December 2011 Archives

DuckDuckGo used to run out of my basement

Gabriel Weinberg

December 28, 2011 10:57 AM

For the first two years or so, I ran DuckDuckGo out of my basement. Then when people really started using it I set up EC2 for fail-over, and now EC2 is our primary host. We still use these basement servers for a variety of things, however.

Before DuckDuckGo, I operated in a pre-cloud world and had been running my own servers for a number of years. My last company co-located (stored our servers in a data center), which had worked well except for when things went wrong and a reboot didn't solve it. Then I'd have to (usually at inopportune times) drive over to the data center, be escorted in, mess with things, and be charged a lot for doing so.

The main problem with self-hosting (vs co-lo) in my mind had always been crappy Internet. Then in 2006 I moved to our house in a town that approved FIOS a few months later. I had been watching it progress, and we were literally the first person in the area to install it.

I was hopeful and it turned out correct that the crappy Internet problem had been solved. In five years, it has never been fully out except for the time our service got suspended for lack of payment (forgot to update my expired card). Other than that, there is just the usual blip always coincidental with some internal Internet routing thing. In fact, since I have complete network control, the "co-lo" doesn't reboot routers for scheduled maintenance either. The latency is also pretty good.

Note that I'm not advising any of this -- simply telling my story. So why did I do this? Really it was the path of least resistance given my history and experience. I was used to setting up and maintaining servers, and had some laying around. This setup seemed great at the time -- I'd get the benefits of co-location (good Internet) but could mess with things at will. (The other co-lo benefit is power -- I have that covered as well.)

I still like the idea of having a server for non-production use, e.g. this Web site. There is something nice about having it close by. Perhaps it is a false sense, but I feel that the setup is more reliable than any cloud provider. And I get to feel a bit more full stack.

But all that pretty much stops at one server for me. Anything beyond that and it quickly becomes a PITA. Here's a pic from when we bought the rack off of Craigslist:

One million true fans

Gabriel Weinberg

December 20, 2011 1:02 PM

A few years ago Kevin Kelly wrote a post called 1,000 true fans, in which he argued an artist "needs to acquire only 1,000 True Fans to make a living," and using the power of the Internet it is possible to do so independently.

In the last few years since that post we've seen an explosion in the use Web services and apps by everyday people -- with arguably Facebook leading the way. Chris Dixon just called where we are today an internet of people.

We're at a point now where I see the 1,000 true fan concept regularly applying to startups, albeit a few orders of magnitude higher (depending on whether it is consumer or business). Now it is relatively common for a startup to get 1,000,000 true fans and be both nicely profitable and relatively low profile.

A couple of days ago @startupdigest tweeted a link to a Business Insider article on the story behind Zappos where the founder told this related anecdote:

We would have that conversation over and over again about, alright, no one is going to buy shoes without trying them on. I would say, "No, last year 5% of shoes sold in the U.S. were sold through mail order catalogues," and they'd say, "Yeah but nobody is going to buy shoes without trying them on." And it was like, did I just say that out loud or inside my head, but let me repeat it, "last year, 1 out of every 20 pairs of shoes sold was sold through a mail order catalog." "That may or may not be, but no one is going to buy shoes."

I've had a similar conversation a half-dozen times in the past year. Just because the majority, even the vast majority, doesn't want to do something, doesn't mean there isn't a sizable and passionate minority who does want to do it. And because we are now an Internet of people actually using stuff, that passionate minority is a) increasingly reachable and b) willing to spread services through their online communities.

What's your startup's reserve price?

Gabriel Weinberg

December 14, 2011 9:44 AM

Here's some acquisition and financing advice: know your reserve price. That's the minimum price (easiest to think about cash in your bank account at close after taxes) that you'd be willing to receive in exchange for your company. Corollary: if it isn't cash, then it needs to be heavily discounted--to zero in many cases.

It's a complicated question, which is why I strongly encourage you to think about it ahead of time, and ideally talk it through with some people who've been through acquisitions and are "richer" than you. In the acquire-hire age, your reserve price can be tested a lot and quickly, especially at the early stages. If you are caught off guard, you can get sucked in quickly to something you may regret later.

Additionally, I think you should know your reserve price before seeking investment of any kind. Investors are generally looking for 10x+ returns. Quite frankly, if you have a valuation/reserve-price combination that doesn't yield such, you shouldn't be taking investment.

And there's nothing wrong with that! In fact, I've argued that no or minimal investment may maximize your financial outcome in some cases, and is at least worth considering.

Talking about reserve prices seems to get into fuzzy math really quickly. Would I take $2M but not $1M or $15M and not $10M? But you should really take it seriously because these differences do matter, especially at the lower end of the scale.

Yes, everything feels different when you have an offer in front of you. And that's the point of thinking about it ahead of time. It's hard when you have no real savings in your bank account to turn down $1M. But that can be the right decision, especially if you have any kind of traction.

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December 2011 Archives

DuckDuckGo used to run out of my basement

One million true fans

What's your startup's reserve price?

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