Friday Entrepreneurs - Kathy Waste, Artist

August 1 12 Comments latest by emmalaiho.net/blog » Blog Archive » new

Entrepreneurship isn’t just about technology. Today on Friday Entrepreneurs, meet Kathy Waste, 51, artist and entrepreneur.

In my discussion with her below, find out how she:

• Uses her art for multiple revenue streams
• Prices her product in the hundreds and thousands
• Markets her work
• Calls people who buy her work “collectors,” not customers — and why the difference is worth thousands of dollars

* * *

I think most artists are absolutely horrible businesspeople. Yet you left a 15 year career teaching for the University of California to pursue a living as a full-time artist, and even managed to roughly equal your income from when you were teaching. Tell us a little bit about your art.

I love looking at simple, everyday objects to see beauty in things we might otherwise pass right by. So I paint still life watercolors - watercolor because I love the luminosity and glow of the colors. I tend toward objects that hold cultural and in some cases, iconic meaning - but try to leave the irony for those better suited at expressing it.

I notice your art costs a lot (one painting I saw costs $675.00). How did you decide to charge that much?

Actually, that’s just the price of a print. I offer limited edition reproductions, to maximize the earning potential of a single painting. It’s also a great way to make fine art available for entry-level collectors, many of whom start with prints and work their way up to original paintings.

I see. So how much does an original sell for?

My originals sell for between $600 and $8,000 depending on size and complexity. Most artists use a general “per square inch” formula to price their works, based on a combination of previous sales, the going rate of artists who do comparable work… even the cost of the frame gets factored in.

Rarely (and sadly!) is an artist able to charge based on the actual time invested in creating a painting. Labor Theory of Value doesn’t apply.

[Ramit’s note: Notice how, with one piece of art, she is able to offer it at multiple price points. If you produce something similar, you might produce a free gallery online for the people who will never pay, a $50 print, a $500 limited-edition print, and a $5,000 original, sweeping the entire spectrum of customer demand.]

What are the risks of making so few pieces of art?

Art is all about risk-taking. It’s hard to predict the market, although when the economy is in a tough spot like it is right now, you can safely assume that many people are cutting back on luxury items from $5 lattes to original works of art! So my job is to keep painting, work twice as hard on the marketing end of the business and stay in good communication with my collectors.

Do you have other sources of income besides directly selling your work?

It’s easy to wish I could spend all my time in the studio - the truth is, being out in the world - not just isolated in my studio - makes me a better artist.

I teach painting classes for other busy professionals. Many of my students they tend to be left-brained types who want to take a time-out to explore their creative side. My workshops are essentially word-of-mouth, and have been so successful, that it tells me there is a real unmet need out there in the marketplace. So I’ve recently launched a new venture which takes the artist’s way of seeing the world into the corporate environment with hands-on creativity workshops.

How has the art industry changed in your experience?

It used to be that galleries would handle - and pay for - all the marketing and business end of things for their artists so that we can spend all our time making art. In general, it’s a different world out there these days.

The artist is responsible for framing and shipping the work to the gallery as well as expected to pay 50% of all costs for a gallery opening, i.e., the advertising, the invitations, even the wine poured at the event.

In exchange, the gallery provides “one-stop shopping” for art lovers as well as a venue for your work. Some people don’t buy art except through a reputable gallery.

But let’s face it - being in a gallery can be a love-hate thing for artists. It’s a huge expense, because even if your work doesn’t sell, the artist still has to pony up for all those marketing costs.

Is it common for artists to do what you’re doing, i.e. promoting on the web?

Some artists are choosing to bypass the gallery system all together and market directly online. I suspect this will be effective for selling to established collectors who already know your work - but poses a dilemma about reputation. After all, if we aren’t “vetted” through the traditional system, we’re somehow kind of cheesy if we’re stooping to marketing our own work. But I also think as more and more young artists come along, artists who grew up in a web-connected culture of internet marketing and social networking, the nature of the gallery business will change.

How did you get your first customer?

I honestly can’t remember who bought my first painting. I do know that my first batch of paintings went to various friends and long-time acquaintances and that one of my brothers stepped up to buy my very first prints when they were hot off the press. Of course, I gave him a good family discount!

And how do you get customers now?

I use the word “collectors” rather than customers, because I’ve found that if my art speaks to someone enough that they are willing to shell out hard-earned cash for it, they tend to come back for more.

[Ramit’s note: A key difference. Someone who buys from you once is FAR more likely to buy from you again. This becomes more important with higher-value goods that require more expensive marketing. The cheapest marketing you’ll ever do is to existing customers.]

