Transparency Report #21 – The Good, the Bad, and the … Illegal?

Welcome to the 21st edition of our monthly transparency report (for October 2016). In the series, I discuss various aspects of running a WordPress business. I try to give you the back story behind our strategies, what’s going on right now, and what we have in store next. Check it out if you want to see what’s been happening behind the scenes at CodeinWP, ThemeIsle, and Revive.Social. Click here to see the previous reports.

Cutting down on expenses

October was a really busy month here … it was the first full month without Zerif Lite driving our sales (the story), which means that it was the first month with 50% less revenue coming from ThemeIsle. Not cool.

Luckily, it’s much less dramatic than it sounds, due to the fact that our affiliate revenue has increased a lot over the last 3 months. The payments have just started coming in, meaning that our diversification efforts have paid back just in time! This has helped to ease the pains of lost ThemeIsle revenue hugely.

Nevertheless, I still started the month by further analyzing our financial situation in search for optimizations. Here’s what I did:

  • I calculated the fixed costs (mostly salaries for both the in-house team and contractors) in order to understand if there’s a reasonable chance to continue supporting these costs. The number came to around $50k / month, which should be sustainable.
  • I decided that it’s high time we start accepting advertising on our blogs (this one and ThemeIsle). Right now, this is mostly about paid listings and reviews. This will hopefully increase our revenues by a noticeable amount.
  • I got in touch with the theme review team to find some common ground and start working on getting Zerif Lite back in the repo (considering the fact that some people really understood the nature of those problems and offered their help).
  • I went through our PayPal and bank statements for previous months and looked for any stuff that we can further optimize.

That last point is particularly crucial here. Since I started the company, I have always thought that it’s much more important to focus on growth, rather than on savings and optimizations. I’m somewhat inspired by Jeff Bezos early approach with Amazon. For the most part, it has been working well.

However, this also means that we’ve been wasting quite a lot of money on tools that we didn’t need, or stopped using a long time ago, or didn’t even test entirely in the first place. Our hosting bills were rather noticeable too … mostly because we didn’t ever get around to optimizing our site’s code. We were much more focused on how to bring more people to the site, and didn’t pay enough attention to how to then optimize the site so that it can serve those people more efficiently.

Speaking of bringing people to the site, one more thing that consumed a lot of our budget were various marketing experiments and campaigns. We did a lot of those, and on various platforms. Our main goal was to simply build our brand as the place to go for free themes, without focusing on getting an immediate return.

And don’t get me wrong, I don’t think that an approach like this is bad. It’s great if you can afford it. But it’s also risky in tough times when you really need to pay attention to how each dollar you spend on marketing connects to new dollars coming in through sales.

That time – to get more efficient with marketing – has finally come, so we’ve made some steps to cut lots of things. For example:

  • We reduced AdWords budget 3x.
  • We reduced our hosting costs 2x. This we were able to achieve by reducing our database load. We used to create accounts for all users who downloaded our themes (free and paid), and we also generated licenses for all products that the user was allowed to download. Now we just keep accounts for pro users and generate licenses on the fly for the specific products that the user needs.
  • We reduced email marketing costs by communicating more efficiently (filtered our lists and focused on the users that engage with our content more).

Now, even though we’re reducing our marketing budgets, this doesn’t mean that we’re done experimenting with new methods.

I believe that deciding to stop experimenting altogether is a huge risk in situations like this, albeit highly tempting.

One of the biggest mistakes that companies make is that, after a while, they get totally risk-averse. I mean, it’s easy to see why that’s the case, but that doesn’t make it the right approach.

When you start, you have nothing to lose, but after 4-5 years on the market, you see the stakes rising … people start depending on you being able to make good decisions and keep everyone happy (the team employed, your customers well-serviced, etc.). So you gradually stop taking risks … more and more … and then you ultimately fail.

And I’m not trying to convince you that you should always take risks, and that no matter what the consequences are, you should go ahead and not worry. All I want is to just plant this idea – the danger of being entirely risk-averse – somewhere in the back of your head.

