Andrew: Hey before we get started, these three messages. First, when you’re facing a tough business problem like, “How do I get customers?” Were do you go? Have you noticed that when you do a Google search for those kind of issues, you end up with a poorly-written, link bait article? Well, with Mixergy’s premium membership, proven entrepreneurs turn on their computers and teach you their techniques for getting customers, or press, or new employees, or anything else that you need to be an incredible entrepreneur who leaves a mark on the world. Mixergy.com/premium, check it out.
Next, when we needed to learn how to build Mixergy’s membership site, do you know who we trusted? This dude, Noah Fleming. If you want to learn how to create a compelling membership site, I recommend going to membershipblackbox.com. I’m a member of it, and I recommend it to you. Membershipblackbox.com.
Finally, after he sponsored hundreds of Mixergy interviews, if I ask you, “Who is Scott Edward Walker?”, what would you say? The answer, of course, is he’s the lawyer that specializes in helping startup founders. I’ve known Scott for years, and I have privately recommended him whenever a founder asked me for a lawyer. Scott Edward Walker of Walker Corporate Law. Here’s your program.
Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. The place where proven entrepreneurs come to tell you how they did it. How does a bootstrapper, an entrepreneur with no outside funding, create an online repair manual business that generates over $4 million dollars in annual sales? Kyle Wiens is the co-founder of iFixit. You probably know that company as the guys that take apart every new iPhone and every new product that comes out there that’s shiny, and they tell you what’s inside it. What their business is they have a collaborative wiki with a goal of crowd sourcing gadget repair manuals for every type of device imaginable. We’ll find out how he built that business. I also want to find out about his new product, his new site dozuki.com. It’s a site that lets companies create vibrant product manuals that their customers will actually enjoy reading. Kyle, welcome to Mixergy.
Kyle: Thanks for having me on.
Andrew: Hey, the $4 million number that I got came from Inc. Magazine. I think it was sales for 2010. Can you update us? What were the revenues for 2011?
Kyle: North of that, I’m not going to give a specific figure, but we’ve been on the Ink 5000 list the last three years in a row. 5000 fastest growing company list. We were actually probably I think the only retail e-commerce company to ever get on the Ink 5000 list running out of the garage.
Kyle: We started actually in the dorms and then sort of kept moving from garage to bigger garage to bigger garage.
Andrew: And the difference is of course, if you’re selling bits or advertising, it’s much easier to grow and to get those triple digit growth rates that Inc. Magazine likes to feature at the top of their list, but if you’re selling stuff then it’s a lot harder. Every time you double sales it means you’re kind of roughly doubling the products that you’re sending out.
Kyle: Right, it’s not just what you’re sending out. You have to double the amount of physical inventory that you have. And the problem is that if I increase my inventory by $100,000 in a year, so at the end of the year I have $100,000 more in inventory than I did at the beginning of the year, I have to pay the IRS 40% taxes on that $100,000 inventory that’s sitting on my shelf and I haven’t made any money off of. So it’s incredibly difficult to grow an e-commerce company bootstrapped fast. You can get venture capital and use that money to buy inventory and grow fast, but doing it bootstrapping is much more difficult.
Andrew: All right, I’m going to come back and ask you about the model and why you didn’t do what everyone else online seems to do, which is run an ad only business and make everything else for free. First, I’ve got to ask you this. I get a lot of entrepreneurs to tell me how much revenue they’re making. It feels to me like Ink does an even better job. Inc. Magazine gets even more entrepreneurs to do it. Why do you tell Ink Magazine what your revenues are? Seriously, let me take the tone out of my voice and just really understand. Why do so many entrepreneurs who run privately held companies do that?
Kyle: It’s a good question. For us, it was sort of a prestige thing. Honestly, we’re still calibrating what our 2011 revenues were. So I don’t have an exact number myself because returns still come in and they change the number around.
Andrew: Because if you say we’re an Inc. 5000 company or an Inc. 500 company, there’s a lot of credibility that comes with that, right? That means you’re a fast growing company and you’re real and it sends a message that it’s harder to send if you’re a bootstrapped company. Is that it?
Kyle: Yeah, that’s fair. There’s some credibility there. It’s helped us with getting employees to let people know that we’re legit and we’re not just some fly by night company, but there is an argument for not disclosing revenue at all. 37Signals doesn’t disclose their revenue to the INC. 5000 list and you know they would be near the top every year. So companies find different ways. We’ve debated it internally whether we want to do it or not and we decided that we were willing to let slip a few numbers just to let people know what was out there. The flip side is, and I guess the thing for entrepreneurs to know, is if you’re on the list you’re going to get calls from VCs on a regular basis.
Kyle: What we have found is that the VCs that call us off of the list are pretty low quality. So I would much rather be at a networking event and meet a VC and get funding from them than get funding from the folks who are cold calling me because I was on some top 5000 revenue list.
Andrew: Interesting actually. You really have to be a bottom of the barrel VC if you have to cold call people to get them to take your money.
Kyle: I get cold calls a couple of times a month and I have for three or four years.
Andrew: Well congratulations on the success. Let’s make sure the people understand the product and then I want to go back in time and figure out how you did this because really this is a company that in so many ways you wouldn’t expect to succeed – not a lot of funding, interesting/different business model, you’re in gadgets, you’re deep into gadgets. In researching you I saw more pictures of chips than I think I’ve seen in my whole life. But take me through a typical user who ends up on iFixit.com. What’s his motivation? What’s he getting out of the site?
Kyle: We found when we started that the big issue out there was that people had broken electronics and they had no idea how to get them fixed. You know, you can go and get a VCR fixed anymore. It’s just not worth the repair guys time to know how to fix it much less your money to pay him to fix it. So we realized that there were three barriers to people fixing things. One was they didn’t know how to fix it. Two was there wasn’t a source for parts for them to fix it and then three was it was either going to be too expensive or too much time.
We designed iFixit to solve all three problems by making the parts available, writing free open-sourced service manuals that reduce the amount of time it takes people to do a repair. So if you look at people saying I’ve got an iPod that’s broken that’s worth $40 to me. My time’s worth $40 an hour and the part costs $20. So if I can get them to fix it in less than an hour then it’s worth their time. If it takes them more than an hour then it’s not worth their time and they’re just going to go and buy a new one. So for us the higher quality the manual was the faster we could make an individual at fixing something, the more likely they were to buy a part from us.
Andrew: I see. And the revenue comes from selling parts?
Andrew: Okay. Got it.
Kyle: We got our start, I was in the dorms at (??) and I had an iBook clam shell, like the one with the handle which is like the greatest computer Apple ever made. I dropped it off the bed onto the power plug and it was one of those things where if you held the power plug just write you could get it to work. I knew there was just a cracked soldered joint in there so I figured I could take it apart and fix it myself.
So I disassembled it and I had a soldering iron that I had brought with me to college because I’m a geek. I added a drop of solder, let it cool, was tired because it was like 3 a.m. I figured I’d put it back together the next morning. Went back to put it back together the next morning and I couldn’t figure out how to get the computer back together. So I’m Googling for Apple service manuals to see if I can find something and there was nothing available. It turns out Apple has written service manuals for every product they make but they don’t allow you to post them online. So if you post Apple’s service manual to your site, you’ll get a cease and desist letter from Apple’s lawyers within 24 hours.
Andrew: So if people want it, how do they get one of these things? If they’re not posting it online, how are you supposed to get it? Are you supposed to call them up and they’ll mail it to you?
Kyle: No, they do not want you to have it.
Andrew: Oh! Not at all?
Kyle: There’s no way for a consumer to get the manual.
Kyle: This is the case with a lot of electronic companies. They don’t want consumers to know how to fix their stuff because if you fix it you’re not buying a new one.
Andrew: I see.
Kyle: So we came along and said that’s fine, Apple doesn’t want to write a service manual so I’ll write my own. So we buy Apple products and we take them apart and we write better service manuals than Apple’s ever written and we post them online. They’re open source and they’re collaborative. It’s a Wiki so if you see an error in our manual or you got confused at one point and you can just add a one line correction or clarification, our manuals are constantly getting better. So let’s say Apple and us release a service mail at the same time for the same product. Maybe Apple’s is better than us initially. Two years later ours is going to be better because we have thousands of people all over the world that are working to make it better.
Andrew Warner: Okay. The very first time that you did this, you just posted a repair manual on your. We’re talking about 2003. You’re just posting a repair manual on your site? For what?
Kyle: Well, so we weren’t sure. Our initial thought was, and this is iterating on the start up. We thought that, your computer is broken, your computer is broken. So you’re not going to be able to look up a manual on the internet. So we actually laid out an end design our first six repair manuals, and figured we’d sell them.
We figured we’d find a way to get the printing cost down later. So they cost us like $13 each to print, we were selling them for $15. Just to try to get (?). And we sold like 45 of them. And we said, this is not working. People don’t want to pay money for a manual. And so then I just exported from end design and their crappy HTML and posted online. And like the first day I posted it we had 10,000 hits. We were like, wow, this is something people want.
And so after that we never looked back. With our first print run was our only print run, and we’ve been giving the documentation away ever since.
Andrew: You know, how do you even, as a new startup, get 45 sales? I know that that’s not much and you didn’t bank your business on it because you saw that that was small. But for a lot of new entrepreneurs 45 sales of the first product is very good. How’d you do that?
Kyle: You know we experimented with, cuz we were selling parts, it was a physical thing. So we experimented with selling on E-bay just to see you know what the market and pricing was. And once you get outside of E-bay you can generally get better pricing for things. But I was sort of surprised. I mean, we set up the very first version of our web store. I mean, I was a freshman in college. I set up the store and then I went home for a week. And my business partner was here. And he called me up like three or four days later and said, hey we had a sale.
We were like, what, we put an e-commerce shopping cart online, we didn’t submit it to Google or anywhere else, and we have a sale in the shopping cart three days later. I have no idea who was on the 150th page of the Google results and decided to buy something. But we were shocked. And so that was, you know, (?) from there. And we did some things with ad words initially to get sales, but.
Andrew: And so to get the 45 sales you did a little bit of ad words, a little bit of luck from people who found you on what felt like the last page of a Google search result, and some e-bay. That’s what got you to 45?
Andrew: Okay. And you said that even back then you were selling parts. Was this on your website?
Kyle: Yeah, so we started out. I mean, we sold parts experimenting on E-bay at first and then set up an e-Commerce store and sold parts. And it was for like, initially, 3-6 Apple laptops. This was like in the Powerbook G3 Era. So the G3 Wall Street and (?) Laptops were sort of our bread and butter initially. And it’s easier to get going almost with a parts business because people are out there buying parts anyway. Even like, not the hard core do it yourselfers, but like just these service techs are looking for parts. And if they can’t find a PM new board. So it was relatively easy to get going with that initial batch of sales. Where like a software startup, like Tazooki, it’s harder to get your first 40 clients.
Andrew: I’m sorry for tearing down your story so in such depth. I do it for two reasons. First, I love to study entrepreneurs the way you guys love to study gadgets. I want to take the whole thing apart and understand what makes it work. And the second part is, as we’ll get to later, you’re a celebrity in our space. When a new product comes out people want to see what it looks like first, and then they want to see what the inside looks like. And we always know that you are going to do that for us. So I’m especially eager to learn about every bit about what you did.
So the first business was selling parts and you said, we’ll also create manuals? Or selling manuals and then parts?
Kyle: We started initially selling parts and then. We would actually, we would complain about our customers. The customers kept saying you sent me the parts but you didn’t send me instructions on how to fix it. And so it was like the customers were telling us like, we need this documentation. And it was interesting because this is like, we weren’t by any means the first to sell parts for Apple computers on the internet. And nobody was doing this sort of documentation. But our customers kept asking us for it. And so that was the beginning of, okay, well we’ll, that’s was what gave us the idea. So I think it was like 6 months between when we started selling parts to when we wrote our first printed manuals. And then maybe a month after that that we realized this isn’t working and I put them all online for free. And we’ve gone open source completely, socialist, you have all the information (?). Ever since.
Andrew: You and your co-founder Luke were still students at Cal Poly. What was the vision for this business? Was it to earn some side money while you were in school or did you say, there’s a future here in selling parts and we’re going to do it and be around the bits of the tech industry that we love.
Kyle: The very beginning of this, we were in the dorm. This was the beginning of our freshman year. And we wanted to meet girls. We were just brainstorming ways that we could do it. We said, “It would really cool if we had a projector because there’s a central area in the dorm so if we could host movies then girls would come to the movies then we could” . . . right? And we’re like, “OK, we need $900 to buy a projector,” and so we had this crazy idea that maybe we could sell enough computer parts to make the $900 to buy the projector. So that was how it got going. We made the $900 and then we never really stopped selling parts.
Andrew: And did you get girls from it?
Kyle: Initially, there was no vision. It was just like, let’s make some money to buy a projector. I was doing freelance web design for some folks and I was building like e-commerce websites for wineries just to pay for school and this was sort of a side thing, like, “Let’s make this much money and we’ll stop,” and we never really stopped.
Andrew: Why didn’t you?
Kyle: Because we were making so much money!
Andrew: I see. You know what? So here’s the thing that gets me. Help me understand this. It seems like your business just took off. Sometimes I talk to entrepreneurs and they say, “You know, Andrew, it just took off. I didn’t even plan for it. It just took off.” Other times I talk to entrepreneurs and they spent three years and nothing happened to them and then bam it goes. Am I understanding your story right? That it was just one of those things that the market was just ready for it? You had the product and it took off and brought in money?
