Sean Eby

Following up from a previous post about how dumb it would be to regulate free web services (located here: http://seaneby.com/regulate-free-web-services-lets-see-why-thats), Dan Shafer was making some pretty illogical arguments, and certainly ones that could never sit well with a free market economy (yep, turns out people DO get hurt sometimes, imagine that). Steve Dembo of Discovery Education also wrote about paying for services that may also offer a free option here recently: http://www.teach42.com/2010/08/17/love-free-web-2-0-sites-then-pay-for-them/

In any case, this article about Ning, published on Aug. 20th, 2010 (http://blogs.forbes.com/taylorbuley/2010/08/20/free-of-freemium-things-are-st..., explains in more detail the follow-up to what has transpired since Ning eliminated the free offerings. 2 interesting things to note are how Ning is doing better now that they have shed their freeloading free users as well as some of the reasons behind why they did this. From the article:

"Here’s the reason why Jason Rosenthal — the person who stepped up from his chief operator role to mop up the Ning mess as chief executive — explains why he’s forcing every Ning network creator into a paid plan: While Ning’s sprawling empire of free communities brought it many people, these people did not bring it many dollars. 300,000 free communities brought in only 20% of revenue and 25% of traffic; 15,000 paying customers footed the rest.

Before Rosenthal took control of the company Ning was at low end of the generally accepted 5% to 10% conversion rate needed to support a freemium business model. It converted just under 5% of its total user base into paying customers. Low conversion rates aren’t necessarily catastrophic, as demonstrated by Skype, but Ning’s freemium freeriders sucked down its most expensive resources — headcount, bandwidth and infrastructure — at a rate Ning could not support."

In the first paragraph, you can correctly see that it is certainly about money, which at the root of the matter, is of course greed. Greed was one of the reasons Dan Shafer cited in his post on why we should regulate free web services: http://danshafer.posterous.com/do-free-services-have-an-obligation-to-users

Of course, he's right, it is about greed. Turns out, consuming as much free shit from the free buffet of online services is also greedy. So I guess we're in this boat together. And besides, as they say, "Greed is good," according to our favorite Gordon Gekko (http://www.youtube.com/watch?v=7upG01-XWbY). Greed is certainly one of several motivators that drives so many people to create new and innovative things. You know, like the internet.

In the second paragraph in the quote above, however, you can also see that not only was it about greed and making ever more money but also about sustainability, survival, and growth of the company. If you read between the lines, this is exactly why some businesses need not have a free offering at all; the economics of keeping the entire service running might not make sense.

So, once again, people, stop bitching about free services going away or how paid services *should be free*. It's not worth the crying: Get up from your armchair and go do something more meaningful instead.

It seems Dan Shafer thinks free services on the internet perhaps need some regulation to keep them from potentially leaving some free users out to dry when they change their terms, policies, or service offerings. Here is Dan's post:

Knowing what you don't know and admitting it (as well as recognizing things you don't even know that you don't know) are central tenets in science which help progress go forward in the field. It creates the sense of new challenges and admitting things we haven't yet figured out yet as a human species. We also use "I don't know" when new information may cause previous assumptions or theories to be false until enough new evidence sets a new precedent.

This sort of thinking; admitting one is wrong or not fully knowing, is important to making one's self better and more wholesome. This just isn't true of the behavior of most of the world's popular religions and is an under-appreciated and under-popularized criticism of religion.

Because if a religious leader had to cast doubt or, worse, change their entire stance on what was previously considered fact (perhaps on the basis of it being "in faith") it causes the organization to lose credibility. So, instead of risking the prospect of looking incredulous and untrustworthy, their best bet is to admit that previous history was either misguided or misinterpreted, or worse, attempt to quietly move on and hope no one notices they were actually wrong about something.

What's funny is that it is truly a lot easier (and far more self-effacing) to either say, "I/we don't know the answer (yet)" or even better, "Turns out we were wrong about that." It seems the people most insecure about their beliefs are perhaps also the ones most afraid to admit they don't know the answer or that in fact one of their beliefs (or part of their belief) may in fact be completely false.

There is such an incredible emphasis on education and, within education, a huge emphasis on grades, test scores, and reputation/prestige of attended schools. There is not an argument to be made against having better grades, test scores, or attending reputable/prestigious institutions. However, what's often missed, at least in reading material and the media in general, is everything else that actually matters in one's success in life.

It's been a human anxiety and fear since the dawn of man to accept the fact that we may not know the answers to deep, burning questions about ourselves and our lives. We loathe the fact that we often can't predict the future or that we didn't know about something ahead of time such that we could have averted a catastrophe. At a fundamental level, the "answers" religion brings us are bite-sized, fictional pieces for us to consume to alleviate our anxieties and fears around, for example, death, or the meaning for our existence.

