level like
Zuckerberg or Romney 1, the first thing they do is surround themselves with really smart
(expensive) people who do tax and retirement shielding planning for a living. Why? Because
they’re so smart they understand they don’t know squat compared to those who live and
breathe that type of thing. Trying to be your own high priced investment advisor is like trying to
do your own plastic surgery. It’s kind of stupid.!
Even Buffet who is the one exception often mentioned as “beating the market” has gone on
record saying Berkshire Hathaway’s future performance will most likely barely beat the S&P
500. And keep in mind Buffet’s past performance is often analyzed by experts with the
conclusion it’s his huge amount of cash and negotiating skills (partly due to that pile of cash)
that have given him an edge. This is all excluding the fact that it was his entire life’s obsession
and somehow we think we can trade like Buffet because we watch the news and read The
Motley Fool blog?!
So what do you do? Well, start doing research on the types of retirement plans so that you can
figure out which is a good fit and so you sound educated. Then find yourself a very good
financial advisor and tax attorney, and ideally one who does both, meaning they have both a JD
and CFP among other things. Don’t be greedy. Your advisor should give you high-level guidance
about things like ETFs, TDFs, and more. If they work on something other than a flat fee (it’s
okay if it’s expensive as long as their credentials match their price), then be wary. And if they
promise they can beat the market or get you some crazy return, run for the hills because you’re
about to get Madoff’d. Then repeat in the mirror several times “I am not Gordon Gecko, Warren
Buffet, or The Wolf of Wall Street”. Sure you can open your own online discount brokerage
account and start trading blind, but Vegas is a lot more fun.!
1-Mitt Romney did not found the entire Bain & Company consulting shop, but he did co-found
Bain Capital & made most of his wealth from that.!
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Chapter 8: Starting Broke!
This chapter will apply to some of you but not all of you. How to start a company on WordPress
if you’re broke."
If you’re starting out with no cash to invest in your
company, like savings = 0, it can seem hopeless. You
might think “there’s no way i can start a business, i
have no money, i heard it takes money to make
money” and although making money is easier when
you have money, it doesn’t mean it’s the only way.
You definitely have it harder than someone with cash,
but it doesn’t mean you can’t create a valuable
company. You’ll just need to be more creative and it
might take longer, but that’s reality.!
At this point many people ask... “shouldn’t i just raise money from an angel or VC?” and if you’re
not well connected to the local financing community and don’t have traction (e.g. revenue or
explosive user counts) then you should probably focus on getting some momentum before
going that route. Why? Because the best way to get in touch with a real angel or VC is to be
referred to them, rather than cold calling or emailing them direct. But why is that the best route?
Because they get so many pitches that it helps cut you through the clutter. VC or angel says
“Sam referred this lead to me, it must be at least worth hearing their pitch” and so on. So that
leaves two main sources of raising capital, which are friends and family. I personally find it
awkward to pitch friends/family, but some people don’t and if your friends/family happen to be
rich, even better. Don’t take your grandma’s last nickel because if your startup fails, you’ll be
more upset than she is.!
If you’re like me and not comfortable with pitching your friends/family, then here are some other
ways to get capital together...!
Ever wonder why so many first time founders start an agency or service business? Because it
requires very little capital. Building a product-based business often requires far more capital. If
you’re selling widgets via eCommerce on your WordPress site, then you’d need to pay for molds
or 3D printed prototypes, do package design, and many other things in addition to creating your
website. The costs can add up.!
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But a service business is among the cheapest to set up, and it can often give you the seed
money to start the product-based business you dream of, whether it’s selling widgets or building
a SaaS. What type of service business or agency should you start? Well, that depends on your
skill set. If you’re a great writer, maybe you start an agency that writes blog posts for companies
or a business plan writing service. If you’re creative, maybe it’s a design agency. If you don’t
have any real marketable skills, then take the time to learn some via online classes or wherever
because it’ll help you with your eventual product-based business anyways.!
I am not advocating running up tons of credit card debt, but some companies have been
financed this way and it ended up working out really well for the founders. If you are going to
pursue this route, first get your credit in order with something like Credit Karma and that way if
you take out any credit cards you’ll get better interest rates and limits on them. Ideally you want
cards with 12 months 0% APR so you’re not getting hammered with interest for the entire first
year. By the time month 12 rolls around, hopefully you’ve either paid them off or can at least
make the monthly payments with ease via the newfound revenue/ profits of your startup.!
Full size SBA loans might be hard to get if you’re just starting out, so first focus your attention on
their Microloan program. It provides up to $50K in startup money with the average loan size
being $13K as of the time of this writing. Having $13K might not seem like much but it’s a lot
better than zero, and if you’re lucky you might end up with far more. You can use the proceeds
for working capital, inventory, office furniture, or machinery/equipment.!
If you can’t get a microloan from the SBA, then see what kind of loans and rates you can get at
places like Funding Circle, LendingClub, Prosper, and OnDeck. They each have different
requirements in terms of credit score required, the amount you can get, and the purposes you
can use it for, however they’re definitely worth checking out and the interest rates tend to be
better than credit cards (unless you get a 12 months 0% APR intro offer like discussed above, in
which case that might be a better option all else being equal).!
You’ve probably read about the recent Jobs act and how it’s affecting crowdfunding. If not, you
can read about it here. Anyways, there are a bunch of places you can check out to crowdfund
your idea and they include Kickstarter, Indiegogo, Crowdfunder, GoFundMe, FundAnything,
RocketHub, and Quirky. The latter of which is geared mostly toward those with product
inventions, like creating a better umbrella or whatever.!
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I never really watched Jay Leno, except when I was visiting my parents, but he says he always
worked two jobs so he could save up. Even while hosting The Tonight Show for 20+ years he
did stand-up comedy shows and lived off that money, banking the money paid to him by NBC for
whatever reason. If Jay can do it, you can too. If your current job isn’t providing enough to
support your needs plus capital to save to launch your company, consider pulling a Leno. Get a
second job, whether it’s nights or weekends, and save that money exclusively to launch your
startup. If you’re planning on running a startup, it’ll be good practice for working round-the-clock
like a founder.!
If you have a great idea and bring value to the table, then consider partnering with someone
who has a bit of spare change to co-found the company. Yes, they’ll get more equity because
they’ll be making more of a “capital contribution”, but that’s life. You’d want more equity if you
were the one putting up the cash, right? This is different than finding an angel because a cofounder will get a larger stake and be fully involved, so there is less risk for them in a sense and
they have more control. It might be easier to find a rich partner than an angel to take a gamble
on you. Plus, having a co-founder tends to look better when you do go to raise capital down the
line from an angel or VC.!
In conclusion, being broke isn’t an excuse for giving up, but rather an impetus for getting
creative. Now start filling up those empty pockets.!
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Chapter 9: Startup Advice!
This chapter is about something you hardly ever hear mentioned. How to separate the wheat
from the chaff when it comes to getting startup advice, whether it’s from a fellow founder friend/
acquaintance, a famous founder’s blog, or a guest post. Not learning this key ingredient means
you’ll waste a lot of time spinning your wheels. And when you first start out, everyone and their
neighbor will want to give you their two cents so be prepared."
Some blogs, writers, and founders tend to offer what many
call philosophical advice, rather than practical advice. That
means they give their opinion at a high level about a
particular approach to things, without giving hard details.
This type of advice is hard to do much with. You’re likely
going to form your own product philosophy along the way
(among other things) and should focus on getting practical
advice instead. There are only so many hours in the day.!
Getting practical advice is easier than you think. There are
many blogs, writers, and founders who offer it; the
important thing is to be able to recognize it. For example,
Neil Patel of Crazy Egg and KISSmetrics fame offers
practical advice on his blog. Last year he wrote a post
about how to do an SEO audit that got lots of traction because of its level of detail. That is the
kind of stuff which you can easily take action on. A philosophical post debating whether SEO or
CPC is the best route to begin with is less helpful. You’re better off trying a lot of things and
seeing what works for your particular startup built on top of WordPress.!
Whenever taking advice whether in spoken or written form, it’s important to keep in mind that
your mileage may vary in the sense that your own industry, approach, experiences, and time
period are likely to be much different than whoever you’re receiving advice from. For example, if
your mentor is 75 and ran a software consulting firm 20 years ago, keep in mind that although
their experience is valuable and they may have some good tips, your experience is likely to be
much different now since things have changed quite a bit. In fact, in technology things change
quite a bit every 5 years so it’s all the more important to focus in on advice that is
chronologically relevant. For example, when I do research for SEO or CPC techniques or
tactics, I always narrow the results to the past month when possible, and the past year at the
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most. Anything beyond that is simply out of date and things have probably changed since it was
Another thing to keep in mind when taking or reading advice with regards to your startup is the
motive of the person giving it. Guest posts on blogs are notorious for having slanted views like
this. For example, if someone who works in Big Data does a post about marketing, they’ll argue
that decisions should be based solely on big data and that surprise, their tool is the best solution
to use. They’ll say things like “SEO is Dead” which doesn’t make much sense as long as
organic rankings are around, but you’ll see bold statements like that thrown around a lot.!
When you’re taking advice from a fellow rounder or in particular an investor, always keep the
motive in mind as well. Some angels and VCs will give you advice without any motives behind it,
and that’s a good thing. However some will give you advice that’s slanted in one fashion or
another, and that’s just the nature of things. If a fellow founder is giving you advice, keep in mind
the angle they’re shooting from. Do they run a particular type of startup and hence their view is
When you first start out, you want to read and learn as much as you can. Reading as many
founder’s stories as possible seems like a good idea. It also seems like a good idea to buy all
the current catchy startup books and to devour them also. The problem is, if you’re launching a
startup, regardless of whether it’s a product or service business, you’re going to be extremely
busy and have little time for that. Also, do you think Mark Zuckerberg spent all his time reading
books like that? Or do you think he just got to work and read a few here and there when he
found little pockets of free time? My guess is the latter.!
The final point I’d like to make is to avoid analysis paralysis when doing research on whatever it
is you’re trying to figure out. Analysis paralysis means you bite off more than you can chew in
the research phase to the point that you spend all your time researching and never getting what
it is you wanted to get done in the first place. For example, let’s say you wanted to find a
provider for recurring billing for your startup. You could spend an infinite amount of time reading
articles about the various top players, and in this particular case there might be 5-8 potential
companies you could do research on. Trying to get the full picture on 5-8 companies and going
through all their demos would take up quite a bit of time, and before you know it days, weeks, or
worse yet months have gone by and you haven’t even began implementation. Happens more
often than you’d think.!
