Posted: August 13th, 2013 | Author: Ned | Filed under: General | Tags: agency, australia, lean startup, melbourne, mvp, product development, startup | 1 Comment »
Before I started Tweaky I ran digital agency Native Digital. which did quite a bit of product development.
These days Native focuses on Facebook and Twitter application development. Of the top 10 brands on Facebook in Australia, we have built almost half of their Facebook applications. So while Native gets a lot of requests from people to help them build their MVP or fully-fledged products it’s not something we’re focusing on at the moment.
After the 20th brief came in I put together this list of great product development agencies in Melbourne that I would recommend people speak to when thinking about outsourcing the development of their MVP. All of these groups are great developers but they’re also great product people, helping you to define the scope of the product to test your core assumptions versus just building product without validation.
These guys all have startup experience themselves and generally follow Lean principles, which I think is super important when building this type of project.
John Barton was development lead at Envato.com for a couple of years before launching GoodFil.ms, a film recommendation engine that was part of AngelCube 2011. One of the best developers in Melbourne/Sydney and now running a product development company on the side. He is naturally picky about the projects he works on which is an indication of the high amount of energy he puts into his projects. You need to convince him that your project is worthwhile - which is a good thing.
Tim Riley at Ice Lab has released several of his own products and now helps other people to do the same. He has worked with some big name clients in Melbourne and Sydney and seems to attract an incredibly high calibre of designers, developers and product managers to his team. They also have a 37signals-style approach to the work week which I love – who wouldn’t want to work 4 days a week?
Nathan has been building products for longer than I’ve known him, which is at least 5 years. He also runs coworking space (also called Inspire9) and is the cofounder of Melbourne-based incubator AngelCube. If that isn’t a sound enough endorsement of his skills he also employs one of the best Rails and front end developers in Melbourne.
Chris Rickard has a great pedigree: he is a great product mind and solid developer who was a part of Startmate 2012 with SetKick and also won Startup Weekend 2012 with Corner Storage.
The partnership of product-guy Simon Holland and developer Tom Spacek. These guys have built a solid business and are one of few who are happy to take a reduced fee in exchange for equity. In fact this is the only way PaperCloud works – they have to believe in the projects that they work on in order to be a part of them.
Will Dayble has built a great agency and is the king of side projects. He has built up a great community around himself which means he has ready access to talent which is important as you scale.
Who else should I add to the list?
Posted: March 20th, 2013 | Author: Ned | Filed under: General | No Comments »
Startups are hard work. Long hours for low pay, high stress and a lot of uncertainty.
They’re also associated with late nights in dark rooms, junk food and beer.
Smart people often say that a startup is a marathon, not a sprint – it’s something that might take 3, 5 or 10 years to build into a successful business. And for this reason you need to bake fitness into your startup, no matter what you’re doing.
Living for three years on little sleep, poor food and no exercise is a recipe for disaster.
At Tweaky we’ve baked fitness into our culture from day zero. We knew we were in for the long haul so we needed to get our acts together.
We make time to exercise
We have a work in progress meeting every morning at 9am where everyone details what they’ve been working on and what they’ll be working on that day.
We also all announce what exercise we did the previous day and what we’re doing that day. It’s not a forced activity, it’s more a chance to share things we’re struggling with (my shins) or what we’re excited about doing (squash) just as we do with our work.
This also works for our remote team, with Robb in Canada regularly signing off early for ice hockey training in winter and volleyball in summer.
We never discourage exercise
We’re a fast growing startup and sometimes it gets busy and stressful. There is a lot to do. But no matter what we don’t discourage anyone for taking time out for themselves to exercise.
Occasionally we might ask someone to reschedule their gym session or run to accommodate meetings or a push, but if someone has a gym session scheduled in for the afternoon we can plan around it rather than pushing this out to “out of work hours”.
The reality is that for our small team we’re often working all kinds of hours, so why shouldn’t we exercise at any hour?
We exercise together
We’ve all got different abilities but we try to find time regularly to exercise together. It might be a game of squash or a run around the botanical gardens and usually happens a couple of times a month.
It’s fairly ad-hoc but is a good chance for us to get out of the office, stretch our legs and talk about things other than work.
