1. How much money do you spend each month?
2. Where does it go?
3. Where do you want it to go?
4. Are you rich?
5. What does rich mean to you?
6. Hey, how’d you pay for that iPhone?
7. How much do you automatically save each month?
8. Why’d you pull your money out of the stock market?
9. You’re always thinking about cutting down on spending. Ever thought about earning more money?
10. OMFG, are you REALLY planning to buy a house for the tax deduction?
11. If your employer has a 401(k) match, do you max it out?
12. Then pay off debt, invest in your Roth IRA, and — if you still have money left over — max out your 401(k)?
13. Once your money is in those different accounts, have you invested it according to some simple rules of asset allocation?
14. In the next ten years, you’ll have to pay for a wedding, new car, have kids, take vacations, etc. How much are you saving each month for those things? (In last week’s Scrooge Strategy tip, I showed how to do this tactically, along with a pre-built spreadsheet.)
15. 6 months ago, if I had told you the stock market would be on sale for 50% off, would you have invested more, less, or pulled all your money out?
16. You’re always complaining about money, but have you read even one book on personal finance?
17. When was the last time you said “no” when someone asked you to do something that involved spending money?
18. How do your friends handle their money, and how do you think it affects you?
19. What’s the one thing you could do today to start getting rich?
20. Why haven’t you already done it?

[Update]: Download a PDF version of these questions for easier sharing.

In my discussion with her below, find out how she:

• Uses her art for multiple revenue streams
• Prices her product in the hundreds and thousands
• Markets her work
• Calls people who buy her work “collectors,” not customers — and why the difference is worth thousands of dollars

* * *

I think most artists are absolutely horrible businesspeople. Yet you left a 15 year career teaching for the University of California to pursue a living as a full-time artist, and even managed to roughly equal your income from when you were teaching. Tell us a little bit about your art.

I love looking at simple, everyday objects to see beauty in things we might otherwise pass right by. So I paint still life watercolors – watercolor because I love the luminosity and glow of the colors. I tend toward objects that hold cultural and in some cases, iconic meaning – but try to leave the irony for those better suited at expressing it.

I notice your art costs a lot (one painting I saw costs $675.00). How did you decide to charge that much?

Actually, that’s just the price of a print. I offer limited edition reproductions, to maximize the earning potential of a single painting. It’s also a great way to make fine art available for entry-level collectors, many of whom start with prints and work their way up to original paintings.

I see. So how much does an original sell for?

My originals sell for between $600 and $8,000 depending on size and complexity. Most artists use a general “per square inch” formula to price their works, based on a combination of previous sales, the going rate of artists who do comparable work… even the cost of the frame gets factored in.

Rarely (and sadly!) is an artist able to charge based on the actual time invested in creating a painting. Labor Theory of Value doesn’t apply.

[Ramit's note: Notice how, with one piece of art, she is able to offer it at multiple price points. If you produce something similar, you might produce a free gallery online for the people who will never pay, a $50 print, a $500 limited-edition print, and a $5,000 original, sweeping the entire spectrum of customer demand.]

What are the risks of making so few pieces of art?

Art is all about risk-taking. It’s hard to predict the market, although when the economy is in a tough spot like it is right now, you can safely assume that many people are cutting back on luxury items from $5 lattes to original works of art! So my job is to keep painting, work twice as hard on the marketing end of the business and stay in good communication with my collectors.

Do you have other sources of income besides directly selling your work?

It’s easy to wish I could spend all my time in the studio – the truth is, being out in the world – not just isolated in my studio – makes me a better artist.

I teach painting classes for other busy professionals. Many of my students they tend to be left-brained types who want to take a time-out to explore their creative side. My workshops are essentially word-of-mouth, and have been so successful, that it tells me there is a real unmet need out there in the marketplace. So I’ve recently launched a new venture which takes the artist’s way of seeing the world into the corporate environment with hands-on creativity workshops.

How has the art industry changed in your experience?

It used to be that galleries would handle – and pay for – all the marketing and business end of things for their artists so that we can spend all our time making art. In general, it’s a different world out there these days.

The artist is responsible for framing and shipping the work to the gallery as well as expected to pay 50% of all costs for a gallery opening, i.e., the advertising, the invitations, even the wine poured at the event.

In exchange, the gallery provides “one-stop shopping” for art lovers as well as a venue for your work. Some people don’t buy art except through a reputable gallery.

But let’s face it – being in a gallery can be a love-hate thing for artists. It’s a huge expense, because even if your work doesn’t sell, the artist still has to pony up for all those marketing costs.

Is it common for artists to do what you’re doing, i.e. promoting on the web?

Some artists are choosing to bypass the gallery system all together and market directly online. I suspect this will be effective for selling to established collectors who already know your work – but poses a dilemma about reputation. After all, if we aren’t “vetted” through the traditional system, we’re somehow kind of cheesy if we’re stooping to marketing our own work. But I also think as more and more young artists come along, artists who grew up in a web-connected culture of internet marketing and social networking, the nature of the gallery business will change.

How did you get your first customer?

I honestly can’t remember who bought my first painting. I do know that my first batch of paintings went to various friends and long-time acquaintances and that one of my brothers stepped up to buy my very first prints when they were hot off the press. Of course, I gave him a good family discount!

And how do you get customers now?

I use the word “collectors” rather than customers, because I’ve found that if my art speaks to someone enough that they are willing to shell out hard-earned cash for it, they tend to come back for more.

[Ramit's note: A key difference. Someone who buys from you once is FAR more likely to buy from you again. This becomes more important with higher-value goods that require more expensive marketing. The cheapest marketing you'll ever do is to existing customers.]

Last year, I started working with a publicist and that turned out to be a much wiser investment of my resources than spending money on ads. And galleries, of course, account for about 35% of my total collectors.

I also find ways to connect my collectors and the people who take my workshops. In the process of creating community, i.e., a community of weekend painters, a community of watercolor collectors, it moves what I do beyond the sale of a product or service into the realm of offering a richly rewarding experience.

Anything else we should know?

Follow your muse!

Check out Kathy’s work at her website. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

I absolutely LOVE Payloadz, Shannon’s service that lets you sell digital goods (like ebooks) online. In fact, let me tell you how I learned about it: When I released my Guide to Kicking Ass, I expected to sell about 100 copies, so I was planning to collect payment through Paypal and send the ebook manually. That lasted about 5 minutes, when I started selling way more copies than I thought I would.

About a day later, Shannon wrote me this exact email, which I’ve saved until now:

Ramit,
I’m a long time reader of your blog. I was surprised to see the method in which you were selling your eBook is not automated or protected. I think you should use our service, I will waive any fees. It protects your file and it ensures delivery of your product in an automated fashion and does not rely solely on email (which is unreliable). You can have it setup in your site in 5 minutes. Totally secure. I’ll even promote it heavily in our 100,000+ page view sites.

Check it: http://express.payloadz.com

Beautiful. He made his offer so simple that all I had to do was reply and say “Ok” and the rest was taken care of. How could I say no? That’s marketing.

Since then, I’ve sold over a thousand ebooks through Payloadz, and whenever I email Shannon about a bug or feature request, he gets back to me within the hour, making me love his service even more and want to spread the word.

In this interview, pay close attention to…

• How he got the idea of starting Payloadz
• How he keeps costs down (he’s the only fulltime employee!) and where he spends his time. This is the dream of a lot of iwillteachyoutoberich readers — to start something on your own and have it be profitable from the first week. However, it’s extremely difficult to do. Check out how Shannon does it.
• What he says when his friends ask for advice on starting a company — including what makes him roll his eyes (ugh, me too).

The most important thing in this entire interview is Shannon’s point of how to get people to pay you. There are 2 no-brainer reasons you can charge people for your product: If you’re saving them money or making them more money.

Now check out how Shannon did it.

* * *

What is Payloadz?

PayLoadz.com is a web-based service that allows anyone to market, sell, and distribute downloadable goods such as ebooks, music, video, software, or any other file that can be sent over the internet.

How did you get started?

I started a small web-development company and worked specifically with people integrating basic PayPal functionality. I had been working with PayPal directly for a few months where I was writing tutorials on how to use their Instant Payment Notification (IPN) feature to deliver software to people.

While leaving for a vacation to Florida, I realized that it could be made into a web-based service and the idea for the first Paypal-based service of this kind was born. Unfortunately, the vacation was ruined as I couldn’t think about anything but this idea. It was up and running within 48 hours of returning home.

Can’t someone just set up their own system (e.g., Paypal) and do this themselves?

When I launched, PayPal didn’t have any means in place to do what our service provided other than the IPN. Then they had an issue with the purchase download page where turned into a kind of “hack” as people were looking at the HTML code and going right to the download page.

