UTOSC: Tayler on learning from failure

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.

In The 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 will produce 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 storm".

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 couldn't 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 "iPhone users 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.