Erich Stauffer

Blog

  • Business Cards vs Email Marketing

    I recently sent a “soapbox” email to a couple of friends about how I’ve felt recently about business cards in relation to networking and building up your business through local interactions. I’m currently in the process of building up my business consulting business again and I’ve been thinking a lot about networking I did in 2012 and how I want to market myself in 2014.

    Is it just me or is the act of asking for someone’s business card the equivalent of “I just want to end this conversation and never talk to you again”?

    I get asked for my business card [a lot?] and it’s almost always from someone who does not want to do business with me, but wants to either spy on me remotely later or end the conversation.

    What are some positive interactions from potential customers?

    They seek me out. They call me. They email me. If I don’t write back, they email me again or they call me. No business cards are involved. They’ve heard about me from someone else. It’s a referral thing.

    So how do you get referrals?

    Mostly by doing great work that’s shareworthy. Add a ton of value, show ROI, or other thrilling things that makes someone want to share your work with other people. Other than that, it’s a matter of showing up.

    Email Marketing vs. Network Marketing

    I brought this up while reading about networking meetings in the book, Double Your Freelancing Rate, which I did a lot of last year and had very, very limited success. The greatest success was from simply staying in contact (via email) with existing clients, meeting their needs, and being referred to others by those existing clients. I’m looking to do more of that, but not sure exactly how. That’s why I’m reading the book and looking to other experts in my field for help/feedback.

    In reply to this email, my friend wrote this about his graphic design business:

    I can see that I’m getting local referrals on the basis of the work that I’ve done…For a designer, it is important to have a business card because that is likely the first chance (and maybe the last chance if you don’t have one) that they will have to see your work. They may not get a chance to sit in front of a screen before they make a decision about whether or not to work with you. I’ve always had positive interactions around my cards because they are premium paper and thickness, they are slightly larger than your standard US business card, and they prominently feature my branding (pixel perfect at 300ppi) on the front and a playful, full-bleed image on the back. I think if I had a vanilla business card, it wouldn’t be much of a boon and it would probably hurt me (especially if it were a Vistaprint template card). I also get asked for my card from friends/acquaintances that aren’t looking for design services, but want to share with someone they know or a business owner (to help me or them out).

    Good points. And I like how he was pitching his design services right into his reply. Nicely done.

    Email marketing is one goal I’ve had to start doing more of in 2013 and it will continue into 2014. KissMetrics recently posted 7 Overlooked but Critically Important Details of Profitable Email Marketing in which they mention how Nathan Barry, a web designer, launched an eBook that made $12,000 in sales in 24hrs and went on to make over $85,000 in its first year (what they don’t mention is the 10,000 hours of work he had in his life leading up to that point). But seriously, I’m not even talking about product launches or information products here, I’m talking about communicating with your customers – decent human-like things you could be doing to let them know you’re not dead. Your competitors are talking to them so you should be too. Hopefully this blog post helped someone take some action. Stop reading and start writing!

  • Dental Office Management Case Study

    How I helped an Indianapolis dental office through 100% turnover and go from their worst month ever to their best month ever in 2012.

    When I worked as a business analyst at First Merchants I would often be doing staffing models during the day and working on web sites and IT work at night. After I was went full-time as a business consultant I offered staffing model services to one of my web clients. They trusted me because I had already got them to be #1 on Google for the term “Indianapolis Dentist” and their site was listed as one of the best dental websites.

    Systems in Place

    Systems in Place

    The business owner wasn’t as interested in tracking what each individual staff member was doing as much as finding out what each staff member does, ensuring it’s documented, and making sure there were “systems in place”. At that point he had recently converted his practice management software from Practiceworks to Dentrix and two staff members had already quit. There was real fear of losing all “tribal knowledge” of how his business was ran.

    Observations

    One of the first things I do when I start a staffing model is to simply observe what is going on in the office. For the first two weeks I would ask questions, watch processes, and document as much as I could. If there was a name for a process I would use that – otherwise I would create a new name for it. I started identifying positions and roles (they can be different) and then placing the newly quantified tasks into ‘piles’ under each type.

    Documentation

    To document the process I setup the office with Google Apps and used the Google Sites portion of it to create an Intranet for the company. Each staff member was given their own company email address which they could use to login to the site as well as share calendars, documents, and email each other. Distribution groups were setup for different team members including the front office, clinical team, and the “everyone” group.

    Employee Turnover

    After a short while, a clear picture began to emerge. There weren’t just issues with cr0ss-training, there were issues with the staff themselves. It wasn’t long before there was more staff turnover. It was like they were “jumping ship”. The decision was made to get some new leadership into the organization so the long-time manager was fired in June. I became the interim manager and began to re-build the new staff.

    Changes in Hiring Practices

    One of the first things I focused on was “getting the right people on the bus”. We sought after and hired people who cared about people first and had a great personality. We had learned that those are two things that can’t be taught so those were the most important things we sought after. We didn’t settle for a person just because they filled the position and at some times were working with a crew of as small as 3 people while we continued to look.

    Changes in Processes

    Once we had the right people in place we began working on the proper processes. We started using checklists to ensure the critical morning and nightly procedures were completed. There were many times when they were not and the staff did not like using the checklists at first, but over time they learned to first appreciate them and then not need them as it became second-nature. This helped a brand new staff have consistency and learn faster.

    Changes in Technology

    While the old staff did not understand technology innately, the new staff embraced it. They began using email to communicate, began referencing the Intranet for critical information (the previous staff kept an old Rolodex on the front desk that contained all of the information they’d ever reference – this was typed up into one page on the Intranet affectionately titled, “Rolodex”). And a new wireless camera system was setup to take patient photos.

    Changes in Marketing

    We signed up for Demandforce and Angies List. We began using Google Adwords and revamped the website. We added more social proof, more testimonials, more web pages, and more blog posts. We added more social networks, posted more often, and were more engaged with our patients online. As a result, referrals from the Internet went up along with web site visitors. We used Google Analytics to track the progress.

    The Result

    By first focusing on the staff, then the process, then the technology, and finally the marketing – we had the right people who were given the right instructions for the best technology, which was supported by the best marketing techniques. The result was an initial boost of 116% the first month, followed by an average increase of 72% for the next five months compared to the five months prior. How can I help you get similar results?

  • The Future of RSS

    On July 2, 2013, Google killed Google Reader.
    Google Reader

    Thank you for stopping by.

    Google Reader has been discontinued. We want to thank all our loyal fans. We understand you may not agree with this decision, but we hope you’ll come to love these alternatives as much as you loved Reader.

    Sincerely,

    The Google Reader team

    While I have used Google Reader on and off for years, I don’t use it now. However, I still know and care about the value of RSS as a publishing syndication platform and feel that Google has hurt that by creating a monopoly of sorts by buying up RSS apps then killing them.

    ZDNet wrote a piece on this entitled, Embrace, extend, extinguish: How Google crushed and abandoned the RSS industry in which Ed Bott writes, “The entire RSS industry is being rolled back to about 2006 and asked to start over.”

    Hacker News (HN) chimed in when bambax said, “The killing of Reader looks like a desperate move to help Google+: since Google can’t kill Facebook, they’re willing to hurt themselves instead — to cut their left arm so that their right arm can grow stronger. If this is indeed the case, it’s very shortsighted.”

    In another HN thread about the economics of “Evil Google“, RockyMcNuts said:

    It’s not the RSS reader. It’s the open publishing ecosystem. Most clients point to Reader as the central feed aggregator. Most publishers point to Feedburner as the central publisher. Google seized the commanding heights with Feedburner and Google Reader and captured all the publishers and the clients, and now they’re killing the ecosystem. I don’t see why they couldn’t have integrated Reader into Plus without killing the ecosystem. Twitter, Facebook, LinkedIn are moving into news aggregation, and Google is killing a successful news aggregation system. I don’t understand their strategy, but it’s seems sort of like, we want everyone on G+ and we don’t care how heavy-handed we look or how early adopters feel, and we don’t want an open ecosystem that people can use to pipe content into Twitter and Facebook.

