Startups
Startups: Here are your hosting options
May 22nd
Here are your hosting options:-
Dedicated server in colo facility: Highest up-front cost, you need to be operations person too, Lowest latency, best performance per $, entire machine is yours so blazingly fast when lightly loaded, can run virtual servers, cannot scale up or down rapidly based on demand. Typically given 5+ IP addresses so you have lots of flexibility in hosting multiple sites on the server.
Dedicated server rented: No up-front cost, higher cost per month than dedicated, easier to upgrade to new hardware. Someone else’s problem when it breaks. Typically come with a single IP address.
Virtual Servers: Can add new server instances / environments easily. You can run these on your own server or rent them from someone else. Great for load balancing to get the most out of your hardware. Typically somewhat limited in how much RAM you get.
Cloud Servers: Just like having a virtual server but you can scale up or down easily to add new instances. Highest cost per CPU cycle. You get what you pay for but no more – even if the server you are on has spare CPU cycles you are typically limited to the fraction you are paying for. Shared network, virtual disk, … means it will never be as fast as a dedicated server.
In the end after trying cloud servers, virtual servers and dedicated servers I went with the first option: dedicated high performance servers with SSD drives in them hosted in a colo-facility. This setup outperform all the other options significantly providing lower latency (better response times) and the ability to run multiple virtual server instances on them for complete isolation between services, and in the long run it will be cheaper also. Later when we need to scale up or down based on time of day we will probably combine this approach with some extra cloud servers but at the quietest times of day I would expect to have no cloud instances running.
Email opt-out: Here’s a great example of how to do it right
Apr 27th
I came across this opt-out screen today. It’s one of the best examples I’ve seen recently of an opt-out screen done right.
First, they try to fix one of the key reasons people opt out of email: they are still interested but they want less email.
Then they give you the option to really just quit completely.
Then they give you the option to change your email address.
It really looks like they have done their homework, presenting these in the order that most likely applied whilst also trying to keep you as a recipient.
Anyone implementing email notifications for their startup should also take a look at CAN-SPAM.
WordPress Plugins I’ve found useful so far
Feb 1st
Broken Link Checker
Checks your posts for broken links and missing images and notifies you on the dashboard if any are found.
Flash Photo Gallery
Creates a Flash Photo Gallery like one provided in Adobe Photoshop CS2 Flash Web Photo Gallery templates.
Google XML Sitemaps
This plugin will generate a special XML sitemap which will help search engines like Google, Yahoo, Bing and Ask.com to better index your blog.
HeadSpace2
Meta-data manager on steroids, allowing complete control over all SEO needs such as keywords/tags, titles, description, stylesheets, and many many other goodies.
Next Page
Provides shortcodes and template tags for next/previous navigation in pages.
Page Flip Image Gallery
FlippingBook Photo gallery plugin with page flip effects.
Page Tagger
Enables tagging for pages. PHP 5 required.
Photo Dropper
Lets you add Creative commons licensed Photos to Your Posts from Flickr. By activating this plugin you agree to be fully responsbile for adhering to Creative Commons licenses for all photos you post to your blog.
Useful 404′s
Create more useful 404 error pages, including email notifications for bad links. See http://www.alistapart.com/articles/amoreuseful404 for the inspiration behind this plugin.
Defining Cost of Sales for a SaaS or Software business
Jan 29th
I was asked today how to go about defining “cost of sales” for a software startup, here’s what I wrote:
From the perspective of constructing a useful financial model for your business the key issue is Fixed Costs vs. Variable Costs. If you sell more units / licenses does the cost scale accordingly (either linearly or step-wise)? Items like support, bandwidth, EC2 instance hours, commissions, … might all fall into this category. But if you only need just one email server ever then it’s clearly a fixed cost. As a startup you might want to model cost of sales as zero – you’ve bought a server, you have bandwidth to spare, nobody is on commission, … but eventually you’ll get to the point where these things do scale with the number of customers and should be modeled as variable costs. “Cloud computing” can also help move fixed costs to variable costs and can reduce your burn rate early on.
Separating variable costs from fixed costs allows you to figure out your gross margin, to understand how the business will scale and to find your break-even point. If you have a negative gross margin and no way to make it positive later you will never make a profit (net margin) so quit today! If you have a positive gross margin, how large do you need to scale your customer base to cover your fixed costs too and thus reach break-even? Of course nothing is ever that simple: you will still have some ‘fixed’ costs that move up in steps as you grow your sales making the break-even analysis slightly harder.
Constructing a financial model using “Variable Cost Accounting” like this helps you understand the business and helps you compare it to other businesses using standard ratios and terms.