Anyway, PayPal has come further with things like encrypted buttons, auto return, and Payment Data Transfer. All great tools and useful for digital goods, but each have their drawbacks.

How did you get your first users?

Surprisingly, the first few users were pretty high volume. It seems people have wanted to do this and simply needed the solution to become available. They were selling tens of thousands of goods on our service, and I can say it had some serious lack of functionality back then. We were the only game in town for the first year or so.

Now that you’re more mature, how has your marketing strategy changed?

After the initial period, the competition started coming up, so I had to establish a more formal marketing outline which includes a mix of PPC, SEO, a reseller program, and word of mouth.

Things I’m doing now are getting a PowerPoint and PDF deck together to bring to larger clients or VCs. I hadn’t had the need for this before, as the service couldn’t work for big software players due to integration issues. But with our recently released API, we can target those types of organizations so we needed something to bring to them instead of simply sending them to the site.

How do you make money?

We charge people a monthly fee to use the service if they sell more than $100 worth of goods in a month. The service is free if they don’t exceed sales of $100 each month. Beyond that, it breaks down to a service fee from around 5%-15% per month based on transaction value. I’m trying to focus on the concept of “we get paid, when they get paid”. So, if we provide a service that enables them to make money, it should be painless in converting them to paying customers.

We really have not differentiated the free account features from the paid account features in order to get people to upgrade. We could, and I think when the company moves to the next phase it will institute those kinds of things.

What were some of the biggest mistakes you made in growing your business?

I didn’t delegate. The business was profitable enough after its first few years where I could have started to send some of my duties elsewhere. As soon as you have enough headroom to spend to outsource, do it. For online businesses, I’d say the first one to look into is programmers. Definitely go overseas (Rent-a-coder, eLance). Be careful though, it is very hard to find good ones.

I think I’m still making one huge mistake, one that I’ve been making for some time. That is, thinking I can do it all on my own. The truth is, I could have been building a company ten times the size if I had brought people on to help. I had the fear of using the excess cash to bring someone in and then have things go south and the cash flow dry up. This hasn’t happened once in the entire business life, but paranoia is an entrepreneur’s daily companion.

Where are you in the lifecycle of your company?

Since that first month, maybe even the first week, the company has been profitable, but is still completely in bootstrap mode. To this day I am the only full time employee. I’m not hoarding money away though. I pay back into the company and reinvest almost everything.

I thought I could manage the company through the next phases, but am not sure now. I think there are people much better suited to do that kind of thing. If someone comes along and the offer is right, I can see moving on. However, the company is doing great and as long as I am here, I will continue to drive it forward as aggressively as possible.

What do you do on a day-to-day basis?

The first half of the day is really just reactive. I begin with email, about 155 of which will require my response. They are either tech support questions, larger customers, developers, or one of the many automated emails that keep me updated daily on the status of the system.

Once that is done I check Google News, Bloglines, Digg, and a few special interest sites. Another round of emails has me into the afternoon where I begin the proactive part of my day. It may be tweaking AdWords, brainstorming features, scouting prospective partners, or even doing some of the development myself.

If someone had an idea for a web business, what advice would you give to them?

A lot of my friends, very smart people, come to me each week with website ideas. Normally a quick Google returns ten companies already doing it and it ends there.

Other times I ask the “how will it make money?” question and they say “advertising” which gets an eye rolling from me. A lot of ideas are what I consider chicken and the egg scenario. To make money it needs users and content, but it doesn’t have either to start.

Then again, I’ve shot down many great ideas that have come up years later. A friend sat me down and explained a service that stored your bookmarks for you so you can access them anywhere. I slammed the idea (I don’t know the reason as it seems like the most logical thing ever to me now), but a few years later, del.icio.us sells to Yahoo!

One other concept that has stuck with me to evaluate a business idea is based on the financial service it provides to the user. To me, if someone makes money off your service, you can justify payment.

Is there anything else we should know about Payloadz?

We just sent out a press release which you can see here.

Want to be a Friday Entrepreneur? See the benefits of being featured, then submit yourself as a Friday Entrepreneur.

Check out Payloadz, read other Friday Entrepreneurs, sign up for my newsletter.

Today, read about Charlotte Genevier, a Friday Entrepreneur who’s co-founded multiple companies (including her current one, SocialEngine). Below, learn how:

• She sold her first company for $90,000 in 2007
• She launched her second company with a monthly advertising budget of $600
• The five biggest mistakes she made (including delegating)
• The advice I gave her, which helped to increase traffic by 300% and increase sales by over 50%

How did you get started founding a tech company?
First, I met Alex, who became my co-founder. Alex had an eye for design and a strong business sense as he’d already worked on several projects of his own, while I had a love of (and talent for) math and programming. Though I do help out with many of the business decisions, Alex handles all the marketing, customer and employee management. Similarly, while Alex does much of the front-end design for our products, I plan and program the the products’ back-end.

Looking back, how were you able to get started with no money?
As high school students, we were lucky to have virtually zero living expenses and time constraints. Because of the non-capital-intensity of this field, all we needed to get started was a few dollars a month for web hosting and our own time, which we gladly spent programming instead of playing video games. We officially established our company, Webligo Developments in March 2003. Every time we released a new product, we learned a little more about software development, customer relations, and the fundamental aspects of business.

So tell us about BlogHoster, your second company.
Though BlogHoster earned us about $175,000 during its first two years, we eventually sold it in the summer of 2007 for $90,000 to UK-based Splashpress Media.

The backstory: We spent the greater part of 2004 planning and developing BlogHoster (a blog hosting service) in the typical garage-office fashion. We launched in December and saw immediate sales with only a bare-bones marketing budget. Over the next year, we added a slew of new features as well as a customer mod-sharing community that became surprisingly active. Slowly but surely, we started spending more time on BlogHoster and less time on our college coursework. We grabbed 300 square feet of office space in Pasadena and hired an intern from our high school to help keep everything together. Soon, we realized that BlogHoster had a lot of potential that would likely not be fully realized within our limited resources.

And now you’re working on SocialEngine.
SocialEngine is a white-label social network platform. Before Facebook, MySpace, and the like, personal blogs were all the rage on the web. In fact, they were arguably one of the first major iterations of social networks; websites like Livejournal and Xanga offered basic social networking features. We made BlogHoster to ride the wave of decentralization that always happens when a particular type of web service becomes popular. We created SocialEngine for the same reason. It is said that during the gold rush, the people who truly profited were the ones selling the tools. When modern social networking became in vogue, everyone wanted to be the next Facebook (it even made your
list of “8 Stupid Frat-Boy Business Ideas“). Truth be told, most of our customers are not trying to be the next big thing. Instead, they are using SocialEngine to unite people around a common characteristic or niche theme.

What’s different about SocialEngine?
One of SocialEngine’s most attractive features is that, like BlogHoster, it can be seamlessly branded and customized to match any website.

Here are a few examples of SocialEngine-powered sites:

• http://www.smartlygreen.com/home.php
• http://www.springbreakshare.com
• http://www.sfs.com

How did you initially get users to try SocialEngine?
With an effort to be a bit less shy than we were with BlogHoster, we finally put together a decent advertising budget of about $600/month. We bought some ad inventory on Google, Yahoo, and Hotscripts.com, which brought in some immediate traffic. These types of ads give us an excellent ROI because our customers almost exclusively use search engines to find software like ours, and because the average SocialEngine sale was about $350 and paid for more than half of the month’s advertising budget. In my opinion, Adsense and other ad networks don’t make sense for many products, but they work magically for ours due to its price, the engagement channel that customers use (search engines), and the fact that all of our leads are already “warm.” We also wrote a press release and published it via PRweb.com. Despite being a tad sensationalist, it drew in quite a bit of attention.

What about pricing?
As kids, we always undercharged for our work. It went hand-in-hand with the awkwardness and insecurity of being teenagers. We also had virtually no costs (with no living expenses or office space, just pizza and Diet Coke), so it already felt like we were hitting the jackpot every month. As we transitioned from hobbyists to businesspeople, this obviously changed. For our first big project (the IMS Pro), we eventually took a deep breath and doubled the price.

While our profits increased only marginally, our customer support needs decreased substantially giving us time to begin planning our next project. That’s when we discovered that pricing can be an excellent resource-balancing tool, assuming you can find the equilibrium you’re looking for. Since then, we’ve often used pricing to adjust the flow of our projects. We generally begin with a low price to facilitate market penetration and to build a customer base of grateful, feedback-giving customers. Over the project’s arc we incrementally raise the price to match the added value of new features or to open up time for brainstorming.