    What other platform has such ease of opt-in as RSS? There are email newsletters and Twitter. Both require that the publisher does some sort of action. With RSS it was/is automatic. That is/was the beauty of it. I keep talking about it like it’s dead. It’s not dead. Google Reader is dead. I asked a friend if he still used Google Reader and this is what he said:

    I definitely still use it. I probably will wait until the last week of June to commit to a new solution. I’ll probably go with Feedly, but I’m not sure if they let you pick any website, etc. Also, I don’t know how they accommodate custom searches [like Google Alerts]. I’m going to wait until there is an opportunity for a mature alternative. I also have questions about how the web will attempt to syndicate in the absence of Google reader. I know people are saying that the shuttering of reader is a pronouncement of Twitter winning vs. RSS. But, Twitter isn’t an adequate replacement for RSS and leaning on newsletters is a step in the wrong direction. I’m all questions and all ears.

    RSS Reader Alternatives

    And if that list isn’t good enough for you, NPR suggested Digg. Microsoft Outlook also has a RSS reader and some Internet browsers have RSS readers built-in. Did you know Internet Explorer 9 had an RSS reader? Firefox requires an add-in like Simple RSS Reader, Feedly, or Sage. Same for Chrome. AOL also has a RSS reader aptly named AOL Reader.

    RSS: Curation VS. Aggregation

    I remember the first time I saw Google Reader. A coworker had invited me over to his house and while there he told me he wanted to show me something cool. When I walked over to his computer he proudly showed me how he had collected all of his favorite information into one place. He was able to sort through article after article with the spin of his mouse wheel. It was glorious. I signed up for my own account and quickly began adding RSS feeds from sites I wanted to follow. I quickly became inundated with more articles than I could read in a day. I started to get discouraged and eventually I quit.

    Marco Arment wrote in The Power of the RSS Reader, “The most common complaint I hear about inbox-style RSS readers such as Google Reader, NetNewsWire, and Reeder: that people gave up on them because they were constantly filled with more unread items than they could handle. If you’ve had that problem, you weren’t using inbox-style RSS readers properly…If a site posts many items each day and you barely read any of them, delete that feed. If you find yourself hitting ‘Mark all as read’ more than a couple of times for any feed, delete that feed…The true power of the RSS inbox is keeping you informed of new posts that you probably won’t see linked elsewhere.”

    RSS is not a curator of content, it’s an aggregator of content, but sites like Reddit and Hacker News are kind of both. Articles are collected there and self-curated by the community. Compare this to Fark, which is a news aggregator curated by Drew Curtis. What RSS doesn’t do is filter out all of the mediocre or non-relevant articles that inevitably appear over time no matter how targeted the blog. Far better to find a community around a subject you like and have articles aggregate and share there. This is the difference between Twitter proper and Twitter lists. The former is mostly noise and the latter is much more concentrated. Apps like Hootsuite can also help curate with search lists for keywords.

    RIP Google Reader. Long live RSS.

  • Amazon Webstore Review

    I signed up to test Amazon’s eCommerce Software, Amazon Webstore, mostly because of these two factors:

    • List Amazon.com items on your own Webstore to augment your product selection
    • Take advantage of additional services such as Selling on Amazon, Fulfillment by Amazon, and Amazon Prime on Your Site to grow your business and improve customer satisfaction while reducing your Webstore fees

    I liked the idea of being able to just pull in Amazon products to your store and having Amazon fulfill them for you. It all sounded so easy. It wasn’t.

    amazon-webstore

    Contrary to other parts of Amazon, I found the site incredibly hard to use and very slow. It takes up to 15 minutes for an item you’ve posted to appear on your site. When I went to figure out how to cancel, I couldn’t figure that out either so I did a Google search and ran across this Amazon Seller forum post, which cracked me up.

    redknight781 wrote: It’s built for techies by techies and not for those that are more interested in sourcing and selling. It’s the worst sitebuilder on the internet. mpowell624 wrote: I will go farther and say that it is the very worst experience I have ever had with anything technological. I have basic knowledge of coding and I would rather try to make a website out of twigs and berries.