Kyle: Yeah, and we were actually struggling. There are so many things that are easier to start a business now than it was back then. Our biggest challenge was getting merchant processing up and running. So we started in the middle of August and, I don’t know, we did something like $10,000 in sales that month. And then the next month, we had a merchant processing deal and they way that before the days of Square and PayPal being nice, things worked that the credit card companies treat you being able to process x dollar amounts as a loan for that dollar amount. So if I want to be able to process $30,000 in credit cards for the month, they know they’re going to give me the money ahead of time so I can charge a bunch of bogus credit cards for $30,000, take the money and run to Mexico. So they were really, really paranoid about giving us credit card processors.
So I think our first month in, like, September, we had a $30,000 limit and we hit that limit on, like, September 20th and we’re like, “Crap. We can’t accept credit cards anymore,” so we switched to PayPal and that cut our sales by, like, two-thirds because nobody wants to buy from an e-commerce site on the net that only takes PayPal. Then October 1st we’d get our $30,000 back and so we’d flip it and sales would go back up. I swear the first four months of our business all I was doing was trying to get our merchant processing limit up to a point where we could handle the sales.
Andrew: That’s so painful when you know that you’ve got something that’s grown quickly and you have to hold it back because you’re not being trusted.
Kyle: Eventually, the only way that we were able to get our processing limit up high enough was to get my Dad to cosign on the credit card payment form. It was horrible.
Andrew: How hard was it to get your dad to do it?
Kyle: He had always said, “I will never cosign on anything for you ever, because you’re going to get your own car, you’re going to buy your own house,” and this was the sort of situation where, like, I was being totally financially responsible. We were trying to get the credit (?), we were like, “Can we put up a $30,000 bond just so you let us process the $30,000 in credit cards?” And, you know, that was hard to pull off and so, eventually, he was willing to do it just because he knew there wasn’t really much risk.
Andrew: It’s shocking that they wouldn’t do it. You know, my friend Ben of Dwolla talks about all the time how irrational the credit card industry is and he’s trying to do something different with Dwolla but they’re irrational but they still have such a hold on the market that you have to dance to their crazy tune.
Kyle: Fortunately, I don’t think the problem we had exists anymore. You can go out and, like PayPal has streamlined the process for getting merchant processing seamlessly set up with them so it’s now a PayPal button. So I’m thrilled for the current generation of e-commerce providers because we’ve mostly dealt with it. Oh, the other tip is with Costco you can get like a premium Costco membership and then you can do credit card processing with that.
Andrew: Oh, they give you credit card processing at Costco now?
Kyle: They have a deal with Nova, one of the big credit card processors, and so for whatever the couple hundred dollar premium Costco membership you get pretty dang good negotiated rates for doing credit cards. It’s way better than what Square will give you because Square has to make money somehow.
Andrew: I love tips like that. All right. So then you put the manual up on-line. You get, did you say 10,000 hits, within how long?
Kyle: Yeah. Ten thousand hits, I don’t remember, it was in the first couple days.
Andrew: How? How do you get that? I still, this interview will not get 10,000 hits I worry. I don’t know.
Kyle: You know, we just we e-mailed it out to a bunch of the Mac sites and I can find the initial press release where we e-mailed it out but, I don’t know, we probably sent it to 20 Mac sites and everybody’s like, “Wow. These are great manuals. Nobody has done anything like this before.” This is like the classic start-up, like, we had no idea that you couldn’t write service manuals and publish them for free on-line, that that wasn’t an economically sustainable model, which is what everyone else had concluded in the industry, and so we just did it. And it worked and to this day, nobody else is doing this sort of thing in any other industry.
Andrew: What other industries could they do it in?
Kyle: Automotive, vacuums, toasters; you name it. Anything out there that consumers have and break. The manufacturers should be putting the service documentation out there. The parts company could be making money by putting the service documentation out. The appliance parts companies that have made any traction online are the ones with the most information.
Andrew: We’re going to come back to the narrative in a moment, but I have to ask you about Dozuki. Is the idea behind dozuki.com that if a car company decides that they’re going to try doing what you did at iFixit for cars, or a parts company in the car business wants to do it, that they can go to dozuki.com and set up this online manual that anyone can edit and contribute to and talk about?
Kyle: Yes. What Dozuki is, is a way for any company to have their own iFixit.
Andrew: Their own what? I’m sorry. Their own iFixit.
Kyle: We spent [??] building the software that runs iFixit. Our step-by-step documentation format is awesome. There’s an API that you can pull onto the iPhone or iPad. People can comment, and collaboratively work together to make manuals better. We also have a Q and A support part of it. We’ve been able to keep our support costs really low. I haven’t hired a new support person. Our sales have been hugely the last couple of years, and we’ve been able to keep our support costs flat by putting that onto the community.
We have a really compelling case for a way that we can have a huge scalable business, where we’re teaching people how to do tremendously complex troubleshooting and technical tasks. We have moms fixing iPods for their kids. Moms diassembling MacBooks, and upgrading hard drives. This is very complex [??]. We built software that allowed us to automate all of that.
What Dozuki is, is taking the software that allowed iFixit to grow so quickly and saying we’re going to make that available to everybody out there. Whether you’re a set up manufacturer, or a software company and you want to reduce support costs, there’s huge opportunities for it.
Andrew: All right. So, as we go through the story of iFixit…this is the kind of story that anyone who’s online now that says I want to do this for my industry can go to dozuki.com, sign up, and set up this kind of model for themselves.
Kyle: Right. [??]
Andrew: Any iFixit for their space.
Kyle: Yeah. Exactly.
Andrew: It wasn’t always a Wiki. Let’s go through and see how the idea and the business evolved. You put up these manuals. Before I ask you what the next step is, I’m wondering what the next step could have been, and why you didn’t take that direction. You see that there’s a lot of hits to be had for manuals. Why didn’t you say, we will hire writers, they’re going to create manuals, or we’ll do it internally, and we’ll sell ads against it. If you have a lot of hits, it usually means that you have an ads-based business. Why didn’t you go down that path?
Kyle: Because I wanted real money.
Andrew: What do you mean?
Kyle: I spend a lot of time with [??] founders, and I hear a lot of pitches, and I’m just really shy of ad-based business models. Part of it is that I completely agree with Wikipedia; that the moment you start taking ads, you lose editorial trust. We see TechCrunch, and we love TechCrunch, but can we trust TechCrunch’s editorial integrity? I don’t think so. I wish I could. I read everything on there, and they post a lot of great stuff, but I have to take all of it with a grain of salt because I know that AOL is beholden to larger forces than them. Wikipedia refuses to run any advertising. Wikipedia could probably be making, like what? Something like a half a billion dollars a year if they ran Google ads. But they’re not going to.
For us, it was really important that if you’re disassembling something, you have a huge amount of trust in us. You’re taking your laptop apart, you’ve never done this before, you’re following every instruction very literally, and if we tell you something wrong, that’s a huge issue. We find that the trust that people have to have in us is so extreme to be willing to take something apart, that we didn’t want to betray that by running ads.
Andrew: But if they’re selling the parts, couldn’t there also be a trust issue in people thinking, is he telling me to get this screwdriver and that screwdriver because he sells them both, or because I really need two instead of just the one?
Kyle: Yeah, and that’s fair. That’s where we back it up. The nice thing is that we show you the photos so you kind of know ahead of time. Absolutely. Over the years, we’ve earned that trust from people, but there certainly is a little bit of a conflict with us selling the parts and stuff.
Andrew: I have to tell you, I’ve been thinking the same thing about advertising. I run ads here at Mixergy, and I think, ‘When I talk about a lawyer, does the audience know that I really do know Scott Edward Walker’? Are they thinking that I’ve been friends with him, and I trust him because I referred him? Or are they thinking it’s because of an ad?
Ever since the premium membership on Mixergy has been taken off, I think maybe if I get rid of the ads and just let the audience pay, and if the audience believes in the trust that I’ve got and if they believe in the products then they’ll just keep buying and buying these memberships and we’ll do well; and if they don’t then we’ve got an issue. But there’s no conflict of interest potentially in the interviews. And I have been thinking about it, which is why I specifically wanted to ask you.
Kyle: I think it’s really important and a question you have to go through and what sort of business model are you going to build. There’s something very noble about not having to constantly go out and get advertising. As you’ve probably found, the deeper you get into the advertising space the [??] it gets. You can always [??] once the [??] adds up and make more money. And so that even within that ad space there’s a spectrum, and if you can get away from that entirely and find a way to be sustainable without taking ads I think that’s awesome. There are certain businesses where you just screen. You can’t run Twitter without ads. You can’t run Facebook without ads’ so, fine.
Andrew: I don’t know. I’ve heard some people make some really compelling cases that Twitter could have a business version that would bring in more money than advertising. I don’t know, but I get your point.
Kyle: I think that’s called [??].
Andrew: Called what?
Andrew: Oh, Yammer, right, right. There are other business tools, but I see, I get your point. First of all let me also say to the premium members, thank you all for joining and giving me this opportunity to think maybe I shouldn’t even run ads since premium memberships are going so well. All right, so you get 10,000 hits from these manuals. It’s time to create more manuals, right? How do you do it?
Kyle: I had never done anything with photography, and you know, particularly this [??] is so easy, but going through all of high school, college, I’d never done photography. So we bought a Nikon D70, which was like $1,000, and that was a pretty big investment for us. We just started taking pictures. And the first, I don’t know, three dozen manuals were all written by Luke and myself.
So, we were the ones writing the manuals, wrapping the packages, writing the product descriptions; we just did everything. And we still do write some of the manuals. And there’s a technical communication class here at Cal Poly and I went to the professor and said, “Hey, I’m supposed to take this class next quarter. It’s required to graduate. I’ve already been writing these product manuals. Would you be willing to let me challenge the class and write the manuals instead?” He said, “Sure.”
Andrew: Challenge the class to write the manuals for you?
Kyle: What’s that?
Andrew: The challenge to him was, would you be willing to let me challenge the class and have them write my manuals for me; and he said yes.
Kyle: I just said, “Can I use the project that I’m doing to challenge the class so I don’t have to take it?”
Kyle: So I just used it to get out of the class.
Andrew: I see. So you the work you are doing in your business counts as class credit? I see.
Kyle: And I did that again later. Everybody at Cal Poly has to do a senior project that’s a, you know, a big multi-semester project that’s supposed to be sort of a capstone of everything you’ve learned. And I used that to write the Inventory System. [??] So I wrote the Inventory System on the back end of shopping cart. That was pretty cool. I went to the professor at the end of it and said, “Hey, you want to see the code that I wrote?” And he said, “Well, have you deployed it already?” I said, “Yeah.” He said, “So it’s being used by thousands of people everyday to buy stuff from you?” I said, “Yeah.” He says, “I don’t need to see it.”
Andrew: If only every professor was that smart, and every class assignment was that applicable and that practical.
Kyle: So, this is my chance to pimp Cal Poly. I’m here in San Luis Obispo. Cal Poly is an awesome school if you want to learn the sciences. It’s one of the top schools in the country. And it’s very hands-on and lots of the professors here are like that.
Andrew: I’ve got to say, too, San Luis Obispo slow, as we called it in Southern California when I lived there. It’s such a beautiful place to visit. I’m thinking we should live there, Livey [SP] and I. We used to go there for a weekend and just have such a good time that I thought it’s close enough to L.A. but far enough that I have my space. I’d love to live there. And that’s where you’re living and doing your business right now.
Kyle: Halfway between San Francisco and L.A., and close enough that we can get up and talk with the VCs and the mayor if we want to; far enough away that I don’t have traffic and I don’t have to deal with a lot of the chaos. So I really like it. I figure if I run my own business I should be able to locate it where I want, and I don’t have to live in the echo chamber that is Silicon Valley. The thing is, I love Silicon Valley; I love San Francisco, but I don’t have to live there, and so I didn’t.
Andrew: What are the benefits of being there? Do you get to tap into the school in any way?
Kyle: Yeah, absolutely. We work really close with the school. As a matter of fact, I’m going tonight; we’re doing a startup weekend at the campus.
Andrew: I see.
Kyle: So we’re helping sponsor and judge, and Cal Poly’s giving Startup Weekend free space to run the event. And there’s a really vibrant startup community here in San Luis Obispo that nobody knows about. Just six months ago a company that started here called Punchd got bought by Google, as Google is trying to take on Square. So there are a lot of exciting things happening.
Andrew: All right, at some point you must have said, I’m doing too much. I’m creating these manuals. I’m also handing customer orders. I’m also programming the shopping cart and making sure that it handles inventory properly. And I also have a life. What’s the first person or what’s the first job that you hire for?
Kyle: The first guy we hired was my roommate from freshman year, to pack packages for us. So he would come in. It was a huge challenge running the business and doing school particularly in the e-Commerce thing. So we would be racing home from class at like 3 o’clock, trying to get all the packages packed for the 4 – 4:30 UPS deadline. And so we hired him to come in and do that. And he’s sort of a hacker kind of guy.
And one day we forgot to leave him a key to get into the apartment to pack the packages. And so he’s sitting outside and he’s looking at his watch and he’s saying like, if I don’t get into the apartment I’m not, you know we’re not going to get the packages out for the day. He happened to have his lock pick set in his backpack so he just picked the lock to our apartment and went in and packed the packages.
Andrew: You know, I’m looking at your smile and it just reminds me how great it is to be able to invent the life that you love. I mean, you’re talking about people who you love to hang our with who’s ingenuity you’ve love to just watch even if you weren’t doing business with them. You’re building a site that I’m sensing everything that I understand about you in my research and my short conversation with you now says, Kyle would be on that website and iFixit himself if he weren’t running the site. It’s that fascinating to you. It’s just, it’s incredible to build the life that you want like this. Does that just happen because you’re drawn to the stuff that you love, or did you set out intentionally to build a business that embodied everything that you care about?
Kyle: That’s a great question. When we started it was just a business, it was just a way to make money. And during the course of the couple of years when we were running it during school, Luke and I were very frustrated at the process of running a business during school. Because it was always, do I do homework or do I make the business make more money? And that tension was a lot of stress. So when we got to graduating a couple of years later, we spent a lot of times soul searching and saying, what do we want to do with the rest of our life? Do we want to go and work for a big company? None of us really wanted to do that.
And so then it was like, OK we’re going to run our own company, what kind of company do we want to run? And we sort of had this feeling that we were running a niche parts business. There’s thousands of niche service parts businesses over the world. Do we want to be just doing that or do, we knew we wanted to do something bigger. So we spent a lot of time looking around. Do we want to create our own product? We were both engineers and we felt kind of silly selling other people’s products when we knew we could be making our own. Where do we want to live?
At that point we only had a few employees so it would have been easy to locate out of San Luis. And it always came back to, what’s the kind of life I want to lead, and what’s the kind of company that I want to run. And, see if I have it here. Oh, no. I’ve got on my desk, I must have given it to somebody. There’s a book called Small Giants, that’s about companies that chose to be great instead of being big. And that’s sort of our (?) here. Like we want to be a smaller company that where it’s a joy to come to work. Where everybody here is a family.
And so that was, when I graduated that was sort of the vision is we want to build a company that’s the kind of company that I would want to work at for the rest of my life. And just as important the kind of company that’s going to make a huge impact on the global scale.
And so for me entrepreneurship is kind of a means to an end. Like, I like running my own company but I like making the world better much more. And so the question for us is, we’re just trying this niche (?) parts company. Does I fix It have the potential to be the sort of organization where we can change the material economy of the world on a significant scale? Or are we just going to make a few million dollars and drive a nice car? And so that was when we decided to take I Fix It beyond the max sector and expand it to everything. And that’s what we’ve been doing for the last five years.
Andrew: How do you find that thing that is you? Do you sit and journal? Do you go to therapy? Do you read books and then fill out the, you know, the end of the chapter when they have those blank sections where you’re supposed to answer questions? What do you do? How do you make sure? Because if it’s left to change you’re going to deal with the everyday problems of how do I keep my site up? How do I get more hits? Did I buy more inventory? Did I do my taxes properly? And you’re never going to get around to those bigger questions that really have the biggest impact on your life. So how deliberate, how, what was your process for doing that?
Kyle: Luke and I bailed on the U.S. and went to Russia for two weeks.
Andrew: For how long?
Kyle: We were there I think two or three weeks. We went to Norway, Russia and Ukraine. And we were just looking and saying, we want. We had an idea that we wanted to help people start small businesses doing product engineering and so we spent a lot of time chasing around and looking at ideas and saying, how can we have the biggest impact? And so it was sort of like two, three weeks away from the business doing nothing but talking to each other and sort of thinking about what sort of world we wanted to leave. And at the end of that we realized that what we were doing far more potential than we had previously thought so we decided to go all in. That was a few months before we graduated so that was the spiritual journey that said all right this is the trajectory we’re going to go on for the next ten years.
Andrew: I’ll get back to the narrative in a moment but I have to stay a little bit off course here just to make sure that people in the audience understand that this isn’t just about selling screwdrivers and tools. I saw this video as I was researching you that had a real impact on me that showed what iFixit is doing in the world.
When someone uses iFixit to repair, say an old iPhone instead of chucking it and getting the new version, can you talk about what they’re saving that iPhone from and the people who interact with that iPhone. This is the kind of impact that you have. I sometimes feel like if I’m not a Warren Buffet or a Bill Gates I can’t have any impact on the world because look at how much bigger their reach is. Then I see your video and the impact you’re having and I want the audience to see that they could do this too.
Kyle: We are on a danger course toward a society where everything that we buy we consume briefly and then throw away and it sits in a landfill. In the process of manufacturing it we’re polluting the environment, we’re taking advantage of labor that isn’t necessarily treated well in Asia and then we’re just using something very briefly that was a tremendous amount of work to manufacture and then tossing it aside.
If you think of your parents or their parents, when your parents were growing up if they had a Red Ryder wagon they were playing with and the wheel fell off grandpa put the wheel back on and fixed it. Now if you have a wagon or a bike and it breaks you just throw it away and you got to Walmart and you buy a new one. That’s not the kind of world that I want to live. I think that if we can’t fix our things we don’t really own them and we’re almost selling our soul to all of the things that are around us and spending so much time consuming them that we never actually get to think about who we are and what they say about us.
Andrew: Talk about too, when we talk it out it doesn’t just go and sit in a garbage can for the rest of our lives. It goes somewhere. In the video I saw there were people standing in front of what looked like almost an ocean of electronic goods, not water but you see electronic goods everywhere – computers, keyboards, phones, and then you see these people who are supposed to do what? What are they supposed to do with them and what’s the impact on their lives that they have to take this junk that we didn’t know to use screwdrivers and fix? I promise the audience of entrepreneurs we’ll get back to the business in a moment but go ahead.
Kyle: Your iPhone has 17x as much gold in it by weight as that much gold ore if you mined it out of the ground. There’s a lot of copper. There are a lot of very valuable materials in it. So what ends up happening is there aren’t really regulations on what happens to electronic waste. So the folks in Africa and Asia buy the electronic waste, they buy the non-functional electronics from us and then they mine them for raw materials. So they’re ripping apart computers to get the copper inside. There’s an ancient process called [??] that’s how we used to mine for gold where you take sulfuric acid and cyanide and then you grind up the gold ore and the gold binds with the cyanide and precipitates out and then you throw the solution away. So they’re using this.
They’re grinding up electronics, mixing it with sulfuric acid and cyanide, getting the gold out of it and then dumping the sulfuric cyanide mixture into their water table. We did Ph tests on the water at the site that you saw that was in Ghana, the capital of Ghana, not very far from the capital building at all. The Ph of their water table was zero. So they’ve completely polluted the environment. They don’t understand necessarily what they’re doing. They’re just in a situation where they found a way to make a living. They don’t have any idea of all the toxic chemicals that go in because our manufacturing and dis-assembly processes are continents apart.
So what we have found is that responsible electronics recycling is a big part of the solution but the thing that is driving it is our never ceasing consumption. What we found was that [??] could be a strategic lever by increasing the amount of time that we use things for. So if we use everything that we have for twice as long we’re going to consume half as much stuff. It’s a conservation strategy to get all of us thinking about the things that we have, using them longer, consuming less and also teaching the folks in Africa.
I was talking to these kids that are in this scrap yard and they’re burning electronics. I’m like do you realize that the computer that you just burned could have been fixed fairly easily? He’s like oh no I didn’t know that. I just wanted to get the copper out. So I want to give those guys better jobs by teaching them a sustainable way of life which is repair, which is taking something that is nonfunctional and learning how to fix it and doing something more. If you mine a computer for raw materials maybe you’re going to get $.50 to a $1 from it. If you fix it and resell it, maybe you can get $5 or $10.
