Kalzumeus Software

I know I said the next project was supposed to happen in the summer, but unfortunately I’ve drunken deeply from the Rails koolaid and am now afflicted with an acute condition known as programming fever.  The plan remains to actually launch in the summer, but I want to see if Rails lives up the the (substantial) boasts of its evangelists, and frankly I really want to get my hands dirty with something because after doing several months of crunch going coding cold-turkey makes me feel bored.  (We’ll see if the resurgence of carpal tunnel syndrome I’m feeling doesn’t cool my desire.) 

So here is the plan.  I want the application to be ready, in the full functional sense of the word, by April 1st.  I plan to devote no more than 20 hours per week on it, and to be reasonably diligent about tracking time that I spend.  This will include any time spent in design, learning Rails, and actual IDE time.  On April 1st, I will evaluate where I am (which should be done), and bring in the outside experts (principally a web designer — I’m going back and forth on whether I need to bring in the lawyer or not) to take the first few steps to make the application into a business.  That will also give me a month and a half or so to save my pocket change to pay for their fees.  (Memo to self: carry really big coin purse.)

I’m decided on developing this semi-publicly — I’ll be publishing the market, the spec, the thinking behind it, pretty much everything but the source code.  This will include sales figures for at least as long as I have a day job.  However, I’m not totally naive in the ways of the world and in particular I don’t want someone domain-name camping me for the project code name or obvious misspellings of the actual name (which I already picked out and registered), so I’ll be keeping those under my hat for a while.  I like the project code name so much I think I’m going to use it as the name for my LLC.  I suppose I should get that filed soon too.  The little bureaucratic hoops you have to jump through to make money are so annoying.

Anyhow, the plan:

Two weeks from now or so: Announce project codename and add category to this blog so people can track the development.  Ideally, establish US-side LLC and transfer Bingo Card Creator to it, which will give me instant business history as a software developer with that name, which will be useful for a trademark application. 

Some time after that: After I’ve got enough of the application done to be reasonably sure that I will indeed launch it, post the problem domain, the spec, and the reason why I chose this market to enter.

April 1st: Alpha showing of website (won’t be feature complete or pretty, but should give rough idea of scope).  Bring in web design guy, get the heck out of his way.  Begin dedicated blog (I’ll be keeping this one as my main web presence for the time being, naturally) devoted solely to issues facing target market.

Some time before summer: Launch.  Suffer through a few weeks of catching corner cases which I hadn’t anticipated before.

Summer and beyond: Grow business.  This is the most important part and so naturally I have given it the smallest section of this post and have not done much writing in my design notebook about it.  D’oh.

Budget:

Hosting: $125 for the first year.

Domains: $20 for initial two domains (product and LLC name), possibly $30 for additional ones.  First $20 is spent already.

Ruby Books: $90.  Got them today, they are fascinating.

Logo/Business Identity: Heck if I know.  I have a pretty good idea who I’m going to use for it.  Probably in the $250 range I’m guessing.

Web Design: Heck if I know.  I may do something outside the usual for getting this, we’ll see.  Currently I’m figuring that I’ll need a skin for the application, a simple template for the website outside the application (on the order of complexity of Bingo Card Creator’s, but prettier and thematically coherent with the application skin), and a blog template.  I’ll be blogging on a hosted WordPress blog.

Icons: Not sure if I’ll need them (I already own two sets which may be adequate, but this will largely be up to the web designer).  $100 budgeted. 

Legal: If I hire a lawyer, he is going to be put on a strict $500 leash.  I may not hire a lawyer.

LLC Filing Costs: Owwwwch.  Figuring on $500 for my American LLC and I just weep at the anticipation of having to apply for a Japanese one (suffice it to say that I had to count the number of zeroes in the filing fee a few times to make sure it was correct).  I will file for the Japanese registration after I have achieved significant profitability.

Total Initial Costs: $1,500 to $2,000, probably. 

On the plus side, monthly costs (absent advertising: not budgeting for it yet) are going to be pretty low, so I should be cash flow positive almost instantly again and, I’m hoping, profitable fairly quickly.  I expect revenue growth to be a significant multiple of Bingo Card Creator’s.  More on that at a later date.

