Bootstrapping a startup

Our recent nomination as a finalist in The Crunchies Awards for 'Best Bootstrapped Startup' got us thinking about how we've funded ourselves to date and we thought we'd share that with you, and some of our thoughts for the future.

Mike and I, often with the help of Jodie, have dabbled in various startups over the years while working for other companies. It got us thinking a few years ago that we might want to try it out full time, so we figured we'd do our best to save some money in case we wanted to leave our jobs and try a startup full time. And if we decided not to do that, hey, savings not exactly a bad thing to have done!

So when it came to quitting our jobs we each put in about $25k to the business, and we each have enough in reserve to live a reasonable Sydney lifestyle for 2 years without needing to draw a salary.

One of the great things about Shoes of Prey as a business is that it hasn't required a lot of capital. The big capital requirements for traditional retailers are store setup costs and capital required to buy stock, neither of which we require. So our initial investment of $50k, and the equivalent of 1 person working full time for 12 months has got us to where we are now, breaking even without paying Mike, Jodie or I a salary.

That said, we've got some interesting choices moving forward, some of which may require capital.

1. We can grow via the organic path. We focus on online retail, do some offline retail events and only invest in further offline activities from our profits.
2. In addition to online retail, we can invest more heavily in offline retail opportunities whether that be through instore displays owned by others, such as our experiment with The Grand Social, or even opening our own stores. Either of these could require a capital investment beyond our means as founders, so we're going to start having conversations and learning more about the venture capital industry in case we choose to go down this path.

Clearly there are significant pros and cons to taking on investors. We'd love to have the capital to grow quickly, and there are some great opportunities to do that in the offline space. And having experienced investors involved in our business would mean we'd learn a lot and get some great advice. However at the same time we like the level of control we have over the direction of the business at the moment - we're able to experiment and learn the best way forward without the time pressure of an investor who wants to exit at some point in the future. And going down the path of taking on investors would be a time consuming process.

If you've had any experience with angel investors or the venture capital industry we'd love to hear your thoughts on how you think we should proceed.

And if you're so inclined, you can vote for us in the Crunchies Awards here once a day until January 6. :)

Sam the Butcher

In our recent post about taking our business offline we discussed the fact that we're keen to explore the offline retail world to show customers our custom made women's shoes. This has us thinking about retail displays and how we can best introduce the concept of designing your own shoes online in a physical retail space.

It was with this thought in mind that I walked past a new butcher on Crown St. in Surry Hills - Sam the Butcher. Here's the display in their window:



While I'm not vegetarian, I'm not a fan of killing animals either (I'd like us to offer vegan shoes in the near future), but I think this is a brilliant retail display.

1. It grabs your attention - every time I walk past this display people are standing in front of it. Some people love it, some people hate it - but everyone stops to look.
2. It's buzz worthy - the fact that it's a controversial and different means people are going to talk about it and will very quickly know, and remember, that there is a new butcher in town.
3. It exudes quality - Sam the Butcher is a high end organic meat shop. The clean, polished stainless steal helps show this is a quality butcher.

The other reason I like this display is that in contrast to countries like China, in Australia we've become desensitised to where our meat comes from. This display makes it pretty darn obvious and is a good reminder that when we choose to eat meat, it comes from an animal rather than a plastic packet.

Have you seen any inspiring retail displays lately?

Shoes of Prey is a Crunchies Finalist!

Thanks so much to everyone who nominated us for a Crunchie award a few weeks back. We're a finalist in the 'Best Bootstrapped Startup' category! It's a real honour just to be a finalist, TechCrunch is one of our most read news sites there are some amazing companies and products up for awards.

While it's an honour to be nominated, we'd love to win! If you think Shoes of Prey is deserving you can help us win by voting for us each day.

Here's what to do:

1) Please bookmark this URL -- maybe even make it your homepage while the competition is running: http://crunchies2009.techcrunch.com/vote/?NjozNA==

2) Every day until January 6 2010 select Shoes of Prey and click 'Vote'. You can even share your vote with your friends on Facebook or Twitter. :)

3) Come back each and every day until January 6, and vote again. (Every person can vote once per day.)

Thanks again for your support! :)

Building our shoe community

In order to take our bespoke shoe startup to the next level we know we'll need to start building a community around it. Over the last week we've been giving this a lot of thought. However we'd love to brainstorm some more ideas on our blog with you!

The purpose of building our community is to:

1. Make our site more "sticky" so people want to come back again, and hopefully bring their friends.
2. Give potential customers more confidence to purchase designs they have created.