Last year, I started working with a publicist and that turned out to be a much wiser investment of my resources than spending money on ads. And galleries, of course, account for about 35% of my total collectors.

I also find ways to connect my collectors and the people who take my workshops. In the process of creating community, i.e., a community of weekend painters, a community of watercolor collectors, it moves what I do beyond the sale of a product or service into the realm of offering a richly rewarding experience.

Anything else we should know?

Follow your muse!

Check out Kathy’s work at her website. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

(9 votes, average: 4.89 out of 5)

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Friday Entrepreneurs: Shannon Sofield, Payloadz

July 25 29 Comments latest by Mary

In this week’s Friday Entrepreneurs: Shannon Sofield of Payloadz.com.

I absolutely LOVE Payloadz, Shannon’s service that lets you sell digital goods (like ebooks) online. In fact, let me tell you how I learned about it: When I released my Guide to Kicking Ass, I expected to sell about 100 copies, so I was planning to collect payment through Paypal and send the ebook manually. That lasted about 5 minutes, when I started selling way more copies than I thought I would.

About a day later, Shannon wrote me this exact email, which I’ve saved until now:

Ramit,
I’m a long time reader of your blog. I was surprised to see the method in which you were selling your eBook is not automated or protected. I think you should use our service, I will waive any fees. It protects your file and it ensures delivery of your product in an automated fashion and does not rely solely on email (which is unreliable). You can have it setup in your site in 5 minutes. Totally secure. I’ll even promote it heavily in our 100,000+ page view sites.

Check it: http://express.payloadz.com

Beautiful. He made his offer so simple that all I had to do was reply and say “Ok” and the rest was taken care of. How could I say no? That’s marketing.

Since then, I’ve sold over a thousand ebooks through Payloadz, and whenever I email Shannon about a bug or feature request, he gets back to me within the hour, making me love his service even more and want to spread the word.

In this interview, pay close attention to…

• How he got the idea of starting Payloadz
• How he keeps costs down (he’s the only fulltime employee!) and where he spends his time. This is the dream of a lot of iwillteachyoutoberich readers — to start something on your own and have it be profitable from the first week. However, it’s extremely difficult to do. Check out how Shannon does it.
• What he says when his friends ask for advice on starting a company — including what makes him roll his eyes (ugh, me too).

The most important thing in this entire interview is Shannon’s point of how to get people to pay you. There are 2 no-brainer reasons you can charge people for your product: If you’re saving them money or making them more money.

Now check out how Shannon did it.

* * *

What is Payloadz?

PayLoadz.com is a web-based service that allows anyone to market, sell, and distribute downloadable goods such as ebooks, music, video, software, or any other file that can be sent over the internet.

How did you get started?

I started a small web-development company and worked specifically with people integrating basic PayPal functionality. I had been working with PayPal directly for a few months where I was writing tutorials on how to use their Instant Payment Notification (IPN) feature to deliver software to people.

While leaving for a vacation to Florida, I realized that it could be made into a web-based service and the idea for the first Paypal-based service of this kind was born. Unfortunately, the vacation was ruined as I couldn’t think about anything but this idea. It was up and running within 48 hours of returning home.

Can’t someone just set up their own system (e.g., Paypal) and do this themselves?

When I launched, PayPal didn’t have any means in place to do what our service provided other than the IPN. Then they had an issue with the purchase download page where turned into a kind of “hack” as people were looking at the HTML code and going right to the download page.

Anyway, PayPal has come further with things like encrypted buttons, auto return, and Payment Data Transfer. All great tools and useful for digital goods, but each have their drawbacks.

How did you get your first users?

Surprisingly, the first few users were pretty high volume. It seems people have wanted to do this and simply needed the solution to become available. They were selling tens of thousands of goods on our service, and I can say it had some serious lack of functionality back then. We were the only game in town for the first year or so.

Now that you’re more mature, how has your marketing strategy changed?

After the initial period, the competition started coming up, so I had to establish a more formal marketing outline which includes a mix of PPC, SEO, a reseller program, and word of mouth.

Things I’m doing now are getting a PowerPoint and PDF deck together to bring to larger clients or VCs. I hadn’t had the need for this before, as the service couldn’t work for big software players due to integration issues. But with our recently released API, we can target those types of organizations so we needed something to bring to them instead of simply sending them to the site.

How do you make money?

We charge people a monthly fee to use the service if they sell more than $100 worth of goods in a month. The service is free if they don’t exceed sales of $100 each month. Beyond that, it breaks down to a service fee from around 5%-15% per month based on transaction value. I’m trying to focus on the concept of “we get paid, when they get paid”. So, if we provide a service that enables them to make money, it should be painless in converting them to paying customers.