So this is a way for these guys to have a much better way of life, a more sustainable life style. It’s also when, at this scrap yard these guys are burning these electronics to get the copper off. You have a pile of wire you want to burn the plastic off to get the copper. Every single one of the have breathing problems from the toxic fumes in the plastic. So this is a way…
Andrew: So burning all these electronic, of course you burn all these electronics and bad things are going to happen. OK, so let me see if, let’s go back to the story here. I just wanted people to understand the kind of impact that an entrepreneur like you could have. You decide you’re going to go beyond Apple products to the rest of the world. At what point do you say we need to go to Wiki. We can’t keep creating this all ourselves. We can’t keep hiring people. We need to create a Wiki where the world engages in this.
Kyle: That was on that soul searching trip when we went to Russia. We realized that, I think it has a scale. What we’d done works really well. We nailed a niche. So, we had done something in the Apple [??] that nobody else has done. We have support forums and we have step-by-step procedures on how to deal, we’ve got the parts and the tools. He had the entire ecosystem for this one very vertical niche. So how do we scale what we did for Apple products to every other product out there? And it was a [??] like how do we impact the world. And so that was like “hey let’s put an edit button on every step”. It’s funny, if you look at the site now and you look at it five years ago before we brought out the Wiki it wasn’t that different. We just added another button.
Now on the back end it was 100,000 lines of coding to do, make a collaborative image editor and a step-by-step Wiki. We had to build it all from scratch. We weren’t able to build on top of MediaWiki or anything like that because it was just such a unique challenge. But that was the moment when we said, in order for this to work we have to allow everybody to share their expertise because we had some electronics repair experience but I don’t really know how to fix cars, I’m trying to learn, and so we built a place where the people who know how to fix cars can teach us.
Andrew: Why didn’t you say “we’ll hire people to do this online. We’ll get writers. Writers aren’t really expensive. Maybe some of them will be hobbyists”?
Kyle: Because there’s just know way to scale that effort. I mean, if you look at, probably the biggest service manual company is [??], there owned by the same British company, and they have manuals for a couple hundred cars. I want a manual for every car. I want a manual for every appliance. So this scale, we knew that there was just no possible way to hit that scale with paying contributors. Nobody is ever, I mean, and there wasn’t the business [??] to make that work. Because I want to have a service manual for a 50 year old calculator where there’s never going to be any model, any financial model for paying somebody to write that.
Andrew: A couple of days ago I talked to Jack Herrick of wikiHow about how he grew his Wiki and got people to contribute and he said that it was very lean days in the beginning. It felt like nobody was participating and the participation was pretty junky and it got a little bit better and a little bit better. It’s one of those things about Wiki, you have to wait a long time. What was that period like for you in the early days?
Kyle: I wouldn’t say that we’re out of the woods by any stretch of the imagination. Wiki has a great site they’re much bigger than we are. They are much shallower than we are. So we will go very deep on the topic and write a complete service manual for something. We’re still to figure that out, how we can incentives and get people to add more manuals. We’ve got about 5,000 manuals now. People are adding more all the time but we’re still trying to figure that out.
Fortunately, where wikiHow is an ad-supporting business model, we have a profitable [??] business that was able to fund, so it took us along time. Like wikiHow they’re great. They built theirs on top of MediaWiki. We had more rigid requirements than what they needed and so it took us four years to write the software to make a Wiki. So in the meantime we were continuing to grow the [??] business to pay for my small team of software guys to build the software. That’s a really long time if you think about pivoting a start up to take four years to pivot but that was how long it took us to build the software.
Andrew: Four years and then when you launched it what happened? I feel like we’re all learning to put out a minimum viable product, get into customer feedback then improve and adjust and all that in public because we’re warned that if you wait four years you’re going to have a disaster on your hands because the product will be incompatible with the customer base. That didn’t seem to happen to you or did it?
Kyle: Well if you’re profitable you can sort of skip some of those roles. So that’s a great guideline but if you’re profitable already then it’s OK to take your time and do it right. So I’m a perfectionist and I knew what we wanted. And the other thing was in the process it took us four years to flip the switch and make them available publicly but we were using the software internally to (inaudible) within six months.
Andrew: I see.
Kyle: It was a product that had customers that were using it. They were just customers internal within I Fix It. We just kept making it better and we knew when it would be good enough. We weren’t going to release it until it was good enough.
Andrew: You’re still learning how to improve the product and get more people, I should say, to participate. What have you learned over the last few years about getting people to participate in a Wiki environment where they have to create content, where they have to edit content, where they have to accept that some people will delete their content. What have you learned about getting those participants in there?
Kyle: We came up with a permission system that is different, I haven’t seen anybody else do this but it’s simple enough that I hope everybody does. We have a stack overflow type system where people earn reputation over time the more they contribute. If people successfully complete a repair you get 30 points or we distribute the 30 points between the authors of the document.
The challenge that we had was we had really professional quality content that was our stuff initially. Then users are contributing content and we know that their content isn’t going to be nearly that good. With the new content you need a complete laissez-faire, Wikipedia style system where anybody can make an edit and it shows up immediately. Because that’s how you encourage people to make contributions. It’s important for them to see the edit appear immediately.
At the same time we need to protect the quality of the existing documents. Wikipedia solved this problem by locking things down and having armies of people. We didn’t have near as many people so we did is set on every document is what we call a reputation threshold. Let’s say your reputation is 10,000 points and the document’s reputation threshold is 15,000. Your edit would go into a queue and have to be approved by somebody with more than 15,000 points.
We took Stack Overflow’s closed rep system and said all right, that’s great. Let’s just use that as the permission system for the Wiki. Anybody with a rep that’s higher than that can approve a change. Anybody with less goes into a queue and waits for somebody with enough rep to approve it.
Andrew: I’m really glad that’s true and that’s in place because in researching you I went in and I tried to edit. I said what if I screw this up? I, of course, went directly to a MacBook manual which would have been a popular one and I didn’t want to screw it up. I saw that I couldn’t. I have to get permission.
Kyle: Actually it looks to you as if you made the edit and it’s successful and then there’s just a pop-up at the top of the page that says there’s the current version of the document that’s been approved and then there’s sort of the head of the (inaudible).
Andrew: Did you really learn that from learning Stack Overflow and seeing how their Stack Exchange product was using reputation?
Kyle: Yeah. We’ve worked with those guys. I know Jeff Atwood. We’d been talking with them back and forth for a long time. We were developing something sort of similar and then they came out with theirs and we said wow, what they just did was way better than what we were doing. I went to Jeff and said hey, what you’re doing is awesome. Can we copy it? He said sure. He said hey, your badge names are awesome. Can we copy those too? I said sure.
