December 2019 - Page 2 of 4 - Hamad Dar's Blog

The Thing About ‘Zero’

I’ll be honest. This isn’t my thought. It’s something I read somewhere and I couldn’t agree more.

The thing about zero is that it makes you imagine. You can think of all the possibilities. If your startup is doing ‘zero’ dollars in revenue, you can sell dreams to investors. But if it’s doing $1000 or $2000 or $5000 a month in revenue, the investors are going to see, assess and project you based on those numbers.

And so in a way, if you’re seeking to raise investment, zero can be better than doing a small amount of revenue. Which is unfair, right? But that’s the thing about ‘zero’. And it’s also why sometimes you see companies doing ‘zero’ raising arbitrarily wild amount of investments.

The Fundamental Error We Make When Planning For Retirement

The key to retirement is understanding a fundamental concept called savings rate. A lot of people only focus on the savings, and not the savings rate. Let me explain to you why the savings rate is more important than the savings.

A friend of mine was saving $200 every month while he was making north of $1000. A few years later, his business really took off and now he was saving $300 every month while making nearly $3000. While he was making progress in saving more money, he thought that he was going to retire much earlier now. But that isn’t true. He actually delayed his retirement. Sounds strange, right? Let me explain.

His savings rate before was 20% of his income and a few years later despite increasing the savings amount, he reduced his savings rate to 10%. The reason why this matters is because his expenses have gone up considerably. While his savings have gone up by $100 each month, his expenses have gone up by $1900 per month.

Now that his new lifestyle requires much more money to maintain, and assuming that he doesn’t want to downgrade his lifestyle once he retires, his savings will now support him for considerably lesser time period. And hence he will have to work for a longer time period now before he can retire.

Here’s a retirement calculator for people in Pakistan.

The Open Internet That I Envision

Just yesterday, my Twitter account was suspended. It was suspended because Twitter thought I was involved in “artificial account interactions and engagements”. On appeal, my account was reinstated with a warning that “any future violations could lead to a permanent suspension”. But I didn’t engage in the above-mentioned behavior.

Despite no policy violation, my account now has what we marketers call a “strike”. Future strikes mean, I’ll lose my account permanently. And I’ve a serious problem with this kind of policing.

Twitter and other social media gained popularity because they provided a place to speak independently providing censorship-resistant platforms. But that has slowly been taken away in the name of keeping community safe from abuse and misleading information.

My Breadcrumbs

Because of the obvious problems with the internet today, I no longer feel safe hosting my thoughts on other platforms including Facebook & Twitter as I do not see them as a permanent place of storage for my thoughts and information which will eventually be governed by them, can be deleted as per their will, and removed permanently from the internet. Such web-applications pretend to provide a free and impartial place but are no longer censorship-resistant.

I’ve written 22,500 tweets so far over the period of 10 years, all of which can be deleted by the “propriety” centralized automated system removing my breadcrumbs completely.

Internet Is Broken Today

Just last week, founder of twitter Jack acknowledged these problems himself by doing a round of Tweetstorm

Twitter is funding a small independent team of up to five open source architects, engineers, and designers to develop an open and decentralized standard for social media. The goal is for Twitter to ultimately be a client of this standard. ????
— jack ???????????? (@jack) December 11, 2019

First, we’re facing entirely new challenges centralized solutions are struggling to meet. For instance, centralized enforcement of global policy to address abuse and misleading information is unlikely to scale over the long-term without placing far too much burden on people.
— jack ???????????? (@jack) December 11, 2019

Third, existing social media incentives frequently lead to attention being focused on content and conversation that sparks controversy and outrage, rather than conversation which informs and promotes health.
— jack ???????????? (@jack) December 11, 2019

Finally, new technologies have emerged to make a decentralized approach more viable. Blockchain points to a series of decentralized solutions for open and durable hosting, governance, and even monetization. Much work to be done, but the fundamentals are there.
— jack ???????????? (@jack) December 11, 2019

As mentioned by Jack, social media today no longer serves as a place to simply host content, instead it has become recommendation engine of sorts where content competes for attention also incentivizing content creators to create attention-grabbing content which can often be controversial, gruesome or simply negative.

