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That’s what he told the gathered tech heads at the recent XOXO conference in Portland, Oregon, and while he may have said this with tongue partly in cheek, he spent the next 30 minutes unloading his unified theory of the global computer network, an interpretation formed after 20 years of hard thinking — to say nothing of his experience creating seminal internet companies Blogger and Twitter.
In his speech, Williams explained what the internet is, how it works, and how to get rich from it. Truth be told, Williams is not the best public speaker, but his message was clear: At a time when so many internet entrepreneurs are running around Silicon Valley trying to do something no one else has ever done, Williams believes that the real trick is to find something that’s tried and true — and to do it better. It’s a speech that should serve as a signpost, a bit of much-needed direction for the Valley’s younger generation.
The bottom line, Williams said, is that the internet is “a giant machine designed to give people what they want.” It’s not a utopia. It’s not magical. It’s simply an engine of convenience. Those who can tune that engine well — who solve basic human problems with greater speed and simplicity than those who came before — will profit immensely. Those who lose sight of basic human needs — who want to give people the next great idea — will have problems.
“We often think of the internet enables you to do new things,” Williams said. “But people just want to do the same things they’ve always done.”
‘We often think of the internet enables you to do new things. But people just want to do the same things they’ve always done’
— Ev Williams
In 1994, Williams was a Nebraska college dropout selling tutorial videos to help people get onto the net. In those videos, he described the global computer network as “a puzzle comprised of three things: Computers, information, and people.” But he no longer sees it that way.
After leaving Twitter in 2011 and helping to incubate, among other things, the blog network Medium, Williams found himself rethinking his original formulation. Computers have proliferated and diversified, in size and function, to the point of being unremarkable. Information has become similarly abundant, rendering the term unsatisfyingly generic. And after 20 years, the types of people and groups you find online are basically identical to the people and groups you find in the physical world. What’s now important are the connections between the people and the machines.
“There are hardware connections, then there are all these interactions involved with data and software,” Williams says. “And if you look at any big internet thing, you see it’s basically a big hive of connections. A Follow is a connection. A Like is a connection.
“What the internet is doing now is connecting everyone and everything, every event and every thought, in multiple ways — layer upon layer of connection. Increasingly, everything that happens and everything we do, everyplace you go and check in, every thought you have and share, and every person who liked that thought… is all connected…and it keeps multiplying relentlessly.”
These connections aren’t just proliferating, he said. They’re proliferating in a particular direction. There’s an organizing principle that explains what thrives on the internet and could potentially predict what will thrive in the future: Convenience.
“The internet makes human desires more easily attainable. In other words, it offers convenience,” he said. “Convenience on the internet is basically achieved by two things: speed, and cognitive ease.” In other words, people don’t want to wait, and they don’t want to think — and the internet should respond to that. “If you study what the really big things on the internet are, you realize they are masters at making things fast and not making people think.”
Google, Facebook, Amazon, and Apple were all excellent at delivering this sort of convenience, Williams said. They often got there by removing steps from what had once been a more complex series of actions, precisely the trick that allowed Williams’ first big invention, Blogger, to dominate how people put new content on the web. Instead of creating a new document, saving it, manually uploading it, and viewing it in a web browser, people could simply type their content into a web form and click “publish.”
‘The internet is not what I thought it was 20 years ago. It’s not a utopian world. It’s essentially like a lot of other major technological revolutions that have taken place in the history of the world’
— Ev Williams
The key to making a fortune online, Williams told the XOXO crowd, is to remove extra steps from common activities as he did with Blogger.
“Here’s the formula if you want to build a billion-dollar internet company,” he said. “Take a human desire, preferably one that has been around for a really long time…Identify that desire and use modern technology to take out steps.”
His recent example is Uber. “How old is the desire of getting from here to there?” he said. “How hard was it really to do? They took out some steps in that process…They formed a connection between you and the driver.”
Williams’ philosophy might seem pedestrian. But that’s the point. Twenty years after people began using the web en masse, it’s time, Williams said, to accept that the internet isn’t a magical universe with boundless potential. It’s just another engine for improving quality of life.
“The internet is not what I thought it was 20 years ago,” Williams said. “It’s not a utopian world. It’s essentially like a lot of other major technological revolutions that have taken place in the history of the world.” He compares it to, well, agriculture. “[Agriculture] made life better. It not only got people fed, it freed them up to do many more things — to create art and invent things.”
The rub is that we often take convenience too far. “Look at the technology of agriculture taken to an extreme — where we have industrialized farms that are not good for the environment or animals or nourishment,” he says. “Look at a country full of people who have had such convenient access to calories that they’re addicted, obese, and sick.” He likens this agricultural nightmare to our unhealthy obsession with internet numbers like retweets and likes and followers and friends.
That warning wasn’t so much a slam on Twitter, which Williams helped create, as it was an observation about human nature. People will be people. The internet wants to give them exactly what they’re looking for. And people who understand how to channel that tendency will be disproportionately powerful.
You’ve got stuff, but not all the stuff you need. Dutch startup and TechStars London first cohort member Peerby is hoping to unlock the use value of that stuff with a collaborative consumption model that features some crucial differences when compared to others who’ve tried to turn caring into sharing for neighbourhoods.
