Catster Archive

One of the most popular questions I get asked when helping startups with their business plans and models is around lowering costs and moving towards profitability. As a former accountant and having been through the spend crazy Web 1.0 boom, it’s interesting to see how quickly startups are attempting to cut costs and attempt to get into the black.

Ted, John and Steven over at Dogster have put together a list of 10 tips for building a profitable business which I thought was worth sharing. Check out the post for the full explanation of each tip.

1. If being a business person is not your goal find a business partner immediately.
2. Consult anyone you know that has run a earnings-based business
3. Spend your money when it’s in the bank, not when the deal is agreed to (or never count your chickens before they hatch)
4. Spend at least 50% of your time selling.
5. Know thy accounts!
6. Prove your revenue models before investing in them.
7. Don’t lie to yourself.
8. Fail fast.
9. Hire slow and fire fast.
10. Be frugal about everything.

On #9, I’d suggest looking at a short-term contractor to verify the full-time need before hiring. After working at CKS in NYC back in the mid-90′s, I can certainly relate to #10. When I arrived they asked me how many computers I wanted! We had 2 fridges with only beer, etc. Earlier this year I provided 7 ways for startups to reduce their spending without reducing their consumption.

Interesting note… Ted from Dogster was the first person I interviewed for CN.

Dogster CEO Ted Rheingold was the first CN interview I conducted just over a year ago. I was impressed from the first minute I met him both on his business acumen but also with his strategic visions. I can only imagine what he was thinking as he was coming to meet a no-name, new, no traffic blogger :)

Today, Ted sent over some very impressive stats about Dogster and Catster:

• Over 17.5 million distinct friend-to-friend connections have been made
• Over 3 million photos have been uploaded
• Over 20 thousand videos have been uploaded (video only started this year)
• Over 10.8 thousand member-established and -driven groups have been created
• There are over 100,000 locales now in our dog and cat friendly Local Listings
• There are over 4,000 adoptable pets available on the site right now.

They also launched the 2007 version of their coolest pet contest. I wonder if any cats will be twitter’in about their entries. Check out the contest details.

The reason for their success is (at least) three things: a passionate team of employees who are actively involved with the site community, a leader who is active in the tech community, and a fun, active, affluent community. Dogster is like the Yelp of dogs. Some startups have one or maybe two characteristics, but all three is a huge step towards profitability and long-term growth. Of course I would like to belive the real growth happened after our interview. :-P

Recently I attended the Future of Web Apps Summit in San Francisco. After the event, I had a chance to sit down with Ted Rheingold. Ted is the founder of Dogster.com and Catster.com, two very successful passion-centric communities. Ted will share with us how he came up with the idea for Dogster, what Dogster is and future plans. He will also provide some thoughts on the future of the web and some tips for success. We thank him for spending the time with us for this interview.

Grab the RSS Feed and always know the instant we post other interviews.

Below is a text transcript of the audio interview.

Allen: Google, Yahoo or Ask?
Ted: Google

Allen: Mac or PC?
Ted: Mac

Allen: How did you come up with the idea for Dogster?
Ted: I made a site called fleetingimage.org and anyone could upload an interesting photo and anyone else when they arrived would see those photos one-by-one in random order. And it’s still live and when it was finished and I thought well you know what else people like to look at is pictures of dogs and my wife had been going to aspca and rescue sites just to look at pictures of dogs and other people would show me dogs on their cell phones and it’s always nice to look at pictures of dogs why not make a site where anyone could upload photos of their dog.

Allen: Did you start with funding or in a garage?
Ted: No, no I was doing web sites for clients at the time, contractually. I wasn’t making much money doing it. But that was my business onematchfire.com and I was getting a little tired of waiting three months to get a check sometimes and it was chunky kind of revenue so I thought if I made the site dogster I could sell advertising pretty easily I would just get my own advertisers, charge them $50 a month and if I could get 10 a month, then I would have $500 a month and it would pay for my rent so then it would be worth doing it. I worked nights and weekends and days when I could and I spent very little money on it. Brought in a graphic designer and a copywriter, both of whom were hungry for a more exciting project to be working on than their regular client work so we worked out a payment agreement which was if this site ever starts making money here’s what I am going to pay you so it was on spec. I ended paying them out $200 a month until I paid them off. My original offer was to wait until I am profitable then I will start paying them back but I realized after a couple months that I will never be profitable because I am never including my own time spent on this and you constantly want to spend more time on it if it is popular so I just realized if there is money coming in, I should pay it back.

Allen: Where are you at now with dogster?
Ted: Dogster as a business is now 10 employees with offices in San Francisco, California. As a community we have 250,000 members and we have 30,000 visits a day serving about 600,000 pages a day to those unique visitors. We are growing month and after month, we have dogster and catster. We offer our members a place to make web pages for their dogs and cats and they can connect with their friends and they can communicate in forums, write diaries, private message each other, leave little treats with messages for each other, they can find other members in groups which are all user created and there are 4200 groups now and could easily be described as a very happy, passionate community.

Allen: What is the technology behind dogster?
Ted: We are a LAMP shop. We are using debian and a little redhat, apache 1 going to 2 soon for a little more optimized processing. We are php4 upgrading to 5 soon for the same reason as it is a little faster and mysql4.

Allen: Do you consider Dogster a Web 2.0 site?
Ted: If you define web2.0 as a type of web company that is profitable and focusing on its customers, then yes. If you consider Web 2.0 as meaning offering all types of bells and whistles that technologies offer, then no. So overall no, we don’t consider ourselves a Web 2.0 site.

Allen: Do you offshore any of your development?
Ted: No, but we do have a customer service person in Kentucky, where the cost of living is much lower. He answers all of our emails for us, he’s great, all of our customer service emails.

Allen: Do the dogs and cats themselves have any privacy rights?
Ted: No, but the humans who post those pages do.

Allen: Can you discuss any legal or copyright issues with the photos?
Ted: Since day 1, in early 2004, there was a lot of hub-bub about some sites which were taking exclusive rights to all photos uploaded and even content. I always thought that was pretty insulting so what we offer our members agree that will share the rights to those photos with us. So we have Dogster, Inc. ends up with a non-exclusive right to reuse the photos in any way that Dogster, Inc. wants to. So that means we don’t claim exclusive copyright and they have not lost their rights to those photos. In the end we have not really used the photos anywhere but if we did a cell phone application where people could look at dog pictures we are not going to go back and get the rights for them. If we did a book or some publication or some other thing that members were not expecting, we would probably go back to each and every member and say we are interested in using this photo are you ok. We just think that’s the respectful thing to do. We didn’t take that picture, we didn’t write that story.

Allen: Who are your main competitors?
Ted: I expect any day for a real competitor to come along. We have seen a lot of knock offs or very well intentioned pet community efforts come and most of them have gone for whatever reason they just didn’t have the secret sauce or commitment behind it that Dogster does. Also, as someone said at the conference, overnight success often take 3-4 years and I think a lot of people lost interest when their idea didn’t become wildly popular in a month. We are kind of putting our competition is where our members could be going to entertain themselves on the lines of pets and the big portals also have pet areas and they are mostly devoid of passion and great supportive community but in a way their advertisers we want to be our advertisers so we are making them our competition.

Allen: What can you share about your user demographics?
Ted: Our members are mostly women, they are mostly between the age of 20 and 40 though it can range from 5-100. More than 50% are college educated. A lot live in homes, have families, that they are members of whether they live with their parents, have children or are married.

Allen: Any thoughts on Flickr integration?
Ted: We are just at a point now where we have enough engineering resources and foundation that we can start to consider the APIS we have made in opening them up and working with photo sites and there are probably 25 photo sites that have ten times more photos than we do. So we maybe Webshots or Yahoo! Photos or AOL photos would be a more likely candidate for us to work with.

Allen: Other upcoming partnerships, collaborations or integrations?
Ted: So we just in the last month, we have done the first collaborations with 3rd parties that are for our memberships usage. One is with userplane and their instant messaging service which is great. It’s flash based, web based, you don’t have to have an existing account with yahoo or aim you don’t have to install any extra software. We on our side handle all the presence knowledge of who is online, we initiate the conversation and then userplanes flash-based software and backend keeps the conversation going back and forth between the people and that’s great because its better than we could have ever done and its very inexpensive in the big picture. The other partnership we have worked on to what we consider great success is videoegg. Now all of our members can upload video and we can show that video on our site at really nice component of their service is that our members don’t need to register with videoegg. videoegg doesn’t care who they are, videoegg doesn’t have any information about them. the upload happens entirely on the dogster site, people can drag and drop video from their desktop into the uploader. Once it is uploaded, videoegg passes us back the distinct id for that video so we can store it and call it. videoegg hosts serves and stores all the videos and thats something that would have taken us 100,000, no 250,000 to build so well or even a 100k to build a bad one and there is no upfront costs for us. we will just be doing revenue share on the ads that are being served and feel very good about that. We have no other partnerships in the works but we are looking to not so much white label our services but to offer the rock-solid warmth and love of our communities perhaps with much larger organizations because we have been able to build a taint-free non-corporate dog focused, cat focused only entity. So we could really work with anyone.

