The Building and Investing Journal, Issue #1

Philip Morgan

Preview: "What I came to realize is that I hate the car dealership model. . . Lately I took a step back and said 'If I were to do this the right way, what would it look like?'."

Recently, I asked y'all to share your stories of investing -- expending time or money with the hope of payback/ROI, but without the guarantee of payback. Here's a list member story we'll keep anonymous. The rest of this email is that story, italicization and indentation avoided for the sake of readability:

For a long time I kept doing WordPress and WooCommerce website development projects because the work kept coming. I'm not a fan of the platform (I think it is a raging dumpster fire), but familiarity establishes trust with certain clients, and I'd err on the side of an easy sale vs. a more complex conversation.

What I came to realize is that I hate the car dealership model. Dealerships sell the car, but then have a revenue stream forever on the maintenance, because combustion engine cars have many moving parts and many things to fix. It's not that maintenance work is evil; it's just that the product and ecosystem has grown up in a shitty way that requires a lot of maintenance. Maintenance just brings the car back to the expected performance level that was sold to the client, rather than adding new value. A 'WordPress business' is the same thing. There is a fee for development, then an ongoing revenue stream for 'updating plugins', hosting, and other fixes. (So that's a bit harsh on WordPress as the open model has also unlocked a lot of flexibility for the platform, but for a lot of clients' needs, it's obvious that to give them this flexibility: the juice isn't worth the squeeze.) Back to the car analogy: once electric cars show up on the scene, the car dealership model looks more ridiculous because electric cars have very few moving parts and require very little maintenance.

So to answer your question:

Lately I took a step back and said 'If I were to do this the right way, what would it look like?'. One thing that was obvious was that I wouldn't be charging for 'maintenance', rather I'd be charging for new value created for the client: a/b testing (or 'controlled experiments', as an actual scientist might say), segmentation, customer loops, etc...i.e. top-line focused activities. Charging subscription fees for recurring incremental value, rather than 'maintenance'. So while the old model opportunities floated past, I went very deep into the rabbit-hole a very different technology stack.

Turns out this led me to ask 'what else is stupid?' and led me to wait until I could buy a new Macbook M1 (made sense to me, so I waited for it); but this meant getting better at cross-architecture development, which meant adopting other skills that I had previously avoided learning, and so on.

The details aren't important but it turned into a huge investment of time and effort, with no guarantee I'll be able to pitch a 'value' subscription any better than a 'maintenance' subscription. But it also led me to think about very different 'watering holes' which I ruled out in the past, and what things I need to simplify or let go in order to serve those segments. I've seen promise here and refining the value proposition. But down that path, other opportunities that I had ruled out previously are also popping up. Permission to 'fix what's stupid' has led to a bunch of unexpected things I just couldn't see before.

Share your story/stories of investing: