About 17 years ago (back in 2005) when mortgage interest rates were around 6% I posted an article called How interest rates can drastically affect real estate prices. At the time I was already amazed by the low interest rates and was concerned they would go up and how it would affect people. It’s finally started to hitting us, and what’s even more challenging is that the percentage increases per 1% is higher than it was in 2005 because interests are so much lower today than back then. In other words going from 6% to 7% is an increase in monthly payment of about 10% whereas going from 3% to 4% is an increase of between 13% and 14%. In fact at the time I hadn’t even calculated below 4% because I never thought it would go that low because that was below the historical inflation rate. We definitely live in different times.
In the last few months we’ve just gone from 3% to about 6%. I’m going to use 30 year fixed interest rate because it’s a lot easier as I can just use the FRED data. In any case that’s a 3% increase in a matter of months. That’s also double the interest rate! Looking at the chart from my previous article about how interest rates affect real estate prices, someone who could afford a $1000/mth mortgage back in the summer of this year could afford up to about $235k mortgage whereas today that translates into a $167k mortgage. That’s a huge drop of about almost 29% affordability. If you look at the median house price across the US of $429k (as of early 2022) then that means a drop of $124k, or a drop from $429k to about $305k. That’s very significant.
That was at the time while the market was hot and people were buying. What happens today when people are struggling financially and buying is much much lower? Where you just can’t flip your house or refinance on a higher valuation? If you look on Reddit there are a lot of stories of people on variable interest rates seeing large increases in their monthly mortgage payments. We’re talking multiple hundreds a month to over a thousand dollars more per month. That hurts.
Let’s do the reverse and let’s calculate the difference in monthly payments on a mortgage that was previously paying $1000/mth at 3% interest. We’re still going to use the 30 year fixed mortgage but the math still applies to variable rate mortgages as well as people who need to refinance. That being said a $1000/mth mortgage at 3% affords you a mortgage amount of about $235k. If we take that same $235k and apply a 6% interest rate then the payments balloon to a little over $1400/mth a month for a 40% increase in your monthly payments.
If we extrapolate that to the median house price (assuming 0% down to make the math easier) then that means a mortgage of $429k with a monthly payment of a little over $1800/mth. Today that has now exploded to $2572/mth for an increase of $772/mth. That’s very significant for the vast majority of people. That’s an increase of almost 43%! It’s not just the percentage but the absolute amount of $772/mth is by itself very significant considering the annual median household in the United States is $70,784 (as of 2021). That’s an increase of over 10% of their salary going to their mortgage. And that’s before taxes! If you do the math after taxes it’s probably 15-20% and higher. Ignoring that the median income generally cannot afford the median house, but if it could then the math would be even more challenging.
And we haven’t even started to touch on the topic of those mortgages which keep the monthly payments the same but add on the difference in payments to the mortgage amount. Meaning that if your monthly payment was suppose to go from $1000/mth to say $1400/mth than that $400/mth difference just gets tacked onto the principal amount. Meaning each month your principal is very likely increasing. For a median house that’s an additional $772/mth increase to the mortgage. It won’t be exactly that because of the details but it’s quite significant nonetheless. In other words they would be getting more and more into debt. What happens when they refinance when the mortgage term is up?
And that’s the key. The fallout will take some time to happen. There’s a lot of complexity and variables but there will be a correction, the question is more of when exactly. The first question is what is the average term of mortgages these days. In other words when are most people due to refinance? Until it comes time to refinance a decent amount of people will be able to muddle through. Not everyone but a lot. But once refinancing hits that’s where it will be very challenging for a lot of people. Especially if interest rates continue to climb as is expected to fight inflation. Yes we’ve pushed back inflation a little bit but I don’t believe that battle is anywhere near over. The other question is how many are on variable rates that can continue to holdout.
In addition as interest rates climb prices of houses have to fall. Prices were so high because affordability was so high because of the historically low interest rates. Aka free money. But in turn when interests go back up that also means house prices will have to drop which in turn means for a lot of people their equity will be decreasing. Instead of refinancing to take out equity of their property they will have to put in balloon payments if they end up being underwater. Can they afford that difference?
The other question is will inflation continue to be higher than interest rates because if it does then that could help out a lot people. So for example if inflation were to be at 10% (an even number) then assuming you had a 10% raise and the interest rate on your mortgage remained at the current 6% then you would actually be ahead. That mortgage would be worth less in 2022 dollars. As a more extreme analogy imagine a $30k mortgage for a house in 1980. $30k today is a much smaller amount then it was in 1980 and would be much more manageable then the median $429k. Of course it won’t be as extreme but when inflation is higher then interest rates it can be challenging. Even more so if salaries rise with inflation, which unfortunately doesn’t seem to be the case right now. Nonetheless inflation is having an impact on mortgage affordability.
Seeing as the goal of the Fed is to keep inflation rates in check I believe they will have no choice but to continue raising interest rates until inflation starts to go down, at least in the short term. At the very least keeping it higher then we’ve been used to for many years until inflation starts to get more reasonable. And that’s relative, even today’s “high” interest rates should be considered historically low interest rates. Pre-2000 interest rates were pretty much always above the current rate of 6%. The real question is how will this all play out in terms of interest rates and inflation as they both have very big impacts on loans and mortgages. The speed and scale at which they are moving doesn’t give the markets the chance to easily absorb the changes. This is leading to a lot of chaos and distress right now.
On a positive note there will be a lot of buying opportunities in the near future for those who position themselves well. Even with all the doom and gloom, or in fact because of the doom and gloom, there will be some great opportunities. As the saying goes, fortunes are made and lost in times of chaos, and we are clearly heading in such a time. Not that 2020-2022 were easy times, I just suspect that 2023 will be more interesting in terms of the impacts interest rates and inflation will have on the markets (financial and real estate). We’re about to see the true costs of all the recent money printing and the long term low interest rates. The can was kicked down the road but we’re now getting near the end of the road and can’t really keep kicking it much further without risking high inflation which is a much bigger and worse problem. Some even speculate a once in a generation market crash, a super cycle if you will. Whatever happens the thing to remember is that when there is chaos there is always good opportunities for both failures and much much more importantly successes. May you be one of the successful stories of 2023!
