White-Labeling Plugins and a Rant, Episode 124

Episode Transcript

Carrie: Howdy Everybody! Welcome back to officehours.fm Episode 124. I am here today with Gordan Orlic of Web Factory LTD. Gordon? How are you doing today?

Gordan: Hi. I am doing well. Thank you for having me.

Carrie: It’s a pleasure. I was going to try to have you on last season and the timing didn’t quite work out. I’m glad to get you on this time.

Gordan: Summer got in the way.

Carrie: Yeah something about vacations or scuba diving.

Gordan: Yeah. It was something like that.

Carrie: Well for folks that haven’t met you yet or are not familiar with Web Factory LTD can you give us a quick elevator pitch of who you are and what you do?

Gordan: Yeah sure. We specialize in WordPress, mostly plugins and everything around them. Most of our business evolves around white label plugins that we make for others who then sell them on CodeCanyon, JVzoo and other various marketplaces.

Carrie: Oh we’ve got lots to talk about. Gordan? I was just listening to some of your other interviews around the web, so I’ll try not to repeat the same questions. In my show notes I’ll  link to some of your interviews. What I really wanted to spend some time talking about today is that white label service that you guys provide over Web Factory LTD. So how is this? Somebody has an idea for a plugin but they are not technically capable of executing it so they hire you guys?

Gordan: Well that’s one part of the business. That would be custom development. What we do most is when people have an idea and they are willing to adjust it to something that we already have done on the table. So let’s say you want to do a plugin with a red button but you already have a blue button done so you say ok let’s go with the blue because we know we already have this on the table. We can launch tomorrow. You can start selling the day after tomorrow. So it really cuts down on the whole process of custom development, which can obviously take weeks if not months. If you’re willing to bend your idea a bit or adjusting the stuff we already have that’s great. You can start selling it immediately and we’ll just rebrand it for you and perhaps do some minor modifications. That would take maybe 10ish hours. Basically it’s rapid product deployment.

Carrie: Ok. So you have custom development but also some off the shelf stuff.

Gordan: Yeah.

Carrie: Are the things that you already have on the table some pieces that you have developed for projects along the way? Can these be reused as plugins?

Gordan: Some are plugins and some are not. The thing is there’s a whole market with white label plugins and PLR stuff like e-books and courses. That’s very low end and they’re very cheap. You’re talking about getting a white label license for (I don’t know) $50. We don’t work with that kind of money. People that come to us are willing to spend a bit more and what we provide does not look like a white label product. When you open it, I guarantee you that you won’t be able to say, “Oh I’ve have already seen this”. Every plugin that we put out for customers looks custom-made and they really are custom. Besides the name change, we always change the appearance so it really looks new. Now we have about 50ish of our own plugins that we sell on various places but we also have a huge code base of all of the plugins that we have done so far. I would say in the last year we haven’t really done anything really new because it’s always the same ideas that go around. Basically it’s the stuff that sells. People want to revolve around that. They have the same idea as everybody else but they just want to give it a spin of their own. It’s good for us. But the market is getting saturated with old ideas and stuff that used to work.

Carrie: So there’s nothing new under the sun.

Gordan: Not quite. So the innovation is not really something that people strive towards.

Carrie: Can you share some examples of what some of these plugins would be?

Gordan: Well a lot of them evolve around getting subscribers. So this is anything that could be summed up as an opt-in form. Whether it’s a popup, a form, slide out, squeeze page, landing page, basically anything that has a field where it says give us your email. That is the start. Then people think that they have a unique idea or unique spin around that. That would enable them to get 10 million subscribers in five days. Obviously, that doesn’t work like that. Usually their ideas have already been tried and tested and failed. I would say that 50% of our business revolves around people collecting emails.

Carrie: Interesting.

Gordan: It’s something that obviously doesn’t get old.

Carrie: Like you said, you have something that closely resembles what someone wants and you can make some modifications to customize it for them. Is there any consulting in that process? If somebody has an idea that truly sucks, do you tell them? Or are they just coming to you to get the code?

Gordan: We don’t take business off the street. You have to be referred from somebody who already has done business with us. That’s a huge luxury that we do for ourselves. It really enables us to weed out the customers we don’t want to do business with. We frequently turn down people because their ideas are just unfeasible. Usually it means that even if we took 6 months to do something with the idea that they had, we would never be able to get it to function 100% because it’s simply unfeasible. It’s not doable so we turn them down. But with a little bit of negotiation when bending the idea, we usually are able to work something out with the client. They certainly do have some outrageous ideas.

Carrie: I don’t know if you’re allowed to share those or not, but I would love to hear one.

