Remember the guy who spent $250,000 on a premium domain name?Mike Sullivan
You certainly remember Jon Yau, don’t you? He’s the guy who talked his wife into letting him spend $250,000 on a domain name to start an online business. I first published an interview about Stockphoto.com with Jon in January of 2014. I recently had a chance to catch up with him and see how things are progressing.
Mike: It’s been a couple of years now with StockPhoto.com running as a business. How have things evolved on the site?
Jon: It’s been two years since the launch of the site – going from 57,000 images to now 20 million images. This initial 24 months, as you would expect, was slow going. Signing up photographers, trying to make sense of Analytics and conversions as well as project managing the web development – all very slow when you’re the solitary pair of hands on deck. So about a year ago, I asked Nick Kenn (General Manager of Flippa) to be the inaugural member of my advisory board. Nick has a great background in online marketing and now runs one of the best two-sided marketplaces on the web.
Under his mentorship, I have been able to arrive at an unbiased assessment of my business (“it’s shit – but it has potential” – my words, not Nick’s) and come up with a roadmap to, hopefully, realise its potential. I’ll elaborate below.
Mike: What lessons have you learned about owning a premium, keyword domain based business? Has the ride been what you expected?
Jon: This particular exact match domain has been very good to me. It’s done exactly what I had hoped it would do – i.e. provide a steady stream of targeted traffic against which I can throw my inventory and web design to see what sticks. Until I get the mix right, the EMD would provide a guaranteed level of traffic to test against. Of course, you’d have to take into account the CPC of your target keywords, your gross product margin and weigh it up against the cost of acquiring that EMD.
As an example, using the Spyfu tool – http://www.spyfu.com/keyword/overview?query=stock%20photo shows a cost per click of about $9 for “stock photo” for an estimated 49k searches per month. Spyfu estimates Shutterstock (the biggest player in stock photos) spends $100k a month on traffic. I don’t use this yardstick as the sole indicator but on this basis, I was happy spending $250k upfront on an EMD that brings in the traffic that it does.
The bumps on the road so far (thankfully) have not been fatal but I think it was because my expectations were realistic. I was a one-man band and I was confident in my ability to get to MVP stage ONLY. Having the advantage of a traffic EMD meant I could focus on the product, photographers and infrastructure. About 80% of visitors are first-timers, so given that I expect to be making a lot of rookie mistakes (like bad web design) – I am able to redeem myself and test any improvements on another batch of new visitors. If I do it right (and my inventory grows), then some of those first-time visitors become repeat customers.
Stock photos are a simple product. Obviously there are product and industry subtleties but…you search, you find, you pay, you download. No quotes, no negotiating, no revisions, no variations, no physical logistics (like warehouses, delivery, returns etc). This was an important consideration. If I am to get away with bootstrapping this one, then being able to minimise these manual functions and then automating the rest meant that I could work on other priorities.
The biggest costs of the business would be hosting and photographers’ royalties. Cloud infrastructure has greatly reduced hosting costs (and likely to reduce some more in the future). A startup in this niche would have a predominantly variable cost structure — meaning I could afford to bootstrap it. I could take small steps without having to commit to a large, upfront expenditure (assuming, of course that I could generate sufficient sales).
Mike: Tell me about your two new partners? What do they bring to the table and how do they supplement your passion and skill set?
Jon: After two years of running the Stockphoto.com MVP, I’ve learnt that:
- More inventory + Better search = Higher sales
- Better website design = More searches
- I need help getting more quality inventory.
- I need help with Search and Design.
In early 2015, I brought on two co-founders giving each a stake Stockphoto.com via a stock options (and revenue share) agreement.
Luke Evans is Stockphoto.com’s awesome CTO. He helped re-architect Stockphoto.com and is our AWS and Optimizely expert.
Lee Torrens is Stockphoto.com’s Photographer Advocate. He is the stock photo industry’s leading blogger and what he doesn’t know about the industry isn’t worth knowing. Lee is charged with building on our inventory of quality images.
So, in effect, we’re getting the platform to a point where we can scale quickly. Then we’re scaling quickly J by bringing on more inventory.
We would then work on better search and UX to improve conversions.
I met Lee shortly after I bought the domain. He was instrumental in helping me source seed content to launch with. He works mostly with Canva.com now but I’ve got him part-time in a co-founder role. Lee is based in Argentina (and hails from Melbourne).
Luke is a Perth boy (like myself). We met working for a local IT consultancy. Just an amazing out-of-the-box thinker with a creative bent, he is kept very busy with his young family and work with his Church.
The three of us Skype and Slack regularly. Having formally come on board, I’ve very quickly grown to rely on them – for much more than their technical expertise. I’ve come to realise now what people mean by company culture and DNA.
I think I can sum up our approach as:
– Solve one problem at a time (either the most important OR the easiest one first)
– Laugh and don’t take it to heart when it blows up (because it will)
– Laugh and chalk up the win when it works (because it always will…work…eventually)
– Don’t drink the kool aid – just get shit done
– Don’t be a wanker
Mike: Can you mention any websites that feature images from StockPhoto.com?
Jon: I think we have a small handful of websites of ‘household name’ status but most tend to be blogs, professional services (e.g. training companies, health professionals) and not-for-profits (e.g. we have lots of churches).
I attribute this to the fact that we are the most price competitive for the infrequent purchaser. Most of our competitors push their subscription products which tend to favour high-volume users and have a higher initial price point.
On Stockphoto.com, you can purchase an image starting from $3. (We even do guest checkouts.)
Mike: How has traffic changed over the past two years? Have you done much around paid or organic search?
Jon: Traffic levels have been consistent over the past two years. We’ve not done any paid search or any SEO-ification at all.
Monthly traffic is almost unchanged throughout the year. I initially expected a dip over the US summer but this is not the case.
The EMD gave me a leg-up with initial traffic but in the future I would like to supplement that with content marketing and email marketing. I haven’t quite figured out social marketing but I’ll dabble and test J
I started writing on Medium which gave me a nice source of new traffic. But Content marketing is HARD. If there ever was a reason for buying traffic EMDs, this would be it : )
I have high hopes for my new weekly email newsletter. This one has worked out well.
Mike: Have you made any additional domain purchase since StockPhoto.com?
Jon: No, I haven’t! LOL
In fact, I tried to sell one recently – 3248.com without luck L
Mike: If you had to do it all over again, is there anything you would do differently?
Jon: I don’t think so. I don’t think I wouldn’t have been ready if things had happened any faster. Nick Kenn came on-board at the right time – the MVP was stable and he was able to give me direction (and I was able to implement quickly). Luke and Lee came on at the right time – work enabling scalability was kicked off at the same time as our drive for quality inventory which dovetailed quite nicely.
I hate to say it (because people will think it’s the kool aid talking) – but it’s actually been fun.
I heartily recommend everyone take the opportunity (at least once in their life) to:
- – Build something that perhaps no-one else in the Universe thinks is cool
- – Run the risk of ending up (stylishly) in flames
- – Document it for all for the viewing pleasure of the Internet J