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Do yourself a favor, and do some quick high level research to quickly narrow it down to the top 3
providers. I typically narrow it using a variety of methods. Sometimes it’s seeing which ones
have the most traction and media coverage, other times it’s seeing who their investors are, and
sometimes it’s by reading a few threads on Quora to see what other legitimate startups are
using. Once you’ve narrowed your list to 3 companies you can pretty easily do their demos,
make a quick feature comparison chart (or even better find someone who already did), and get
to the decision making and implementation phase. What might seem like a good thing (too
many choices) is actually a bad thing when you’re running a startup and are strapped for time.!
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Chapter 10: How to Get Press!
This chapter is about something many founders struggle with in the beginning, and even years
down the road. How to get press for your startup and do it the right way, without wasting your
time or that of the reporter."
When you create your first company, you’ll be excited
and expect the world to cover your newfound creation.
However, rarely does a founder/company approach
getting press the right way from the beginning. When I
first started out I had no idea what I was doing and
wondered why my pitches weren’t turning into
coverage in Forbes. Surely writers need stuff to write
about right? But then I started to figure out that getting
press is both an art and science, and a lot more difficult
than you might think. Even venture funded companies
have hired PR firms and paid decent size monthly
retainers (thousands) only to see very little coverage in
PR firms work just like any other type of agency. That means there are smaller cheap firms and
larger more expensive firms. The larger firms tend to have the most connections to writers and
will have clients paying them a range of monthly retainers. These will range from a thousand up
to tens of thousands per month.!
Just like most agencies, the clients that pay the most get the most attention, and in return the
most press. In addition those larger clients are much easier to get coverage for, because they
carry a household name that writers believe the audience will definitely be interested in.
Therefore the firm’s best paying clients are the easiest ones to do work for, and hence they
receive (rightfully so from a margin standpoint but maybe not an ethical one) the most coverage
per dollar spent. That means if you’re one of the smaller clients at a large PR firm, you may
have high expectations and end up disappointed.!
So let’s say you don’t have the money to hire a PR firm and have decided to go it alone. There
is one way in which writers are just like venture capitalists. They both get pitched a lot. They
might receive hundreds of pitches per day, with VCs getting asked for sit downs or to review a
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founder’s slide deck, and writers getting asked to review long-winded press releases or emails
from founders or their staff. It’s important to understand that cutting through the noise is the key.
Your pitch must stand out and you must convince them in small number of characters that what
you’re doing is interesting. Otherwise you’ll be lost in the shuffle.!
You have to start thinking from the writer’s perspective in order to do well at pitching your story.
Stop thinking in terms of how great your company is and start thinking in terms of how you can
help the particular writer. Do they have a weekly column that you happen to fit well into? Can
you tie what your company does to a current trend or news story? Have you read their previous
work and are you even pitching the right writer at this publication? Do they write about similar
companies or are you just pitching them because you found their email address on some
website and it was the path of least resistance?!
Since most publications are going online you typically will end up pitching someone who is a
new school writer rather than an old school journalism buff who is in to formalities. That means
the long winded press releases aren’t going to get read if you blast them out via email. You want
your pitch to be short, sweet, and to the point. Don’t make the rookie mistake of firing off that
1-2 page formal press release in PDF format expecting your inbox to be pounded with positive
responses. It’s more likely you may not get any. Don’t believe me? This article from Forbes
explains it pretty well.!
One of the best ways to get press is to signup for their free daily emails which contain lists of
topics reporters are trying to cover along with contact information, so you can flip the model and
instead of trying to create a story you can start getting mentioned in some that are already being
written. Writers need quotes and sources for their articles, and if you respond promptly with
what they’re looking for, chances are you’ll get coverage. I’ve personally gotten coverage many
times by using HARO and it’s the low hanging fruit of the PR world.!
There are services cropping up which help you do your job in terms of reaching out and tracking
what comes to fruition. One of those is PressKing, which allows you to get lists of press
contacts, send your pitch, and track who opens it and where it gets covered. Your mileage may
vary with this tool depending on your industry, the quality of your pitches, and which type of plan
you have with them.!
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Another great new service on the market is PressFriendly, which is a SaaS version of having a
PR pro on your staff. Basically their software (and a human element as well depending on your
plan) helps you craft your pitch, reach the proper writers, and track what happens. If you’re
clueless in terms of how to craft the right pitch and have a few bucks to spend (and still a
fraction of what a PR firm costs), then you should definitely check out their service.!
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Chapter 11: Riches in Niches!
This chapter is about a lesson I learned a long time ago. Why having greedy eyes is bad for
your wallet, why so many have it, and the opportunity resulting from it for those who specialize.
In other words, why there are riches in niches. Someone wrote a book with it as the title. I’m
sure it’s good, but I never read it. Maybe I should have."
One the best scenes from any movie is in 1987’s Wall
Street when Michael Douglas is playing Gordon Gekko
and gives a ridiculous speech to “Teldar Paper”
shareholders about how greed is good. Douglas might
have won an Oscar for best actor that year and he
makes some valid points, however in the realm we’re
talking about today, greed isn’t good. What type of
greed are we talking about? The “be all things to all
people” greed, the “we have to sell to all types of
customers” greed.!
You see, most founders and companies want to serve the entire market, capture the “whole pie”
so to speak. Sounds like a good approach right? I mean, the more potential customers the more
potential revenue and so on. The problem with that approach is that over time other companies
will specialize in various sectors of the market and chip away those respective customers, since
it’ll be almost impossible to compete with them (or at least should be in theory) on their turf. If
you’re working on a product that serves ten types of customers and they’re working on a
product that serves only one of those, their focus will give them a huge advantage. Not only
that, consumers like when a product appears to be an excellent “fit”, even if it isn’t necessarily
the best option.!
For example, let’s say you own a restaurant and want to build your website on WordPress as
you’ve heard great things about it, and find things like Squarespace too limiting. Are you going
to go with a generic WordPress site builder, or something more specific like Happytables that
only does WordPress websites for restaurants? Of course you’ll pick the latter more often than
not because that’s all they do. Over time more and more verticals are sliced up by companies
like this until you’re eating pizza by the slice and the whole pie approach doesn’t work well
There is one type of company where having different products of different types actually
strengthens the offering of any one product, and that exception is an ecosystem. For example, if
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I own an iPhone and a Macbook Pro, then buying an Apple TV seems to make a lot more sense
than a Roku since in theory I can use them all together much more easily. As Apple continues to
add additional items down the line such as the newly announced CarPlay, my lock-in becomes
much higher. The “switching costs”, as they say in economic theory, increase. But even Apple
started out with just one product way back when, and slowly added additional ones as they
established themselves as leaders in the various areas. Once you’ve done really well in a
particular area, it’s okay to expand to other lines, and if you’re publicly traded, it’s pretty much a
necessity to keep shareholders happy.!
If you’ve ever wondered why Tesla started with just one really expensive car, the Tesla
Roadster, then I’ll give you a hint. By focusing on one type of customer/product, they were able
to do a better job than if they launched five cars targeting five different types of customers at
once. In addition, they started with an expensive model for at least three additional reasons. The
obvious one is that exotic cars have better margins than econoboxes (batteries are expensive
but declining in price), the somewhat obvious is that the lower volume is more manageable for a
startup, but the least obvious is that it’s easier to go downmarket than up. What do I mean by
If Tesla starts by specializing in high-end exotics they become known as a maker whose
products are prestigious and sexy. It’s relatively easy for them to go downmarket and create
cheaper models off a high-end brand name. They’re following the same model we’ve seen
utilized by other makers such as Land Rover and Porsche. Land Rover puts out an “affordable”
$40K SUV, and people are lining up. On the flip side, it’s really hard to start with a budget
product and then go upstream. Volkswagen put out a luxury car and nobody wanted it. Yeah,
they lost $2.8 billion USD doing that. Oops. The idea was to change the perception of the brand,
but that’s extremely hard to do. The point is, if you’re deciding on which segment of the market
to focus on first, it’s typically better to start at the higher end and scale down than vice versa.!
So now that we know that focus is key and starting high-end makes more sense if we hope to
capture multiple areas of the market long term, what is the best approach? Find a niche within
your space that isn’t currently occupied and use it to scale up quickly. Even though the potential
market size of your slice might not be as large as the whole pie, you’ll find supply/demand more
in your favor and once you’ve dominated your niche and reached decent scale, you can
consider going into other verticals and adding more products specialized for those.!
Here at Pagely we started by focusing on managed WordPress hosting, and now we’re going
into more specialized subsets within, such as WooCommerce hosting, WordPress VPS hosting,
and more. On a final note, if you’re worried your niche is too small, never forget that Mark
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Cuban invested in a guy who draws cats for a living. If there are riches there, then you might be
surprised what you find in yours.!
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Chapter 12: How to Close a Sale!
This chapter is about how to close a sale once you’ve decided on which market you’re targeting.
Most people think they’re good at sales but actually suck at it. They say “sales is easy... anyone
can do it” but in reality convincing people to do something (e.g. buy your product, fund your
company, join your team) is one of the hardest things in life."
Think about it. People are lazy and like to “stick with what they’ve got”. In addition you might be
in a market like we are (hosting) where there are lots of choices you’re competing against. If
there are 10 players in your space, statistically you’ve only got a 10% chance of getting their
I don’t have a PhD in sales. I never wrote a book
about sales, and I don’t fly around the country
calling myself a sales expert and selling tickets
to seminars. But I’m fairly confident I know how
to close. How do I know know? Because I’ve
been selling since the day I left undergrad and
I’d be living in a trash can if I wasn’t at least
pretty good at it. Why? Because I’ve founded
and run a number of businesses that ended up
doing fairly well and succeeded against very
steep odds. Eight out of ten entrepreneurs will
fail. Think venture funded ones do much better?
According to Harvard Business School senior
lecturer Shikhar Ghosh, three out of four VC backed companies fail.!
Aside from that, I’ve convinced publications to write about myself or my companies. Try getting
to be part of a cover story for Entrepreneur or convincing Inc magazine to cover you in a photo
spread. It’s extremely difficult. When I was in the “Elevator Pitch” column for Inc the writer told
me point blank... “we do this column 12 times per year and get thousands of submissions
annually, I’m counting on you”. Yikes, those aren’t very good odds either. So how did I convince
them? I didn’t major in psychology but I understand how the human brain works thanks to good
ole’ Robert Cialdini.!
Robert Cialdini wrote Influence: The Psychology of Persuasion in 1984. This is before anyone
knew what a CRM or even the internet was. It has sold over 2 million copies and Fortune called
it one of the “75 Smartest Business Books” of all time. Last year Harvard Business Review
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interviewed him, because they wondered if he gave away too much information on how to hack
the human brain. So yeah, the book is legit and worth reading. That is not an affiliate link, I’m
just saying it’s worth the few bucks. Help Robert take another vacation. He deserves it.
Anyways, the book talks about 6 key principles of influence and here I’ll relate each of those
to sales.!