This sort of recommendation engine is not just limited to social media. It has also taken over emails. Gmail now powers over 50% emails in existence, and controls/prohibits 97% of emails from reaching users’ primary inbox using similar recommendation engine approach.

The problem with these propriety recommendation engines is that you can’t view the hosted content in a different manner using alternatives yet as mentioned by Jack, but it could be possible if social media was a protocol, and Twitter one of the clients with one of the available recommendations engine. The consumer of content could pick and choose any recommendation engine he preferred.

The Open Internet

I read a very interesting post published by Albert Wenger, explaining why finally the time is now for open protocols. The traditional caveat with open protocols (like HTTP, SMTP etc) has been that there wasn’t a big enough financial incentive associated with creating, contributing to or maintaining an open protocol.

This can finally be solved with token-economics as mentioned by Jack as well in his tweet.

An excerpt from Albert’s blog explains how cryptographic tokens can rescue the internet

Now, however, we have a new way of providing incentives for the creation of protocols and for governing their evolution. I am talking about cryptographic tokens. You can think of these like the tokens you might buy at a fair to get on a ride: different operators can have their own rides and set their own price in terms of tokens. You only need to buy tokens once (in exchange for fiat currency) and then can use them throughout the fair. With blockchains we now have a way of issuing and redeeming these tokens digitally (the underlying blockchain can be Bitcoin or Ethereum or possibly its own as in the case of Steemit).
A for profit company can now create a new protocol and create value for itself (and its investors) by retaining some of the tokens. If the protocol becomes widely used, the value of the tokens will increase. For instance, think of a decentralized storage service (a la Amazon’s S3). Anyone can implement the storage protocol in whatever language they want to as long as they meet the protocol spec. They can then get paid in the relevant storage tokens. The original creator of the protocol will make money to the extent that it is adopted and to the degree they have retained some of the tokens (so they can sell them at a higher price later on). This is not hypothetical as there are a variety of such protocols out there, including Storj, SIA and Filecoin.
I can’t emphasize enough how radical a change this is to the past. Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it). Since the creation of this software (e.g. web server/browser) is a separate act many of the researchers who have created some of the most successful protocols in use today have had little direct financial gain. With tokens, however, the creators of a protocol can “monetize” it directly and will in fact benefit more as others build businesses on top of that protocol.

With newfound financial incentives now available to create open protocols, the stage is finally set to make pave for the open and decentralized internet.

Losing Bids And Winning Campaigns

Every performance marketer has different techniques to run their ads. Most professional marketers use a wide range of techniques in order to scale depending on the goals of the campaign. Losing bids is one of the ways to run a profitable campaign.

Losing bid sounds like you’re losing something. But often that isn’t how it works. In fact, losing bid actually means you’re not willing to pay the top dollar for the eyeball. Instead you will bid on whatever audience is left after the auction competition.

This works particularly well for campaigns on a budget. This also works well for campaigns that are not led by the sense of urgency. But it can even work well for campaigns that you really want to scale quickly.

You can run these kind of campaigns by setting a very small daily budget if you are doing automatic bids. Sometimes I run ad-sets for as low as Rs 125 (less than $1) per day. As Facebook is going to evenly distribute your daily budget in a 24 hour period, you will automatically get a lower bid. You can also run such a campaign by setting a low manual-bid with a higher daily budget, which the ad-set may or may not consume.

It is true that you will be getting lesser impressions, clicks or sales compared to higher bids or budgets but at a lower cost which is great when you don’t have the urgency to get your lead or sale, and can wait a few days.

But you can even scale such kinds of campaigns using horizontal scaling methods. To scale, you can duplicate your ad-sets with different targeting for each ad-set while maintaining low budget per ad-set.

