This is part 8 of my Business Timeline, you can read the previous chapters here.
I turned 30 in 2009. I had been back in Australia a year after traveling around the world for 8 months in 2008.
After returning from overseas, I was presented with the opportunity to become a speaker. The plan initially was to teach the “2 Hour Work Day” model over a weekend workshop and then sell high-end coaching packages to people at the event.
Andrew and Daryl Grant, and Liz and Matt Raad are two couples (and friends) who have done this over previous years and made millions from it. I was to do the same. It’s a great teaching model that is also highly lucrative.
Although I was excited about the opportunity to become a better speaker and sell from the stage for the first time, I eventually decided not to do it.
I have done some speaking on stage before, but never to sell my own products directly. Here is an example from one of my old “long hair days” presentations –
At that point I had enjoyed two very lucrative years as a blogger and online teacher, and while not making millions, I did generate over a million dollars in revenue across 2008 and 2009.
I felt that money shouldn’t be the guiding factor for my decisions. Becoming a speaker is no small task. I knew I would work hard, preparing presentations, talking on stage for entire weekends and traveling around Australia living in hotels, not to mention delivering a new high-end coaching program.
That was not the life I wanted.
I really wanted to work on my life outside business – my social life.
Blogging had been good to me. I like teaching online, I like creating content sitting in cafes, and interviewing other people from around the world for my podcast. I didn’t want this to stop.
The problem was I just didn’t have enough social things to do when I wasn’t working. I wanted more interesting friends and to improve my dating life with women.
I decided instead of becoming a speaker to focus on my social life, which is what I did for much of 2009 and 2010.
I attended networking events, did more social things outside of business, made new friends and spent time dating as well. I had personal goals I wanted to work towards, which was my main focus.
For business I maintained the status quo. I blogged, I wrote to my email newsletter and sold my coaching programs, that is until I decided to shut them down…
Closing My Courses
By the year 2010 my Blog Mastermind program had been on the market for three years. It was still a solid program and new members joined every month, but I knew the time was coming that I would have to update it.
I had the same thoughts about my other training program, Membership Site Mastermind.
I did one more launch of Membership Site Mastermind and then once the members were all in, closed it down for the last time (at least the last time for that version).
Become A Blogger, which I had enjoyed tremendous success partnering with Gideon Shalwick on, was eventually closed down as well. It was the hardest program to keep up to date because it was all video content, and Gideon and I were both keen to move on to other projects.
I did one last mini-promotion to close down Blog Mastermind, and that was it.
When 2011 began I had no programs left on the market. I knew that this would obviously hurt my income but I also felt that I couldn’t keep selling my courses without updating them.
The problem was that I just didn’t feel like going back over my courses. In typical entrepreneur style, I was looking towards new things.
In hindsight, this was a mistake. It was the right choice for me personally, but it would have been wiser from a business standpoint to update the programs and leave them on the market to keep my cash-flow going, especially as there was clearly still demand for them.
Both my “mastermind” courses are still at least 80% up to date. Most of what I taught in them are fundamentals, which don’t change. It is more the tactical areas that need updating. For example my courses mentioned “Digg” as the top social media site, which clearly it is not anymore.
The truth of the matter is that I wanted to focus my energy instead on a startup. I’d had always wanted to have a true internet startup company. Even back in dot com boom one, around 1999 and 2000 I was planning startups, even organising meetings with my friends to come up with ideas and form a team.
This time, ten years later with some cash in the bank, I felt I could well and truly chase an idea if I had one worth building. I actually had an idea worth building back in 2007, but I was knee deep in creating my courses, so I shelved it at the time.
That idea was for an advertising management service for bloggers, with an ad network tied into it for advertisers to come buy ad campaigns from. In 2010 I finally made the decision to get it started, and CrankyAds was born…
The Reliability Of Online Advertising Income
I love the publishing model. I’m pretty certain if I wasn’t born at the right time to capitalise on the World Wide Web and run my own websites, I would have written for or managed a print magazine.
Perhaps because of my interest in publishing, it was natural for me to feel comfortable with the idea of making money from advertising.