Give something to get something in return. In other words, the human brain is wired to return
favors. Humans hate to feel indebted to others. Every wonder why it seems Macy’s has a sale
every other week, why companies do free trials, or why companies spend all that time creating
whitepapers and infographics? Now you know. They’re giving you something to get something
in return. Your business. One great way to incorporate this into your business is to be generally
helpful to your community. If you’re in WordPress, answer questions on Quora or in forums and
become known as a great resource. If you’ve answered a question for someone and they’re
thinking about using your services, they’ll be more likely to pick you than someone who wasn’t
willing to offer advice for free.!
Most human beings like to be seen as being consistent. So if we publicly commit to something,
we’re much more likely to follow through, even if you remove the original incentive or motivation
after we have agreed. People view this type of commitment as part of their reflective self image.
If you’ve recently seen The Wolf of Wall Street or the movie Boiler Room way back when, then
you probably remember how most of the stock brokers opened up their pitch. They’d say
something like “How about I start you off with a small investment, just 50 shares and we’ll see
how things go”, and that was their way of getting a small form of commitment which makes it
much easier to get larger investments later on.!
Both of those movies were about scamming people so I’m not advocating that, but you get the
idea. Another example would be how many companies push hard to get you to “commit” to a
demo or webinar of their product. They know this will increase the likelihood you think of
yourself as a customer and hence will be more likely to end up being one.!
This is one of the most used in terms of web startups. Most human beings feel validated based
on what others are doing. In other words, safety in numbers, humans like to do what they see
other people doing. People who move to California somehow end up driving a hybrid. People
who move to Texas somehow end up driving a pickup, even if they never would have dreamed
of it before moving there. I’ve seen this first hand with a number of my friends. I’ll say to them...
“you bought a Prius?” and they’ll reply “it’s considered cool here in California, everyone has
one”. Makes sense right, most people like to fit in.!
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So how are web startups using this? Visit the homepage of most hot tech startups and you’ll
typically see a section allocated for logos of prominent clients. That’s because they understand
the value of social proof. If they show 50 of the Fortune 100 companies on there, they know
customers will think “gosh, they’re all using XYZ, maybe I should too”, and so forth. Another
example is how nightclubs line people up at a velvet rope in Las Vegas even if the 60,000
square foot club is completely empty, which seems to make no sense from a profit maximization
standpoint. I mean they could be selling drinks to those people they have lined up by I don’t
know... letting them inside? But they know people will see the line and say “hey, I want to go
there” and they might end up with a larger head count in the end and are thinking beyond the
first 30 minutes of lost revenue.!
Another principle deals with authority and obedience. Sounds strange but let me explain.
Psychologists have done experiments where they have figures of authority ask people to do
objectionable things, and more often than not, they do them, even if they know they are
objectionable. NYPD officer rolls up on your car and says “block this alley” and most people will
do it, even if it’s allowing the cop to rob a store, because chances are they won’t question
someone of authority. We see this used in movies all the time. Criminals dress as the Brinks
employees and get people to do ridiculous stuff to help them rob the bank. It’s happened in real
Some of the best ways to convey authority are with titles and uniforms. Why do you think
dentists like to be called “doctor” so much? It conveys greater authority. We’re taught as kids...
“you better listen to your doctor” and so forth. If the “doctor” says you need a $5000 root canal,
your response will probably be “where do I sign?” even if you don’t need one. Pharmaceutical
and supplement companies do this in their TV ads. Some of those people wearing white coats
are actors!!
What is the best way to take advantage of this if you don’t plan on being a doctor or wearing a
uniform? One great example is by having a prominent spokesperson. Starbucks recently hired
Oprah to create and endorse one of their teas. Oprah did her “favorite things” lists which
everyone loved, so she must know a great tea right? When LegalZoom first started out they
used Robert Shapiro’s face on their homepage and in their ads. Brilliant. People thought to
themselves... “hey a prominent lawyer founded this, all these services are good enough for me”.!
People are more likely to be persuaded by people that they like. For example, if a straight guy
goes into Hooters or Twin Peaks and the waitress tells him he should really try the daily special
at market rate, then he’s fairly likely to bite. In a regular restaurant, probably less likely. But
attractiveness is just one of the biases discussed.!
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One way this is used in the startup world is on the “About Us” page. If you view a company’s
“About Us” page and like the people you see and the way they carry themselves, then you’re
more likely to buy from them. So if your page is goofy and you don’t take yourselves too
seriously, then you’ll appeal to those types. However it may backfire and if the majority of your
audience is more serious in nature, then those customers might shop elsewhere. CEOs are
another example. If a CEO is well liked then their company will have an easier time converting
customers. Part of the reason people buy Teslas is because their CEO is a modern day Tony
Stark. If he was controversial and had a rough edge, they wouldn’t be as successful. Never
forget that people buy from who they like.!
Perceived scarcity leads to increased demand. Ever wonder why every other commercial says
“limited time only” or something along those lines? It’s because they’re using this principle.
Flash sales sites are a great example of this. They force you to signup with an email address to
“get access to limited quantity deals” and then have a countdown showing the quantity
remaining. Visitors think to themselves “i better get that pair of shoes before it sells out” and
bam, another sale is made.!
Another example of this is gym memberships. If you’ve ever toured a retail gym you’ve most
likely been told by the person giving you the tour that if you “signup today”, they’ll waive the
enrollment fee. But the truth is that sign at the front is there pretty much every day. But they
know that if they pitch you that way, you’re more likely to sign right then and there. The reality is
your best chance of getting the best deal is to leave that day and call them on the phone when
you’re the one in control.!
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Chapter 13: Founder Taxes!
This chapter is about a deadline that we all have and it’s April 15. Most of the time you hear
about taxes for the self-employed or company founders it’s in a glamorous way from your
friends who work in big corporate. They say things like “oh, I wish I had all the tax advantages
that business owners like you have” and to some extent they’re right. The retirement options are
great, you can deduct some things like your laptop that they can’t, but it’s not all wonderful. In
fact, many first-time founders get burned around tax time for a number of reasons. I’ll explain
what those reasons are and how to avoid them. This post will assume you’re running an LLC, as
if you’re incorporated as a C Corp, you likely have a great advisor or team of experts (CPA + tax
attorney) already helping you. If you don’t, then that’s probably something you should work on
right now instead of reading this post. The following is not legal or tax advice. Please consult a
licensed professional for making your decisions. This is just well researched information."
In the old days if you ran a company each month you’d
mail all your receipts and bank statements to a
bookkeeper who would then plug your expenses and
income into some software program that wasn’t cloud
based and hopefully was being backed up somewhere.
Some people still use bookkeepers to this day for small
companies and I honestly don’t understand why. !
There are lots of cloud based solutions out there like
Outright (recently acquired by GoDaddy) that
automatically track your expenses/income since most
things are digital these days. Think for LLCs.
Just like Mint, you simply link your bank account,
create some categories for expenses, teach the system a few rules, and each month watch the
magic happen. It will even prepare your schedule C and provide you with quarterly estimates so
you know what you owe the IRS. If you want to get a little fancier, then you can use something
like Xero which is a bit more advanced and allows you to give your CPA access (or they’ll
recommend a Xero savvy CPA in your area) so you can both see what’s going on and have
access to the data at all times. !
In the old days your CPA might have a software program in their office and you’d have to
request PDFs or printed copies so you could see what’s going on with your business at any
snapshot in time. I have nothing against bookkeepers, but their role is primarily data entry and
it’s becoming less and less vital because of technology. You need people on your team who sat
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for exams/bars like CPAs and tax attorneys, not data entry people who are more prone to errors
than automation.!
Speaking of quarterly tax estimates, you are making those right? This is the #2 mistake I see
founders make when it comes to taxes. They live off their profits and then tax time comes
around and they use TurboTax or H&R Block and realize “holy cow, i owe $XX,XXX in taxes!”
This happens more often than you’d think. It’s really easy to forget about quarterly estimates,
particularly if you’ve come from the corporate world of W2s and payroll, where the taxes are
neatly taken out of your check. Also don’t forget that self-employment tax means you’re paying
both haves of Social Security and Medicare, whereas in your former corporate life your
employer was covering half.!
To handle setting aside the proper amount for taxes you have two options. You can put yourself
on payroll using something like Zen Payroll, Paycor, or Paychex, and have taxes taken out of
your check for the proper amount automatically. If you have stable income this is probably your
best bet and the least amount of hassle, and well worth the $25-$125 per month it costs per
founder/employee. !
The other option is to have 2 personal checking accounts, and use one to store the proper % of
each check for taxes. For example, let’s say that you think your income will put you in the 25%
bracket. Knowing that self- employment taxes are approximately 15%, each time you cut
yourself a check from your business checking to your personal checking you could set aside
(push) 40% from your main/regular personal checking into your “taxes” personal checking. Both
are the same type of account at the same bank, you just use one for storing the money you’ll
need to pay your quarterly estimates. !
So let’s say I take a “withdraw/draw” from my business for $1000. I would write the check from
my business checking account to my own personal name, and first deposit it in my regular
personal checking. Once it showed up in that account, I could push/ transfer $400 of it to my
“taxes” personal checking and store the $400 there. If I do that each time I pay myself then
when it’s time to make my quarterly estimate to the IRS, I could just write a check for the full
balance in the “tax” personal checking as I’ve been taking the proper amount each check like a
payroll firm would. !
This prevents me from spending my entire check and forgetting about that wonderful thing
called tax, or from having a huge tax bill due in April. Note that it’s better to overestimate a little
than to underestimate, as there can be penalties for underpayment.!
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Since you’re technically the employer and the employee both now, you owe the whole enchilada
in terms of taxes related to Social Security and Medicare. Although enchiladas are delicious, this
is not something to be excited about. For self-employment income earned during 2013, that
means 15.3% (12.4% Social Security + 2.9% Medicare). However the 12.4% for social security
only applies to the first $113,700 of income, whereas the Medicare 2.9% applies to all income
no matter if you’re pulling in $100MM per year. Keep in mind you’ll be older than 65 some day
and will (hopefully) get to take advantage of both of these, which are like forced retirement
savings in a sense. No, Medicare doesn’t cover everything but it’s way better than nothing, and
Social Security won’t have you living like a king but it’s enough to keep you from being
homeless, so assuming you live past 65 you’ll see some benefit from paying these. You
calculate your self-employment tax on Schedule SE and report that amount in the “Other Taxes”
section of Form 1040. In this way, the IRS differentiates the self-employment tax from the
regular/general income tax.!
One piece of good news is that when figuring self-employment tax you owe, you get to reduce
self-employment income by half of the self- employment tax before applying the tax rate. Say,
for example, that your net self-employment income is actually $50K according to your books.