Have you thought about raising outside money (angels, venture capitalists…)?
We’ve definitely thought about taking venture funding a number of times along the way. In fact, we’ve received several offers, including a recent one for SocialEngine. Sometimes it’s tough to say “no” since it seems like web startups are only judged based on their ability to attract funding, rather than their ability to turn a profit. We were only 14 and 16 when the Web 1.0 bubble burst, so the basic (yet then-ignored) concept that a company should actually have a business
model left a lasting impression on us. VC funding isn’t free money, and unless we have a need for a large amount of capital for a new project, we will continue funding ourselves organically. The scope of our projects have been relatively small to date, so perhaps VC funding will become a reality in the future as we need to hire more people, overlap projects and accelerate our growth.

What are the three biggest mistakes you made with your first companies?
Here are some of the more memorable ones:

1. Before SocialEngine, we offered our customers free upgrades and unlimited support for life. Yes, that’s as silly as it sounds. It reflects the disbelief we still had that people wanted to buy our software. This ultimately led to us being held at the whim of a few grumpy customers for quite some time. Needless to say, we now charge for installation, extended support, and new features since they are, in fact, substantial investments of our time and valuable to our
customers!

2. Another one of our big mistakes was poor money management. We let our profits pile up into a savings account that earned 1% interest, not even beating inflation. Although we can say that we were naive kids that didn’t even know what a mutual fund was, that’s only half the story. A much larger portion of that money could have been reinvested in the company, allowing us to grow much faster than we did. I think the main reason we left it in the bank account was the fear that our lucky streak would end at some point. When we finally realized that luck wasn’t the reason our projects were selling, we started to use the money more actively.

3. We used to be very shy about marketing. All our pre-SocialEngine projects had tiny marketing budgets (due to our fear of spending money) that bought ads on only one or two websites. With BlogHoster, our primary source of traffic was a single script-directory website on which we had a sponsored listing. We later discovered that our sales trends correlated directly with the traffic levels on that site. By putting all our eggs in one basket, we were left at the mercy of that company’s ability to attract traffic to it’s site. With such high profit margins and virtually non-existent operating costs, we should have been more bold and varied in our marketing instead of sticking with what we believed to be our “tried-and-true” methods. The lesson here is to avoid being timid when you have the resources to be bold!

I love hearing about these mistakes because they’re so instructive. How about more recently? What about the biggest mistake you’ve made with SocialEngine?
The biggest mistake we’ve made with SocialEngine is the length of time it took us to begin properly delegating. Because the company was just the two of us for so long, Alex and I had the mentality that we didn’t need help, even when we were swimming in support emails. We didn’t think another person could perform the tasks as well as we could, but we couldn’t continue adding new features to the product, manage marketing, answer pre-sale emails, and handle support all by ourselves. When we finally found a third member to add to our small team, it was like a weight was lifted from our shoulders. We were suddenly able to handle more work and get more things done with much less stress.

We actually talked in October and I gave you some feedback on the site. Can you tell us what we spoke about, what recommendations I made, and what you’ve done?
Initially, SocialEngine earned between $15,000 – $20,000 per month from license sales. After the 2.0 release in December (which included a variety of new features) and the implementation of your suggestions, we’ve brought our revenue up to between $25,000 – $30,000 per month. Of your suggestions, we tried the following:

1. Offer a taste. We decided to create a 15-day trial version of SocialEngine to give people time to experience the product on their own servers. This has been an excellent way to prove SocialEngine’s quality and build trust. To track conversions, we offer a $10 coupon with each trial download. Our records show that conversions from the trial version generally take less than one day, which supports the theory that people just want to make sure our product has substance before buying!

2. Test your front page and make it easier to purchase. After the launch, we occasionally received emails from people who couldn’t seem to figure out how to place an order. This was more than a little disconcerting! We redesigned our site layout to include at least three “purchase” links on every page of the website, with four on the homepage. Our Google Analytics (and the lack of confused emails) show that these have been very useful.

3. Do some search engine optimization. Realizing that search engines are now our primary source of traffic, we’ve optimized our pages with the hope of receiving as much organic traffic as possible. Before the optimization in early October, we averaged about 220 unique visitors daily; now we are averaging about 750 and still growing.

4. Add testimonials to your website. We frequently receive glowing emails from customers about SocialEngine. You suggested that we publicly quote these on our website, and we have (as you can see on our homepage). Having these quotes from customers seems to really have improved pre-sale trust. We may be opening up a customer showcase in the near future to display some great implementations of SocialEngine.

Lots of iwillteachyoutoberich readers would love to start something small and make a little revenue off it. What would you suggest to them?
First, don’t put money into a new project if you have no idea how it will make money. Although there are a few rare exceptions, this basically never works. Once you have a business model, stay focused! Don’t be tempted by alternative ways to make a little money here and there, as they will usually derail your efforts and waste your time. Our business model is based on selling our own products, not consulting on an individual basis. In the past, we took on a few consulting projects as an attempt to mitigate the risk of releasing a new product. To our dismay, these projects were extremely time consuming, stressful, less profitable, and actually slowed down our main progress.

Second, don’t be afraid to take calculated risks. At the beginning of myjunior year at Harvey Mudd College, I struggled with dividing my time between work and school. When I finally made the decision to take time off, nearly everyone I talked to was overwhelmingly negative. The arguments they made for staying in school were valid, however I truly felt that if I didn’t take the risk of devoting myself completely to my company, I’d always regret it. Not having the “safety net” of a college degree is scary, but I know I would be much less fulfilled had I played it safe.

Is there anything else we should know?
Thanks for reading about our work! As a special thank you to IWillTeachYouToBeRich readers, we are offering a $50 discount on the purchase of a SocialEngine license (valid for the next twenty days). Simply enter the coupon code “ToBeRich” when ordering your license from our website: http://www.socialengine.net

Now what? Check out the SocialEngine. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

Now that’s great customer service.

And then I thought more about her store. When I went in there, there was a “Please Yelp me!” placard on her desk. I love companies that openly ask their customers to evaluate them, which means they’re listening and changing to what people are saying. And, no surprise, when I checked out the Yelp reviews for Mingle, they were almost all positive. (As Mimi says, “I am unsure why other stores don’t encourage their client reviews.”)

As I dug around online, I discovered that her store has a frequently updated blog and lots of things written about her. She uses the classic marketing strategy used by bloggers when they ask others to guest write: If someone else writes on your blog, they’ll link to it, ensuring more people visiting your site. Same for her — she carries lots of independent designers’ clothing, who of course tell people to visit Mingle.

Beyond that, her interview below tells how she found the space herself (through Craigslist), looked at other business plans before making hers, and how the hardest part is not getting a store up, but keeping it going. Running a retail store is a tough, tough business. Mimi runs her store on one of the most competitive retail streets in San Francisco, and she’s built up a great following from her customers and the designers whose clothes she sells. Check out her interview below.

What is Mingle?
MINGLE is a boutique that features the works of local and independent designers. By definition, mingle means “to mix or bring together in combination, usually without loss of individual characteristics”. Our store reflects a mix of styles and creations from many talents, but together, they tell a cohesive story. We offer clothing and accessories for both men and women.

How’s it different than other retail stores?
We are different than a typical retail store in that we primarily work with independent designers. Therefore, many of our merchandise are one of a kind or limited in quantity. Also, because many of our designers produce their own pieces, our price points are much more reasonable than that of other specialty boutiques.

When I went in your store, I noticed a placard that said “Yelp us!” Then I looked up your Yelp reviews and was surprised to see how universally positive the reviews were. What made you put up the placard? Why don’t other stores do this?
I became involved with Yelp two years ago and really loved the concept of “user based reviews”. As a consumer/user, it means I can obtain honest opinions about an establishment before I make a decision to patronize.

As a business owner, Yelp became an in integral way for me to obtain customer feedback. It is very important to me to know how our clients view our business. There is no better feedback than from customers who has had first hand experience shopping in our store. Yelpers are generally very generous with praises and definitely not shy with their complaints. Yelp reviews help us stay aware of what changes are necessary to keep up with our client’s expectations.

In addition to the Yelp Placecard, I also include a yelp link to our newsletters and encourage our customers to check out what others are saying, as well as giving us feedback through Yelp.

I am unsure why other stores don’t encourage their client reviews. Perhaps they are not familiar with Yelp or the benefits associated with it. Also, I believe that small business owners are often more involved with Yelp than major/chain business.

Your store is on one of the most expensive retail streets in San Francisco. How do you do it?
Lol, yes, Union Street is known to be “expensive” in terms of leasing space. There are various factors that dictate how “expensive” a space may be..i.e. sunny vs non sunny side of the street. which block you are located on…etc. I believe that we are in a great location and the size of our small boutique makes it manageable.

