Setting Expectations

Inspired by my participation in a panel at SXSW, this post is one in a series of posts regarding the building and operation of web application startups. Many of the questions posed to the panel were about expectations; this post endeavours to ground expectations of aspiring entrepreneurs in reality, by highlighting the stories behind a handful of successful web apps.

When you start anything new – like a business – you need to set expectations. It`s my belief that this is one of the most important steps in determining your success – set your expectations too high and you`ll think you have a failure when you might just have a winner – set your expectations too low and you might squander a great opportunity.

In this context I`d like to talk about building web apps. A lot of people are building them these days – many in their spare time – and I get the sense many are starting off with a false set of expectations.

Over the past few years there have been a handful of companies that by all accounts have been very successful. There is YouTube, Flickr, 37signals and Writely to name a few. Many would-be web application developers have seen these successes and figure they can replicate these successes and it will be easy. In my books this optimism is great – so long as those entrepreneurs set their expectations correctly.

In almost all of the cases outlined above, the companies had something going for them when they launched. 37signals had a loyal audience of readers at their truly excellent Signals vs Noise blog – so their audience took care of marketing their Basecamp project collaboration service when they released. That`s not to say their product wasn`t great and they aren`t very very sharp. I am only saying they had a asset most companies don`t have when they launched – an audience. Writely is another great example. Here`s the back-story on them. Basically they were document management veterans. I could go on but I won`t.

These successes caught the imagination of the press and others – but the point I am trying to make is they did not come out of thin air. So if you are building a web app, don`t expect yours to. We did not have a paying client for almost two months at FreshBooks – by many accounts that constitutes a failure. But we’ve hung in for over three years. We kept improving our product, refining our pricing and spending money marketing a product we always believed in. I like to think our expectations and our faith were well placed when we started – despite the initial lack of results. But we had an asset too. We were able use the revenues from my web design and development consultancy to sustain us as we gradually transitioned all our team from that company to FreshBooks. That revenue generating company and an unwavering belief in ourselves have been our assets…those things, and what I would call reasonable expectations.