We really have not differentiated the free account features from the paid account features in order to get people to upgrade. We could, and I think when the company moves to the next phase it will institute those kinds of things.

What were some of the biggest mistakes you made in growing your business?

I didn’t delegate. The business was profitable enough after its first few years where I could have started to send some of my duties elsewhere. As soon as you have enough headroom to spend to outsource, do it. For online businesses, I’d say the first one to look into is programmers. Definitely go overseas (Rent-a-coder, eLance). Be careful though, it is very hard to find good ones.

I think I’m still making one huge mistake, one that I’ve been making for some time. That is, thinking I can do it all on my own. The truth is, I could have been building a company ten times the size if I had brought people on to help. I had the fear of using the excess cash to bring someone in and then have things go south and the cash flow dry up. This hasn’t happened once in the entire business life, but paranoia is an entrepreneur’s daily companion.

Where are you in the lifecycle of your company?

Since that first month, maybe even the first week, the company has been profitable, but is still completely in bootstrap mode. To this day I am the only full time employee. I’m not hoarding money away though. I pay back into the company and reinvest almost everything.

I thought I could manage the company through the next phases, but am not sure now. I think there are people much better suited to do that kind of thing. If someone comes along and the offer is right, I can see moving on. However, the company is doing great and as long as I am here, I will continue to drive it forward as aggressively as possible.

What do you do on a day-to-day basis?

The first half of the day is really just reactive. I begin with email, about 155 of which will require my response. They are either tech support questions, larger customers, developers, or one of the many automated emails that keep me updated daily on the status of the system.

Once that is done I check Google News, Bloglines, Digg, and a few special interest sites. Another round of emails has me into the afternoon where I begin the proactive part of my day. It may be tweaking AdWords, brainstorming features, scouting prospective partners, or even doing some of the development myself.

If someone had an idea for a web business, what advice would you give to them?

A lot of my friends, very smart people, come to me each week with website ideas. Normally a quick Google returns ten companies already doing it and it ends there.

Other times I ask the “how will it make money?” question and they say “advertising” which gets an eye rolling from me. A lot of ideas are what I consider chicken and the egg scenario. To make money it needs users and content, but it doesn’t have either to start.

Then again, I’ve shot down many great ideas that have come up years later. A friend sat me down and explained a service that stored your bookmarks for you so you can access them anywhere. I slammed the idea (I don’t know the reason as it seems like the most logical thing ever to me now), but a few years later, del.icio.us sells to Yahoo!

One other concept that has stuck with me to evaluate a business idea is based on the financial service it provides to the user. To me, if someone makes money off your service, you can justify payment.

Is there anything else we should know about Payloadz?

We just sent out a press release which you can see here.

* * *

Want to be a Friday Entrepreneur? See the benefits of being featured, then submit yourself as a Friday Entrepreneur.

Check out Payloadz, read other Friday Entrepreneurs, sign up for my newsletter.

(8 votes, average: 4.5 out of 5)

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Friday Entrepreneurs: Charlotte Genevier, SocialEngine

February 1 14 Comments latest by DevLabs

The Friday Entrepreneur series continues.

Today, read about Charlotte Genevier, a Friday Entrepreneur who’s co-founded multiple companies (including her current one, SocialEngine). Below, learn how:

• She sold her first company for $90,000 in 2007
• She launched her second company with a monthly advertising budget of $600
• The five biggest mistakes she made (including delegating)
• The advice I gave her, which helped to increase traffic by 300% and increase sales by over 50%

* * *

How did you get started founding a tech company?
First, I met Alex, who became my co-founder. Alex had an eye for design and a strong business sense as he’d already worked on several projects of his own, while I had a love of (and talent for) math and programming. Though I do help out with many of the business decisions, Alex handles all the marketing, customer and employee management. Similarly, while Alex does much of the front-end design for our products, I plan and program the the products’ back-end.

Looking back, how were you able to get started with no money?
As high school students, we were lucky to have virtually zero living expenses and time constraints. Because of the non-capital-intensity of this field, all we needed to get started was a few dollars a month for web hosting and our own time, which we gladly spent programming instead of playing video games. We officially established our company, Webligo Developments in March 2003. Every time we released a new product, we learned a little more about software development, customer relations, and the fundamental aspects of business.

So tell us about BlogHoster, your second company.
Though BlogHoster earned us about $175,000 during its first two years, we eventually sold it in the summer of 2007 for $90,000 to UK-based Splashpress Media.