On Peerby, which has already launched successfully and grown at a fairly rapid clip at home in the Netherlands, users post requests for items that they need from their surrounding community, rather than just offering up a list of available “inventory” based on what they owned and are willing to share, the way it works on other networks that have attempted similar things in the past like Neighborgoods and StreetLend.
“We’re launched basically in the whole of Holland,” Peerby co-founder and CTO Eelke Boezeman told me in an interview. “And we’ve got about 15,000 members there. We also have an active community in other places including London, Berlin, Spain and New York. We don’t restrict it, and while we’ve focused on growth in Amsterdam, it’s growing organically elsewhere, too.”
Peerby’s request-based system for local borrowing and lending has earned it fairly high success and engagement rates – the startup claims that over 80 percent of its requests are fulfilled by Peerby members within 30 minutes of their posting. They maintain that this is because on Peerby, you aren’t dependent on having to find what you’re looking for before you request it. In some ways, the model Peerby has chosen is similar to what Localmind did for local Q&A, with its crowdsourced software for community intelligence platform, which was acquired by Airbnb late last year.
So how do you make money from something that is more successful the more it can encourage people to act somewhat altruistically and spend less money rather than more via sharing with their neighbours? Peerby sees multiple routes to revenue, including premium subscription plans for members who want more, possible rental mechanisms for high-value items, offering insurance coverage on things like cars, and group buying mechanics that can enable a whole community to go in together on something everyone in the neighbourhood needs.
“We’re going to look at renting, because for a power drill, sure it just lies around and you might as well lend it out,” Boezeman said. “But if it’s your racing bike, that’s a different story. We’re also maybe looking at subscription. But the key thing is that when I joined Peerby, I never thought this would work. Now, every day we have 25 exchanges, and that’s for a system that people still definitely aren’t used to.”
Peerby’s organic growth has helped it get to this point, but to grow further it needs to push more actively to expand its communities in London and other international destinations, and that’s what it’s currently seeking 600,000 EUR to accomplish. It may not be the first network based on the idea that borrowing from neighbours is better than buying things you’ll rarely used, but it may have the right timing and recipe to capitalize on the growing interest in collaborative consumption.
And after 33 years at the company, that energy and love for the company is still very much alive.
Earlier this week Ballmer led and spoke at his final Microsoft employee meeting and delivered a goodbye speech like no other to a stadium full of his Microsoft colleagues.
"Soak it in, you work for the greatest company in the world," Ballmer screamed on stage as his eyes welled up with tears.
As people screamed out his name he said, "This isn't about any one person, it is about the company, it is about a company that is important, that's forward thinking, that's innovative, that's ethical, that hires great people and lets them lead great lives, that helps people around the world realize their potential."
Nobody puts Ballmer in the corner
Video of the speech was exclusively published by technology website The Verge. You can watch the full video below.
Ballmer, who is expected to leave within the next year when a replacement is chosen, has long professed his deep love for the the company. At Microsoft's 25th anniversary event, he ran across the stage and screamed "I love this company."
In the speech earlier this week he said that Microsoft was like "a fourth child" to him. "Children do leave the house," he said. "In this case I guess I am leaving the house."
The speech ends with Ballmer's Patrick Swayze moment and playing one of his favorite songs "I Had the Time of My Life."
As you'll see in the video, he doesn't attempt the famous lift, but instead sings a bit and bids an emotional farewell.
"I wanted to pick a song that was exactly perfect, a song that let me say thank you, a song that looked back retrospectively, and a song that celebrated the future," he says. ""You've made this the time of my life."
Small business owners shouldn’t have to struggle to keep their cash flow organized. Many either struggle to manage their books themselves using software like Quick Books, or bring in a bookkeeper. Using various services, small business owners can easily automate a lot of the day to day bookkeeping hassle that comes with running a business. Let’s look at some of the hottest tools that are available to making your bookkeeping as quick and easy as possible.
Outright
Outright helps you keep track of your income and expenses. At face value, it’s quite simple. Type in every payment you receive and every expense you incur. It uses this information to help you prepare your tax paperwork, as well as generate you a wide variety of reports to show you where your company stands financially.
Outright can streamline the process of working with contractors, which many small business owners do. With the click of a button, you can request your contractor to complete an electronic version of a W9 for your records. When tax time comes, it will automatically prepare each contractor their own 1099. Additionally, if you would like to e-File your copy of the 1099’s, you can do so from Outright for just $5 each.
Taking advantage of the “bookkeeper access” feature will allow you to grant your accountant or bookkeeper access to your information. You remain in full control of who has access to what.
At the surface, these features seem very basic compared to QuickBooks. The huge benefit is that all your data is accessible from anywhere and can be easily shared. At the same time, you can rest assured that it’s secure on the Outright server.
Like what you see so far? It’s just the beginning. Most of the income and expense entries can be imported from other sources. These include:
Online Credit Card Statements
Online Banking Statements
PayPal
eBay
Invoices (from FreshBooks)
Receipts (from ShoeBoxed)
Mobile Expenses (from Xpenser)
Existing Data (from a CSV file)
The real power of Outright comes into play when you begin using some of the tools listed above to help you manage other facets of your bookkeeping, then import them into Outright. Check out the Outright Website and if you like what you see, sign up.Remember, it’s free so you have nothing to lose.