The truth we must face, though, is the dreaded, faceless, race-less reality that stands before us. Not as bystanders but as participants and players and warriors for our own lives. Take ownership of reality, including its extreme unknowns, I-don't-know answers, and surprises. This includes the good things and the terribly awful things too. A friend I knew recently committed suicide: a good, honorable, charismatic, talented person decided to end their own life. It's one of those oh-my-god-how-terrible (and it truly is) where you end up asking yourself why such bad things happen to such good people? The truth is that is bare and desolate: bad things simply do happen to good people. Bad things also happen to bad people. Meanwhile, occasionally great things happen to bad people, too! How dare them!

Reality isn't here to simply serve our needs. Justice isn't designed to merely enforce itself. Morals/rules/laws/social norms *exist* merely because they can be broken (and they do, often). The sooner you accept that realty "just is," the sooner you can take reasonable, rational steps to better yourself and your situation. No one is out there to save you; it's just you and perhaps a few close friends and family members (and for some, it's just themselves alone).

I find so many people want to remain dependent on someone or something (or a "higher power") for salvation, guidance, and what-should-I-do-now? advice. This kind of behavior doesn't serve you! It's a fallacy and a mistake to fallback on those things all the time. It can be helpful to have that support system but after everything is accounted for, the will power and the decision to move forward or do anything must come from within yourself.

This most definitely includes playing the cards that are dealt to you in your life the best that you can and not blame yourself for everything that happens around you. I know I personally have been so fortunate in my life to have amazing things happen, many of which can be credited to good choices I made (along with the help and guidance from people I trust, too!). That said, you can't have that perfect, planned life you think you're always on track to have. You have to adjust to the course shifts and steer things around. For me, this require muscle and effort and brains, not to mention some stress and burnout along the way.

Those shifts in course, surprises and situations that arise (and their accompanying challenges) are indeed what make life interesting, beautiful, and worth living. Rising above from where you are now is a hugely motivating and rewarding thing. No one can help yourself more than... well, yourself. It's OK to not know the answers and it's also OK to admit that you don't know, to yourself and quite often to others around you. It's not necessary to know all the answers all the time or to be up in arms, flailing around, because you don't know what you should do next. Take it one day at a time, peeling the onion of each problem and situation, one layer, one stroke, at a time.

Last week, I was invited to be a part of an entrepreneurship forum at the University of Illinois in Champaign-Urbana. During the actual panel session, we used my product, Poll Everywhere, to allow the audience of students to submit questions to the panel during our talk. This is a great use of Poll Everywhere and it worked really well in this instance.

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The panel consumed all of the available time so we didn't quite get to as many of the audience questions as we hoped so I thought I might try to answer a few good ones that didn't get answered. Here we go:

Where do you go for inspiration? Where do you get ideas from?

On one level, ideas seem to come at me, randomly being around the city or driving or visiting with friends or out at a bar. Other ideas also come from reading new and interesting books that I've found or were recommended to me to read. Different environments and experiences also seem to give me new insights and ideas such as traveling through many different countries as I have or visiting new places (museums, national landmarks, small neighborhoods, and on and on). I also like challenging friends on different issues or problems to see if we can construct an answer to a tough problem. I suppose it has been said before but inspiration can come virtually from anywhere.

Team or idea? Which is important? Paul Graham said, you cannot change a team, but you can change an idea anytime.

Well, both are important. I disagree that you can't change a team but it is definitely harder to change a team than it is to change an idea. On the other hand, it's also easier (most of the time) to see whether you have a good team in place than if you have a good idea or not. A good team will eventually be able to figure out what it needs to do or how to transform the wrong idea into something new (and perhaps entirely different). When starting a business with partners or hiring outside employees or contractors for the first time, you absolutely have to think about who those people are with a critical eye.

Do you have someone like a mentor to review your business plan before launching your business?

Certainly advisers to the company and me personally are valuable for feedback on what you're trying to accomplish and how you are going to accomplish it. A business plan is not necessarily a prerequisite to starting a business but having at least something written down about what you are going to attempt to do, how you'll be doing it, who you're doing it for, etc., helps when trying to have meaningful conversations with advisers to get feedback in the first place. Also, remember that just because an adviser or mentor says something is good or bad also doesn't mean that you should or shouldn't do it.

Does team matter? What is the best size for a team?

Team absolutely matters as I said above. Team definitely comes before idea (usually). The best size for a team is not a known number but when starting from scratch, having at least 1 other person involved, either as a co-founder or hired help is probably best. Starting a business from scratch and doing everything yourself with no help is almost impossible (you need other people to help and be a part of what you're doing to succeed).

I've always heard "Starting a business is no time for on the job training." How much experience did you guys start with?

