Great STIRR event on Wednesday evening. It came at the end of a
long day for me, but it was well worth the time. It was subtitled
"from the trenches" and was presented by two of the key people in
iStockPhoto.com (Patrick Lor & Kelly Thompson). (In
case you don't know, iStockPhoto.com is a Calgary-based company,
sold to Getty in 2006 for $50 million2.)
I'm always interested in hearing back-room stories of ventures.
For example, did you know that iStockPhoto originally was a
non-commercial forum-type online photo swap? Me neither. Patrick
Lor brought in the notion of selling images for $0.25. But there
was some great points, beyond the stories.
My top 4 takeaways:
- Spend your marketing dollars somewhere that you're competitors
aren't. Ideally, somewhere they can't even access.
- Business ideas need to be simple enough to be explained to get
people to explain them on your behalf
- Timing of being a venture: good = longer, bad = too long.
- Cash-flow: timing of payments
Marketing Spend: don't compete with your competitors
This idea hit me as the newest - I
hadn't really thought about it before. If you spend your marketing
dollars in the same place (Google AdWords, TV, Radio, Print,
Outdoor) and you have a similar budget - how are you going to do
better?
You might have slightly better marketing: better mix, better
targeting. But that's going to be marginal or minimal. If you want
outperform your competition you need to be using places that they
aren't using.
Even better: use places that your competitors have no access
to.
In iStockPhoto's case, they made business cards for
photographers who delivered exclusive photos to them. On the back
of the business card was a coupon code for iStockPhoto. For all
their marketing dollars, Getty & Corbis didn't have access to
the same places that those photographers did: handing out
advertising business cards at networking events, when
meeting clients, etc..
For startups this seems even more critical: startups likely have
less money than your competitor's to spend on marketing:
not the same amount - so if you compete in the same places, you're
starting off with one arm behind your back.
This idea seems simple, yet lots of people don't necessarily
execute in this manner.
Simplicity of Business Concepts
If you want people to talk about your business, the story has to
be simple enough to repeat. I've talked about this before, but it
is always nice to hear re-iterated (and from an external
source).
iStockPhoto: affordable royalty-free images2
Make sense? Easy to explain? Yup.
For people to spread your message, the following needs to be
true:
- It needs to be easy to spread ( my previous post on
this)
- They need to want to talk about it
- *It solves other people's problems
- *People get a benefit when more people know about it
(in this case, more buyers for their photos)
The final two are not required, but they do help.
iStockPhoto has all these things. No wonder people spread the
word about/for them.
Do you wish you had started earlier?
This was a question from the audience. Kelly Thompson had
apparently been asked (and re-asked) on a regular basis to join
iStockPhoto. Bruce Livingston pestered him for 2 years before Kelly
joined.
So, when asked, Kelly - standing on this side of the event -
naturally said that he wished had joined earlier (apparently there
was an offer of a 50% stake at one point).
There was also some mention that they may have gotten a better
deal from Getty had they waited longer.
Which lead me to think:
If you have a good venture, you'll always wish you started
earlier and left later.
If you are in a bad venture, it can't be short enough.
Unfortunately, when starting, you don't know which way it'll go.
Which is, in my opinion, why it's so important to have the ability
to test early and often and then you can make an decision to quit
if needed, spending only enough time to give yourself a real
chance3. But this could be the topic of another post.
Cash-flow Timing
This is a minor thing but I found it very interesting how
Patrick laid out three cash-flow systems (labels mine):
- Consulting: you get paid 60, 90, or 120 days after your
work
- Retail: you get paid the moment that you hand over the
goods
- Pre-paid: you get paid and, at some future point, you deliver
the goods.
iStockPhoto is category4. This
is due in part to the small price charged: instead of charging for
photos when bought, customers pre-pay because charging $0.25 (photo
price when it started, I think $3-5 is current price) is
unfeasible, so you spend $15, $20+ at the outset, but only receive
$1-4 of goods at that time - you get more goods later.
Nice model if it fits your business. In this case, it fit
perfectly.
iStock has now added subscriptions as well - this is also
pre-paid, but is slightly different: you have a steady revenue
(always a nice thing).
Notes & Links
- I'm breaking my norm of using a
Creative-Commons Licensed photo from Flickr in this blog post and
using a royalty-free image I bought on iStock:
http://www.istockphoto.com/file_closeup/concepts-and-ideas/6080713-businessman-and-transparency-sheet.php?id=6080713
in addition to the larger flickr CC photo.
- Press Release:
http://www.marketwire.com/press-release/Istockphoto-Inc-NYSE-GYI-579577.html
- This is likely more true for a "serial
entrepreneur." Those that are in it for the idea of it (not just
starting a business, but they are most likely only interested in
ever starting 1 single business), this may not be as important:
you're going to stick it out for 5, 10, 20 years before it
succeeds, because it is a cause, not just a business
opportunity.
- This wasn't the way that they
described it, but it works (and I can't remember the words that
they used). Point is: you (and their audience) can think of a short
phrase to sum up iStockPhoto.
More on that in a previous blog post here: /2008/5/22/make-it-easy-to-share
- More info on the Getty buyout: http://www.flickr.com/photos/thomashawk/279288683/
- Interview with iStock CEO Bruce Livingstone:
http://decker.typepad.com/welcome/2005/01/interview_bruce.html
- Previous posts on making ideas easy to share: