The most common reaction to my recent announcement of starting a new WordPress hosting company was that this blog provides me with a ridiculous unfair advantage.
But was it?
Here’s what people said:
“[You’re starting from nothing] except approximately 18,000 prospects. How convenient. ;) I wish I had that kind of mailing list starting out.”
“You’re doing this the easy way, publishing this post so that thousands of users see it.”
“It is, of course, simple to talk about how easy it is to be popular, when you’re the already established prom queen.”
Fair point, but what actually happened after that post announcement? How unfair was this advantage?
Interestingly, Eric Sink got the same reception years ago when he launched a little company of his own. It’s worth hearing Eric defend himself because it’s just like my scenario, but because this happened six years ago I can reveal his results at the end of this post:
“Reactions to my Winnable Solitaire experiment were mostly positive, but several people claimed my experiment was “unfair” or “invalid”. In a nutshell, they argued that because I am already “famous” for my writings about the business of software, I have an advantage that is not available to my readers. My experiment is therefore meaningless because I did not duplicate the conditions a regular person would be facing when trying to launch their own micro-ISV.”
Let’s start with the results of my post:
WPEngine got two new signups. Only two. That with 17,000 wonderful, loyal, friendly, supportive RSS subscribers and as many page-hits from Twitter and HackerHews.
Not exactly the massive boost you or I was expecting. I figured on 10-20 new customers at minimum and dreamed of 50. I was wrong by an order of magnitude.
Eric had a similar result: One month into his Winnable Solitaire experiment he had sold a total of six copies. Hooray for fame.
And let’s put this into broader context: At WPEngine we had 50 paying customers (not prospects) before my post went live. Most pay $49/mo, a few pay north of $1000/mo (large blogs with serious traffic). So whatever we did without the advantage of this blog was far more important, at least in the one case of getting initial customers. (I’ll explain exactly how we did that in future posts.)
Still, the blog was instrumental in getting those first 50 customers, but not because I’m able to push WordPress hosting onto 17,000 unsuspecting victims. One of the biggest reasons was in building the team.
It’s no secret that the team is a critical factor in a startup’s success; have you ever heard otherwise? But there’s precious little advice about finding and gathering that stellar team. Interviews on the subject invariably turn up explanations like “we went to school together” or “we worked together” or “we met at StartupWeekend.” In short, you put yourself in an environment where you’re likely to interact with other intelligent, capable people, and hope that you find someone socially compatible who is also crazy enough to want to do a startup. It’s a good strategy, and anyway what else can you do?
I knew I needed a killer team for WPEngine — not just “capable,” but a group that would itself be an unfair advantage. See, WordPress hosting is already a commodity, with every hosting company on Earth offering something at every price point from $0/mo, $5/mo, $15/mo, $40/mo, and even $500/mo + $200/hr consulting fees. In a mature market you need severe points of differentiation, and one of those (I felt) had to be the team itself.
We needed someone like Aaron Brazell. Aaron is a WordPress core contributor and the author of WordPress Bible (Wiley). He’s famous enough that strangers at WordPress conventions ask for autographs of their dog-eared copy of his infamous tome. He has seventeen zillion Twitter and blog followers, most of whom are themselves active in the WordPress community. He knows all the major players in the industry including the key folks at WordPress.com, BZ Media (the CopyBlogger media group), ProBlogger, and members of the press at Mashable, TechCrunch, and others.
Maybe with an Aaron we’d have a chance. His network should provide an ocean of free leads. His reputation transferred to the company would bless us with instant credibility. His press connections should give us pops of traffic and external legitimacy. His intimate knowledge of WordPress internals and roadmap should mean our service is technically superior. That’s a lot of advantages! Maybe enough to make or break the company.
Well we got Aaron, and it’s because of this blog. When I called Aaron he was charging an obscene (and well-deserved) hourly rate for WordPress consulting in Washington DC, but he was yearning for the startup life. He was ready for the trade-off of less money now in exchange for more money later, and for building something of lasting value instead of the impermanent drudgery of un-screwing hacked WordPress installations.
And the blog sealed the deal. Aaron could have joined (or startup) any number of startups, but he liked WPEngine because he wanted to do a startup with me. And he wanted to do a startup with me because the blog revealed my attitude, perspective, and credentials.