Andrew: What was yours that wasn’t so good?
Kyle: It was just more complicated. That was years ago so I don’t remember off the top of my head. We had a lot of ideas and we were starting to implement something. Sort of the kernel of simplicity of what he did was phenomenal.
Andrew: Tell me a little bit more about the motivation. I’ve got to tell you I was looking at Dozuki. Beautiful product. I can see your attention to detail in it. I can see that the price is right for anyone who wants to add manuals and let their users edit them. There’s so much more than manuals. There’s a question and answer, there’s a community.
What I was thinking was if I put this thing up and nobody contributes to it I’ll look like a fool. Not only do I not want to look like a fool. I want to take that energy that I have when I launch a new product on the Dozuki platform or anywhere else, I want to take all this energy and direct it to something meaningful. I want to know what do I do to motivate people to contribute? What do I do to motivate people to add content to the manuals that they create if I’m running a Wiki on your platform or, frankly, any other platform?
Kyle: It is really hard to start a Wiki and be successful. There’s a reason that Wikipedia is the only really massively successful Wiki out there. There aren’t very many other examples. My suggestion to people that want to start a small site is to not bank on the success of a Wiki. Instead put out amazing content. Have a path, maybe, for users to help you improve the content. Fix typos, that kind of thing. It was sort of embarrassing when we put out our Wiki.
The first batch of changes for the first few months was people fixing typos that had been on our site for five years and we had just never caught. Focus on creating really compelling, useful content that people like, and over time build a community around the content. And I wouldn’t even flip the Wiki switch on for a while. I would leave it as a stand-alone content site. Get people interested and engaged and make it a Wiki link.
Andrew: That makes sense. So just use it’s as an easy platform for your people in-house to create the content, to create the manuals. Because, frankly, manual creation products think out there. You have to do a lot of photo editing before you upload. You have to do a lot of adjusting for each individual manual. So you’re saying, “Make this easy and then open it up to the rest of the world if time comes.”
Kyle: Yeah, and think about. Let’s say, you know, you’re a small startup, Y Combinator, hardware startup or, you know, you got your own software and stuff. You’re going to set up your support set. You’ve got to write your initial documentation. You want to crowd source support so you can lower support costs over time, but, you know, initially you know you’re the one going to be the one doing support. So just do the support.
Set up an interactive Q&A site that, you know is… we let you set up [??] Q&A site for product support. But understand that your customers aren’t going to be answering questions for the first six months. You’re going to be the one on there posting really good answers. But the cool thing about that is because you’re the one there, like, you know that the [??] quality that starts off the site is going to be really good.
Andrew: That’s a good point. The teardown. I heard about you…
Kyle: One of the things I mentioned is that I don’t know very many Wikis out there that actually let you start out in non-Wiki mode and then switch it to a Wiki later. That’s something that’s kind of cool about Dozuki is the whole thing is a Wiki. You get the tools of a Wiki for your team but you can leave it as a non-public…so the public can’t edit things until maybe at some point [??] decide to do that.
Andrew: The teardowns. Going back to that. I keep reading about you every time there’s a new phone that comes out. Where did this idea come from?
Kyle: That’s a good question so I don’t ever…we rarely come up with our own unique ideas. There was this awesome guy in Japan named the Kodawarisan, his site is the Kodawarisan. Every time new products came out, at least, Apple products came out, he would take it apart. I visited him a while ago just to say, “Hi, and thanks for the idea.” And he told me Kodawarisan means fanatic in Japanese. And he was just this Apple gadget freak. He loved this stuff. He’s actually a doctor, so he’s not trying to make any money off this. He just does it for fun. So he would take this stuff and post the photos and it got a lot of traffic but it was all in Japanese.
And so we started doing the same thing in English and, you know, we took it much to the extreme. He would post six photos, and we would post fifty. And we, you know, really dialed in the photography and spent a lot of time investigating the electrical engineering and identifying all the circuits inside. And eventually he got to the point where he’s, like, he didn’t care about doing it himself, he just wanted to see inside and so he would email me [??] the products and say, “Hey, are you going to take this apart, if so, then I won’t bother.” So he’s a great guy, we’re still really good friends, but he was totally the source for the idea [??].
Andrew: So when you saw it and wanted to use the idea, did you feel like he was going to think that you were copying him, that there would be any kind of hassle in the industry because of it?
Kyle: No, I mean there was a lot of demand for this sort of thing in English, we’re not doing it in Japanese. So he still does disassemblies every once in a while and post them in Japanese or he’ll take our photos. We’ve always given him permission to republish our photos. So I think that’s’ a way that we’ve been able to garner a lot of goodwill is, we never restrict our photos.
We put them out there and tell everybody they can use them. They’re all Creative Commons licensed and we give them away to the press. The New York Times and the Wall Street Journal [??] our photos on a regular basis because they’re free and they’re trying to keep their budgets down. So that’s the way that we have been able to get exposure by giving the product away.
Andrew: Yeah, phenomenal exposure. Can you tell my audience about what you did when the first iPhone came out?
Kyle: So when the iPhone 3G came out we realized that the…we were competing…there was some other parts companies that had got the idea that, “Hey, this is a pretty cool teardown thing, like, anybody can take something apart and take pictures”. So you think about, like, “How do you keep new entrants out of your market?” And so it ended up turning into a race where every new gadget that would come out Engadget would link to the first one, whatever the first teardown was. And we might have gotten beat once and that sort of made us realize we need to get faster.
And so the iPhone 3G came out on, I think it was June 11 of 2008 and it was a day and date release, so the same date, worldwide release. The iPhone initially was U.S. only and then 3G went worldwide. And so it turned out that New Zealand was going to be the first place where the iPhone went on sale clockwise. It was something like 21 hours before here in California. So Luke and I decided that we needed to send somebody to New Zealand to take the iPhone apart.
And we’re looking at each other, like, “Shucks, who has to go to New Zealand to take this phone apart?” And we ended up flipping a coin and I lost so Luke got to go to New Zealand, waited in line for a day, bought the [?] at midnight New Zealand time. We found somebody that had a coffee shop, let us use their office in downtown Auckland, New Zealand, got the disassembly done by 4:00 a.m. Auckland time. We published it, and Gadget was running the story of our tear down, while they were running the story, said ‘hey look, everybody’s waiting in line outside the Apple store in San Francisco.’
Kyle: So that was pretty fun.
Andrew: When you get a hit from in Gadget, when they write about you, how many hits do you get to your site?
Kyle: I don’t know specifically. I [?] Gadget lately, but our iPhone tear down did over, our [?] tear down did over a million views, our [?] tear down did over a million and a half views. It’s pretty much every single text site on the net links to us at once, and for a long time, that was a huge server scaling challenge. We started out at [?] Networks with a little shared server and every time we would have one of these tear down events, I would be like screaming for the servers, ‘give me another server, give me another server,’ we can’t handle this traffic, and they would always say ‘oh, you can have another server in 24 to 48 hours.’ That was never good enough. We never licked it. We kept having performance issues.