We’ve run campaigns with $1000/day budget by using 50 ad-sets spending $20/day each. We obviously avoided paying the premium for the bids as well as were able to spend a large amount of money daily on our campaign reaching the scale we intended.

This kind of strategy definitely works and I encourage you try it if you haven’t already.

Will Over Skill

I’ve met many people in my life who’ve done well for themselves despite not having the top skill. And I’ve met many people in my life who are struggling despite being very good at what they do. I think this is because of the phenomenon that I term as “will over skill”.

I’m a a staunch believer that most businesses just need to be run long enough for them to succeed. There’s no short cut to compounding. Most skills can not outrun what compounding growth does to your business. If you grow your business on a very small scale but do it year after year, you’ll have a very large business at some point.

And so if you’re losing will despite having skill, you’re not going to make it. But if you have will despite not having skill, you’re more likely to get somewhere.

The skills would either be acquired at some point, or hired if they can’t be acquired.

You Always Have Two Options; Retention Vs Acquisition

I feel a lot of founders, especially when they are running their first company, don’t have their priorities straight when growing a company.

Let me start with an example. When losing weight, you create a calorie deficit. You have two options to do it; you can either burn more calories or intake lesser calories. For wealth generation, you can increase your earnings or reduce your expenses. And for your business growth, you can increase your users, or reduce the number by which they are leaving your business.

Most first-time founders focus on increasing the user-base as a way to grow their business. It shouldn’t always be the top priority. In fact, I believe the top priority should be to reduce churn. Let me give you another example to explain what I mean.

Suppose your business generates $100,000 in annual recurring revenue and your churn rate is 50%. It means every year your business will need to replace $50,000 worth of customers in order to achieve the growth rate of 0%.

A lot of businesses continue to focus to add more users. They would focus to add 50% more users every year. They would spend a lot of money for this much customer acquisition and in the end achieve a 0% growth rate.

The right, easier and cost-free strategy requires working on cutting down the churn rate. If you’re able to bring the churn rate down to 25%, you only need to add 30% more users in order to see a 5% growth. You would spend lesser money on customer acquisition and will eventually achieve a steady growth rate.

We always have two options, and we often focus on the wrong one.

The Lazy Entrepreneur – And Why It Isn’t Bad

I achieved many of my goals by the time I turned 24, and most by the time I turned 28. Of course, my goals weren’t as big as many others have. They were rather small.

I tried to find happiness in things outside of work accomplishments and financial success and also tried to live a modest lifestyle. I also slowed down at 28 because I felt burnt out by working really hard in the past 10+ years. I felt that I don’t have the same kind of energy anymore that I used to have before, and I turned lazy.

I understand this could be a controversial opinion, and others may disagree. But I think laziness isn’t as bad as it sounds. In fact it can be good. Initially I didn’t like the fact that I’ve turned lazy. Even now, sometimes, I don’t like it especially when I FOMO about interesting opportunities. But I’m in a transition to becoming what I call the lazy entrepreneur. I haven’t achieved the status properly, but I wish to.

The lazy entrepreneurs don’t like working actively. They are tired of working. So they find lazy solutions to the problems that need to be solved. They like investing in things to create passive income. Lazy entrepreneurs also build lazy stock portfolios. But my favorite kind of lazy entrepreneurs invest in and empower active entrepreneurs.

Lazy entrepreneurs wish to move from being CEO of 1 company to having CEOs for multiple companies. Unfortunately, I have already achieved being lazy but haven’t yet mastered the art of being a lazy entrepreneur. Although, it’s a journey I’m excited about.

The Secret E-Commerce ‘Hot Sauce’ That No One Talks About

When I started blogging and later ventured into internet marketing, things were a lot different than they are today. During 2009 and 2010, 93% of my traffic came from Windows and Mac. Only 1% traffic came from iOS and Android. This meant, I largely ignored how mobile users viewed my sites and only focused on desktop.