Aaron picked up, moved to Austin, and has already been instrumental to our success thus far.
So fame does help in important ways — enough even to deserve the title of “unfair advantage” — but startups are still hard and unlikely to succeed no matter who’s at the helm. Case in point? Eric Sink.
Eric’s experiment eventually failed. Well, “fail” is a too harsh a word, it’s just the one in-vogue nowadays, especially when describing an wonderful experience in which you had fun, learned a lot, grew as a person, and wouldn’t trade it for anything, particularly not a dull, predictable day job. You know, the kind of “fail” that characterizes a lot of software startups.
On sales of $216, Eric sold Winnable Solitaire for a small sum. Of course neither the exit nor the to-date revenue amounts to anything that anyone would declare a solid success.
WPEngine’s revenue to date is several orders of magnitude more, so hopefully we’ll avoid that fate. Still, our expenses are also orders of magnitude more than Eric’s, and as I hope I’ve shown, although we have decided advantages it’s never an easy road.
But then, if it were easy it wouldn’t be worthwhile, right?
Have your thoughts about reputation changed, or is this blog still an unfair advantage? Continue the debate in the comments.
38 responses to “Reputation isn’t as powerful as you imagine”
Hello Jason, I am looking forward to hear how you got those first paying customers… I want the details :). Regarding this post, I am not sure what it is that you are trying to accomplish, after reading it, I am more convinced that you in fact have an unfair advantage over an unknown person like myself. You said it yourself “we got Aaron, and it’s because of this blog”, so yes, I agree that having a great team increases your chances to succeed (it is not a guarantee), but it is a lot easier to attract really good people when you are “famous”, I am sure that Aaron wouldn’t have said yes to an unknown crazy entrepreneur. Having said that… I agree that the great team, the “fame” and the 18,000 subscribers do not guarantee an instant success, and it will be foolish not to use those resources when you have them ;)
Trying to accomplish => Showing that although there are clear advantages, it’s not necessarily the obvious ones like “getting people to sign up,” which both me and many other people thought was the case.
Wow, that’s pretty counter-intuitive, thanks for sharing Jason! Particularly helpful as someone who was considering ‘establish reputation -> launch product’ route.
Do you think it’s more a case of what you do with that reputation, though? For example, if you had 10k email subscribers (for argument’s sake) and could pitch them directly about your new product (in a way you can’t so much with a blog), you might milk that initial 10-50 new customers in a way that tangential links to the product might not. Or, if you had some annoying pop-over for those landing on your blog, for example.
I guess it’s the kind of reputation you have and cultivate (i.e. ‘fans’ vs a industry reputation), the degree to which you push your product, and the crossover between markets.
Always good to knock another ‘underpants gnome’ argument on the head though, in this case:
– Gain reputation
– ???
– Profit!
Yes I’m sure the conversion rates between different kinds of “attention cultivation” vary widely — even by orders of magnitude.
I could imagine a targeted mailing list that results in double-digit conversions. I could also imagine someone building a mailing list based on an AdWords landing page where they were excellent at converting those eyeballs into email sign-ups but it turns out to not be the right sort of people and therefore doesn’t convert at the email level.
Maybe people argue “RSS Readers” is a poor measure of this type of influence, and I think I just proved them right. :-) Those same people often argue that email lists are much better.
Jason,
How many, in your opinion, are your potential customers out of 18,000 members of your mailing list based on the WPEngine solution and price point?
I would have guessed a lot more than 2. And I would have guessed that I would have converted a large percentage of those, because if they’re the “perfect customer” and they could host with me, my reputation ought to be the tipping point.
Also I would have thought that many (even a thousand or more) are generally influencers in their own circles, and would tell others to do it.
Also the post got viewed a lot as well — Twitter, HackerNews, etc — and these “2 orders” includes that too!
But ultimately the answer is “I don’t know!”
Jason,
Something else to consider is that you may have gotten only 2 signups, but how many will you get from the same audience over the next 18 months? My guess is you will probably exceed your 20 new customers from this group during that time
That’s not to argue against your thesis at all, but simply to point out that high-end hosting isn’t an impulse purchase. Many of the people on this “list” who are viable prospects just might not be at the exact point to sign up “today”, but over time many of them will be at which point you’ll convert.
