Editor’s Note: I originally had this post published on Problogger in Jan 2008, at Finding Profitability – The Tipping Point for Expansion.
Years ago when I had more time to spare, one of my favourite pastimes was to play computer games. In particular, I rather liked those real-time strategy games like Warcraft and Starcraft, which brought hours of enjoyment, to the decline of my studies and chagrin of my girlfriend of the time.
I’ve not had the time to play one of those games recently, but now and again I do think about them, and how they relate to blogging and business. In particular they are useful for looking at the tipping point for a blog that we run at Envato called Psdtuts+, and how it went from small site to expanding little business.
Strategy Games
So in case you’ve not had the great pleasure to play one a real-time strategy game, let me outline roughly what happens in them. Generally you begin every round with a starting set of resources like gold and timber, and a few little guys to do your bidding. It’s your job to build a base by constructing buildings with your gold, use the buildings to train more guys and use the guys to harvest resources so you can then build more, train more, and so on.
Now the trick to these games is that you need to balance your growth and expansion if you want to be successful. You have to use your resources wisely and make your base self-sufficient, as your initial resources will run out quickly and you’ll be left floundering.
Psdtuts+
In September of 2007, I started a Photoshop tutorial blog called Psdtuts+ where we post comprehensive tutorials and general articles about Photoshop. My early tutorials brought lots of traffic because they were longer and more in-depth than anyone else was really writing at the time, so the site stood out. But because I work on lots of projects, I have only a limited amount of time and could only put together one tutorial each week. And while the traffic was good, there wasn’t much income from the site. From memory it was just under a thousand a month from Adsense, some affiliate links and some text-link-ads I was selling.
So in many ways, it was kind of like being in one of those strategy games I mentioned earlier. I had a little base, with a few posts going up a month, some resources coming in, and one guy to do my bidding – me! While not a bad situation to be in, I wanted to expand.
So I started spending what little income I had, and hired a tutorial writer. I also offered cash for contributions that we published and started accepting community contributions. After a few months of this we’d gotten to publishing two, and sometimes three tutorials a week, and correspondingly income had gone up. Unfortunately, so had costs. Because Psdtuts+ is and has always been popular, hosting all those masses of big images on every tutorial meant that I was serving up over a terabyte of data every month. Plus our tutorial writers cost money, because if you want the best content, you have to pay for it. And the more time I spent on the blog, the more I thought that I should be accounting for my own time in the accounts.
This status quo lasted for another three months. The site grew, but slowly. I was tied down to it, having to keep up my own work on the site. And though it wasn’t really losing (much) money, it certainly was not profitable. Without profits, there wasn’t really any way to expand, and so I was stuck.
So the question was how to harvest more resources. In strategy games, there are usually some key buildings that you need to build, that allow you to get more out of what you’ve already got. This was important because it was clear that if I simply hired more writers, built more sites, stuck more ads in, or a host of other expansion ideas, I wouldn’t really be getting anywhere.
The Tipping Point
In the end it was an idea that I’d shelved because it was too hard that made the difference. Where previously we’d been giving away the source Photoshop (PSD) file, then selling them individually, now we built a paid membership system. The system, which we call PSD Plus costs people $9 a month to join. For that they get to download the source files and we put up periodic extra tutorials that only they get to read. It’s built using aMember and WordPress, and took me a good two weeks to put together initially.
It took a little while of saving and a bunch of work to get the system up and running. But as all players of strategy games know, this is often the case in building a pivotal part of your base. And as in strategy games, it paid off when a few hundred loyal readers joined! Sure there is extra work now, because it’s really important that these readers get value for their money, but the tradeoff is extremely positive.
So all of a sudden the site went from break even, to profitability. So what to do next?
Expand, expand, expand!
The smart thing to do here would probably have been to not do too much, and build up some cash reserves. But where’s the fun and excitement in that? And besides, it wouldn’t really be a tipping point, if all I did was collect money. As we know from strategy games, there’s only one thing you can do when your resources have grown – build more!
So in the months since, I’ve hired an editor, commissioned some celebrity writers, expanded the posting schedule, and a few weeks ago built the first sister site at Nettuts+. And as these new expansions increase revenue, we can expand more, train more, and harvest more resources.
What’s the lesson here?
Well aside from learning that playing Warcraft wasn’t a waste of time after all, I suppose you could say that thinking strategically about your blog is important if you want to build a business with it. Look carefully at what you are spending versus what you are getting back. Think long term and don’t be afraid to spend money along the way – so long as it’s wisely spent. And good luck!
Since this post was written, the same principles discussed have built Psdtuts+ into a major blog network based at Tutsplus.com with close to 4000 members in the Plus program.
