Kalzumeus Software

(See the directly preceeding post if you’re wondering what the heck a Kalzumeus is).

I have a bad habit of becoming fascinated by any system which is sufficiently complex and wondering how to do it better.  Baseball statistics, for example.  I really do not care for baseball.  The activity does not interest me, the sport bores me, and aside from a cultural imperitive to root for the Cubbies in my family I’d be completely ignorant about it… but I own a book about Sabermetrics.  Forget the game, that stuff is interesting.  I collect wee little obsessions like this as the time goes by, and generally write down my ideas in a notebook, and after two pages or so I get bored and nothing new goes in about that subject.

I decided at some point that I was going to actually make a go out of the uISV thing as, eventually, a full-time occupation.  I’m not exactly sure when I made that decision — when I rolled out Bingo Card Creator I was definately thinking “Amusing hobby, expected shelf life 6 months or so”.  Now I find myself considering potential job offers in the light of “Can I easily transition from this job to full-time self employment in 2-3 years?”  Regardless of when exactly that change happened, since then I’ve been adding things to the notebook with an eye towards obvious connection to money.  The general idea is that it is far easier to justify someone paying you $250 if you save them $2000 than it is to justify someone paying you $24.95 if you save them $10-15 a few times a year (which is one of the pitches for Bingo Card Creator).

I chanced upon a particular investment opportunity when reading the Motley Fool and was quite taken with it.  Not that I had any interest in doing it myself (see: baseball), but it is extraordinarily popular in the United States — millions (!) of people are actively engaged in it, and they are all investors and as such have money to spend.  There are many, many niches in this field, and many, many problems faced by these niches.  Some niches have Big Problems which get literally millions of dollars applied to them by Companies That Solve Big Problems And Have Capitalizations To Match.  However, a couple of the niches have problems but the solutions available are, well, not so great.  Many of the solutions involve calculations on paper, elbow grease, and very expensive professionals doing things that could be done by a trained monkey with a slide rule.

I picked one particular niche, where small businesses or individuals are working in this investing field, and picked one particular high-value problem they have.  There are companies which will offer to solve this problem already, but which use a far different way than the web application I am developing.  In general, their methods scale very well for the user but have prohibitive startup costs and, as a result, they really don’t encourage (or sometimes even accept) business from the smaller fish.   This results in most small businesses or individuals not using these services, instead preferring to fix the problem by themselves, and then complaining about it to anyone who will listen on their forums.  Ahh, music to my ears.  As a plus, there are at least twenty companies who all appear to be making a living doing different variations at different price points of the exact same thing.  That spells fragmented market, and as Ian Landsman once commented fragmented markets are the uISV’s best friend.

I am slightly worried about my cost-competitiveness with some of these solutions.  With my web application, scaleability is going to be fairly low compared to my competitors, but the fixed cost of entry is going to be comparable or lower.  As a result, I think that I can be fairly competitive on price for the niche that I’m targetting, where the cost of entry will overpower the scaling factor.  I know I can blow them away on the feature set (at any level) — there is something about replacing paper and slide-rule totting monkeys with computers that suggests a plausible increase in process efficiency.

My other worry, excessive regulation of the niche, turned out to be vastly overstated.  I read through all my competitors’ disclosure forms and legal agreements, expecting a 40 page monstrosity of a release about one point in particular.  Apparently, everyone treats that point as just an risk of doing business, one that is too minor to even put in their contracts (the one that mentions it disposes of it in a single sentence which begins with the word “Obviously”).   This means I will likely be able to sleep at night without the prospect of being dragged into court on a weekly basis, which is a good thing.  I also think that I can position my application as having less risk with regards to that point than my competitors do, which can only help my sales pitch.

Marketing is going to be tricky.  I don’t have personal experience in the niche and, while I know a few places where they hang out and am putting myself through a crash-course about their business practices and problems,  have not yet figured out a totally effective way to address them.  On the plus side, my competitors apparently have not heard the phrase SEO yet and the two which are using AdWords are not exactly geniuses with it.  Search engine traffic on related keywords may or may not indicate enough interest to sustain me, we’ll see.

Price point: Given that I’m focusing primarily on small fish in the big pond, I’m thinking of breaking with web-app tradition and having exactly one price per month.  The idea, similar to e-junkie, is to get people hooked on you quickly and then bill them forever.  Most of my competitors require you to do math to figure out how much they will charge you, and I think the simplicity of “We have ONE price for ALL customers and are interested in YOUR business even if our competitors think you’re too small to be bothered with” might be a decent differentiator.  We’ll see.

In terms of how many customers I’d need to make a permanent go of this, I could cover my burn rate with about 200 (assuming no growth in Bingo Card Creator) and will replace my next job’s salary well before hitting a thousand.  This is in a market, again, numbering in the millions.  I’m forecasting minimal churn since the pain involved in moving to one of my competitors (and their high fixed costs) looks pretty prohibitive when compared to the price delta, and I don’t anticipate many folks abandoning me for their old way of doing things.  My tentative plan is to take a few years building up the business to where it makes sense to switch, and then going full-time.

I have been unreasonably busy with the job search and other assorted random stuff (and its truly a random assortment: my younger brother wants to become a novelist and sent me a proof copy, etc).  This has caused me to fly passed my self-imposed deadlines for actually talking about the second project.  Well, its “second project” no more, because a) I’m really hating how clumsy that is to say and b) I have a domain name or two burning a hole in my pocket and no more reason to keep quiet about them.

My LLC (paperwork not quite in yet and won’t be for a while, but its on my desk) is going to be called Kalzumeus Software, and I guess this would be the official unveiling of that name.  I am an ardent proponent of the theory that product names are more important for branding purposes than company names as a uISV (and the product name is about as boring as Bingo Card Creator).  After all, the company is just a legal fiction designed to give me an easier way to relate government authorities and other corporations who expect entity-to-entity rather than person-to-person relationships, and almost all of the folks who I’d really want to be interested in my ongoing concern rather than my products identify it by my name.  So I picked a name which is a little self-indulgent.

Its 9 letters long, easy to mispell (Calzoomius? and about 300 variations), and means nothing to most people.  On the plus side, this made getting the domain name fairly easy and, unless this post has been indexed by the time you read this, its totally unique on Google.  The story behind it is more than a little bit on the geeky side: its a talking dragon from a long-running series of RPGs my friends and I used to play, and as the dragon was smart, cheeky, and just a little insane I thought that was as good a mascot for a software company as anything.

Anyhow, plans are currently to go through whatever legal flimflam is necessary to transfer Bingo Card Creator over to Kalzumeus once it is officially opened (likely towards October or so), and to have it debut simultaneously or thereabouts with the second project, which for the sake of my sanity I’ll call the Kalzumeus project until I can actually release the product name.  Until then you’ll be able to find everything relating to the project and the company under the Kalzumeus tag on this blog, and eventually they will be making the transition to dedicated blogs.  I plan to continue this blog about Bingo Card Creator as long as I’ve got anything useful to say about it.