Well it’s actually closer to a year and a half if you include the initial private by invite only release of the web based LandlordMax Cloud Edition but nonetheless I will say that it was the best decision we could ever have made. It’s been a huge success!
We knew there was a lot demand but we never expected to be as massive and as dramatic as it turned out to be. We initially released the LandlordMax Cloud Edition by invite only to existing customers so that we could roll it out slowly, get customer feedback, and basically do a very managed and controlled rollout. Within a month it was clear that was not going to happen, the demand far exceeded our expectations. We did a full public release within just a few months, well ahead of our schedule, again due to the overwhelming demand. A good problem to have. And our public release exceeded our expectations!
We were initially planning on offering the installed Editions such as the Desktop Edition, the Soho Edition, and so on in tandem with the web based Cloud Edition but within a month more than 97% of all activity immediately transitioned to the web based Cloud Edition. Yes that huge a percentage in just the first month! And it only got more one sided from there. The demand was so one sided that we discontinued the previous installed Editions in favor of the web based LandlordMax Cloud Edition.
It’s interesting how much the market has shifted over time, especially in the last decade. Up until the early 2010’s everyone wanted installed software, there was almost no demand for web and cloud based property management software, and as a result very few existed. Again it was all installed software. On a side note 2008-2009 were very interesting years in that the financial crisis weeded out a lot our competitors. In any case back in the early 2010’s there was the odd request for a web based solution but it was very rare. It’s not that people wanted one or the other, I think it just wasn’t yet on people’s radars.
By around 2013 we could start to see the demand shifting. It wasn’t massive or anything but if you responded to customer support requests or pre-sales requests you could start to see some demand for web based solutions. Not a lot but some. It was more of a low rumbling in the background slowly building up steam.
Our first official announcement came a year later in late 2016. First in our email newsletter and then here. By then we had already been working on it for some time and I described some of the features we hoped to deliver with the new web based Cloud Edition of LandlordMax. Things like new filters, a reporting system that would allow custom reports, and so on. Interestingly enough, and on a very positive note, most of the features I described are now available in the Cloud Edition which is great to see that we were able to fulfil the majority of our goals.
As time passed the demand for a web based cloud solution just kept growing and growing. By 2017 it was clear that if we wanted to stay in business we had to offer a web based cloud solution. By 2018 it wasn’t even an option. At that point I believe we were one of only 2-3 solutions left that still offered installed software, everyone else was either closed for business or had transitioned. I believe that today there is only 1 installed solution left in the market. The demand for installed software has completely shifted to web based cloud solutions. There will always be a small number of people who wanted installed software but they are a shrinking minority.
The analogy I like to use is Blockbuster versus Netflix. The demand for streaming media started slow but it gained more and more momentum until Blockbuster eventually went out of business and Netflix became a huge success. There are still some people who prefer to rent movies but they are a dying breed, which is why you only see the odd niche movie rental store. Blockbuster had the opportunity to shift but for whatever reason they decided to stay with their old business model. We did NOT make that mistake, we saw the shift in demand and transitioned to meet our customers needs.
It took some time to build the web based Cloud Edition and in 2018 we did a private release by invite only of the web based LandlordMax Cloud Edition. As much as we wanted to do a slow rollout the demand was too significant and as a result we accelerated the full public release. And as I said above. within a month of releasing the web based LandlordMax Cloud Edition more than 97% of all activity immediately transitioned to the Cloud Edition. That includes both new and existing customers. And it only got more one sided from that point on.
As you would expect we’ve seen incredible growth this year. We’ve been experiencing double digit growth every single month since we released the Cloud Edition which clearly confirms we did the right decision to build a web based cloud offering.
On somewhat of a tangent I will say that we’ve also experienced some significant changes in terms of customer/technical support. The most noticeable change is that we no longer get support requests from people who lost everything because their harddrive or computer failed (with the installed software everything is only stored on the user’s computer). Less than 20% of people even have weekly backups so combined with harddrive and computer failure rates (nevermind computer viruses, etc.), well as you can imagine this was a terrible but unfortunately too common issue for which we could do nothing. Today this is no longer an issue. In my personal opinion I believe it’s one of the big motivators and attractions of web based cloud services for most people. It’s a big reason why I’ve personally changed my opinion from 2012, where I now believe cloud solutions are better than installed software for most people. I very strongly believe that way more people lose their data to failed computer systems then to failed cloud services, and by a very large margin. Most people will experience some kind of computer failure that will result in loss of data at least once every few years based on my experience so being protected against that is very valuable, especially for business critical data like that which is stored in LandlordMax.
The other really big change is that we get almost no IT related support request any more. These can range from simple questions such as my icon to start the software has disappeared to I brought my computer to an IT repair shop and now the software is missing to much more significant issues such as my antivirus has suddenly decided to incorrectly block the software’s access to the database files and so on. One of our top 3 support requests before with the installed software was how to copy and paste the license code into the software, a lot of people do not know how to copy and paste so they would manually type in the license code and all it takes is for one typo for the license to fail. In fact 9 of our top 10 support requests were all IT related and they are all completely gone now. We almost only get questions on how to operate the software, that is how to handle specific use cases and scenarios which is great. As much as we love to support our customers it’s still important to keep in mind that IT related questions are almost never due to issues with the software. In addition to improving the quality of support requests it also means that customers who are less IT inclined are not blocked due to an IT issue outside of the software such as not knowing how to download software from the internet.
Getting back to the topic at hand the feedback we’ve received has been overwhelmingly positive. Of course in addition to it being a web based cloud solution we’ve also added a lot of new features (and more have been added since that list was first created). The biggest ones being the ability to create custom reports on top of quite a few new major reports. But there are also a lot of other smaller new features such as the ability to search on any column in any table, select the columns on every table, and so on. In other words in addition to being web based we also took the opportunity to add quite a lot of new features.