How’d you get started?
After college I spent about 5 years in the high tech industry doing various things from consulting to sales. I was enjoying the steady income but did not find my work gratifying. I didn’t quite know what I had wanted to do, or how to get started. However, I began visualizing doing something I love– something that challenges me to use all of my skills. Shortly after, I was introduced to someone who helped me get started financially. I applied the same visualization philosophy towards getting the store launched. I did not have any experience in retail or running my own business. However, I had a picture of what MINGLE should be, and I mapped out a plan on how to get there. This entailed doing research, identifying a location, creating a layout and theme for the store, and most importantly, bringing to together the designers/artist labels that represented MINGLE. I was so set on making MINGLE happen I didn’t believe in obstacles. Sure there were challenges.

For example, I had been warned about difficulties of finding a retail space..especially at a place like Union Street. The commercial leasing agents I contacted did not seem eager to assist me as a small business. I began my own search and believe it or not found current location through Craiglist. There were no lawyers and no agents involved. I went to every local trunkshow/sample sale to seek out designers. I also revisited Craig list to help me enlist designers outside of the city. I found that the local fashion community is very tight and open to supporting one another. People were very generous with referrals and from concept to launching the store it took me about 3 months.

I’m really interested in your outreach. We talked about Yelp, but you seem to be one of the few stores that reaches out to its customers in different ways (a blog, etc) and local talent.
Yes, as a boutique, our primary focus is working with independent designers. We provide up-and-coming designers a chance to showcase their goods and provide a bridge between the designers and the general public. By the same token, we are able to offer our clients unique and cool things that can’t easily be found somewhere else. Our designers love working with us because they enjoy the exposure and feedback to help them grow. Throughout the year we host various trunk shows and “meet the designer” events so our clients can preview new collections and meet the faces behind the fashion.

What advice would you give to someone wanting to start a retail business?
Follow your passion and your instincts, then create solid plan on making it happen. I sampled other people’s business plans to get ideas but created one based on my own goals. Clear financial goals must be set and met. It breaks my heart to hear about wonderful retail establishments going out of business due to lack of proper planning.

I received a fortune cookie once, “It is easy to open a shop, the hard part is keeping it open”. I am not even joking—I can’t tell you how true that is. One may think that the biggest challenge of running a business with is getting one started. In my experience, the bigger challenge is to keeping a positive outlook and maintaining the passion despite the responsibilities and the ups and downs associated with running the business. I am very fortunate to have many great clients who are constant reminders that I am still having fun doing what I am doing

Now what? Check out the Mingle web page. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

Courtney also told me that people might read this and think, “Well, I don’t have a family vineyard in Chile or an MBA from Stanford or a…” You’re right, you don’t. So what? I wrote about this in Success and the Shrug Effect, where I noted that we often point to someone successful, identify their qualities that we don’t share (”A Stanford MBA”), and then shrug, saying, “What can I do?” That’s BS–don’t fall for it. Everyone starts, whether it’s a paper route at age 12 or a vineyard at age…something more than 12.

My favorite part of this interview is when she identifies a huge problem that you’ll encounter when you’re doing your own thing: the fact that you have a million things to do with no structure whatsoever. Her solution? Sticky notes. Read on to find out what I mean.

What is Kingston Family Vineyards?
Kingston Family Vineyards is my family’s winery based in Chile’s Casablanca Valley. We specialize in hand-crafted Pinot Noir, Syrah and Sauvignon Blanc made from our hillside vineyards. All our wines are produced and bottled in Chile, and then I import them and distribute from my California office.

Ok, honestly. How often are you drunk?
Actually, I taste and enjoy a lot of wine (sometimes before 9am if I have an early tasting appointment with a restaurant) but sometimes the job is less ‘intoxicating’ than you’d imagine. If you think about it, you can’t learn very much about wine if you’re not sober enough to remember what it tasted like.

How did you get started running a vineyard?
My family always had this ranch in Chile. My dad was born there. But when I graduated from college in the early 1990’s, it was mostly dairy and beef cattle (and some great mountain biking trails up in the hills). The idea of starting a vineyard was my brother Tim’s and my idea. Back then I was working in high tech in the Bay Area. I liked my job and worked long hours, and gave it everything I had.

Plus it was good for my lifestyle—I was single, loved living in San Francisco, everyone I worked with was my age with similar interests. But as I moved up in the company, my job became a lot of directing/managing/helping others get their job done. I became somewhat like a well-paid traffic cop, but I no longer felt I was doing anything tangible myself. I also started to burn out from the long hours. When I turned 30, I decided I needed a lifestyle change where I could enjoy a more balanced life. That’s when I took the plunge and started working full-time on developing our wine business. And coincidentally I met my husband Andy just six months later.

How did you take that step of going from a safe job to doing something so unusual?
It was a tough transition. One of the biggest challenges for me was going from a job that was reactive (e.g. a highly scheduled day managing other people) to starting a business with a blank slate every morning. Every day, there were a thousand things that seemed urgent that I needed to do to get things going. It was a little paralyzing and I didn’t know where to start. My friend Rob gave me a great piece of advice: decide what *one thing* is critical to your concept’s success. Write “ONE” on a little yellow stickie, and stick it on your computer monitor as a daily reminder to accomplish one thing–no matter how small—that will get you one step closer to that goal each and every day.

For Kingston Vineyards, our biggest challenge in the beginning was finding a talented pinot noir winemaker who wanted to explore the new frontier of making pinot in coastal Chile. My “network” in Napa consisted of only two people when I started. And they weren’t even winemakers! But with that little yellow stickie reminder, every day I sifted through the thousands of urgent-but-not-important distractions to get one step closer to our goal of finding a winemaker.

What was some of the feedback you heard when you left your job?
On the surface, my work colleagues were encouraging, but I think they really thought I was nuts and believed they’d be interviewing me for an internet job within a year. While wine definitely has sex appeal, I was not pursuing a pre-IPO opportunity like everyone else was at the time. I left a job with 60 people on my team to go work by myself out of my San Francisco apartment. I cut my salary by more than half. I went from a known quantity—doing something I knew I was good at but that no longer challenged me—to something I wasn’t completely sure was going to work out.

I think most people thought I was taking a “break” rather than starting a real business. The hardest thing about pursuing a dream is that it isn’t convenient. Sometimes it’s more convenient to have your dream sitting on a shelf, neatly wrapped in a pretty package for you to look at from a distance., and always wonder “what if”. At least I could say I tried. I remember a professor of mine once saying “when you come to a crossroads, whatever you do, just don’t stop. Go right, go left, go straight. Whatever way you go…go forward.”

What are some of the interesting insights you’ve learned about doing business as a woman?
I can’t say doing business as a woman is harder, since I’ve never known anything else. I’ve had some challenges as a woman doing business in Chile, where the business culture is very male-dominated. Also, earlier in my high tech career, my straightforward/to-the-point approach was typical and expected. I was all about white boards and bullet points and optimizing the use of everyone’s time. And I was used to leading. Then there I was: a “gringa” in rural Casablanca where business is done differently. It took me a while to adapt and learn how to be effective in a completely different work environment.

How is Kingston Vineyards doing now?
I’m about to fly to Chile for our fifth vintage, which is hard to believe. Our wines are now on the wine list in some great restaurants across the U.S., such as Michael Mina and the Ritz Carlton in San Francisco; Masa, Jean Georges and Restaurant Daniel in New York; Spago in Los Angeles and the Four Seasons in Jackson Hole. A third of our wine sales come from our mailing list—where customers can buy direct and we ship to their homes. We’ve been fortunate to have a reputation for top quality wines with limited production, so the demand for our wines far outstrips supply. Wine Spectator recently said the Kingston Family Vineyards is leading the way, bringing excitement to Chile.

Oh—and since you live in San Francisco—I’m especially proud of the fact that our “Cariblanco” Sauvignon Blanc is by the glass at Hog Island Oyster Co. in the Ferry Plaza. Byron, our winemaker, loves to sit at the counter with his wife Mary for some fresh seafood after landing in SFO from Chile.

That’s right by my house. So…you know how it’s kind of impressive if you have a signed copy of a book? Well, what if I bought a bottle and got it signed by you? Is that absurd?
People actually do that…but no one has ever asked me. Maybe that’s when I’ll know I’ve really made it big…

What do you do on a day-to-day basis at the vineyard?
I ‘m actually based in the Bay Area, a long way from our vineyard in Casablanca. I used to fly down every other month, but since my daughter Annie was born last year, I now go about half as much. (We’re headed to Chile next week for Annie’s third trip.) My day-to-day job involves everything on the importing, sales & marketing side of the business. That means deciding the design of our wine labels , how much more pinot noir we should make in 2008, or how to adapt the financial model that forecasts when we’ll break even. But I don’t do it alone and we now have a small but mighty team based up here in the U.S. and flying back & forth to Chile.