It's also important that we build the community in a way that is consistent with our brand. In other words, we don't want create something that is insulting to the intelligence of our customers or relies too heavily on gimmicks.

To kick off the brainstorming we reviewed some popular websites to see how they've managed to build their communities. Here are some of the sites we reviewed:

	TypeTees -- a sub-brand of Threadless -- makes funny t-shirts from slogans submitted and voted on by the community. The great thing is that you receive almost immediate feedback after you post a slogan.
	Etsy sells arts and crafts made by independent artists and designers from around the world. They have many community tools on their site such as forums, chat rooms, voting communities, and smaller support groups called "teams" that support particular geographies or crafting mediums.
	Foursquare is a location-based game played on mobile phones. Users "check-in" to places they frequent, such as cafes, nightclubs and restaurants. If they are the person that checks-in to a particular location the most, they are crowned the "mayor" of that location. They are also awarded points for their check-ins and, over time, their aggregated activity will unlock various badges as they achieve certain milestones.
	Yelp relies on the community to provide all of the content for their website. To keep people motivated they keep track of a wide variety of statistics, such as the number of "funny", "useful" or "cool" reviews a person has submitted, the number of "first" reviews each user has submitted, and the number of "compliments" a user has received. Really active users are selected annually to join the "Elite Squad" - which gets them a special badge on their profile page and invites to exclusive events.

After looking at these sites, and some others, we've got a number of ideas about how we should design our community features. However, we'd love to know what you think! Do you have any favorite websites with great community tools? What would you recommend we do to help build our community?

Should you discuss your business idea with other people?

As we mentioned in a recent post, if you have an entrepreneurial idea, it's highly likely that whatever influenced you to have the idea has influenced 1000 other people to have the same idea at the same time. So this begs the question, should you keep your idea under wraps, hidden from others? Or should you talk to people about it and seek their advice?

If you're a regular reader of this blog you probably have a good idea of our thoughts on this. We've gained so much from talking to people about our business, particularly via this blog, both before our launch and since. Whether it was the 72 incredibly generous comments helping us to brainstorm a new name when it looked like we couldn't use Shoes of Prey, or the discussions we've had with people about the shoe sizing conundrum, being open about our business has been hugely valuable. Over the last few years we've had literally hundreds of ideas that, after talking to people about them, we've realised won't work. No doubt that's saved us a lot of effort and contributed to us starting Shoes of Prey rather than another business.

The obvious risk of discussing our idea is that potential competitors read our blog, learn from us and use our ideas. And particularly prior to our launch, the risk was that someone would take our idea and beat us to it. Obviously we don't discuss everything on this blog, but there's actually very little we don't discuss. We think our success will come down to how well we execute on the idea. If other people read this blog and enter the market, that's ok, it's up to us to offer a better product to our customers.

What are your thoughts? If you have a business you're thinking of starting do you discuss it with others or keep it quiet?

Photo Credit.

Social Media Lessons from CashDoctors.com.au

As we've discussed previously, our Facebook Page is performing really well for us and I've been doing quite a bit of reading on social media marketing to learn how we can improve on our efforts.

I was recently introduced to Greg Ellis (Co-Founder) and Johan Kriegbaum (Online Marketing) of Cash Doctors and boy do they have a social media challenge on their hands! Encouraging people to talk to their friends about PayDay loans is no easy task. But I think they're making a fantastic go of it, and there are some great lessons for those of us using social media marketing.

I should mention, payday loans might make you think of dodgy, scammy lenders, but after reading through their site and meeting with Greg and Johan, I'm very impressed with their ethics and responsible approach to their lending practices - eg. Cash Doctors only lend money to people with a job and a clear ability to repay the loan.

So onto the good stuff, here's the lessons I've taken from Cash Doctors social media approach:

1. Develop a clear strategy around what will best get people talking about your product.
People aren't going to talk about how they just got a payday loan because they were running short of cash, but they will talk about ways to save money and great deals, so Cash Doctors have developed 'Catie Cash's Deals' to discuss great deals, like this post about saving money with your Christmas shopping. They've also established the 'Tight Arts Appreciation Society' to discuss innovative ways to save money.

2. If you make a mistake, be honest with your customers.
Check out this post from co-founder Greg titled 'How we blew our launch'. Who are you going to forgive and develop an affinity for, a company that gives a short, undetailed 'oops, sorry' response, or one who takes responsibility and explains the error in detail?

3. Show your personality.
Cash Doctors do this brilliantly. Check out the video on their Facebook Page that shows co-founder Sean's face being painted like a dog! Or this post showing whales migrating past their office (which had 10 comments on their Facebook Page). Cash Doctors also regularly change their profile pic to show a different employee from their company.