Mobile Evolution

Over the past 10 years, I’ve seen mobile traffic go from under 10% to over 90%, and that brought quite a lot of challenges for me. While mobile has certainly increased the potential audience by manyfold, the responsibility now lies on the website founders to serve content in a way that works perfectly across the large variety of screen sizes, OS, browsers etc.

For content websites, the estate for ads just squeezed into nothing. We couldn’t serve the same quantity of ads anymore. But I’m not gonna talk more about that right now.

For e-commerce which we only ventured into in 2016, mobile had already taken over by the time we started it, bringing its challenges with it.

E-Commerce Struggle

Early in our cycle, we identified what we believed was a winning product and we created a large set of ad sets which we also believed would give us a winning campaign. Despite that, we had a low conversion rate and while we made sales, we struggled to make a profit.

We were sure the product would work, we had data to believe in it. We saw others grilling and scaling it. As for ad campaigns, we had spent enough on Facebook before (outside of e-commerce) to be sure that what we were doing with ads was also not a problem. Which brought us to our final conclusion, that it was the landing page that was the problem.

Often I see, people working really hard but focusing on the wrong things or fixing what isn’t broken. I bring this up, because a lot of people just change their products or ad strategies without thinking about other possibilities.

Landing Page Struggles & Heatmaps

Back to our problem; we couldn’t think that our landing page could be problematic because our store was powered by Shopify. We expected the store and theme to be optimized to work in a perfect manner. But mobile can be tricky and so we introduced heat-maps and video recordings to see exactly how users interacted with our landing pages.

We used a tool named Hotjar, but you could use anyone you like.

I’m not going to go into details of the wide range of things you can do with heatmaps, but personally I focused on scroll heatmaps the most. While it’s a natural behavior for the loss of audience from top to bottom, if the colors change abruptly or sharply, it means a significant number of users left the page there. This can mean, among other things, that user is either not interested in content below that point, or is unaware that the page has more content to offer.

This can be solved by either removing an element at the point of abrupt exit, or introducing new elements that convey to the user that there’s more content available below. After making certain changes, I saw the conversion go up, but not enough to be excited about it.

Video Recordings

The next logical step for me was to watch thousands of video recordings of users interacting with our store. And so I did that.

The reason why I started this blog post with emphasis on mobile was because after watching hundreds of videos, I saw how different the user interaction was for different devices having different screen res, OS, browsers, in-app browsers (such as site loading inside Facebook) and how many changes were needed for everything to be in harmony across the board.

Conclusion & Further Reading

After making those changes to the theme and landing page, we were able to bump our conversion by 120% and so the secret ‘hot sauce’ of e-com, at least for me, is the heatmap and landing page optimization.

I’ve previously written three posts about our dropshipping experience explaining what dropshipping is, how we scaled it, and how we grew it by 837%.

Crypto Revolution Will Happen

Often I hear from people about the “bad innovation” that’s happening around us. Not everything seems like a good idea to everyone. But I think innovation has never stopped, and never will, even if some people believe that it’s ruining lives.

The first industry that I watched very closely in my career was the music industry. Artists made their living by selling albums on cassettes and eventually CDs. But someone decided that music needs to be more portable and digital and so Mp3 was invented.

MP3 contributed big time towards music piracy and killed the revenues for musicians. Eventually Steve Jobs saved the day for musicians and record labels by offering “a la carte” music at 99C a piece to customers as a legal alternate to piracy. The digital music had to happen even if it happened at the cost of suffering of musicians and record labels.

In a similar way, I think crypto revolution will also happen, even if it happens at the cost of many other things. The money will be digital, decentralized and deflationary whether someone likes it or not. It’s likely that just like Mp3, Bitcoin or other crypto assets may need to be acquired from the iTunes of crypto-assets. But the crypto revolution will happen.