Pretty cool, I got mentioned in this Wall Street Journal article about R&D tax credits and politics in general. IMO, stability is a key part of a good government, and the best thing the gov can do to help businesses amidst all the other challenges.

Wow, I realized today it is my 6 year anniversary at World Wide Web Hosting / Site5! Time flies :)

Seriously, it is broken and whoever is in charge of this should be tarred and feathered. Trying to give them money is near impossible :). I’d like to please be able to buy train tickets Renfe, why do you make it so hard to buy anything?

In 2004 I left college, sold the web hosting businesses I had built, and went to work at HostGator (1st official employee woot woot!). It was an awesome opportunity and I was so happy to NOT be on call 24/7. I loved working at HostGator but Boca Raton Florida wasn’t a good fit for my personality. So my awesome boss let me move to Ireland where one of my best friends was studying at the time :). I landed in Dublin around Halloween 2004 and I was able to stay until May 2005, at that point my tourist visa shenanigans ran out. I managed to score a room in a shared house prior to landing for only 150 euros a month (remember this is pre airbnb). And within 72 hours of landing I had my own little office at the Guiness Enterprise Center. I even got them to bump up the bandwidth for the entire building so that I had good VOIP quality for voice calls from the States.

At some point I realized I was ready to build a business again. I was pretty driven because I realized I wanted more control of my time so that I could travel and do what I wanted (the shock of the “real world” was rough after 5 years in college). Plus I wanted to get out of debt faster, and I thought a little income from side projects could help speed that up. I was in debt for student loans and credit cards that I used to start the first business, pay for part of my time at university, and lived on during school.

I knew I wanted to build a website based business since I had so much experience doing that, but beyond that I wasn’t sure. I started reading about seo, ppc and online marketing at WebmasterWorld.com and every other forum I could find. I knew I wanted to build a website but I wasn’t sure how to monetize it and build it into a revenue stream. And that is when I found rfung. Rfung was a user on WebmasterWorld.com and he posted a thread on how he built his income up to $20 dollars a day, and eventually $100. And then a second post on his quest to $300 dollars a day.

This was incredibly motivating and it really helped me zero in on affiliate marketing as a way to build a business with a passive income stream. And he heavily influenced me because he was traveling while doing this and pursuing other passions like…

As far as Europe, the plan so far is up for grabs – fly into Gatwick, go south to Brighton where I have a cousin, go north to Glasgow where I have a friend. Cross the channel to France and into Spain, where I’ll sign up in a flamenco guitar class for a month or so, then work my way through France into Holland where I have another relative in Amsterdam.

When I got back to the States in May 2005 I was super motivated and working like crazy to build a cool website. I convinced my friend Joel to do the coding for the backend and split the profits with him. By this point I was learning everything possible about search engine optimization and totally loving it (incredibly valuable skill).

Fun Timeline:

May & June 2005
Our first website launched in May with the goal of teaching people how to resell web hosting. It was called MyResellerGuide.com but had a quick name change to ResellerGuide.com as soon as we got that domain a week later. By June we were making a little money off it. In fact I emailed Joel about how excited I was to make $12.07 in a single day off it in late June :). You can still read all the articles I wrote as it hasn’t changed much since we sold it a long time ago (since taken down it seems).

July 2005
We created three more websites and they were ranking for their target search terms within five days. We got our first sale on July 9th, two more on the 11th, and then nine sales… and it just kept growing. We had found a great niche and it was blowing up. It took 30 days for the sales to clear, but when we got the check-in early September it was half what I was making with my full-time job (which felt amazing).

August/September/October 2005
We kept building and by October had five sites going strong. We also launched a b2b business called Certified Hosting Reviews. We shut it down as it wasn’t working, but we learned a lot from it. We should have taken it bigger in scope as there are a lot of businesses doing this now (RatePoint/ShopperApproved).

November 2005
This entire period was a blast, I would often work my day job, then work all night on my projects, and then go to work on my normal job and then sleep. Crazy fun :). By this point, I was making twice what I was at my full-time job annually. Mind-blowing.

December 2005
I turned in my resignation to my normal job on December 1st, and my last day was late January.

January 2006
By January Joel had built a new system that let us spin up dozens of new sites easily and manage them easily. This allowed us in one month to launch around 25 to 100 new sites. And then I filled in loads of content and users followed up with any more as they ranked in Google.

