October 2014 status - a live autopsy and question

I'd expect that any sale of LFGSS would come with a condition that David doesn't start a competitor forum in the next $time_period though, and getting 44k people to open accounts on a new forum would be rather tricky, and the new owners would most likely want to move it back off of Microcosm.

David and investors, I think you should go for a third round of crowd founding.
The time has been too short for launch and make Microcosm known for its potentiality.

Don't give up too soon or you will never know how it could have been ended.

Hi David and all,

Thanks for the honesty. Option 1 seems to be a very final decision, option 4 not a possibility. I think that there is no rush for investors to recoup money - people invested with the knowledge that they may well lose all their money, so I would feel that there is no huge rush to trigger the SEIS relief. Thus, if there is even a glimmer of a chance from pursuing options 2 or 3, I would hedge that it is probably worth doing!

Anyway, whatever you decide to do, good luck and you'll have my support!

I've a question that someone may be able to answer regarding the SEIS relief, how long does it last for? Effectively I'm asking at what point do we stop getting the benefits if the company is closed after that point?

I'm in no hurry to get any cash back out of this. Shares are a long term investment, 2 years isn't a long time.

I have some SEIS forms but still don't know what I'm supposed to have done with them. As far as I'm concerned my investment was a bet. Being prepared to lose it is part of the deal. I would probably prefer the limp along or open source options to shutdown.

I'd also note that my understanding is that course 4 has issues for those of us with shares & SEIS, as we cannot sell the shares for 3 years, and get the capital gains relief.

I may of course be wrong.

SEIS is back claimable for 5 years

It is worth claiming relief, see this thread > http://www.lfgss.com/conversations/229792/

Before releasing any of the intellectual property of the company as open source, the company officers may have to call an extraordinary general meeting so the shareholders can vote one way or another.

I think option #5 is sensible and I don't know why you haven't made "donating" an obligation already, a sales tax or similar could be interesting too, not sure on te legalities surrounding it, but eBay is 10%? How about 2% of sales go in the kitty? If it's what's needed to continue and will be sufficient, then do it. At least try it, then you can go back to considering #1-4 I think enough of the users of the site would value the resource that it is at £10 a year, maybe if all goes well we could get an LFGSS badge one day... @Velocio

I don't think this is about LFGSS being self sufficient - its about making the platform as a whole profitable, which means growth.

Can you not just change your pitch level and see what that brings? If you can pitch to VCs and sell the concept then surely by targeting potential customers instead of investors you can achieve some growth.

I would suggest that you should look at getting a Job and some income asap and perhaps keep it running for say 3-6 months after which time if it doesn't look to have improved then go for option #1

tldr: #2 for a while and then #1 if needs be.

I'm going to speak to Seedrs today about the wisdom of this, but it certainly seems the most sensible route. If it isn't a realistic option (wouldn't grant enough time, or with costs - accountancy, legal, etc - that ultimately mean it delays winding up only by months and leads to a messier end as there would be no funds to clean up tidily, etc) then I'll opt for winding-up ASAP.

I've enquired about a possible job with a company I respect, and that seems to be promising - they are interested in me, and I in them. My concern here is that if I do take the job my focus will be spent on the job and not the (zombie) company. I don't think it's realistic that if I do get a job elsewhere that I will have renewed enthusiasm to leave that and come back to this company once I'm earning a decent salary, focused on other tasks, and living a more comfortable and sustainable life, etc. Not to say I won't want to work on the platform/code... but would I realistically want to go back to the low salary of the last couple of years given that I'm racking up my credit card getting married? Very unlikely.

@salmonchild I think that the issue is that there isn't enough cash left to do that. We need the round to get enough cash to be able to go out and tell people about Microcosm.

I'm not a salesperson, but I saw an opportunity to pitch Microcosm to a company last week, and took it, they bit my hand off, but I'm holding off passing them details until this is sorted, as what they wanted was the 'tumblr for forums' model that David was proposing, the cost of forum was an issue for them, running their own had previously cost them around £600 per year, so they were willing to put down around £300 per year (which was the point where they felt it was worth it for them). They where only a small company doing user groups for a much larger company, and felt forums would help them with coordinating requests.

An no, this isn't about LFGSS being self sufficient, more about Microcosm being so.

Before releasing any of the intellectual property of the company as open source, the company officers may have to call an extraordinary general meeting so the shareholders can vote one way or another.

