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 (Patrick Lor & Kelly Thompson). (In case you don't know, 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:

  1. Spend your marketing dollars somewhere that you're competitors aren't. Ideally, somewhere they can't even access.
  2. Business ideas need to be simple enough to be explained to get people to explain them on your behalf
  3. Timing of being a venture: good = longer, bad = too long.
  4. 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:

  1. It needs to be easy to spread ( my previous post on this)
  2. They need to want to talk about it
  3. *It solves other people's problems
  4. *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):

  1. Consulting: you get paid 60, 90, or 120 days after your work
  2. Retail: you get paid the moment that you hand over the goods
  3. 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

  1. 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: in addition to the larger flickr CC photo.
  2. Press Release:
  3. 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.
  4. 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
  5. More info on the Getty buyout:
  6. Interview with iStock CEO Bruce Livingstone:
  7. Previous posts on making ideas easy to share:

Friday, January 23, 2009, 12:00 AM

tagged: ideas, creativecommons, startups, communication, crowdsourcing, gettyimages, istockphoto, marketing, starting, stories, strategy

series: Events (1 other post in this series)