February 2006
By February I paid off all my debt, which was an amazing feeling after feeling that pressure for so long.

And by this point, Joel had built a custom tracking web app that we designed which gave us a MASSIVE edge for the next couple of years until we sold this business. It was way ahead of its time, in fact, we are still using the core part of its codebase.

June/July 2006
By this point, I was fulfilling some of my desire to travel :). I was running the bulls with my brother in Spain, and traveling around Europe while working for myself.

So I send out a big cosmic thanks to rfung!!! I know he inspired a lot of people on those forums :), including me.

Thanks rfung!
Ben

PS, I asked in Dec 2006 what happened to rfung and he posted a short update here if you are curious where he ended up :).

PS2, I’ll try to do another post on earlier businesses at some point too. We eventually sold the website network described above, and crazy enough Ziff Davis owns them now. And funny enough we eventually bought the hosting company Site5, who we started working with in 2004 with some of these sites.

Usually Forbes has shitty posts and link bait, but this one was really good: How Successful People Stay Calm. I highly recommend this read, having gone through one of the most stressful periods of my life (tense might be off there…) I can attest to the stress curve they reference:

Falling on the right side of the curve sucks, try not to let that happen and recognize when it does so you can get enough sleep and regroup.

I also highly recommend keeping a list of what makes you happy, and reading that every night. I’ve been doing it for a few years and it helps to keep me grounded (I think). Followed closely by my “Zorro circle” strategy, control what you can, plan for what is in your control, but don’t reach beyond that. A wise friend has referred to it as “washing machine” thoughts. Limiting coffee intake is also a pretty good suggestion, green tea seems to have a better burn. And, talking to friends & significant others helps you sort out what is going on… and remembering to breath (lol), are also good strategies :).

This is the single best article I’ve ever read that describes the ups and downs of entrepreneurship: The Psychological Price of Entrepreneurship. It is worth the read, some other good pieces are linked below too:

Depression and Entrepreneurs by Brad Feld. He has a great blog and talks about a lot of really good issues he has encountered. Like thiss and this.

The Fearsome Nightmare Entrepreneurs Never Talk About. Short but still a good post.

When Death Feels Like A Good Option by Ben Huh (CEO of Cheezburger Network). Like the INC article said, a deeply personal post by Ben but worth the read and some of his other posts go into more detail.

Officially the company started On April 4th 2000, but the project that helped to spawn it started March of 1999 (Unofficial UltraHLE Project & later EMUHQ & related webstes). Pretty crazy!

Lindsey and I did a 30 day challenge to live on a budget of $30 dollars a day and track everything, it was a great learning experience :).

Why did I do this?
I wanted to remember what it was like to live on a $12 an hour salary. It has been a while since I’ve been living on this type of salary and I wanted to remember what it was like. And, we employ a lot of people at this range and I wanted a better grasp of what it meant day to day.

So how did I get to a $30 dollars a day number?
– $12 dollars an hour, times 40 hours, times 52 weeks = $24,960 a year.
– Which equals $2,080 a month.
– Minus 20% towards taxes leaving you $1,664 a month.
– Minus $750 towards rent and utilities (I figure $500 to $600 for a bedroom / cheap apartment or house, and the rest on water, gas, electric, internet).
– That leaves you $914 a month for other spending, divided by 30 days is roughly $30 bucks a day.

Assumptions:
– Health care 100% covered by employer.
– I live in Fayetteville Arkansas so all the costs are from there.
– 20% goes toward all the state/federal taxes. Might be a few % points higher.
– Not doing any type of savings in the budget.
– I just moved into a new place after being a nomad for two years and living out of my backpack. So I didn’t count any of the house purchases I made since those are one time and a bit outside what this was about.

So how did it work out?
I did this from Feb 3rd to March 3rd, and had an income of $870 and I ended up spending $982.41 cents. I was over by $112.41 dollars. How did I spend the money?

Eating out – $377.47
Groceries – $232.87
Gifts – $130.79
Books – $57.84
Entertainment – $50.99
Coffee – $42.00
Fuel – $36.47

What did I learn?

1. It isn’t much money… duh. I knew that but it was a good experience to see how that panned out in reality. It would take a pretty big change to my lifestyle to live on this budget + save 20% of my monthly income for retirement. Not to mention all the things that pop up that are unexpected such as car repairs, house repairs, health costs.
*Not to mention how you can afford a car/house on this type of pay (more on that later). I bought my current car for $1,500 and you would have to save $100 for 15 months just to do that.

2. The stress of my job would not be worth it at $12 an hour :). There are many times I finish a super long day and I don’t want to cook and I’m just wiped out. Or, I want to eat out or go for a drink because it is a bit of stress relief and novelty. That is very hard to do on this budget. But hopefully at a $12 an hour job you don’t deal with the level of stress I am paid to handle.

3. Dating on this budget would require some smart choices. I love going new places and trying new things, and that gets expensive :). There were several large expenditures because I went places I couldn’t afford on this salary.

4. You could not live in a big city on this salary without a ton of sacrifices. That is something I knew going into this and it just makes it so obvious why this is only possible in rural areas + the south and midwest where housing & costs are realistic. You would need to get a pretty basic apartment or live in a shared house or with family to do this well.

5. I read 100+ books a year and that would really eat into my budget. I figure I spent $1,500 to $2,000 dollars last year on books and that is $100 a month towards books. I would totally have to switch to the library :). Not a bad option as I use it too but def a big change considering how much I love to read.

6. Raising and having a kid on this budget would be near impossible for a family IMO.

Bigger Thoughts…

In the USA, $12 an hour is a “liveable” wage only for someone just getting started in the job market or as a 2nd income in a family. You could make it work but it would be incredibly incredibly hard, something I don’t think we are used to doing…. ie, no eating out, no TV, no gaming, no media expenditures, shopping for groceries very carefully, a lot of cooking time, and carving out a significant amount of the budget for retirement and emergency funds. It just isn’t what 95% of the people out there want, or think they want.

This is a complex issue and a hard one to fix. Minimum wage is not designed to be a liveable wage at it’s current level. And I don’t think businesses can fix this issue, the government has to show some leadership and raise minimum wage to at least $10 an hour and level the playing field (and peg the fucking thing to inflation). They are supposed to set the system and they have really failed over the last couple decades to create a fair and balanced system for the people.

And then start talking to economist and states/cities to figure out what else can be done. For someone under 24 years old it might make sense to have a lower minimum wage since they don’t know shit, but we have produced this entire segment of workers who have nowhere to go but a permanent minimum wage job. Think about Walmart and other retail cashiers, or fast food workers, its an entire industry that doesn’t pay enough for their workers to ever be happy or attain any lasting economic security. Just stress and misery and frustration. For some rare people that stress does produce drive and amazing miracles of innovation and entrepreneurship, but for most people it just destroys their lives and the generation they raise as well.

And with automation and robots starting to eat more into that we are just going to have more and more people coming back into the work force with no skills that the economy values. Can we find ways to make their skills valuable? Is it possible to retrain them? Or are we prepared to have high unemployment going forward and give an entire segment of the population no option to work? Or should we start paying a base liveable pay out of tax revenue and shift work to be something that you don’t have to do but can if you want a little more money?

I’d love to see some experiments where everyone receives a base salary of $10 an hour, and then you can choose to work and earn more or not. Given the rise of robotics and the internet this might have to be the future. Creates a great economy and rewards those that want to work while not destroying the lives of those who don’t want to work as much, or who don’t have the abilities to demand hire pay in this new economic system.

Anyway… next I’m doing $60 a day test to see how that goes, a little more informal just to get a feel for it. Obviously adding in another $900 a month is a huge change.

What an asshole that contributes almost nothing to the world. This is the type of bullshit that makes people hate the stock market and the bullshit quarterly outlook that creates a lack of long term value creation…

Romania is beautiful, it reminds me in a lot of ways of Arkansas but with more “big” mountains!

