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Bingo Card Creator (etc) Annual Report (kalzumeus.com)
288 points by patio11 on Dec 18, 2010 | hide | past | web | favorite | 88 comments

Thanks for sharing your numbers, they are refreshingly honest.

I wonder if conversion rate from free to paid accounts is similar in other industries.

If so, the numbers are quite sobering.

If even a successful, highly targeted and well marketed SaaS product with 100K users and millions of pageviews makes as much profit as someone working for minimum wage flipping burgers, it seems that most startups don't stand a chance of ever getting ramen profitable.

I'm not deliberately trying to be negative, but I'm wondering why your revenues are so low even with such a massive amount of traffic.

Is your free offering so good that most people don't feel the need to upgrade?

I don't think conversion numbers are comparable across industries, products, etc etc. Heck, BCC's aren't even comparable across BCC! They're quite sensitive to, most prominently in my market, the season and traffic mix: http://www.bingocardcreator.com/stats/conversion-rates

There are a lot more parents in the world than teachers, by necessity. Parents typically don't need 16+ cards. The free trial lets you print 15, which means it is essentially free for parents.

My mental frame of comparison is usually "young Japanese salaryman" rather than "guy flipping burgers."

I have an 8% conversion rate to sale per unique visitor. I wish I knew what I was doing right.

I think it has to do with your product, frankly. I imagine there's a lot of buying intent there.

Patrick's is 0.18%, amazing to see the range - especially considering the Bingo Card Creator funnel is pretty optimized.

If you have any questions, feel free. I can't answer the obvious juicy ones regarding acquisitions or clients, but other than that, I aim to please.

Why are you bothering with BCC when consulting is so much more lucrative?

(I can think of a few good reasons, but I'd like to hear what your reasons are.)

I really enjoy being a product guy. BCC has a very desirable property in that it mostly works in my sleep. Consulting is quite lucrative and intellectually engaging, but it often disrupts my life in ways that BCC does not: for example, flying off to $BIG_CITY_ACROSS_OCEAN for a few weeks is wonderful once or twice a year but would get tiresome if I were doing it every month. I very rarely get tired of BCC, and with the exception of a trivial amount of support all of my work for it is at my absolute discretion to schedule. I mean, my little brother is graduating college this spring and, without even looking at the calendar, I can say "Sure, no problem, I'll be there. Tell me the day sometime."

Money is also not a huge motivator for me. I like it, don't get me wrong, but after I've got the rent and necessities covered (oh look, bingo) money generally has to be the icing on the cake to motivate me to do something. (Shh, no telling the consulting clients.)

Why are you bothering with Tarsnap when consulting is so much more lucrative?

(Not being snarky).

Pretty much the same reasons as patio11 gave, plus (a) I like being in control (or put another way, don't like it when people pay me for advice and then don't take it), and (b) at +300% Y/Y growth, I think Tarsnap will be more lucrative than consulting in the very near future.

(I would have listed my reasons when I asked the question, but wanted to avoid biasing patio11's response.)

Other than linkjuice, what help would you like, and accept from HN?

(I think this is only fair: for I feel the transaction between you, and HN (or at least me, personally), is in massive inequality, and if there's a scalable way of repayment, now's your chance to figure it out ;) )

I really like hearing when my advice helps someone out. Negative confirmation ("We tried it... and it didn't work!") helps, too. Hearing via a blog post with a link to one of my businesses is, of course, double the fun.

What do you like to do when you are not working on your businesses? (e.g. you seem to spend so much time producing - what do you consume?)

What holds you back from selling your knowledge via a webinars or eBook?

How do you track/manage life outside AR,BCC,Consulting? (e.g. do you A/B test life or do you just go with your instincts?)

Congratulations and thank you for inspiring!

you seem to spend so much time producing - what do you consume?

Time with family and friends. Trashy urban fantasy and science fiction novels (approximately fifty in 2010 -- they will take my Kindle from my cold, dead hands). Hacker News. Video games, though I find myself enjoying them less these days. Gym (for health, rather than enjoyment). Dates. Church.

I don't have any intention of dating a simple random sample of women, so A/B testing life would be kind of difficult. "Organized and methodical" is something that I have never been described as outside of work or school.