Tell me a little bit about yourself.
I was born in Princeton, New Jersey; nowhere near as glamorous sounding as Casablanca, Chile. I also went to Princeton for college, and studied international affairs & public policy. I was convinced I was going to move to Washington, DC and “make policy,” until I realized I’d probably have to be a politician and run for office to do that. I moved to Northern California in 1992 for a “year off” before getting a real job on the East Coast but have been here ever since. Along the way I got my MBA from Stanford. That was enormously helpful in giving me the tools to help me start my own business. My husband Andy and I live in Portola Valley with our daughter Annie and our loveable 90-pound, oaf of a dog, Harley.

You’ve worked in big companies, small companies, and now you’re doing your own company. Can you tell me about some of the core differences?
I think the great thing about working in big companies is that you can specialize. You often only need to focus on your piece of the pie, and you are often supported with more infrastructure. I miss the free office supplies (all the yellow stickies I could ever dream of!) and Friday afternoon happy hours. And I especially miss being able to call IT support without getting an invoice!

But the bad news with a large company culture can sometimes be lack of ownership, and a pass-the-buck mentality. In a small company, you really have to pull yourself up by your bootstraps, and the buck stops with you. There’s no IT support. No free pens. But you can build something you’re proud of, and the diversity of your day is amazing. I love the fact that today I poured wine at a favorite restaurant, worked with a consultant in Chile to develop winery tours (you should come for a visit!), updated our distributors on recent excitingreviews from Wine Spectator and Wine & Spirits magazines, and got to give an interview to teach others how to get rich! (Can we talk again when the winery actually breaks even?)

Do you think everybody should do their own business once?
Not necessarily. Not everyone’s dream is to start their own business. I think everybody should figure out a way to follow a dream. Go right, go left, go straight. Just make sure you go forward.

Now what? Check out the Kingston Family Vineyards. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

Some of you imagine me as a knight in shining personal-finance armor, riding around on a white horse with golden hooves, correcting financial injustice and pointing out hypocrisy and inaccuracy in an unfair world. But sometimes I deign to do normal activities, like a couple weekends ago.

I’ve written about my love of Taco Bell, pens, and ironing on this site. But on Super Bowl Sunday, I went on a buffalo wing crawl, proving once and for all that (1) I hate sports and (2) I will out-eat anyone in a spicy-food eating contest. Also, I may not have that much class.

Have you ever heard of a pub crawl? It was like that, only with buffalo wings. My friend and I love them so much that we have been systematically trying out buffalo wings from all over the Bay Area. On Sunday, we went to 5 different places, ate their wings, and photographed and analyzed them. I honestly have no idea what this has to do with personal finance or entrepreneurship, but I want to show you some of the absurd things we discovered. Oh yeah, and today’s Friday Entrepreneur is a buffalo-wing nut connoisseur.

Beautiful presentation (note the classy mimosas + wings) and great texture, but BBQ sauce is not spicy or good:

Don’t ever try to pass anorexic chickens off as wings to me:

A little better, but nothing great:

Unsatisfied after these wings:

The funny thing was that everyone was watching the Super Bowl, and we were the only two people in there with our heads down who kept getting up and leaving in the middle of the game to go to the next place. I will continue updating you with my quest to find the perfect buffalo wing.

As you read, note a few things in the interview:

• I LOVE his unorthodox marketing strategies. He hired chickens to protest his product! Who else would have done that? Being a small player calls for being different, not the same.
• He actually built a physical product, which is different than most of the other Friday Entrepreneurs I’ve featured. Check out how he did it (and his profit margins).
• This product hasn’t succeeded yet, but the idea alone challenges the “why would people need that–they could just use a bowl?” mindset. This product isn’t something you need, it’s something you want. Below, I ask Aaron about other industries where the products are “good enough” and then someone comes out with a product people really want.
• Finally, the reason I love this interview so much is that he took a weird/obscure passion and did something with it. How many people take what they really love and try to do something entrepreneurial with it?

You’re one of the first Friday Entrepreneurs to have a real-life physical product. What is The WingDipper?
It’s the perfect cup for dipping Buffalo wings. Have you ever tried to get dressing on your Buffalo wings? It’s impossible because they just don’t fit in a round cup. The WingDipper’s unique shape is designed to get dressing only on the part of the wing that you eat. There’s a round section for the drumette and a long section for dipping the flat. A picture is probably the best way to show how it works.

See? You dip the drumstick in the middle of the cup, then the flat part of the wing lengthwise.

Are you a huge weirdo?
Well, I guess I’ve always moved to the beat of my own drummer. Maybe it’s because I’m an only child. I’ve never really let other people stop me. I find that when you get to the outer edges, you find people with genuine passion for whatever they do. I think that’s where I am.

Once you realized this massive hole in the market, what did you do?
As they say, necessity is the mother of invention. I was eating wings at a bar here on Long Island and I just snapped. Of all of the problems that are in the world, I said, “I can’t get any #$% dressing on my $#%$# chicken wings.” In a split second, my brain had the following thought process:

Q: Why can’t you get dressing on the wing?
A: The cup is a bad design – round is the wrong shape.
Q: How would you fix it?
A: You need 2 shapes to dip the different parts of the chicken wing.
Q: But 2 cups? That’s silly.
A: Right, so here’s where they intersect.

Boom. The WingDipper design popped into my head and I could, literally, picture it on the bar. Like Doc Brown in Back to the Future, I guess.

I laughed and pushed it to the back of my mind. But Monday morning I couldn’t shake it. Luckily I have a friend who’s a patent attorney. I called her up and said, “I’ll tell you my idea but you can’t laugh.” When she stopped laughing she said, “Actually, that is a very patentable idea.”

That same day I registered WingDipper.com and sent over a draft of my idea to my childhood friend and business partner, Mark. We’re kind of like sounding boards for all of our ideas. I think this is really important in business and in life. You need somebody who isn’t afraid to tell you that your ideas stink. Surprisingly, he was totally into the idea. He said it seems like one of those things that if it hit, might be big.

I filed the papers for the patent but I didn’t really have a plan after that.

I think a lot of people imagine they could build something like this, but how did you get attention for your product?
A few days later, I saw a blog posting talking about a new show called ’American Inventor.’ I figured it might help get some free publicity for the WingDipper. I looked at the coverage of the other auditions and noticed that no one was doing anything different or fun. You saw a whole bunch of people waiting patiently in line. It seems that everyone forgot that they had to make good TV.

So, I called Mark and we started to brainstorm some ideas. I came up with the following idea: I would play a Matthew Lesko-esque character being followed around by protesting chickens. The idea was that the chickens knew if the WingDipper was chosen for the show, people would be eating chicken like there was no tomorrow.

Both Mark and his sister Lindsay agreed to dress up. I went and got two chicken costumes and started to decorate a lab coat with pictures of chicken wings, carrots and celery. As I’m ironing them on, I’m really starting to question my own sanity. Thinking about it now, any really good marketing campaign is a mix of uncertainty, bravery and stupidity. If you’re not nervous it won’t work, you’re probably not taking enough risk.

The New York audition went great and a few weeks later I got a call that I had made it to the semi-finals in LA. My first reaction was, “What about my chickens?” They said, “Yeah! Bring the chickens!” So off we went to LA.

The four judges were really supportive. Ultimately, they said it wasn’t right for the show (they were looking for something that could be sold at Target or Wal-Mart) but that I should make some contacts and do it on my own.

That seemed like a good advice. When I got back from LA, I did some research and decided to exhibit at the National Restaurant Show in Chicago in May. This is the major tradeshow in the foodservice industry. I figured I had about 8-10 weeks to get everything ready. How tough could it be to get some prototypes made?

Now, you have to realize that I knew nothing about plastic manufacturing. Nothing about the restaurant industry. This was all new to me. I wanted 5,000 cups, at most. Most manufacturers didn’t want to talk to you unless you wanted 5,000,000 cups made. After Googling a few places I found a company in California that would do a small initial run.

Next up, I have to put together a trade show booth. First thing I did – brainstormed with Mark. Like all good ideas, this one started with a joke. I was looking at how much stuff costs from the trade show company. 100 sq ft of carpet cost over $300. I said, “For that price, we can get wood floors.” Then the idea hit – let’s make the booth look like a wing joint – wood floors, a bar table, crazy chicken crap on the walls. Like American Inventor, I wanted something that would stand out in the sea of boring
booths.

And stand out it did. At the show, the booth was mobbed. 4 days of non-stop excitement. All the restaurants that we spoke to wanted to buy it as soon as possible. Everything was going great and I figured it would be smooth sailing from here out.