My first ever website success, started back in 1999 about the card game Magic: The Gathering, made money from advertising. From that point forward right up to today (that’s 13 years straight!), I have had some money deposited into my bank account or Paypal account thanks to ads on my sites.
Advertising income started with Magic, then it was on my blog EJ, then it was with forums and other blogs I bought. I’ve always played around with banner ads, text ads, newsletter advertising, and recently video ads, experimenting with pricing and placement to increase income.
While I have used ad networks and enjoyed some solid income from AdSense in particular on niche sites I purchased, my biggest advertising income source has always been direct sponsors. I sell ads directly to advertisers, with no middleman, which usually means you make more money.
In order to facilitate selling ads directly you need some kind of ad rotator, or ad management tool to deliver the ads and track statistics.
Over the years I experimented with many different ad management tools, eventually settling on what was called PHPAdsNew, then OpenAds and finally OpenX today (it was the same software, just upgrading and changing names – and business models too!).
OpenX is a good tool. When I first used it, it was an open source platform that I downloaded, then carefully followed the PDF manual to install and configure.
The problem with it was that it was too complex. It did so many things, nearly all of which I never used. I just wanted to rotate ads, sell them to sponsors and have some kind of control panel where advertisers could track their clicks and impressions.
OpenX did this for me, although it was a bit clunky to setup. During the early days I configured it all myself, but eventually when I started to rely on technical help I gladly handed it over to them.
Around the year 2006, maybe early 2007, I had this idea for an ad rotation tool. It would take the bits I liked about OpenX, and make it much simpler to set up and manage. I’d also include the functionality in the script to create an advertise page, a powerful tool for selling more ads that I had relied upon since the early days with my Magic website.
Since I was such a fan of the many-to-many business model, I figured if I made this really simple ad rotation tool and then gave it to other bloggers to use, I could place all their ad inventory into a marketplace and sell it to sponsors, taking a cut of the revenue from ads sold.
I had the foundation for a potentially solid company, something that I could begin as a proper startup. Now I just needed to build it and test my theory.
What Kind Of A Name Is CrankyAds?
I wasn’t sure what to call my ad rotation service. I was looking for something that above all else people would remember.
I wanted brand association with the concept of selling ads on your website. If you needed to rotate banners, I wanted my service to be something everyone knew about and considered as a possible solution.
I didn’t want something boring like “banneradrotator.com” that just described the service. At one stage I considered coming up with a new word, like a “Google” or a “Skype” to name my service, but nothing quite right was available.
While brainstorming ideas, checking to see what domain names where available, CrankyAds.com came up as one of the best available options.
I like the word Cranky. It’s funny, and in some ways ties into the cranky feeling you get when having to deal with advertising. I felt it was a rememberable domain name that described the service (ads), but also left people curious about the whole “cranky” part.
I had recently found a character designer when getting a logo made for my 2 Hour Work Day project. I approached him again to create a character for CrankyAds, and Mr Cranky was born. I felt Mr Cranky was the perfect addition to make CrankyAds a rememberable brand.
Software Development Is A Lot Harder Than I Thought
With the name and logo sorted, the next step was a first version of the software. In late 2009 I started putting out feelers for a development service. I came in contact with a company called Caimes, had a meeting and liked the project manager I met.
I decided to hire them and see if they could put out a beta version of CrankyAds for me. I knew I could get it done a lot cheaper if I outsourced it overseas, but I wanted an in-person contact point so I could clearly explain what CrankyAds was supposed to do.
Our initial meetings went well and I felt they knew what I wanted. Unfortunately development did not. Each time I was due to see the software it was buggy.
I had already reduced the scope of what the Beta version could do down to the bare necessities to help keep costs down, yet even reaching a functioning version of a skeleton program proved difficult.
As the project reached $25,000 in fees I realised I had to put a stop to development. They finished up some final features, I hit $30,000 in cost and then said good-bye to Caimes.
I was left with partially functional software, but I wasn’t ready to give up. I was still very excited about my idea, and having so many meetings about it explaining the features, was only making me more excited.