Well, I just woke up on the 26th and checked my mail, and it seems I’ve now sold 100 copies of Bingo Card Creator on the dot (since launching the program — not, regrettably, since December 1st).  Yay.  Aside from being great fun and a nice learning experience, thats about $1500 or so that I wouldn’t have had otherwise.  Not a shabby bit of money, as my newly paid-off student loan can attest.

Its not quite New Years yet but I thought I’d go ahead and set some business goals for the New Year:

1)  Release BCC v1.05 sometime in the month of January.  On the list of stuff to accomplish:

• Fix minor printing niggles when you only have numeric “words” on the card.
• Add Halloween/Christmas bingo to get ready for next year (low priority).
• Improve printing of word lists to allow more than 25 words on them (done already on local machine).
• Give option for advanced users to select printer (done already on local machine).
• Make sure its Vista compatible.  This will probably involve changing on Windows boxes where I drop the serial key, user name, and timestamp for the last program update.  Oh, and I should move the document folder to My Documents, too.
• Let people put in column headers (B-I-N-G-O or configurable).
• Option for headers/footers, at least for single cards on a page.

2)  Retool the website.

• Improve purchasing.htm so it makes the sales presentation better.
• Eliminate eSellerate.net.  I have yet to be paid from a single sale from them, due to low volume, and having the option there when no one uses it needlessly complicates things.
• Create a version (or versions) of the website which broadens the niche a wee bit from teachers.  Most of my search traffic these days is coming in for bingo stuff rather than teaching stuff, might as well oblige them.
• Resume some content-writing SEO activities.
• Blog some stuff of use to folks, out of my totally charitable desire to collect free links improve the sum of human knowledge.
• Spend some time reaquainting myself with Adwords and AdCenter to see if I can’t squeeze a little more juice out of the turnip.  In particular, AdWords is still at $.40-$.45 a conversion and I want to fight that down to $.30 again.

3)  And some financial goals:

• $1,000 a month in sales by April
• Yearly sales of $10,000.
• Maxxing a Roth-IRA from self employment (I am not eligible for any IRA normally as I don’t pay taxes in the US due to the Foreign Earned Income Exemption.  Incidentally, if you are a US taxperson, you run a uISV as a hobby,  and you don’t have an IRA, for the love of all that is holy fix that this year.)
• Get legal in Japan (I am so NOT looking forward to those forms) and at least one American state.  The Japanese taxman “Oh, thats just a hobby, don’t worry about it” immunity phases out at 1 million yen (at 120 yen to the dollar thats about US$8,300) and I’d like to have stuff squared away by then.  Additionally, a legal entity in the US for my software company will make launching a more amibitious product much easier.
• A wee bit more robustness from sales when the teaching market isn’t in a buying mood (wait a few days for my December stats, you’ll see what I mean).  In particular, I don’t really want to see income drop to $0 over the summer months (particularly because I have a move coming up in August and won’t be able to save as much from my day job as I usually can).

Other stuff:

• Locate a new day job by August.  My contract on the current job is expiring and while its been a wonderful three years its time to part ways.  My current thought is employment somewhere in the Nagoya area.
• Start a new, more ambitious uISV project.  I’ve got a thought for one at the moment but am wondering if the market is big enough (think “consumer finance” and a ticket price, uh, a wee bit above $24.95).
• Continue search for Ms. Right.

Here’s something a wee bit off the beaten path for this blog: so lets say you’ve got a consistent cash cow, or at least a cash calf, of a program?  Well, I’m a) just not a very spendy person and b) have no efficient method of spending dollars on physical goods and c) have hideous tax and exchange consequences if I ever turn dollars into yen.  So basically my Bingo Card Creator earnings have sat in my US bank account and every month when I send home my transfer to my student loans I tack on the earnings.  Which is saves me 7% a year, and 7% times my lifetime earnings from Bingo Card Creator can buy a whole muffin. ;)  (I actually sort of pre-spent the money I saved from September: it gets me a Wii bit closer to a certain Christmas-present-for-me come December 12th, since I won’t have to transfer that amount of money home to my loans.)