    You used to have to call Amazon to cancel, but now to cancel your Amazon Webstore, simply make your way to your Amazon Webstore Subscription page and click, “Cancel Webstore”. You can do this as long as you don’t have any outstanding orders.

  • Leverage

    Mindvalley Insights recently emailed me an article entitled, How to Avoid Entrepreneurial ADD and Pick the Most Viable Ideas to Pursue, which I thoroughly enjoyed and prompted me to write this post. Below is that 7-minute talk where Vishen, CEO of Mindvalley Insights, shares how he uses the principal of leverage to pick business opportunities.

    This video is about how to choose opportunities that you either come up with or are presented to you. Vishen does it by quantifying leverage of existing and possible future opportunities. He uses his own businesses as examples, so I’ll some of my own companies and their subsequent opportunities: Telablue > Watershawl > Costpub/Tenet Marketing > Webories > Content Motors > A/B Insights > Coconut Oil > Apps/Database/Tracking. Vishen says to draw relationship lines between the different businesses/opportunities to see if there are any ways that one leverages the other. The more leverage, the more likely you should do it.

    This is similar to the advice Cal Newport gives, which I highlighted in How to Work a Life of Purpose: build up a body of work that you can leverage for future work. Become so good at what you do that you can do it anywhere any way you want. Whatever you have invested all of your adult working life and school on would be silly for you to not leverage going forward. Whatever you’ve been working on the most is unique. It’s rare and therefore valuable. You know what problems your industry has and are also able to create solutions for those problems. Maybe you’re not interested in solving them, but if not you, then who? There is no one with your perspective other than you.

    If you truly possess a competitive advantage, let me recommend that you do not diversify but instead leverage that skill-set to the maximum. Whatever you do, do it better than anybody else (and if you are one of these unicorns, I applaud you – send me your business plan and let me invest in your venture). – Ching Ho, Restauranteur | Designer | Adventurer

  • How to Improve Your Stations in Life

    While your “station in life” is a British phrase referencing your status in your community, I feel that it’s a negative term used to keep people in their place and so I’ve decided to commandeer it for a more positive use. The context of this article is about the different stations in your life. You do not have one station in life – you have many – and that’s a good thing. (Note: if you’re looking for how to improve your work life, try this article about how to work a life of purpose.)

    I recently wrote about how the number of stations in your community (places you go regularly throughout your day) is directly linked to happiness. But what I didn’t mention was how to increase the number of stations in your life or how to improve the ones you already have. In this blog post I’ll share my ideas on how to get the most out of your community. The first step is to identify the community you already have. To do this I’ll give you three different examples.

    My Brother’s Stations in Life

    My brother lives in Bargersville and drives to Terre Haute most weekdays. It’s an hour and a half commute by car. In the morning he stops in the kitchen for breakfast with coffee (Station 1). There he’s greeted by one to three kids, depending on their sleeping schedule. When low on gas he stops by the local gas station (Station 2) where he recognizes the clerk, makes small talk, but feels uncomfortable calling them by name (even though he knows it). When he gets to work (Station 3) he’s greeted by his coworkers – some happy to see him. For lunch he goes out to the same restaurant where he talks to the same host and the same waiter. Again he knows their name, but doesn’t move beyond small talk. After he gets home he goes to his garage (Station 4) to get his mower and heads off to his first lawn client (Station 5). Occasionally he might go to our parents house (Station 6) for dinner or to drop off his kids so he can go to a nice restaurant (Station 7) with his wife.