JMTCW.
-Mike
Good point.
Another aspect of this is that maybe I was convinced that WP Engine is the right choice for me, but I’ve already pre-paid a years worth of hosting. Odds are I’m going to wait until the year is up before I switch over to WP Engine.
Here are some thoughts
1. How many people on your mailing list have serious websites that are built using wordpress vs. personal blogs that use wordpress?
2. Most of the members of your mailing list may not have a need for wordpress hosting at this point.
3. Those who use wordpress, are already hosting somewhere else and do not want to pay more even though WPEngine has lot more features and is a superior solution.
4. Some of them will use WPEngine in future.
Nice article Jason. I love hearing about other successful internet start-ups. When you have a nice network its much easier to take the “Hollywood Launch” approach (as 37 signals likes to put it). This is the Teaser-Preview-Launch model that only would work if you have an existing network.
In my case, I had no network starting out. Can you imaging “Teasing” my list of family and friends with my great new product! Ha! That would be embarrassing!
Without a network it is still possible, it just takes time, patience, and a different approach. I have been able to grow my start-up with good SEO, and fantastic customer service that leads to word-of-mouth referrals. A much slower process, but it can work!
Inspiring to hear that even famous people are dealing with humble beginnings in their new venture.
I think you are completely mistaken here. It was because of your reputation that you got people join answers.onstartups. Your fan club is unfortunately not totally into WordPress.
Actually, because of your/Aaron’s fame, you have possibly become a credible competitor to the Automattic juggernaut, with massive press coverage.
I like your point about “Answers” versus “WordPress.” You’re probably right.
Also though, Answers is free and similar to the blog in nature. So maybe the lesson is that the closer the thing is, the easier it is to transfer that attention. But “free” helps too.
However part of why I thought this would go over well is that the few blog posts I’ve done about WordPress have been popular including lots of comments and questions about WordPress in particular. So I thought there were, in fact, avid WordPress’ers who would like to come on board.
Clearly, though, you have it right!
So whether you are 25 or 50 years old and have a personal network of 1000 or 18000 contacts in your network getting 10 – 20 customers to sign up for your products and services requires: time, money, hard work and an influential team.
Most importantly time and money, because with the first two you buy the latter. Above and beyond whatever influence we imagine we have, building a team that can work without cash compensation, health benefits, relocation assistance, money to pay the bills, etc. equates to the rich getting richer in most peoples minds.
From your blog, readers deduce you and Aaron are both independently wealthy and qualified investors (defined as >$200K in available cash-on-hand). The blog helped you influence the team that attracted the pre-marketed 50 paying customers: how much time and money did that take; both in terms of cash and credibility over a period of time? You invested something to buy the sphere of influence to attract 50 customers. Even if you used your reputation to convince Aaron and a team of other folks with time and money to join together to increase everyone’s chance for success; that is an advantage most entrepreneurs simply won’t have at startup. Not unfair – just a reality that contributes to your increased chances of success.
It sounds like your readers want you to imagine investing in a company with a seedling of an idea where a principle entrepreneur doesn’t have the money to fund a team or attract an independently wealthy team. Remove the cash-on-hand, the past success and the blogosphere… hold down a check-to-check job, (or not) now sprinkle in the worst economy in this lifetime and then launch the company anyway. Find that guy and invest time and money in him if you want a true test of nut up or shut up. Better yet, make it in a market where you don’t even have domain expertise.
From what I read, this is the entrepreneur speaking to you in your blog comments, which may also offer insight into why you only received two new signups from a following of 17000. They are not a WP target market.
I also don’t think it is a question of fair or unfair advantage – everyone accepts life is not fair! It is a matter of comparing apples-to-apples, level playing fields, equal opportunities.
At the end of the day, if WPEngine were to fail – it would not mean Jason Cohen or Aaron Brazell would be starting over at a zero sum. But for most entrepreneurs reading your blog the risk is probably a negative zero sum.
Always good to share in your thought process Jason.
So true.
