Alex Le’s Blog

Websites As Businesses

Running a website should be considered as running a business, albeit a unique kind of business that everything is virtual. The designs and implementation is no longer the most important part. Managing contents, marketing, SEO-ing, and monetizing become a lot more critical, especially if the site is within a niche and crowded markets. Google is now rising to be the big G of the web: getting “Google-slapped” means dropping number of ads clicks and losing revenues from advertisements.

How profitable is a website?

Very and varied. When a site reaches a certain “critical mass” in terms of visitors, page views, Google page rank, it can pull in at least a couple hundred dollars a month. Smaller content-based sites (such as my website) can pull in a couple bucks to $10, $20 a month. On the other hand, there is a few blogs that pull in $1,500 to $2,000 dollars on average a month from advertisements. Other more successful blogs pull in $20,000 to $30,000 a month. John Chow’s personal blog is a notable one as the mastermind behind it publicly posts the monthly income on his website (that is also one of his marketing/PR techniques too).  Mega site MySpace’s revenue is up in the hundred of millions and a writer from Forbes estimated the 1B number.

True story:  a friend of mine is running a non-for-profit search page (www.searchkindly.org) that collects advertisement money and donate to charities.  He was able to raise $817.25 for March alone.  It is quite amazing to look at his “proof of giving” page.

With that kind of revenue, running a website as a business is much more profitable than any other kinds of investing, including real estates. The downside is that it takes a certain kind of people to run such a virtual business since there is no schools, no classes, no books to teach you about making a living off the internet. There are e-books being sold all the time with the promise of teaching you how to “make $5,000 a month from home in your pajamas using your laptop “, but I highly doubt the contents and techniques from such sources. There are certain things you can pick up and learn as you go. Making a money off the web is certainly one of them.

If you talk to people around you about making money online, most people will look at you with puzzled eyes. They probably won’t be able to grasp the concept of how a banner and some text links can generate such money. Alchemy they think. But as the internet become more and more crowded, the site that can generate leads and capture visitors attention will certainly win the breads.

Where should one start?

The easiest way is to start a blog and start writing about your favorite hobbies and ideas.  I love web technologies, I love coding, I love making money so this is the theme of my blog.  Your interests is different than mine, but it is something unique and better yet, you can start making money off it right away.  John Chow’s advice is to write not about money but what you love. He is making money doing exactly just that.

If you can program a web application then it is even better way to make money through both advertising and subscriptions.  However, the efforts will be significant higher.  Trust me.  It still hurts me every time I think about all the failed ideas, postponed projects that I worked on over the years.  Motivation and PERSEVERANCE is the biggest key to success.

The risks associated with such an endeavor is also mountain-high if you financially invest in it.  The risks get even worse if you don’t have the technical background and hire developers to implement your ideas.  The cost of developing an application is not cheap, at all.  You will get conned, get ripped, get sold on compromises, and delayed deadlines.  Your dream idea can become a nightmare, both emotionally and financially.  If you are not tech-savvy, then don’t start a web project until you find the right team and the right technical person to relate to.  Otherwise your loss is guaranteed. Speaking from my own personal experience, the best way to start a small web application is to have a team of 3 people:  1 designer, 1 lead developer/ thinker, and 1 co-programmer.  At an average rate of $50/hour per person, the numbers adds up quickly.

Can anyone make money off the web?

Yes.  You have to pick a point where you want to start.  Visiting lots of other sites with proven revenues to get ideas.  Experimenting with your site to generate more ideas and use that as the launch pad for other stream of revenues.

In the coming months, I will share more of my experience of making money online so definitely it will be more interesting.

I’ve been doing quite a bit of reading lately.  I read a lot of blogs and somehow I get clicked with a few personal finance blogs which I discovered from the personal finance section in alltop.  My favorite ones are 7Million7Years, MillionaireMommyNextDoor, Brip Blap (funny name, try to say it fast), IWillTeachYouToBeRich.  There are lots of gems from these sites and I’m glad that I can learn from their mistakes and how they work their way to be “rich”.

In terms of monetary gain, how much have I earned from these blogs?  A lot.  AJC from 7M7Y talks about the “magic number” and how to balance life and money.  This alone worths at least 2 million dollars to find out (that’s my magic number).  Millionaire Mommy blogs about how to take advantage of the market and investing in real estates.  This can worth at least a couple thousand dollars.  Meanwhile, Brip Blap wrote about his journey of losing 100lbs and building wealth, at the same times giving out free tips to increase salary to 6-figures.  Ramit from IWTU2BRich wrote an excellent post on the barriers, or the thoughts/actions inertia.  Suddenly I remember the wise words of Professor Orogun:  “People always find ways to fail, while I find ways to succeed.”