Another really big benefit for both us and our customers with the software being a web based cloud system is that we can update the software with new features on a regular basis, we no longer have to wait until a major new version is released to release a ton of new features all at the same time. And we’ve definitely taken advantage of this, we’ve released a number of new features since the initial release of which you can find some listed in the LandlordMax company blog. I can’t express how much better it is to release new features on a regular basis then having to wait for new major versions. We, both us and our customers, really benefit from this.
All in all releasing the web based Cloud Edition has been an amazing success and one of the best decisions we ever did. If I could go back in time all that I would change is that we release it sooner than we did. The feedback has been overwhelmingly positive. Our growth rate is the highest it’s ever been in the 16 years we’ve been in business! The software was showcased as a success story on Vaadin for how well it was programmed. So I can only imagine what the future holds for us at LandlordMax.
It’s hard to believe it’s already been 15 years since I incorporated LandlordMax this month! About a year more if you add the time before the company was founded, that is when the first pieces of the code were written. All in all it’s been quite a ride.
We’ve posted a pretty in-depth history of LandlordMax on our company blog including screenshots of the earlier webpages all the way to the software itself, including the very first version! It’s interesting to look back and see just how much the software has evolved over the years. The thing to remember is that the computer landscape was very different back then, the iPhone was about half a decade from being released (Android as well). Google was a new company barely 5 years old. Most computers back then had about 5% of the RAM as they do today, and they were also much slower. HDTV (High Definition TV) was something only a small number of people were aware even existed. And in fact Blu-Ray had just come out and a new player cost about $3500-$4000. Things have definitely changed since then.
In fact we launched LandlordMax just a couple of years after the end of the dot com crash. We also survived AND thrived through the financial crisis and real estate market crash of the late 2000’s. We’ve been around around for a while!
And with that we celebrate our 15 year anniversary. I recommend looking at our company blog post LandordMax 15 Year Anniversary to really get a sense of how much the software has changed and evolved over the years.
The LandlordMax Cloud Edition is now publicly available! Although we pre-released it a few months ago to existing customers I’m happy and proud to say it’s now publicly available to everyone! You can access the new Cloud Edition at: https://app.LandlordMax.com You’ll find the Cloud Edition also includes some new features that are exclusive to the Cloud Edition including but not limited to:
Online and web based
Ability to edit entries in the tables directly
Searching and filtering on ALL columns in the tables
Ability to create custom reports
Many new reports including the completely redesigned Profit & Loss reports
Very significant performance improvements
Built-in word processor
Completely redesigned Automations which can run custom reports
Multi-user and computer support at no additional costs
And so on…
You can click here to read the full release notes which includes most of the new exclusive features of the Cloud Edition. The release notes include screenshots and instructions on how the new features work and how to use them, basically everything you need to start using the Cloud Edition.
Before I continue I just want to take a moment to say we sent out a lot of emails to notify our existing customers but please note that if your email is no longer current then you would not have received your invitation email. It’s also possible we haven’t yet sent out your pre-release invitation as we were sending them out in phases. Our goal was to send out invitations to at least half of our customers before we released it publicly to give people a chance to transition, the rest of the invitations should be coming in the following months. In any case you can start right away, you don’t need an invitation any more to start using the new LandlordMax Cloud Edition.
With that I’m proud to say we were able to include almost every single feature we wanted to that I listed in my post on this blog here from two years ago which is amazing. Even better we included some features and functionality I said we would not be able to include in the initial release of the Cloud Edition! Specifically we included filters and searching on all tables, customization of printouts, built in word processor, custom reporting, and the ability to edit entries directly in the tables. We also significantly improved the reports, and some got complete overhauls such as the Profit & Loss and Tenant Statement reports. And very importantly we completely redesigned the Automations which now allow you to run any landlord or tenant report in batches, even custom reports you create!
The Cloud Edition is a major new version, I should say Edition, and it includes a lot of new exclusive features. Again I definitely recommend looking at the Release Notes. I initially planned on going through many of the bigger points but I quickly released it got too long and instead decided to refer you the Cloud Edition release notes. As you can well imagine we’re very excited about this release!
If you have any questions please contact our support team. We’d also love to hear your feedback on the new Cloud Edition, so please feel free to send us feedback and comments you may have as well.
And with that I invite you all to the new LandlordMax Cloud Edition!
As most of you already know I’m the founder of LandlordMax a company which makes property management software. As a result I try to stay up to date with everything real estate related, and part of this effort is listening to real estate podcasts. What I’ve unfortunately found is that often potentially interesting podcasts are short-lived. People often start new podcasts and within a few weeks to a few months it’s basically over. As a result today I decided to make a list, partially for myself, of all the podcasts I’ve listened to at least once that have over 100 podcasts or have been around for at least several years. In other words podcasts are active and should continue to be active for a long time.
As a side note, if I missed anyone please give me a holler and we can look at adding you to the list.
In alphabeticalorder the top real estate podcasts that meet the above criteria are:
Although blogging protocols strongly recommend that you should never apologise for not having written in a long time, I nonetheless believe it’s important that I do since it’s been over a year now. This is completely my fault and I don’t have a good excuse. All I can say is that I’ve been incredibly busy and as a result I’ve had less time to blog. I tried to start up last summer after a hiatus of a year but it ended there as I quickly got too busy again. I don’t plan on making the same mistake again.
Since then a lot has changed, especially in regards to my company LandlordMax. At the time of my last post we had just released version 11.05 of LandlordMax about a year earlier. I’m happy to report that version 11.05 has gone through several updates and is doing very well. Version 11.05 was a massive release! Each of our releases (new major versions) is bigger than the previous one and version 11.05 was once again our biggest release so far.
Since version 11.05 was released I’ve transitioned to the upcoming major new and exciting Edition of LandlordMax called the LandlordMax Cloud Edition. Although it’s not yet available we’re now officially starting to talk about its release. Just to quickly re-iterate for those who aren’t aware, it’s our policy that we do not officially state release dates. We will talk about how we’re progressing in the email newsletter and I will give updates here on my blog but due to the nature of how software works we do not give out official release dates. One of my favorite articles on this topic asks you to estimate the time it would take to walk from San Francisco to Los Angeles. I have no doubt that the answer, and article, will very much surprise you. I have yet to meet someone who comes close to a correct estimate.
But getting back to the topic at hand, the Cloud Edition of LandlordMax, I’m proud to announce that we’re working on this brand new Edition of the software called the LandlordMax Cloud Edition. The Cloud Edition will be web based and will be available as a cloud service only. In other words you won’t have to install any software, worry about backing up your data, etc., everything will be managed for you and be accessible directly through the website from any computer on the internet.
We have been working on this Edition for some time now. And just like all our previous releases this is going to be our biggest release ever in terms of scale and effort! Not only will the Cloud Edition offer the same functionality as the current software but it will also enhance many of the existing features as well as add some new major features!
Now before I begin please note that all the following are being actively worked on and although we’re officially working on a Cloud Edition the features mentioned below are unofficial and therefore may be subject to change. We don’t expect any changes because most of what will be mentioned is either already either completed or well on its way to being completed, but we still nonetheless need to state it just in case something changes between now and the release date.
That being said one of the major new features of the Cloud Edition will be the ability to filter/search on a per column basis. In other words instead of the Data Filters that are currently available you will be able to manually type in the header column what you want that column to be filtered on. So for example if you only want to display the accounting entries for the tenant named John Smith you can type in his name John Smith in the name column header and only accounting entries for John Smith will appear. If you want to further restrict the accounting entries to just the tenant John Smith and say entries where the Description field includes the word “Utilities” then you can additionally enter in “Utilities” in the Description column header and now only entries for John Smith and “Utilities” will appear in the accounting table. In other words all columns are searchable/filterable. You can even select ranges of values where appropriate, etc.
Another major feature we’re working on is a brand new templating engine for almost everything that’s printed. This includes everything from workorders, invoices, receipts, etc. to reports, and so on. We’re working on a built-in word processor which will allow you to edit the templates and generated documents directly within the system. You’ll be able to completely customize them as you wish directly in the software. If you want to include your mailing address in the invoice template then you can do so. If you want to include a specific notice on all your receipts, you can do so. You will have full control of the output printed out in a built-in word processor.
In addition to editing the template you’ll be able to select what data (within some constraints) will appear on the invoices, receipts, workorders, and reports. So for example if you want to include different values in a report than what is currently available you will be able to do so. You will be able to select which columns appear. I won’t get into the specifics now because we’re very much actively working on this and deciding the details, but let’s just say you can decide what data you want presented where in the reports within reason. You won’t yet be able to create a new custom report but you’ll be able to select which data is outputted, how it’s formatted, etc. For example maybe in the rent roll report you want the cell phone number and email, maybe you want the address, maybe the security deposit amount, etc. You can basically decide what data is presented for the available reports.
Keep in mind that in addition to selecting the data you can also select the formatting, which means that if you want the text to wrap you can set it up so that the text wraps rather than being truncated as it is now (with the three periods at the end). You will also be able to select the font type, font size, etc. amongst other goodies.
Now because you can create and edit your own reports, templates, etc., the software will also have the ability to manage these templates. As a result you will be able to save your report templates and select the ones you want to use when it comes time to print the report, which means you can have multiple report templates for a single report. You will also be able to select from the list of invoice templates you’ve customized, and so on. You could have 10 different invoice templates which you select based on the specific tenant, it’s completely up to you. We’re trying to make it as flexible as possible.
We’re even taking it a step further where you will be able to generate documents such as lease agreements based on your templates. In the example of the lease agreement the software will automatically generate and populate it based on your tenant’s information in one step. You will then be able to both store and print the generated lease agreement all directly within the software. The same is true for notices, and so on.
Now what happens if you need to make an edit to the lease agreement after it’s generated? Well you’ll be happy to hear that we’re also working on post-generation editing. In other words you will be able to edit the generated lease agreement after it’s been generated from the template in case you need to make some specific changes to just that single lease.
These are just a few of the things we’ve been working on in addition to creating the Cloud Edition. There is quite a lot coming and this effort has been massive, and hence why it’s taking longer than expected. It’s also why I’ve been so busy and haven’t had the time to focus on my blog or our company email newsletter, for which I apologize. From now on I will be updating you with more details as we progress through the development of the new Cloud Edition. I also plan on releasing some preview videos in the near future.
There is a lot coming down the pipeline and I’m exciting to see what 2017 holds for LandlordMax!!
Yes I’m still alive and well. I know you’re not suppose to post a where have you been or sorry for not writing in a long time, but I’m going to break the rule since it’s been over a year since my last post.
So where have I been? Working very very very hard. It’s not an excuse for not posting yet at the same it is. I’ve been so overwhelmingly busy that I just haven’t had the time to post. Each post takes me about a day to write, well this one is an exception, but on average they take me several hours to about a day to write. I wish I had more time but I just don’t. As my company LandlordMax continues to grow I find that my time is more and more limited.
I’m not the only one, I remember for example reading Joel Spolsky’s blog JoelOnSoftware on a regular basis. I just looked at his blog recently and he’s only written two blog posts in two years, which made me feel better for not having as much time myself. He’s not the only one, it’s actually quite common, he’s just the one that came to my mind first as I was writing this. Unfortunately this is one of the side effects of growing your business. I’m of course going to do my best to be the exception to the rule!
That being said LandlordMax is now on it’s 12th year of business! We’re preparing to launch a web based cloud version of our property management software LandlordMax very shortly. Our current goal is before the end of the summer and we’re working very hard to achieve this goal!!
This obviously opens up a number of questions, such as what will it cost, and so on. All that I can say at this time is that we’re working out the details of our business model. A web based cloud version is very different than a downloadable version, there are different cost factors and so on to consider. So although we’re ready to announce that we plan on offering a web based cloud version very shortly, we’re not quite ready to announce it’s pricing model yet. That being said we’d love to hear your feedback and comments so please feel free to contact us.
That being said you should expect to start seeing some previews of the new web version shortly, including video previews. We’re not quite ready yet but it shouldn’t be too much long. The previews will not just be here but also through our email newsletter. I have to admit our email newsletter has also fallen quite behind but I plan on resurrecting it very shortly. And the closer we get to the release the more details and information I will be able to share.
So in the spirit of breaking the blogging 101 rules, here’s to apologizing for not posting more often and that I plan on posting more in the near future! Your classic Blog faux pas.
Dharmesh is a software entrepreneur and currently the co-founder and Chief Software Architect of HubSpot, a software company building a revolutionary software platform for Internet Marketing. HubSpot is his third software startup.
Dharmesh is a technologist, more specifically, a software developer. He’s built and shipped approximately ten commercial software products across my various startups. He still programs as it keeps him in touch with reality and makes him a better entrepreneur. Plus, he enjoy it.
Prior to founding HubSpot, Dharmesh founded Pyramid Digital Solutions, an enterprise software company in the financial services sector. Bootstrapped with less than $10,000 in capital, Pyramid went on to demonstrate exceptional growth and was a three-time recipient of the Inc. 500 award. Pyramid Digital Solutions was acquired in August 2005 by SunGard Business Systems.
Since the sale of Pyramid, he has been an active member of the entrepreneurial community in the Boston area and has made several angel investments in early-stage technology companies. Dharmesh has recently graduated from MIT with an M.S. degree. As part of his graduate work, he wrote a thesis focused on software startups. Dharmesh also has a B.S. in Computer Science from the University of Alabama in Birmingham (UAB).
Interview:
Steph:What makes a blog successful according to you? Is it traffic, reach, revenue, etc.?
Dharmesh: The most important two numbers I track are the number of subscribers to the blog (via RSS and email) and the daily unique visitors. This gives me a sense for how many people the content is reaching.
Steph:When did you decide you finally reached success with your blog?
Dharmesh: I’m not sure I’m there yet! I don’t think it is binary (i.e. you don’t wake up one day and say “yesterday, the blog was not successful. Today it is.” Having said that, the big milestones for the blog , and what signaled to me that it might become popular, was when there were large spikes in traffic. These spikes occurred when I was linked to by one of the A-list bloggers or made the front page of one of the social content sites (like Digg.com or Reddit.com).
Steph:How long does it take to become a successful blogger?
Dharmesh: For OnStartups.com, it took about 6 months before there was steady traffic and the site started becoming reasonably popular. A lot depends on the topic being written about, the talent and determination of the blogger. Though it took me 6 months, my guess is really good bloggers could likely create reasonable traffic and visibility in just a couple of months.
Steph:Who do you think are the most successful bloggers on the internet today?
Dharmesh: This is a tough one, because a lot depends on how you define success. The bloggers I admire most are those that built a following through their blogging efforts — and weren’t already widely known before that. For example, I love the blogs of Guy Kawasaki and Seth Godin. But, they were both famous well before they started blogging. The ones I admire most are those that weren’t really famous before they started their blogs. Examples include Brian Clark, Darren Rowse, Richard MacManus and Joel Spolsky. All of these folks used their blog to build their brand and represent (in my mind) some of the best writing on the web.
Steph:Which five blogs do you regularly read?
Dharmesh: I read lots of blogs regularly (and am subscribed to 193 feeds now, after a bit of cleanup last week). The ones I follow most closely are: TechCrunch, SEOmoz, VentureBeat, and Xconomy. Disclaimer: I’m an early investor in Xconomy, hence I have a bit of a bias).
Steph:Which websites would you recommend for any new bloggers starting to blog?
Dharmesh: I’d suggest most of what you need to know about blogging you can get from: ProBlogger.net, and CopyBlogger.com.
Steph:Which book(s) would you recommend for new bloggers (these can range from marketing books, blogging books, etc.)?
Dharmesh: I like Bob Walsh’s “Clear Blogging” (but that may just be because I’m in the book). I’d also recommend “The New Rules of Marketing and PR” by David Meeman Scott. This is a great overview book of how marketing has fundamentally changed. [Disclaimer: David is on the advisory board of my startup, HubSpot].
Steph: What is your most successful blog post ever?
Dharmesh: I actually write actively for two blogs: OnStartups.com (about startups) and Blog.HubSpot.com (about internet marketing). The most successful article on my startup blog was “Hindsight 2.0: Lessons From A Failed Web 2.0 Startup” which has been viewed over 56,000 times. The most successful blog post on Blog.HubSpot.com was “12 Tips To Search Google Like An Expert” with over 107,000 views.
Steph:What’s your biggest tip on writing a successful blog post?
Dharmesh: Have an opinion, take risks and always, always, always think about your readers.
Steph:What’s your best advice in regards to content and writing for bloggers?
Dharmesh: People like short articles better than long ones, and bullet points more than paragraphs. We live in an impatient society. If you want to build a popular blog you should face this reality. You can write long, academic and deeply analytical articles, but it takes a lot more talent for that kind of blog to become popular.
Steph:How important do you think are the headlines of your blog articles?
Dharmesh: Extremely important. Particularly in the early days when you’re just getting started. When nobody knows who you are, and your blog is not a recognized brand, the headline is your only chance to pull readers in. Doesn’t matter how great your content is if nobody reads it. Once I have an idea for a blog article, I usually write the headline first.
Steph:Do you spend any money and time on marketing?
Dharmesh: I don’t spend much “hard cash” on marketing. However, my blog runs on custom software that is part of HubSpot (my startup). So, in a sense I am investing in marketing by way of building the software that powers the blog. But, I don’t do much direct advertising or other promotion (except as a tool to learn about how those things work).
Steph:What are your main methods of marketing your blog?
Dharmesh: The social media sites (Digg, StumbleUpon, etc.), search engine optimization and the blogosphere (participating in other people’s blogs by leaving comments). Of these, the SEO investment I’ve made pays the highest dividends. 40% of my traffic comes from search engines now and the number continues to steadily increase.
Steph:Which marketing tactic has surprised you the most in terms of its effectiveness?