Over the course of a year we’ll have exercised together between 12 and 24 times – it’s an awesome way to build the team.
PJ and I have been working together on Tweaky now for 18 months with the rest of the team joining in the last 9 months. I’ve personally lost about 6kg in weight, dropped a pant size and had to tighten my belt. I’m also a lot fitter and healthier than I was prior to starting Tweaky, it’s amazing how much more motivated you are to eat well when you’re exercising a lot.
PJ on the other hand has gone through the most dramatic change, going from a chubby lad to a fairly buff guy who has had to add three extra holes to his belt. Not bad at all.
How to bake fitness into your startup:
- Actively encourage your employees to take time to exercise regularly
- Announce your own fitness activities
- Incorporate company-wide activity into your schedule
I’m keen to hear about other peoples experiences in fostering healthy lifestyles in an early stage startup and keeping your team fighting fit.
Posted: January 24th, 2013 | Author: Ned | Filed under: General | No Comments »
Aspiring startup founders need to stop talking about their brilliant startup ideas.
Nobody cares about your idea.
It’s an idea backed up with action that counts.
Initially nobody cares because nobody gets it.
It takes time to be able to concisely articulate an idea; it takes work to build something to test its boundaries and its opportunities; it takes energy to explain why it should exist.
Better than a well articulated idea is an idea that comes with evidence of its brilliance: market validation.
Stop talking to your friends about your ideas.
If they grok the concept, they will ignore its many flaws. Just as they do for your own flaws.
Your friends are ultimately not your target market. You will either get a false sense of market validation if they like the idea; or a deflated ego if they don’t get it.
Stop talking to customers about your ideas
Your customers are people who will buy and use your product. To do either of these things there needs to be more than an idea, there needs to be something they can see, touch or interact with.
To show them something tangible that they can use shows that you are serious. You need to build something.
Stop telling me your ideas
I don’t want to hear about your startup idea. Don’t ask me for advice or introductions or investment.
When I hear a great idea I want to know everything about it – How does it work? What did you launch with? How are you selling it? How many have you sold? Who are your customers? What are your distribution channels?
If you can’t answer those questions then I’d prefer to wait to hear about it when you can.
If you can answer those questions then I definitely want to chat and more.
99% of ideas are vapour, let’s talk about the 1% of ideas that are in a state of progress.
Talk is cheap. Take action. Put ideas into practise.
This post originally published on Shoe String.
Posted: January 13th, 2013 | Author: Ned | Filed under: General | No Comments »
It’s been a week since I moved on from my former life as a man without an iPhone and not all that much has changed.
A little over two years ago I gave up my iPhone 4 and switched to a burner – the most rudimentary Nokia phone you can buy. The idea was that without access to the a steady stream of apps, interruptions, push notifications and internet I could be more present in what I was doing.
The reality was that I was already tied to a screen for upwards of 12 hours a day, missing out on a few hours while I was out with friends or in transit was probably not a bad idea.
While I really enjoyed the disconnect that having a burner gave me, the limitations had started to wear a little thin. Simple things like not having a convenient device to capture moments in text or images; running late and not having the contact number for the person I was meeting; having to pull out my laptop to verify travel details.
Two years without a smart phone definitely helped me in many ways. I learned to focus on the people with me in a room far better than I did before. Instead of being drawn back by a push notification or by checking in while they went to the bathroom I was just there, occupying that space with them and my thoughts. I didn’t feel the need to occupy every waking minute of my life with activity, I could sit patiently and just be.
My return to the world of the smart phone has been very measured and deliberate.
The only push notifications I allow are sms.
Between 10pm and 7am I have the “Do Not Disturb” on and you can’t call or text me.
I do have email, both work and personal, but it’s for emergency use only. Thankfully almost none of my correspondence requires up to the minute response times and if it does I’ll get a phonon call.
No Facebook or Twitter though I’ve allowed Instagram.
At the end of the day it’s about increasing my utility over a need to be constantly connected or to bathe in procrastination.
The main benefits I’ve gotten out of the first week back in the world of modern technology:
- ability to check time sensitive information like when is the next tram coming or do I need an umbrella.