Let’s look at how some of these other components work.
Invoicing with Fresh Books
Pricing: Manage up to 3 clients for free, then pricing starts at $19.95 per month.
Fresh Books makes invoicing painless. Signing up with Fresh Books allows you to send and manage all of your invoices online. Let’s look at how easy a typical work flow is:
A new client is interested in your service. They explain what they want done and request an estimate.
You compile an estimate for them and send it to them with one click.
Upon review, the client can accept the estimate, giving you the go ahead to start the job.
Once completed, you simply locate the estimate and convert it to an invoice with another click. Of course, you are able to make adjustments if you need to.
Your client is advised of your payment terms and as long as you have PayPal enabled, is able to pay you instantly.
The brilliance behind this is how fast and efficient the entire process is. When you send the invoices via email and accept payments via PayPal, the whole process can take a few seconds. Small business owners know that time is money.
A similar process is available in QuickBooks, but it requires elaborate configuration to run smoothly. Additionally, it is only accessible from the computer where QuickBooks is installed. Using Fresh Books lets you send and manage your invoices from any internet enabled computer or smart phone.
Fresh Books automatically updates itself when payments are made and generates the client an invoice marked “PAID” for their records. In the event that a client does not pay within the terms you set, they will be sent reminders automatically. If they still fail to pay, Fresh Books can automatically add a late fee based on your specifications.
While QuickBooks has the ability to manage these things, most need to be done by hand. Fresh Books will save you precious minutes with each payment that you don’t have to enter manually. While it may not seem like a lot, they do add up. Determine how long it takes you to input each payment. When you determine how many payments you manually input a month, you can clearly determine how much time this alone will save you. Chances are, if you spend a total of only 30 minutes a month entering payments by hand, Fresh Books has paid for itself, and then some.
There are some more benefits of Fresh Books that should not go overlooked. One is how easy it makes the process for your clients. Demonstrating a concern for your customers time by making it fast, and intuitive to pay you will not go unnoticed. Second, by managing all of your invoicing online, you are saving money on postage and envelopes as well as all of the time associated with paper billing. If you have a client that prefers to receive a paper invoice, you can send them one with one click from Fresh Books for a very reasonable cost. Finally, due to the tremendous amount of paper you save by not sending physical invoices, you are demonstrating concern for the environment. Let’s face it, every little bit counts .
Visit the Fresh Books Website and look over what they have to offer. You can also, sign up very quickly. They offer a free plan which will let you manage your first 3 clients without paying a dime. After that, it’s only $19.95 per month to invoice up to 25 clients. If you need more than that, they offer a package for $29.95 that includes unlimited clients.
Once you have your work flow established in Fresh Books, it is only a matter of clicks to import your invoices into Outright.
Accept Instant Online Payments with PayPal
Don’t you hate waiting for checks to come from clients? Most small business owners would be able to dramatically increase their cash flow if they were able to receive payments faster. That’s where PayPal comes in. Singing up is quick, and you can be accepting payments in a matter of minutes. PayPal allows your clients to pay you from their credit card, bank account, or existing PayPal balance. When you integrate PayPal payments with your Fresh Books invoices, you give your clients the chance to pay you instantly with just a few clicks.
It’s completely free and easy to sign up. Once you do, you will pay a nominal fee on each transaction that they process. It’s often very worth it since it can really help your cashflow. Integration with Fresh Books is a cinch, and you can even import your transaction log into Outright.
No other payment solution is this easy to sign up for and use. If you are not already working with PayPal, you are missing out on a huge opportunity to get paid faster.
Additional information about how PayPal works is available on their site
Manage Receipts and Expenses with Shoeboxed
When you make a business related purchase, what do you do with the receipt? Many small business owners keep them in a pile (or a shoe box) to either enter later, or have their book keeper log. Once they’re entered, you’re still required to save the receipts in case anything comes into question with the IRS. This leads to a lot of paper being retained, and a lot of effort being wasted entering the expenses. Enter Shoeboxed.
Shoeboxed’s mantra is simple. They want to help you “focus on business, not paperwork.” They do this by letting you mail in all of your receipts for them to process. Here’s how it works:
Sign up for a paid plan, starting at only $9.95 per month or for $99.95 a year.
Each month, gather your receipts and send them through the mail to Shoeboxed. (You can also use your mobile phone to take a picture and submit the receipts via email.)
Shoeboxed receives your receipts and scans images of them into your account for your records.
They will also retrieve all of the data off the receipts and record all of the expenses in your account in an easy to manage format.
That’s it! Drop your receipts for the month in the mail and let them worry about the data entry. From your account, you can export the data in any format you need. It can generate expense reports in PDF, Excel, CSV, QuickBooks or Quicken formats. Even better, you can import your Shoeboxed expenses into Outright with just a couple clicks.
