Categorized | Shoestring Startup

Covered Call Investment Tools: Building A Profitable Web Service On A Shoestring –

From 2002 to 2008 I was a venture capitalist in Silicon Valley at two billion dollar VC funds. Prior to VC I had been an investment banker and a software engineer. During my time as a VC I read 15,000 business plans and invested $86 million of limited partner capital into a dozen high tech startups. While I enjoyed that work, I always wanted to run my own company.

I started Born To Sell in early 2009 to address an unmet need I was experiencing personally. From the age of 15 I had been interested in options trading. My father was a stockbroker and he taught me at a young age that it is better to sell options than to buy them (because 75% of them expire worthless). He used to tell me I was “born to sell options to other people”. Hence, the company name Born To Sell.

The problem with selling options is that you need good software to do it well. Over a 20 year career (engineering and VC) I had built up a series of spreadsheets to help me with my part-time option trading. Even though I’m good with Excel there were several flaws with them: (1) they didn’t import stock and option price data during market hours, (2) they didn’t consider all 150,000 possible covered call combinations, (3) they didn’t integrate earnings release dates, (4) they didn’t integrate ex-dividend dates, etc. Basically, I felt like I was investing with one hand tied behind my back.

I found a couple of stock market data sources and got sample data from the vendors. I hired a programmer in Singapore to set up a mysql database and connect it to some browser-based user interface controls so you could filter, sort, and browse the data. Once I saw that demo (January 2009) I knew I could build a killer web site.

I spent the first month designing screen shots and workflow for the site in PowerPoint. Then I used and to hire about 30 people over 18 months for various tasks. Skills I hired for include php, mysql, HTML, CSS, Javascript, graphic design, copywriting, accounting, SEO, QA testing, etc. I quickly discovered that my main role was one of project management. I was the only one on the team who knew what a covered call was and had to direct everyone to create a site that made sense and was useful. Most of these people were very good at what they do, and since they live in low-cost areas they will work for a tiny fraction of what someone in Silicon Valley charges. My average wage paid to outsourced help was probably $10/hour.

I spent a ton of time on user interface design. I threw away the first 2 color schemes and layouts. Too complex. My design goal was the iPod. I knew it was possible to keep it simple and bring covered call investing to the masses and I kept asking myself “if Apple was to design a covered call tool, what would it look like?”

I used a variety of on-demand software tools: source code control (, a bug database (, secure email delivery for system generated emails (, newsletter subscriptions (, credit card authorizations (, and an affiliate program ( Most of these are very cost-effective compared to buying traditional installed software. Most of my technology was outsourced, as was most of my development team.

In the end it took 18 months to develop a sellable service. We launched in July 2010. The response from subscribers has been phenomenal. We were cash flow positive in our 2nd month, and profitable in our 5th. We charge $59.95/month to investors who want access to our investment tools, and we offer a discount if they’ll commit to 3 or 12 months. They are willing to pay this because we save them time and help them make better investment decisions.

As a self-funded startup we are a success story. I estimate that using outsourced providers caused us to take 6 months longer to develop than if we had hired a local full-time team (because of team turnover, and time zone differences). But we probably saved $500K in labor costs so it was worth it for us.

The most important skill I learned was how to interview people via email. The ‘portfolio of prior work’ and ‘reputation/feedback scores’ available on Elance and oDesk are only a starting point for hiring someone online. You need to email them several times (to test their English skills as well as their response time), and give them a small test project ($50-100) before hiring them for anything medium to large. In fact, I would frequently award the same small test project to 2-3 people and then see who does the best job the quickest, and then give that person the larger remainder of the project.

Once we launched the product we didn’t really have a large marketing budget (since we had just completed 18 months without a paycheck for us). So we had to become experts at SEO and learn how to attract organic (free) traffic to the site from Google, Bing, and Yahoo. It took us 5 months of optimizing our pages and negotiating external links to our site, but we now rank on page 1 of organic search results for dozens of phrases that are relevant to our business. We are getting thousands of first time visitors to the site every month, all for free (well, “free” meaning we don’t buy the traffic with PPC ads; but we did spend 5 months on SEO getting to this point).

A couple of things that have worked well for us include: (1) guest blogging (write something for someone else’s blog in exchange for a link back, (2) article marketing (write something about your space and publish it in the article databases that exist), (3) social bookmarking (get people to bookmark your site in a variety of social sites), and (4) offering some content for free. In our case the free content is a covered call tutorial, covered call newsletter, and covered call blog.

Another thing that saved us money during development is to not get an office. Spent the first 9 months working out of the local library (only issue there is you can’t have food at your desk and you can’t take phone calls), and then the next 9 months sitting in an unused office at a friend’s company. Although it would have been nice to have an office with some whiteboards in the beginning, we were trying to build this business on a shoestring. If you’re creative, and really do without things that aren’t essential, you can do it.

Mike Scanlin, CEO
Born To Sell

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