Reminds me of the mid-to-late 90’s while we were growing VBxtras and early on we’d set our targets on things like getting our printed catalog in Microsoft’s Visual Basic box itself. I thought if we did then everything would be easy. We pushed and pushed and finally it happened! Then I woke the next day and nothing significant had changed. I had to keep fighting the good fight every day, no different than before. :) Yes, it was helpful but it wasn’t a silver bullet.
And there were numerous “if only” goals we had, and each time we achieved them we saw only tiny incremental improvement.
I think things that make everything easy are so rare that we can probably literally count the number of times they happen to anyone and everyone in a year’s time! For example, if you are a book author and Oprah clutches your book to her breast and says “America, buy this book!” then I think your world might change at that moment (that’s a quote from a local author who was lucky enough to have that happen. :)
But other than that, life’s a struggle no matter what the “advantages.”
-Mike
I love the way you are keeping everyone (myself included) engaged in the process of growing that business. Also thanks for your insights. Indeed, reputation is not everything when it comes to creating new client relationships.
I made two assumptions about your RSS subscribers that to me indicate why you only got 2 sign-ups.
1) Assumption 1: Most of your RSS subscribers knew about WP Engine before your post (I did). So, I would guess that the ones that were really interested would have signed up before your post went up. The post itself didn’t provide the reader with a compelling reason to sign-up – the post wasn’t really about WP Engine, but about what we as the readers could expect from your future blog posts.
2) Assumption 2: Most of your RSS subscribers are working in cash-strapped software startups, possibly pre-revenue, such as myself. Which means we are not your target market. $600/year for hosting is just way too much money for most startups. Now I realize that there is value behind that $600/year, but the fact remains that it’s just not affordable for the average bootstrapper.
Are my assumptions wrong?
“And he wanted to do a startup with me because the blog belied my attitude, perspective, and credentials.”
I’m not sure what word you wanted to use there, but it’s definitely not “belied”.
Ha, you’re right! “Belie” implies falsehood. Changed to “revealed,” thanks!
Very surprising post. I would assume that you get more than 2 subscribers after publishing the post. May be the decision takes longer time and hopefully you will get more subscribers because of your blog efforts.
I would too argue a point that most of your readers already know about WPEngine therefore the post did not have great impact. I am not sure how can you check how many readers are your “best fit” prospects, may be ask for feedback to get some data.
I really hope that WPEngine will take off.
I would love to know how you get your first customers. You are in very competitive market.
Do you think that getting clients is the most important part of success?
Well in the “grand scheme of life,” I’d say success is only that it was fun, I learned stuff, it was a worthy cause, I liked the people, we built something interesting, and so on.
But it’s a business too, so yes success means clients. Even more, success means profitability because that means sustainability, which IMHO is what a “real business” is — something generating enough value that it sustains itself.
You make me sound like such a whiner. But my comment (the first one) was more of a sarcastic pat on the back.
I heard this a few years ago and it sticks out when I hear anyone whine about fairness: “life’s not fair, and that’s great news!” I think I heard it first from David DeAngelo.
The advantages, if you can call them that, that you’ve earned from the success of this blog and your other ventures are only unfair because it doesn’t match anyone else’s EXACT starting conditions. I think the best advice you can give to anyone looking for THE formula is “create your own formula and quit looking to me for all the answers.”
Luv U.
You gotta stop apologizing (I know you’re not) for your advantage. You worked your ass off for it and any of these babies that complains can just shove it.
Someone told the other day that I was a “good public speaker, but that was not fair because I speak so often that I have fine tuned the skill”. Ummmm, how is my working hard to have presented to over 300 audiences “unfair”?
You have built a brand, reputation, and a band of people who respect you because of consistently delivering. That is not an “unfair advantage”, but instead and “earned advantage”
Thanks for sharing – interesting. After thinking about this since reading it yesterday, I’m not totally convinced though. There’s a lot more that goes into marketing than just having an audience. You’ve got to have the right audience, a good offer, and effective creative/communication of your offer.
Audience – As others have posted in the comments, are you sure your audience wants/needs what you’re selling? If they don’t, then two sales might actually be a huge testament to the power of your reputation.