Always awesome to read your posts Collis, Thankfully I had the chance to monitor psdtuts and envato from the early day it begin
I wrote two articles on Themeforest… One of the best experiences I ever had
Keep rocking!
Intriguing to read how the tuts network started out. I never imagined you at one point were barely making a profit from psdtuts. I wonder what your long term plans for this blog are;)
Fantastic article. I was always certain that strategy games would be beneficial to me in the long run but I wasn’t too sure how and why. This article nailed it!
Very Good Post!
I like to play strategy games mostly Rise of Nations.
I have started my blog some months ago but being active from jan 09. The first months traffic was 57 then in feb it was 114 & now in march till date it is 107. That means traffic has been increased by many folds.
I dont have personal domain name hosting service but thinking @ it to get it within next 2 months.
What is your opinion @ buying domain name & host at this stage?? Will it be worth for the current traffic??
This is a great post! A lot of this reminds me of my self. I am new to freelancing, although I have been designing for 5-6 years. I never played WOW, but I did played a game very similar. My game of choice was Age of Mythology. I find my self thinking a lot like I am playing a game, build but build smart, build wisely and keep it organized, and Build out wards instead of inwards. I constantly strategize how, and when I should expand, in other words “ATTACK”.
Constantly think ahead, vision what will happen if you take your path of choice. Make this path your goal!
We so agree. Strategy is everything in starting a new company. Thanks for such a great article. The Tech Angels of New Rochelle (http://TheTechAngels.com) started very small. Weighing options over time to expand or not expand becomes the question. The biggest question becomes “To spend or not to spend?” Much more important than the “To be or not to be?” There is so much we all want to be. What’s more important is what are we willing to do to “be”. Be strategic, be frugal, be public, be recognized, be reputable, be helpful, be successful… Thanks for giving us some interesting points to ponder as we redesign our website. Yep, deciding to spend (a reasonable yet cost effective bit) for a more professional web appearance is one of our latest strategic moves.
Great story and it really gets me pumped about the possibilities of internet businesses. Looking forward to seeing more from the Envato network in the future.
Collis, you rock my world
Great post.
*Happily Bookmarking*
I had exactly the same ideas while building my own startup, since I had played Command and Conquer back in the days. I think this is extremely important analogy for self funded startups. Let’s hope I don’t need to start a new game…
you rocks!! i really like your sites.
Railroad Tycoon III, although several years old, has taught me a lot about general accounting principles, how the stock market works, and general business dynamics.
A lot of strategy is involved with building an empire, conquering your competitors, etc.
Strategy games rock and so do you Collis! Always a pleasure reading your post.
Thanks for you valuable insight into the industry.
The only problem with your analogy is that in a game I know about my race, the units, buildings, technology, and I know those of my opponents and friends as well. In a game, I have objectives in missions with a story line to guide me.
Then, with this knowledge, I assess the foggy map the best I can to determine my enemies location, the resources, the locations of the interesting spots on the map when I discover them. I learn about my enemy, how he thinks, how he likes to do things. Is he a computer or another human? Is he easy, hard? Does he rush? Does he have a favorite unit? If he’s human, do I have a particular hatred for him (and thus a need to utterly crush him)? Is he stupid, smart? Is he good at his race?
In reality, I’m not given a whole lot of information. I know little about business personally, little about what resources I have available and how to utilize them (not just how to budget them). I know nothing of my opponents personalities or technologies.
My own storyline I determine to a great deal. I set my own objectives and my own missions. Much of the current events I have no control over and I must respond to them, but I have to digest them and make sense of them. In a game, I don’t even need to pay attention to the storyline, but in the real world, I must learn to respond to them.
Your analogy is a good one, but you’re going to have to build upon it in future blogs, in my opinion. I do have a lot of resources available to me to learn but I’m not going to learn the same way a game will teach me how to play, and I’m not going to learn as completely as I can in a game. There will however always be a new and better way I’ll never know–another building I thought was worthless that some clever entrepreneur capitalizes on and utterly humiliates me.
Wow! I never thought about it that way! Thank you so much for the insight!
Good Article! I used to play Roller Coaster Tycoon all the time when i was a kid. Somehow, managing my income/outcome in business got pretty easy now that i started my freelance business. I dont spend too much time playing games though, i feel im wasting time when i play too much.
but that’s just me!
I play Starcraft since his creation in 1998. I’m pretty good. But I’m poorest now than 11 years ago. Certainly because I play more than I work. Anyway, I agree with Collins because I compared already Starcraft with a business. Collins, him, he is smartest than me, he wrote the article.
Come on Collins, just for one game 1vs1, I’m waiting for you on Starcraft, my aka is xanark!
Sorry for your name Collis! Oups!