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Does your startup pass The Sleep Test? (markmaunder.com)
67 points by mmaunder on March 1, 2010 | hide | past | favorite | 26 comments

For those of you whose businesses should pass the Sleep Test (as in, have no permanent impediment like requiring sales presentations for $75k authorizations in B2B) but don't, I really can't recommend SEO enough. It is the gift that keeps on giving -- today, tomorrow, and until the end of time -- and it works whether you're asleep, at a day job, on a date, etc. Similarly, display advertising, search advertising, free trials, and automated fulfillment. (When I found you could send someone a CD with a HTTP POST I nearly had kittens.)

I remember having to do this myself... What service would you recommend for sending CD's out?

I use SwiftCD. They have only caused me 3~4 problems in 3.5 years, and I suspect that all but one of those was due to either customer or Post Office error.

Stating you've had 3 or 4 problems is an unusable fact unless you tell us how many total transactions this is against. 3 or 4 out of 5 vs. 3 or 4 out of 5 million?

What resources would you recommend for learning more about SEO (either online or in books) ?

This is a broad topic, like "What would you recommend for learning programming?" I recommend the SEOMoz blog, the SEOBook blog, and building stuff. Much like programming, you can read yourself up to a low intermediate... after that, you learn by building, seeing what worked, building some more, seeing what worked, etc.

(SEO is as much a marketing challenge as a technical challenge, and for that part of it, you can cross-apply any marketing books you want. "How To Win Friends And Influence People... To Link To You".)

Patrick is clearly too modest to link to his own post about this so here it is: http://www.kalzumeus.com/2010/01/24/startup-seo/

I expect you know this, but I'll state the obvious because it is important. The search engine you want to like your site is Google. The others do not matter. Google tells you what they like here


Isn't this pretty obvious?

Oh, btw, that first morning when you wake up and find out you earned money while you were asleep... feels great.

Just wait until the day you spend seventeen hours at the day job, collapse at a hotel for six hours prior to doing it again, and on waking and turning on your Kindle found that you made more while sleeping than you did while working.

That feels... great. Just freaking great. sigh 30 more days.

What do you have on your Kindle that tells you how much money you made?

The kindle as a simple xhtml browser. So any basic website that works well with mobile browsers will generally work.

Done. A couple of times at least. And I agree it sucks :P

(though I do love my day job)

Well the alternate method surely, is scaling the price you charge for your 'work'.

For example, a live musician won't make money while he sleeps, but if he becomes well known/popular/famous, he can scale up how much he charges for an appearance until he's charging millions and playing Wembley stadium.

Of course that model doesn't really work for us too well and isn't a natural fit business model.

I don't really know what the point of the article was apart from restating what we already know :/

I still remember the morning I woke up to find that my site had finally been added to the Yahoo Directory (Late '99 I think), and I had had 200 visitors!!! already that day, and earned something like $10 from ads. It was a revelation.

What does it for me is the daily email with the subject: "Successful Credit Card Settlement Report."

This article may create a wrong attitude towards customers and business imo. I believe it is indispensable to go out and talk and listen to people instead relying only on online-tools (by the way, that's what 37signals always have done, too). A company that is happy to pass the sleep-test, is very likely to start drifting off...

Unless your business earns revenue while you are sleeping, it won’t scale.

I find this statement oversimplified. I works for some models like basecamp, but some social services's business model can be simplified to "register for free and WE will pay you $100(ok, maybe not in cash but in value that they spend on average user/ or value that user gets of using them)". However as we can see some of these services growing really fast and probably can be huge success in future, just by monetizing their huge audience.

So i guess initial statement is mostly address bootstrapped startups, not taking VC/angel into consideration. I'd modify it to smthg like:

Unless your business earns revenue or traction while you are sleeping, it won’t scale.

Presumably, when they attach the monetizers to their huge audience and begin extracting money from them, it will happen even when they sleep, so the statement still stands.

I guess Chili's doesn't scale?

"If you’re a brick-layer who employs other brick layers and also employs a sales person, driver, accountant and all the other business components so that your business runs while you’re not there, you CAN scale."

So yes, Chili's scales. The owner(s) of franchise granting rights makes money from franchisees while they sleep. The owner of each franchise makes money from wait and kitchen staff while they manage their money and buy another franchise.

  [To be able to scale] your web app business must also:
  1. Not require additional staff time per customer
Well, I guess that means immensely succesful enterprises like Facebook and Twitter don't scale. After all, they've been hiring more and more people while growing, in part to deal with all their customers.

It's there, in the end:

Final caveat: I’ve written this post discussing this concept in absolutes i.e. you either do or do not pass the sleep test. Of course in reality there is not a single web app business that does not need to employ more staff as their revenue and customer base grows. Google is a fine example of a business that is designed to avoid having to employ more people as revenue or customers grow and they employ over 20,000 people today. But this test is a useful way to measure and think about how efficiently your business will scale.

Facebook and Twitter don't scale in the same way that adding servers doesn't scale because part of the additional processing power is consumed by networking and other infrastructure. (Is that a litote?)

Facebook has 1 million active users per technical employee.

I think it has more to do with whether the staff time and customer count are linear. Obviously each additional customer adds overhead, but in scalable businesses, growth of revenue far outpaces the growth of overhead.

passive income + good content (which is inherently viral)

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