You do realise I personally am the majority shareholder, and that Matt is the next-largest shareholder?

Additionally you realise that we both hoped from the outset that the work could eventually be open-sourced? And that we are both in agreement that this would assist adoption and growth (less fear of lock-in, which is the major reason cited against using a new community CMS), as well as offer customers a continuity option in the event of the company being wound-up.

The reasons we did not do this on day one are that we never wanted the implementation or pace of development to be compromised by:

• constraints introduced by commodity hosting environments.
  
• the overhead of having to provide installation and usage support whilst the platform was undergoing rapid development.
  
  

In many ways the platform is a complex enough install (load balancer config, django web app and config, API web app & config, PostgreSQL, AWS, monitoring infrastructure, etc) that open-sourcing isn't going to result in the creation of many competitors. There are examples of the same pattern repeating itself, how many Reddit competitors exist using Reddit open-source code? Or how many Wikipedia's using Wikipedia open-source code? Very few in both cases, and I can think of no occasion in which the open-sourcing of community CMS tools has harmed the core product/platform built with those tools.

Another problem for Microcosm (us essentially) I suspect from what David has said is that our user growth is what's being looked at, not our forum numbers growth, and that previously any sales effort took away from the development effort.

Investors would, I suspect, like to see growth patterns like those, not quite understanding that Forums are maybe a little different, and the the numbers will jump if you can bring existing forums on-board, but that finding and talking to forum owners takes time.

I can think however of loads of places that they fit. David has suggested that he thinks that car forums are out of reach, I say we should start them, and go after the little car clubs that are all across the UK. I know of two that exist, that as far as I know don't have a forum at the moment.

I really feel like Microcosm has only been in a place where it can be marketed outside for a month or so, and that it's not yet been given it's chance to shine as a product.

I think that what I'm trying to get at here is that I have a strong preference for option 3, but targeted at a larger amount, maybe via overfunding?
Followed by Option 2, with it left as late as it can be for the SEIS part
Followed by Option 1.

I'll go away and leave this now, I've said my bit several time over, and have been very rambling, for which I apologise.

TL:DR
David, do you you think is best, my preference is strongly 3 (but try for a bigger round to get sales over the next year, even if just one person), 2, 1.

As a user of multiple forums: Pistonheads, WSCC Boardroom, UKLegacy.com and LFGSS I would say Microcosm stands head and shoulders above the software the others run on and is by far the best on mobile. Whatever happens I think you have created a quality product!

finding and talking to forum owners takes time

If I could reduce our issue with failing to achieve the necessary growth to convince early-stage VCs and angels to a single thing, it is this.

Our target market is made up of hobby communities, user groups, residence groups, craft groups, sports clubs, and even small companies, charities, etc. Groups with an average size of between 50 and 500 members, though a few outliers in the thousands+ region.

I always knew that the sales process would be slow, but I vastly under-estimated how slow. Instead of weeks as I anticipated, we're talking 3+ months per customer at a best-case scenario and some of our potential customers are only now converting after a year.

Every potential customer is effectively a committee of (small-c) conservative members who are against change and whom have different views about what is best for them. Each sale is an attempt to herd cats towards a set point, and if the cats don't all reach that point at the same time the sale falls through.

Then, we've failed to adequately build awareness of our product. Having already failed to understand how slow the process would be, I didn't understand that I needed to compensate that effect by putting an even greater effort behind marketing such that we should build a much larger funnel so that even more potential customers were being talked to simultaneously so that the conversions might have been achieved at the desired rate even though each conversion took so much longer to win.

It's not that we didn't build the product that the market asked for, nor that we screwed up the core task of managing the business itself. But that I failed to fully understand that my decisiveness in making decisions for LFGSS isn't reflected by any other organisation or group, and that in fact it's an outlier that isn't reflective of the market.

I just didn't get how slow and painful the sales would be, nor how we should react to those conditions given the tight financial constraints we had.

When some of this became more apparent, I pushed harder for LFGSS to move to Microcosm as it could act as a convincing argument during the sales process that the product really does do everything we promised that it would.

I suspect we should've aimed to be here a year ago (though how with the resources, I'm not sure), or that we should've put less effort into moving LFGSS and spent that money on pure sales resource instead (though I'm watching other startups go after the group market with precisely this sales-led effort and I can't say that is working for them either).