4. Engage with your customers - social media is a 2 way communication.
Cash Doctors do a great job of responding to fan comments on their Facebook Page and messages on Twitter. Follow up comments from fans is testament to this being viewed positively by their customers.

All of that said, it's clearly still early days for Cash Doctors and their social media strategy. And speaking to Greg and Johan, it's still unclear whether this is going to work for them. Despite what I view as a brilliant effort, they've only got 122 Facebook fans and 94 twitter followers, so clearly they aren't getting a good ROI just yet, but if it's possible to have an effective social media strategy in their space, I think they're going the right way about finding it, so hats off to Greg, Johan and Catie Hughes (their social media whiz) for giving it a go and good luck!

What do you think of their approach? Any ideas on what they could be doing differently?

Customise Your Life

It was over the Christmas break last year that we had the idea for Shoes of Prey, and at that time we hadn't come across too many customisable products. We'd read that customisation was a growing trend and it made sense to us that people would want to buy customised products - with the growth of manufacturing in China consumers can now buy just about anything at very cheap prices compared with just a few decades ago, so to be unique and different, consumers want to be able to customise products to suit themselves. Coupled with this demand are improvements in manufacturing that make customisation easier to do, and big improvements in software and web development which make it possible to build something like a custom shoe designer.

And we've been amazed at how many other entrepreneurs and businesses are onto the same concept! Not only can you customise your own shoes, you can mix your own muesli create your own rug or even design your own Lego set! And there are now websites dedicated to profiling companies that allow you to customise products, like Milk or Sugar who have a quickly growing list of over 100 different customisable products.

A big lesson we've taken from this is that if you have an entrepreneurial idea, it's highly likely that whatever influenced you to have the idea has influenced 1000 other people to have the same idea at the same time. So don't overplan and waste valuable time, or worry about protecting your idea, get out there and execute on the idea well and fast. To us it looks like success is more in the execution than coming up with a new idea no-one else has ever thought of - because someone else will have.

Image Credit.

Online Marketing v Offline Marketing

I was reflecting on our offline retail plans and the fact that our biggest website traffic and sales spikes have come from bring written about in offline media and I realised that our experience with Shoes of Prey is completely the opposite to the experience of most other retailers - we are discovering offline retailing and marketing for the first time, while traditional retailers are discovering the online world the first time.

When I was working at Google a big challenge for the Retail sales team was persuading retailers that their customers are spending time online, and that as a retailer, you need to have a strong online presence to engage with those customers. Retailers are starting to test the waters, some more than others, and those that are doing it properly are doing very well.

We on the other hand, are sold on the benefits of online retailing and marketing, and are now just discovering the wonderful world of offline retailing and marketing! And it makes sense that offline retailing and marketing works too. Despite the impressive growth of online, the bulk of media consumption time and retail dollars are spent offline. So we'll soon be embarking on a PR push that is focused on offline as well as online media, and we're talking to offline retailers about selling our shoes in their stores.

If, like us, your background, work experience and frame of reference is predominantly online, what can you do for your business or career that is offline?

Getting Things Done

Our recent post about the value of blogging lead to a discussion in the comments about ways to organise to do lists and I thought I'd share mine.

My Gmail inbox and calendar are where I organise my life. I find that around half of the things I have to do come to me via email, so for the other half, I simply send an email to myself so those things are also captured in my inbox. I use Google Calendar for to dos that are time based, eg. I have to do something at a particular time or on a date in 2 weeks time.

As you might just be able to make out in the screenshot below, I use the 'Superstars' gmail labs features. Red stars are important/urgent to do's, blue stars are less important/not urgent to do's and yellow exclamation marks are things I'm waiting to hear back from someone else about - this reminds me to follow up if people haven't gotten back to me about something important. Anything that can be done in under 3 minutes I do immediately rather than emailing myself or starring it.

I also use the 'Multiple Inboxes' labs feature so that my starred items, or my to do list appear on the right side of my inbox for easy reference.

I don't archive messages which I know is a little abnormal. If something is read and not starred it's the equivalent of being archived in my mind, but I like to keep it in my inbox in case I need to quickly scan and find an email that I hadn't needed to star earlier (though I love and often use Gmail search for this).

This approach came about after reading The 7 Habits of Highly Effective People a few years ago, then doing a Getting Things Done course at Google and speaking to another Googler, Will Blott who uses a system very similar to the one I now use.