The benefits of Shoeboxed are outrageous. Since you have scanned copies of all the receipts, you don’t need to retain the paper copies. The IRS will accept an exact scan that Shoeboxed creates. At the same time, you never need to worry about the time consuming task of entering all of your expenses by hand. Shoeboxed will enter up to 50 receipts a month for just $9.95. Consider how long it would take you to enter 50 receipts by hand, or how much you would have to pay a book keeper to do it for you. If you save just two hours a month, that is two more hours that you are able to complete billable work for your clients. Get more information, or sign up on their site.
Record Your Expenses on the Go With Xpenser
Xpenser is a free, simple to use service that will help you keep track of your expenses in real time. What makes Xpenser so easy is that you can submit expenses form a wide variety of real time communication platforms such at email, instant message, twitter and an iPhone app. As soon as you incur an expense, shoot Xpenser a message with simple details about the transaction and it will be logged. It’s that easy. You can even attach a scan of the receipt. Check them out atXpenser.com
The Numbers
The savings here are unbelievable and really a no-brainer. Let’s look at what this whole automated setup will cost you:
You can enjoy the benefits of all the aforementioned automation for just $339.35 per year. Just under $1 per day. Who WOULDN’T pay $1 a day to cut out all the stress, hassle and frustration that comes with bookkeeping? I would.
Love http://www.shoeboxed.com to handle all my receipts, invoices, and business cards. They also have an iphone app and a mobile platform that allows you to take pictures of receipts from any mobile phone and upload them to your account. You can send an expense report from the airport before you get back to the office while you are waiting at the airport!
THE INSIDE STORY OF HIPSTAMATIC’S STRUGGLE TO KEEP PACE IN THE WHITE-HOT PHOTO-SHARING SPACE. IN PART TWO OF THE SAGA, FACEBOOK'S BILLION-DOLLAR ACQUISITION OF INSTAGRAM RATTLES HIPSTAMATIC, WHICH FUMBLES THROUGH A SERIES OF HALF-BAKED PRODUCTS AND SOCIAL FEATURES THAT NEVER STICK.
When I ask Hipstamatic CEO Lucas Buick if he lost focus in the last year, he immediately responds, “Absolutely.” Since laying off roughly half of his workforce in August, Buick has had to come to terms with his darling Silicon Valley startup suffering negative press, ex-employee reprisals, and a public perception that his company is approaching bankruptcy.
Three years ago, Buick launched a $1.99 photo app that takes analog-style photographs and sells in-app digital lenses and films that effectively turn your iPhone into an old-school instant camera. The startup attracted millions of users and millions of dollars in revenue, and Buick believed the company could become “Kodak for the digital era.” He envisioned a future where Hipstamatic would become the industry leader in digital camera goods and third-party photography and printing services. But the fickle app market where Hipstamatic dwells has since become obsessed with finding the next killer social photo app.
Throughout 2011 and leading into the new year, Buick began moving his own startup toward social. But by that time, it was perhaps already too late: Its photo-sharing competitor Instagram had soared beyond Hipstamatic in popularity, and would soon capture the attention of Facebook. Like so many other startups in transition, Hipstamatic would soon start experiencing severe growing pains. As it hired more people and pursued new products in an attempt to keep pace with competing apps, Hipstamatic's culture became fractured. On one side, founders chased venture capital and rushed through work on a series of half-baked products, while on the other side, newly hired employees struggled to build something they thought would last. The two groups had very disparate visions for Hipstamatic's future.
For a startup that prides itself on the originality and creativity of its users, Hipstamatic spent much of 2012 chasing many other companies’ ideas. "I can honestly say that there was a lot of talk about Instagram, Path, and social," Buick says of his company's internal discussions. "Ultimately, that’s what shifted our focus away from who we really are.”
In the most regrettable ways, Hipstamatic was, in fact, becoming Kodak. Like the once venerable brand, which failed to keep pace with industry changes during the 1990s, Hipstamatic was struggling to adapt to the daily chaos and external pressures of the social app world.
It had arrived at a crossroads that many other startups inevitably encounter: Hipstamatic had to pivot. So in February of 2012, an engineer started work on a project internally called CS9, which would expand Hipstamatic's filters to video, similar to the 18-month-old service Viddy, which is often called the Instagram of video. (According to Buick, the idea was on the “product list for two years,” but only kicked into gear again in February.) Around that time, another team began developing a prototype web service and iPhone app codenamed Timeline. ("It was a horrible name," acknowledges one former employee. "I was confused by it so much I begged them to rename it internally just so I could keep up with the differences between Facebook Timeline and our Timeline app.") Timeline would aggregate photos from a user's fragmented social networks, pulling images from Instagram, Tumblr, and Twitter into one unified stream; the team also had plans to add Facebook photos and implement cross-network interactions for commenting and liking.
Also on the docket was Hipstamatic Classic, the internal name for the new version of the original photo app, which would have more mainstream, point-and-shoot-camera-like functionality. (The social app would assume the Hipstamatic branding, or possibly be called Hipstamatic Next, sources say, though nothing was ever finalized.) "They wanted to make a Camera+ killer--it was actually described in those terms," says Jonathan Wight, a former engineer at the company, referring to the popular camera app that had become one of the top-selling photography services on iTunes.