Dharmesh: I’m amazed at how effective StumbleUpon is at driving traffic over the long-term. Digg is nice for big spikes in traffic, but it is very binary (if you don’t make the front page, you get almost zero traffic). But, StumbleUpon will send some modest traffic for a modestly successful article. That’s good, because it’s hard to make the Digg front page.
Steph:What are your quick and short five best tips for blogging?
Dharmesh:
Start! (most of the would be great bloggers have not started a blog. You could be one of them)
Write better by reading better.
Emulate the masters.
Think of your audience.
Have fun!
Steph:What is the most common pitfall new bloggers generally fall into?
Dharmesh: The most common is never getting started or abandoning too early because things don’t take off. In the early days, you need to be consistent and be patient. The second is not owning your own domain. Do NOT put your blog on something.wordpress.com or something.blogger.com.
Personal Offer: If you’re reading this, and are still not convinced that you need your own domain, track me down and send me an email. I’ll send you $10 to pay for your first year of domain registration. Offer expires Jan 1, 2009. Quantities limited (let’s say to the first 1,000).
Steph:If you knew what you know now when you first started, what’s the one biggest tip you’d give yourself today?
Dharmesh: I would tell my former self to stop procrastinating and have gotten started sooner.
Steph:What repels you the most from a blog (animations, in your face advertising, etc.)?
Dharmesh: Blogs that are hard to read repel me the most. I don’t mind ads as long as they don’t detract too much from my consumption of the content.
Steph:Do you make any direct money from your blog through advertising, product placements, etc.?
Dharmesh: I am not monetizing the blog currently (other than to run small experiments and learn). I took all of the proceeds of 2007 from the blog and donated them to charity. Will likely do the same again next year.
Steph:What is your best monetization method (Ads, affiliate marketing, etc.)?
Dharmesh: Technically, the fixed block ads are the most valuable, but right now, I’m only advertising my own startup so no direct cash gets generated. The second most profitable vehicle is Amazon Associates (I maintain a suggested reading list page).
Steph:Do you find you get more from direct monetization of your blog or from opportunities that come because of the existence of your blog?
Dharmesh: Hands-down, the value for me is not direct monetization but from the people I come into contact with via the blog and the credibility it builds. A number of the folks I have recruited for my startup originally found me through my blog.
Steph:What’s your most interesting story related to your blog and blogging experience?
Dharmesh: My most interesting experiences are when I meet random people that make reference to an article I wrote (but they don’t know that I was the author). The article that gets this the most is my “Google As Dictator” article. People still bring that article up in conversation and are surprised when Ii tell them I wrote it.
Steph:What’s the one biggest opportunity that came to you because of your blog?
Dharmesh: Not to sound immodest, but I’m at a stage where I’m no longer really seeking big “opportunities” (I’m happily married and have a fast-growing startup). I already have more opportunities than I know how to deal with.
Steph:Any other comments or thoughts you’d like to share?
Dharmesh: I think blogging for business or pleasure is an immensely powerful thing. As more and more people connect online, I think they are going to start seeking targeted content about topics they care about. Everyone should try blogging, because everyone has something to say that somebody somewhere cares about.
Derek is an average person in his early 30’s working as a Senior Software Engineer that’s doing his best to provide for his family and enjoy life along the way His family is number one in his life, although there are times when his wife might argue that blogging has taken over that spot. Outside of spending time with his family and working on his blogs you’ll likely find him on his Harley enjoying the open road.
There are three blogs where you will find Derek sharing his thoughts and opinions:
Dad Balance is where you will find him writing about work life balance from a dad’s perspective
My New Choice is where he blogs about personal finance, eliminating debt, and money management
Derek Semmler.com is where he blogs about life, blogging, motorcycles and just about everything else
Interview:
Steph:What makes a blog successful according to you? Is it traffic, reach, revenue, etc.?
Derek: Ultimately, I believe that a blog is successful when the author has a passion for the topic of the blog and has demonstrated the ability to regularly publish content for more than six months.
It is possible, maybe even feasible, to define success by traffic, revenue, or any other measurable metric. But when you consider the number of blogs that are started each day and the fact that many of them are abandoned before they are sixty days old, I believe anyone that loves to blog and does so consistently is a success.
Steph:When did you decide you finally reached success with your blog?
Derek: I’ll let you know when I get there. Personally, I would have to say that I reached success on the day that I published my very first post. Too many people sit and talk about starting a blog or making money from a blog, yet they never take action. There are many goals that I have yet to accomplish but none of them would even be possible had I not made that first post.
Steph:How long does it take to become a successful blogger?
Derek: That really depends on how you define success. If you want to be a blogger that can make thousands of dollars each month, you should be prepared for it to take a considerable amount of time. If you want to share your passion for a given topic with other people, you can become successful in a much shorter period of time. The important thing is to define what success means to you and then measure yourself against that definition.
Steph:Who do you think are the most successful bloggers on the internet today?
Derek: When thinking of the most successful bloggers, I tend to narrow my focus to those that I read regularly such as Darren Rowse, Shoemoney, John Chow, and Brian Clark. But there are so many bloggers that have done a masterful job of building their brand and achieving success that I could likely give you a list of 100+ names and still leave out a considerable number of successful bloggers.
Steph:Which five blogs do you regularly read?
Derek: While I could easily include a list of very well known blogs such as Problogger, DoshDosh, or Shoemoney, I want to mention a handful of blogs that I enjoy reading regularly but may be a little less mainstream.
Steph:Which websites would you recommend for any new bloggers starting to blog?
Derek: There are so many great sites that I could recommend but the one site that is a must read for any blogger is Problogger. Darren has a feature titled Best of Problogger that will teach a new blogger many valuable lessons and the archives contain many more nuggets of wisdom. Just be careful not to spend so much time reading that you forget to work on your blog.
Steph:Which book(s) would you recommend for new bloggers (these can range from marketing books, blogging books, etc.)?
