This is Part 2 of the story of how I attempted to start my own e-business (www.onlinecamcourse.com). Go here for part 1: http://state-lines.com/first-startup-part-1/ Follow along as I take you through the ups and downs, twist and turns, successes and failures.
Dividing a non-existent pie
How do you determine the ownership percentage for a business that doesn’t yet exist? With the potential profit still largely a mystery, Scott and I had to attempt to answer this question. I did some research to see if I could find a common practice for giving an ownership percentage for the development of an idea. It turns out there is no custom to fall back on. Almost all startups are forced to face the decision on their own, making their best guess as to what is fair.
I was certain that I should be the majority owner, but by how much? On the one hand, I had already invested hundreds of hours in researching and creating the course curriculum. Consideration of the time investment I had already made weighed heavily on me, but my attachment to my idea was the hardest to let go of as I considered dividing up the invisible pie. On the other hand, I was so eager to make the business a reality I ran the counter-risk of foregoing too large a percentage in my haste to get to market. Further complicating matters was the fact that we had no way of being 100% certain of how much work the partners would be responsible for once the website was up and running.
Scott and I were extremely uncomfortable discussing this part of the business. We are both people pleasers by nature. Our natural instincts would be to take a smaller percentage to avoid confrontation. More on this later. If we could have avoided making a decision all together we would have, but we couldn’t’. Ultimately, we decided I would own 65%, Scott would own 25%, and Scott’s web designer – who I won’t name – would receive 10%.
About that unnamed web designer. Scott suggested it was a good idea to bring in another person to help build the website. Scott and I had full-time jobs so our time was limited. The web designer was unemployed, clearly brilliant, and understood exactly what needed to be done. the problem was getting him to do it. As someone who clearly doesn’t enjoy laboring for other people, I was very sympathetic to his lack of enthusiasm. Then again, he was technically a partner, not an employee, and because his task was mainly all up front work, if the business proved successful he would be able to just sit back and collect profits while Scott and I handled administration. The 10% ownership percentage we decided to give him was actually a doubling of the 5% we originally intended. This was done in the hopes that the higher ownership percentage would be added motivation. It did not work. Whether he simply lacked the discipline or never believed in the business, I may never know.
Eventually, I became impatient. By now I understood that the website did not need to be built from scratch. I learned that there are a multitude of wordpress plugins that can be adapted to build the website and course. Plugins are software, created by computer engineers, meant to carry out specific tasks and can be integrated into existing websites. I spent hours researching the different types of WordPress plugins that would be necessary to create the framework for an educational platform. I forwarded my research to the unnamed web developer so that he could evaluate the different plugins. Crickets. Eventually Scott and I settled on a plugin that could do the job. I watched tutorials on how to build the website and build a course using the plugin. Once I became confident that I was capable of designing the website and building the course myself, Scott and I decided to part ways with the unnamed web designer, vote him out of the company, and divide his ownership percentage among ourselves. Now 70/30.
Work, work, work, work, work
We spent the better part of every evening and weekend, for the next 6 weeks, building the course and website. It was invigorating to be so close! I knew as soon as we launched it would be profitable, even if that meant just a couple hundred bucks a month. That is $200 more than we would have had otherwise and it more than covered our low operating costs. The process of learning all of the different components of a website and how those components interact with one another required 100% of my attention. It was enjoyable working on my own business but it was stressful too. The hundreds of multiple choice questions I created had to be input manually and properly cataloged. Plus the course textbook still needed to be finalized. I understood from books such as the The E-Myth Revisited that these early stages of the business are the best, possibly only, opportunity to get it right. Laying a poor foundation could be disastrous down the road if we prove successful and demand for the course is high.
The Planning Fallacy
Remember the hundreds of multiple choice questions that had to be entered manually and properly cataloged Imagine how distraught I was when all of the work I had done was erased due to an update to the site. The setback nearly had me in tears. We were so close!
I was barely able to withhold my frustration. I was somewhat prepared because I read that setbacks are a part of doing business. A few years earlier I studied intensely a book that helped prepare me for this situation and many others. The book titled, Thinking, Fast and Slow by Daniel Kahneman would forever change the way I thought about nearly everything. It taught me about the planning fallacy and all of the other cognitive biases that cause us to distort reality and prevent us from seeing the world as it is. The planning fallacy is the phenomenon where, due to optimism bias, people almost always predict a project will be completed in a much shorter time-span than what the project ultimately requires. This is because, when embarking on a project, people are overly optimistic and, therefore, rarely anticipate the setbacks that inevitably occur in the endeavor. Before embarking on large projects, smart organizations should ask themselves, “what are the things that could possibly derail or delay this project?”