Success or failure, It is all in the mind.

The lowest level of success is money,  but it is usually the hardest one to achieve (you’ll find a lot more poor poets than rich poets, a lot more musicians than rich musicians, hence a far more many people than “rich” people).  The common theme running across the personal finance blogosphere is living frugal below your means, not getting into bad debts, investing smartly, and finally starting a business to generate passive income.  Get busy and get rich.  If you are not busy producing, then you are busy spending.  Brip Blap hit the nail on this one regarding saving more or earning more (ideally both should be done at the same time).

Instead of spending time to experiment with different investing tools, I can read directly from these excellent individuals’ experience.  Maybe I won’t start or get into the same business, but the ideas and the thoughts being provoked are equally important.  Instead of working for money, I am working towards my own number so that one day, I can have money worked for me.  Instead of sitting on my butt and think about what I should be doing, I am busy working ideas and projects.  It is like I am having a new mentality.  The transformation is great.

I am excited to see where I would head to in the future.  I cannot foretell, but I know what I have to do.  In the mean time, I’ll be a regular reader at the PF section at Alltop.  See you there.

In light of my previous post about common errors in English, I’d like to share this error message I got from the PayPal Sandbox. I was working on PayPal for a client and testing the script using the Sandbox, which is tremendously useful. However, I managed to encountered this error after a few random Back clicks.

I guess the PayPal developers have to ask the “Pimp” object to do several things: “Pimp::this()”, “Pimp::that()”, and of course, “Pimp::the_sandbox_user().” And when things don’t work out well, “PimpAbort” it.

So PayPal is pimping over the place and nobody knows about it, of course until now.

I was writing some code documentations (I try to make documenting a habit now) and happened to come by this page, Common Errors in English by Paul Brians.

The Common Errors in English includes a refreshing and interesting list of commonly misused or misinterpreted words and phrases. I actually learned more about the English language just by skimming through the online words list. Coming from a background of non-native-English speaking, I know the different nuances in the usage of English words and their meanings. Sometimes what you are saying is not what you mean.

My favorite example of misinterpreted phrases is “quantum leap”, which is used to describe a tiny, discreet jump of an electron from one level of lower energy to another of higher energy. Quantum leap is very small because it’s is used in the sub-atomic world. So using “quantum leap” to imply a giant breakthrough is quite inaccurate. “A new quantum leap in rocket engine development: the new rocket can travel as fast as a sleepy turtle runs.”

To me, written words are thoughts. The more precise you can get, the clearer your thinking is. And sometimes it only takes a small step at a time to improve your thinking: be precise as much as you can, at all time.

Common Errors in English is only $10.20 from Amazon (free shipping if you have Prime). I highly recommend the book or reading on the website.

Slashdot today (Dec 28, 2006) has a link to an article on WSJ about a conversation between 2 venture capitalists. One of them is claiming Web 2.0 is another bubble and the other one claims the otherwise. My take on it: Web 2.0 is NOT another bubble like what happened during the dot-com boom and burst. Why? It’s not general public money that are pumped into the web 2.0 ecosystem like what happened 7 years ago with web 1.0. Base on that fact alone, I can safely back my claim.

To a lot of people who are monitoring and following the news on web2.0, it may seems like a bubble is forming. A classic example: we saw that Youtube got bought with $1.65 bln. How on earth a FREE video sharing site with NO real business plan besides selling ads inventory, e.g. eye-sights, is worth that much? It’s hard to believe. Another speculative number from the WSJ article: Facebook is valued at $500. Sure, whatever. I have to admit that I used facebook once in a while to keep in touch with friends, maybe writing on their walls some b-day notes. The truth is when thefacebook.com’s version for Lake Forest College was available, some of my friends assumed that I had built the site. Because not long before that, I had built www.247lfc.com, an online classified-ads for the college and got some reputations ’round campus — not enough to impress the freshman chicks (I just finished by Sophormore year at the time) but enough to raise a few eyebrows of the faculty and cause dis-comforts to the monopoly on-campus e-follet bookstore. Anyway, to me, fundamentally, facebook is more like a week-end project of a student. Slapping a guesstimate value-tag of anything above a few million dollars is already a hard-to-believe thing, not to mention the ridiculous number of $500 million.