(Molli Sullivan, Hipstamatic’s director of communications, disputes Wight’s recollection. “There were no conversations around app killers--there was nothing around any type of killing of other companies,” she says. “When we looked at the competitive landscape, we would have discussions around other companies, but it was never malicious. That’s not what the conversations were like.” However, at least one other source says it wasn’t uncommon to refer to the product as a “Camera+ killer.”)
In March, Hipstamatic held a demo for Timeline and a companywide meeting about the product. Buick distributed questionnaires to employees afterward to gather feedback about the prototype, but their feelings had already become evident at the meeting. "Once you attached Timeline to a camera app, it became Instagram," Wight says. "During the meeting everyone was like, 'You know this is Instagram, right?' It was voiced several times: 'This sounds a lot like Instagram.'"
One former developer, who was also present in the meeting, recalls, "People raised concerns that it didn't offer anything more than an Instagram feed of photos, and that we would basically be mimicking all the functionality that Instagram already had."
Hipstamatic CEO Lucas Buick and CTO Ryan Dorshorst
“At the beginning of the meeting, Lucas was very vocal and upbeat, but the second that was said--that it was basically just a version of Instagram--he immediately shut down, became quiet, and seemed pissed off,” says Stuart Norrie, then a designer at the company. “It was very clear those comments touched a nerve.”
Sullivan confirms the meeting took place, but clarifies, “There were a lot of questions about [Timeline]. We were testing a lot of different technology. I wouldn’t put so much focus on Instagram--it wouldn’t be right to focus entirely on comparing things to Instagram. While Instagram may have been mentioned, there were other companies [mentioned]. When you're looking at the competitive landscape, more than one company comes up.”
Indeed, by that time, rather than viewing Instagram as a competitor needing to be challenged, Buick had actually decided to partner with Instagram. He and Instagram CEO Kevin Systrom, who Buick refers to as his "best frenemy," had been in talks for weeks over ways to team up. (The two are friendly and get drinks together every so often. Says Buick, “I'm a whisky drinker, though not quite as hardcore a whisky drinker as Kevin is.”) In late March, thecompanies unveiled an exclusive partnership that would allow Hipstamatic photos to be seamlessly shared on Instagram's network with one click. "When we launched, it was all about Facebook, Flickr, and Twitter, and now we're seeing a huge shift in our user base toward Instagram," Buick told me at the time.
The partnership provided additional exposure to Hipstamatic on Instagram's platform. By then, Instagram boasted 27 million users, while Hipstamatic had peaked at roughly 4 million active users.
But what the partnership most demonstrated was the powerful social pull that Instagram wielded. "We started to see how many people were sharing to Instagram, and I think [Buick] felt like he was missing out on all that," says Sam Soffes, a former iOS engineer at the company, who would later have a dustup with Buick.
“I was sitting next to Jon [Wight] who just said aloud, ‘Oh, Facebook bought Instagram?’ I think it was [CTO] Ryan [Dorshorst] who was like, ‘No way--that’s a joke.’ We all thought it was a headline on The Onion,” recalls Laura Polkus, a former designer at Hipstamatic. “Then we saw Mark's blog post. And it was like, ‘Wait, one billion? Like, a billion dollars? What? What does that mean for us? Does that mean that [Instagram] won?’” The team spent most of that April morning reading stories about the acquisition.
Buick was on a plane landing in New York from London when he heard the news. He sent Systrom a congratulatory note, but otherwise didn’t return to Hipstamatic’s headquarters for several days. “It was never our goal to be acquired,” explains Buick, who adds that, if anything, he was happy for Systrom. “We weren’t building that type of company.”
“He didn’t have much of an outward reaction. He was more like, ‘Well, that’s fine; we didn’t want to be bought,’” confirms Polkus. “At least that’s what he told us, regardless if it’s true. I mean, I don’t know who wouldn’t want a billion dollars. It would’ve gone through my head if I was in his position: Why not us?”
Lucas Buick was shopping at Uniqlo when he received a phone call. It was mid-April, not long after Facebook had announced it would be acquiring Instagram. (Some sources say it was on the day of the announcement.) The call Buick received, it turned out, was from Twitter, which again expressed interest in acquiring Hipstamatic, sources say. Before Facebook beat it to the punch, Twitter was reportedly interested in purchasing Instagram in order to bolster photo sharing on its network. Perhaps Hipstamatic wasn’t such a bad secondary option. Buick entertained the idea, sources say, but never seriously considered it. (Hipstamatic and Twitter declined to comment on this matter.)
By that point, the Hipstamatic team already had enough on its plate without potential acquisition offers. Outside CS9, Timeline, and Hipstamatic Classic, multiple sources say the company was juggling an ever-growing number of projects, including a physical Hipstamatic camera. “There were plans to do a photography field guide, a bunch of community initiatives, and always talk of physical products,” says one source. “I guess none of that really happened. Products would get shelved, ideas would get thrown away, and new things would take their place.”
