Interesting on Bitcoin

http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html

Via Daring Fireball

To editorialize briefly, BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind — to damage states ability to collect tax and monitor their citizens financial transactions. Which is fine if you’re a Libertarian, but I tend to take the stance that Libertarianism is like Leninism: a fascinating, internally consistent political theory with some good underlying points that, regrettably, makes prescriptions about how to run human society that can only work if we replace real messy human beings with frictionless spherical humanoids of uniform density (because it relies on simplifying assumptions about human behaviour which are unfortunately wrong).

healthcare savings 2014

This is not a debate on Obamacare! Just our experience going through the process as a small company. Your milage may vary, etc etc.

Early in the fall we received a notice from our healthcare provider Aetna that we wouldn’t be able to renew the plan we were currently on. It did not conform (though they didn’t say why) with the new laws.

Fear level was pretty high at UserScape HQ (meaning Jamie and myself). Every employee at UserScape has a family covered under the plan. We got in touch with our insurance agent and were told they wouldn’t have any information at all until November 1st. The insurance companies weren’t releasing information to them before then.

So we pretty much just waited around with nothing to do. Most articles we were reading estimated increases for small business of at least 10%, though some said as high as 30%. We pay 100% of all premiums for UserScape employee’s so a 30% increase is a significant expense. In 2013 we’ll pay about $71,000 in healthcare premiums for our 4 active plans (that’s freaking crazy BTW).

In the 5 years we’ve offered a healthcare plan here rates have never gone down. They’ve gone up every year, usually at least 5% or more. To say we were expecting the worst is an understatement.

November 1st came and they still didn’t have information. We waited more, constantly checking in.

A few weeks later we finally had some details. The plans offered were pretty shocking. They had nearly the same coverage with a few minor tweaks and a slightly higher max out of pocket limits. The prices came in 23% less than last year, a savings of $16,000.

We went even deeper into panic mode as this surely must be in error! We’d now have to get that straightened out all while working with the deadline of January 1st. That was when our plans expired and we’d need to obtain coverage before then to avoid any lapse and general chaos.

We double checked and not to our surprise the agent said yes, something is wrong. They sent new plans. These had a savings of $7,000. Still great on paper, if not slightly disappointing. Like thinking you had all 6 lotto numbers and finding out it was only 5 (it’s like that right?).

We prepared to move forward, but a day later the agent emailed us yet again. The original numbers were in fact correct. They were sure this time. Hopefully.

A few more back and forth emails and we were able to get our renewal in place at the 23% savings level. Truly amazing.

You can’t underestimate the importance that kind of savings has on a small business. During this back and forth we were in talks to bring on another employee. While we were going to do the hire either way, this savings makes that process just a little bit more comfortable. For other lower margin businesses these savings are the difference between hiring and firing.

I know there’s plenty of stories out there about people paying more. I can’t speak for anyone else, but for us at least the new law seems to be a positive so far.

Footnote

  • Our plan is a national plan in order to cover 4 families in 4 different states. We’re located in New York, Tennessee, North Carolina and Arkansas.
  • Certainly the worst part of the entire process was the obvious confusion of all parties involved. Perhaps it’s to be expected for such a large change, but it did certainly made everything more stressful and complicated.

how we built besnappy for 317000

You see a lot of press these days about seed/VC money, 2 million for this and 5 million for that. I thought it would be interesting to add up what it actually cost us to build a sophisticated web application using the latest technologies (BackBone, Laravel, Coffeescript, Less, message queues, email parsing, Facebook integration) and a top notch team. The results are interesting.

I suspect most people who read this will find it either amazingly expensive or remarkably cheap! I think we did a great job and kept the costs within what we could afford. Luckily, we already have a successful product so we could be our own Angel in this endeavor and not rely on any outside funding. In fact, if we were a true startup we could have done it a lot cheaper, more on that farther down.

These numbers are all ballpark, I looked up the figures, but didn’t add it all up to the penny. These costs are for the last half a year or so that we’ve worked on Snappy. Another important note is that we were not working on Snappy that entire period. There was the continuing work on HelpSpot, support on HelpSpot and Taylor was working on Laravel. I’ve taken that into account a bit in the numbers, again ballpark.

Payroll: $198,000

Obviously, this is most software companies largest expense and no exception for us. I couldn’t ask for a better team and wouldn’t trade these guys for anything.

Healthcare: $46,000

I considered rolling this into payroll, but it’s so shockingly huge I decided to break it out!

Other overhead: $20,000

This is just “stuff”. We have a small office, hardware, 401K matches, time off, software, etc.

Design: $50,000: Focus Lab

I spoke previously about my desire to implement a great design and to have a consistent brand experience for Snappy from logo through the app. This was the most (by several times) we ever paid an outside company. I think, if you have the means, it’s money well spent.

Note: this ballpark design cost posted with the permission of Focus Lab

Web services: $1,000: Sendgrid, Pusher, Bugsnag, others

Snappy is wired together with a lot of other great services. The monthly fees for these are shockingly affordable.

Lawyers: $6,000*

This is only an estimate, they haven’t started the work yet on the TOS and privacy policy.

Business Insurance: $1500*

This is also an estimate. We currently pay about $2,000 in errors and omissions insurance. The extra product, extra revenue (hopefully) and being a product where we host the data will add to the cost. This number could be higher, I’m being optimistic!

Servers: $0

So far we’ve spent very little on servers. We already have an existing infrastructure and partnership with EngineHosting. They’ve just been running everything on a custom VM cluster for us during the beta and it’s been very smooth so far.

A note here, that we did initial play with AWS when we thought we may use some of their other infrastructure pieces but it was so complicated, expensive and slow that in the end it just made sense to use a more traditional (I guess if you can call a VM cluster traditional) setup.

Domains $2,000

Yeah, so before Snappy was called Snappy it was going to be called SnapReply. I need to write up that change in direction another time, but the short version of this story is that we paid $2,000 to a domain squatter for a domain we’re not using 🙂

What’s it all mean?

That its not nearly as expensive to build a top notch product as all this money flying around makes it seem. Sure, with some VC money we could have hired more people but that doesn’t always equate to things getting done faster. In fact, it can have the opposite effect. Especially in a new product where there’s a lot of wandering around. Trying something, seeing if it works, reworking it and so on.

This isn’t to say there’s not a place for VC or even that under some scenarios I might not take some myself. But it’s so affordable to build a great app these days that it just makes sense to build it and get it rolling on your own if at all possible. See if it works, see if people like it and if you then want to take on some investors to scale it, pursue that from a more strategically advantageous position. Or don’t and just be profitable!

Update: The kids have started a Hacker News thread. I’ll follow up on comments over there