This is a guest post from the founder of 48hourslogo.com, Chris. He’s awesome. And generous with his startup experience.
I graduated from Georgia Tech with a degree in Electrical Engineering and got a job as an application engineer in Silicon Valley.
48hourslogo was one of several side projects I initiated. Luckily, it turned out to be the one with the most potential and allowed me to quit my engineering job and fully focus all of my attention on my own startup.
I have always enjoyed reading StartupBros and thought that sharing my own startup story may provide some interesting insights for some of you. I’ll show you how I came up with the idea, how I had the site built, how I got customers and designers, and some ways we’ve grown the company. I think you’ll enjoy it!
Like most people launching logo contests for their first time, I was amazed by the selection of logo concepts presented to me when I started a logo contest back in 2010. I liked it so much that I decided to drop my earlier business idea and start a logo contest website of my own.
The idea behind 48hourslogo is quite simple: Instead of paying an average of $400 to have 30 or 40 designers competing on your logo project, customers can spend a third of that and have 10 or 20 designers competing. This is plenty for bootstrapping founders.
I like things done fast. So instead of having a contest running for 1 or 2 weeks, how about just 48 hours?
Lucky for me, this domain name was still available and that’s when 48hourslogo.com was born.
Starting a new business on your own is hard. The key is to break up your project into smaller steps that you can focus on one at a time. So for 48hourslogo.com, I broke it down to the following 3 steps:
Step 1: Website Development
Despite my engineering background, I did not know how to code a website. So I had to find a developer for my project.
Initially, I was quite optimistic after browsing through different freelancing sites and seeing the kind development tasks that were posted and the eagerness of the many developers active on these sites. But after I launched my own project and started communicating with several freelance developers, I realized that it would not be as easy as I had originally anticipated.
Because I was working with an offshore developer, effective communication was the biggest challenge. I quickly learned that instead of explaining everything I needed in a Word document, it was much easier to ask him to just copy the existing functionalities from my competitor’s website and process further adjustments I wanted myself.
After 2 months of countless emails and about 3,000 dollars in total development costs, I ended up with a very basic but functioning website.
Above you can see the first version of 48hourslogo when we launched in early 2010. It only had the most basic features and the UI and layout design was significantly inspired by our competitors.
Some of the lessons I learned were:
A. Know your basic HTML
Unless you have a technical cofounder who will take care of the web development, you will most likely be working with Freelancers you found on the web. Knowing basic HTML will allow you to make small fixes yourself and communicate effectively with your developers.
B. Keep it simple
Building a website with any kind of custom functionality is going to be much more complicated than you think. Every button, link, or text input will require detailed design and consideration. So it is important to think of every little detail and simplify as much as possible before passing your requirements to your freelancer developer. Most likely he will get it wrong so your job is to make it so simple that it is almost impossible to understand it incorrectly.
C. Leverage as much as possible
Instead of starting from scratch, it is probably a good idea to copy from your competitors or other websites that offer similar functionalities. This offers 2 advantages.
- You get a chance to study your competitor’s website in much greater detail and discover many small tricks you didn’t realize before.
- Having your developer copying an existing product is much easier for him than trying to understand your unique specs of which there is no live demo.
Step 2: Recruiting Designers
Clearly I had a chicken and egg problem. Designers need clients and clients need designers. I had neither.
Before inviting designers to join 48hourslogo, I would need available contests they could participate in immediately after they signed up. To accomplish this, I did 2 things simultaneously:
A. Launching artificial logo contests
I created some artificial contests but with real prizes. I personally acted as the contest holder, selecting the contest winner for each contest based on what I thought was the best design and I awarded the prize accordingly. I did this for several weeks and awarded several thousand dollars until I was able to realize enough actual clients entering real orders.
B. Inviting designers to signup
I joined a number of graphic design forums, blogs, and discussion groups, and sent personalized invitation emails that were well received. Soon, I had more than 30 active designers working on actual client orders submitted to 48hourslogo.
Step 3: Acquiring Customers
This is probably the most straightforward part because all I did was set up a Google Adwords account and started bidding on my relevant keywords. There are many ways to market your business and attract potential customers.
Google Adwords is a good measuring stick to see where you stand among your competitors. If you can break even or even make a profit by acquiring customers via Google ads, you got a real business.
Some tips for running Google search ads:
A. Write descriptive ads
Remember that you are only charged when people click on your Ads. Do not write ads that promise someone the world. Instead, write descriptive ads, including your prices, to only attract your target customers.
B. Use exact keyword matches
Include your keyword combinations in square brackets. That means you ad will only appear if a potential customer types in your exact preconfigured search terms. For example, “logo design” and “logo design tutorials” represents 2 different types of potential customers.
C. Set maximum bids for your keywords
The average per-click cost for my main keyword “logo design” is about $3. Initially I used Google’s automatic bid, but was surprised to discover that the automatic bids went as high as $12 per click. Your ads do not have to be in the first place to receive visitors. 2nd and 3rd place is just as good and costs significantly less per click.
My initial Google search ad campaign was quite disappointing.
My profit on each new customer excluding my AdWords expenses was $25, but I was spending around $45 to acquire a new customer via my AdWords campaign, thereby effectively losing $20 on every new customer via my AdWords campaign. But losing $20 on every new customer was still better than setting up artificial contests where I had to give out $80 for each prize.
The most promising sign that I received at that time was that most of the customers which were using 48hourslog were quite happy with the level of service and the quality of design they received. I was confident I would be able to slowly turn things around.
How to Turn a Profit
So I had a money-losing business, but at least things were up and running.
The first thing I did was hiring a local developer in my city because communicating remotely was simply too much of a pain. After that, I added several features to really improve my conversion rate and turn 48hourslogo into a profitable business.
Redesigning the Home Page
We already had real customers getting quality logo designs via our site every day.
In order to give visitors a realistic sense of what to expect, I redesigned my homepage to highlight all recently finished contests on the front page.
This allowed customers to easily see the contest prize offered and the quality and quantity of designs received. After the redesign, our conversion rate went up a notch.
Lowering the Entry Barrier
Even though our $99 minimum prize already offered the most affordable logo contest on the web, we decided to introduce the $29 initial payment option.
For customers who were still not 100% convinced, we facilitated the option to start a contest with just a $29 listing fee, and to pay the rest AFTER seeing the design concepts submitted by our designers.
If they did not like what they saw, they could simply walk away and only lose their initial $29.
By lowering our initial cost to only $29, even skeptical customers were willing to at least give us a try.
Focusing on the Product
Our success depends on our ability to create a process that balances the needs of both our designers as our logo clients. So we spend most of our energy polishing our product. For example:
We made our contests blind during the initial design concept stage, meaning that the designers entering a contest could not see one another’s submissions, to maximize the design creativity of participating designers.
Relist & designer invites
If contest holders were not happy with the initial set of design concepts, we added an option to re-list the contest and invite new designers. We attached a $5 tip with each designer invite to really incentivize designer participation. This worked out really well for both the logo designers and contest holders.
Moderators & designer qualifications
To protect our clients from copycat designs, each winning logo is reviewed by our moderators to ensure its uniqueness and originality. We also implemented a new designer acceptance test to ensure our new designers possess the basic graphic skills needed to produce a professional logo.
Starting a business is harder than you initially think, but interestingly enough, it gets easier as you set a plan and work on it step by step. When I first started 48hourslogo, I knew neither graphic design nor web development. But building a startup is all about taking action.
I am a big fan of Will and Kyle’s blog because it offers a step by step actionable plan of starting a business. When you have a detailed plan, things get a lot easier. So we have a special promotion for startupbro readers where we will give your a free “Featured” contest upgrade. Just click on the following link to get started:
Free Logo Design Giveaway
Thank you for reading my story. We are also giving away a free logo contest valued at $150. If you need a custom logo for your website or blog, Please tell us about it in the comment below. We will pick a winner who we think deserves this opportunity the most by the end of the month.