    My Friend’s Stations in Life

    Erich on the Monon TrailMy friend lives in Nora. He lives five minutes by car from his work in a walkable neighborhood right next to the Monon Trail. In the morning he stops in the kitchen (Station 1) for coffee before sitting at his desk in the living room (Station 2) to read his email before heading off to work (to check his other email). He rarely stops at the gas station (Station 3) anymore and while he lives near two Starbucks (Station 4), doesn’t go there as often anymore. At work (Station 5) he’s greeted by several coworkers, but most days he goes home for lunch. When he does go out it’s usually with coworkers and he doesn’t take the time to learn more about the staff at the counter. He doesn’t know their names and they don’t know him. When he comes home at night he’s greeted by his neighbors as he drives by or when he goes for a walk with his family. On the weekends he might go to his local hardware store (Station 6) and on Sunday his local church (Station 7).

    My Stations in Life

    I live in Tipton, but work mostly in Carmel, but travel all around the Indianapolis area. It takes me about 45 minutes by car to get to my first job each day. My wife wakes me up, makes me coffee and breakfast with a side of water. I sit down at the kitchen table (Station 1) to eat. While I’m eating my wife makes my lunch. By the time I’m done eating she has packed my lunch in my car with coffee to go. My kids are now awake, wait by the door, and demand kisses before I leave. When I arrive at my first job (Station 2) I get a few nods. Afterwards I may go to my second job (Station 3), to Starbucks (Station 4), or to my friend’s house in Nora (Station 5). If my gas tank is at a quarter or below I’ll stop at the gas station in Tipton (Station 6) on my way home. When I walk in the door I sit down to dinner, then get up to go check on the garden (Station 7). On Sundays I go to church in Noblesville (Station 8). Some weekends I go to parent’s homes (Station 9).

    How to Improve Your Station in Life

    Appreciating what you have and be thankful first. If you’re not first happy where you are now, you won’t be happy ‘there’. The grass isn’t greener on the other side of the fence, it’s greener where you water it. Your community is made up of your stations in life and it’s up to you to be thankful, appreciative, engaging, and involved in order to get the most out of it. By helping others and continually adding value to your relationships, you will build a stronger community and improve your stations in life. If you don’t live in a walkable neighborhood, walk around. It will become walkable. If you hate where you live, don’t move (yet), first find what you like about it and practice focusing on that. Be the change you want to see in your community. Start with yourself – the only thing you can change. Don’t try to change too much at a time – the longest journey begins with the smallest step. So get walking!

  • Building Time

    My son is 4 years old. He was born the same day Lehman Brothers collapsed in 2008. He collects things to build with in hopes that one day I’ll take the time to do that with him. Right now he’s asleep, right outside my door, on the floor, next to his red bucket of things to build with me.

    One day I took him out to a junkyard I used to drive by when my wife and I each ran a paper route. We were trying to keep from losing the house and were behind on our mortgage. The bank made us a deal. They said we could stop paying for a while, and then make a big balloon payment at the end. I didn’t see how that was much better, but I signed the papers anyway.

    Kevin wanted to build a rocket. (That is my son’s name.) But what he really wanted was to fly in a rocket. We’d go in the closet and I’d simulate a launch sequence. He never bought into it. I kept saying, “You just want to fly up in the air, but how are you going to get down?” (Safely, I meant.) He wasn’t concerned with that. He just wanted to fly. And I was going to help him build a rocket.

    Kevin Spotted a TrainWhen we got to the junkyard, there was no longer any rocket parts laying around. We saw a train. I stopped. We raced to get out of the car. He pointed at the train. It was exciting. When we got home I found some parts in my shop and we built a small rocket model, about three feet high. It wasn’t much and he didn’t care for it. He wanted something he could climb in, something he could fly.

