How 99Designs.com came to be

I love hearing stories of entrepreneurs, it keeps me motivated and there are always great lessons to be learned.  Today, I went to an event in the city of Campbell to hear Matt Mickiewicz, Founder of SitePoint, Flippa, and 99Designs, talk about how he got started.  At first glance, Mickiewicz is a very happy-g0-lucky type of guy, but don’t be fooled because he is a serious entrepreneur.

Back in late 1990s, there wasn’t a lot of of information on how to build websites, so Mickiewicz decided to pull all that information together on one website called WebmasterResources.com.  Hahaha, I laugh because later in his talk he mentions another website with a long name.  Alright back to the talk.  He coded WR using MS FrontPage which he jokingly said he pirated.  Did I mention that he was only 15 years old when WebmasterResources.com was started?  During lunch at school, he would have sales calls with customers and say that he had a hard stop at 1pm.  Unfortunately his customers didn’t know that his hard stop was really his social studies class.

Later, Michiewicz partnered up with someone much older (not 15) who had the business know-how to take WebmasterResources to the next level.  WebmasterResources then got rebranded to be SitePoint.  SP had a lot of tutorials that were downloaded a lot.  All of them for free.  He figured out quickly that there was a demand for printed tutorials.  For $35, people can get a printed copy of a tutorial so that they can use while creating a website.  He said they found some sh*ty online print on demand service who could take credit cards and went from there.  Today, SitePoint gets 2.5M visitors per month and has 1.5M email subscribers.  They were able to outgrow a competitor who had $3M in funding when SitePoint only had $300K in funding.

It is often asked how entrepreneurs come up with their ideas and then how do they validate and build the business.  For Mickiewicz, he was keen on monitoring the conversations on the vBulletin forum on WR.  Organically, graphic design competitions were happening with no money involved.  Then people started offering money to have directed contests.  Mickiewicz saw this and decided to build a MVP product within SitePoint.  He also implemented a $10-$20 listing fee for the contests.  Soon people from coffeeshops and non-tech businesses were finding their way to his SitePoint site and posting design contests.  The design contests were buried in the forums so Mickiewicz knew that he was onto something.  Later, 99Designs was spun off and the rest is history.

Another website, Flippa, is a website auction site which started in the forums on SP too.  To this day they have auctioned off $55m worth of websites with 55% of website sales ending above it’s initial sales price.  A notable site is FaceSmash which sold for $30k the week the movie Social Network came out.  Even Perez Hilton blogged about Flippa because of its relationship to FaceSmash and Social Network.

One idea that never took off was NameMyThingey.com where you can crowdsource business names.  People would get 50-100 name recommendations and be indecisive and not choose a name after all.  The name brainstormers got pissed because of this.  Oh well, you can’t win it all.

I really enjoyed hearing Matt Mickiewicz talk about all of his business ideas.  I had no idea that 99Designs was just one of many companies that he started.  I wish him luck with Flippa and a new eLearning video website that he’s working on.

Tips from Matt Mickiewicz:

  • To keep costs low try swapping services for other services. He would trade ad space on WebmasterResources for free hosting services.
  • If you are deciding to get an MBA, maybe try finding someone really smart in the Valley and volunteer to work for them for 2 years.  I guess this makes sense.  If you are going to forgo salary for 2 years why not do an apprenticeship.
  • Track your competitors, look for their sales process, what’s going on on their front page, and their conversion rates.  Since 99Designs has started, a bunch of other graphic design contest websites have popped up.  He said CrowdSpring actually did a contest on 99Designs for its logo.  Funny!
  • Pick up a book on sales and negotiating
  • Don’ts: 1) Don’t hide from customers, his personal cell phone was on SP website 2) Don’t trust  vendors and prepay for things.  Some vendors go bankrupt.
  • Consider using Amazon EC2, 99Designs uses it, they get 5.25TB of images uploaded frequently, EC2 helped them scale with customer demand
  • Initial team members of founding team should be 4-5 people – 2 developers, 1 designer, 1 product manager, and maybe 1 marketing person.  This is probably one of the first times that I’ve heard product manager and marketing person at the very beginning.  I agree.
  • If there isn’t positive feedback early even when it’s a less than perfect product, then you should abandon it.  He said loyal customers will stick it through and give you feedback to make it better.
  • It’s possible to outgrow other competitors who have a lot more funding than you.  The main difference is that they were able to leverage their distribution channel.  He mentioned that an idea is worth nothing and often times fails because lack of distribution channel.
  • Consider partnering up with forums and pay forums who send customers your way.  He told me that one dating website had over millions of users and he asked them how they did it.  The dating website basically partnered up with forums overseas and acquired customers that way.  Since this was in other countries, their customer acquisition costs were much cheaper than the US.  After establishing a foreign user base, the the dating website came to the US.  I have never thought about launching in other countries especially since it’s cheaper to acquire customers.  I’m going to have to try this one day.
  • You can get more sign-ups using viral techniques.  The dating website mentioned above leveraged user’s imported email contacts to get more sign-ups, for every 100 email contacts imported, they got 10 new users (10% conversion rate).  I think this method has worked well for Facebook.  I know that I went through my gmail contact list to see who I can “friend” on FB.
  • If a product is not part of your core business, consider spinning it off / rebranding it.  This is interesting because I personally wonder why Amazon keeps Mechanical Turk and EC2 under the Amazon brand.

ZURB.com’s blurb on Matt Mickiewicz:

It’s not often that you hear of a 15 year old who was closing $10,000 advertising deals for his newly launched site in between classes at school, earning enough to buy himself a new BMW with cash by the time he was just 16.

That’s the story of Matt Mickiewicz the founder of Sitepoint, a site which, back in 1999, was the first online forum for web designers and developers. It has matured to be a massive web community and tutorial/resource archive for web developers and designers now. Matt has spun off three other businesses based on observing how his 1+ million users use Sitepoint.

Sophia Perl

Sophia Perl is a product manager for a database tool at IBM. She has over 10 years of software development and management experience. Sophia holds a BS in Computer Science from University of Southern California and an MBA from University of California at Davis. She is the creator of iPhone apps PicPredict and Eventabulous.

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