Julian101.comThoughts, Lessons, Business Tips from ProWorkflow.com’s Serial Entrepreneur - Project Management Software

About a year ago, I did a series of YouTube vids for a laugh and also to share some advice I’ve learnt along the way developing www.proworkflow.com . Although I’m a year older now, and a bit more wise and weathered, this advice still stands. Please excuse the poor quality of the sound - I was experimenting with a camera and got some lag.  But I bet Twitter wished they’d listened to the first vid!

Here’s the series! Have a watch and tell your friends!

Business Tip - Don’t scale up before testing!
Learn why you shouldn’t scale up you web business before testing your internal systems and processes.

Business Tip - Don’t Make a Startup!
Learn why you need to make a ‘Started-up’ rather than a startup.

Business Tip - Be Good Don’t Suck!
Learn how and why you need to be good at what you do and how not to suck.

Business Tip - Low Inertia Web Businesses!
Learn why people love to hear a physical voice behind an internet company or web based business.

Business Tip - People love to hear a voice!
Learn why people love to hear a physical voice behind an internet company or web based business.

Business Tip - Fish in the Demo Pool!
Learn how and why you should be fishing in the demo pool of your web based business.

Republishing Note:
Anyone is welcome to republish this article as free online content, provided that the paragraph below is included in the full form as shown.
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About the author:
Julian Stone, CEO – Project Management Software visionary for: ProActiveSoftware.com, ProWorkflow.com & Julian101.com
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I’ve had a few good chats lately with Patrick Macfie from Start-up.co.nz about what they’re up to with the Start-up venture. This is a great New Zealand based resource for people needing startup advice, info, resources or simply to see who else in in ’startup mode’ as well.

Whilst our company ProActive Software, developers of the ProWorkflow Project Management Solution aren’t in startup mode any more, I wish this website had been around when we were. There’s a lot of  great material worth checking out. I asked Patrick to send through a bit more in-depth info about the website and what they’re doing. Here’s what he sent through.

Why Start-UP?

The idea for Start-UP came about as a result of our own online startup experience/ failure.  A friend and I tried unsuccessfully to launch an online service and in the process lost a whole heap of cash (I’m talking six figures).  During our Startup journey we spent a lot time scouring the Net looking for any information that could point us in the right direction and people that maybe able to help us. I quickly realized that there was a real lack of locally relevant content and that there were some really big barriers online companies faced to being successful here so we decided to do something about it. 

We were really determined that others wouldn’t suffer the same indignity we had gone through on our startup journey and wanted as many people as possible to get access to the right info and advice and decided the best way to do that was through a mainstream media channel like TV.  We had always remarked that our experience would make great TV so I pitched the idea of a documentary television series based on the journey of a group of kiwi online entrepreneurs trying to break into the international market to a long time friend that was a TV producer.

Through the series we wanted highlight the challenges that we had faced and hopefully offer up some answers on how to do it better.  The plan was to utilize that mainstream TV coverage to drive people back to the Start-UP site where they could get access to more practical information.  So really we’re now just in the early stages of execution on our go to market strategy, the TV series went into full time production last week, the website is up and running and the community is building nicely and somehow we managed to launch a magazine in the middle of it all.

What do I hope it’ll do for the industry.

I really hope that we can draw attention to the potential that the online space has to offer the NZ economy, we’re not looking to be industry spokespeople or anything like that (I think that’s wanky in a web 2.0 world) but I do passionately believe that the online space represents the single largest export opportunity that this country has in the near future.  We want to encourage growth and investment into the sector and we want to shout about the successes and learn form the failures.  We want to provide a mainstream media channel for online startups and create a community of online entrepreneurs that share knowledge and experience for the benefit of the community that results in better online businesses coming out of NZ and impacting the World.  

Patrick MacFie
Founder Start-UP - http://start-up.co.nz

Keep up the great work guys… I’ll keep coming back and watching with interest! We need more resources like this.

Republishing Note:
Anyone is welcome to republish this article as free online content, provided that the paragraph below is included in the full form as shown.
————-
About the author:
Julian Stone, CEO – Project Management Software visionary for: ProActiveSoftware.com, ProWorkflow.com & Julian101.com
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It’s a hard balance being in the Software/SaaS (Software As A Service) industry. We can put lots of time and focus into systems and development, but sales may suffer… or we focus on sales and then development suffers… ProActive Software (www.proworkflow.com) has bootstrapped (growth through no funding, and only sweat equity) to profitability thus far and this is fun to a point however if the intention is to bootstrap through to profitability as we’ve done, the issue is 100% correct allocation of resources between development, sales, systems and marketing.

We don’t have a truckload of resource, rather a smaller dedicated team and no massive flash offices (ProActive is largely a virtual team). There are a few contractors globally but we do A LOT with what we have.

We’re up to a good number of dedicated servers in California and one in NZ, and are in profit. So the years of hard work have paid off. Revenue is looking healthy and we all earn good salaries (founders work 16hr days).

The biggest problem I see in both the local and global market is the high number of software/SaaS co’s trying to scale, but using (old school) high inertia sales and marketing.

Ie: people having to hard sell, or visit companies premises to sell. Also, trade shows and exhibitions, travelling etc…

All this is fine (if you can afford it), but the underlying business model HAS to be low inertia, otherwise, it’ll scale, but so will the costs and expense… and profit will never come.

To be in New Zealand and compete in the SaaS market globally, there needs to be minimum expense per sale, and as the revenue grows, the margins need to expand as well.
If your business’s margins shrink with scale, you’ll hit a lid and have no profitability long term… Expanding margin mean you can scale faster as you grow.