    One day I came home and he had built an airplane out of scraps of wood he had found and some tape. I thought it was pretty cool so I gave him some more wood to see what he could do. We even made a video of it. He seemed to be more creative with less. There isn’t much in his bucket – just some wood, a marble, a miniature cardboard cutout of Superman, and some string. He wants to fly, but most of all he wants time with his dad.

    We were able to make that balloon payment and keep the house. Shortly thereafter I went full-time in my own IT/web consulting business. I helped a lot of people, but somewhere along the line I forgot what I was doing, and who I was doing it for. I stopped asking how I could help other people and was only focused on myself and what I could do. I had to get back to my core values, but i didn’t know what they were. I seemed lost. My son doesn’t know what he’s going to build, but he knows that if he collects enough of the parts he wants to see in the finished product, the end result will be something he can be proud of. That’s what I started to do, too.

    My first value was more of a mantra: help people. If I wasn’t helping someone, I didn’t want to do it. While this seems simple at first, there are a lot of things you can do that are not helpful to people. Some are annoying, some are exploitative, and others are just downright harmful. I wanted to help make the world a better place by helping people. My second value was: add value. In every transaction, interaction, and blog post I wanted to be adding value. I don’t want to be noise, I want to be a part of a community where my clients and I look forward to seeing each other.

    Kevin Building a RocketOne of my favorite scenes in any movie is in Apollo 13 when the engineer at NASA dumps all the parts on a table and says they have to make ‘this air filter fit in this air system’. That is like a dream come true for me. I would love to have that challenge. I’d like to think that I wouldn’t have made two different air filter systems for the same ship, but there’s something about the puzzle element that fascinates me. I wonder if that’s what my son feels when he’s building. I hope I’ll soon find out when he wakes up and I make time to build.

  • I’m Not as Great as I Think I Am

    Recently Dove did a study that showed men think they are better looking than they actually are, but a similar study was done in 2010 and before that in 2009. I probably think I’m better looking than I actually am, but what I’m more concerned with recently is that I may think I’m better than I actually am.

    For the last year and a half I’ve had this inflated notion that I’m ‘more than just an IT and web guy’. “I’m a high-level thinker!” I’d say to myself. “I think at a systems level. I can synergize data. I can run a big company. It’s easy for me to make money. I can do anything.” The problem was that while I was busy thinking about better ways to run a company or businesses I could start, I wasn’t really doing anything. I was really just running my mouth.

    Work is Hard

    The moment I was forced to do some of the things I was claiming I was ‘so good at’ I found the tasks extremely hard to do. Solving big problems is not easy. Setting up an ecommerce site is not easy. Going to work everyday is not easy. I had to get over my dream of doing nothing and realize that I’d always be doing something – and so I had to get better at whatever it was I was doing.

    What I was doing was IT work, web design, and online marketing/SEO. But because I had spent all of my free time thinking of new business ventures, reading about startups, or hanging out with friends, I wasn’t spending any amount of time becoming a better IT guy, learning more about web design techniques, or discovering new SEO and online marketing strategies.

    To be fair, I was learning new things about marketing. I recently learned about things like market sophistication, multivariate testing, and content marketing. I was able to apply this new knowledge to clients who needed to use market segmentation to create separate marketing campaigns for different target markets. It also came in handy while writing the marketing strategy for a business plan for one of my customers.

    But there is a lot more I could be doing. I wrote a post on Google Authorship Markup Validation in 2011, but I’ve yet to get it working on my site. My voicemail message still says my old company name and my Gravatar still reflects the old logo. I’m still trying to figure out video and I’ve yet to start an ecommerce store (one of my goals in 2013). However I did start an Amazon Web Store (Amazon’s eCommerce platform) yesterday to try it out. I was looking for something that would let me easily add products and I’ve found that finding suppliers is one of the hardest parts of setting up an ecommerce site. So far I’m not thrilled with it. Why? Because it’s hard.