That’s the amount you report as taxable for income tax purposes on Form 1040. But when
figuring your self-employment tax on Schedule SE, the taxable amount to use is only $46,175.
Not paying the 15.3 percent tax on $3,825 difference in this example saves you $586. How did I
come to that figure? It’s simple. Since self employment taxes are 15.3%, half of that is 7.65 %.
So rather than doing a bunch of adding and subtracting, it’s easier to just take your income
($50K) and multiply it by .9235 (since 1-.0765=.9235) which gives us the $46,175. So your selfemployment taxes owed in this case would be $46,175 x 15.3% = $7064. Please note that i’m
rounding the numbers to make things easier so we don’t have to deal with change.!
Another piece of good news is that you can claim half of what you pay in self-employment tax as
a general income tax deduction. For example, a $7064 self-employment tax payment like the
$50K earner above reduces total taxable income by $3532 (half of $7064). Let’s say you’re in
the 25 percent tax bracket, that saves you $883 in income taxes (25% of $3532). This deduction
is an adjustment to income claimed on Form 1040, and is available whether or not you itemize
your deductions. If it sounds confusing, just keep in mind that there are 2 taxes we’re talking
about above. One is your regular/general income tax which is calculated/found on form 1040,
and the other is your self-employment tax which is calculated/found on Schedule SE. They are
different forms and different numbers, but yet relate to each other. It all makes sense if you take
a look at a sample income tax return for an LLC.!
Bonus: If you’re willing to pay the fees (hundreds of dollars, not the end of the world)
associated with electing to have your LLC treated as an S-Corp for tax purposes, then you can
reduce your self-employment taxes considerably. It tends to make sense for those making over
$50K, as anything less than that it’s typically not worth it. That’s because the IRS says the SCorp must pay you a “reasonable” salary, and anything less than $50K is typically going to be
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found unreasonable if you’re running a business. However, let’s say you are John Edwards and
made $5MM- $10MM per year as a trial lawyer. He paid himself a salary of $360,000 (subject to
self-employment tax) which is a “reasonable” salary for a high-powered lawyer, and then paid
out the rest of his income as “distributions” (not subject to self employment tax). The NY Times
wrote an article about it here. He saved $591K in medicare tax by doing this, because that 2.9%
didn’t apply to millions of income beyond his $360K salary. He still paid the 12.4% for social
security because that’s on the first $113,700 of his $360K salary, so he didn’t save anything on
that part.!
There are some additional reporting and accounting headaches and some increased legal/
accounting expenses associated with running things this way, but if your income is say $100K
and you’re a photographer (using WordPress for your site!), then you might be able to pay
yourself a “reasonable” salary of $60K and take the rest as distributions, since photographers
on average (yes there are exceptions) aren’t known for making tons of money. If you’re a
software engineer, then a reasonable salary might be closer to $100K, in which case you could
take anything above that as a distribution. If you’re a software engineer and your LLC makes
$100K, then obviously electing to be treated as an S-Corp for tax purposes won’t do you much
Remember that thing called a Schedule C I mentioned above? If you’re confused, let me
explain. This is not a schedule like a calendar, but rather where you tell the IRS how much
money you made from your business. If you have a regular job, you fill out a 1040. If you’re a
founder with an LLC and hence self-employed, then you fill out a 1040 and a Schedule C. In the
Schedule C you’re basically just itemizing things out and telling the IRS what your income/
expenses are from your business and how you came to those numbers. The form is literally
titled “Profit or Loss From Business (Sole Proprietorship)” and it’s not terribly complicated if you
have been keeping good records all year long. Something like TurboTax can walk you through it
and if you’ve been using something like Outright to track everything, you’ll basically be just
copying/pasting over the numbers it tells you. If you’re going to use something like a TurboTax
to file, then you’ll likely need a “Business” edition or similar, as the standard version will only
cover a 1040.!
Whatever you do with your taxes, just don’t wing it. Don’t rely on a bookkeeper or friends to be
your advice channel. Get yourself a CPA and tax attorney in your area/state who are solid, and
pay them for their advice as often as you need it. I say one of each because sometimes one will
find things the other missed and two heads are better than one. Tax attorneys are better suited
to coming up with strategies to maximize deductions, minimize taxes, and hence maximize
income, whereas CPAs are better suited to the tactics of filing your return. A lot of people are
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penny wise and pound foolish when it comes to this, and say things like “tax attorneys are
expensive, I don’t want to pay $300/hour for advice” but if you pay them $1K and they end up
saving you $10K, you’re still $9K ahead. Start thinking bigger.!
It’s okay to use software tools to track your expenses/income, and to use TurboTax to actually
file. But it’s important to have someone advising you on deductions you might be missing or red
flags that can trigger an audit. Taking a home office deduction? Your chance for an audit just
went up, yay. Writing off that Escalade? Oops, unless you drive it only for work (which you likely
don’t unless you’re a courier), you’ve not only raised your chances of an audit but also will likely
owe back taxes to boot. There are a number of other red flags that increase your chance for an
audit but those are the two big ones that first time entrepreneurs tend to misinterpret or take
liberty with. Audits and jail time are not fun. Growing your business is.!
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Chapter 14: Finding a CoFounder!
This chapter is about something many people wonder about. Do I need a co- founder, and if so,
how do I find one?"
First, let’s look at the top technology companies that were created in the United!
States over the last 40 years (roughly since Apple & Microsoft began), and see which ones were
started by solo vs co-founders.!
• 1975: Microsoft (Bill Gates, Paul Allen)!
• 1976: Apple (Steve Jobs, Steve Wozniak, Ronald Wayne)!
• 1976: Computer Associates (Charles B. Wang, Russell Artzt)!
• 1977: Oracle (Larry Ellison, Bob Miner, Ed Oates)!
• 1982: Symantec (Gary Hendrix)!
• 1982: Adobe (John Warnock, Charles Geschke)!
• 1983: Intuit (Scott Cook, Tom Proulx)!
• 1984: Dell (Michael Dell)!
• 1994: Yahoo (Jerry Yang, David Filo)!
• 1994: Amazon (Jeff Bezos)!
• 1995: eBay (Pierre Omidyar)!
• 1997: (Jay S. Walker)!
• 1998: Google (Larry Page, Sergey Brin)!
• 1998: PayPal (Elon Musk, Max Levchin, Peter Thiel, Luke Nosek, Ken Howery)!
• 1998: VMware (Diane Greene, Mendel Rosenblum, Scott Devine, Edward Wang, Edouard
• 1999: (Marc Benioff, Parker Harris, Dave Moellenhoff, Frank Dominguez)!
• 2004: Facebook (Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin
Moskovitz, Chris Hughes)!
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So we have a few exceptions, but most were
started by at least 2 co- founders, and several
had many more than that, although the
consensus among savvy startup folks is that
having 4-5 co-founders isn’t necessarily better, as
it creates more potential for infighting. Many
argue 2 is superior to 3+ as well because it
means the equity stakes are still fairly high for
each. Anytime you add another founder there’s
dilution and if you’re raising rounds of funding that
dilution will get magnified. If you have 5 founding members and plan to raise capital you better
have a large exit to make sure it was worth your while.!
We know that investors and accelerators are more likely to fund a startup with co-founders
versus a solo founder. Fair? Maybe not, but they’re going based on what they’ve seen, and they
have the best pulse on the startup scene. Paul Graham of Y-Combinator says that even when
they fund solo founders the first thing they do is tell them to go out and find a co-founder. Their
logic is that creating a startup is typically too much for one person to bear. Dave McClure of 500
Startups says the ultimate team is the hacker + hustler + designer combo. I tend to agree with
that for the most part, as long as design is a large part of your startup’s requirements.!
But is their any real data out there to support all of this? The Startup Genome project is
attempting to do just that. They found the following when it comes to co-founders versus solo
• Solo founders take 3.6x longer to reach the scale stage compared to a founding team of
• Business-heavy founding teams are 6.2x more likely to successfully scale with sales
driven startups than with product centric startups.!
• Technical-heavy founding teams are 3.3x more likely to successfully scale with productcentric startups.!
• Balanced teams with one technical founder and one business founder raise 30% more
money, have 2.9x more user growth and are 19% less likely to scale prematurely than
technical or business-heavy founding teams.!
Now that last bullet point is definitely a solid argument for having a balanced pair of co-founders,
one technical and one business savvy.!
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There are few things more important than this decision. It ranks up there along with what idea
you choose, and some might argue is even more important since most startups end up pivoting
anyways. Picking someone you can stand to be around for long hours is probably a must. In
addition, you want someone who complements your skill set. Business guy partners with hacker
and vice versa. That combination is far more lethal than two people with identical skill sets.
Imagine if Apple was founded by two Wozniaks or two Jobs. It wouldn’t be what it is today, that’s
for sure.!
Be sure to pick someone for whom you have mutual respect. If you’re a hotshot coder and you
pick a slacker, it’s not going to work out. You need to not only complement each other but be of
similar caliber in your own discipline. So hotshot coder partners with hotshot sales/marketing
guru and now we’re talking. Also make sure your motives are aligned. Does one of you want to
save the world and the other wants to get rich? Not gonna work out so well.!
Many of the famous co-founder pairs met serendipitously without knowing they’d end up forming
a company and dominating the world. Bill Gates met Paul Allen while attending the private
Lakeside School outside Seattle when they were literally just kids. Wozniak met Jobs when a
friend told him he should meet this other fellow who also liked electronics and pulling pranks.
Wozniak was in college at the time and Jobs still in high school. Others met while students in
undergrad (Facebook) or graduate school (Google). But maybe you haven’t been that lucky thus
Let’s say you haven’t met your co-founder serendipitously and you live in the middle of
nowhere, don’t belong to any clubs, and aren’t in college. There is still hope. One idea is to
move to an area where startups are being created at a fast pace, and to become part of the
community. So if you live in the backwoods of Maine, consider moving to Boston. If you live in
Eureka California, consider moving down to Silicon Valley. Your odds of finding the perfect cofounder in the middle of nowhere are probably low, so you may need to move. Nobody said it
would be easy.!
In addition to moving to an area with more activity, there are some companies/communities that
have popped up in recent years that can make it easier than just running around the streets of
Silicon Valley. There are now lots of technology incubators that put on meetups and networking,
and even sites like FounderDating and CoFounders Lab that specialize in this sort of thing.
Don’t forget Startup Weekends as well, although I suggest you attend one in a city known for its
startup culture as they can be pretty weak-sauce when they’re in the middle of nowhere. There
are also lots of conferences/events where like minded individuals may be, including TechCrunch
Disrupt, TechWeek, and Technori Pitch. Even co-working spaces can be a decent option once
you get to know the community there.!
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Chapter 15: Scalable Hosting!
This chapter explains how to start out with scalable hosting infrastructure and not let that aspect
of your business end up being your achilles’ heel like it does for so many others."
