WonderProxy broke two records this week: 200 servers, and highest single day revenue. This left me considering what advice I’d give to my past self or other people considering starting their own company:

Charge Money

This may not be the route to a billion dollar valuation in 18 months, but it’s a great way to lose less, and be able to count on yourself rather than external investors. WonderProxy launched with 8 servers, and my first prospective customer trying things out. They were paying us within a few weeks. Dollars in our pockets did a much better job of proving this was a viable business than friends saying “that sounds good”.

Free customers stay free

Over the years, we’ve had a number of customers on trial accounts or using alpha services come back with “we’d pay if only you did …”. Ignore them. You can implement that feature but they’ll never convert to paying customers. When paying customers make similar requests, pay attention, they’re much more likely to start paying you more.

Big companies pay slowly

Our model is pretty close to a SaaS: people pay up front, get access, then when they stop paying, the service goes away. When a big company comes along, they’re going to want a PO; legal is going to want changes to your terms of service; they’ll insist on Net 90; people will invite you to conference calls where you’ll do nothing more than read them part of your website & agree to email them something… It’s a disaster. Just grin and bear it. Part of the problem is that the person who wants your product has zero ability to manage any part of the process of paying you regardless of how much time or money your product can save them or the company. Accounts Payable has a process and if it’s a big company, it’s going to suck for vendors (you) and purchasers (your prospective user) alike.

Set a minimum for manual transactions

Some customers won’t want to use your nice automated systems, and end up requiring manual effort. Set a floor in terms of dollar value for manual transactions. It’s not worth it for us to generate an invoice, email it, wait for a cheque to arrive, run to the bank to deposit, and upgrade an account… all for $14.95. We try to restrict these steps to our high value plans, or ask customers interested in them to pre-pay for large blocks of time (6 months or a year) to cut down on the repetition.

Match expense periods to income

When we hired a long term contractor, we originally set it up to pay them once every four weeks. This was folly. Under that plan we’d end up needing to pay that contractor twice in a month (52/4 = 13). Our customers only pay us once in a month. So every month, we’d need to pay our contractor, and remember to set aside 1/12th of their fee for that special “two bills month”. Certainly over the course of a year the total cost would be the same, but it’s an easy way to run into cash flow problems.

Write down verbal agreements

When Will and I first started, he was just giving me a hand as I was in well over my head. After that continued for a while I “gave” him 20% of the company that couldn’t have existed without him. We had that conversation on Skype but we immediately wrote down our agreement in GChat or email. That became a pattern for us: discussing things frankly over Skype/Google Hangouts, then follow it up with a written copy. When the company incorporated, our previous agreements were formalized (and the equity distribution became more equitable).

The internet has witnessed several partner fights over the past few years. Written agreements, even in email, can be very helpful identifying who said what, and what the agreement made years ago was. Had either of us attempted to gain the upper hand, we would have had more than foggy memories of conversations to go on.

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Hi, I’m Paul Reinheimer, a developer working on the web.

I co-founded WonderProxy which provides access to over 200 proxies around the world to enable testing of geoip sensitive applications. We've since expanded to offer more granular tooling through Where's it Up

My hobbies are cycling, photography, travel, and engaging Allison Moore in intelligent discourse. I frequently write about PHP and other related technologies.