Web comic author and illustrator Howard Tayler
looked at success and failure in business, particularly from the
perspective of free content business models, in his keynote talk at the
Utah Open Source Conference (UTOSC). Tayler has successfully turned his comic, Schlock Mercenary, into
his day job for the past six years, even though the comic is freely available
daily on the web. Arriving at a successful business plan is mostly a
matter of learning from mistakes, he said, either your own or those of your
peers. We live in a time where it is much easier to find out about
mistakes, thanks to the internet.
Tayler previously worked at Novell for 11 years, doing everything from
tech support to product management. He started Schlock Mercenary in
2000, while he was there, and built a following for the comic. In 2004, he
left Novell to do the comic full-time. Though there have been ups and
downs, he has succeeded in supporting his family since that time, primarily
with book sales of the comic, along with advertising on the web site.
This is not the first time Tayler has spoken to UTOSC. In a presentation at
UTOSC 2008, Tayler focused more on his particular
business model, and at that time he saw it much differently than he does
today. He likened his earlier model of creating a business plan to
"making grizzly bear soup", which has a hard part, actually
killing the grizzly, and "everything else is just soup
recipes". For him, the hard part was to make the comic itself, and
the other, moneymaking parts kind of just fell out of that. But,
"business plans are not that cut and dried", he said.
We are all storytellers, Tayler said, of one kind or another. His stories
are 1000 years in the future, but he also tells himself the same kinds of
stories that those of us who aren't comic space opera authors tell. These
are the stories that often govern our behavior ("if I work hard I will be
able to retire at 65" or "if I always take off my shoes at the airport, I
am safe from terrorist attack" and so on). As we keep telling ourselves
these stories, some of them become business plans. Unfortunately, those
stories are not really reflecting reality.
Black Swan, author Nassim Nicholas Taleb attributes success
"much more to luck than we would be comfortable with", Tayler
said. That book "blows my mind" and he strongly recommended
it. One of the examples that Taleb gives is Casanova, who succeeded
and failed seven different times in his life, going from prosperity to
poverty. To many this is "proof" of the adage "never give up", but Taleb
points out that there are likely many more folks who tried just as hard but
never achieved that final success, so we don't know anything about them.
The failure stories would be valuable, so that we can learn from them. But
people are "disinclined to talk about the failures", so we
lose that information. But now, we have lots of ways to find about
failures. People love to sweep their failures under the rug, but
"there are now spiders under the rug recording those
failures", and we can access that information through search engines.
An example that Tayler gave was the logo redesign that Tropicana orange
juice did last year. The logo changed from an orange with a straw in it to
a glass of orange juice, and within three weeks Tropicana knew they had
made a mistake because they were losing millions of dollars. Brands that made
"terrible orange juice", like Donald Duck brand, were suddenly
outselling Tropicana. Marketing had decided that the brand needed a
refresh, but it was a bad decision that looked good at the time it was
made. Tropicana went back to the old logo, and in pre-internet days, that
controversy would have faded. But you can still find lots of information
about that failure on the web today.
On the other hand, people imitate each other's successes all the time. In
his talk two years ago, he encouraged people to follow the same path he had
as a business plan. But, he said, that kind of plan won't work for
everyone as "'web cartoonist' pays better than 'web
novelist'". For whatever reason, changing the web comic business
model to a product that is strictly words doesn't work.
He has been lucky in that he "hasn't had enough failures to learn
from", at least yet. When he left Novell, he set a failure
condition: if they had to tap credit cards to pay bills for two consecutive
months, it was time for him to go look for a job. Thousands of people
don't recognize that their business has crossed a failure boundary, and
they keep going hoping that the business is going to work out and pay them
back. It is very important to set some failure conditions when starting a
business so that failure can be recognized and flexibility can kick in.
Taleb and "dozens of authors" have suggested that business
planning needs to be both robust and flexible. It must be robust enough to
absorb a few mistakes, while being flexible enough to learn from those
failures. Large organizations tend to come to this realization late, he
said—if they realize it at all.
Evolution is the ultimate teacher of flexibility, robustness, and learning
from failure. Evolution does not move toward a goal, it moves away from
things that didn't work. It is, "improving things by making
accidental random changes", which results in things like sharks—but
also zedonks. Zedonks
are a cross between donkeys and zebras that are ornery, sterile, and
will "live to a ripe old age on a pony farm biting children".
They are one of evolution's mistakes, he said.
While we may not have the time to make changes to business plans the way
that evolution does it, we can use the information from various failed
plans to guide our choices. You can't try out all of the different
possible plans yourself, but new businesses are being started all the
time. The ability to see their plans—what works and what
doesn't—is an enormous advantage.
There is a flipside to the "law of large numbers", he said. If you roll a
six-sided die many times, the average is 3.5, but rolling it long enough
long strings of consecutive sixes. By looking at the failures of others,
"we can game the system", and make it more likely that our
plans will come up sixes. "Lightning wants to hit something",
he said, so "put up a lightning rod at the leading edge of a
Tayler then took questions from the audience, most of which centered on the
specifics of his particular business model. He brings in
roughly 30% of his revenue from web advertising and 50-60% from the sale of
several different books.
There are some revenue sources he hasn't tapped yet, like speaking
engagements, mostly because he likes talking for free. He cautioned
against having any single revenue stream that makes up more than 40% of
your income. At one point, he was in that position with Google AdSense and
was concerned that Google could just "randomly turn that off",
which could have been catastrophic.
Community is very important to his business. When he sells something, he
wants that customer to "feel like they are part of a club".
That requires good customer service, and making a connection with people at
conferences and shows. There are certain cities where he sells much more
than the population would indicate, like Austin and Detroit, because he has
been there multiple times interacting with his fans.
In response to a question about telling good ideas from bad, Tayler
pointed to a meeting that he attended in 1997 when he was working for
Novell. In that meeting, then-CEO Eric Schmidt said that the internet
needed a "directory", which was a great idea, he said, but one that Novell
deliver. So Schmidt went to a startup (Google) and helped make it happen.
It is important to get a lot of feedback on an idea; "the more eyes
on your idea, the better". Many in his field make the mistake of
believing that their customers are the same as they are, so they design
their products and such for themselves. Getting others to review product
plans and other business ideas will help avoid that trap.
There may be a big change coming for publishing with the advent of e-books,
he said. There is a belief that a "tipping point" exists once e-book sales
reach 25% of printed book sales. Unlike some others in the publishing
business, though, he is cautiously optimistic about his prospects if that
happens. If it doesn't happen, he will be fine because he sells paper
books. If it does happen, he has 200,000 readers that already read things
online, so he is confident that he can find a way to sell content to them.
He has already done some e-publishing, starting with an app for the
iPhone. He chose that market to start with because he heard that
have big fat open
wallets and low IQs", he joked. The truth is that iPhone users have
a reputation for being more willing than Android users, for example, to pay
for content. After a year with a subscription-model iPhone app, he made
$1200, which he split with the developer. That was not enough income to
continue that experiment, so
he now has free ad-supported apps for iPhones, Android, and the
iPad. The iPad is "the way to read my comic", he said, and
believes that it will be a big player in the e-comics world.
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