I had a friend named Walter who I knew was a good programmer. We had never worked together before, but I had heard countless stories from him about the work he did. He also happens to be a math genius and has watched every single TED talk ever published online. He is about the purest geek I have ever met (and proud of it!).
I sat down with Walter, talked about my project and asked if he wanted to come on board as a 50/50 partner. He would provide the development, and I would provide the audience and marketing. He was keen to work on a startup with big potential and so agreed.
My experience partnering with Gideon Shalwick on Become A Blogger was a good one, and I felt this situation with Walter was very similar. We each brought different things to the partnership that the other needed. I was hopeful for another great result.
Next we partnered with my long term designer friend Mick, who came on board as a minority shareholder to work on the design elements of CrankyAds.
We had our team – Marketing, Development and Design.
Here is a bloopers reel from Mick, Walter and me –
The Slow Development Curve
Things started well with CrankyAds as a three person project.
I enjoyed meeting with the guys each week, where we would often spend hours talking about ideas of what CrankyAds might do.
Development went slowly, first with Walter taking the initial code I had created by Caimes in Php, and turning it all into C#, a .NET (Microsoft) language that Walter is particularly good at.
At this stage I became heavily interested and involved in the startup scene. We attended lots of networking events, studied materials about startups and eventually made the decision to go after investment funding.
It became clear quickly that having only one developer working on the code was too slow for us to reach a version that might bring in cash-flow. We needed to hire more programmers so we could release a functional version of CrankyAds and build on features quickly.
This video explains some of the lessons we learned as we grew CrankyAds –
CrankyAds quietly launched first right here on EJ. It replaced OpenX as my ad management tool in early 2011 and we had our first beta test underway.
Bugs continued to surface with Walter working hard to fix them. We experimented with using overseas programmers to help speed things up, but instead it just slowed us down.
The hiring process took time. Then once we did hire someone, Walter spent a good chunk of time reviewing their work, time he should have been using on development.
Unfortunately we never found any A-Player developers overseas and we could not afford to pay local developers because .NET skills are in demand and cost a lot.
We decided to return to just a three man team with Walter as the only developer and focus on reaching a point where we could make some cash flow, and then potentially hire someone.
While Walter worked hard on development, I spent a lot of time looking for ways to bring in money to speed things up.
It was a struggle to build the basic features and make them bug free, let alone move on to the more ground breaking ideas we wanted to test. We needed help, and finding investors was one way to make this happen (and of course all the rage in the startup world).
We had several meetings with people who might invest in us, or who might lead us to investors. One offered us $50,000, but it was too little for how much equity he wanted.
We applied to an incubation program that offered a small grant. After succeeding in our pitch to get in, we turned them down because they wanted to take too large a chunk of equity in our company for the money they were offering.
Here is a one minute pitch video that helped us qualify for the final live pitch session in front of a panel –
I joined a co-working space called River City Labs (in Brisbane) to help further our cause to find funding. We did a practice pitch at River City Labs in front of a group of successful entrepreneurs and were given great feedback. They said we were ready to pitch for the kind of money we wanted, given a few tweaks to our presentation.
We were confident we had the ingredients necessary for raising capital. We had a three person team with each of the roles filled that investors want to see (backend development, frontend design, and marketing and distribution), we had already put in time to build a beta version that was making money, we were going after a large market and we had “skin in the game” (my $30,000 already spent, and all the time my partners had sunk in).
After all this experience trying to raise funds, I wrote these articles about looking for investors that you might find helpful if you are raising funds for your startup -
- How I Created Our Pitch Deck For Investors And Tales From Our First Startup Presentations
- How To Value Your Startup Company When Looking For Investment
Saying No To Funding
Despite all this effort to raise funds we decided in the end to not get investors.
Why you ask?
By this stage we had come to two important conclusions -
- We were not sure that CrankyAds would reach a cash-flow positive position any time soon.
- We began to realise that CrankyAds was just as much an advertising company as it was a technology company, and we weren’t too keen to be in the advertising industry.
