No one is successful 100% of the time. Just look at entreprenuers like Richard Branson (founder of Virgin) and Milton Hershey (founder of Hershey’s Chocolate). They are (were) both extremely succesful and yet they’ve also had some spectacular failures (remember Virgin Brides?).
Thankfully we’ve enjoyed a couple successful ideas here at Carsonified on the web app front:
* DropSend was built on a budget, grown to a profitable monthly revenue and sold for a healthy sum of money.
* Our internal event booking web app EventStream has been a big help to the company.
* Matt was a successful small app which didn’t make us any money, but was really fun to build and got us a ton of press coverage. Awesome.
But we’ve also failed pretty badly with another web app called Amigo. We launched it in late 2006 and received some great press. The idea was solid (pay-per-click advertising in email newsleters) but the problem is that we were naive and we thought we could run it in our free time.
Wake up call: you can’t run a web app in your free time.
You can build a web app in your free time, but you sure as hell can’t market it, grow it, maintain it and promote it. Once you build a web app you need to pay attention to all the details. Things like:
1. A/B testing
2. Conversion rates
3. Usability tweaks
4. Email marketing
5. Blogging
6. Networking and sales
So Amigo is going on the chopping block at Ebay so another owner, with time and money, can make some serious money with it. I’ve never sold a web app on Ebay, so it should be an interesting ride. Stay tuned.
Time to build a big app again
So now with three successes and one failure under our belt (well, two if you count DropSend’s short-lived predecessor FlightDeck that I coded in PHP), we’ve learned a huge amount about what makes a great app and what doesn’t.
With that in mind, I’m very excited to announce that we’re building a new web app called Truvay (a play on the Frech word trouver which means ‘to find’). It’s the brainchild of Keir Whitaker and I’m fricken excited about it.
Mike Kus will be designing it and Elliott Kember will be building it and we’ve set up a pretty interesting arrangement with Elliott (as he’s no longer working at Carsonified).
Here’s the rough contract that Elliott has agreed to:
Maintenance
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* Work at least 8 consecutive hours per week every Monday
* Answer all support emails within 24 hours
* Use Basecamp for project milestones and todos
* Use a bug tracking solution (suggestions?)
* Blog at least once a week on Carsonified.com about the development and progress of Truvay, before and after launch. This isn’t a part of the 8 hours of consecutive work every Monday
Ownership
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Carsonified will own all intellectual property for the project.
Financials
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There will be no charge for building or maintenance of the app, but instead Elliott will receive a monthly cut of the revenue. This will be after expenses, which include:
1. Hosting bill (bandwidth, rental, etc)
2. Marketing costs (variable but will include AdWords), which Elliott will be consulted on
3. Bookkeeping
4. One day of Ryan’s time per week for management (normally charged out at £800 per day, but reduced to £300)
Elliott will receive 10% of monthly revenues, after the expenses listed above. If he launches the site on time (3pm April 20th), this will increase to 15% (hat tip to Natasha on that idea). When the site hits $25,000 monthly revenue (excluding VAT), his take will increase to 25%.
His monthly cheque will be determined by a snapshot of the revenue on the 1st of every month at 9am.
If the app is sold, Elliott will receive 10% of the cash price, after lawyer and accountancy costs.
Notice period
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Either party can terminate the contract with one month’s notice. After the one month notice period has ended Elliott will stop receiving monthly revenue and will no longer be eligible for 10% of any future sale price. If we receive a Letter of Intent for an acquisition, we will not be allowed to cancel the contract, providing he is still dedicating at least one day (8 consecutive hours) per week to the project.
Your thoughts?
Normally companies would just hire a developer to build a web app but we don’t want to take that financial risk right now. I think that this deal is a win-win for Elliott and Carsonified. He has the potential of making serious long-term revenue and we get to launch the app with very small financial risk.
Love to hear your thoughts …
[Photo Credit: http://flickr.com/photos/babsphotosecosse]