Gordan: Well they mostly involve some shortcuts. So at one point Facebook had the idea… it wasn’t the idea…it was a semi bug/semi security issue. You could grab the IDs of people that were in a Facebook group. By using those IDs you could get to the people’s emails. Those weren’t their “real emails” those were Facebook assigned emails. But people still had those forwarded to real emails. So if you send 1 million emails, I guess, I don’t know 5% gets through. So people were exploiting that. One of our customers (actually not one but at least 3) wanted us to scrape the entire Facebook and get everybody’s email and then deliver a product that could somehow email all those people in one day. So besides the fact that’s illegal or semi-illegal, it’s definitely immoral. Let’s ignore all that. It’s stupid because sending that amount of emails that are untargeted is just spam. That’s a Nigerian thing all around. It just stinks. People usually want to do something fast. When something takes time, they want to take shortcuts. We had another customer who really insisted on what’s called analytics spam. When you open your Google analytics and you go to referrals, you can see certain websites that did not refer any traffic to your site. Basically they inject those visits into your Google analytics in order for you to see their URL. It’s usually has something to do with SEO. You go to the site and they will optimize it…blah, blah, blah. So you see that URL that you visited. It implies that you buy something from them. It is just spam but it doesn’t go into your inbox. It goes into your Google analytics. Now that customer basically wanted to spam everybody who had a Google analytics account. He acquired a list of (I don’t know it was something like 100 million websites) an enormous number he purchased from builtwith.com. This is legal. They actually have something where you can choose to give me sites that are powered by WordPress, or give me sites that are powered by something else. So you can buy the list. So he purchased the list. It wasn’t cheap. He gave us the list and said here’s a list of the websites. I expect my URL to be in everybody’s Google analytics by next week. Aside from the fact that it’s illegal or immoral…the problem was you would need like 100 servers to ping Google that amount of time. Your IP would be blocked. It would take a whole infrastructure to pull that off. So needless to say we didn’t do it.

Carrie: So your business model for that…do you do just a straight fee for delivering that white labeled service or bit of code? Do you ever do any sort of a profit-sharing percentage based profit share?

Gordan: We don’t anything on percentage. We tried that but I am a bit of a stickler. I like things done in a certain way. So I don’t really agree with the methods that are usually in place on sites like JVzoo or things that have to do with affiliate marketing. I’m not saying there’s anything wrong with that. It’s a perfectly fine way to do business but I just don’t like it. A lot of our customers are in that niche. So no, we don’t do anything percentage wise. We take a fee for development. Usually we also take a fee for consulting services because there’s a lot of things involved from how do we license things? Is it going to be a monthly fee, a yearly fee or lifetime fee? Does the license work for 1 site, 5 sites or 10 sites? Do we even have licenses? Stuff like that. We also don’t touch end user support. Obviously, if something’s wrong and it’s our mistake, or there’s a bug; we fix it with no extra charge. However, you need to be the one to communicate with your customers. If three people say, “this button doesn’t work,” then you forward the email to us. We don’t handle end customers because 90% of the emails can be summed up to how do I install WordPress? We just don’t provide support at that level.

Carrie: Moving on then from the white labeling service, you mentioned consulting. Do you do traditional client services or is everything pushed towards your white labeling services?

Gordan: Very rarely. I would say out of 25 jobs maybe one would traditionally be in that sense. Simply after doing so many white label jobs, people get referred to us or know what to expect. From the get go we go down that route.

Carrie: I’m curious about the licensing. What’s the license on the code? Is it GPL?

Gordan: Mostly people just don’t care. They just ignore it. It’s complicated. I’m definitely not a lawyer but from what they told me it should be GPL on the PHP part. You can keep something proprietary on CSS, JavaScript and other files. Basically, there is no innovation here. We have three things that go around in circles. So investing a lot of resources in protecting yourself is in my opinion at the current time; futile. It’s open source. If somebody wants to steal something from you they can do it. They can steal it in a way where you probably can’t prove that it’s stolen. They can look at the code and re-factor it. I really don’t see a way that you can prove that it was your idea. Probably it wasn’t; let’s be clear. Generally when it comes to licensing and the license under which the plugin is sold, I just tell my clients to do whatever they feel is right (especially for those who have similar ideas of how to protect their plugins with encoding PHP and stuff like that). I’m really against that because it’s a scripting language. You can’t properly encode it. Whatever you do, it can be unpacked. So why waste your time on something that can be undone when you can invest in something like marketing? In the end if you go through these obscure steps to protect yourself, you’re just screwing the people that gave you money. They will have to enter seven license keys and verify their emails and whatnot. They gave you money. Now you’re screwing with them to take these additional steps into proving that they didn’t steal from you. People who want to steal and will steal will just find a way to do it. If you must, just have some trivial license key that people can enter so that you can keep track of how many sites they use the plugin on. You can track if the support is still valid or not after six months or a year. Just don’t invest a lot of time into it because it’s not going to pay off. If Microsoft didn’t solve the problem with piracy, who the hell are you to do it?

Carrie: Gordan? I get the feeling that you’re a person where if you get the right topic you can get a good rant going on.

Gordan: Thank you I guess.

Carrie: So? Let’s rant a little bit.

Gordan: You want a rant? A real one?

Carrie: Yeah! You got one on deck?

Gordan: It’s all fresh. Like five hours fresh.

Carrie: Ok. Let ‘er rip.

Gordan: So you know the day that’s called Black Friday?

Carrie: Yes.

Gordan: Ok great. In my personal humble opinion it does not fall on a random date. It falls on a certain Friday. Again, in my humble opinion (which may or may not be correct) you do know what Friday it is a few Fridays ahead. A hundred at least. Now what happened? It seems that this year black Friday managed to pop up on Envato unannounced. They had this plan of having a landing page with certain discounts and they said that they will publish it (it was either yesterday or today). But they have sent an email to us who should be on that landing page saying that it’s not really going to happen yet (because you know Friday is like two days away). They’re trying to get “the best experience they can for the end-user.” The way I read it, somebody royally f*(^ked up. It’s like they didn’t know that black Friday is coming and they thought well f*(^k it. We have time. Now it’s two days off and they should be publishing those landing pages but they’re not to be found! Rant over.

Carrie: That’s a good rant. Gordan? Some people that are tuning in may not be familiar with your history with Envato. Can you get into that a little bit?

Gordan: Well, I don’t know if you could call it history. We sell on Envato…CodeCanyon and ThemeForest mainly. We used to really do good there. At some point the amount of effort that it took to sustain that income just became disproportionally large to the income that we were getting. We just backed off. We pulled a lot of products off of CodeCanyon. We still do have a lot of them up there but we’re just not investing the same resources as we did before. Besides the money (Envato is constantly making decisions that I really don’t support). Obviously it’s not my company, so I don’t have anything to say about it, but I do have the right not to do business there. On this rant I made a minute ago, just shows what’s going on there. If you’re making…I don’t know 50 or 100 million dollars per year…you would think that you have somebody that can look at the calendar and make a bloody landing page. Obviously they don’t. It’s constantly little things like that. They just keep on adding stuff, adding new services, adding new sites and not focusing on what they already have and fixing that. The UI for uploading things looks like it was made for Windows 3.1. It’s like this relic. I don’t know if duct tape is holding it together. It has no Ajax, no nothing! It’s just a bloody form. It’s stuff like that. If you have 100 items and you need to look at that form 5 hours a day, you just don’t like it. Let’s say that politely. I just think they should focus on some core things rather than continuously trying to bring something new and never really finishing it up. Again, as I said, it’s not my company so obviously they have different plans.

Carrie: Well…we’ll chalk that up to your humble opinion. We love hearing those on the show. So in terms of you needing to pull products because it wasn’t quite worth the resources that you’re putting into it, was that primarily the time that you were spending to support those products?

Gordan: Everything. The main problem was (and still remains) if not the main problem then one of the three…was licenses. When things started out on CodeCanyon you basically had one license. So you paid the author $10 and you got the plugin. The author chooses whether he wants to support the plugin and in which way. So you can say if you give me $10 I will support you for a year. So that was reasonable. Although in a global sense from the buyer’s perspective you never knew what you were buying because certain authors didn’t support certain dates. Some did for five years, some did for six months. The big problem was that you were able to get updates for the plugin for lifetime. That means that you gave me $10 and now I’m your bitch for the next 20 years. That is not feasible. You can’t update the plugin continuously without a revenue stream that can support those man-hours. For those who are thinking that new purchases support continuous development, that’s just not true. At some point new purchases stop and now you should support all those people that bought the plugin a year or 5 years ago. That coupled with the fact that Envato “wants a level playing field” and you couldn’t set your own prices, that basically drove a lot of people a lot of business. They got the initial surge of sales (like say 100 or 1,000 it doesn’t really matter) that’s it. Instead of charging those customers again in a year for reoccurring support and updates and everything that goes along with it, they couldn’t do it. Furthermore, customers expected those updates and would give you a one star rating if you didn’t update the plugin in how many months. Things were and still are kind of twisted. Envato is trying to fix that in a special way but it’s difficult to do it when you have such a legacy behind you. When your customers are accustomed to certain things, you can’t really take an ax and just smack down and say people who bought before January 1 are these people. After January 1, serve these people and it’s going to be different. People get upset.