Starting a business is very much on-the-job training, at least in the sense that you will be learning what works and what doesn't in how to build a business around an idea, how customers are really using your products/services, and how the specifics of the business model function. Maybe that saying refers more to if you are building, say, software and have absolutely zero programming experience on your team. That lack of skill is probably going to prevent you from building anything significantly useful. Starting with more experience can definitely be a plus but as was said in the panel, some ignorance about certain things can also be beneficial! I definitely wouldn't look at "how much" experience you have as a barometer to whether you should start a business. There are too many examples of young people with very little experience launching a new business and getting somewhere with it. Would additional experience have helped them? Yea, maybe, but so what and why wait?

What separates you all from unsuccessful entrepreneurs? Luck? Sweat? Brains?

My success is only a small amount so far with my business so I can't claim some major public success as of yet. What separates me from others (I think) is my persistence and focus. Giving up and giving in too quickly or too easily is what kills people's momentum and any significant chances of success. Persistence and focus and maintaining those two things requires an ability to filter out emotions such as fear, trepidation, and feedback from the random person on the street who might say "no" to buying your product/service. Also, not that this is a big differentiator, it helps to simply start getting to work and getting shit done! Don't mull around all week or month *thinking*, start doing it, and do it now.

Start full-time or part-time?

Does not matter much. I started part-time and it worked reasonably well. In fact, having a nice paycheck and moonlighting on the side can be a really great combination for later success, including the ability to balance the two workloads appropriately and not get steamrolled by too much, too fast. With less time to focus on your product/service, it forces you to spend time on the absolute essentials of what is important about what problem you're solving for other people. Get the simplest product/service in place for people to start using and consuming it.

Do you think I should start a company while in school?

Definitely. You're surrounded (hopefully) with a plethora of other smart and bright people who might later want to be a part of what you're doing. It goes back to moonlighting while working a full-time job in that you will be forced to balance the important things against what your responsibilities are while still in school. Starting a company, even if it fails while in school, will also be of value if you decide to later get a job with a regular employer. That's a huge differentiator over other candidates. Come in with a story about what you did, why it didn't work, and the valuable lessons you learned from it.

 

The best advice I ever received and ever followed was simple: Save money. Live below your means by eliminating costs and personal belongings and expenses so that you have money left over to save in an account. What you do with the saved money is either let it sit there for a long time (not the wisest thing around) or invest it (a good idea but not all of it, and this sounds like a pretty bad idea had you done this just 18 months ago, right!?). Seriously, though, making sure you have a large stash of cash around for yourself is probably the best thing you might end up doing for yourself. There are thousand-and-one reasons why you will one day need that cash and I can assure you it won't be to help finance a new yacht.

For me, it's what allowed me to start my business and leave my full-time job so I could invest my efforts full-time into the new business. Most new businesses, naturally, don't start making significant revenue or profit for awhile. We're fortunate enough to have started a business that generated some cash practically from day one but still, making the money over time does take patience and discipline. Nevertheless, things would have taken even longer had I not been able to go full-time and I guarantee you that I wouldn't have been able to go full-time had I not saved money.

It's so simple... the concept, that is. Just save a little money and build a stash. Don't touch it, just keep adding to it. Keep most of it in cash and you'll know you're reaching a significant point when you have *at least* 9-12 months of living on the cheap stored in your stash. Some people suggest 3 months, maybe 6 months, but they're usually suggesting that for people who leave their jobs (or are fired or laid off) and need some cushion to find a new job. I'm talking about leaving your job for good and doing something else with your life to make a new living. Trust me, build cash, save it, and then be ready for that day when you'll need it. I promise you, one day you will need it, and you'll be glad you saved that money. Very glad.

I think that all of us work towards a better life, a better day. One of the ways to do that is to create wealth and one of the ways to create wealth is through technology. Technology, by itself, though, doesn't always automated every task and every obligation that humans require, like, say, plumbing.

The reality is that as we more ahead technologically, there will always be gaps in what we can automate. "Progress" is everything you can define as that which you can accomplish without thinking about it: Technology helps us get there but doesn't always solve the lower level details along the way.

If this is true, we have to accept the fact that some jobs, at least for now, will always require a human to do them. It makes me think twice about college since, technically, if everyone had a college degree (like 100% of the population), wouldn't you then need a master's degree to "get ahead"?

I don't know what this ultimately means... does it mean that we should all be getting degrees? Who is left to mop the floors? If we all get degrees, then are we all super-fantastic? If not, then don't we need Master's and PhD degrees? What happens to society if we then need to be in school for another 3-6 years? Can we assume our lifespans are that much longer?

My social democratic side struggle with relativism while my republican fiscal side thrives. Perhaps the point of human nature, no matter what, is that some people will always suffer and some some people will always thrive, no matter the circumstances.