    Seeking Out Easy

    James Altucher recently wrote, Why Do Anything? In it he writes about how he likes, “to submerge myself completely in water and just float for as long as I can hold my breath.” I used to do this. It was my favorite thing to do when I was on the swim team in high school. As soon as school got out I would race down to the locker room, get changed, and submerge myself in the diving well. I didn’t weigh very much then so I’d sink down about 10 feet until I reached an equilibrium and I’d just hover there, weightless and silent. Nothing could hurt me and all was right with the world – all but my lack of oxygen. I try to recreate this feeling when I’m in the shower, but it’s not the same. That’s the only thing I miss about high school.

    In August of 2012, a little over a year after I first quit my job, I wrote a short post called Always Working. It was the first time I realized that I had a feeling where “I just have to work until [x]” happens. Later I had a dream about a hill behind my house. It was a place I had gone many times before and I knew it very well. There were trails, a playground, a parking lot, and a place to buy candy – all at the top of the hill. The only thing was the hill doesn’t exist in real life. It never did.

    It was clear my perception of work needed to change.

    Recently a friend texted me with the stark realization that he still has 30 more years of work ahead of him. I don’t know. It’s all about your mindset (what people used to call your attitude). To me, work is part of life – and you’re always going to be working – even when you’re not technically working. It’s great if you can do something you love, but it’s better to be better at what you’re doing. Be the best that you can be and things will get better. If you’re a farmer, be the best farmer. If you’re an accountant, be the best accountant. If you’re a writer, be the best writer. If you’re not the best, practice “deliberate practice” in order to get better. This is what great people do. If you want to be great, you have to try to be great – not just think you are great. No one becomes great by doing nothing. There is no hill in your backyard. You cannot float forever. You have to come up for air.

    Slowly I Turned…Step By Step…Inch By Inch

    Seth Godin recently wrote an article for Fast Company about how to build a company slowly and one line stuck out to me and it’s one that I’ll end with:

    Sometimes the best way to be great at something is simply to become better and better at that thing, rather than hoping one or three bold and brilliant choices will reap a windfall.

  • What Happened to the Color App?

    Why Did Instagram Succeed When the Color App Failed?

    We hope you’ve enjoyed sharing your stories via real-time video. Regretfully, the [Color] app will no longer be available after 12/31/2012.

    That was the message posted on Color.com [Update 7/15/2003: The site is no longer up.], the domain Color Labs paid $350,000 to acquire in 2011 almost a year after Instagram was founded. A year later their photo sharing app would be on the way out while Instagram was getting bought for a billion dollars. What went wrong? Why did Instagram succeed when Color failed?

    Color vs. Instagram

    What Happened to the Color AppColor Labs was a start-up based in Palo Alto, California whose main product was a social application for photos called Color. It allowed people to take and view photos matched to a location. Color grouped photos based on a user’s friends so that they are more likely to see those pictures that are most relevant. Like Color, Instagram is an online photo-sharing and social networking service that enables its users to take pictures and optionally tie them to a location. Unlike Color, users can apply digital filters to photos and share them on a variety of social networking services. It confines photos to a square shape, similar to Polaroid images, which along with the filters gave photos a retro look and feel.

    A Difference in Startup Methodologies

    Color Labs started after co-founders Bill Nguyen and Peter Pham received $41 million in funding between 2010 and 2011 from Sequoia Capital, Bain Capital, and Silicon Valley Bank before the app had a single user. Conversely, Instagram was started by Kevin Systrom and Mike Krieger in October 2010 with $500,000 and teams of just a few people. As Instagram introduced successful products and attracted users, they slowly raised more money and hired engineers. Meanwhile, Color Labs spent $350,000 to buy the domain color.com (and an additional $75,000 to buy colour.com), rents an office in downtown Palo Alto, California, where it employs 38 people to work in, according to the New York Times, “a space with room for 160, amid beanbag chairs, tents for napping and a hand-built half-pipe skateboard ramp.”