It was a rough transition as I’ve spent a year in summer spanning from the southern to northern hemisphere and I left 2 months of being in some of the sunniest parts of europe to head to Brasov and the dark Carpathian mountains. It was dark cold and a bit of a shock. I did some great trail runs before it started getting colder, and a lot of little tourist day trips in between work. I managed to see dracula’s castle, his real castle, his supposed tomb, and lots more :), great trips! It snowed the couple before I split for a work conference in Amsterdam too :)

Plus I visited a ton of our team, which was the best part! Some fun nights out, especially at SmartWeb which was one of the best conferences I’ve been too! Can’t wait until next year too. Short post but more coming on some of the pictures…

Funny enough, a big part of my world trip was tracking down places with mythological significance. In the case of Romania Dracula, and also Vigo the Carpathian from Ghostbusters 2 :)

I spent August in Freiburg Germany exploring the Black Forest. Some pictures below:

German Trail System…
The German trail system is the most amazing I’ve ever seen! I biked over 120 miles and ran 100+ miles and I barely touched what was available. Beautiful dirt/gravel trails with off shoots everywhere for smaller harder climbs. I really hope more cities in the USA start expanding their trail networks through nearby national parks, rail lines, and canals. The closest thing I’ve seen in the USA is the DC canal path that goes up to Maryland. IMO, the most important part is that the trails are away from cars, you get so relaxed and meditative when running in the quiet of the forest.

Mountain Biking…
I really enjoyed Mountain Biking and it was a nice switch up as you can only run so many days before you need a break. Freiburg has some steep climbs though, sometimes I would be climbing thousands of feet for an hour or more. It sucks when you look at the odometer and realize you can run faster than you are going up the hill. Of course when you are going 30mph down the other side you realize you can’t run 30mph… Near the end I figured out it was a lot more fun to find small difficult tracks and go up those for a 30 min climb and then back down as fast as possible without injuring myself too badly. I’m looking forward to doing a lot more moutain biking back home and hopefully coming back to Freiburg since I docked my bike there for a year.

I didn’t get in as many rides as I wanted, but I forgot how sore your ass gets from a bike seat when you haven’t ridden one in over a year :).

Culture Shock…
Funny enough Germany was the first place in many many years I exp some culture shock. How? In Freiburg no stores are open on Sunday, and they close really early during the week. Quite a few times I was left eating almonds for dinner because I didn’t plan out groceries and nothing was open. And since I do a lot of phone calls in American hours it usually was too late by the time I finished to grab something. The only thing open in the entire town was a Turkish pizza place (luckily really really good just not very healthy)… Every other place I’ve visited in the last 5+ years has grocery stores or at least corner stores where I can buy some eggs and bread near 24/7. Or at least a sandwich. Germany/Freiburg is definitely more protective of their workforce but also somewhat annoying to an American not used to planning out his grocery shopping times…

I also spent an absurd amount of time trying to find Clean & Clear face wash with these little micro beads, I have developed a serious addiction to the stuff and its about the only thing I require when traveling… Germany doesn’t seem to have it available and I’m guessing it is illegal due to the micro beds (they stupidly make them with plastic instead of sand which is causing problems in lakes with fish)? Regardless it was quite weird given that I’ve been able to buy them in Peru, Panama, Argentina, Chile, Hong Kong, Australia, South Africa, Romania, etc etc.

All these things might sound ridiculous but when you are someplace new its a bit of a weird feeling when something so routine is so different. Plus, IMO Germany is one of the few places that has defended itself against the rise of the new “global culture”. Places like Croatia, Australia, and South America have such a strong immigrant population or tourist focus or global business outlook that large swaths of society have tapped into the new global culture. And when traveling to those places it is much easier to feel at home if you don’t deep dive under that layer. Freiburg is a smaller town and feels a lot more “German” than Berlin or Frankfurt or Munich too.

About 8 months ago I was browsing AngelList looking for startups that were trying to solve interesting problems. And I came across one called CodeAnywhere that was working to create a online code editor and even better they were doing a freemium/premium business model which made it accessible to the world. This meshes perfectly with our goal of making it easier to build online. I left this comment and then contacted them through AngelList:

And now 8 months later I’m happy to announce that one of our companies did a big investment in CodeAnywhere to help them do even more. News on TechCrunch (and TNW).

I love solving problems and that is the entire purpose of startups, find a problem and solve it! The process is challenging, difficult, sometimes frustrating, and usually attracts people who have an interesting temperament. AngelList is like the google of the startup eco-system and I love it!

And I’ve spent the last 3 weeks in Split and they certainly choose a great place to start a global startup :)

PS, anyone interested in the Croatian startup scene should come next year to the Shift Conference here in Split, it won’t disappoint!