Allen: next 1-3 years for dogster/catster?
Ted: We are going to round out all the pets so people with horses, birds, fishes, bunnies, hamsters, gerbils, snakes, geckos will all be able to have a place just for them. They will all be their own entities; we will not squeeze it into dogster or catster. They will be very much their own destinations with their own facets and sensibilities related to that type of pet. In two to three years we see it so very realistic to start offering communities built around non-pet passions. We have learned how adults like to communicate which has taken 2.5 years of being on the front line to really understand what to them means safe, what to them means fun, how to help them share all they want to share while also protecting them from sharing, what in the end, they don’t want to share. Dogster inc will very likely become great community web sites inc and we look forward to becoming a network of 20,30, 50 passion centric communities.
Allen: Next 1-3 years for the web?
Ted: I think one significant component will be that a lot of web based features and functionalities will start moving to devices that are more convenient or supplement the convenience of the web site. So I see a lot of web presences also being supported by interaction on cell phones, console games, home entertainment systems, handhelds. I just think I see things moving away from web only to networked or online. I think it will be a slow process but the cell phones already starting to pick up a lot of very quick communication features that people relied on the web site to check in on the web site. I expect to see a much reduced reliance on web presences being restricted to their domains. Just like you can check stocks or movies on yahoo, you will be able to check-in on many of your favorite web sites on the web page of your choice and vice-versa on your favorite web sites you will be able to check in on all your other favorite web sites. Thats a slow process but everyone who is opening APis and everyone who is making web services where people can integrate widgets of web sites or mini-sites I think what all that means is that you will be less required to go to an exact url to get a web site’s information.

Allen: What are the top 3 things you have learned since starting dogster?
Ted: Once you start a big web project, once it gets live, is absolutely just day 1. You think that the whole endeavour is to just to get it live, but that is just the prelude, the whole endeavour is to get it all the way to the last chapter. If you are not willing to commit that time to it, it will stop after the first or second chapter. Another thing I learned is that communities absolutely cannot manage themselves and the more research I have done there is just no example of an online community that has been able to take care of itself in the nature of the tools that the internet offers it just conflicts with a lot of human problems so running a community means being a caretaker and a guardian at all times. It is really a 24 hour job. The 6th person we hired was our community manager and the 5th person we hired was our systems administrator because we found that if the servers are down no one can use the site and we also found if the community is down as in having a big fight or is in a very emotional state then as well it is as if the site is down. some people don’t notice but for some it is a tragedy so you really have to think of it as a garden and watch over it every day. Third thing I learned is that it is pretty easy to run a business poorly or so-so. You can actually go for years running a business that is losing money or is breaking even or not losing much money. What I found is a lot harder is running a business that is actually successful. It is kind of obvious but the point is when you are able to make it profitable or successful it becomes that much harder because you cant screw up anymore because you cant blow things off that you could before when we were just losing a grand a month, so what if I want to go away for a weekend. But now if I go away for a weekend and there is a problem with an advertisers banners, when we first started out and could not afford staff, one bad advertiser experience could result in a 10% dip in revenues the following month so while anyone can run a business badly it is much harder to run a business well.

Allen: Top mistake you have made with dogster so the CenterNetworks visitors can learn from it.
Ted: The biggest mistake was that I did not have enough backup plans in place when I started. I didn’t understand mysql well enough. I understood it as a user, not as an administrator. And I know that if I lost my data that would be it or if there would be a hard drive failure well then all that data would be gone and I had backup scripts going and I would even look and make sure that the backup scripts were updating and I would go and look and verify the files were there. I didn’t look at the file size which was 0 and I had a data failure and lost a lot of data about 2 months in and i thought it was going to ruin everything forever. Fortunately members accepted my stupidity and my apologies but its never too early to make sure you are backing up and backing up as professionally as possible.

Allen: Any other tips or thoughts you would like to share?
Ted: You are making it for them not for you, which is what most businesses are for, for a lot of people to use, get it live as soon as possible. So people can start using it. If you are a no-name or a nobody, make it live. Don’t put it in private beta, don’t care, just get people using it as soon as possible. And then as soon as possible, listen to all their feedback. Solicit request feedback because they are the first people using your product as real people and they are the first people who can tell you what they product should be. If their suggestions deviate from what you thought they want, go with their suggestions. It is important to make sure you get a wide survey not just go with the largest 10 people say but listening to them is whats going to make a service that people want not a service that you want to make or think should be made. Complementary to that is to answer every e-mail, stay on top of every bug and complaint. You have to do customer service for at least the first year and you have got to make sure that at any point in your company’s life, you are aware of what they complaints are, what are the most common issues. Do customer service for half a day every other week and answer emails. The further you get from your actual customers, the further you get from actually offering them what they want.

Well we have reached the end of our interview with Ted. A big thank you to Ted for spending this time with us on this beautiful morning here in San Francisco. Ted, I am certain our listeners have learned something about Dogster and what they should be thinking about when they create the next big web app. If you would like to participate in a conversation on CenterNetworks, or if you have any comments or questions, you can contact me via e-mail at allen===at===centernetworks.com or visit CenterNetworks for all of our news, reviews, insights and conversations.