What were the roadblocks you faced?
Roadblock 1- At the show, I learned that take-out wings are a big part of the industry. In order to do this, they need lids. I found out that the company that made the prototypes didn’t have the expertise to engineer a lid and the volume I needed was too much for them to handle.

Well, now I was back at square one. More Googling. As luck would have it, there was a plastic manufacturer a few miles away from me. He put me in touch with a designer and we were able to design an improved cup and lid as
well as a reusable version.

Roadblock 2 – I still have a day job. I still have day-to-day clients that have projects to complete. Making time for 2 full time businesses gets challenging sometimes. This on top of having some sort of personal life is a very delicate balance that I don’t always succeed at.

What happens now? What’s your marketing strategy?
The official launch is March 4, 2007 at the New York Restaurant Show in New York City. Then it’s off to Chicago again in May. In the meantime, I’ve been getting WingDippers into as many hands as possible. To steal a line from Seth Godin, I’m trying to unleash this ideavirus in the wild.

If you had to do it over again, what would you do differently?
I looked at the Chicago show as though it was the introduction of the product. I should have looked at it more as market research. I was telling people that they would be available by the end of the summer. I was making promises based on guesses. In reality, it took 6 more months until I was able to get them out the door. I think that made me look more like a crazy inventor and less like a real business. I should have told them that I would let them know when I went into full production. I wouldn’t have talked to them again before I was able to deliver product.

What is your favorite type of wings? Why?
I go old school – The Anchor Bar wings in Buffalo. They invented the Buffalo wing so I have to give them respect. If you’re ever up in that area, stop in – it’s well worth it. They sell their sauce in bottles too and it’s just about as good.

What was the biggest surprise in doing this?
I thought it was going to be easy. I figured that everyone would see the WingDipper and be throwing money at me. I really thought that the idea alone would be enough. What I realized is that even if you have a great idea – you need to spend a lot of time getting the word out.

Also, I was amazed at how willing people were to share their knowledge with me. At the show, I didn’t hide the fact that I was new to the industry and that I didn’t have any experience. People with 20 or 30 years experience just shared a massive amount of knowledge with me.

From your experience, can you tell us 3 myths of creating a physical product?
1 – You can’t do it on your own
You can. There are lots of places that will work with you to design, manufacture and distribute your product. With outsourcing, it’s pretty easy to run a business from your desk.

2 – It’s easier to sell a physical product than attract people to your site. The grass is always greener on the other side. It’s just as tough to get people to buy your product as it is to get them to come to your site.

3- You can’t make money on small profits
We’re talking about a small piece of plastic that sells for pennies. I have to keep costs down and compute margins on tenths of a cent. For me, this is a game of inches.

Why build the Wing Dipper? Aren’t bowls good enough?
I guess this comes from my programming/design background. When I program, I make sure I do it right the first time. If I don’t do it right, I’ll pay for it later. Good design is valuable in more ways than you can see initially.

That being said, it’s equally important to look at the business side of things. Buffalo wings have this fanatical following. Bars and restaurants pride themselves on their wings. Entire chains have been formed that serve only wings. People have wing nights with their friends.

Putting this product together with those kinds of these people was the real important part. If I designed a cup for dipping asparagus, I don’t think it ever would have gotten out of the initial idea stage.

Can you think of other product examples where everyone says the state of the art was “good enough” and then something better came along?
The best example I can think of is Aeron Chairs from Herman Miller. Before these came out, people thought a chair was a chair. If you’re an executive, you spend a lot of time in your chair. You need to be comfortable. You become fanatical about your comfort and productivity. So, yes, a kitchen chair is good enough to sit in. But there is a segment of the population that will pay a premium for the best.

Same thing with Starbucks. They turned a .50 cent commodity into a $4.00 premium beverage. As you have said before, it’s all about executing on ideas. It’s not about waiting for the big idea. It doesn’t have to be earth shattering to have an impact.

Do people think you’re nuts for your wing obsession?
I’ve found that people respect other people that have passion for what they do and are confident in their ideas. When I tell people about the WingDipper, I see that skeptical look on their face. But then they see how it works – they try it out – and I can tell when they ‘get it.’ That’s when I feel really good.

Can my readers get a sample of The WingDipper?
Here’s a special offer for your readers. Go to http://www.wingdipper.com/purchasefnf.php and you can get a special Party Pack. It’s 12 disposable and 2 reusable WingDippers for $12. That includes shipping. And, if you haven’t signed up for Google checkout yet, they’ll give you a $10 off coupon so it’ll cost you $2 bucks to try it out.

Now what? Check out the WingDipper web site. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

(Friday Entrepreneurs is a series I run that features entrepreneurs doing interesting stuff. It can be a website, a retail store, a cool project, or whatever. I try to share your story with iwillteachyoutoberich readers and send some people your way.)

I’m planning on featuring a bunch of them, including the inventor of a buffalo-wing-eating device, something near and dear to my heart.

Here are quotes from past Friday Entrepreneurs:

• “Thanks for the interview, Ramit – it’s only been a couple of weeks, and I’ve already gotten several jobs from people who saw it!”

• “Thanks for featuring Joyce on Friday Entrepreneurs. People really loved it – and as a bonus renkoo got hundreds of signups!”
• “Over a 1/3 of our traffic in the last 10 days has been a result of your blog. More importantly than traffic, we have had lots of people sign up for our group and received a number of emails from prospective partners.”
• “The number of loans made on our site has increased by 60% because of iwillteachyoutoberich.com readers [and the post] led to our biggest loan volume day ever…”
• “At first, I kind of thought, wow, that’s cool. It seems like Ramit’s posts have a good effect on the companies he spotlights. But, then I realized, this is just ridiculous. The biggest loan volume day ever, and Kiva.org has been mentioned in various international news sources (BBC, CNN, Wall Street Journal). ”

It’s getting a little more competitive to be featured, but who cares? If you’re doing something interesting, submit yourself as a Friday Entrepreneur.

There’s also a special surprise for iwillteachyoutoberich readers. Read to the end for it.

Note a few things in her interview:

• Joyce was the first person fired for blogging. It was huge news, so we talk about that a little.
• She talks about the myth of finding a great idea, and points out the futility of trying to keep your idea secret. That’s my kind of entrepreneur.
• She explains the difference in hiring senior (30+ year-old) engineers vs. 22 year-olds. This is especially interesting for young people who want to work in a startup.
• Above all, she talks about people who can get it done. This is the whole point of personal entrepreneurship–people who can have a disproportionate impact by actually getting stuff done, not sitting around, complaining about things not being perfect, and wondering what to do next.

You’re kind of famous, huh?
I think you mean “infamous!!”

Well, you were one of the early engineers at Friendster…
I was lucky to work there. Whenever you get the opportunity to work at scale, you learn things you can never learn any other way. Plus I made a ton of great friends there, without whom Renkoo could not exist.

And you were fired for blogging? What’s up with that?
I think you actually mean “shitcanned for blogging”. OK, here is the real deal: I actually don’t know why. Literally when I got fired all they said was, “This is a termination meeting, and the reason is blogging. There is no performance aspect to this termination.” Then when all the negative publicity happened, everyone involved in the decision started trying to blame someone else. So now it’s totally a Rashomon situation… and after a while, I have come to prefer it that way. Life should have some mystery, you know? I have never edited any of the posts on my blog that referred to the company in any way, so you can judge for yourself.

That’s pretty cool. And now you’re working on your new venture. What’s Renkoo?
Renkoo is a web platform that helps you plan outings with your friends when you know who and what, but not when and where.

So let’s say you and a few friends want to get together for dinner… there’s probably a lot of back-and-forth about the best day of the week, what time, which restaurant, whether someone wants to add a friend, how to get there, you are going to be going to be late, etc. It’s a pain to manage the planning – Renkoo solves that.

Why not just use Evite?
Evite is for large parties where you already know who, what, when, and where. It works on an old-fashioned host-guest, hub-spoke, one-to-many model of what social life is all about. Most social life isn’t like that… 90% of my socializing is with smaller groups of people where we decide the details of place and time by consensus. Coffees, lunches, drinks, movies, clubbing, game nights… do you use Evite for that stuff?

No, I hate Evite. So is Renkoo about a better design, more features, better tapping into the social web?
It’s about a different concept of what social life is. A social software product always embodies a theory about what social interactions are all about, doesn’t it? Did I mention that I was trained as a social scientist (BA, MA, most of a PhD in Japanese cultural history from the University of Chicago), not a computer scientist?

How many people on the team?
8 full-time, 4 contractors.

Your startup is a little different than PBwiki in that you took funding almost immediately ($3 million in VC). Why? And how’d you go about doing this?
Actually, “almost immediately” is a little bit of a misconception. We took a very small angel round after 9 months, and a venture round more than a year after we started. The reason for the funding is twofold: 1) we probably have more complicated technical stuff going on than a lot of websites, and it took us a relatively long time to build that stuff; and 2) I’m 37 years old, man… I don’t have 22-year old friends who I can convince to work for me for free. The people I know and trust are senior software engineers.