Some companies I know of think that ‘Speed to market’ is the key. You must grow fast! – Bollocks - it’s a myth! Long term sustainability is the key. Be smaller and healthy rather than rush things with the wrong model only to find out that you’ve scaled up too fast on a bad model and the only path to profitability is to take round two funding (and lose more control).

We track our competitors (as it’s a competitive market) and probably 20-30% of the competitors I track have disappeared in the past 12 months. Gone! We won’t allow that to happen to ProActive Software  ;-)

In my personal opinion, Founders should also take a company to revenue BEFORE taking investment to scale – otherwise you simply give away too much of the company and the investment goes into R&D (Investment should go to Sales/marketing). Not only that, but it’s those bootstrap years that help you truely discover the ‘profit recipe’ of your business. You can’t spend needlessly – every dollar out must return. This thinking can be lost or clouded if too much investment comes in too early.

Ultimately there is one formula we ALL must adhere to to succeed long term.

COST TO AQUIRE a Sale
   < Must be Less than
AVERAGE REVENUE from a Sale

Where most companies get it wrong is on the ‘Cost to Aquire a Sale’ part. They make plenty of sales, but when you look at their model and costs, with trade shows, print ads, high sales costs etc they can blow 30x or more the monthly revenue they’ll gain..

Ie: A software co may spend (if analysed) $1000-2000 in time and company resource to land an average $50 per month sale. This means they’re not in profit until that customer has been with them 30 months. On this note, every company has a different ‘Average Customer Retention’ time.
This may be 3 months or 2 years, but simple maths will tell you that if it takes 30 months to get to profit and the ‘Average Customer Retention’ time is 12 months… Guess what… you have a problem… and you’ll be chasing 2^nd round funding sooner or later to stay afloat.

Understanding the key metrics around ‘Cost to Aquire a Sale & Average Revenue from a Sale’ is a key issue we all need to focus on – every day…

That’s my 2 cents for the morning… Time for a coffee!

Republishing Note: 
Anyone is welcome to republish this article as free online content, provided that the paragraph below is included in the full form as shown.
————-
About the author:
Julian Stone, CEO – Project Management Software visionary for: ProActiveSoftware.com, ProWorkflow.com & Julian101.com
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I was thinking it’s time to ‘get down to business’ for the year and it reminded me of an awesome wee tune called “It’s Business Time” by our superstar New Zealand folk legends, “Flight Of The Conchords”.  Enjoy!

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Republishing Note: 
Anyone is welcome to republish this article as free online content, provided that the paragraph below is included in the full form as shown.
——————————
About the author:
Julian Stone, CEO – Project Management Software specialist for: ProActiveSoftware.com, ProWorkflow.com & Julian101.com

I read a good article in the NZ Herald online the other day called “NZ Entrepreneurs going to town on web” about some New Zealand internet software start-ups taking some promising steps towards international success. In the article, Wellington entrepreneur and Xero founder Rod Drury quotes “There are a number of next-generation entrepreneurs kicking it on the international stage”.

Good on all these guys! Keep up the 20hr days! I’ve met Rod from XERO, and had a few good chats with Grant Ryan from Eurekster and they’re both passionate, and focused. XERO seems to be fleshing out it’s powerful offering nicely and Eurekster looks to be picking up some good momentum. I think in the next few years we will see even more great Internet successes come from New Zealand as more kiwis learn to use the Internet as a massively powerful and leveragable marketing and distribution platform for their ideas. Rod also has some tips on starting a business on his website that may be of interest.

Definitely some great talent being displayed there, however I wanted to add a couple of other promising Internet companies to the list (ours included). Keep an eye on these companies as they’re both growing nicely. They both are keeping a strategic low profile whilst refining their low inertia scalable business models but are set to scale and should make some good ground this year.

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ProActive Software was interviewed recently by www.fastservers.com. This is the server facility housing ProWorkflow.com’s servers. They’re a dedicated team of professionals who we totally recommend.

Here’s the interview link:
http://www.fastservers.net/blog/web-hosting/software_as_a_services_prowork/

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Software as a Service: Proworkflow

posted on November 30, 2007 4:37 PM. by Aaron Phillips

Almost 1 year to date I did an interview with Julian Stone of ProWorkflow to discuss his business model and software as a service. During this interview he discussed the future of his organization and I wanted to follow up with how things have transpired over the last year. In case you didn’t get a chance to read the first interview you can jump over to that post below.

Here’s the original 2006 interview:
http://www.fastservers.net/blog/interview_with_fastserversnet_1/

Q1: What milestones and accomplishments has ProWorkflow made in the last 12 months?
The last 12 months have seen a huge amount of product refinement, with version 5 released and approximately 20+ incremental updates. We listen to customer feedback and have put many of their ideas into the solution.
There has also been plenty of effort put into smoothing out the ProActive Software business system. The ProWorkflow solution isn’t just simply a product, but rather it’s a product, client account and billing area, server technology, backups, knowledge base and our back end license management system. The ProWorkflow product is just part of a larger solution designed to help businesses run more efficiently.
We feel it’s a great accomplishment to have put all this solidly in place so we can offer a great solution to companies needing to manage their staff and projects.

Q2: What’s your take on the buzz around Web 2.0 and how has it impacted ProWorkFlow?
Personally I think there is far too much hype surrounding the subject. I’ve written a lot about Web 2.0 on my personal blog http://www.julian101.com. Everyone seems to have a different opinion on the issue, but I see Web 2.0 as a new phase of web applications. Better usability, better use of technology, tools like AJAX improving user interaction, more community focus, user led solutions etc.
However some people see Web 2.0 as simply big buttons, cutesy roundy interfaces and ridiculously simplistic odd little applications. Whatever we deem it to be, there is a change occurring in the applications market and some great new tools appearing (and some terrible ones :-).
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