In the spring of 2012, for example, after both Timeline and CS9 had died, another social idea started to take priority: The Hipstamatic team began work on a new product that Buick says was a cross "between Tumblr and Instagram." It would be a private social network, like Path, designed to share the photographs you still find yourself inefficiently sending to friends via email or text or showing them in person. (The sharing feature was internally called PhotoMail, sources say.) As Buick explains, "It all comes down to brunch. After some shit goes down on Saturday night, there's always the great iPhone swap over brunch. These are photos that you don't want on Facebook but you want your friends to have."
But nearly all involved say the experience never came together in any coherent way. "They wanted it to be everything: to be Camera+; to be Path; to be Pinterest," the former employee says. "It was kind of like the new [group photo-sharing] Flock app--that's pretty much what we wanted to do." Even “director of fun” Mario Estrada, who is still with the company, admits, "None of us could really identify it. We kept on talking about the elevator pitch to describe what the product was. The product never really made complete sense."
Despite the internal confusion, Buick knew that if his company were to seriously compete in social, it would need to raise a round of funding. Hipstamatic's pivot toward social would be a huge risk for the company. In order to scale a private social network and achieve viral growth numbers, Hipstamatic would have to become a free service, Buick explains, which would upend its business model and cut off its revenue stream. Buick also had hoped to triple the size of the startup's team. Over the summer, he set out on a financing tour to meet with as many investors as possible, in hopes of raising between $15 million and $20 million.
"We didn't need money to operate the type of business that we had," Buick says. "What we needed money for was scaling the social network--to build another fucking social network."
"At a company meeting they announced they were going after VC money, which we thought was kind of strange because we had a good amount of money coming in. Well, supposedly. I didn't get to see the financials," Wight recalls. "I started to wonder if the financial situation was worse than I thought. When they decided to go for venture capital money, that's when things went a little bit crazy."
As the summer progressed, multiple sources say Hipstamatic’s product plans only became more complicated. “Whenever Lucas came in, he would have another crazy idea,” says Wight. At one point, the team started experimenting with a Zynga-like virtual goods store where users could purchase Hipstamatic credits that could be spent on individual photo filters. “The idea was you’d go to this store and spend $1 to get 50 credits,” Wight recalls. “I had very strong objections because it was basically relying on the end users being dumb to get more money out of them.”
The team also explored the concept of digital galleries, which were going to be akin to Pinterest pinboards but for Hipstamatic photos, so users could start their own galleries and list their favorite pictures. Another idea involved situation-specific filters: say, a filter for night photography, or for taking pictures of food.
Sources say the product kept changing from week to week, with little or no concrete direction from higher-ups. Says the former developer, "There was a lot of direction change--a lot of, 'We're going to do this! No! We're going to do that instead! No, that doesn't matter; this matters now!'"
“We didn’t know what we were supposed to keep adding to this social app without getting any feedback,” the former employee explains. “At a certain point, we would come to work and just talk for hours. They kept pushing everything off, and it got to the point where by the end, we were just twiddling our thumbs trying to find stuff to do.”
Hipstamatic disputes this characterization of the company. When asked about the startup's seemingly haphazard product roadmap, Buick says, "I feel like we're reliving our whiteboards here."
"It's just not true that there was a new idea every single week," says Sullivan, the company's spokesperson. "Absolutely, we would whiteboard. Everyone would talk and throw ideas out about what the product could look like. But to lay this out like Lucas and [CTO] Ryan [Dorshorst] were changing their minds every other week is not accurate, and it's not fair to what the process was like."
Stuart Norrie, the former designer, describes a different atmosphere at the company. “There were 9 billion ideas on the table and nobody was saying what to do,” he says. “They didn't really know what their next move was, and it was very apparent that they were paralyzed in making decisions. They were constantly switching back and forth. I’d ask them for feedback and they would never have an answer. They'd be like, ‘We'll talk about it next week.’ I’m like, ‘But it's only Tuesday! What am I supposed to do?’ It was the most unproductive time of my life, and I'm including grade school.”
As if the company didn’t already have enough projects in the pipeline, in June of 2012, Hipstamatic released yet another side project called Snap Magazine. Snap was an iPad magazine that would give Hipstamatic an editorial voice, and enable the company to highlight exemplary user photography as well as potentially push advertising and in-app purchases down the road.
In a sea of stop-and-go projects, Snap Magazine somehow turned out to be a big success. Its first several issues over the summer received more than 100,000 downloads, and Apple would eventually feature Snap on billboards and in an iPad commercial.
But despite the external success of the product, internally, tension had reached a boiling point, and demonstrated Buick's growing disconnect with Hipstamatic's developers, in terms of both product development and company direction. The tension spoke to a larger divide between the company’s designers and engineers, an obstacle that most startups face at some point. As Buick tells me, his founding team, which was composed mostly of designers, "never operated [Hipstamatic] as a software company. As we started building that type of company, we ended up with really talented engineers who were not used to our creative process. There was tension. There was separation on the teams."
The “teams” that Buick describes can be divvied up into two groups: the new hires, composed mostly of the development team, and the members of the founding team, who call themselves the “Wolfpack,” a likely reference to the film The Hangover. The “Wolfpack” includes Buick, Dorshurst, Mario Estrada, and creative director Aravind Kaimal, most of whom were friends from the University of Wisconsin at Stevens Point. The “Wolfpack” became a source of resentment for the new hires, who felt the clique created unnecessary splintering within the small startup. “It was not a well-loved term by nonmembers of this group because it felt divisive and, for some, just further evidence that there was an in- and out-crowd within the company,” says the former developer.