In Greek mythology, when Achilles was a
baby, it was predicted that he would die
young. To prevent his death, his mother
Thetis took him to a river named Styx, which
offered powers of invulnerability, and she
dipped his body into the water. But because
she held Achilles by his heel, it was never
washed over by the magical waters. Achilles
grew up to be a warrior who survived lots of
great battles. However one day a poisonous
arrow lodged into his heel, killing him swiftly.
Many startups are just like Achilles in the
sense that they have everything going for
them but one major area of weakness. Their hosting infrastructure and ability to scale. In fact,
it’s so common of a problem that many startups have popped up to address it yet it still happens
all the time.!
It seems pretty obvious to worry about the scalability of your hosting and infrastructure but when
you’re a startup founder it’s easy to skip over this critical step. You’re excited to launch and
hosting seems boring. You’re focused on your product and customers. Maybe you’ve built stuff
for clients or small applications that were more like hobbies and had fun/success doing it. But
have you ever built a really popular application with a million plus users? If the answer is no
then you likely need to slow down for a minute and think long and hard about how well your
setup will scale. Don’t let startup excitement and euphoria cloud your judgement.!
The way to solve this problem is like any other such as retirement or figuring out how to put your
kids through college. Don’t wing it, and instead plan ahead. Ask yourself specific hard
questions... are you prepared for an immediate swarm of 100,000 visitors if you hit the
homepage of Huffington Post? Are you prepared for your BuddyPress social network to have
100,000 users at a time pinging your DB like crazy? What does your infrastructure look like at
10,000 users, 100,000 users, 1,000,000 users and maybe even 100,000,000? Start drafting a
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plan so you have the pieces in place, whether they be experts in scalability or hardware
The pragmatic way to tackle this is to assume your startup is going to blow up in the media, and
then figure out a way to get affordable infrastructure and systems in place now that can scale up
to handle that. That means regular shared hosting is probably out. It doesn’t scale very well, and
migrating to dedicated hardware is a pain; there’s potential for downtime, and most shared
hosting caps your # of “workers” which means your users will get timeout errors or the site might
go down if you’re getting serious traction.!
Now going out and leasing a cluster of servers for $5000/mo on your credit card is what the
poor folks in the olden days had to do. When I talk to people who founded companies in the late
90s and early 2000s and they tell me what their infrastructure costs were I literally can’t believe
it. There wasn’t “virtualization”, “grids”, “containers”, or any of this other cool stuff. It was go big
or go home. Fortunately a lot has changed since then.!
Your best bet is to start out with a VPS with a dedicated DB. By having a VPS, you have enough
dedicated resources and horsepower to handle the traffic waves you’ll get starting out.
Combined with a dedicated DB it’ll take you confidently up into the low 7 figures in terms of
visitors. Because you have a dedicated DB, you can then scale that up along with your VPS
resources so that they can grow together. Amazon is the most popular place to host for
scalability these days, and for good reason. If you’re built on top of WordPress then we’re an
excellent choice since we’re layered over top of them. If your startup isn’t built on WordPress
then you can use something like Heroku, which makes Amazon more user friendly. Running
direct on Amazon isn’t the easiest thing in the world. Their pricing calculator alone is enough to
make most non-sys admins want to faint.!
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Chapter 16: Founder Writing
In this chapter we’ll talk about two things you likely hated in school, grammar and spelling. You
might think it doesn’t matter if you have poor grammar and spelling as a founder, but trust me, it
does. I’ll explain why it’s important to have good grammar and spelling as a founder as well as
the most common mistakes, so you can avoid looking like a fool.!
You’ve graduated from school and think grammar and spelling
are behind you. You’ve got spell check and other crutches you
lean on when composing things in Google Docs, Microsoft
Word, and even your e-mail client. However, those tools are
just that, crutches, and they aren’t perfect. In fact, they’ll let
more things slip by than you could ever imagine. Otherwise,
we’d stop teaching grammar and spelling in schools and just
let those take care of it all. Maybe some day they’ll be perfect,
but until then you’d better brush up.!
Let’s say you’re thinking about raising funding for your newly
launched WordPress startup. You’ve met an investor at a
conference and things went well. They give you their e-mail
and ask that you reach out when you’re back in your home
state. You’re excited. They’re excited. Your dreams are about
to come true.!
However, you send them an e-mail that’s littered with grammatical errors. The VC is likely well
educated and probably has pretty good writing skills, even if it’s just an associate and not a
partner. They see you continually use “your” when you mean “you’re”, and they use this the
same way as they use the university listed on your CV; they use it as a signaling mechanism.!
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So the associate or partner gets to the bottom of your e-mail and now thinks you are a moron,
or at least write like one. Not to point out the obvious, but this will not increase your chance of
getting funded. In addition, this isn’t the only scenario where you’ll reflect poorly on yourself with
mediocre writing skills. In fact, this same signaling mechanism will be used anytime you publish
a blog post, send an e-mail to a prospective partner, or reply to a current client. If they’re up on
their writing skills and you aren’t, it’s the same as if you use jargon incorrectly or make other
mental gaffes. To be clear, we’re not worried about texting and tweeting. Savvy people
understand that grammar and spelling go out the window when composing those due to the
character restrictions.!
Speaking of these errors, if you use the incorrect form of a word (e.g. “your” instead of “you’re”)
is that technically a spelling or grammar error? Most people don’t know the difference, because
it’s kind of confusing. Grammar is the set of structural rules governing the composition of
phrases, clauses, and words. Spelling is using the correct letters and diacritics in a word.
Diacritics are just symbols and accents, so don’t freak out. So even knowing that, what kind of
mistake is the above?!
We used incorrect letters and symbols but we also used the word incorrectly in the sentence.
The answer is pretty simple if you think about it. If you meant to type “you’re” and accidentally
typed “your”, then that’s a spelling error, because you knew the right grammar but you
accidentally misspelled the word. If you thought you were correct in using “your” and you
should’ve used “you’re”, then it’s a grammatical error. The problem is that for the recipient, it
doesn’t matter. It’s impossible for them to know what you intended to type, and chances are
they’ll assume it was grammatical in nature.!
Luckily there are some common mistakes that nearly everyone makes and just knowing these
will solve quite a few of the gaffes you might be making.!
This one is pretty simple, but it’s the one I see most often. The word “your” is used to describe
something that belongs to someone. An example use might be.... “Where is your phone?”!
The word “you’re” is a contraction and is short for “you are”. It might be used as... “You’re going
to be late!”!
Once you understand this rule you’ll start noticing how many people e- mail you things like “Your
going to be late” and it will drive you nuts.!
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2. ITS VS. IT’S!
This one is very similar to the one above, and might be equally abused. The word “its” is tricky
because it’s possessive but doesn’t require an apostrophe. So a correct usage would be
something like... “Your phone loses its charge quickly.”!
Many people would type that using “it’s” thinking they’re being correct since an apostrophe often
corresponds with possessive form. The word “it’s” should only be used if you’re trying to use the
contracted (shorter) version of “it is”. So a correct usage might be something like... “It’s raining
This one seems really obvious, but still is tricky for some and is the mistake I understand the
least because it’s easy to remember. The word “two” means the number 2, and the word “too” is
meant to be a substitute for “also”. The word “to” with one letter o is used as part of a verb or
preposition. A correct sentence using all three might read something like... “We have two tickets
to the movie tonight, and all our friends will be there too.”!
The word “lose” means to have lost something whereas “loose’ means it doesn’t fit tight. So you
have “loose clothing” and hate to “lose” at blackjack. Pretty easy.!
This is one of the easier ones as well. The word “affect” is a verb, whereas “effect” is most often
used as a noun. So using them both in a sentence might read... “Having excellent writing skills
will affect your net worth in a positive way, since the effect of poor grammar on a person’s
income is well documented.”!
Notice that the first usage (affect) is being used as a verb, as we are talking about an action
(changing net worth), whereas the second usage (effect) is the result of that action (noun).!
Everyone and nobody are both singular nouns, and so you use them accordingly. They mean all
people and no people respectively. Correct use in a sentence might be something like...
“Everyone was laughing, but nobody had tears.”!
On the other hand, “every one” and “no body” mean each person and no person’s physical body
respectively. A correct use in a sentence of those might be... “We wish each and every one of
you congratulations on the race, and especially you Jane, as no body can take the kind of
physical strain that yours can.”!
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A comma should be used to indicate that the reader should take a breath, before the end of the
sentence. Many people use commas when they should be using periods. If the second half of
the sentence can stand on its own, it should be separated with either a period or semicolon. So
when should we use a semicolon instead of a period? There are two situations that warrant
them. One is for long lists like... “My favorite places are Bangor, Maine; Hartford, Connecticut;
Boston, Massachusetts; and Newport, Rhode Island.”!
You can also use a semicolon when separating closely related independent clauses like... “My
grandmother seldom goes to bed this early; she’s afraid she’ll miss out on something.”!
This one is pretty simple to keep straight. The word “their” indicates possession. So an example
use might be... “Their website is amazing.”!
The word “there” is a noun. Using the noun form would be something like “Manhattan is
amazing; I wish I could move there.”!
The final form “they’re” is short for “they are” and would be used in a sentence like... “I love
powdered donuts, they’re the best.”!
The word “than” is used to compare two things. So you might write... “X is larger than Y”
whereas “then” means something that is about to happen or an element of time. You might
write... “First I eat breakfast, then I take a shower.”!
This one seems hard but it’s actually easy. You use “myself” only when referring back to yourself
in the sentence where you have already used “I”, so a couple examples might be... “I myself
hate radishes” or “I can’t live with myself.” If there’s no I present earlier in the sentence, then
stay away from using “myself” and you’ll be fine.!
To figure out whether to use “me” or “I”, just remove the other person/ name from the sentence
and see which one works. Here is an example... “Steve and I both love soccer” and if we
remove Steve we see that “I love soccer” still works so it’s correct. If we had used “me” it would
be “Me love soccer” after removing Steve and that doesn’t sound very good.!
The word “me” is an object pronoun, which means that it refers to the person that the action of a
verb is being done to, or to whom a preposition refers. So a correct usage would be... “She
needs to talk to Joe or me” even though you might have thought it should have read “She needs
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to talk to Joe or myself”. We know the latter is wrong because “myself” usually refers back to “I”,
and there’s no “I” in that sentence.!
A “compliment” is something you receive when someone tells you that your shirt looks nice. A
“complement” is something that goes well with something else. Example sentence “I got a
compliment from Sarah on my tie, as she said it complemented my shirt well.”!
Only humans (or Siri) can give compliments. If it’s something else, then use the other version.!
