Ade in Business

I didn’t get a chance to go to SXSW, so have been happy to see slides that have come from some of the presentations. One of the more interesting ones was Barenaked App: The figures behind web apps. It’s an essential read for anyone who’s interested in building a web-based application for a new business and wants some reference for the costs involved.

According to the presentation, here’s how much it cost to build some successful web applications (design, development, hosting, legal, accounting, etc.):

• DropSend: $48,012
• FreshBooks: $20,000
• Maya’s Mom: $70,000
• Mobissimo: $60,000
• Wesabe: $200,000

And here’s how much they cost to maintain each month (including employee salaries for some):

• Dropsend: $3,625
• FreshBooks: $46,000
• Maya’s Mom: $30,000
• Mobissimo: $150,000
• Wesabe: $3,000+

While these numbers are certainly not representative of every type of web application, the presentation shone light on the types of things to think about when planning a web business. Here’s what I took away from the slides:

1. It costs a significant amount of money

There’s a popular myth that you can hire a developer to build something for $50, post the URL to Digg, then watch the $1B buyout offers flood your inbox. OK, maybe nobody believes that exactly, but I think people largely ignore the fact that web businesses operate under the same maxim that brick-and-mortar businesses do: it takes money to make money.

Generally speaking, anything that costs an insignificant amount of money will probably face a large number of competitors and knock-offs. Even if you somehow managed to protect your business from that, any major application with less than 100 hours of work behind it probably isn’t going to be designed with a great user interface, won’t scale with increased traffic, and will be riddled with bugs.

2. It doesn’t cost that much money

On the other hand, those numbers are within reach of most would-be entrepreneurs through funding from angel investors, small business loans, or a line of credit. Most successful web applications don’t require venture capital to get started, if ever at all. Web applications are a lot less capital intensive than most businesses — retailers would probably be overjoyed if they could open new stores with startup costs that low.

3. It still costs money after it’s launched

The second part to the $50 myth is that once your application is up and running you can just sit back and count the profit, without spending any time and money to maintain. Ongoing costs will vary widely depending on the business, but it’s fairly safe to say that some amount needs to be budgeted at least for customer support and ongoing hosting if not for development of new features.

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Out of curiosity, did these numbers seem reasonable to you?   What else struck you about the costs?

One of the things that intrigued me most about the rat infestation of a New York KFC restaurant was reading about Robert Corrigan, the expert that was brought in to help clean up the mess. Corrigan (from nearby Richmond, IN) has been called “the Elvis of the pest control world” for the research he’s done on the subject. An Indianapolis Star article describes one of the ways Corrigan achieved his expert status:

The key to Corrigan’s success is understanding how bureaucrats and rats think. He learned about the latter during his graduate student days at Purdue University, when he once spent 30 days in a rat-infested barn in Indiana. He lived the nocturnal life of his subjects, watching them eat and reproduce. They crawled all over him. The more he watched the animals, the more he liked them.

As someone who’s been terrified of rats ever since I saw the movie Ben as a little kid, the image of Corrigan living 30 days in a rat-infested barn makes me want to crawl into a fetal position atop the highest piece of furniture that I can find.

But it got me to think, how far would I go to become an expert in my field? I think a great web developer does more than just learn a few programming languages and try to keep up with the latest technologies. I thankfully don’t have to live in a rat-infested barn, but what kind of immersion is necessary in order to become better at what I do?

• Spend a day watching a novice users work with a web application so I better understand usability?
• Ask script kiddies on IRC to hack my website so I better understand security?
• Build complex applications that never see the light of day so I learn how to fully implement a particular technology component?
• Work on a 5-year old PC and 33.6kbps Internet connection to learn how to optimize web pages?
• Spend a day with my monitor turned off so I understand how a visually impaired person uses the web?

What do you think — what’s the rat-infested barn of your industry?

I’ve written before about using a Virtual PC image to run IE6 and IE7 on the same machine. The old image was set to expire on April 1st, but Microsoft has released another image that will last until July 23rd.

I’m also happy about this because I recently installed Windows updates within the old image and now am getting all kinds of WGA messages about how it’s an invalid copy of Windows.

Download the image here and Virtual PC 2007 here.

I think I set a record today. My computer started acting sluggish, and I came to find out that Firefox was taking up 465M of memory. And on a machine with “only” 1G of RAM.

It’s a good thing that Firefox 2 has that session restore feature that saves your work when you need to end a task in a hurry.

I run most of my applications in a browser: email, calendaring, RSS, help desk, invoicing, and more. A year ago it would have been a big problem to have this single point of failure — if Firefox dies then it’s essentially equivalent to my OS dying. But with session restore and the (mostly) stateless nature of the web most of those fears disappear. It has my vote for killer feature of the year.

Now if only I could keep memory usage to something around 100M.

UPDATE: I just came across IE7pro (by way of Lifehacker), an add-on for Internet Explorer 7 that provides session restore and a number of other cool features currently only found in Firefox and Opera.

I had the pleasure of being interviewed by Eric Mattson for Jenerous (formerly called marketingmonger) this morning. If you haven’t heard of Jenerous, I definitely recommend checking it out. Eric started the project last year in an effort to interview 1,000 “leading marketers, entrepreneurs and other interesting people”. It’s a great undertaking, and he’s got 100+ interviews with a lot of interesting people so far.

I’m pretty sure I’m not a leading entrepreneur yet, but you can listen to the interview anyway