But what was right for Renkoo is not necessarily going to work for very young people with no track record. The VERY FIRST THING that an angel or VC is going to ask — even before they look at the idea in any depth – is whether they are positive that this team can get it done. My team had a very strong track record at scale, and I would suggest it might be a waste of time for a very young team to seek funding from the same sources until they have a little more traction. Might seem unfair, but that’s the fact Jack.

So tell us how you go about constructing a social app like this once you have the idea?
If you look at the successful social software apps these days, they are almost without exception founded by people who are about my age or have been around the block a few times. (And before you mention Facebook…do you know who Sean Parker is and what his role in that company was?)

Why is that? Because we’re keeping the younger people down? Because experience helps you get funding? Because we cater to geezers like us? No… I think fundamentally it’s because it’s a bit easier for us to absorb the lessons of the past when designing the product.

We 30-somethings have a tremendous reservoir of ideas from the first Internet boom that had a lot of merit but didn’t pan out under those circumstances. 7 years ago this month, I was interviewing at Epinions…which was the Yelp of the day. My husband was interviewing at a major search engine whose CEO told the employees that search was not a growth area and therefore not worth new investment… ironically, just a few months after Google got its first venture funding. But from the seeds of those “failures”, many great successes have grown. When I talk to younger people, I often wish I could tell them… Dude, it’s not the idea! Maybe you should worry less about being completely original, and more about executing on anything… ” (Ramit’s note: Hmm, sounds like The Myth of the Great Idea.)

With venture backing, you have different expectations than a college kid starting a blog, etc. How do you meet those expectations?

Hmmm… how can I put this? When you’re a new engineer, you think that success means that you finish your tasks earlier than you said you would… so you maybe start estimating long. As you get more experienced, you realized that success means that you finish EXACTLY when you say you will — so it’s mean-zero, on average your estimates are neither long nor short. Analogously, I think what I’d say is that it’s not the venture backing per se that creates the crushing expectations… it’s the inherent size of the idea that you are lucky enough to have had. If your idea is the size of a blog, it’s your job as an entrepreneur to create the maximum value that you can from that blog. If your idea is the size of Google, it’s your job to create the maximum value that you can from Google. I will say that my funder’s expectations of me or of the company are never greater than my own.

How do you market Renkoo?
Marketing has changed a lot in the past few years. Traditional marketing has been about spending money on mass media – billboards, magazines, radio ads, TV spots — in every case, you have to pay to play. Today, people send things like pictures and videos to their friends that they find funny, outrageous or simply bad-ass – the biggest sites today have relied on viral marketing! Renkoo is an inherently viral application — after all, it’s about friends and family — and we are focusing on building features that make it fun and easy to invite your friends to have fun. Of course, we periodically have events that appeal to users too.

What are the things that keep you up at night?
My experience has been that the success or failure of a startup is largely not a question of outside factors like competition, but determined by internal factors like the strengths and weaknesses of the founders. So I’d say what keeps me up at night is worrying that some character flaw in myself or my co-founder Adam Rifkin will turn out to be defective.

What is the stupidest thing you’ve heard people say about doing a startup? Btw, knowing you, this question is not limited to one thing.
Oh man… I could go on forever!!! Definitely one of the things I’ve heard a lot is that you can start a great startup with no money. Uh…find out the facts about the early funding situations of Facebook and YouTube and Reddit and Basecamp, not just the hype. Your idea of “no money” and Fortune magazine’s idea of “no money” might be very different.

What would you say to a young person who wants to do something entrepreneurial?
Do not worry for one second about someone stealing your idea — you’re really not that brilliant. People already have more ideas than they could possibly implement. (Ramit’s note: Also see Your Idea is Not Good Enough to Keep Secret.)

What qualities do you look for when hiring?
A deep love of RFC 2616. A desire to learn a lot — everyone says they feel this, but it’s actually a rare quality. And I don’t think you’ll be successful at Renkoo if you don’t have much of a real-life offline
social life… we’ve had to go thumbs-down on otherwise great candidates because they don’t seem to get out much.

And are you hiring interns, by chance?
Sure! Send ‘em to jobs@renkoo.net.

So I hear you have a surprise for my readers.
Right now, we are switching from a private beta to a more public beta. We are very excited to have iwiillteachyoutoberich readers be our first blog audience to get to try it out! To sign up, go to http://renkoo.com/selfsignup.php, sign up, and invite a few friends. Let us know what you think.

Now what? To get an invite to Renkoo before anyone else, click here (try setting up an event with your friends). Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.

Right now the site is slow and the product selection is weak. Homeslyce feels like a well-functioning proof of concept. But the Stanford trio working on Homeslyce has done a good job, and is smart to focus on one market. In the post-college world I could see this working beautifully for wedding presents and for other gifts as well.

Still, the people behind it are 3 Stanford seniors, and I have a soft spot for them. And if you look at their answers below, they know the site is just in the beginning stages! That’s the funny thing about starting something entrepreneurial. Most people (who are by definition not entrepreneurs) will expect your prototype to be perfect. “You haven’t added a login page! You haven’t added text-message support! What about paying by check?!!?”

Seth Godin writes about this:

I’m a huge fan of prototyping. Prototyping just about anything is faster and more effective than ever before. It makes hypothetical questions go away and surfaces real issues. It gets things moving. And most important of all, prototyping eliminates fear.

BUT

If you use a prototype to try to persuade someone of an idea, be careful. Most people you know are not as conceptual as you are, especially about stuff you really care about….

Too many times, I’ve gotten excited about an idea and created a conceptual prototype. And almost every time, people, smart people, didn’t get it.

Right on. The real nitty-gritty entrepeneurs know that it’s a low process of getting it right (as opposed to the flashy end results you see, like “THIS COMPANY SOLD FOR 1 BILLION DOLLARS!!!”). Getting there takes tons of hard work.

I hope you’ll check out their site and send them feedback. That’s how you get to be bigger–by releasing an early iteration, getting lots of feedback, and improving again and again.

Notice a few things are you read this:

• They actually retained a lawyer and got incorporated before launching, something most other Friday Entrepreneurs haven’t done.
• They talked to lots of professors and experienced entrepreneurs, which I think is the smartest thing you can do.
• I challenged them a little, saying that I don’t know if Homeslyce would really be more effective than having a friend call up other friends to try to get a birthday gift together. Their response is great–they acknowledge that I might be right, shrug, and then basically say “we’ll see.” Those are the kind of entrepreneurs you want to see winning.
• Why are they doing this? I love what they say: “So far, we’ve learned so much. And, we still have lots to learn. So if we succeed, we’ll be ecstatic; if we fall, we’ll fall forward and at least have a lot of experience under our belts.”

What is Homeslyce?
Homeslyce is an online service that helps groups share the cost of birthday gifts for their friends. All you have to do is come to Homeslyce.com, choose a gift such as an iPod for a friend’s birthday, and invite friends to contribute by entering their email addresses. We’ll take care of the rest. We’ll help coordinate money collection from friends, send out reminders, and ship the product and email the birthday wishes once your group collects enough money. If not, no credit card will be charged.

Why’d you name it that?
Jen Gee came up with it. It’s from the slang, “What’s up, homeslice?” However, “homeslyce” is the plural form of “homeslice,” which means friends or buddies according to Urban Dictionary.

We never realized how hard it was to come up with a name that everyone liked, was still available as a domain, or would comply with the Secretary of State. We went through several names, such as Partypurchase.com and Group2O.com. Hopefully, everyone likes Homeslyce.com!

Where did the idea come from?
I’m sure you’ve probably experienced it. A special occasion such as someone’s birthday or anniversary arose, and everyone decided to pitch cash together to purchase an expensive gift for a friend. However, it’s a difficult process. First, there’s the inconvenience of dividing up costs and obtaining money from each individual, where location could cause difficult or less money transactions. Second, someone probably doesn’t pay up and the person organizing the gift purchase, usually the best friend, always ends up taking up the bulk of the purchase or the purchase just doesn’t come through. We just thought this process would make everyone much happier if it was done online.

And what did you do after you thought of it? (Literally, what were the next 2-3 things you did as next steps?)
To be honest, I think I called my mom first, and then my friends. But afterwards, I ran to the Stanford Bookstore, browsed the Small Business section, and purchased “Launch it!” by Molly Miller-Davidson and JoAnne Stone-Geier. I never realized it before, but these types of books just become ten times more interesting when you have an idea in mind. More ideas jump out at you, too! It’s as simple as a cookbook when you have an idea. You follow instructions and sometimes tweak them a bit to fit your idea.