However, these 2 examples above and many not-mentioned cases is not a sign of a forming bubble. They are merely examples of over-valued IT products, which happens to be the expensive merchandise deep-pocket companies like Google, MS, Viacom, etc. want to possess. Women like jewelry and nice accessories. Rich women like expensive handbags and sparkling diamonds. Similarly big companies like to have controversial, widely-known products. If they don’t have anything to brag about, they will buy a product with a premium. But that’s about it about this web 2.0 bubble.

There are a few profound reasons why the wave of Web 2.0 companies is not a bubble.

1. There are not enough big companies out there to cause a massive injection of public cash into the market.
If we look around, we can only name a few really successful companies. It’s true that for every one of those successful companies, there are 10 more of the copy-cats. This is because the nature of Web 2.0 companies: very low barrier to entry. Begin with a javascript framework, slapping on some stripy, shiny, cheerful designs and we have a web 2.0 product or service. However, at the end of the day, the general public generally stays unmoved. People don’t even know about the existence of those companies, not to mention about investing in those companies. I don’t hear anyone mentions alot about IPOs these days, besides the flopped IPO of Vonage last year, and Vonage is not even considered a web 2.0 company.

2. The invested money are by Venture capitalists only, not by general public.
What made the dot-com boom was not the VCs. Yes, VCs commands lots of money, but it was the general public’s interests on the companies at the time that caused the massive injection of cash into the internet. Usually VC’s funding are cost-prohibitive to the general public — I don’t think any VC would accept a small investment of $20,000 from this random old man on the street to so that the guy can participate in the VC’s game. VC’s get funding from rich or uber rich guys because it’s all about the risk/reward ratio: the rich can take more risks so they can play the higher reward game with more money at stakes. The general public are less fortunate, we loose a few thousand dollars in stocks and we will show a disgusting face when someone mentions that company’s name again. The Risk/Reward ratio is of ordinary people are so low that we can’t invest in anything other than ourselves (e.g. paying for college). Since there are not enough IPO’s going around, and people still have the scar of the last burn from the dot-com explosion, the general public are safe from web 2.0 this time. Without the money of the mass, there won’t be any bubble at all.

With that said, where are we heading in the near future? I can see that we will have some consolidations among the copy-cats. Some of the grass will die, or weeded out because the lack of nutritions due to the absence of a real business plan. In stead of seeing 20, or 30 YouTube clones, we will see 2, or at most 3. In stead of seeing 50 Myspace clones, we will hear about 3, or 4, or less.

The overall trend will be the localization of popular services to a per-country basis. Even though MySpace is big in the States, Bebo is leading in Europe, or in South Korea or China, there are major local brands that leave MySpace in the distant trail. Take Ebay: they were just reported to begin waving the white flag, giving up China’s market. So localization is the big trend in the coming year. Successful services or products are ported and modified to work better with the local people. And most of the time, Western companies are very slow in terms of internationalizing or localizing their products and services. Hence, they are likely not able to compete with local companies offering the same or copy-cat products.

Also, I would expect to see more sophisticated Web 2.0 services, instead of the cut-and-paste mashed up services that have mushroomed for the past 2 years. Take the new Yahoo Mail beta as an example: the free webmail serivce behaves more and more like a desktop application with sophisticated features that even a few years ago very few people would imagine. Together with the maturing Javascript frameworks (Dojo, YUI, Google Toolkit, etc.), more soup-ed up applications can be built. A consequence of this fact is building up a web 2.0 application is not a trivial or easy task like what we have seen and experienced: building a working, functional web 2.0 application will require serious planings, engineering of infrastructure, and software design. Such things requires skill and efforts, and they are the results of serious investment in terms of time, money, and human resource. Effectively we will see larger micro-ISV (independent software vendor) putting out applications, instead of a one-man-team or two-man-team like before.

In brief, what currently happens with the Web 2.0 lanscape is low barrier-to entry of AJAX technology leads to the proliferation of new web 2.0 applications. Financial-wise, I don’t see a bubble at all. If there is, then it’s just the beginning, not the end. For me, I’ll hope on the web2.0 wagon and enjoy the ride. It’s too much of a good opportunity to miss out. The thing is, are you ready when the time comes?