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The Andrew Warner Story
- merrick33 18y agoIn case some of you don't know Andrew Warner, he has a ton of great interviews on: http://blog.mixergy.com http://blog.mixergy.com and here is his Hacker News profile: http://news.ycombinator.com/user?id=AndrewWarner http://news.ycombinator.com/user?id=AndrewWarner
- AndrewWarner 18y agoI'm much rather have a business I care about than clothes I look good in.
- pavel_lishin 18y agoAnd here I thought the story was about some sort of return & refund scam...
- AndrewWarner 18y agoI cleared with J Crew. I told them I wore the clothes. Their policy was that you could return clothes any time in any condition. I don't think they expected anyone to take them up on it. Laziness and embarrassment are two characteristics entrepreneurs don't have.
- melvinram 18y agoAmen to that last sentence. You gotta do what you gotta do to make shit happen!
- padmanabhan01 18y agookay. I am starting to JC penny right now.
- electromagnetic 18y agoA local supermarket had as their policy, that if the scanned price was wrong then you got the item for free. Well they started selling other things, with much bigger price tags than a $5 ham. My wife's uncle grabbed a BBQ set from it, but when they scanned it the price came up as $349.99, not the sale price of $299.99 and he walked away with it for free. The store amended the policy, it now has a $50 maximum.
- Goronmon 18y agoSounds like he owes a lot to his brother.
- AndrewWarner 18y agoI owe him more than I can say. It's not just that he's an incredible developer. In the early days, I had to deal with a lot of rejection when I pitched our company. Michael helped me stay optimistic.
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- simplegeek 18y agoJust curious was he a co-founder? EDITED TO ADD: Just noticed, I guess his brother replied in one of threads below.
- brk 18y agoAnd equally, his brother owes a fair bit to him. There is a lesson here...
- MichaelApproved 18y agoWe were partners and complemented each others skills well. It was exactly how a partnership should be. We shared in the business development but then went off to handle our respective tasks. And when we talked with outsiders we were able to speak with one voice.
- TJensen 18y agoThere is no doubt a combination of solid sales guy and solid technical guy is important in a start-up. The last start-up I worked at was missing the sales guy. I'm now thinking of starting something up, and that is weighing heavily on my mind.
- jrnkntl 18y agoLesson learned: There is nothing wrong in copying other peoples ideas, just make sure you execute it better than they do.
- brandnewlow 18y agoActually: You can make a lot of money from using someone else's idea. I don't see anything in the story that makes an ethical judgment one way or the other on the practice.
- melvinram 18y agoMicrosoft is a shining example of this. You may or may not like them or their products, but you cannot deny it worked for them.
- MichaelApproved 18y agoLately it hasn't been working so well for them. They haven't produced a blockbuster in a long time. Be it a ripoff or original creation. XBox seems to be the only exception. Did I miss something else?
- timr 18y ago"Let’s do the math. We paid webmasters 10 cents every time one of their users used our greeting card engine. We got paid up to $3 by venture-backed firms every time we got those users to register for these venture-backed firms’ services. That’s how we got our margins." I think the lesson here is that making money on the internet is greatly facilitated when other people are willing to pay irrationally large amounts of money for what you're selling. Product quality may have played a role in this story, but it sure sounds like the critical step was recognizing the ridiculous inefficiency that existed in the market for eyeballs (i.e. paying $3 for something acquired for $0.10)
- AndrewWarner 18y agoI interviewed Jason Fried of 37 Signals on my site. He told me that his ebook made hundreds of thousands of dollars. I think his margins were even better than mine. What margins like these don't take into account is the years of work that came before them. In my answers to Neil, I tried to keep my explanations simple. But I don't mean to imply that I found a way to turn nickles into dollars by salesmanship alone. Thanks for bringing this up timr.
- richcollins 18y ago"Millions of people used our greeting card engine each month. Venture-backed firms paid us $1-$3 every time we convinced those users to sign up for their services." Kind of reminds me of RockYou's Facebook advertising model. (If there is a gold rush, sell mining equipment instead of mining) I wonder what the ROI was on the users "purchased" by the venture backed startups.
- AndrewWarner 18y agoSo one of our VC-backed clients accidentally showed me his investment deck. Turns out his investors were valuing his company at $7.50 times number of members. It's part of a game that some VC-backed startups are involved with. I bet their VC's had numbers that showed they could take the company public at $10 times number of members.
- mr_justin 18y ago> I’m amazed that you noticed our margins Neil. Why is that amazing? Isn't it plainly obvious?
- AndrewWarner 18y agoI'm surprised that people don't look at financials beyond the top and/or bottom line.
- mr_justin 18y agoBut at that point in the interview you've just mentioned that you made $1-$3 per user, with millions of users active each month, and you were paying 10 cents for a portion of those users. Of course the first thing people are going to is the math and realize there's a lot of money right there. But back to why I posted my original comment, it was more the condescending tone of the "I'm amazed" part of that sentence. My gut reaction would be: "Why yes, I can multiply in my head and it is amazing, Andrew." Thanks for your reply though, nice to see you in this discussion.
- antiismist 18y agoWasn't it that they paid $.10 per user, and then, if they converted, got $1-$3? Without knowing the conversion ratio you wouldn't be able to say what the margin was.
- AndrewWarner 18y agoGreat point. We didn't have 100% conversion. I kept things simple to explain how the business worked. There were other factors like this at play. By the way, a big one was fraud. I remember seeing my first washed check. That's where someone took a check our company made out for $25 or so. Washed our ink of it, and rewrote the check for much more money. Crazy.