Derek: There is so much information available on the Interweb that I am not sure new bloggers need to rush out and buy (or get from the library) books to get started. If I had to recommend a book to new bloggers, I would probably point them in the direction of the SEO Book by Aaron Wall as it is an outstanding resource to help you learn how to build a more successful blog.
Steph:What is your most successful blog post ever?
Steph:What’s your biggest tip on writing a successful blog post?
Derek: I’m not sure that it can be boiled down to one biggest tip but I would certainly stress the importance to write with opinion and personality. There are so many blogs out there that you need to do something to set yourself apart. Readers come to your blog for more than just the cold, hard facts – they want to know what you think and feel as well.
Steph:What’s your best advice in regards to content and writing for bloggers?
Derek: Be yourself and let your voice be heard. It is tempting to try and blog about topics that you think will bring in the money or score big on the social media sites. However, when you are not blogging about something that is of interest to you and that you are passionate about, you will struggle to write quality posts that other people can connect to in some way.
Steph:How important do you think are the headlines of your blog articles?
Derek: Some might say that the headlines are the most important aspect of your blog articles, as that is what likely determines whether someone stops to read your article or not. In terms of social media, I would agree that the quality of the headline is critical. But if you put a killer headline on a garbage article, you will bring in a bunch of readers but they will likely only visit your blog that one time. So while the headline is very important, don’t sacrifice on the quality of the blog post itself just to get a great headline.
Steph:Do you spend any money and time on marketing?
Derek: I’ve spent much more time than money on marketing my blog. The one area that I have spent money is on a monthly membership to a personal finance news aggregrator, which rewards members with highlighted entries in their feed as well as a premium listing on their blogroll.
The time that I spend on marketing is primarily spent on doing my best to become an active member of other blog communities, including other personal blogs as well as popular social media sites. For the blogger on a budget, this can be a great way to market your own blogs. As you demonstrate your value to the community on other blogs, people will naturally be interested in what you have to say and follow your links over to your blog.
Steph:What are your main methods of marketing your blog?
Derek: As I just mentioned, I would say that my main method of marketing my blog is active participation on other blogs. The easiest way to participate on other blogs is via the comments. Try to engage the author, as well as the other readers, with quality comments and you will begin to build a rapport that will likely translate to new readers at your own blog.
Other methods of marketing your blog can include writing guest posts for other blogs, publishing guest posts from other authors, including a signature line on all of your emails and/or forum posts, or being active on social media sites. The possibilities are nearly endless so just try to get out there and plant the seeds for future growth.
Steph:Which marketing tactic has surprised you the most in terms of its effectiveness?
Derek: For a new blog, I really think that one of the most effective things that you can do is to respond to the comments that readers leave on your site and return the favor by commenting on the blogs that you read. People enjoy it when they know that their comments are appreciated and it will make them feel more a part of the community.
Steph:What are your quick and short five best tips for blogging?
Derek:
Listen to your readers, there is a wealth of knowledge in their comments and it will help build a true sense of community.
Don’t obsess about your blog stats, I know it is fun to check how you are doing but limit it to once or twice per week instead of once every five minutes.
When you see that someone has visited your blog, take the time to check out their blog and share a few comments.
Do not force a post, some bloggers feel that they must maintain a set schedule of posts per day or week and will force a lackluster post just to meet that quota – post when you have something to say.
Be genuine, write from the heart, and always stand behind your word as nothing will ruin you as a blogger quicker than a reputation as a fake or cheat.
Steph:What is the most common pitfall new bloggers generally fall into?
Derek: The most common pitfall seems to be a combination of burnout and unrealistic expectations. Many new bloggers think they can start publishing a few posts and they will be on their way to earning money from their blog. In the beginning, they may be posting multiple times per day as the excitement about their blog is fresh. As the days become weeks and the blogger has only earned $0.42 from AdSense, they begin to question what they are doing and they realize that they cannot maintain their current pace of posts. Eventually they lose steam and the blog falls into the pile of abandoned blogs, never to be heard from again.
Steph:If you knew what you know now when you first started, what’s the one biggest tip you’d give yourself today?
Derek: I’m going to take a slogan from one of the most well known companies in our time, just do it. Don’t spend so much time worrying that everything about your blog has to be perfect before you get started. Let your blog be a living creature that you build and nurture over time. The important thing is to start writing great content and building a sense of community.
Steph:What repels you the most from a blog (animations, in your face advertising, etc.)?
Derek: General websites that repel me are the ones that are entirely built using Flash. But with blogs, I really don’t think anything repels me more than just a lack of updated content and/or content that does not interest me.
Steph: Do you make any direct money from your blog through advertising, product placements, etc.?
Derek: Yes, I do make money from my blogs. When I started blogging, I was guilty of the trap that many new bloggers fall into and that was thinking that using Google AdSense was the one and only source of income. As I have learned more about making money with my blogs, I have experimented with a variety of tools and resources to help me earn money. Do your best to avoid relying on only one source of income and never stop experimenting to see what works well for your blogs.
Steph:What is your best monetization method (Ads, affiliate marketing, etc.)?
Derek: The best monetization method that I have been using would have to be private ad sales, although that was not the case from day one. As your blog grows, you will likely find that the best monetization method will change as well.
Steph:Do you find you get more from direct monetization of your blog or from opportunities that come because of the existence of your blog?
Derek: At this point, I would have to say that direct monetization has brought me more.
Steph:What’s your most interesting story related to your blog and blogging experience?
Derek: On my personal blog, I published a post that included pictures of what happens when a CD explodes inside your DVD drive. This post brought my first experience with making the front page of Digg and the volume of traffic was very exciting.
Not only that but I got a taste of how far a simple blog post can reach, as I was contacted by a representative of Dell who wanted to send me a free replacement DVD drive.
Steph:What’s the one biggest opportunity that came to you because of your blog?
Derek: Within the last few months, I was presented with an opportunity to become an author at Wendy Piersall’s eMoms at Home blog writing about work life balance from a dad’s perspective. This has been such an exciting opportunity for me to write about a topic that is very close to my heart and it would not have been possible had I never started blogging.