Thanks for being comfortable in revealing that you don't have everything organized and figured out. (2nd Law of Thermodynamics)

I'm eagerly awaiting this:


Out of curiosity, what genres/types of games, and why do you think you're enjoying them less?

I don't have a question, though I do have a suggestion, Patrick. At risk of spreading yourself too thin, you could leverage your fame among the crowd at both hacker news and Joel's forum to deliver a how-to ebook in which you summarize and methodically organize advice on how to go from zero to hero with a software product. If you were to sell such an ebook at somewhere around $29-49, you could very easily stand to make make six figures out of it.

Probably not going to happen. Writing is a lot of work. Promotion is a lot of work which I generally dislike. I rather prefer doing stuff as opposed to being a paid commentator about doing stuff: it means I get to post on HN without having the implicit disclaimer "Trying to sell you his get-rich-quick-in-only-half-a-decade-for-values-of-rich-which-are-not-quite-rich guide."

I also think, no offense, that HN is a terrible, terrible market to sell to. Among many other signs: if the price point a hypothetical customer goes to for "Actionable advice which stands to make my business a lot of money" is "thirty bucks", I have negative a billion desire to be in a business relationship with them. No offense intended to anybody here. Instead of spending six weeks writing and then a year wheedling people to part with their $50 as if that were a meaningful amount of money, I could pick up a phone tomorrow morning, call one of a couple CEOs, and say "So, still want my help?", and then do six weeks of consulting. There would be very little wheedling over $50 involved.

You said elsewhere that you like to be a product guy (where the income is passive). So writing an e-book and selling it wouldn't be that different from selling BCC. And unlike consulting you wouldn't have to travel.

You make the initial investment in your pajamas at home, and then apply your own advice to promote it. I'm certain that it'd make far more money than BCC.

Perhaps the value of my suggestion was lost in its specificity. It doesn't even have to be an e-book priced at $50. Do webinars/courses a la Frank Kern. Charge $1000-2000, and accept only up to 100 people. Record the all thing, and then sell it on DVD at a cheaper price, when the live course is over.

My suggestion was to capitalize your "fame" to make some serious money and in the process help a great number of companies. Consulting is one way to do it, but there are less stressful, and more scalable ways in my opinion.

PS: I only replied to clarify the scope of my suggestion. I don't want to convince you or interfere with your plans.

Why is HN a terrible market?

Dear Patrick,

Please write an ebook for $49. I will buy two of them.


Your consulting client who now feels like he overpaid.

I've got a question for you and Patrick. It seems like a lot of the HN elite (you two, cperciva, jacquesm, etc) know each other to some extent. Is this because you had preexisting relationships, because you guys emailed each other after seeing each other's HN comments and submissions, or because there's some kind of secret HNers With High Karma group?

If it's the latter, is 4k karma enough to join? ;)

I met Patrick last year when he came back to Chicago for Christmas. It turns out he used to live in the parish directly adjacent to mine on the south side. I'm a fan of his work and so jumped at the chance to work with him. At this point I'd call him a friend. He brought us cranberry bread!

I like Colin and all, but have never met him. We tend to talk to each other a lot because we have very similar interests. You're as likely to see us bickering with each other as not.

I don't really know Jacques at all.

Any time you're in Chicago, look me up; I'm happy to buy coffee (we're on top of an excellent coffee shop downtown). I met a different HN person every other month or so just doing that.

You're as likely to see us bickering with each other as not.

I prefer to call it debating. :-)

One of the main differences in the early days of Hacker News was that it was small enough that you could recognize all of the names. The ones with high karma get recognized more by virtue of seeing them post more often.

I'd argue that you can still recognize the names of most of /leaders, simply because they post often enough. Or maybe I'm just exceptionally good at remembering usernames.

Also, to your parent, pretty much everyone I've ever emailed from HN has been friendly, and the ones I've met in real life have been great, too. Familiarity is the way that community is built. I've emailed all of those HNers except Colin before, when appropriate, and I still randomly know cpercival's name.

Looking down the /leaders list, I don't think I've met any of them in person, nor had a preexisting relationship with any of them. I've been in email contact with tptacek, RiderOfGiraffes, jgrahamc, epi0Bauqu and probably others for whom I don't have a HN name <-> email address mapping cached in my brain.