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- condor 18y ago“'You don’t understand,' he told me. 'If I ran ads in it, it would taint my work.' There were a bunch of email newsletter guys who felt that way. In their stupidity, I found an opportunity." Amazing, they're stupid because they care more about the product than making money off the product. I wish most companies were that stupid, there would be a lot better products out there.
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- comatose_kid 18y agoYeah, they didn't want to make money doing what they love. How smart.
- condor 18y agoreally? I wasn't there, but it sounds more like running ads would ruin the product to them so it wouldn't be something they loved anymore. I'm amazed that the idea one should make money is so novel . . . it's like breathing, it should be assumed, how else does something sustain itself? The focus should be on greatness, making something better, pushing something forward (with the assumption that it should be able to pay its own way), not simply how to angle an extra dollar.
- ryanwaggoner 18y agoI wish most companies were that stupid, there would be a lot better products out there. No, there wouldn't. They'd gradually wither away and die because they're afraid of making money from their business. I will never understand the reluctance of so-called "entrepreneurs" who have some philosophical aversion to the idea of making money. Note: I'm not just talking about condor's comment...I see this attitude expressed constantly here on HN and throughout the "Web 2.0" world.
- condor 18y agoits not an aversion to making money, there's no way to survive without making it. I will never understand the glorification of making money as an end, its so obvious, it should go without saying, yet here we are with yet another big bucks lottery article. the energy and focus should be on making things better, focusing on refining the product, with the obvious profit constraint.
- 10ren 18y agoI always assumed those greeting card websites sold their mailing lists to spammers - and was irritated when someone sent me one. In retrospect, that's pretty cynical, bitter and curmudgeonly of me.
- chops 18y agoThis interview is great stuff. Some great quotes: "You think the teachers were proud? If a kid wanted to draw or write poetry or do anything artistic, they were full of praise. But as soon as they found out what I was doing, they shut me down. Sharing your candy with others is fine, but there was something disgusting to them about commerce. ... Ever since elementary school, I wanted to show that businesspeople are the heroes and encourage others to become entrepreneurs." So true! It's rare that a teacher would appreciate the selling of goods at school. Interestingly, I got busted by my principal in middle school for selling something regularly (I don't even remember what; soda, probably), but he wasn't appalled by the selling, so much as just covering his ass. He actually said he appreciate the entrepreneurial spirit, but that he just can't allow students to sell stuff to other children. (Maybe he was blowing smoke up my ass to keep me complacent, but I got the impression he was generally impressed with the "entrepreneurial spirit") But I can totally see an elementary school teacher being completely appalled at a student selling (god forbid) goods, rather than sharing. This quote in particular really strikes home: I hate the pansies who whine that "it takes money to make money." No it doesn’t! It takes a sense of mission. If you’re on a mission, you’ll find a way. Sounds very much in tune with being "Relentlessly Resourceful."
- misuba 18y agoMaybe that teacher was appalled at the gouging. Ten cents for a stick of gum??
- electromagnetic 18y agoThat's commerce though. Each stick of gum comes from a sheet that's about as big as your living room floor and costs them about $10 to make, they then sell the entire thing for like $10,000.
- run4yourlives 18y agoSupply and demand. Gouging is a myth.
- coglethorpe 18y agoAs much as I can appreciate the author's point with selling items at school, there also is a time and a place for certain things. Schools aren't shopping malls and lockers and desks aren't storefronts. Still, schools should do more to teach business and finance skills. But that's another article. :-)
- mikeyur 18y agoAndrew, I had a similar experience in elementary school. I was in elementary school during the whole pokemon phase, so about 8 years ago. I sold pokemon cards on the playground. Now, you'd usually go to the corner store and pay $3-5 for a pack of cards. I had the idea when I was at an asian night market that I could buy a box of cards for a lot less (I think about $1.50 a pack) and then resell those. So I started out just selling packs for $2.50 or $3, a bit below the regular stores with a decent return. Which was pretty awesome at the time. I sold about 2 full boxes then realized there was more money selling single cards. So I bought another box and some card protector sleeves and started ripping open packs. I found a bunch of valuable cards that gathered over $10 each. In total I spent about $60 on supplies and made a bit over $450 in a 3 week span. And then I got busted by a teacher who confiscated my earnings for a day and a binder of cards. I was told that if they caught me selling anything ever again I would be suspended. I understand that they can't allow others to sell stuff to the students, but it really hurt my entrepreneurial spirit at the time. Until I got to highschool and started reselling illegal fireworks, but that story didn't end as well, although I made a lot more money ;)
- run4yourlives 18y agoAnd then I got busted by a teacher who confiscated my earnings for a day and a binder of cards. I was told that if they caught me selling anything ever again I would be suspended. Confiscated your earnings? The word is stole your earnings. The crap that goes on in school sometimes drives me insane.
- ableal 18y ago"businesspeople are the heroes" No. Just no. Businesspeople are useful, but, by definition, not heroic. Heroic is something else: not counting the cost. There is also an important difference between hacker and huckster.
- zacharydanger 18y agoAndrew's sister is "the Girl" of Keith and the Girl, the wildly popular podcast. So, the whole lot of them seem to be ridiculously talented.
- davidmurphy 18y agoI love Andrew's interviews and it's nice to hear more about his story. I love the J Crew story. I've returned Christmas gifts (electronics) to fund my startup, but I may have to look through the closet now, too... LOL