Setbacks like the one we experienced are almost guaranteed and, when viewed in the proper light, can be positive in the long run.. Had we not learned that such an update can cause the loss of all of our data, then we may have not set up systems to account for the loss. Thanks to the mishap, Scott put into place a system that would periodically save all of our data in the event of another occurrence. This may sound simple, but it was no simple task. Scott spent countless hours reconfiguring the site, speaking on the phone with Godaddy technicians, and testing the site to ensure the loss of data does not occur once we go live with real students.
Duplicating all of the lost work accomplished before the setback was not nearly as onerous a task as it was the first time. Since I now had experience building the course I developed habits and practices to complete tasks more efficiently. It took one-third of the time to do the work the second time around. I now had a mental roadmap to follow. In fact, I ended up creating multiple versions of the course from which we could choose to market. This was a major confidence booster in my ability to further design the website. I had developed the skill, albeit limited, of web design!
Just before completion of the website, we received word from the state that the course textbook and curriculum was state certified as an official Pre-licensing course for Florida Community Association Managers.. This was a major accomplishment. Two important lessons contributed to my being able to draft a course text. The first is WYSIATI: What You See Is All There Is. This may sound ridiculous, but I recall at a very young age marveling at textbooks. I wondered if I would ever have enough knowledge to write a textbook. I learned later the reason textbooks seem so astonishing is not just the knowledge we see, but the lack of knowledge we don’t know is missing. What the reader sees is all there is. I thought I needed to know everything to write a textbook, when in actuality, readers don’t know what is missing. I learned I would probably never know enough. The key is to just start writing. So that’s what I did. Write, research, then write some more. Eventually I ended up with a book. That is not to say I didn’t make every effort to put as much practical knowledge in our textbook as possible. I was able to harness WYSIATI as a confidence booster to get started, but it was also an effective tool in recognizing the textbook’s weaknesses and filling in those blind spots with relevant material. Since our course launched I have been encouraged from feedback from numerous professionals in the CAM industry that told me our textbook is superior to any Prelicensure course they have seen to date.
June 17, 2016
We launched the website in June of 2016. Sadly I don’t remember the exact date. I was too busy blasting anyone and everyone through social media about our brand new endeavor in the hopes to get visibility and improve our google ranking. On June 17, 2016 we had our first sale. Within 10 days we had four sales. We were the beneficiaries of free marketing. The Department of Business and Professional Regulation posts a listing on their website of all the prelicensure providers. We also had the benefit of having the best looking website of all of our competitors. One month later we had nearly 20 sales. It was incredible! Scott was more excited than I was. Thanks to the minuscule start-up cost, we paid ourselves back our capital investment within the first few weeks. It wouldn’t be long before the time investment would be paid off as well. The business is mostly automated and requires minimal maintenance and administration. It would not be possible if not for the internet and other technological innovations that have spread like wildfire over the past few decades. Over the next 5 years the number of people on the internet is expected to double! The web is the new gold rush. Here is a list of how my life improved since the launch of our business.
I choose my employers when I need work and I have far more leverage to dictate terms.
Spent a month in Chicago on workcation performing legal work while exploring the city and meeting new people.
I bought annual passes to Disney for my family and I have the flexibility to go on day trips.
I have as much time for my daughter as she needs. I’m available to pick her up from school, take her to doctor appointments, and care for her when she’s sick. Rarely do I ever have to say “Sorry babe, I’m too busy.” This is winning!
I spend more time with friends than I have since childhood.
I own my mornings. I am not a morning person and now any job I take is aware of that from the outset. On a typical morning I wake up slowly, read, journal, meditate, eat and drink coffee in peace.
Life is irrefutably better. If I’m bragging, it’s out of joy. It is not my intention to rub it in peoples’ faces. I don’t go on social media and post my every move. But if you’re reading this and it sounds appealing to you, and you think you may have the tools to similarly pave your own way (hint: you do!), then do it. If you are already on your path, keep going. Believe in yourself and believe in the process. For those of you that feel stuck, it’s not too late. Start making moves today. Contact me if you want to talk.
Not everything has been perfect during the past year. Life has come with bumps and bruises. Debt is still a major part of my life. Scott and I even had our first fight over ownership. More on that in part 3…