Steph:Any other comments or thoughts you’d like to share?
David Seah originally studied computer engineering and computer graphics design. From he moved to the professional video game industry, working with the Internet and freelancing as a New Media designer/developer for a few small companies in the greater Boston area. As a result of these experiences David developed many skills in several useful areas, but career successes continued to elude him.
He then started blogging in 2004, to figure out more about what truly interested him, what his career path should really be. And this is when he discovered that sharing his experiences in his own words was the missing piece that eluded him in his career. And because of this discovery he flipped his priorities. Now, his goal is to meet the kind of competent, conscientious, and self-empowered people like him. He now applies his skills toward making that possible through collaboration and community building. He reports on this experience on his blog, and through the creation of various productivity tools such as The Printable CEO.
Interview:
Steph: What makes a blog successful according to you? Is it traffic, reach, revenue, etc.?
David: Ultimately, a blog is successful when it connects people together in a way that creates opportunity and change. That generally means reaching and influencing just a handful of the right people that WANT to create that opportunity with you.
Steph: When did you decide you finally reached success with your blog?
David: I’d say early 2007 or so. I had been blogging long enough to see that it wasn’t a fluke, and that the blog was doing a good job of representing myself to the world authentically, which has lead to other interesting opportunities. I am meeting fascinating people.
Steph: How long does it take to become a successful blogger?
David: If you’re measuring success by traffic, then not that long if you can maintain the blogging rhythm and post compelling original content. This increases your Google footprint. After that, it’s a matter of getting noticed by the larger sites, which will drive readers to you. If you write good content that is unique, they will find you. The rate of growth is then determined by the size of the demographic, your ability to write compelling original chunks of content every day, ease of accessing the chunks, and the perceived utility of your writing.
Steph:Who do you think are the most successful bloggers on the internet today?
David: I don’t really follow these kinds of trends, as I don’t chase after this kind of success. One person that comes to mind, though, is Virginia De Bolt, who I imagine would be the first to say she is not as glamorous as the A-Listers, but through blogging rediscovered her sense of purpose in a niche that embraces her. It’s this kind of personal success—connecting people with the right people—that I consider the most important.
Steph:Which five blogs do you regularly read?
David: I actually don’t read any blogs regularly…I’m quite busy these days, and when I have time to do blog-related stuff I am generally creating a new article. When I have time to surf, I’ll check out the blogs of my “online council” of like-minded bloggers to see what they’ve been up to.
Steph:Which websites would you recommend for any new bloggers starting to blog?
David: I would tell them to check out the member sites (both past and present) that belong to the 9rules Network. I’ve been a member for quite some time, and what is particularly interesting about the group is that we’re all committed to creating a better web site experience. Browse them. Find ones that appeal to you. It’s helpful to have some kind of role model to follow.
Steph: Which book(s) would you recommend for new bloggers (these can range from marketing books, blogging books, etc.)?
David: No specific titles come to mind. I would just tell them to get into the habit of writing their experiences in a way that makes sense to people who don’t know you or your subject; that’s writing 101. Next, suck it up and put it online. For the “how do I…” technical questions, I’d probably just tell them to check out ProBlogger or something.
Steph:What is your most successful blog post ever?
In terms of getting me recognized by a lot of cool people in the web development industry: FYI, I am Not Dave Shea.
Steph: What’s your biggest tip on writing a successful blog post?
David: Get to the point in the first sentence, or hook ‘em via some other means.
Steph:What’s your best advice in regards to content and writing for bloggers?
David: Provide something useful to someone that hasn’t been said before, something that people can APPLY to themselves. And don’t worry about appealing to everyone; just appeal to yourself first.
Steph: How important do you think are the headlines of your blog articles?
David: Headlines give people an idea of what they’re in for, so they’re very important. I try to write them so they pique curiosity while also being search-engine friendly.
Steph:Do you spend any money and time on marketing?
David: No money. I do spend time on putting content out in several areas, which is in essence marketing.
Steph: What are your main methods of marketing your blog?
David: Word of Mouth, which gets me linked on other blogs, which drives first-time visitors, which result in subscriptions or bookmarks, which ultimately drives page rank.
Steph: Which marketing tactic has surprised you the most in terms of its effectiveness?
David: Word of Mouth.
Steph:What are your quick and short five best tips for blogging?
David:
Make good, original content.
Be a real person with your own opinion, but don’t mistake opinion for content.
Stand behind your words.
Write constantly and consistently.
Talk to your audience in your comment area.
Steph:What is the most common pitfall new bloggers generally fall into?
David: Mistaking content for reporting about what other bloggers are writing about instead of adding something NEW to the blogosphere.
Steph:If you knew what you know now when you first started, what’s the one biggest tip you’d give yourself today?
David: Nothing actually comes to mind; the blogging experience was one of exploration and empowerment of my own process, so it was very natural and unburdened with any expectations.
Steph:What repels you the most from a blog (animations, in your face advertising, etc.)?
David: Obvious commercialization.
Steph:Do you make any direct money from your blog through advertising, product placements, etc.?
David: I have some AdSense revenue, enough to perhaps cover my hosting costs. My blog is a platform, not a revenue generator in its own right.
Steph:What is your best monetization method (Ads, affiliate marketing, etc.)?
David: I haven’t monetized my blog. I may create a separate web site for direct monetization of my writing, which is not the same as my blogging.
Steph:Do you find you get more from direct monetization of your blog or from opportunities that come because of the existence of your blog?
David: Opportunities, definitely, are the greatest benefit from my blog.
Disclaimer:This is a personal blog about my thoughts, experiences and ideas. The contents of this blog are for informational purposes only. No content should be construed as financial, business, personal, or any other type of advice. Commenters, advertisers and linked sites are entirely responsible for their own content and do not represent the views of myself. All decisions involve risks and results are not guaranteed. Always do your own research, due diligence, and consult your own professional advisors before making any decision. This blog (including myself) assumes no liability with regard to results based on use of information from this blog. If this blog contains any errors, misrepresentations, or omissions, please contact me or leave a comment to have the content corrected.
