Tue. Jun 01, 2004
TextDrive, or How To Raise $40,000 In 4 Days
I recall when Josh Marshall decided to solicit his readers for funds to send him to New Hampshire for the primary. The money came in much faster than he’d ever dreamed, and he cut it off after about 24 hours. During that time, he averaged about $200 per hour. I found that a pretty amazing example of “user funding.”
So I don’t know what exactly to call this: “We have no photographs of our CEO strutting past server racks, or of women in telephone headsets awaiting your call, but we hope you’ll consider joining us all the same.” Well, it’s called TextDrive, which is a web hosting company (now with it’s own Wikipedia entry!), but that’s not what I mean. It obviously takes a fair cash investment to start up this kind of business, especially to do it right. As I explained in more detail earlier, Dean “Da Man” Allen had the option to sign a deal containing many zeroes with venture capitalists. But he decided he really didn’t need that many zeroes, just a few. Maybe four.
So he came up with a less obvious option: raise the funds from the relatively small user base of a program that hasn’t even been properly released yet. One might think, this man has been in the vineyards too long. But one would be wrong. Dean’s gamble paid off handsomely, and quickly: “The plan involved raising startup capital in a newish way – something I thought, optimistically, we could do in a few weeks. And here it’s happened in 75 hours. So here’s to user-funded startups!”
200 people paid $200 in about 75 hours, an average rate of over $500 per hour. Dean ends up with $40,000 to start his business, and 200 “mini-VC’s” (now known as the “VC200”) get web hosting for the life of TextDrive.
Of course, not just anyone could do this. You can only do that kind of thing if you have an excellent reputation in the web community, built through years of free contributions. If you have the free thinking brain to come up with the idea. And maybe some dog pictures. Only then does the phrase ”$199 web hosting for life” sound like something other than just another fly-by-night con.
When you read the specs of the servers you’ll be on, and the results of some Apache benchmarking tests … well, you wish you’d bought two. But I’ll settle for one.
Though the doors of TextDrive are open today, it will be some unquantifiable amount of time before this site is moved to the new servers. June may be an odd month around here.
Later: A new “lifetime” offer from the TextDrive home page: “Available until 7 June 2004: Buy a year’s worth of TextDrive’s best hosting plan for $199 (regularly $300 month-to-month or $250 yearly), and get the same discounted rate every year for as long as you stay with TextDrive.”