This is everyone’s least favorite, and maybe the most challenging to get right. I still mess this up
from time to time, and that’s because both of these are pronouns. Whom is used when you’re
referring to the object of a sentence, and “who” is used when you’re referring to the subject.
Starting to get confusing, right?!
So just use the trick I learned in undergrad. When deciding between “who” and “whom”, ask
yourself if the answer to your question would be “he” or “him”. If the answer is “him”, then
“whom” is the word you want to use. If the answer is “he”, then “who” is the word you want to
Here are two examples..."
Whom do you love? = Answer might be something like “I love him.”!
Who stepped on the cat? = Answer might be something like “he did”.!
Memorize this above list and you’ll be on your way to writing like a pro, or at least close enough!"
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Chapter 17: Wireframing!
In this chapter we’ll talk about something a lot of founders hate to do and like to skip over,
proper wireframing."
I’ll explain why it’s important, the various ways to do it, and even review some tools that you can
try out. Yes some blogs or self-proclaimed gurus will tell you it’s a waste of time and it’s better to
just start throwing stuff together. I’ll make a case for why that’s a stupid idea (unless you’re at a
hackathon or something where it’s literally infeasible). Even startups at Y-Combinator wireframe,
as partner Garry Tan has posted on Quora that he often helps member companies with it.
They’re on a time crunch to present at Demo Day and still find time for it, and you should too.!
Let’s start with why it’s important to wireframe
your idea/app before building it. Is it really
worth all the time and hassle, and spending a
few bucks a month on a SaaS product instead
of just diving in head first and plowing away?
The short answer is yes, without a doubt. Let
me explain why.!
It’s faster and cheaper to pivot and adjust as
you go. If you think you’ve got your MVP in
your head and nothing will change between
now and when it’s ready for beta, you’ve got a
wakeup call coming. The end result (even an alpha or beta) almost never ends up matching
what your initial idea or mental wireframe was. Oh, it would be so nice if it did. However, you’ll
learn things or run into walls along the way and change how things should work quite often. In
fact, it’s a great exercise when you’ve launched to briefly look back and see how far apart the
two are!!
So rather than scrapping tons of code and design assets you either created or hired someone to
create (either way it cost you something, time or money), it’s much more intelligent to work
through the flow using wireframes and scrap or adjust those. So not only is it cheaper and a
better strategy, it’s also much faster. When launching something for yourself or even a client,
time to market is extremely important. Do you want to re-wire that one signup process or rePhotoshop and code it? That little voice inside your head just answered that for you.!
So aside from being more efficient (least waste of effort), it’s also more effective, and there’s a
difference. Wireframing is more effective because it’s more adequate to accomplish the
intended or expected result, a great web app and/or site. You get to display the site architecture
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visually and spend the proper time evaluating the flow. If you’re building the real thing on the fly
you’ll be spending so much time doing so that you’ll tend to cut your review process short.
Wireframing also pushes usability to the forefront because you’re working with a simplified
layout. Rather than being wowed by a beautiful design, you look at your flow and layouts more
objectively. Things like ease-of-use, naming of links, conversion paths, navigation/feature
placement and image locations tend to stand out more and be easier to evaluate. Think back to
anatomy class, and how they introduce it to you via a skeleton. Repeat after me... the wireframe
is my skeleton to make my application flow like water.!
Another side benefit we often forget is that wireframing is more versatile and can be done by
nearly anyone on the team. Certainly some people are better at it than others and in larger
organizations there is someone who does only that, however if the designer is tied up working
on logo concepts and the developer is doing research on hosting and long term architecture, it’s
the perfect chance to help out if you’re the hustler/ COO on the team. The hustler can work on
figuring out which wireframe tool to use and start making progress, and then share things with
the team as they go along and revise accordingly. A good idea is to whiteboard or sketch on
paper the basic layout idea/concept, and then tear someone loose on the actual process. Not
every team is going to have a former UX/UI person from Google, so try to figure out who has the
time and brainpower to tackle it.!
All of the above is critically important if you’re a solo founder and are going to be contracting out
your design/dev. You will save a ton of money on revisions since you’ll tackle those during
wireframing, and not only that, the quotes you get from freelance devs and designers will be
much less than they would’ve been if you pitched them an abstract idea or showed them
something on a napkin. When that happens, freelancers put some padding into their quote
because oftentimes they really don’t know what they’ll be building or how much work it will
entail. This is probably the #1 reason contracted out projects fail. Most designers and devs tell
me I wouldn’t believe what some of the project outlines they receive look like. Sometimes it’s
literally just a paragraph of text!!
Online the commonly cited cheesy line often goes something like... “Would you build a house
without a blueprint?”!
So now that we’ve established that not skipping wireframing is both more efficient and effective,
let’s figure out how to do it and then in the next section we’ll look at some of the more popular
tools to make it easy on us. Rather than giving you a long spiel about how to do it as there are
various approaches out there, I’ll link to some helpful articles you can read later that describe
the process in great detail.!
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Here are some worth taking a look at:!
• A Beginner’s Guide to Wireframing from Tuts+!
• How to Wireframe a Web Application by Culttt!
• Prototyping vs Wireframing by Usability Geek!
• UX Apprentice!
At a high level the idea is to look for inspiration, figure out the process that works best for you,
and pick your tool to begin. Some choose to do their wireframes in a very basic fashion like the
picture above, and some choose to add colors and even real design elements. How detailed
you want to get will depend on how much time you have to spend on it and personal preference.
I kind of like to do mine somewhere in the middle between basic skeleton and full blown
designed prototypes.!
Thankfully a lot of companies have popped up in recent years offering free or affordable SaaS
tools to get the job done. In the old days it was literally PowerPoint, Keynote, or some fancy
design program that ran on your machine like Adobe CS. However, you no longer need to try
and re-work a presentation tool or download expensive software to create excellent wireframes.
That means there is literally no excuse these days to skip it other than pure laziness.!
Everyone likes free. In general the free tools are not as sophisticated as paid tools but like
anything else some free tools are better than some paid ones. I personally prefer more
advanced paid tools as they save tons of time and have more flexibility in terms of sharing/
collaborating which you’ll find useful unless you’re flying solo and building something pretty
• MockFlow has a free plan that limits the # of projects and users. Their focus is on making
the process super easy. Their paid plans are affordable.!
• Cacoo has a free plan that has some limitations as well and some affordable paid plans.
Their focus is on drawing stuff, so wireframes, flow charts, diagrams, and more.!
• UXPin has a free 30 day trial and in addition their unlimited plan is so cheap that it’s
almost free at just $15/mo.!
• Gliffy has a free plan and their paid plans are also so cheap they might as well be free.!
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• Balsamiq – this is probably the most successful and well-known paid tool that focuses
exclusively on wireframing, at least in my opinion. They offer both web and downloadable
• Mockingbird – this is another popular and super affordable option. It used to be totally free
but they’ve since changed that. You can link mockups together to make a clickable
• Axure RP – they allow you to download their software for free and evaluate it for 30 days.
Axure is a little more advanced in that it allows you to create clickable wireframe
prototypes. I personally prefer online SaaS offerings, but some people swear by it and I’ll
probably download and try it out in the near future to see if it’s worth the precious space on
my SSD.!
• Omnigraffle – this is another hugely popular option and it is broader than just wireframes
but many use it for just that.!
• Justinmind – this app focuses on helping you create clickable wireframes and prototypes.
You can start with images, their templates, your own wires, or even from scratch.!
• Lucidchart – this app is a tool that many use for wireframes, but can also be used for flow
charts and diagrams.!
Personally, for mobile prototyping and wireframing I swear by but this series is geared
towards WordPress and web apps, and for that I like to pair Balsamiq (which focuses purely on
wireframing and not prototyping) with a tool (Solidify) to make the wires clickable, and below is a
list of other apps to do just that.!
• Solidify – this is my favorite application for this aspect. They have done an excellent job of
balancing features for power users with simplicity. You can even run tests with real users
and get feedback before you build something that sucks!!
• – this application has a very simple interface and lets you upload your wires
and make them clickable.!
• InVision – this app focuses largely on team collaboration/feedback and hence is used by
household names like PayPal, Yammer, ZenDesk, Adobe, Zappos, Oracle, Dell, and
Yahoo. You simply upload the wireframes or even design comps and then make them
interactive and collaborative. If you have a ton of stakeholders involved or a really large
starting team, then this one might make the most sense.!
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Chapter 18: Adwords!
In this chapter we’ll talk about something nearly every startup uses as part of their marketing
arsenal, Google AdWordsTM. Yes, I agree it should be written as “Adwords” and that “AdWords”
looks goofy much like FaceBook would, but oh well. Zuck, please shoot Larry an email and get
that resolved."
Everyone thinks they’re a pro when it comes to AdWords, but
here’s a little secret, most people suck at it. How do I know?
I’ve managed maybe fifty plus campaigns over the past ten
years and I’ve seen it all. I took the time to study and sit for
the certification exams, which aren’t nearly as hard as passing
the California Bar, however they are no joke. Yes, you can
attempt to cheat on them by running two laptops side by side
or hacking your OS, however you’ll just be cheating yourself.
Not learning the info kind of defeats the whole point of taking
It’s easy to think that you can do AdWords. Programmers do
this a lot. Hey, I can write code in Python, I can do anything including AdWords! Um, not really.
That’s like a lawyer saying they can win civil suits so they definitely can tackle wireframing
without taking the time to learn. Just because the UI is friendly-looking and it appears there
aren’t that many buttons compared to Photoshop doesn’t mean it’s not a powerful system, with
huge gaps in knowledge between beginners and those who know every single setting both in
theory and in practice. If you want to call yourself an AdWords expert, study for and ace the
The second mistake I see all the time is that of incorrect targeting. By default, AdWords will do
what’s best for AdWords (in financial terms) and hence its parent, Google. That’s no surprise
and I don’t blame them. It’s the user’s job to know how to set things up. Google is publicly
traded and has to meet or exceed quarterly estimates. It’s not that they’re evil now, it’s that
they’re huge.!
So how does AdWords do what’s best for AdWords with respect to targeting? Well, a lot of the
settings by default are pretty broad. Location might default to entire world, devices to all types,
and so forth, even if your product is only applicable to your home country and your mobile site
sucks. Do you want all those extra clicks that probably won’t convert? No!!
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So here’s a tip. Make a list of all the countries that your product can be sold in and where the
average purchasing power makes sense for what you’re selling, and target those. For example,
we don’t target Nepal for enterprise hosting terms because although they might use WordPress,
they don’t have many enterprises (if any) and a decent apartment rents for $150 per month
(thanks House Hunters International). So the purchasing power isn’t there and neither are
enterprises. Even a $400 VPS will seem like a fortune to them. But sadly most people who
setup AdWords accounts don’t think about stuff like this. If our mobile site isn’t as easy to use as
our main site (our soon to be launched new site will take care of that) then we decrease our bids
for mobile accordingly by say 75% since we’re only willing to pay 1/4 as much for a click as we
are for laptop/desktop.!