While this approach works very well for me, everyone's different and I love hearing about other people's to do systems as I often pinch little things to make my own process more efficient. How do you manage your to dos?

Taking our Business Offline

As we discussed in an earlier post, we've been experimenting with offline retailing, and it's been working really well, more than half our sales have come about as a result of our offline efforts! That's amazing given that we've had about 20 times as many people visit our website as see our offline displays. For those of us used to measuring conversion in the online world, the conversion rate for visitors to our business that see one of our offline displays is 20 times higher than for visitors who see our website only. That's incredible, but it makes sense.

As an online retailer of custom made women's shoes we face 2 barriers to people purchasing from us:

1. People like to see and touch clothes and shoes before purchasing them, particularly high quality products like ours.

2. Customers are a little uncertain when they come across a new business concept like ours. Despite our best efforts to allay their fears, they aren't sure if the shoes are going to look like they hope they will.

When people get to see and touch our shoes, both of these barriers are overcome. They see that the shoes are very well made and that they look very similar to how they look in the designer.

After quite a bit of thought and discussion, we think it makes sense to combine some offline retailing with our online efforts, the two are very complimentary. As we see it there are two approaches we can take:
1. Our own stores.
2. Shoes of Prey displays in existing retail stores.

Given the capital requirements of option 1, we figure we should leave that possibility for now and start with option 2. Retailers displaying Shoes of Prey shoes wouldn't need to hold stock, and we think we could build a great display in 1m x 1m, so we're going to start talking to some retailers to see if they'd be interested in working with us.

As this stage we think the ideal stores for us are mid to high end women's clothing boutiques and wedding dress stores. If you know of any great boutique women's clothing or wedding stores who you think fit with our brand, please let us know!

In terms of the in store retail display, JC from The Grand Social, who have kindly hosted our latest offline efforts (see the pic above), made the good point that we should aim for a really innovative display which clearly tells the story that you can see and touch the shoes in the display, then design them online. A simple way to do this would be to include a touch screen version of our shoe designer in the display. However I'm sure there are much cooler things we could do. Any ideas?!

Shoes of Prey and our Blog

On Tuesday 22michaels was listed as a 'Blog of Note' on blogger and we're getting a lot of new visitors, so we thought we'd take the opportunity to explain our business, Shoes of Prey, and our blog, 22michaels.

Shoes of Prey allows you to custom design your own women's shoes. You choose the heel, toe, colour, leather and embellishments. Our expert craftsmen then handmake your shoes and we ship them to your waiting feet.

Designing and ordering custom made women's shoes online is a relatively new concept and it's been exciting to get the business of the ground. And this blog, 22michaels, is where we talk through the process of starting Shoes of Prey and the challenges we face along the way.

To all our new visitors, thanks for stopping by. Please take a look at Shoes of Prey, we'd love to hear your thoughts on the business, and if you like our blog you can subscribe by email at the top of the page, bookmark us or add us to your RSS feed. :)

Thanks,

Mike, Jodie and Michael.

Startup in the Cloud

As we've progressed with Shoes of Prey we've come to realise that we're not using a lot of software on our computers and that instead most of what we do is done in 'the cloud'. Not only is this cheap, but it means we can easily share what we're doing with each other and jump on any device connected to the internet to work, whether that be our computer, someone else's computer or our iPhones. Here's what we do that's done in the cloud:

• We host our website with Google AppEngine.
• We use Google Apps for our email, calendar, documents and spreadsheets.
• From starting our business until just 2 weeks ago Mike, Jodie and I had never all been in the same city at the same time, and Mike and Jodie still haven't met Vanessa in person, so we use Google Talk within Gmail for chat and video conferencing.
• We use Blogger to host this blog and Tumblr to host the Shoes of Prey blog
• We recently discovered and now use Pixlr for a lot of our image editing.
• Twitter and Facebook are two of our key marketing tools. We also use Google AdWords and Facebook Advertising.
• As we've talked about previously, we use Saasu to do our accounting.
• We use Picasa to share our shoe related photos between Jodie, Mike and I.
• As we've mentioned previously, we use Campaign Monitor to manage our Shoes of Prey email subscription list.
• Mike stores our website code with Github so it's not lost if anything happens to his computer.
• We use Google Analytics to analyse usage of our website and will soon start using Website Optimizer to improve our website.

The only software we use that's not in the cloud is the operating system and web browsers on our computers, Skype for cheap international calls, particularly when we're overseas, and the web design software Mike uses - Adobe Flash, Dreamweaver and for some graphics editing, Fireworks.

Is there any other cloud based software that you use which would be useful for us?

Photo credit