How I Did It: The Story Behind 99Designs

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Race © by easylocum (2007)

In its early days, 99designs didn’t originate in Silicon Valley, result from a roomful of MBAs brainstorming, graduate from Y! Combinator or raise a single penny in outside money. Instead, 99designs grew out of SitePoint.com, an established content and community website for designers and developers that draws millions of monthly visitors.

Friendly Competition

In 2006, some designers in the SitePoint community began challenging one another to games of “Photoshop Tennis”—essentially coming up with fictional projects and competing to see who could create the best design. They did this simply to practice their design skills and because they were passionate about graphic design. Eventually, other members of the SitePoint community jumped in and started offering cash awards for work on real projects, such as logos and WordPress themes.

The designers leapt at the opportunity to generate additional income and get in front of potential long-term customers. As for the clients, they loved the results. Rather than having to pick a single designer up front and pay regardless of the outcome, clients could review dozens of design concepts produced by dozens of designers, and then select their favorite. It was a revolutionary way of outsourcing graphic design work and, quite literally, dozens of times better than the next best alternative.

Exclusive Entry

After a while, when it was clear that this organic model had lasting power, we began charging each “contest proctor” $10 to post a request for design work in our forums and we quickly started generating thousands in revenue. We chose to invest that revenue by hiring one developer and one designer to hack together some basic software and a user interface to improve the flow of the process and make it more user-friendly on all fronts.

The popularity of these design contests continued to soar, and mainstream businesses like realtors, coffee shops and spas started hosting design contests on SitePoint—despite our lack of marketing, documentation and support. We knew we were onto something, and that it was time to create a separate company—and a distinct brand.

Crowding the Cloud

99designs—a name we chose because that’s about how many design submissions the average contest received back in the beginning—launched in February 2008. We took a leap of faith and decided to build out 99designs’ infrastructure using Amazon Web Services for servers and storage. Now, you have to remember that five years ago was still the very early days of cloud computing—Amazon had just launched its new platform and didn’t even offer a Service Level Agreement guaranteeing uptime. Bells and whistles? Not a single one.

Thankfully, we pushed through and were able to rapidly scale our infrastructure to accommodate massive month-over-month growth, with very few hiccups. At the same time, we witnessed our competitors who’d gone the traditional leased-server route suffering from numerous daylong outages followed by weeks of poor site performance.

Customer Service

We quickly noticed that tech entrepreneurs were among our most prolific early adopters: Jason Calacanis (This Week in Startups), Adeo Ressi (FoundersInstitute), Paul Graham (Y! Combinator), Tim Ferris (4-Hour Work Week) and other prominent tech-world names became frequent sources of referrals and new clients. A steady stream of positive press—from The New York Times to Good Morning America to dozens of Australian media outlets—helped a new set of customers discover graphic design crowdsourcing for the first time.

But it was word of mouth from happy clients that proved the real golden ticket to 99designs’ growth. Customers of all size and scope—from tech startups to mom-and-pop shops—were eagerly referring us to their acquaintances. We estimate that about 85-percent of our business has historically come from our customers telling their associates about the positive experience they had. In May of 2010, just 25 months after 99designs launched, we accepted a “People’s Voice” Webby Award in New York City for Best Web Services & Application, beating out some fantastic companies many times our size including Dropbox and Tumblr.

Fans and Foes

This isn’t to say we haven’t had our detractors. Some vocal members of the design community think 99designs’ model is unethical—that designers shouldn’t submit on “spec” without a guarantee of being paid. We disagree, and we know we’re unlikely to ever change their minds. We currently have more than 140,000 designers in 192 countries who have uploaded designs, and who see us as a valuable way to build their portfolios, make money and source clients they otherwise would never have had access to.

By this time, venture capital firms were circling, having sensed strong momentum and an increasingly audible buzz from their own portfolio companies who had used 99designs. We had been profitable from day one and were consistently expanding every month—and we told would-be investors “no” over and over again while going through the process of bringing in an outside CEO to head up the company from San Francisco.

In April 2011, we announced a $35 million Series-A funding led by Accel Venture Partners and a select group of strategic investors, including Dave Goldberg, Stewart Butterfield, Anthony Casalena and Michael Dearing. I was confident we’d found an ideal product-market fit, and that we needed to scale not only our development team, but also our outbound marketing efforts. If we’d done so well largely via word of mouth alone, the impact of adding marketing to our mix could be immense.

In our first four years, 99designs hosted about 120,000 design projects. Our hopes for 2012? To surpass 200,000. And it all started with a single discussion forum for designers.

Matt Mickiewicz started his first company while still in high school, and has leveraged his early success into three profitable businesses which have have published 50+ web design books in 20 languages, paid designers over $30 million for their graphic design work through 99designs, and helped entrepreneurs sell over $60 million in websites and domain names on Flippa.

The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. The YEC leads  #FixYoungAmerica, a solutions-based movement that aims to end youth unemployment and put young Americans back to work.

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