At one point, Yahoo.com linked to us off of a story on their home page, and I thought we were getting DOS. I had no clue, I couldn’t even SSH into the server there was so much traffic, and eventually I started tailing logs I found to be Yahoo and from our referral logs is how I found out that they were taking us down. Eventually we switched to Amazon and that fixed all of our problems, so we automatically scale servers dynamically when we have these traffic spikes with us, just add more servers. Until we did that, and we were, I think, fairly early on easy, we had been there for several years. We were, I think, one of the first e-commerce companies on ec2 [SP].
Andrew: All right. I’ve got to do a quick plug and thank someone in the audience, and then I want to come back and ask you one important question I’m writing down here that several people in the audience have asked me to talk about, but I don’t get enough entrepreneurs like you to ask this question of. The email I’m talking about is one that I got from a premium member who took the PR course and he got written up in Fortune magazine. Gaurav Sharma of Right Buy. He took the PR course, he learned how to pitch an angle instead of pitching his own start-up, and if you read Fortune magazine’s article titled, When You Work for Yourself, Can You Take Time Off.
You’ll see him talk about how he handled his client obligations when he took time off. Not only did he get that PR, he had even emailed it, looks like he emailed Stella to thank her for leading that course, and of course, Stella’s the right person to teach that course because she and her company, Fee Fighters, have been getting phenomenal press for years, even though they don’t have a PR company working for them. They do it all themselves and so what they learned is what they taught in the Mixergy premium course and what Gaurav and others studied in that course.
That’s basically the way premium courses work. I find an entrepreneur in a business, a start-up that does it themselves, does something phenomenal like PR, and I have them come on and teach other entrepreneurs. If you’re a premium member, you have access to all of those courses. You don’t have to pay for any one of them individually. You just get access to them all. You just go to mixergy.com/premium and just start with any one of those courses instantly.
If you’re not a premium member, I hope you do sign up and join us, and get the kind of results that Gaurav has been telling me, and other people have been telling me via email. mixergy.com/premium, and if you are a member by the way, thank you for doing this. As I’ve been talking to Kyle, it’s helping grow the business, helping me get researchers like Ari [SP] who did all this great research on Kyle, and I just had to sit here and go through in preparation for this interview, and it’s helping us improve the site all the way around. Thank you for being a premium member.
So here’s the thing. I don’t get a lot of bootstrap e-commerce entrepreneurs here, Kyle, who’ve succeeded to the extent that you have, and I get a lot of requests for this kind of interview. Unfortunately, guys like you don’t grow on trees, so for the people who are out there in my audience who are bootstrapping e-commerce sites, what big advice do you give them for making this work instead of going over to advertising the way most other people seem to be?
Kyle: Well, cash flow is everything. When you’re running an e-commerce set, it’s very easy to be profitable and go bankrupt, so understanding the tax implications of increasing your inventory, managing your inventory, [?]. These are the things you’ve got to focus on every day. Sales are one thing, but managing inventory is really, really critical. The other thing is to realize that Ad Words, there’s a lot of people probably smarter than you and better at Ad Words than you on there, and we have never really found that Ad Words – when we get sales from Ad Words, we’re basically buying market share. We found that we can break even on Ad Words, but it’s somewhat rare to find Ad Words, Key Words and Buys where you can actually make money off them.
Andrew: So the best way to get customers then is what, if not ad words?
Kyle: Some other way. Don’t pay for advertising, find some other way. You know be creative. My favorite example with creative marketing is the Run Keeper guys. When he first starting out, he dressed up in an iPhone suit and then ran the Boston marathon. I can’t imagine running the Boston marathon, much less in a [??]. So kudos to him, and I think that was the thing that put them on the map, and now they’re awesome. So do something crazy to get your name out there.
Andrew: And if you can’t come up with it yourself, do what I Fix It did. Look around the world and see who else is doing something creative that you can borrow or bring back to your industry. Everyone in the audience has already been on I Fix It. If tell them to go check out I Fix It, I think I’ll just go tell them to check out a site that they’ve already experienced. What I’m going to recommend instead is that they check out Dozuki. Where’d you get this name, by the way? Because I’ve got to spell this to people to make sure they go to the right place. Where’d you get the name Dozuki?
Kyle: Dozuki is very precise Japanese saw for doing the rib cuts. So if you talk to any Japanese, or any fine wood worker, and they have a Dozuki. And I was looking for a precise tool that did the job well. But there’s one thing you have to know about a Dozuki before you get to use it. If you use it like a normal American saw and you’re pushing back and forth, you’ll break the teeth off the saw immediately. You have to pull back, [??]. You pull back. You cannot push forward, it’ll break the teeth off. So that’s just a tool that you have to know one thing about before you can use it. And that’s what Dozuki is. It’s a way of teaching people how to do awesome things in the real world.
Andrew: And the product is just beautiful. I recommend not just checking out the website to get a sense of where Kyle is going in the future and what key ideas worked for him at I Fix It, and now he’s productizing them. I think the product video, Kyle, that you have on the site, low engagement. I only had to spend about a minute and a half, and I totally got the product overview, and I understood it. It’s one of the best videos that I’ve seen for new products. It just helped me understand everything.
Kyle: Thank you. Well, our inspiration for that video was Adam Lisagor [SP] and Sandwich Media. They do awesome product videos, and we saw what he did. And yeah, I met him a few times, and he’s a great guy. So we said, well maybe we can do something that is partially towards what he has done, because I think his product videos are phenomenal. And I think we managed to do something that was good enough for us.
Andrew: I like how, not only do you get your ideas from other places, but you’re willing to talk about it and not pretend that you invented everything. I think it gives us a good perspective on where ideas come from. All right, Kyle Wiens of Dozuki and iFixit, thank you for doing this interview. It’s great to hear your story.
Kyle: Absolutely. Great to be on. Thanks for having me.
Andrew: You know what, thank you really for just appreciating the vision here of learning about entrepreneurship. By just tearing apart your story and picking out the key ideas and seeing how you did it, and then going out and experimenting in our own lives and using some of these ideas. I couldn’t do this without guys like you saying, I’m going to go… Because frankly, you get like that when you do a teardown, more traffic then you’re going to get for this whole interview. I hate to say it.
I love the audience here, but you’re clearly not doing it because you’re hungry for traffic. You’re clearly not doing it because you’re hungry for sales. You told Ink Magazine that your sales are good. Even though you didn’t tell me, I still understand you’re not doing it for that. I’m seeing, and I see in this conversation this vision of really wanting to help people, and I appreciate you joining me in that.
Kyle: Well, the world needs more entrepreneurs.
Andrew: Thank you, and guys like you who are willing to talk about it. I actually can talk about so many things except the things I’m really passionate about; that’s when I start to trip over my words. So I’ll just leave it with this, with two short words. Thank you. Bye, everyone.