Luckily, I have realized a while ago that I still don’t really have much to lose in terms of the things that I really value – people, experiences, and knowledge, so I’m quite comfortable with risk.

Which brings me to one big risk that we just took last month:

Dev7studios joins the CodeinWP family

I am really excited to announce that we have acquired Dev7studios.com.

Dev7studios

You might have heard of a jQuery/WordPress plugin called Nivo Slider. Nivo Slider is a Dev7studios creation and the brainchild of Gilbert Pellegrom.

According to BuiltWith, the jQuery library with the same name is used by 1.5 million sites, including some really big brands. The main WordPress plugin receives around $1000 / month in recurring revenue.

So … you’re probably asking, why do this? We can barely cover our monthly expenses, but we still go out shopping for new businesses?!

Although it seems weird at first, the more you think about it, the more sense it starts to make:

We did manage to save some money in the first 8 months of the year, so putting this money to good use I believe to be the right direction. What we need now is not cash to burn, but better cash flow altogether. And I believe that introducing a brand like Nivo Slider into our ecosystem of themes and plugins is likely to increase our monthly revenues. I also think that it’s a product that we can promote a lot, due to its overall quality and usefulness. Probably the best content slider on the market right now (my opinion).

Here’s a comment on the acquisition by Gilbert Pellegrom – the founder and previous owner of the brand:

My focus has been on other projects for some time now and so I’ve been considering selling the Dev7studios.com WordPress plugin business for a while. I just haven’t had the time or energy to commit to the products like they deserve.

So I was very keen to sell them to someone who can take the existing products and inject some new life into them. Finding the right buyer within the WordPress community who could not only properly look after our products and customers, but bring the products to new levels was paramount in my opinion.

Thankfully Ionut and the ThemeIsle team were keen to take on Dev7studios.com and I’m very confident they can take the Dev7studios.com products to the next level. I’m happy that our customers will be in good hands.

All I can add is that I’m just as excited as Gilbert about this acquisition, and that I, and the whole team here, will do everything we can to make sure that Nivo and the other Dev7studios brands get the spotlight they deserve.

What developers really love, trademarks!

Unfortunately, the good things are often balanced out by the bad ones, or the problematic ones at least.

So…

Let’s talk trademarks in connection with the WordPress repository.

Not actually encouraged, but if you’re like me then you don’t think much about trademark matters when you develop your next theme or plugin.

In some ways, this is good. I mean, you probably started doing this whole WordPress thing because you wanted to release something useful (and free) to the community. However, sometimes, this can evolve into a real business and that “something useful” of yours can start generating revenue.

Let’s take the Nivo Slider as an example. Gilbert trademarked it in the UK, and we will probably follow in his footsteps and try to get a trademark in the US and the rest of the EU. However, currently, there are plugins in the WordPress repository called WP Nivo Slider, Nivo Slider Simplified, and maybe some others.

Now the hard part, from my understanding, those people are breaking our trademark. There are also some Joomla and Drupal plugins doing the same.

Now that I’m the owner of Nivo, I’ve begun to understand why protecting your trademarks is important, and why I don’t necessarily want other people to use the “Nivo Slider” name. This can affect the plugin’s brand in the long run.

Imagine someone getting one of those other plugins with Nivo in their names. If they then experience problems and end up not being satisfied, then they will also be less likely to reach for yet another plugin named “Nivo something.”

Having this introduction, I have also learned the following (keep in mind that I am not a lawyer, nor this is legal advice; it’s just a summary of my own experiences with trademarks as a business owner; this has been written for entertainment purposes only):

You can infringe on someone’s trademark even if your brand name doesn’t include someone else’s brand name entirely. For example, if you launch a theme called “Photosop” (notice the typo), it still infringes on the Adobe’s “Photoshop” trademark. The wording difference is small, it’s pronounced nearly the same, and they are both in the same “design space.” You need to be careful with stuff like that.

Now, potentially some worse news. If you find yourself in some trademark trouble with your WordPress theme or plugin that’s in the repository, you cannot actually fully rename it without losing the install numbers and reviews.