My issue with the #2 option is still that the time that is needed for those conversions to happen is still really long. Far longer than the (just over) £10k in the bank would get us, so I'm not wholly convinced the gamble works. I have Google Docs open and a projection of this in the works to see whether it's truly realistic.

In fact, most of the sales we did make were ones in which the groups were either just small enough at that point that they hadn't encumbered themselves with a committee, or that they had a strong leader who was able to make a decision and get that to be supported by the others in the group.

Hah, I seem to be arguing that totalitarian groups function better. Plato would be proud.

I am wondering if migrations are the way to go, rather than perhaps trying to push the ease of creating a new, awesome forum that just works perfectly via mobiles.
I wonder if you could try and generate some buzz around the ease of creating a new forum and get a whole load of signups that way. Most would likely be tiny and probably not much used, but I recon you would get quite a number of "breakaway" forums signing up by people/groups of people who are disenchanted with (large) forums that they currently use but the barrier to setting up a new forum has been the tech knowledge. You have removed that barrier...

It's true that the platform has barely had a chance to shine but the resource here is a person and it's all well and good for us to say keep going but he's the one earning no money, accumulating debt, working a million hours and tearing his hair out.

P.S. This could probably all have been avoided had the quote function worked properly.

True, part from it was the delay in getting the ignore to work.

Nargh! I said I would walk away! Sorry!

Three final (at the moment) things - I think that @danb is quite likely right, Microcosm has removed a tech barrier to setting up new forums, and as such, pottering along allowing new sign ups is a great idea, to get growth it needs to be listed in places where such people will find it. Microcosm needs to be there when I search for 'how do I set up a forum' or 'Forum Software'.

As for other forums, They shift when they hit a tech barrier - we know that from LFGSS (it shifted when things got too broken, David might have held off longer if not), and most likely do similar searches. Microcosm needs to be in those places, and have eyeballs that way, which would drive the organic growth that is needed if we go to option 2.

@Señor_Bear makes a good point, and that is why I'm keen on a larger Seedrs round, to pay David and A.N. Other (or more if there's cash) properly to work on this and market it for another year or 18 months.

That was our initial play... but small forums take a long time to grow, and so the growth argument still isn't won by focusing on that (hence our switch to focus on the import tool and migration, to push the numbers and make a more compelling growth story).

The best performing (new) forums we host have around 250+ members, with 25+ concurrent online most days.

Most new forums we host have got to ~25 members per forum, with ~5 concurrent most days, in 6+ months of operation. They are small seeds showing solid but very slow growth.

The fundamental hypothesis that we started with has proven to be true, that each forum grows linearly and by hosting many forums it is possible for the compounding nature of many linear growth lines to work as cubic (or exponential) growth. The flaw is that on the graph of this, the x-axis of time has much larger labels we expected. We always knew it would take time, but we didn't imagine it would take this much time.

Again, this is my bias and my flaw... my experience founding forums (Jeepster, Bowlie, LFGSS) and working with forums (Chicago Fixed Gear and other music forums like the Beggars Banquet and NME forums) has always been seen far faster growth per-forum so I believed this was the norm. I also suspect that when I was speaking to other forum owners that I've been misled by survivor bias, I spoke to good sized forums... and obviously (now) those are the ones that grew fast enough to survive - I didn't hear from those that failed.

So aside from it taking ages to acquire customers, it takes ages for those customers to grow to the point that they produce any significant revenue.

True - but are any of them from breakaways/splinter groups?
I have seen it happen on several forums (mostly HiFi / AV related) where a core, key set of users get pissed off with the administration so setup on their own, often taking a large user base with them.

If you can somehow make these key "players" aware of the existence of microcosm and its ease of setup then I think you could grab a large number of users quite quickly.

A lot of forums use google ads - could you take out a small test campaign to target getting adds on forums along the lines of "microcosm: create your own awesome, mobile friendly forum in under 5 minutes, for free! "

If it works, this has the benefit of not requiring a migration but still having a strong initial userbase...

That was part of our growth hypothesis too. That most large new forums are created as a result of schisms or division within existing fora, and so we should be there... easy to use, quick to set up, when that time came.

We have one splinter group from another cycling forum, but as they're currently opting to be stealth (private forum) to avoid the inevitable politics that come from being a splinter group... it's not yet growing fast even though it has a solid core.

It currently resembles a standard, small, new forum as per the stats above: ~5 concurrent users most days.

I understand, but I'm asking if by making luffguss profitable could VB generate enough turnover to sustain the entire project.