Building the Company

I was thinking of using LegalZoom.com to form the LLC, and using PayPal initially as the only way to do the credit card processing. Eventually I can expand with other payment options.

Soon I'll be needing a hosting plan and, as much as I like webcomindia.net, hostgator.com seems to be made for scalability with all of its varied payment plans by bandwidth, and hostgator.com seems to have their act together. In the end, however, I'm going to make a spreadsheet with the plusses and minuses of all these different web hosts per my needs, and see who comes out on top.

For the bug tracker, I forked the code of my software and thinned it down a great deal, then made it talk to an inexpensive (hosting-wise) backend of SQLite3. I'll also make this available too as a purchase or free download item.

I think it's obvious I'm going to need some ad revenue on the site, and I'm going to need to hedge my bets with content affiliate marketing / forum sites that are separate from this software site, but which can help direct traffic to my site too.

I don't know much about the details you're wondering about, but overall it seems you've got a good plan.

About web hosting, most of the mainstream hosting companies oversell (give you a seemingly huge package for only few bucks a month) because they don't actually expect you to be spending all of the space or bandwidth that they specify as the limit (so if they say you've got 250GB bandwidth a month and you really start spending 200GB there could be problems.

Really best quality web hosting are a bit more expensive and realistic such as Pair for example. Another option is VPS. I use Slicehost for that and they're quite good.

I would say, though, that if your requirements are small, almost any decent host would do, overselling or not, cheap or expensive.

Good luck

The wife chewed me out today. Not fun. Nothing like having your hopes called fantasies. She's peeved because she's got her Summer ahead of her because she's a school teacher with the Summer off, and she doesn't know what to do with herself yet. She's peeved because I wanted to talk to her about the business, but this time needed to talk about using a credit card at legalzoom.com and get other parts of the business ready. She's disappointed that I've had two startups already that failed, a third one now that's about to start, and says I've spent 5 long years with her waiting to see what can come from this. Then, to give away the software, that was a bit of hard sell for her, but she finally came around to it and I can't lose her faith for it. The first startup actually worked well except for the fact that Microsoft invaded my space and I had to move on, and for the fact that a buddy offered me a lucrative job at a software startup in its 5th year. The second startup failed because I had the kind of business plan that required too much capital up front and too much risk. The current startup is the web-based software on the FOSS model, so I'm hoping it will succeed.

If it weren't for the fact that the FSF actually got a lawyer to answer my questions and justify the $120 fee I paid, she'd be spitting bullets right now.

We then got into an argument about packaging. I mean, to do it right, I need at any given month about 15 boxes of software until I start rolling. The software needs to be in full color cardboard boxes with silkscreened CDRs and nicely printed manuals. It needs a T-shirt as well. I want to work on all this but then she shot that down. She handed me a gradebook software package. She showed me how the packaging was much different and cheaper. First, they used a thin three-ring binder with inserts. It used full color, laser-printed cardstock for the binder inserts. It put a silkscreened CDR in a clear CDROM jewel box, but you could do the same with a color laser-printed press-on label. The manual pages were hole-punched on greyscale sheets with images and text. And the whole thing was wrapped in celephane and dropped in a padded envelope. She says I must go with this design first, and then get some cash in, and then upgrade to nicer packaging. She also said she could get logo shirts done at a shop down the road for $8 a shirt.

You may be thinking, but what about the free downloads? I mean, I have posted this forum post on libervis.com, after all. Sure, it will have 100% free downloads. There's a catch, though. The catch is that my site will not permit cross-linking of the download link. Some server-side code will generate a random URL for it. Therefore, you will want to go come to my site, and while there I can present to you some Google AdSense ads in an appropriate way.

I then wanted to talk about eCommerce. She refused to pay for anything right now but PayPal, so that's what I'll go with until someone international emails me and says they can't use PayPal for some reason. She likes PayPal because you don't pay a lot for it. Plus, everyone uses it like crazy and it's convenient.

I spoke to her about making a rackmount server. I told her the hardware for a RAID-1 mirrored-drive system might cost me $1500 and then I could sell it with the software and web server on it for $3000. Hopefully that will fly and customers would care. However, she said that I need to just see who actually bites at this option before she makes that decision. Another thing that was reeling around in my mind (which I have yet to dare to reveal to her) is that you just can't stick Ubuntu Server, Apache2, PostgreSQL, and PHP5 on the server. You have to put some kind of web management thing on it and most of these suck right now. If you want to see a really cool web-based server management system for Linux, check out http://ebox-platform.com/. However, eBox goes in a different direction than me -- they use Debian instead of Ubuntu, they also don't mess with Apache2 or PostgreSQL config. So, unfortunately for me, I'm going to have to build this web-based server management system all myself and make it my very picky way. There goes another huge time sucker.

So, there's nothing like having your hopes and dreams dashed into the rocks. It's darn discouraging, I tell you. When you're an entrepreneur, the first time you do it, it feels very eccentric, if not insane. I mean, you are literally making clouds into airplanes and selling them, or opening up a hole in the sky and showing people a whole new world they never knew before. The second time you do it, you feel very discouraged. The third time you do it, if you make it this far, you are aware of avenues that lead to discouragement and eccentricity that borders on insanity. You are more careful, but a heck of a lot slower. The slowness can be discouraging to everyone wanting to spend time with you.

I went to legalzoom.com to form my LLC (Limited Liability Company). This is my first LLC -- previously I ran an S-Corp that converted to C-Corp, then formed a separate sole-proprietor company that never got off the ground and folded. I was previously part of an LLC with another relative, but that deal fell through. However, it gave me a taste of what to expect.

I didn't like how I got ripped on the price. The website says $139 + state fees in my case, and then said it would be $110 in fees. Then, it's an additional $30 for an Internal Revenue Service (Federal Gov) form that they'll pre-fill out for me to sign and send in. Okay, so do the math and that comes to $279, not the final total of $428. That's a difference of $149 that they don't explain at all on the website. What a rip! Still, however, it's far easier and cheaper to deal with them than a lawyer, so I'll just quit the complaining and move with it.

My wife will be pissed with extra $149 we didn't see coming for this, so I told her I'd work weekends at the mall or lose 20 pounds in 30 days just to make her happy with me again and/or pay off this debt! Talk about sweat equity. At least in Marc Fleury of JBoss's case, he had a wife that stood back in the first year to let him do his thing. Instead, I have to involve my wife every step of the way and it's rough. Word of advice? When you get married or re-married, keep separate banking accounts and only have enough debt that your wife could pay all the bills with her salary and still have $200 shopping money, a $50 family meal, and a $40 trip to the movies each weekend. However, my wife's first husband cheated on her, and did it with the aid of separate bank accounts, so I wasn't able to pull this separate bank account thing off with her. Talk about whipped.

Up next? Fees for web hosting, software packaging (Kinko's fees), and perhaps a PayPal business setup fee. When I get the cash, I'll go ahead and trademark the company, but that's VERY EXPENSIVE in the USA ($531 per trademark + fees). If people start to slam the site with too much bandwidth absorption, then I will be forced to look for donors for download mirrors, site content mirrors, and then hopefully have the cash coming in to upgrade the site's hosting plan to the next level.

It's interesting that when I went to the website for the domain I wanted to purchase, and noticed it was taken, it appears that an automatic registrar update record occurred on the very same day! That's what the WHOIS said. Coincidence? I would have thought so, previously, but not now.

Domain hosting has become a devious world. People can do things they used to not be able to do, such as:

* Put in systems that detect when someone purchases a .com, but not a .net, and then snatches that up based on fuzzy logic algorithms on the names and how many characters it is.

* Put in systems that detect which domains expired but match a certain criteria, then dump out a report for one to run over with a highlighter and purchase.

* Put in systems that detect how many hits are against a current domain that's registered. If it's the right criteria of characters and actually spells a word in the English dictionary, and then a human reads this list and thinks it's one to snatch up, they can have an automated system try and register it upon the WHOIS expiration date.

* Try out sites for 30 days. Watch how many web hits they get on sites. If it's enough hits, they go ahead and pay for the site. If not, they dump the sites.

* Simply going to a site to check on a name is perilous now because it could trigger a third-party to try and snatch up the domain before you do, looking at all the ones you tried in a secret log file that he pays for.

* Hosting sites to steal away your traffic based on typos, such as microsft.com or microsoft.co or microsoft.cm.

All of this is not really fair anymore and should be declined. Many domains are purchased not for someone to catch email or serve up reasonable content, but to put up phony content and advertising, parking there, clogging up the Internet with their trash.

The only way to beat these mean guys is to get lucky, build your own scripts that copy what they do until you get the domain you want, or try to pay $2000 or $4000 for a domain that's already registered and which is hosting fake content, if they'll take it. Someone needs to file a formal petition with the ICANN to get this knocked off. It could make the Internet non-functional eventually or end up making websites like postage4058.com just because all the variations are bought up already.