    Instagram’s $500,000 seed funding round came on March 5, 2010 from Baseline Ventures and Andreessen Horowitz while Systrom was still working on Burbn. By February 2, 2011, it was announced that Instagram raised $7 million in Series A funding from a variety of investors, including Benchmark Capital, Jack Dorsey, Chris Sacca (through Capital fund), and Adam D’Angelo. The deal valued Instagram at around $25 million and later that month, Facebook made an offer to purchase Instagram and its 13 employees for approximately $1 billion in cash and stock. By May of 2012, the number of photos has exceeded one billion. Google offered to buy Color for $200 million in July of 2011, but Color Labs turned down the deal. They were later acquired by Apple (mostly for their patents and talent) in October 2012 for an undisclosed sum.

    A Difference in Responses to the App

    On March 24, 2011, Color Labs launched its first application “Color for Facebook” in Apple’s App Store and within a week released an update allowing users to see photos from events “Nearby”, a “Feed” of relevant photos, and a “History” of groups that users can participate in. In June 2011, less than three months after the company officially launched, Peter Pham left Color. When it first launched, the application had around 1 million downloads, but as of September 2011, the service had a little under 100,000 active users. The app was poorly recieved, attracting few users and many who did not understand what it was supposed to do. One reviewer in the Apple App Store wrote, “It would be pointless even if I managed to understand how it works.” Users were confused with the application’s user interface and purpose. Its initial rating in the App Store was 2 out of 5 stars.

    For Instagram, the response was much different. It rapidly gained popularity, with over 100 million registered users as of January 2013. Support was originally available for only the iPhone, iPad, and iPod Touch, but on April 3, 2012, support was added for Android phones. Instagram for Android was released[18] and it was downloaded more than one million times in less than one day. An app rating under 3.5 stars makes users considerably more reluctant to download the app. With an app rating of 2 out of 5 stars, the Color app was doomed. Once entered into the cycle of bad reviews it was nearly impossible to break out as there were wasn’t enough new downloads or positive press to bring the average back up and over the 3.5 stars mark. Meanwhile, as of this writing, Instagram has 4.5 stars ouf of 4 on the Apple App Store with over 62,000 reviews.

    A Difference in Purpose

    Color was first meant to help you find and share pictures related to your location, but Instagram was solving a different problem. They were making mobile camera photos look better. The Color app only worked if other people were using it (a chicken and egg problem), while Instagram solved a problem people had right away. This could have been because Kevin Systrom had already developed a check-in app called Burbn. Josh Williams of competitor check-in app, Gowalla, said, “Early user feedback, coupled with a desire to avoid the check-in battle…led them to drop everything to focus on one simple feature: photos. They made the act of taking and sharing photos (many of which just happened to be location-tagged) fast, simple, and fun.”

    In Summary

    Color was a company in search of a product. They didn’t have much more than a mountain of cash when they started, but it was spent on things like numerous employees, fancy offices, and marketing rather than product development, user feedback, and customer interviews. Color may become a PR lesson for the future as they may become legends for squandering one of the biggest and most covered product launches in app history. On the flip side, Instagram already had a product they were trying out, were listening to their users, and created a new company based on the results. They continued to listen to their users and made their product even better. They didn’t hire a bunch of people or spend a lot of time talking about their company. Their product solved a problem, people liked it, and they used it. Each company had a runaway effect, albeit in different directions. Once those directions were set in motion, it was hard to change them.

    In closing, I’d like to quote from Color’s about page, which says a lot about how the company thought. If you have a different opinion about why Color app failed and Instagram succeeded, please let me and other readers know in the comments.

    At Color, we believe in the opportunity that the new mobile era presents and are excited about developing products that transform the way people share the stories of their lives. We work collaboratively, iterate often, and enjoy problem solving. Color is a company of entrepreneurs and innovators, highly skilled in their respective specialties, constantly striving to learn and grow. We’ve cultivated a very relaxed and informal culture and enjoy our extra curricular activities, which include but are not limited to: ping pong tournaments, ball pit acrobatics and impromptu poker nights.

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