I was getting back to the transition period. Ok, so getting back to Envato…I understand it’s a difficult thing to do. You need to transition old customers to new things and you need to educate new customers of what’s going on. So it’s not something that can be done in a day or a week. But as time passes, things are just getting worse. So what we have at the moment, they enabled creators to set their own private support. Basically you have to provide support for six months or 12 months or say that you do not provide support. They have separated the price for plugins from the price of the support. This is great because now support is more normalized. You basically know what you can expect when you buy a certain plugin. So we still have the problem with updates. Once you purchase a plugin, you have the right for updates for a lifetime. That is just not sustainable. I am hoping to see some changes done at a certain point. At that point we may go back to Envato. I don’t know. We’ll see what happens.

Carrie: Well, not if they listen to this episode and hear your rant.

Gordan: No. You wouldn’t believe the kind of emails we exchange. I think that I am the most vocal person about their issues. If you look at their forums you would get a sense that people hate their guts. It’s obviously not so. I think that I can be very specific in naming things that bother me and I’ve told them that numerous times. It’s just that they feel that the direction they’re going is right and I’ve said that in some other podcasts…I wrote an article on Envato’s blog. It was titled something like Why is giving Envato 30% a good deal? l I still stand behind that article. If they do what they say they will do for 30%; I feel that is cheap. When you round up all of the expenses needed to run a plugin shop (actually not a shop but just to sell one plugin) it easily comes down to 30%. What is great with Envato if you’re not selling, you’re not paying. So there are no upfront fixed costs. If you’re selling a plugin on your own, there will be a huge amount of fixed costs, which you obviously have to pay regardless of the revenue you’re doing.

Carrie: That makes total sense. I am going to link that article for those of you are listening to this in the show notes over on officehours.fm. I will have a link to the article that Gordan just mentioned. Gordan? You’re in Croatia is that correct?

Gordan: At the moment, yes.

Carrie: At the moment. You’re very mobile.

Gordan: Yeah why not? I’m still young.

Carrie: (laughs) There you go. Were you able to attend the WordCamp over there?

Gordan: The last one. No. I attend as much as I can in Germany. When it’s in Germany and the UK mostly.

Carrie: I was curious if you had any rants about being a part of the WordPress community outside of the US.

Gordan: Well that’s not a rant. I feel that we’re not treated the same way. It doesn’t really get in my way. I don’t feel threatened by it. I don’t feel that I’m losing anything but there’s definitely a sense of…this is America and this is everybody else. People that are just starting with WordPress where they’re just starting their own businesses, they’re trying to break through, make some plugins get some customers…I think it really falls hard on them. I don’t know if I would call it discrimination. Probably it is. There’s definitely a sense of this is them and this is us.

Carrie: Is there any specific thing you can think of that either WordCamp central or WordPress as a larger community, that the US contingent could do to help that?

Gordan: That’s really a difficult question. It’s difficult to answer now. I feel that it will be even more difficult as time passes by because of one very simple fact. That’s money. The more money that’s involved in the ecosystem and around WordPress the worse people get. When it all started, nobody was mentioning money. It wasn’t something that WordPress started to build upon. It was just the community and open source and sugar and spice and everything nice. Now you have Automattic and they purchased WooCommerce. Now you have WP Engine. Now you have GoDaddy getting into the fight. These are entities with millions of dollars behind them. It’s obvious the times are gone where Little John from his daddy’s garage was able to do something. Big guys have stepped in. They obviously have millions of dollars budgeted for marketing. They have 10, 20 or 50 employees. They can pay people to contribute to WP core. So it’s everything that you can’t do if you are you are a one-man shop. Primarily I think the market has changed. It matured, but not necessarily in the best way. Again when you get that amount of money rolling, it’s just what happens. I’m not going to say it’s capitalism or put labels on it but definitely when you have somebody like GoDaddy step into that game, you know your time has passed if you’re still a one-man shop. That doesn’t mean that you can’t earn an honest living. Its just things have changed. Now to get back to your question…hmmm…I don’t know. I’ve attended a few meet ups that Envato held in New York and London. Actually in New York, I think Pippen was there and a few other guys. It was “tenish” of us. All those guys are now let’s say big players. On the other hand, in London there were a few hundred people. Yeah nobody has done anything “big”. Definitely there’s a difference between the states and Europe and the rest of the world. I really don’t have any good ideas how to fix it.

Carrie: I appreciate you sharing your perspective on that. I think we could probably do a whole other episode just on that topic alone. Because you have a business to go run and  I have a business to run and we can’t talk all day…I am going to wrap this up. Thank you so much for taking the time to come on to the show today and share with my listeners. Where is the best place that people can follow up with you online?

Gordan: Well if they send me an email it might get lost. Twitter would be best. It’s @webfactoryLTD.

Carrie: All right. Thank you Gordan. Enjoy the rest of your evening.

Gordan: Thank you for having me. Have a good one.