Libervis was right when he said that most web hosting providers undersell with low-ball prices and tell you unlimited bandwidth when it's really a throttled GB that's somewhere deep in the fine print. Then when they've got you, they know it's a hassle to switch over somewhere else, so then you're ready to move up the chain to other hosting plans with the same company. That's when you get the whopper of a bill. No, instead, you're better off to find a company that's upfront with you about bandwidth, which has a fairly linear line of bandwidth to cost, and multiple hosting plans to choose from as you graduate up the chain to more bandwidth.

Eventually, hosting your own server becomes the most affordable option when you've graduated to that level.

Also, there are so many options to consider. Does it have root access or does that put the server in an expensive league? Does it have at least 1GB of RAM? Does it support PHP and SQLite3? Does it come with a web admin interface? How much bandwidth does it support now? Do they automatically bill you if you go over or give you the option to have a "site down: bandwidth exceeds limit" message? How fast is the main website for the hosting provider as an example of its speed? How is the tech support? It takes a spreadsheet, and even then you're playing rhoulette because you really don't know all the ups and downs until you know all the ups and downs.

P.S. It would be cool if web hosting providers could produce "site down: bandwidth exceeds limit" message with a PayPal Donation link. Users could literally donate your next month's bandwidth bill so that they could access your site.

It seems that what she's suggesting is bootstrapping. I think that is a good idea. You don't necessarily have to have everything big and shiny at first and a smaller package can look quite attractive as well. Everyone will understand that a startup must start a bit cheaper at first. Besides, I don't think your business going to depend on shiny boxes.

Just to reassure you, I don't think this is a problem. I fully support that idea. GPL does not say you must offer easy or even free downloads, just freedom with the final copy one gets. And besides, how hard can it be just following the steps you designed on your site?

I think PayPal may be fine at first. For those who can't pay through it and email you directly asking about that you could have a Moneybookers account open just in case. It's free. Another option which I also use is 2CheckOut. It has a one time fee of $49 USD and then they just substract small fees and percentages from every sale you make which are a bit bigger than PayPal from what I know, but at least there are no subscription fees so what you pay always depends on what you actually earn. With 2CheckOut you can accept all major credit and debit cards directly so almost everyone in the world can pay through it.

Indeed. But one of the things that make an entrepreneur is persistence, not giving up. I'm sure you've heard that nine of every ten startups fail. Some would see this as a reason enough to not even try or give up too soon, but others would simply say that this just means you have to try at least 10 times because then you'll surely succeed.

Of course I understand not everyone is able to try ten times, but it all depends on how big and ambitious individual projects are. This is why I think bootstrapping is good, starting small and building up on it, micro by micro. Maybe I'll have to build 10 sites before hitting a real jackpot, but I started micro-small, from nothing, and so I can do that.

Is it really necessary to register a trademark right now? From what I know I think this is not a must. It is just an additional protection but you can live without it for a while till you become a big enough fish to justify it.

In Croatia.. I wont even be registering an LLC for my organically growing business, let alone a trademark. It's going to be a simple craft, as long as it's legally established I'll be fine.

Heh yes it's gotten quite bad.. I didn't even know of some of the things you mentioned. In such a jungle it seems to be a safest bet to come up with completely unique names which currently do not have neither of the three major .com, .net and .org taken and then register all three of them and point them to your site or subsites.

I think VPS is a perfect middle between hosting your own server or dedicated and shared hosting services. VPS gives you much of the control of a dedicated, but for an incredibly lower price. You do share a box with other people, but you have a protected space and resources to use.

For example, I currently have a VPS with Slicehost with 256MB RAM, 100GB bandwidth, 10GB storage for only $20 a month plus $5 a month for automated full backups. For $70 a month you can have 1GB of RAM, 40GB storage and 400GB of bandwidth. Good thing about slicehost is that they limit the amount of people per server so overloads are very unlikely.

One of the popular sites hosted by Slicehost is AjaxWhois.com, but there are others. They are also very open and have a nice support community as well as professional support. The two guys who run the company are almost always available real time to answer questions. They even hang out in an IRC channel on freenode: #slicehost (started by a friend here from Croatia). They're quite impressive.

Of course, if you decide to go for VPS I do suggest you look around for alternative solutions before Slicehost.