“I shit you not: They’d actually be like, ‘Wolfpack is going to lunch,’ or ‘Wolfpack just got back from Vegas,’” recalls Norrie. “It was like, good god.” Another source confirms that it was common for the founding team to say, "I want it to just be a Wolfpack thing this weekend.”
The discussion became heated, and a war of words erupted between Buick and Sam Soffes, the former iOS engineer, who argued he could build a solution that was just as good as or better than Adobe’s platform. "It was a big argument right in the big open area of the office," recalls Wight.
Music was blaring through the headphones worn by Laura Polkus and Stuart Norrie when the two heard shouting between Buick and Soffes. “My music was really loud but I started hearing raised voices, so I sent an IM to Laura and was like, ‘Are you hearing this?’” Norrie recalls. “I hit pause and all of sudden F-bombs were dropping like it's D-Day.”
"I remember I was like, 'You're completely wrong. I can pull up graphs on my computer and show you how much faster we can build it,'" Soffes recalls. "And he goes, 'I got two graphs for you.' And then he gave me the finger in both hands."
“The double bird,” Polkus recalls.
"The entire company basically saw the CEO of this company give the double finger to a developer," Wight says. "It wasn't in jest either. It was, 'I'm angry, so fuck off.' Lucas walked out. That pretty much sums up the company for me. You just don't do that as the CEO."
Buick acknowledges that the argument took place, but says he wanted to go with Adobe’s platform only because there “were not enough engineering resources to go around.” Buick also clarifies that he hadn’t realized how expensive it would be to use Adobe’s platform yet. “I mean, I certainly feel bad about it,” he adds, referring to the exchange. “I don’t feel like an adult about what I did, but it happens. Shit happens. Let’s move on.”
Of course, it's far from uncommon for tensions to spill over in any environment where strong-willed personalities tend to prevail. But the tenseness of the relationship between designers and engineers at Hipstamatic was palpable, ex-employees say. In fact, Soffes left Hipstamatic not long after his argument with Buick.
The quarrel also highlighted bigger issues simmering within the company regarding its overall vision. To Buick, Snap Magazine was an opportunity to further cultivate its growing photography community, in industries ranging from fashion to media. It was part of his strategy to make Hipstamatic a “lifestyle brand,” as he calls it.
But others inside the organization felt that idea made little sense. To some, between D Series and Family Album, two past, semi-social products soon to be discontinued; Timeline and CS9, which were both killed; and ongoing plans to make a social app, remake its camera app, and develop potential hardware products--in addition to Snap Magazine and two other previously released photo products called Incredibooth and Swankolab--Buick’s referral to Hipstamatic as a “lifestyle brand” was simply wishy-washy jargon meant to mask the company’s floundering product strategy. "They kept pitching us, 'We're a lifestyle brand,' whatever the fuck that means," says the former employee. "We didn't know what to do because there was no direction. It was a bunch of art school kids that didn't know how to run a software company.”
“Most of my time was trying to convince the development team of what the lifestyle brand was, and then trying to convince the lifestyle people what the development team was doing,” acknowledges Buick. “Ultimately, we never got on the same page.
"We may have been a lifestyle brand," says Wight, "but we also make software. And we had to get serious about making software. We had the loosest, most disorganized plan I have ever seen--there weren’t even regular developer meetings. We needed someone who could lead the development team."
“Very clearly there was a growing disconnect between the teams. It’s a company of designers versus guys who are engineers, so it’s not always easy to speak the same language. Did we experiment with a lot of different ideas over the course of the last year? Absolutely,” says Sullivan, the company’s spokesperson. “These engineers are very used to a certain structure or company or schedule, and maybe that wasn’t quite aligned with the vision we had.”
Says the former developer, "Hipstamatic needed to transition to a software company, but it failed to do that.”
Tomorrow: In the final installment, Hipstamatic's founders go hunting for venture capital but come up empty. In a perceived cash crunch, they lay engineers off and attempt a do-over. "We should coin this the unpivot," Buick says.
Mike and I stated working on crowdSPRING in the summer of 2006. We incorporated the company in May 2007 and launched the crowdSPRING marketplace in May 2008. We’ve learned many important lessons along the way. In some ways, our experience is typical of other start-ups. In other ways, it is not. I want to share some of our adventures (and mis-adventures) in the hope that it’ll help others looking to start a company or those who’ve already launched a start-up. So, once or twice every week for the next few months, I’ll post a new tip, based on our experience with crowdSPRING over the past two years (and my experience advising technology start-ups over my 13 year career as an attorney).
Start-up Tip 6: Building the Budget Side Of Your Revenue Model
Earlier this week we talked about the need for companies to develop a compelling revenue generating model. Although it’s not necessary to understand your expenses when you are developing a revenue model, it’s difficult to properly evaluate a revenue model without considering your expenses. After all, you want to develop a revenue model that allows you to build a sustainable business, and no business operates without expenses.