For instance, even if you change the name, the slug stays the same. Take a look at our Revive Old Post plugin, for example. The slug there is still the old tweet-old-post. What this means, to continue with the “Photosop” example, is that if you’re required to stop using the name, your only choice will be to resubmit it as a completely new theme, and lose all your metrics in the process.

Going back to my first point – that we don’t usually think much about stuff like naming when working on new things – the message I want to convey here is that you really do need to do your research diligently. You really don’t want to be forced to take your theme/plugin off the market purely because the name it uses is too similar to someone’s trademark.

And the worst thing about that whole thing is that the trademark doesn’t even need to be a hugely well-known one. All trademarks are protected equally (it’s one of the rules of having a trademark that you’re obliged to protect it). No matter if your plugin is called “Coca Cola Plugin” or “Joe’s Noname Plugin” it can still be hit just as hard from a trademark infringement point of view.

Conquering ThemeForest

Sorry, I couldn’t resist using the word conquering.

Anyway, I’m happy to let you know that our first theme has been approved on ThemeForest. TheMotion is now available.

TheMotion

As you can see, it’s not selling like crazy right now, but having our first theme in that directory is an important step for us. Now that we got the process started, we can learn how to optimize everything for any subsequent themes. And we’re also planning to release all future themes to ThemeForest alongside having them available on ThemeIsle.

(By the way. After doing some research, we’ve also learned that $79 is the right price point for us. What’s yours?)

As to why we’ve decided to put more focus on ThemeForest, there are two reasons:

  • Diversification – the obvious one.
  • We are basically blocked by WordPress.org’s rule of 1 theme in the queue per author, so we’re forced to focus on premium products more than on the free ones.

That second thing is unfortunate. We have some interesting free stuff in the pipeline, but we simply can’t get it shared with the community through WordPress.org in a reasonable amount of time. So most of the new free things are now on our own website, and the rest is just waiting for better times.

Hopefully, we can have our next theme – Hestia Pro (demo) – online on ThemeForest by the end of Nov. Also, I’m hoping that we will be able to maintain the pace of 1 new theme per month.

Big thanks to the team

As you can imagine, having your theme removed from the repo can be a little de-motivational. Most of the people in our team are makers/creators. They build our stuff, support our customers, and do their best every day. So seeing their top work removed from the repo was frustrating (even though it was the right thing to do by TRT).

Nonetheless, I am hugely grateful that everybody did their best during those last 2 months, and worked harder than ever to make sure that we reach our goals.

Thank you!

And sometimes things happened in surprising and funny ways too. For instance, Andrei, who is our full-stack developer, decided to record the voice-over for one of our product videos himself, just to save money.

Maybe there’s a career there for him, what do you think? 🙂

By the way, #WCUS is just around the corner. The majority of our team is going to be there as volunteers. Plus, I will also attend the Post Status Publish event. Don’t hesitate to say hi if you’re there too!

What’s with the revenue?

Okay, so it’s been a long while since I shared any raw numbers. Let’s do that today, just so that you can get a general overview of where we’re at with the bottom line. Data for Oct 2016:

ThemeIsle:

Revive.Social:

CodeinWP:

  • Affiliate income:
    • Hosting: $20,000
    • Themes: $8,500
  • Other partners: $4,000

Here’s the overall breakdown:

(Chart by WordPress Charts and Graphs Lite.)

As always, thanks for reading and for supporting CodeinWP! Stay updated and get new reports delivered to you by subscribing here:

All edits and witty rewrites by Karol K.

Ionut Neagu

Love to travel, share and help others, I am working with WordPress at ThemeIsle.com. Passionated by Growth Hacking and the big things around me (trying to understand people, society, economy and our world ).
  • Miguel

    Great post Ionut! Thanks for sharing all this useful information, congratulations for Dev7 and best of luck with the sales at Themeforest!

  • Matthew Cain

    Thanks Ionut! It’s always interesting to read your transparency reports!