In addition, targeting China and India is tricky as well. Many advertisers get all excited because
they comprise nearly half the world’s population and target them without realizing the huge
disparities in wealth between the haves and have nots. There is a lot of talk about a booming
middle class in each however they are all concentrated in a few cities respectively. In India,
most of the wealth is in Bombay/Mumbai, Delhi and Bangalore (trust me, I’ve been there). In
China, most of the wealth is concentrated in the cities of Shanghai, Beijing, Tianjin, Guangzhou,
and Shenzhen (trust me, I’ll be in China among other countries next week).!
The people in the cities have 10x the wealth of the rural population, some of whom do have
internet. So the city worker’s apartment in downtown Shanghai might be $1000 USD per month
and the rural farmer’s rent might be $100/mo. In the U.S. we have disparities in wealth between
the large cities like LA/NYC and say rural Kansas, but the difference is that the rural family in
Kansas has rent of $1000 whereas the family in LA might pay $3000. That means the rural
family still has significant purchasing power to buy most products and services. All of this
doesn’t account for the language, cultural, currency, timezone, and shipping barriers. Make sure
you’re bidding only where people can afford and more important are definitely willing to buy your
products. If you are going to target India and China, then be sure to try and narrow your bidding
for each to their major cities. You don’t want the rural farmer who lives on $100/mo clicking your
ads at $5 per click for a SaaS product that costs more than their rent.!
Set it and forget it. Ron Popeil made a great living off of it, but it doesn’t apply to AdWords. Yes
you can use their automated bidding feature to maximize your clicks per budget but that doesn’t
mean your work is done after setup. You have to continually refine things such as trying new ad
variations, new keywords, eliminating bad keywords that are triggered via broad match by using
negative keywords, and more. You have to monitor and review your account at least twice per
week, typically Monday and Friday are best in my opinion, to make sure nothing funky is going
on. Managing an AdWords account properly takes a good 5-10 hours per week. The funny thing
is that if your budget is high enough, it’s actually cheaper to pay someone say $1000/mo to
manage your account than to just set it and forget it. They’ll save you that much or more in
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crappy clicks and if they’re good they’ll increase your CTR and conversion rate so you’re both
spending less and making more than you would have been without them.!
If you want to run your own AdWords for your company, don’t be a doofus and think anyone can
do it. Study for the exams and ace them. If you don’t have the time, hire someone who both
does and knows what they’re doing. Like most things in life, winging it is really just a waste of
your time and money.!
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Chapter 19: SEO!
In the last chapter I talked about the importance of running AdWords properly, and why most
people should either study for the exams or outsource managing it. This time we’ll talk about
something equally important and perhaps more elusive, SEO."
I hear this thrown around a lot both in person and
on the web. In fact, I’ve been hearing this for about
ten years now. Every time Google pushes out a
new update or major change in their algorithm,
people start chatting about this as if it’s actually
going to occur. I would like to point out the obvious;
until Google stops serving organic results alongside
AdWords sponsored slots, SEO will exist. After all,
according to Wikipedia SEO stands for Search
Engine Optimization and they define it as “the
process of affecting the visibility of a website or a web page in a search engine’s “natural” or unpaid (“organic”) search results.”!
Yes, the way you obtain good rankings in the natural/organic results is an ever moving target.
Something that worked in 2005 won’t necessarily work in 2014. But that doesn’t mean the entire
process or art is dead. It just means it’s always changing. In the past couple of years, it’s meant
that tactics that many would call spammy or gaming the results no longer work. Whereas in the
past you could manipulate your way to the top by doing some fairly odd stuff like hiring
companies to acquire thousands of inbound links to your site for no other reason than to just
“have more links”, nowadays you’ll have to do stuff that actually requires hard work.!
There are a lot of tactics that no longer work (or never did), and I’m here to make those known.
Don’t waste your time with these as you’ll only expel time/money with little to no return. You’ll
also clutter up the web with a bunch of junk, and the place is already a mess, so it doesn’t need
help with that.!
• Hire low-wage offshore firms on Elance et al to get you tons of links each month.!
• Crappy links are worth nothing and these days can actually even decrease your
rankings. So you’re doing negative SEO in a sense if you go this route.!
• Put keywords in the background area or try to hide them on the page using a font which
matches the background color.!
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• Stuffing as many keywords as possible into your meta keywords, title element, meta
description, or even body copy.!
• Creating your own “network of sites” that all link to each other solely for the purposes of
gaining rank.!
• Google considers these link farms and doesn’t like them. Even if you game the IP
addresses to be different C blocks you might still get busted.!
• If you’re unsure what C block means, is in the same C Block as because it has the same numbers for the first 3 series, with only the 4th
series differing. That means they reside close together, i.e. are internet neighbors.!
• Buying “sponsored links” on various websites. Even if they disclose it’s a sponsored link,
it’s a dangerous game to play unless it’s a sponsored post and the blog is extremely well
known. Even then, only link to your site using branded terms to be safe.!
• Cranking out lots of short 300 word articles. SEOMoz did a recent study proving that
longer articles/pages rank better.!
• Trying to “funnel” PageRank and using site wide footer links to manipulate rankings.!
• Cloaking, which is delivering different content to humans versus search bots.!
• Creating doorway pages that redirect to your site.!
• Listing your site in every web directory under the sun.!
• Submitting articles to tons of “article submission” sites that are full of junk.!
• Having all the links pointing to a page be “keyword rich” in terms of the anchor. This now
looks spammy to Google.!
• Acquiring tons of “social bookmarking” links.!
• Doing proper keyword research and finding potential topics/keywords that you could target
your site content towards.!
• Making sure Google can find, crawl, and index your site.!
• Following Google’s Webmaster guidelines for SEO and not doing anything crazy without
checking to make sure it’s not frowned upon.!
• Having an XML Sitemap that is regularly updated, as well as an HTML Sitemap as a
• Using an SEO plugin like Yoast to keep you on your toes so you don’t miss anything
• Getting inbound links via press that you earned the right way, by being interesting and
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• Creating lots of unique and useful content. In other words, turning your blog into a content
machine, but not in a spammy way.!
• Doing quarterly or monthly site audits with tools like Integrity for Mac, Screaming Frog
SEO Spider, and more.!
• Doing quarterly or monthly inbound link audits with Webmaster Tools and using Link Detox
to identify harmful ones.!
• Create and grow your social media presences on places like Twitter, Facebook, Google+,
and LinkedIn.!
• Monitoring your rankings with a tool like Authority Labs and seeing what works and what
The game may have changed, but it’s still being played. Just make sure you’re playing it the
right way and you’ll be rewarded. If the above sounds like too much work and you have more
money than free time, consider hiring an SEO agency. Here are the ones that SEOMoz
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Chapter 20: Branding!
This chapter is about branding and why most people don’t seem to get it. We’ll sort out the
difference between advertising, marketing, and branding, and then explore why creating a brand
is important."
If you can’t quickly contrast and articulate
the difference between the above three
disciplines, then you’re not alone. In fact,
most people can’t. They think they’re all
kind of one and the same. So what is the
difference? Let’s define advertising and
marketing quickly so we know what they
are first.!
This is the one that’s probably easiest to define. It’s any paid announcement to the public aiming
to get them to buy what you’re selling, whether it’s goods or services. If you’ve ever watched
Mad Men, then you know advertising. If you haven’t, then try binge watching season 1, since it’s
fantastic and also educational. The methods and tactics may have changed since the 1960s,
but many of the thought processes and strategies have remained the same. I worked inside the
largest advertising company in the world, WPP, and I can assure you the show is surprisingly
accurate (except for the in office romance and drinking of course). Things that fall into
advertising in the modern world include ads for TV, radio, and print; plus the more recent
developments such as AdWords, sponsored tweets, banner ads, text-link advertising and more.
In simple terms, you send a desired message towards a desired audience using a particular
medium (e.g. satellite radio).!
This refers to business activities that aim to bring together your company with buyers of your
product. So it’s a bit more broad, and that means advertising is a single component of the
marketing process, but not the only one. In a large company in fact, they will have a marketing
team that corresponds with an outside advertising agency. At P&G for instance, each brand
(e.g. Swiffer) has a “brand manager” and a marketing team at their disposal that comes up with
the marketing strategies, some of which are then relayed to the advertising agency to broadcast
across particular mediums.!
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For example, the Swiffer brand manager and marketing team might decide that a good
marketing strategy is to giveaway 10,000 mops via a sweepstakes to build buzz for a new
design/feature. They might contact the advertising agency with this idea who then comes up
with an ad campaign detailing their thoughts on the best way to get the word out. Another use of
marketing would be to come up with ideas for the packaging on a product to further enhance the
brand or drive repeat business. That’s why some packaging will include a coupon you can tear
off or something similar. You can thank the marketing team for that.!
In a large business, the most expensive line item for marketing will typically be advertising,
followed by PR, and then other things like market research or community involvement will follow
suit. So marketing can have many line items and advertising is just one of them.!
A brand is anything that helps get potential customers to become loyal to your product or
company. This can include company names, logos, icons, symbols, taglines, and even design. A
lot of newbie entrepreneurs suck at branding, and it’s not their fault. It took me a while to truly
understand its power, and I had it hammered into my head in b-school for 4 years in undergrad.!
Here’s how you can tell if someone doesn’t get branding...!
• Terrible company name!
• Shoddy website design!
• Logo looks like it was made for $10!
• Products/features aren’t named in a memorable way!
• Domain name is terrible!
• Little to no usage of trademarks, whether TM or ®!
Take a look at your own startup and be honest. Are you failing the above test? Have you created
a real brand or just a pile of s***?!
When someone mentions a household name or well-known brand, you should have
expectations and experiences come to mind. McDonalds? Fast, unhealthy food. Apple? Quality,
reliability, premium, expensive. Walmart? Low prices, long lines, zero people to help you find
anything. Google? Engineering, scale, intelligence. WordPress? Open-source, free, scalable,
ubiquitous, flexible.!
Many people think branding is overrated, but here’s some data to back up my claim that it’s not.
Here’s Forbes reported valuation of the top 5 brands are as of this writing, and keep in mind this
doesn’t include company assets, IP, etc. it is purely an estimate of what the trademark/ brand is
worth if the company wanted to sell it. The next time you dismiss branding, think back and
remember this list.!
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1. Apple $104.3B (market cap $545B)!