But as other people have said, it all comes out of seeing each other's comments here. There is no secret cabal, unless you count the YC founders mailing list (which I'm not part of).

I think given the nature of the software and startup world it's not unlikely for people to meet each other. I'm pretty sure most people on HN will be connected to each within one-two degrees of separation.

I know I'm connected with tptacek by one degree and linkedin tells me I'm connected to patrick within two degrees through two different people.

Someone should write a six degrees of HN app :-)

Just my own observation from the comments over time:

tptacek and patio11 probably met here, both have Chicago connections, met in person and now have done business together.

tptacek and cperciva are both in the security/crypto world. Don't know where they met but get the impression that they would have some connections regardless of HN.

Not sure about any connections outside of HN with jacquesm.

The way I see it, the HN "elite" spend a fair amount of time here, build relationships based on similar interests here on HN (maybe eventually in real life) and then appear to everyone else as if they've always know each other.

If there is such a club, I haven't been informed of it. (Karma over 9K.)

(Looks at karma of tptacek and patio11) Well you need to have karma >20k to know about the club. >35K to join it :P

Really not true.

I have the karma of a simple country boy. As a HN reader, I read many of tptacek's comments, and in particular his invitation in his profile to "Don't apologize for contacting me! I'm happy to meet you." So I ran into him at HN Chicago, we talked, one thing led to another, and now I work at Matasano.

So you know about the club by reaching out to anyone you find interesting.

I am not a member of any other group that is as friendly and accessible as this one here.

Ah. Well at that rate, I'll be allowed to know about it in 2012 or so. If the goalposts haven't moved by then. :-)

This is akin to say that you'd feel like you overpaid (or wouldn't hire) a programmer, given that he wrote a book on a subject that you could study and then use to implement the code.

A book can contain actionable advice, but it's still somewhat limited and generic. The value of a consultant lies in his ability to apply his knowledge to your specific requirements. It's a personalized service that no book can replace.

In fact, writing a book usually leads to more consultancy gigs and higher rates.

If I wrote a book, our consulting rates would not go up.

Would you be willing to give a rough breakdown of you $16,685.24 in expenses last year for Bingo Card Creator, please?

The yellow legend (coincidentally, for the biggest chunk of the pie ;)) is unreadable.

Sorry -- it randomly picks colors every reload, and I'm too lazy to change that at the moment. The big chunk is advertising, or you could keep rerolling until you found a readable set.

It's either: Advertising, Payment Processing, Freelancers, Online Services, Domains and Hosting or Fulfillment.

It says "Payment Processing"

Do you ever feel like you should be working on bigger, more important projects and you are wasting your time with current ones? (by important, i mean impacting more people's lives on large scale). And how do you approach what to work on?

I taught a couple hundred thousand kids last year, adding somewhere around a dozen full-time teachers to the US via efficiency gains. I'm feeling pretty groovy with regards to social impact of my work.

Do you have any designers you've worked with that you'd recommend, and have bandwidth for extra work? I'm awful at design, so I'm always on the lookout.

Do you use Facebook Ads ?

I've been spending a lot of time optimizing Facebook ads for my own startup over the last month or so, and I've been shocked at how poor the information out there is regarding it.

In a month of doing my own tests I've probably got more info on how to optimize Facebook Ads than is on any blog / website out there.

Given your love for A/B testing it be great to hear if you've any experiences with Facebook ads that you'd like to share ?

"Like setting money on fire." describes everything I know about it.

I, along with other members of the community would be interested in that information. Care to display it in a blog post?

I just figured out a good amount of info myself, by using a $50 coupon from them. Their ads way under perform google ads for me as well, but in the last two weeks I was almost able to squeeze an equivalent CTR, even if my conversion rate (signup for free account) through FB ads has been dramatically lower. I can pull a 15-20% conversion rate from google ads, but FB is only 5.7% right now. My CPC is about $0.15, which is down from $1.00 when I started.

The biggest difference I am seeing in performance between adwords and FB ads is that adwords works well for exploratory searches (obviously), whereas the only FB ads that are performing worth a damn are the ones calling out our competitors. My slew of ads have crap performance except the two titled "Tired of Map My Ride?" and "Tired of Garmin Connect?", with map my ride and garmin connect being our two big competitors.