However, as of next month, my student loans are going to be totally paid off (this has been my singleminded financial obsession since I got my current day job).  Hip, hip, hurray.  So I need to do something else with the money rather than let it languish in my checking account.  I considered opening a savings account with my American bank (Bank of America, naturally) but their .5% annual interest makes me wonder if they are sane.  I opened a wee little savings account at ING Direct which pays I want to say 4.4%, and after I figured “Eh, I’m not going to actually touch the money anytime soon” moved it to a 9 month 5.05% CD with them instead.  But investing in CDs is painfully boring and low-return.

Of course, generally as your return goes up so does your risk.  I’m perfectly OK with that, since I’ve been happily living within my means thanks to my day job and have always treated my uISV and the income it produces as an intellectually stimulating hobby.  If I were to sock it away in a portfolio that lost 20% of the value over the next year, it wouldn’t cause me to blink financially.  So I decided to fulfill a lifetime financial goal and become an investor.  (Note for those not in the know: I’m rather young.  I’m honestly embarassed to admit how young, because I have given people advice despite them having been professionals in this field when I was in swaddling clothes, but suffice it to say most people my age aren’t thinking of retirement yet.  Then again, most of us don’t have software companies, either.)

So here’s the question: what to invest in.  I’ve been reading the Wall Street Journal since the age of 8 and this is what I have learned from the experience: the market aggregates information with efficiency and scale which makes Google look like a single-celled organism.  I am not terrible at investing in the way I am terrible at art.  No, I am worse than terrible: I had a mock portfolio in 8th grade and managed to lose 15% of it in an up market in 6 weeks.  So I’m going to do the same thing with stock picking that I do with stock icons: outsource.

So some people would guess “Ah hah, mutual fund, huh”.  Well, yes.  Except not an actively managed mutual fund.  Paying 2% of my investment every year to somebody who has about a 1 in 4 chance of matching the return of the market does not appeal to me.  So instead I’m going with an index fund: pretty much a mathematical guarantee of being about a point below the market, as measured by whatever the tracked index is.  Since my job prospects are heavily, heavily dependent on the health of the Japanese economy, I decided to pick a US index: it lowers the risk of me having a catastrophically negative job market and a catastrophically negative investment market at the same time, and if those two countries are ever both down simultaneously then the world as I know it is pretty much screwed anyhow.  :)  And since my job prospects are similarly very intimately entwined with the tech field I decided to go with something broader (i.e. not NASDAQ): S&P500 sounds good.

Now, when there are billions of dollars to be made doing something there are a million ways to do it, and there are billions of dollars to be made in index funds.  I picked two vehicles based on convinience and a wee bit of research.  The first is a lightly managed large cap S&P500 index fund available through ING, which I figure is good enough for government work.  The second is buying shares in spiders (if you don’t know, pretend its a mutual fund which implements the Stock interface, it will save you pain) on Sharebuilder.  Both are relatively friendly for teeny-tiny little investors like myself, and extremely cheap on the fees (nothing for ING aside from the fairly low management fees on the fund, $4 a trade on Sharebuilder and I plan on making probably one trade a month).

I should also note that I anticipate getting $25 for signing up for Sharebuilder, which ought to improve my annual return a weeee bit :)  I signed up for them after logging into ebates.com, which is essentially an affiliate site that splits their affiliate commission with the customers.  Sharebuilder pays them a $50 affiliate commission or whatever and they Paypal you $25 of it eventually.  (There are also instructions online for abusing Sharebuilder promotion codes to get money from them, but I’m honest.  Besides, this blog gets hit enough by people looking for promotion codes, typically for free Mrs. Fields cookies from Quill, which I mentioned in a few of my posts about customer service.  Oh, if you were searching for a code to get cookies out of Quill, try JUSTFREAKINGASKFORTHEM.)

Recently, on the Business of Software board (an excellent resource, by the way), there was a discussion about using stock icons for your application.  Some folks turned up their noses at paying $29.95 for stock icons when you could do them yourself for free.  And I suppose you could.

My question is what you’d have to be smoking to want to.  Your time as an ISV is severely limited and there are several demands on it: programming the next version of your software, marketing marketing marketing, optimizing your AdWords campaign, rewriting your website, answering customer inquiries, and doing all the things in your life that don’t happen in front of a computer screen.  Presumably you’re good at all of these things or you wouldn’t have decided to go into this business.  For things you are less good at, outsource them.  Now.

