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* The Business of Software

I read somewhere (can't remember where) that Kevin Rose invested $1000 that he had kept for his house's deposit payment into starting Digg. Is that true? Anyone got any other info about the personal life of the digg founder(s)?

Just for insipiration.

I don't see any reason to doubt it.  I believe digg started as a simple 1and1.com hosted site.  Most of his initial bucks were spent getting a friend to do the programming.  There was a good story about him and it's origins here: http://www.businessweek.com/magazine/content/06_33/b3997001.htm

Rose started Digg 6 months before leaving Attack of the Show. The boost given by his celebrity was worth far more than $1000.

When people talk about starting a business with $1,000, they're usually talking direct up front costs such as licences, taxes and fees, a hosting service and bandwidth, i.e., the stuff you really need.

If you have a computer and Internet access, you can pretty much do everything else for free. Obviously, it's easier if you grease the way with money, but it's not mandatory.

The one thing they never mention is the cost of their time.

So, is it possible to build a successful product these days with a budget of only $1000?

>If you have a computer and Internet access, you can pretty much do everything else for free. Obviously, it's easier if you grease the way with money, but it's not mandatory.


Its not true that you can do everything else for free. I mean, i'm horrible at graphic design. If I design my website myself, it would suck so bad that no one would stay at it for anymore than a few seconds. Which describes why its mandatory for me to shell out $500 on my website design. Its not just a matter of things being easier, its absolutely crucial for your success to get a professional guy to do some of the things.

I heard it was more like $3-5k.  I'll see one of their devs tomorrow (Eli White), so I can ask him.  ;)

>>
So, is it possible to build a successful product these days with a budget of only $1000?
>>

I did it on $60, with reinvestment of the proceeds and a lot of sweat equity.  If someone were looking to start from scratch with a similar model ("small app; don't quit your day job") I would suggest having $250, it makes things a bit easier.  That way you can afford your stock icons and Robosoft in time for launch day.

==> When people talk about starting a business with $1,000, they're usually talking direct up front costs such as licences, taxes and fees, a hosting service and bandwidth, i.e., the stuff you really need.

==> The one thing they never mention is the cost of their time.

Because, at least in my case, the cost of the time is irrelevant. I pay myself a salary, just like an employer would. The cost of my time is a net zero. I give my time, my company pays for that time. How is that any different than a job?

I started my business with (2 x) $1800 -- my partner and I both chipped $1800 bucks each. We've been at it for 8 years and will just miss (by "this much") our first million dollar (revenue) year. This year, we'll take out close to $200K each. Last year we took out about $55K each. There's ups, there's downs ... but we don't work for free. There is no "cost of [our] time. It's paid for. By the profits of the company. It's been paid for since day one, 8 years ago.

OTOH, assume it ain't profitable for a year or two. Would you be worried about the "cost of your time" in the first, say, 2 years, if you were sitting on top of something worth tens of millions? I sure wouldn't.

Just for insipiration: please tell me where I can find the design for $500. Need it as well.

How to spend $500 on your web design:

1)  Go to www.oswd.org, pick out a template you like which looks professional.  Many of them are very blog oriented but there are any number which can be adapted to selling.  See, for example, http://www.oswd.org/design/preview/id/2204/ or http://www.oswd.org/design/preview/id/2997/.  (My own site is a very slightly modified version of: http://www.oswd.org/design/preview/id/2583 )
2)  Optionally, spend $50 or so on getting icon packs or stock photos (*cough: istockphoto.com*) to spruce things up. 
3)  Paypal me $450 for my Wii, er, excuse me, I mean consulting fee.

Patrick, OSWD templates don't work for everyone. If you want a product that makes over $2000/month you *need* to have a kick-ass web design.

I agree with the above poster.  Most of the oswd templates are quite lacking in the design department.  Sure, they look better than your high school nephew's site, but not by much.

The other problem with OSWD is new designs never seem to be posted, although one can't complain about free labor, i'm surprised given it's growing popularity that the most recent design uploaded is two months old. 

+1 to you get what you pay for though.  OSWD is a great place to start if you have a very low budget, but if you can afford a web designer you can get a much prettier site.

"Patrick, OSWD templates don't work for everyone. If you want a product that makes over $2000/month you *need* to have a kick-ass web design."

+1 to Patrick.  Any of the OSWD sites would be an improvement over mine in the looks department but my site has a healthy conversion rate and that's all I care about. 

Graphics don't sell a product. 

A good product, a believable sales pitch, and great customer service sells the product.

And yes, if you're willing to work a lot of nights and weekends you can start an ISV with less than $100o.  My startup costs were under $60, and I was able to quit my day job 6 months later with a year's salary in the bank.

I make ~5 times this a month, and if I posted the URL to my site I am sure that most people would consider my design to be amateur, at best ;)

Many people are also looking for substance and something different - personally, I'd rather have a amateur looking site if it meant that a "pro" site looks just like every other product site I seem to go to (you know the one - the one with the "stock" business template with the graphic of the man or woman in some inquiring pose, or looking at something with a coworker - BORING!)

Personally, I use OSWD as a starting point.  I find a handful of designs that I like and then customize for what I'm looking for.  It's not an end point in the process.

"Because, at least in my case, the cost of the time is irrelevant. I pay myself a salary, just like an employer would."

I mispoke I think. I was thinking more along the lines of opportunity costs, not being compensated for your time.

If you spend 60 hours a week working on your idea, that's 60 hours a week you can't spend on something else - you can't work at McDonald's, you can't go to school, you can't go on trips with your family and so on. If you have a day job at the same time, that's not much free time at all.

I think in Digg's case, Kevin Rose started the business when he had a lot of free time and very few obligations. That meant he was able to focus on writing the code and learning what he needed to learn as opposed to hiring someone else to do it for him.

The net benefit was that he only had to spend $1,000. What he didn't tell us is how long it took him to learn how to do all the things he did for himself. Let's assume just for the sake of argument that he spent 160 hours assembling everything.

If you had a day job, a family, a hobby, etc etc such that you only had 3 free hours a week, how long do you think it would take you to do everything Kevin did?

Answer: a full year.

That's why it annoys me when someone says "I built my business with only $1,000." Kevin makes it sound like all you need to do is write a check, flip a few switches and the money starts rolling in.

"you *need* to have a kick-ass web design."

Someone has never seen plentyoffish or craigslist.

i heard he pay $12/hr for a php programer to code up digg. i don't know if this is b.s. or real. my previous employer pay $78k to a php programer at Cali. for a php web app that look very amatureish.

Great design helps but saying that you can't use OSWD templates and make more than $2k per month is just plain silly.  I use modified OSWD templates for two of my three products and they make more than $2k per month.  The third product website is of my own devising and to my eyes not as nice as the OSWD sites.  It also makes more than 2k per month.  I haven't changed it because I am scared that I will break the SE rankings and cost myself money.

Now I'm not saying that this is possible with ALL OSWD templates but if you understand the principles of what is required in a software selling website you can easily pick one that works.

What he said.  Granted, most OSWD designs are not appropriate to your project, just like most files on sourceforge aren't appropriate to your project, for the same reasons: different focus and uneven quality.  That doesn't mean you can't find real gems for nothing. 

I'm all for spending money to make money but web site design is not a place where your shoestring budget will get the highest marginal returns straight out of the gate.  (Neither is incorporation, in my opinion.  Product, website, paperwork, in that order, seems to be a better bet from where I sit.)

> Product, website, paperwork

If you are doing a web based product, your website is even more important than the actual product. Because, without a good enough website people wouldn't sign up for your free trial and try out your product.