It might seem strange to read that second point. It should be obvious that an advertising management tool with an ad network on the back is in the advertising industry, right?
I saw CrankyAds as a technology tool that could help website owners generate an income from their hard work. Over the years I had never had to do too much to find advertisers. Beyond sending out a few emails to targeted companies many years ago, advertisers usually found me.
This was the principle that CrankyAds was to build on. Create the assets and people will come. Minimal marketing required.
Unfortunately creating the assets was proving difficult, and our many-to-many business was struggling to reach critical mass on both sides of the relationship.
In order to bring in cash-flow, we needed paying advertisers (we take a cut of advertising revenue as our income source). In order to get paying advertisers we needed ad inventory on websites to sell to them. Without one, we don’t have the other.
We were slowly building up a small and loyal following of web publishers, and even managed to make a few ad sales on a handful of sites, but we were loosing a lot of people because we just couldn’t find advertisers for them.
Of course we can’t expect to find advertisers for every site out there, especially if they don’t have much traffic. The plan was to have a long tail spread of publishers and advertisers who wanted to reach them, so that we could help a lot of little guys make a little bit of money.
As time drew on the pressure to generate cash-flow increased, and we started to realise we might have to act like an advertising agency. This would mean going out there and finding advertisers for our publishers.
We started down this path and hired a long time online friend Blaine to help find paying sponsors for some of our larger sites. I also spent some time to try and secure some larger sites to use CrankyAds, since it is usually easier to find paying sponsors for larger sites.
It was a fruitless experiment. We ended up paying more money to Blaine than he could bring in and I hated going out there effectively trying to broker advertising deals. I did not want to be in charge of an advertising agency with a sales team, I wanted to help two groups of people come together thanks to some cool technology.
We killed the brokering experiment pretty quickly. We working a very old model that is already well serviced by other, large and established ad agencies. I knew we would never compete if we had to manually chase advertisers. We could only win through innovative technology. That was my belief (and where my passion was).
Blaine stayed on as our new customer service person, without the responsibility of finding advertisers. He is still in that role today.
At this stage we began thinking about a pivot. This means a change in direction, hopefully still using our platform, but changing who we target or what we offer.
With the variability in our plans it was clear that we shouldn’t take on any investors, even if our pitch was good. We didn’t want to be responsible for someone else’s money and feel even more pressure to perform.
What To Do Next With CrankyAds?
We found ourselves in an uncomfortable catch-22 situation.
Our development capacity, even with Walter putting in very long hours, was limited. We could not roll out the unique ideas we wanted to test, even if they might end up being the difference that helps CrankyAds to break through.
We didn’t have the money to hire more developers, and even if we did, the hiring process would slow us down before it sped us up.
Investment funding might help our cash situation and allow us to hire developers, but we would still have the issues of hiring to deal with. We also weren’t exactly keen on having yet another group or person with a vested interest in our company, creating more pressure and more people to deal with.
The process of raising funds is also incredibly time consuming, further slowing down development of the company itself.
In an ideal situation if we had a bunch of money to play with to hire three or four developers that Walter could manage, and take away the pressure to generate cash-flow, we might have been able to fully test all the cool ideas we had for CrankyAds. That would certainly be a fun option from my point of view!
That of course was not reality, and even if it was, it was probably smarter to stay true to the Lean methodology than pour hundreds of thousands of dollars into salaries to test ideas that might not work, even if it is fun.
I was thinking at one point of running a new training course as a possible way to raise funds, and certainly a much more fun way for me to do it, without the need for third party investment. The problem with this plan was how to incorporate me investing more of my own money into CrankyAds, when we wanted to keep the ownership structure the same.
You might be wondering what happened to all the money I had made during previous years as a blogger and teacher. Most of it is locked away in property investment, it paid for the apartment I now live in and the nice BMW I drive. Some I gave to support my mum and dad too.
I wasn’t about to sell property to fund CrankyAds, and even if I did we would face that same issue of changing the ownership equity ratios if I put in more of my own money.
I believe it’s better to focus on your own hustle than your own capital with a startup. You can quickly burn through funds as I learned with my experience spending $30K early on with CrankyAds, paying it to a development firm.