So, to wrap up a long winded reply, I agree with Patrick. For most, it's probably equivalent to lighting money on fire.

Do you A/B test your pricing (including one-time fee versus subscription service)?

On average, how many hours do you work per week overall? And on which days (weekdays, weekends, etc.)?

It bounces all over the place. I spent some time at client sites and worked 9 ~ 5 or 10 ~ 6 at their preference. There was about a month in the summer where I probably did 10 hours a week in a good week. November, when I was pulling the hard yards on Appointment Reminder, was generally six hours a day. (Sometimes a very quirkily scheduled six hours: between a bad cold and longstanding bad habits, I often got up at noon and started working around two or three.)

I generally don't work on weekends, with the exception of customer support emails and an evening or two prior to the AR launch. I mean, crikey, until the very end they even gave me weekends off when I was a salaryman: working weekends would be moving in the wrong direction.

Hi Patrick! You mention several times your past as a salaryman, and from your posts I get the feeling you're very happy about not being one anymore :) Besides the "pull" factors (such as loving to develop your own product, manage your own time, etc), could you mention some of the "push" factors that made you want to leave the salaryman existence?

I guess most people on HN could elaborate a lot on why working for a salary is not among their first options, but now I'm particularly interested in your story, if you don't mind :)

(For reference, here are some quotes from your blog:)

My name is Patrick McKenzie. I’m an ex-Japanese salaryman

reacclimating myself to a human existence after years of salarymanhood

After several years working as a Japanese salaryman, I quit my day job and went full time on my business as of April 1st of this year. This was the best decision I have ever made.

The three hour commute to the seventy hour workweek was the lArgest factor. Having to ask for permission to see my family grated on me, too. There are also comparatively minor issues about salary (mine was half a US starting engineers') and having impact with my work, but I would have lasted those for a long time without the work/life balance issues.

How did you find time and energy to work on BCC while working 70 hour weeks?

That is a revolutionary post on the time aspect. What about energy, or was it even an issue? I work about 45 hours a week, but it sometimes seems like that's all the work I've got in me. Working 70 hours a week would, I'm assuming, be almost twice as draining.

Any thoughts on Heroku, now that you have some paid experience with it?

I like it, in a qualified fashion. For apps at the scale I operate at, which don't really benefit from the scale-to-the-moon aspect, the main selling point is the ease of deployment. You have to balance this with there being many, many headaches if you decide to use gems/libraries which interact poorly with Heroku's view of the world. I had to do an awful lot of R&D to get a client's project working, and that was for a wee little website which mostly turned strings into other strings.

Personally, at my combination of developer and sysadmin ability, I find using VPSes is a better use of my time. For client work where I want to hand over a product which doesn't require my ongoing involvement? Heroku all the way.

For the average Joe Dev, what would be the recommended pathway to becoming proficient at SEO?

Spend two weeks reading SEOMoz and SEOBook like it is your job. Then, do SEO. I'd pay particular attention to the parts where programming is an unfair advantage, such as scalable content creation. (See blog Greatest Hits for lots of discussion of this.)

There's a lot of paid content on those two sites. Is that what you're referring to? If it is that's fine; just want to know whether it's worth paying for or not.

I used to pay for SEOBook and think their training stuff has value (though most of the value for the subscription is in the forums). That said, you can do pretty well just with the freebies -- I learned basic SEO from them just by reading their blogs obsessively back in 2006 or so.

You'll eventually reach a point where it is not worthwhile for someone to tell you for the 47th time "You need a scalable method of attracting links to your website." and instead need to actually be able to plan and execute one.

What is your scalable method of attracting links to BCC (and AR)?

For BCC, Patrick does something really smart. He automagically generates bingo cards for different terms such as:

* army bingo cards

* pizza bingo cards

* harry potter bingo cards

Generating such bingo cards and thus relevant pages is easy so even if no body ever searches for 'angry birds bingo cards' it hardly costs him anything to generate and host. But if someone does such a search, Patrick gets a free visit (which normally costs $1 or so in AdWords). Don't forget that a majority of search queries are unique and have never been done before so generating content automagically is a great way to do SEO.