Here’s a couple of things that strongly suggest to me “Yep, I should let somebody else do that”.

No customer will be able to tell the difference.  I would never outsource support or customer service for the simple reason that people hate, hate, hate that.  Doing it all myself lets me brag on my website that people can get an answer “straight from the top” and I think the personal connection (or potential for one) is one of the primary advantages of this form of business.  Similarly, I wouldn’t outsource programming the key features of my program (e.g. the logic which controls printing).  But everything else is fair game.

The cost of outsourcing is lower than the cost to even consider whether you’re capable of insourcing.  I pay e-junkie $5 a month for them to handle Paypal IPN notifications for me (receive notice from Paypal that someone has paid me, send out an email to the customer with their serial number).  I’m not a web programming guru but I’m pretty certain I could whip up a Perl script to do this… but, crickeys, $5 a month.  I know it will take me hours of researching the IPN spec, brushing up on my perl syntax, looking at code snippets, etc etc, before I even start coding my version.  And e-junkie is already there… for $5 a month.  This is a no-brainer.

The outsourcing would result in higher quality than insourcing.  This is why I spent $29.95 on the Roma icon set yesterday (price good to the end of August, incidentally — you might consider taking advantage of it).  I’m not an artist — the one thing in my life I have ever successfully drawn is a goomba (little mushroom monster from Mario which requires about 5 pencil strokes, for those people who have lived under a rock for the past twenty years).  Meanwhile, the stock icons look professionally done (because they are, naturally), they stand out vibrantly when compared to the (free) stock Java icons I had been using previously, and they’ll make my screenshots leap off the page.  I remember how much of an impact the graphical design of Direct Access had on me — it was stylish and professional looking, and I think bringing that flavor to Bingo Card Creator will generate at least two marginal sales over the next 10,000 downloads, which would pay off the investment handily.

Speaking of stock icons, somebody cooked up this resource: stock icons review.  Its probably the only example of a socially beneficial AdSense site I’ve seen: it aggregates information which is of genuine use to someone looking for stock icons, such as a list of a few dozen players, their prices and formats, and a save-you-hours-of-looking estimation of their quality.  And in return it has AdSense ads (for stock icons, naturally) and affiliate relationships with a lot of the icon producers (check for the links which point to tinyurl).  I hope the site makes the author a mint, to encourage folks to actually create value with AdSense rather than just spamming the entire Internet with, e.g., automatic scrapings from blogs.

You wouldn’t pay yourself $5/hr to do the work.  Are you tempted to code a minor component yourself instead of just buying something which will do it for $19.95?  Try this little experiment: put a cookie jar next to your computer.  Now, take $5 out of your pocket every hour on the hour and put it into the cookie jar.  The point of this excercize is essentially to demean and annoy you: first, you’re really worth a lot more than $5 an hour (and should return to the tasks where you’ll make more than that), second, $5 is an inconvinient denomination which will have you constantly trying to make change.  Have you ever noticed that computer programmers can’t tolerate 15 seconds of nuisance an hour but will happily spend man-weeks reinventing the wheel?  This way, you get to internalize that annoyance and do what you should do, which is abandon the trivial task to the person who already solved it and get back to what makes your business special.

I did the cookie jar trick (although I used a plastic cup, since I don’t own a cookie jar) for my newest feature: implementing a font chooser.  I was pretty sure I could do it myself rather than just adapting pre-existing code (which was available for an attractive license: give me credit in the documentation and its yours).  After 1000 yen was in the cup (in 100 yen coins, five an hour) I surrendered and just downloaded this guy’s solution.  I ended up extending that code a bit (I finished off his todo list, added in sane default choices for the font, and improved the time complexity of initialization) but I estimate I probably saved six hours even counting the two I wasted due to stubbornness.  And its time saved writing Java GUI code, which on the scale of “tasks which I relish” falls right between taking out the trash and cleaning the bathroom.

Incidentally, the 1,000 yen stupidity tax is lunch today.  I’m thinking chicken.