The backstory: We spent the greater part of 2004 planning and developing BlogHoster (a blog hosting service) in the typical garage-office fashion. We launched in December and saw immediate sales with only a bare-bones marketing budget. Over the next year, we added a slew of new features as well as a customer mod-sharing community that became surprisingly active. Slowly but surely, we started spending more time on BlogHoster and less time on our college coursework. We grabbed 300 square feet of office space in Pasadena and hired an intern from our high school to help keep everything together. Soon, we realized that BlogHoster had a lot of potential that would likely not be fully realized within our limited resources.

And now you’re working on SocialEngine.
SocialEngine is a white-label social network platform. Before Facebook, MySpace, and the like, personal blogs were all the rage on the web. In fact, they were arguably one of the first major iterations of social networks; websites like Livejournal and Xanga offered basic social networking features. We made BlogHoster to ride the wave of decentralization that always happens when a particular type of web service becomes popular. We created SocialEngine for the same reason. It is said that during the gold rush, the people who truly profited were the ones selling the tools. When modern social networking became in vogue, everyone wanted to be the next Facebook (it even made your
list of “8 Stupid Frat-Boy Business Ideas“). Truth be told, most of our customers are not trying to be the next big thing. Instead, they are using SocialEngine to unite people around a common characteristic or niche theme.

What’s different about SocialEngine?
One of SocialEngine’s most attractive features is that, like BlogHoster, it can be seamlessly branded and customized to match any website.

Here are a few examples of SocialEngine-powered sites:

• http://www.smartlygreen.com/home.php
• http://www.springbreakshare.com
• http://www.sfs.com

How did you initially get users to try SocialEngine?
With an effort to be a bit less shy than we were with BlogHoster, we finally put together a decent advertising budget of about $600/month. We bought some ad inventory on Google, Yahoo, and Hotscripts.com, which brought in some immediate traffic. These types of ads give us an excellent ROI because our customers almost exclusively use search engines to find software like ours, and because the average SocialEngine sale was about $350 and paid for more than half of the month’s advertising budget. In my opinion, Adsense and other ad networks don’t make sense for many products, but they work magically for ours due to its price, the engagement channel that customers use (search engines), and the fact that all of our leads are already “warm.” We also wrote a press release and published it via PRweb.com. Despite being a tad sensationalist, it drew in quite a bit of attention.

What about pricing?
As kids, we always undercharged for our work. It went hand-in-hand with the awkwardness and insecurity of being teenagers. We also had virtually no costs (with no living expenses or office space, just pizza and Diet Coke), so it already felt like we were hitting the jackpot every month. As we transitioned from hobbyists to businesspeople, this obviously changed. For our first big project (the IMS Pro), we eventually took a deep breath and doubled the price.

While our profits increased only marginally, our customer support needs decreased substantially giving us time to begin planning our next project. That’s when we discovered that pricing can be an excellent resource-balancing tool, assuming you can find the equilibrium you’re looking for. Since then, we’ve often used pricing to adjust the flow of our projects. We generally begin with a low price to facilitate market penetration and to build a customer base of grateful, feedback-giving customers. Over the project’s arc we incrementally raise the price to match the added value of new features or to open up time for brainstorming.

Have you thought about raising outside money (angels, venture capitalists…)?
We’ve definitely thought about taking venture funding a number of times along the way. In fact, we’ve received several offers, including a recent one for SocialEngine. Sometimes it’s tough to say “no” since it seems like web startups are only judged based on their ability to attract funding, rather than their ability to turn a profit. We were only 14 and 16 when the Web 1.0 bubble burst, so the basic (yet then-ignored) concept that a company should actually have a business
model left a lasting impression on us. VC funding isn’t free money, and unless we have a need for a large amount of capital for a new project, we will continue funding ourselves organically. The scope of our projects have been relatively small to date, so perhaps VC funding will become a reality in the future as we need to hire more people, overlap projects and accelerate our growth.

What are the three biggest mistakes you made with your first companies?
Here are some of the more memorable ones:

1. Before SocialEngine, we offered our customers free upgrades and unlimited support for life. Yes, that’s as silly as it sounds. It reflects the disbelief we still had that people wanted to buy our software. This ultimately led to us being held at the whim of a few grumpy customers for quite some time. Needless to say, we now charge for installation, extended support, and new features since they are, in fact, substantial investments of our time and valuable to our
customers!