- ability to use emoticon. How did I ever emote before?
- ability to write and this blog on a tram
Posted: December 2nd, 2012 | Author: Ned | Filed under: Music | 9 Comments »
There are fairly simple economics with Spotify’s streaming music service. Artists and labels who want to list their music on the site get paid a royalty rate that they negotiate.
There have been a bunch of articles and music industry pundits over the last couple of weeks who have argued that the rates that artists are earning from theses services are unfair.
As a believer in free market economics my first reaction was that artists are getting paid what their music is worth. To suggest otherwise would suggest that there is some imbalance in the market, that Spotify has some kind of monopoly over music distribution or is otherwise forcing musicians to list their content on the site.
I thought I would delve a little deeper into the economics of Spotify to determine exactly what the service is doing with their revenue and what that means for the average artist.
The Spotify Model
Spotify has a freemium business model where free users are served ads and premium users are charged around $10 per month for a subscription to play unlimited streams of music on any device.
83% of revenues come from premium subscriptions.
On a single stream of an artists song the artist makes a royalty of $0.00029 while the label takes $0.0016. These numbers vary depending on the deal the artist and the label have. On top of this there is an additional payment to the composer of the song.
Of all Spotify revenues 70%+ is paid out to labels and artists.
Spotify doesn’t allow for front-loading, your music needs to be great.
Traditionally in the music industry the bulk of revenue for an album or single would be made in the weeks and months after its release. A lot of marketing dollars are spent to make sure that the album has a strong debut.
Under this model the label and artist make a lot to their money for the album up front. As a consumer if you buy an album and only listen to it once or twice then that’s the way it is. If you listened to it thousands of times then you were getting the most “value” out of that release.
Under the streaming model the artist (I’ll come back to the label) makes their money on their release over time based on the consumption of the music instead of the straight up-front sales. This brings about a new model for royalty distribution to the long tail of music consumption
“People need to transition from unit-based thinking to consumption-based thinking in terms of royalties. We feel the metric of success should be based on how many people are listening to your music over a period of years, as opposed to looking at how many units are shipping in one week. People are used to seeing big numbers from a unit-based model, but that’s really front loading.”
- DA Wallach, Artist in Residence at Spotify
If your music isn’t great, isn’t consumed by either a lot of people or a small subset listening to it a lot, then you’re not going to be earning a lot of money.
You do have options though if you want to front-load. Make your Spotify fans wait.
Artists can hold out.
If you feel like you’re not getting a good deal from Spotify you can always leave the service.
If you’re likely to make more money from physical sales instead of on a per-streaming basis then it makes sense not to list on Spotify.
We’ve seen this from artists like Coldplay and Adele who withheld their new album releases from Spotify in the short term to increase digital and physical sales in the early weeks of release, only to list on Spotify after the initial burst of sales. This allowed them to capitalise on early demand and then cater to the long tail that Spotify affords.
Spotify doesn’t have a monopoly. It’s stronger in certain markets but there is plenty of competition from other distribution platforms including Amazon, iTunes, RDIO, Rhapsody and Last.fm.
Spotify is a distribution platform.
Spotify is like any other distribution platform. If you want to get the greatest distribution, go where the people are.
There are currently between 15m and 20m users on Spotify. Do you want to reach this audience?
Different distribution platforms pay out different rates. For instance a spin on a US college radio might pay out 5 cents. A TV commercial in Australia might pay upwards of $50,000. A feature on Pitchfork will likely pay you nothing but street cred.
Choose where you want your music to go.
Spotify can’t afford to pay any more.
The reality is that Spotify is already paying out 70+% of their revenues as royalties.
They probably could pay more – others before them have – but many others before them have also gone out of business.
Spotify is not making massive profits.
In fact the company is losing tens of millions every day as they pay out to the rent seeking major labels.
They made $236m last year with losses of $57m. This year is expected to be higher at around $500m but given that their operating expwesnidutue in 2011 was $60m (and likely to increase proportionally ) and they have to pay out at least 70% of all revenues as royalties they are likely to lose another
Some people say the company can never be profitable, so perhaps it’s worthwhile to make the most of it while you can.
Spotify payouts are actually increasing.