Offer – Looking back on your post announcing your new company (and remembering seeing it a few weeks ago), the offer I see is that we can follow along as you “nut up or shut up” and share your experiences starting a new company. While you mention what your company does briefly, I don’t see any offer specific to purchasing services from it. We’re slow, you gotta be specific if you want us to do something specific. :)
Creative/Communication – The announcement is a good read as a blog post, but it definitely doesn’t follow the standard structure of a direct response letter or conversion-focused web page. These things all look the same for a reason. True, this is a blog post and not a landing page, but there are still lots of things that could have improved your conversion rate quite dramatically.
Too bad you can’t a/b test an RSS feed!
You said something that really hit me.
The “unfair advantage” lies within the team itself.
That’s something I strongly believe in as well. While it’s obviously not enough for guaranteed success, I believe a solid team is definitely a condicio sine qua non.
In my experience, at least in this Southeast Asian country where I live in, being famous gives you a LOT of leverage in most cases. A well-known tech blogger here started selling web design services, and he easily got hundreds of customers..worst part is he was able to get away with charging exorbitant prices just because he was the one designing. Another one who blogs about cars started an auto detailing shop and he easily got customers too. I guess it might be different depending on the service offered though.
I read you post where you announced that you are gonna share with us how you are going to run your new company. I don’t think you ever said that you intend to use the RSS subscribers as prospects. Yes, the audience did say that was an unfair advantage.
I am sure if that post was a marketing pitch for WPEngine it would have a different style. And offcourse you would have considered how many of us readers are actually prospects.
So what you’re saying is that you need to be “famous” to build a good team, and THEN get people to buy your product. Got it!
In all seriousness, it is refreshing to hear that you and others(Seth, Joel) etc are not successful in business simply because you have a successful blog.
So, basically, your own reputation landed you Aaron as a partner and Aaron’s reputation landed you a handful of high paying clients soon out of the gate. So how does this post show that “reputation isn’t as powerful as we imagine”?
Because everyone assumed that just announcing WPEngine meant we would get a bunch of customers, and we didn’t.
Read the comments here and on that HackerNews post and you’ll see the deluge of people who assumed that.
But it’s not true. There seem to be other ways it helps, but not necessarily in that way, and that’s helpful to know whether you’re trying to compete against another company with that advantage or whether you have that advantage yourself.
I was depending on getting 20-50 signups, and I didn’t.
I’m behind on blogs, but I had to respond to this. To be honest, I’m really tired of entrepreneurs who blog having to be defensive about using their blog to promote products they’ve built or investments they’ve made.
It’s your blog. Thanks for writing it. Please write about WHATEVER you want to.
I looked at WPEngine when you posted about it and the prices just weren’t in the range I was willing to pay. Kudos on all of the traction you’re getting, though!
Hi
I have to say I just recently found out about WPEngine and was immediately interested, so I signed up to test it out, I am VERY impressed and absolutely love the staging Area, I am really wanting to stay with WPEngine, the thing is I sent a couple of support emails and still haven’t had a response, it’s not been that long so far but I am starting to get concerned, if I can’t get ahold of someone pretty quick then I’m going to feal uneasy, Maybe I will get a response soon now, (i hope so) I really think support is very important and it’s the thing that is making me pause, I Love the idea of WPEngine and think there is a big market out there for it, but support is always going to be very high on peoples requirements, it’s very scary thinking about something going wrong and not being able to contact support very quick.
You’re right, support IS key. We’ll find out what happened to those emails. Normally we respond quickly.
Thanks Jason, Looking forward to that response.
I would just like to say I personally don’t think the price is high (as some have said) for what you get, I am absolutely sure there is actually a very big market for a service like this, In fact I wouldn’t be surprised if more people knew about WPEngine you may get more signups than you could handle, More and more people are using WordPress for their main site and are really unhappy with the current hosting packages available, I did a lot of research into which host to use to launch my new Website and nothing caught my eye, until I came across WPEngine, (By the way for your reference, I came upon WPEngine through the Vaultpress Blog) I really hope you make a success of it because I would like to be able to use it, I certainly will be telling people about WPEngine and hope that I can tell them I found my ideal new hosting service, we will see over the next few weeks, first I need some support and need to feel confident that I will always get support if I need it.
Best
Rico
NOT happy:(
Getting MUCH happier :)