Scalable content creation has resulted in a few links but not nearly as many as I was expecting prior to doing it. Most of my cards are worthy of consumption but not worthy of telling your friends about, and getting a link out of a teacher takes real work. The exceptions are the Dolch sight word pages. Who knew, right?

I have a client project which blends linkable content and consumable content in an interesting fashion. I'll show you after it launches.

Yep, that's true. Though I was not talking in context of link juice but just catching the occasional long tail query visit (irrespective of if it ever gets a back link).

I would be very interested to learn once your client project launches. Good luck with that.

Publishing A/Bingo (best ROI ever on that score), being (tongue very much in cheek here) "Internet famous", etc.

How has the USD-YEN exchange rate impacted your income and year over year numbers?

Hey Patrick,

I don't have a question, but I just want to say that you're a huge inspiration... and I'm so close to getting ready to take the plunge, get off my ass, and start working on my own projects.

Thanks for being so open with your experiences.

>so close to getting ready to take the plunge, get off my ass, and start

How close is that again? :p

We started going down the whitelabeling path with Doorkeeper, but ran into the issue that we were competing for mindshare with the whitelabeled version. I'd be interested to hear how you plan to approach the whitelabeling of Appointment Reminder.

Seems like there's a bunch of recurring credit card payment services out there now; what made you choose Spreedly?

A recommendation on a Rails blog. Investigated: sane pricing, painless API, worked with Paypal. That was my shopping list.

Have you ever tried making software targeted at the Japanese market? From what I understand, you might find a lot of niches as of yet unserved.

I had an agreement with my employers that I would not, prior to quitting my job recently. I think there are likely huge, huge unexploited opportunities here, but the language barrier (I speak Japanese, but I speak English very well, which rather helps when doing copywriting) and my lack of familiarity with the contours of the Japanese-speaking Internet (I couldn't name a major Japanese blogger if I tried, for example) always make me reach for the USA first.

The agreement was that you wouldn't work in the Japanese market at all? I agree with you about the huge, unexploited opportunities. ;-)

Patrick, considering your chops (I think anyone who's read your posts on HN for a while will agree that you're in the '10x programmer' range), is there a reason why you won't launch a full fledged startup? Maybe even try out for HN? BCC is clearly at a point where it can be run on the side and that can take care of your 'ramen' needs while you focus on building something great.

AR looks an awful lot like a "real" startup I'd you squint at it the right way. If I were willing to commit to the growth curve (and implied lifestyle) that taking investment commits you to seeking, I'd do it and start hitting up people for money. At present, that doesn't fit in with my plans at the moment, but if I ever decide to roll the dice YC will be among the first to know.

Why do people start startups? Two reasons that come to mind are: 1) To build something cool. 2) To work more now in order to have the option to work less later.

Patrick already seems to have met these goals, so why would he start a startup just to start a startup?

In my case, I'm currently doing almost exactly what I want to be doing for the rest of my life. The problem is my bank-account is not trending in a sustainable way. So, for my part my efforts are directed towards being able to do what I'm doing now, indefinitely.


I'm curious why you worked as a salary man for the time that you did. You enjoy spending time with family/friends and money isn't a huge motivator, so why submit your self to the 70 hour work weeks and 3 hour commute?

And as other have said, thanks for the inspiration and information.

If you had to live only from BCC's profits alone (25k~ this year), would you be able to?

Yep. Ramen profitable for me is about $2k a month, counting taxes. Japan would be cross with me, though: the unofficial "below this line you are stealing our jobs" mark is three million yen a year. It is not maximally relevant to Immigration that I created the job to steal it.

    the unofficial "below this line you are 
    stealing are jobs" mark is three million 
    yen a year.
Still a bit below the mark here (~2.4-2.5k euros/month for Austria, which is ~3.2-3.3m yen/year).

Kind of annoying when you have enough money to not need a job but not enough to not lose your work/residency permit.

"Aside from frightening my bank a few times when I got large wire transfers from America, charging a lot of money is a great idea in every possible way."

That is a classic, congrats Patrick!

I am know AR is still new, but can you shade light on traffic numbers related to AR?

Go to the lower third of the article.

Matasanos is the Spanish slang for doctor (literally, means "healthy killer").

Thanks for sharing

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