I am slowly trying to learn basic financial terms and it is frustrating as people define financial terms with other financial terms. It’s a total catch 22 where in order to learn one term you have to learn ten more finance terms, and than ten more for each one of those ten, and so on… So I’m going to try to explain some terms in a way that normal human beings speak. And hopefully this helps me learn them as well.

What is the difference between gross margin and operating margin?

Operating margin is the ratio of money the company made after all your costs (but before you take into account interest/taxes) compared to your total income.

Operating Margin Example:
– You sell $10,000 dollars worth of web hosting & related services one month.
– After all your costs (except interest/taxes) you have $1,000 dollars left.
– Your operating margin would be 10%. You get that by dividing the money you have left ($1,000 dollars), by the total revenue ($10,000).

Gross margin is the percentage of money you have left after you have paid for everything directly related to delivering that service or product (also called COGS or “Cost Of Goods Sold”).

The key word in that line is “directly related”, because this is supposed to only apply to what it cost to deliver those products sold. For a retail or a manufacturing company that is easy, but we are a web hosting / saas company and it creates a lot of confusion over what you include there. After a lot of research online it appears that it is up to the saas business to decide what goes in cogs for now since its such a new model compared to manufacturing. As more saas companies go public this will settle down too.

Here is what I think makes sense for web hosting after reading a lot of blog posts on saas “cogs” debates:

What I would include as COGS for web hosting (its a bit of a bastardized saas model)…

1. Cost to keep that product running.
– Hardware / Infrastructure Cost. Especially given we do a rental model so that all this cost is operating expense with no hardware ownership.
– Software licenses needed for those products.

2. Costs to support your customers.
– The cost of the tech support team.
– The cost of the change management & monitoring team. The people that keep the software up to date & services online.

3. Financial fees.
– Credit card and related fees.

*4. And possibly including the people cost of the engineering team as a license fee under #1. How would I do that? Take the total monthly cost of the engineering team and divide it over the # of hosting services and apply it. So that if our engineering team costs $100,000 that month and we had 50,000 hosting services active that month we would view that as a $2 license cost per service sold.

Gross Margin Example:
Let’s say I sell $10,000 dollars worth of hosting one month. The cost to deliver that $10,000 dollar worth of hosting that month is $2,000 dollars of hardware & software cost and $4,000 dollars worth of support cost.

So the gross margin would be 40%. How? Add up your costs, in this case $4,000 + $2,000 = $6,000. Then subtract that from your revenue, $10,000 – $6,000 = $4,000. And then divide the money left after subtracting costs by total revenue, $4,000 / $10,000 = 40%. And now you have that $4,000 dollars left to pay the rest of your costs that are not directly related to what you sold… (If you are in the software/saas business I highly recommend this article by David Miller

I’ve always wanted to go to Bali and I found an awesome house on AirBNB. I love the style of Bali/Thai houses where the walls open up on all sides. I stayed in Ubud the entire time.

It was a really nice vacation, and much needed after a trip to Vegas for a management meetup and all the jet lag that induces. I spent half my time catching up on big picture work projects and the other half reading. I made it about half way through the Wheel of Time series as I wait for the last one to make its way to ebook… If you haven’t read the wot series yet please do!

The best 3 parts of this trip?

#1 – The house included someone making breakfast each morning which was awesome. Nyomen was very nice and cooked a massive breakfast each morning with black rice pudding (delicious), local fruit salad, yogurt, and delicious bread from the local bakery. I had at least 4 fruits I’ve never had before, drank my way through 12+ coconuts, and one bottle of homemade rice wine (the pink drink). And delicious coffee each morning that was grown only a few miles away (pic below).

#2 – The quiet. Living in downtime Melbourne I forgot how nice it is to open your window and there is just silience and bug noises (like Arkansas). Plus at night the terrifying screams from the lizards sitting on the roof ease you into slumber (amazingly loud). It’s been a long time since I slept so soundly and woke up with the sun.

#3 – Rice hike. I went for a few hour hike with Nyomen all over the area which was fun. Bali is beautiful, especially when you stay out of the typical south-asian touristy towns.

Last 3 months basically, or however google breaks them up into periods. Been really busy but good! Especially considering there were at least 5 weeks of traveling in there too.

1,455 Emails Sent
11,856 Emails Received

1,162 Emails Sent
12,367 Emails Received

1,270 Emails Sent
13,055 Emails Received

51 meetings on my calendar.
71 meetings.
77 meetings.