I quickly formed my team with Jen and Mickey, toyed with several names for our site, wrote an executive summary, and talked to several professors and entrepreneurs for advice. To get the ball rolling further, I started the incorporation process. My professor put me in touch with his son who owns a law firm and we began to accrue from them (which basically means to put all expenses on a tab until capital is raised). From then on, programming and building the website consumed most of our time.

To be honest, I’m not sure this is something I’d bet on. I think there are certain things that require offline participation. For example, if one of my friends wanted to get a bunch of people together to buy me a Christmas gift, he’d probably call them up. If he sent them a web site where they could chip in, I bet they’d all get confused and just do nothing. So some things require the offline touch, I think. What do you think about that?

It’s true. I still prefer calling my friends rather than emailing or messaging them. But I feel like more and more people are becoming Internet savvy and are using a lot more electronic communication, like Evite.com to invite their friends to events. People use a lot of services online now because it makes their lives easier. Especially with the feature where gift givers can all pitch in with different credit cards from anywhere around the world, hopefully Homeslyce.com will make everyone’s lives easier, too.

I feel that we do try to add the offline touch. When your friends receive an email from Homeslyce, they will see a picture of their friend whose birthday is coming up as well as a message from the organizer. Moreover, on the page where they can chip in, they can post messages to everyone excluding the gift recipients and leave birthday messages. Maybe down the line, to make it more personable, we hope to make it possible for the organizer to send voice messages along with the email.

Tell me about yourselves.
We’re seniors this year at Stanford University. Jen Gee, Mickey Asavanant, and I all lived together freshman year in Paloma. Jen and Mickey are both very talented computer science majors. Jen is from Maryland, while Mickey is from Thailand. I’m an Economics major from Texas. To us, Homeslyce became something we loved talking about, we’d take time away from studying for classes to improve the idea, and something we kept between the three of us. We can’t believe our idea materialized and we’re actually using our own service to slice gifts with our friends.

How did you actually build Homeslyce (how much did it cost, where do you host, what did you need to do in terms of paperwork, coding, finding people, etc)?
Let’s see… to build the site itself wasn’t very expensive. So far, we have spent no more than a thousand dollars to build the site. This includes hosting at bluehost.com, and recently, we’ve had to move to our own server to handle the additional traffic and all the emails sent out. Our own server at aplus.net costs about $100 per month. Paperwork included many legal documents, which we had to take care of to incorporate in Delaware (tax rates are far better there), file as a foreign corporation in California, obtain a business tax ID number, and open a small business bank account. We are currently accruing from the law firm and owe a couple thousand dollars in addition to 2% equity. As for coding our site, we’ve been programming with PHP, MySQL, javascript, and HTML. Jen has been primarily in charge of the Homeslyce’s beautiful user interface making great use of Photoshop and Dreamweaver. Mickey has been in charge of the server-side programming connecting all the pages and making our site fully-functional and dynamic. I picked up some programming languages over the summer to help these two, but what I got most from learning these new languages is that I learned what is and isn’t possible and with that, was able to generate new features and add new functionality to the site. We also asked lots and lots of questions from many professors, entrepreneurs, and friends and attended many entrepreneurial conferences. If you’re passionate about your idea and are willing to make it happen, talk to people who might be able to help you and keep your ears open, and you’ll find that you have so many resources at your fingertips.

What are your goals with Homeslyce?
We’ve always wanted to start a business of our own and see the whole process through from the beginning and on. It was really cool that we solved a problem that many people could relate to. This was the perfect opportunity to take our goals and act upon it. So far, we’ve learned so much. And, we still have lots to learn. So if we succeed, we’ll be ecstatic; if we fall, we’ll fall forward and at least have a lot of experience under our belts.

Also, we love to make people happy and we love to celebrate birthdays. We feel that birthdays are really special days when people will put in an additional effort to celebrate and make someone feel special or to even use as an excuse sometimes to keep in touch with an old friend. I guess the goal/mission of this site first of all is to make it a lot easier for friends to pitch in money together for a gift (everyone can pay with credit cards, the person organizing it doesn’t have to handle and gather all the money, and friends all around the world can help “slice a gift”). We want to keep the birthday spirit alive. With people inviting friends to contribute for a gift, it will help people remember someone’s birthday is coming up even if they don’t pitch in, and if they do pitch in, it becomes really easy because they don’t have to decide on a gift to purchase. Moreover, we just think people would like great gifts that are sometimes too expensive for someone alone to pay for. And aggregating lots of money together allows people to be creative with so many more gifts to choose from. We were thinking that instead of getting a friend a bouquet of flowers, you can purchase them a room full of flowers. Or maybe even catered dinners, DJs… Also, this site will be able to let friends catch up with each other during each of their friend’s birthdays with messages to each other on the contribution page in addition to the birthday wishes you leave for the receiver of the gift.

How’d you pick 3% to charge? Where did that number come from?
Learning lots of Excel this summer, I had a lot of fun coming up with a financial model comparing Google Checkout and Paypal taking into account all their transaction costs. Generally, credit card companies charge us 2-3% for every transaction made. So with a site like Homeslyce.com with several transactions made for a single item, the costs can become very expensive. The model also revealed the minimum amount each individual had to contribute (which now there isn’t one) if we wanted to get away with charging a certain percentage over the cost of the product and shipping. We chose Google Checkout because for every dollar spent in AdWords, it waived ten dollars the following month in transaction costs. This has helped us reduce the percentage we charge tremendously. Moreover, 3% is the percentage where there’s no profit to be made. We’re really hoping lots of people use our site and enjoy making birthday wishes come true!

Our goals right now with Homeslyce.com is to really focus on getting our site out to the public. Also, we have so many features and new ideas to add to make gift-giving and receiving more user friendly and fun. Lastly, we would like to reward the organizers who initiate the giving process for their thoughtfulness and lively spirit. We’re collecting their emails right now, so once we have substantial funding we’ll find something very cool for them.

And how do you get there?
We feel like we’re in the perfect position to target our audience of college students. This won’t limit our scope of marketing, but currently we’re spreading the site through our friends, whom in turn slice gifts with their friends, spreading to other colleges and elsewhere. We feel like since our site is of a social networking nature, it should spread virally. We’re also going to advertise on Facebook.com, other social networking sites, and Google Checkout. And just as importantly, interviewing with great sites like www.iwillteachyoutoberich.com has been a tremendous help. Ramit, you are just awesome!

What’s the feedback you’ve gotten from people?
One feedback we’ve been getting from some users is that they were worried about security and thus, worried about inviting friends before they knew it was secure. Moreover, people still aren’t as familiar with Google Checkout as they are with PayPal. To help with these concerns, we’ve added visual images of Google Checkout and other secure services we’ve used. Moreover, we’re trying to emphasize how Homeslyce.com does not hold any credit card information and how Google Checkout handles all our transactions. We feel that the most important thing is to heavily advertise Homeslyce.com so that more people know about our site and feel safer trusting our site.

From our friends, they’re all very supportive and happy that we’ve come this far. They love the idea, and we love them!

There has been lots of other great feedback as well. Some other sites have contacted us wanting to work with us. We loved our fans from overseas, many asking if we were going to expand into foreign markets because they’d like to start using it now. And our lovely users who test every thing on our site and tell us how to make it better. And of course, we always love the occasional drop of the note, “Great site! Love the idea.”

Keep the feedback coming! We really appreciate it and we love hearing from you.

How do you use data in your design / iteration?
Right now we do monitor traffic, especially visitor paths and most popular pages. The most popular pages tells us which pages we need to optimize to increase conversion rates, and the visitor paths help us determine how users are using our sites. We have also been closely observing how people navigate through the store, if they primarily shop via prices, categories, personality types, etc. In our next iteration, we hope to add more flexibility in how people can find the perfect gift.

In addition, we’ve been constantly taking user feedback and fixing flows to optimize the user experience. We want gift-giving to be as easy as possible!

What about other people doing things like this? Billmonk, etc.
I feel like this is perfect timing for our website. There has been a trend of social networking and more specifically social e-commerce sites that have just been developed. There are so many great ideas. For example, Billmonk.com splits bills. When you’re on a trip, anyone can text message, for example, the restaurant bill and the people involved, and Billmonk.com will let you know who owes whom how much. Fundable.org is another great idea where people post things they’d like funding for, and others will donate towards it. Furthermore, there’s lots of new registry services for any special occasion.

What else should we know?
Thanks so much for giving us this opportunity, Ramit! We’re such a fan of your site!!!

Now what? Check out Homeslyce at http://www.homeslyce.com. Read other Friday Entrepreneurs, sign up for my newsletter, and submit yourself as a Friday Entrepreneur.