2. Microsoft $56.7B (market cap $337B) !
3. Coca-Cola $54.9B (market cap $179B)!
4. IBM $50.7B (market cap $186B)!
5. Google $47.3B (market cap $379B)!
Notice something interesting in the above list? Coca-Cola’s brand is more valuable than both
IBM and Google, however their market caps are much larger. Also, notice that their brand’s
value is nearly as much as Microsoft’s, yet MSFT has nearly twice the market cap. The CocaCola brand is one of the best ever created, and I’m saying that objectively as someone who
prefers Pepsi (Pepsi Next to be specific). After all, it’s just sugar water in a can and somehow
only Pepsi has been able to compete globally. IBM and Google have moved mountains
technologically to get where they are, and some company with a piece of paper in a vault in
Atlanta has the more valuable brand?!
Ok, so now we know what the differences between advertising, marketing, and branding are,
and we know that Coca-Cola are apparently branding geniuses, what do we do with this
newfound information?!
First, think long and hard about what you want your startup’s brand to convey, and make sure
your company name, tagline, logo, icon, design, and more reflect that. Second, come up with a
marketing plan and strategy, making advertising just one piece of it. Run your brand by the
smell test given above and see if you measure up. Then try to figure out how to reverse
engineer Coca-Cola’s branding. I’m still working on that myself.!
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Bonus Chapter: From the desk
of Joshua Strebel!
Below you will find a series of essays and musing from Joshua Strebel, the co-founder and CEO
of Pagely."
Joshua Strebel!
A 10 year veteran of the web industry leading teams in design,
marketing and product development. Psychologically
unemployable. Co-Founder and CEO of Pagely.!
Early in my career I hired a professional business coach to aid me on my journey from there to
here. He practiced in an area of self improvement called Neuro-linguistic-programming or NLP.
Essentially this is a method of hacking your thought and behavioral patterns, or so they claim. It
worked for me, but your milage may vary.!
One of the learnings I gained from my sessions with my coach was to better understand the
causation of procrastination and a method to overcome it.!
When we procrastinate we are essentially telling ourselves that the cost (whether in time,
emotional or physical effort) of completing the task at hand exceeds the penalty/consequence of
not completing the task at his point in time. We have made a cost/benefit analysis and
determined that we can let the task slip as the the consequence is not yet severe enough for us
to act. As en example: You promised that client the comps would be delivered by Friday, and it’s
only Monday, so you put the task off as the consequence of delay at this point is small. !
However come Thursday the consequence of non-delivery rises and the mindful person takes
action to avoid the unfavorable outcome. The slacker will sometimes wait even longer having to
work right up to the deadline to deliver.!
This is part 1 of the lesson from my coach: Humans are primarily motivated to avoid pain.
They only act when the pain of not acting exceeds their comfort level. (procrastination)!
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We all know that person that despite their good intentions never seem’s to elevate their level of
income, job title, or personal wealth. They coast along and then work really hard at the last
minute to hit the deadline or pay their rent. When their proverbial ass is out of the fire they then
relax their effort and slide back down. Their ‘achievement’ graph would look like this. The peaks
and valleys are balanced over time. They only put in as much effort (peaks) as possible to avoid
the pain (valleys).!
Top producers and high achievers don’t seem to procrastinate by in large. They do seem to be
on an upward trajectory over time. Yes they may have setbacks but their peaks are consistently
higher than their valleys. Their achievement graph would look like this.!
Overtime they are consistently building upon their results. They have setbacks like everyone
else but they seem to keep reaching higher ‘peaks’ as time passes. So what’s the difference
between the two?!
Part 2 of the lesson: Humans often achieve more when motivated towards pleasure (pulled
towards a pleasurable goal) rather then pushed towards a goal by pain avoidance.!
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Example of moving towards (pleasure) motivation: You have a desire to take a really nice
vacation. You picked a nice scenic place, founds activities you will enjoy, and have a friend or
loved one to join you. The mere thought of this vacation makes you smile. Between you and this
vacation is mountain of files on your desk, but you know as soon as they are done you can turn
on your email vacation auto-responder and start playing invisible around the office the last day
or two before you leave. To everyone’s amazement, and maybe even yours, you crushed that
stack of files, got them turned in 3 days early and took off an extra day early. !
What happened? How did you suddenly get 500% more productive at your job? The pleasure
feeling invoked by your upcoming vacation pulled you towards the goal of completing the stack
of files. You were motivated by the reward rather than the consequence of failure.!
This to be a great little brain hack. I found that I could just anchor my thought patterns in what
will I get out of this instead of what will happen to me if I put this off . The cost benefit analysis
was always returning true in favor of; I gain more benefit by getting this task done, then I do by
letting it slip. My procrastination habit was severely curbed when I made this par tot my life.!
Part 3 of the lesson: Use both modes of motivation to your advantage. "
Pain avoidance is a very powerful (likely the most powerful) form of motivation and you can and
should use it. However it will only work long enough to get ‘your ass out of the fire’. The next
step that most people miss is to anchor your motivation in something pleasurable to pull you UP
to the next level. !
Personally, I mentally frame things like this: !
• If I hustle and finish X task I can do a 3 day weekend and take my family on short
vacation. (the family time is a powerful motivation for me. More so then the pain of
completing X task)!
• I’ve always wanted an Audi R8, and I’m going to buy one soon. There are many steps and
tasks between now and then, but this mental anchor of owning a fine sports car one day
pulls me towards that goal, thus making the day-to-day grind easy.!
• If I get these dishes done, and my clothes put away, then I can relax and watch some
NBA. I’m not going to let a few dishes and laundry keep me from a glass of scotch and
Use mental anchors of pleasurable outcomes/things/events to pull you towards the goal instead
of just doing enough to avoid the pain or consequence of inaction.!
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Since times of old the kingdom of WordPress has been governed by Automattic. Times are
good, most people are happy, WordPress has dominated the interwebs.!
In the future I suspect the balance of power may shift. Heresy!!
Just consider the underlying market fundamentals.!
Godaddy+(mt), Bluhost/Hostgator/ASO (EDI), Dreamhost, Siteground, et all. combined are
probably $750MM to $1B in annual revenue from hosting WordPress. !
Pagely, Pantheon, WPE, Kinsta, Flywheel and the 20 other niche ‘managed’ players, another
$50-80MM in annual revenues from managing WordPress.!
AWS, Azure, Digital Ocean, Rackspace et all. are banking cash hosting WordPress, even when
not actively targeting the market segment.!
WooThemes, iThemes, EDD, and the other plugin/themes players, another $20-$40MM in
revenues from building the things every WordPress site uses.!
10up, CrowdFavorite, Humanmade, Web Dev Studies, and the other large agencies, another
$20-$40MM in revenues developing the marquee sites built on WordPress.!
These companies, collectively, are the WordPress economy. What happens when they
decide to get on the same page and work together. !
I am not advocating for this, but it will be interesting to see how it unfolds if these companies
recognize and harness the power they have.!
Pagely as you may know it today began as a single PHP file containing about 500 lines of code.
Our current CTO, who worked with me back then as well, hacked together a MVP to install
WordPress onto a Plesk server, with a handful of plugins and a few custom themes. This was
the birth of the Managed WordPress hosting industry that is now driving hundreds of millions of
dollars in yearly revenues from all the players. That was in 2006. Here at the end of 2014,
Pagely is by all accounts a success with an amazing list of clients, talented and dedicated staff,
and revenues in the several millions. All without a single penny from investors.!
There are somewhere around 252 million seconds between 2006 and today, and that was 252
million times I could have quit. However lets get realistic, there were probably at least a dozen
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times I should have quit. All signs were pointing to quitting; give up, walk away, try something
Throughout the life of a your company or career you will be faced with many chances to throw in
the towel and walk away. How do you when that time has come?!
• Are you broke? Like broke broke.!
• Do you have any customers left?!
• Are you getting any new customers?!
• Do you see a future for the product/company?!
• Do you have the bandwidth to pivot?!
• Are you just not in love the idea any more?!
• Is the competition eating your lunch and throwing the wrappers back in your face?!
Anyway that you answer those questions, it does not matter. It only matters if you do or don’t
give up. !
As recent as early 2013 I was in one of my monthly CEO roundtable meetings. When it was my
turn to give an update I proceeded to lament the state of the WordPress hosting industry, shared
that sales were mostly flat the last quarter, new competitors were sucking up the low-end of the
market, and vented my frustration around the poor performance+reliability of our key vendor. I
genuinely asked the question to the group if it was time to try something else. !
A colleague of mine who has built and sold hundred million dollar companies looked me in the
eye and told me: “What are you going to do? Quit or claim what is yours?”!
A few months later we hired our CTO, started the switch to Amazon, adjusted the pricing on our
plans, and doubled down on delivering the best quality of service and the best performance
available for WordPress. We got our mojo back. Soon after we were growing at a solid pace
again, announced our move to Amazon and released new, up market VPS plans and pricing
and began landing very large enterprise deals. Today we are banking double digit month over
month growth (MoM) and leading the field once again. !
Had I thrown in the towel earlier, and at any of the opportunities presented, our company would
not be where it is today. Quitting is easy. Being successful is hard.!
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Or healthcare, or stock options, or anything else listed in an employment contract. !
At Pagely we are a distributed team. Our team is spread all over the world, working different
shifts in different timezones. They are some of the most passionate and dedicated people I
know and I am fortunate to work with them.!
As a business owner have you ever thought about what a conversation would look like between
an employee of your’s and his best friend? Are they going to gush about how awesome their job
is and how smart and talented their co-workers are? Are they going to share with their spouse
that the CEO is a honest person, doing their best to build a company and to take care of
customers and employees. Are they going to say the company they work for is grounded in
integrity on ethical business practices?!
Now think about it. What do you employees say about your company when in private, among
their family and friends.!
How you conduct yourself as a CEO or manager, The words and tactics you employ in your
marketing, how your company culture talks about the customers and the competition in private.
All these things, these intangibles that are not listed on your offer sheets, are informing your
employees on how they feel about the company and people they work for.!
Money makes the world go around, and rewarding employees financially is just the first step.
Making it easy for them to tell other’s about the great place to work is a form of compensation
that we place a priority on. !
Most people would be uncomfortable saying: !
“My boss is a crook, and treats us like shit. Our support team is forced to upsell every
ticket or lose their job, and the our marketing dept. are bunch of lying jerk off’s. But
who cares I’m getting paid mine.”
So don’t be that company.!
Be the company that respect’s the customer as the people that pay your mortgage, are putting
your kids through school, or financing your starbucks habit.!
Be the CEO that when faced with an easy win or the ethical choice chooses the path that his or
her team can respect them for.!
You employees will put in more effort and treat your customer’s better when they have a good
example to learn from at the top of the organization chart.!
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Read the full series and more on our blog.!
Pagely® is Managed WordPress Hosting and The Most Scalable WordPress Hosting Platform
In The World. Come see why WordPress notables and biggest brands in the world trust us to
scale their WordPress sites.
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