Despite all of this Spotify payouts are actually increasing as their user base grows.
Charles Caldas, CEO of Merlin, the largest global representative of independent record labels, says that
“Spotify’s payouts to Merlin’s 10,000-plus indie labels rose 250 percent from the year ending March 2011 to the year ending March 2012. More importantly, the revenue per user (RPU) “has grown significantly alongside the overall revenue growth and is currently the highest it has been since the launch of the service,” said Caldas. “We see consistent, ongoing growth on revenue per user, revenue per stream, and the total revenue the service brings.””
The problem is that Spotify pays labels and not artists.
From the same reference:
“Anyone who doesn’t think we’re paying a fair cut hasn’t seen the numbers we pay out. By far the vast majority of the money we’re making goes back to the owners of the music – about 70%. When compared to iTunes, the average listener spends $60 dollars a year into the creative community, whereas Spotify Premium users spend $120 per year. As “the pie gets bigger” so to speak, so do the royalty payments. The growth of the platform is proportional to the royalty pay out and since inception we’ve already doubled the effective per play rate.”
D.A. Wallach, artist in residence at Spotify
Major labels take the lions share
Major labels refused to deal with Spotify until they had been paid substantial sums up front for the right to list their catalogues.
This was to be seen as an advance on future royalties.
The deal the majors cut was pretty sweet.
$200m per year for access to their catalogues OR 75% of the companies revenues OR a per track streaming fee. Whichever is the highest.
Labels might not even need to pay out any of their up front payments to artists because the up front payments are not directly attributable to any one artist, rather to the value of the entire catalogue.
In fact given that Warner, EMI, Universal and Sony own between 15 and 20% of Spotify it’s fair to say they they’re onto a winner all round with the company currently valued at $4bn
Independents get pretty screwed.
It’s definitely harder to be an independent without the collective negotiating power the majors have as a result of their huge catalogs. Thankfully Spotify seems to be fairly straightforward with payout rates though I wouldn’t be holding my breath on upfront payments.
You can use services like TuneCore to get your music online for a flat fee per track or release without needing a major but your overall leverage is significantly reduced, despite Merlin’s efforts.
People will continue to make music.
The good news in all of this is that people are going to continue to make music.
First of all the majors aren’t going out of business anytime soon. There is some consolidation, like Universal buying EMI for £1.2bn but they’re not closing their doors.
Warner Music Group lost $94m in the 9 months to June 30 2012, but this was on $2bn in revenue and with $219m cash in the bank. Digital revenues are up 13% to 35% of their total revenue with streaming making up a quarter of digital revenues.
None of the majors are planning on shutting up shop.
Artists will also continue to make music. Music wasn’t invented at the same time as the compact disc. Artists have made music for thousands of years and will continue to. It might not be as lucrative as it once was but that’s the nature of any industry, there are ebbs and flows.
“Who said art has to cost money? And therefore, who says artists have to make money?
In the old days, 200 years ago, if you were a composer, the only way you could make money was to travel with the orchestra and be the conductor, because then you’d be paid as a musician. There was no recording. There were no record royalties. So I would say, “Try to disconnect the idea of cinema with the idea of making a living and money.” Because there are ways around it.”
- Francis Ford Coppola
Home taping didn’t kill music.
Artists are making more money from other sources
One bottom tier Sydney band I’m familiar with recently made $50,000 licensing a single song to an FMCG commercial. They could have made even more if they had been willing to play a couple of commercial gigs.
A high end Sydney band I’m also familiar with regularly perform $100,000 corporate gigs to supplement their income. This is alongside their relentless number 1 chart success.
Zach Horowitz, President of the Universal Music Group claims that having your track featured in Guitar Hero increases sales 2x to 3x. Weezers inclusion in Guitar Hero III saw sales of their debut album increase 10 fold.
Activision CEO Bobby Kotick claimed that the standalone title Guitar Hero: Aerosmith resulted in more revenue for the band than any individual Aerosmith album.
Which is pretty good considering that they sold 9m copies of both Pump and Get a Grip and 8m copies of “Toys in the Attic”.
Streaming is increasing music consumption and spending
The pie is getting bigger but it’s being distributed between more artists.