2. Another one of our big mistakes was poor money management. We let our profits pile up into a savings account that earned 1% interest, not even beating inflation. Although we can say that we were naive kids that didn’t even know what a mutual fund was, that’s only half the story. A much larger portion of that money could have been reinvested in the company, allowing us to grow much faster than we did. I think the main reason we left it in the bank account was the fear that our lucky streak would end at some point. When we finally realized that luck wasn’t the reason our projects were selling, we started to use the money more actively.

3. We used to be very shy about marketing. All our pre-SocialEngine projects had tiny marketing budgets (due to our fear of spending money) that bought ads on only one or two websites. With BlogHoster, our primary source of traffic was a single script-directory website on which we had a sponsored listing. We later discovered that our sales trends correlated directly with the traffic levels on that site. By putting all our eggs in one basket, we were left at the mercy of that company’s ability to attract traffic to it’s site. With such high profit margins and virtually non-existent operating costs, we should have been more bold and varied in our marketing instead of sticking with what we believed to be our “tried-and-true” methods. The lesson here is to avoid being timid when you have the resources to be bold!

I love hearing about these mistakes because they’re so instructive. How about more recently? What about the biggest mistake you’ve made with SocialEngine?
The biggest mistake we’ve made with SocialEngine is the length of time it took us to begin properly delegating. Because the company was just the two of us for so long, Alex and I had the mentality that we didn’t need help, even when we were swimming in support emails. We didn’t think another person could perform the tasks as well as we could, but we couldn’t continue adding new features to the product, manage marketing, answer pre-sale emails, and handle support all by ourselves. When we finally found a third member to add to our small team, it was like a weight was lifted from our shoulders. We were suddenly able to handle more work and get more things done with much less stress.

We actually talked in October and I gave you some feedback on the site. Can you tell us what we spoke about, what recommendations I made, and what you’ve done?
Initially, SocialEngine earned between $15,000 - $20,000 per month from license sales. After the 2.0 release in December (which included a variety of new features) and the implementation of your suggestions, we’ve brought our revenue up to between $25,000 - $30,000 per month. Of your suggestions, we tried the following:

1. Offer a taste. We decided to create a 15-day trial version of SocialEngine to give people time to experience the product on their own servers. This has been an excellent way to prove SocialEngine’s quality and build trust. To track conversions, we offer a $10 coupon with each trial download. Our records show that conversions from the trial version generally take less than one day, which supports the theory that people just want to make sure our product has substance before buying!

2. Test your front page and make it easier to purchase. After the launch, we occasionally received emails from people who couldn’t seem to figure out how to place an order. This was more than a little disconcerting! We redesigned our site layout to include at least three “purchase” links on every page of the website, with four on the homepage. Our Google Analytics (and the lack of confused emails) show that these have been very useful.

3. Do some search engine optimization. Realizing that search engines are now our primary source of traffic, we’ve optimized our pages with the hope of receiving as much organic traffic as possible. Before the optimization in early October, we averaged about 220 unique visitors daily; now we are averaging about 750 and still growing.

4. Add testimonials to your website. We frequently receive glowing emails from customers about SocialEngine. You suggested that we publicly quote these on our website, and we have (as you can see on our homepage). Having these quotes from customers seems to really have improved pre-sale trust. We may be opening up a customer showcase in the near future to display some great implementations of SocialEngine.

Lots of iwillteachyoutoberich readers would love to start something small and make a little revenue off it. What would you suggest to them?
First, don’t put money into a new project if you have no idea how it will make money. Although there are a few rare exceptions, this basically never works. Once you have a business model, stay focused! Don’t be tempted by alternative ways to make a little money here and there, as they will usually derail your efforts and waste your time. Our business model is based on selling our own products, not consulting on an individual basis. In the past, we took on a few consulting projects as an attempt to mitigate the risk of releasing a new product. To our dismay, these projects were extremely time consuming, stressful, less profitable, and actually slowed down our main progress.

Second, don’t be afraid to take calculated risks. At the beginning of myjunior year at Harvey Mudd College, I struggled with dividing my time between work and school. When I finally made the decision to take time off, nearly everyone I talked to was overwhelmingly negative. The arguments they made for staying in school were valid, however I truly felt that if I didn’t take the risk of devoting myself completely to my company, I’d always regret it. Not having the “safety net” of a college degree is scary, but I know I would be much less fulfilled had I played it safe.

Is there anything else we should know?
Thanks for reading about our work! As a special thank you to IWillTeachYouToBeRich readers, we are offering a $50 discount on the purchase of a SocialEngine license (valid for the next twenty days). Simply enter the coupon code “ToBeRich” when ordering your license from our website: http://www.socialengine.net

Now what? Check out the SocialEngine. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

(5 votes, average: 4.6 out of 5)

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