A Simple Approach With A Deadline
On top of all challenges we faced with CrankyAds, as a team we were getting tired and were running out of resources.
I was becoming disillusioned because it was clear that all the cool ideas I wanted to test were just too expensive and too slow to develop, especially with no guarantee they would work.
We had already gone almost two years to reach a basic version of CrankyAds, which we initially thought could be done in six months. Software development was a lot harder than I expected.
Walter and Mick had run out of savings at this stage and needed to take on client work to pay their bills. This was another condition that slowed us down.
We had a few emergency meetings to brainstorm possible pivot ideas. Nothing realistic surfaced, because every idea we had required more development time, even if some sounded pretty exciting.
After an impactful casual meeting with a friend who is also a developer, we had a plan. My friend said to forget about funding or wasting time on anything other than development with just the team we had, focusing on the core features we could develop quickly using a Sprint methodolgy. Walter should just sit in his cave and code and see how much he could get done. My job was to protect him from any distractions.
It was 2012 and we figured we had one more focused burst of development left in us. After that we would have to look at selling CrankyAds, closing it down, letting it run as is, or it would take off in a growth phase.
Our plan was simple. We wanted to develop three core features -
- The launch of our affiliate program, which would give us a built-in viral mechanism to fuel growth.
- An update to the interface of CrankyAds to allow us to incorporate these new features.
Once these features were done, my original vision for CrankyAds would be complete. It might only be the base version, minus the innovative social media and community components I wanted to add, but it was something functional that meets a real need.
We agreed that Walter and Mick would complete these three upgrades, I would promote them, and then we would stop any new major development on CrankyAds. We would still maintain the service, support customers and fix bugs, but we wouldn’t pour any more significant development time into it.
The service continues to grow slowly, we have a core group of users and the income is slowly creeping up. It’s making about $1,000 a month, which is enough to cover hosting costs and a monthly fee to Blaine to help support our customers.
This is far from what we hoped CrankyAds would become, but at least we have something that can run itself and meets a need. My vision for a simple ad management tool that is easy to set up and handles text, banner and video ads is now complete.
Right now as I type this CrankyAds is operating and we intend to have it continue and make another assessment at the end of this year. This provides CrankyAds with several months of growth to see how much of an impact the three major changes we launched will have. At the end of the year we will assess where it is at and decide what to do next.
As a side note, I interviewed Todd Garland back in September 2012, who is the founder of BuySellAds.com, the biggest and most similar competitor to CrankyAds. As I learned in the interview, Todd had the idea for BuySellAds around the same time I had the original idea for CrankyAds – back in 2007.
The difference – he went ahead and executed it immediately, using his own coding skills. The result – his company is now at around the $10 Million mark.
That shows you what happens when you take action quickly and how much of a difference timing makes.
Walter and Mick have moved on to new projects, although they still support CrankyAds when our customers need it. We continue to do small tweaks, as long as it doesn’t require significant time.
My focus is back on my information publishing business. The CrankyAds experience, while clearly disappointing on some levels, has had a surprising side-benefit of reigniting a passion in me to return to creating and updating my teaching products. I’ve realised that I like to be in control of what I create, and since I am a writer and not a programmer, it’s best if I focus on creating information based resources.
This time I want to build the complete training business I have always seen was available to me, but I never fully executed. I will tell you about that in a future article.
Coming Up Next
In the next part of this Business Timeline update I will review what else I was up to over the last four years besides CrankyAds.
This includes -
- My experiment changing EJ to a multi-author blog, why I did this and what the impact was.
- Inviting a new partner to take over and re-launch Become A Blogger.
- My ongoing struggles to outsource to the Philippines.
- Why I moved away from AWeber and what I am using instead.
- And what my future plans are.
All of this is coming up in the next chapter in my business timeline.
P.S. One thing I didn’t mention that happened during this time period as well – I cut my hair!
You can see the before and after shots, and also the upgrade to what car I drive, in this post from back in 2010 – I Cut My Hair And Bought A New Car.