“In the 2008 MTV Music Matters survey of people aged 15-34, the percentage of people who claimed they liked music rose from 67% in 2007 to 85% in 2008.“
In the last 12 months streaming revenues have increased by 40% with services like RDIO and Spotify pushing into new markets and continuing to grow market share overall.
“Spotify is a plus to the industry because more people are listening to more music. The casual listeners will turn into engaged fans and people will discover artists that didn’t have a chance before.”
- Will Barton, Digital Strategist at the Mushroom Group
Streaming is reducing pirate behaviour
Music fans have long complained that if they could get ready access to music online they would pay for it.
In this Danish study one in five people have said that they have stopped downloading music illegally since streaming services became available. As much as 23% of 12-17 year olds who use streaming services say that they stopped illegal downloads.
You can’t compare Spotify plays with album sales.
For one, album sales are continuing to fall in favour of singles.
Secondly people are using Spotify to discover new music and to listen to an incredibly large, almost limitless, collection of music.
While people are spending less on buying and owning music they’re trending towards leasing it.
Spotify isn’t cannibalising other revenue streams
There is currently no data to suggest that sales of digital music or physical music are being reduced as a result of streaming services. So people are consuming the same, if not more, music as a result of music services and still spending the same amount of money.
The future of music is cheap, trending to free.
For what it’s worth I see the future of listening to music is either cheap ($10 per month) to free.
This is in line with a trend that artists have progressively been getting paid less and less for consumers to listen to their music over time. See this infographic that has been going around for a while.
An album sold in a store for $10 would have netted an artist between $0.30 and $1.00. An iTunes track download would net the artist $0.09 per download. A stream on Last.fm nets the artist $0.00075. A single Spotify stream nets the artist $0.00029.
There are a number of reasons behind this, ranging from it becoming less expensive to produce music, and it being a more competitive marketing landscape for recording artists. This is compounded by music having been available for free since the late 90′s via peer to peer and other pirate music sources.
Artists are going to need to either be exceptional in order to earn a living from streaming services or they’re going to need to rely on other sources of income, including but not limited to performance; synchronisation and other licensing; and the ever faithful patrons of the arts.
Posted: July 26th, 2012 | Author: Ned | Filed under: General | Tags: drinking, ned dwyer, not drinking, startup, tweaky | 7 Comments »
I recently launched Tweaky.com with my co-founder PJ Murray and together we decided to give up drinking until we’re profitable.
It’s a ritual I started when I took over Native from Nick Crocker. We took three months off drinking to focus on producing great work and it became one of the most productive periods of my life up until that point.
I’m not generally a heavy drinker, though I’ve had my moments, but like a lot of people I’ll have a drink or two on a Friday night or after a particularly challenging day.
So why are we not drinking until Tweaky.com is profitable?
1. To bring the team together and create healthy rituals
One of the big reasons for us to be sober until we’re profitable is that it means we’re all focusing on a common goal of building a successful company.
Not drinking is a tangible manifestation of our commitment.
Not drinking when I’m embarking on something new has become a ritual for me and something I want to pass on. Creating tradition and ritual brings tribes closer together.
2. To focus on the work at hand
We’re trying to build something important to us and that takes a lot of time and energy. Coming into work with a hangover or slowing down on a Friday at 5pm when the beers roll out is not something we feel like we can afford right now. We’re playing to win.
While having a few drinks of an evening might only slow down our performance by a few percentage points we want to be operating on 100% at this critical stage of the company.
3. To have more quality time outside of work
The little time we have outside of work we get to spend with our friends and partners – quality time that has become a lot more intense without booze.
We’re already turning down a lot of social engagements and spending less and less time with friends and partners, we don’t want to have to turn down more because we’re hungover or tired affected by drinking.
Everyones different and perhaps we’ve taken a somewhat extreme approach to starting up but for us not drinking as a founding team has brought us closer together and closer to achieving our goals.
If you’re a founding team taking a similar line we’d love to hear it in the comments.
If you’re a small business looking to tweak something about your website you should check out Tweaky.com: the marketplace for customising websites.
“As a cure for worrying, work is better than whiskey.”
- Ralph Waldo Emerson