For us, the first step in building our revenue model was to anticipate and develop our budget models (we did this in Microsoft Excel, but there are existing tools, such as Quicken, that can help you to build your budget). Building a solid budget is an involving process and requires a great deal of thought and error-checking. We had a separate budget for development and also prepared a budget for the first five years of operation (our model actually covered the first 10 years, but most people focus only on a three or five year budget, given the difficulty of anticipating expenses with any degree of accuracy looking forward beyond five years).
In building our budget model, we had to anticipate our cost of sales, operational expenses (not including salaries), direct salary expenses, and employee related expenses. For the current or upcoming year, you’ll want a month by month breakdown; for full years after the upcoming year, you’ll want the annual breakdown at this point (some people will do quarterly projections).
To better understand your budget, you’ll want to include in your worksheet your cash on hand, interest income, and the anticipated revenues, by month for the upcoming year (we’ll look at building the revenue side of your financial model next week). You don’t need the level of detail for revenue on your budget worksheet that you’d include on the revenue worksheet, but you’ll want to know these numbers. Let’s look at the categories for the budget items:
1. COS (cost of sales).
You’ll need to understand how much it will cost you to produce and sell your product and/or service. COS is a variable cost because it will have a direct relationship to the amount of your sales. Generally, as sales increase, you’ll pay higher COS costs. Some COS categories are less variable than others. For example, we assumed we’d pay a fixed amount for web hosting during our first year because we anticipated that our technical infrastructure could support a level of traffic through our third year of operation (we were wrong about traffic - we had to upgrade after three months, but we budgeted more money than we needed for this and so ultimately, we projected correctly). On the other hand, credit card fees are variable because they represent a percentage of sales. As sales increase, the fees would stay constant but would represent a higher total.
The following categories may differ for you, but here are the categories that we included in our budget: Hosting, Commission – Sales (anticipating an affiliate program), Subcontracting, Design, Programming, Credit Card Fees, Other costs (bad debt), Payment Gateway Services, and Disbursement Expenses (the cost to pay out). All but Hosting and Payment Gateway Services were truly variable and were stated as a percentage. Hosting and Payment Gateway Services in our first budget were fixed numbers.
You’ll want to Total your COS.
2. Operational
You’ll need to consider how many employees you’ll need, how much you’ll pay them, how much you’ll pay yourself, what benefits you’ll offer, other expenses, what office space will cost, what equipment and software you’ll need to buy, etc. There are many items to consider in operational expenses. There are all of your expenses in operating your business (other than salaries and COS). If you’re operating your business in your kitchen, these expenses should be lower. If you’re renting office space, they’ll be higher.
The following categories may differ for you, but here are the categories that we included in our budget: Fixed Assets: furniture and fixtures, Fixed Assets: software, Fixed Assets: equipment, Bank Charges, Auto, Insurance: Liability, Interest, Investment Expenses, Marketing, Marketing: Conventions & Seminars, Marketing: Meals and Entertainment, Marketing: Viral, Miscellaneous, Office Supplies, Office expense, Office expense: housekeeping, Dues and Subscriptions, Recruitment, Rent, R&D, Shipping & Postage, Telephone, Travel, Utilities, Utilities: internet service, Professional fees, Professional fees: designs, Professional fees: accountant. (we would have added Professional fees: lawyer, but I scraped by doing our legal work).
You’ll want to Total your Operational Expenses.
3. Salaries
You’ll want to include salaries to anyone in the company that will be drawing a salary during that budget year. If you anticipate hiring mid-year, prorate the anticipated salary. Make sure you list each person on a separate line so that you can easily tweak as necessary.
You’ll want to Total your Salary Expenses.
4. Employee Related
Here, you’ll want to include the expenses related to the salaries you listed in section 3.
The following categories may differ for you, but here are the categories that we included in our budget: Employee Benefits: 401k admin, Employee Benefits: Disability insurance, Employee Benefits: Health Insurance, Employee Benefits: Gifts; Insurance: Workmans Comp, Payroll fee, and Payroll tax.
You’ll want to Total your Employee Related Expenses. And you’ll also want to Total your Operating Expenses (including sections 1, 2, 3 and 4).
So that you better understand your budget, you should consider including a few other calculations here. For example, after we totaled our Operating Expenses, we took into account our anticipated Operating Profit, Depreciation, Earnings Before Taxes, Taxes, and projected our Net Income.
We also created a summary for ourselves that reflected our anticipated gross sales, total COS, Gross Profit, Margin %, Total Operating Expenses, to project our Earnings Before Income Taxes, Depreciation and Amortization (EBITDA).
Finally, because we were developing software, we calculated our Research and Development Credit (this is a more complicated subject – we’ll talk about that in another post).
There you have it. Once you create a worksheet for the upcoming year broken-up into months, you’ll easily be able to create a budget worksheet for your first five years of operation.
If this post didn’t put you to sleep and you’re reading this – you get a bonus! If you need some help to get started, email me (ross at crowdspring dot com) and I’ll be happy to email you the Excel worksheet for our budget (without the numbers, of course), but with the formulas intact.
If you have your own tips or stories, please feel free to share in the comments. And if you enjoyed this post, please also take a look at our other start-up tips:
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Justin Winter says:
