Russ: This is the BusinessMakers Show heard here and online at theBusinessMakers.com and it's guest time on the show and I have a guest that I've been trying to capture for more than two years because I'm sitting here right now with William Hurley, also known as Whurley and also known as the Evil Genius. Whurley, welcome to The BusinessMakers Show.

WHurley: Thank you very much.

Russ: I'd like to describe you as this guy that sort of integrates group behavior psychology with software. Would you agree that that's accurate?

WHurley: Think there's a lot of people that would. I like to think I have maybe some other talents but those are definitely the things that the Interwebs would tell you would be all about me.

Russ: Okay. Well before we get into your brain, why don't you tell us what's important to you now?

WHurley: Well, I'm at South by Southwest. I'm going to be announcing what I've been working on. I left BMC Software in November and I've been working on a new project that is a mobile application studio called Chaotic Moon Studios. There's going to be a lot of news coming from there and it's kind of a culmination of several years of planning around the iPhone dev camps that I helped start and the pre-dev camps and a lot of the writing I've done about augmented reality in mobile and things like that for InfoWorld and BusinessWeek and all of that and it's kind of like the big reveal, if you will.

Russ: Now, for those that are new to the world of Whurley, it's still interesting that you're focused on mobile. I mean, your history and your reputation is all in this whole big world of open source.

WHurley: That's correct.

Russ: Okay. I've always wondered how you were going to take those talents and skills and turn them into a business. I always thought it was going to be some form of a private company that used all the tactics you learned of collaboration and open source, but that's not what you're doing at Chaotic Moon Studios, right?

WHurley: Well, actually, you know, it's funny. At Chaotic Moon Studios, it's kind of a nice hybrid. So there is a lot I've learned about community building and, you know, all of the social aspects and, as you said, kind of getting large groups of people to exhibit certain behaviors and stuff that will be built into what we're doing and that will be, I don't want to say proprietary, because they're not, but an advantage, if you will, in the marketplace. But then there's also a whole bunch of open source stuff we do. For example, we have a program to release our component code on Android and Pre and some of the other phones. We can do the same for iPhone but, you know, as some of your listeners that deal with that may know, you know, there's certain things you sign on with the Apple SDK that don't really allow that, and we definitely want to play by the rules with all the companies were dealing with.

Russ: Tell us about Chaotic Moon Studios.

WHurley: This is going to be very interesting. Like I said, there's going to be a number of people that, when they hear it, or hear this interview are going to go like, "Oh, like all of these different things that didn't seem to go together, now all of a sudden fit together." You know, that goes for the camps and the publishing, but also for some of the work and some of the consulting I've done. Chaotic Moon Studios is a mobile application studio. What I mean by that is we offer four primary services: we do, obviously, custom development for very high-end projects. So Fortune 50, Fortune 100 brands, very large open-source projects and things that have millions and millions of users. We also do content publishing. So we're a publisher. If there's a listener out there that has an idea, they can contact us and we can arrange to meet with them and see if that's an idea that fits into part of our business. We have about 100 titles that were working with right now that will all be coming out definitely before now and the end of the year, probably in the next, you know, 4 to 6 months. Some of those will be published at us. Some of those are others where publishers have come to us and asked us to co-publish. So, they may be under their channel in whatever store. We also, obviously, provide mobile strategy. A lot of mobile companies call me. A lot of companies, in general, about open source and open innovation and building developer communities and things of that nature. So we definitely provide those services, not just for the large companies, but also for small companies that are like, "Well how can I start a camp or do a developer program or something," even if they're companies that are just 10 or 20 people that are doing iPhone apps and stuff. Part of that open source culture that's ingrained in us is everything his coopetition, right? We don't really feel we have any competition. We're happy to stand on our own and were happy to help all of those around us. We went to see a very large, very vibrant community and industry, if you will, around these mobile applications. And the last thing is probably the most interesting, which is called application resurrection. A lot of people go and invest tens of thousands of dollars, in some cases a few hundred thousand dollars, and developing a mobile app and they throw it out in the store and it's kind of, it's funny, it parallels open source, you know? I used to always have companies say, "Well, we released our source code. Where are all of the developers and all of the stuff ____ done?"

Russ: [Laughter] Build it and they will come.

WHurley: Yeah, exactly. "What, what happened? Like, we're not number one on SourceForge and we're not millionaires yet. But VCs are angry." But the reality is is it's the same way with the mobile apps, right? I mean, especially in the App Store with Apple. You have, you know, a number of people who invest tens of thousands, again, in one case that I know of, several hundred thousand dollars in a mobile application that they're likely to never see that investment back on. They throw it in the store and lo and behold, there's no customers, right? The customers are the new developers, if you will. And so it's really interesting with that service, we take apps that haven't been successful and we, in some cases re-brand them, in some cases keep the same brand and we redo all of the art. We do all of the code and we also build a strategy for it and sometimes it means taking an app from one industry where the person thought it would do well and shaping it quite differently and putting it into another. For example, a consumer to an enterprise play or sometimes vice versa.

Russ: Okay and that's all in this application resurrection category?

WHurley: Yes.

Russ: Okay. So the person that brings you this application, that needs your application resurrection services, what do they have when the dust clears?

WHurley: So, first of all, sometimes they bring it to us. Sometimes we find them. So we do run some algorithms and look through all of the things that are in the store, you know, our favorite thing to say is, out of 140, 150 thousand apps now, the chances that somebody's already invented that wheel are pretty high.

Russ: Right.

WHurley: You know, what a person gets. Well it's a standard publishing arrangement, so they get a royalty right and they get paid out. We upfront all of the cost. In some cases there's other special arrangements made. But you know, we don't believe in treating people who are our content providers, if you will, content originators, like a lot of publishers. Because of that, again, that kind of open source, very collaborative culture -

Russ: Right.

WHurley: - in a lot of cases you know, they're getting treated as if they are a partner in the company.

Russ: Right.

WHurley: Right? For example, with developers, if there's any developers listening out there, we always need more. There's three main people in the company and developers can, you know, make up the 25 percent on a project that they work on. That's something we're really proud of.

Russ: And so you're saying to somebody that brings you a product for application resurrection that you're going to treat them fairly and they have a chance, really, to resurrect their original idea and get a return?

WHurley: And see it be successful. And by the way for them, not only am I saying that, but also them being the superstar.

Russ: Okay.

WHurley: So, are kind of all guys that have made our reputation and all and part of this for us, it's fun, it's taking someone who had an idea and maybe it saw the light of day and didn't get that much sunlight or -

Russ: Right.

WHurley: - maybe it never saw the light of day, and helping them, enable them to see their vision come to fruition but also to see it be successful and to see it be successful with them being the person behind it, right? There are companies that work with you and be happy to take your idea and claim it as their own -

Russ: Right.

WHurley: - and that's, you know, that's just simply not our approach.

Russ: Right, right. We'll be back with more with Whurley after this. You're listening to The BusinessMakers Show, heard here and online at theBusinessMakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show heard here and online at theBusinessMakers.com. And continuing on with Whurley and his new endeavor, Chaotic Moon Studios. Now, when you were talking about Chaotic Moon Studios, you started talking about even offering consultancy services in the whole open-source arena. Does that mean that it's strictly related to mobile?

WHurley: Yes. So the focus is mobile and that's a good thing because to be quite blunt, I think mobile is an area that desperately needs more open source and open innovation and I think you're seeing it naturally kind of do that, right? Google released Android but then they came out with a phone, so then Samsung released Bada which is their open source operating system and you see all of these things that look like things are fragmenting into a million pieces that are actually what I think, you know, a market struggling to come to equilibrium, right?

Russ: Okay.

WHurley: So, you know, it is focused on mobile but I'll be blunt, I scale fairly well, but as you know having tried to track me down for a couple of years now -

Russ: Okay.

WHurley: - you know, I think there's more than enough for me to handle there, even with the team of people behind me.

Russ: Right. If somebody had an application and they thought, "Hey, this is good to put it out there in the open source marketplace," why would they want to do that? I mean, they would not necessarily be able to benefit financially if they did it and it became a big success correct?

WHurley: Well, think about it this way. It depends on who they are. If you think about the open source model and developers, why do developers contribute for free to software? Credibility his current seat and open source, and so that's kind of happening in mobile development, as well. There are people who are writing things like AR toolkits and all of that and they are not benefiting directly off those, necessarily, or in some cases they build it up into a business eventually. But they're getting that credibility and they're getting that exposure and other opportunities present themselves. It's like this: there's core and there's context, right? So you have knowledge that's core to the way you make a living; i.e., how you develop software, things like that. And then there's contextual knowledge. You make your living doing the radio show, right?

Russ: Right.

WHurley: I know a little bit about it but not a lot and maybe you have a hobby. Do you like soccer or baseball or any sports? What's their favorite sport you have?

Russ: Entrepreneurship. [Laughter]

WHurley: See the interview has turned.

Russ: Right. [Laughter]

WHurley: So that's fine. So you have a wealth of information on entrepreneurship, right?

Russ: Right, right, right.

WHurley: So if I ask you a question and say, "Hey, you know, after the interview, I'm starting a business."

Russ: Right.

WHurley: There's probably a ton of stuff that you would -

Russ: Sure.

WHurley: - that you would share with me -

Russ: Sure.

WHurley: - that's contextual, right?

Russ: Sure, absolutely.

WHurley: And that's what you see is that same exchange.

Russ: Right.

WHurley: So, people that are willing to share, not necessarily the deepest thing closest to the way they make a living -

Russ: Right.

WHurley: - but they have all this other knowledge that may be context to them but core to other people. And so, you see the same thing in the mobile development community.

Russ: Sure, sure. And does the company already have its own group and team of developers, as well?

WHurley: It does.

Russ: Okay.

WHurley: And we need more.

Russ: More. All right.

WHurley: I'll tell you this: we're probably looking at bringing on another 60 developers between now and August.

Russ: My goodness.

WHurley: So, call me. [Laughter]

Russ: Right. [Laughter] Right, right. Cool. Well go ahead. I mean tell - tell them how to get in touch with you.

WHurley: Well, it's pretty easy. You can visit chaoticmoon.com or you can send me email to whurley@chaoticmoon.com or you can text whurley to 50500 and it'll give you my phone number and all my contact details in a return text message.

Russ: Okay. Now sort of back to one of these other comments you talked about, about how you have somebody that might not even be a developer but they just have a good idea for a good mobile app and you will sit down and listen to their idea and perhaps go out and develop it and publish it and still, just like you talked about in the application resurrection strategy, they will own part of the product and participate with you, correct?

WHurley: Right. And it's based on - it is a participatory model, right? So, if we are investing, you know, the time and the money and the development resources and the creative at all of that, obviously we want to be compensated for that. I mean we are a publisher, that's part of our business.

Russ: Sure.

WHurley: And that's part of our business strategy; however, a lot of publishers will, you know, just blatantly take advantage of people, right? You get a two percent royalty on an idea where you had an idea, you did some art, maybe it wasn't that great, but you're a developer and you also wrote the code, and maybe because it's pretty good, but you get treated equally, depending on those. And we have a variable model, right? It's more of a scale. So, the more that you've brought to the table, the more you deserve in our opinion.

Russ: Right, well - but that's going to be sort of interesting. If somebody has a real good idea, it's an opportunity to see it come to fruition.

WHurley: Absolutely.

Russ: Cool. Real cool. All right. I'm talking with Whurley, the founder of Chaotic Moon Studios, and we'll be back with more with him after this. You're listening to The BusinessMakers Show, heard here and online at theBusinessMakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show heard here and online at theBusinessMakers.com and continuing on with Whurley, talking about the new venture, Chaotic Moon Studios. So what is your title with the company?

WHurley: So I'm the Chief Technology Officer.

Russ: Chief Technology Officer? Cool. Well, so, who's the CEO?

WHurley: Well we don't actually have the CEO. That was something that, to be blunt, but the level of experience of the team, A) it wasn't necessary, and B) we all know what the CEO's real job is, right? It's like people forget in corporate structure. The board has one job: they always want to give you advice and tell you about all this stuff and experience they have -

Russ: Right.

WHurley: But their real job is hire and fire the CEO.

Russ: Right.

WHurley: Right, that's their function.

Russ: Right.

WHurley: And the CEO's job is to hire everybody else.

Russ: Right.

WHurley: And be like chief cheerleader and salesperson.

Russ: Right.

WHurley: And it's like everybody here has such a vast amount experience, they would probably be offended if, when I started this, it's like, "And you can work for me, I'll be the CEO." And I would probably be offended if one of them said the same thing. So, think of it like the RIM model. You know, Blackberry, Research in Motion, the parent company, they have two CEOs, right?

Russ: Right.

WHurley: And so we thought about that model and then we thought, you know, what role is the CEO going to play? Because one thing about Chaotic Moon Studios is everybody is a contributor. Almost everyone there can write code, even the creative people. Many of the developers are actually very well versed in creative stuff and storyboarding and everything else. So you're talking about a new hybrid where roles are defined really simply, which is this is what we do and everybody we hire needs to be able to do almost all of those things, right? And that made for a very, very strong team environment.

Russ: Well, it doesn't surprise me that you're not taking the standard structure at all but are their investors in the company at all?

WHurley: So, we basically covered all the investment ourselves and there's not a board at this point.

Russ: Right.

WHurley: And I don't really foresee us or look to us having any investment. I left in November, BMC, I took a couple months off, spent some time with my son and just kind of relaxed. January we started, as I said, now we need to hire about 60 developers by August. So things are going incredibly well. I'm not sleeping, but those people who know me would claim that I don't sleep anyway. But contrary to rumor and innuendo, I'm not some sort of vampire and I'd like to sleep more, but you know, I'm on two to three hours a night since we officially started in January and it's good. It's exciting.

Russ: Okay.

WHurley: It's a kind of thing where you're tired but you feel really great about it.

Russ: Well, I'm curious about this non-standard structure. So is the company even incorporated?

WHurley: So, no. It's an LLC right now.

Russ: LC. Okay.

WHurley: And that made the most sense. I mean -

Russ: Okay.

WHurley: - perhaps we'll incorporate. The thing is, when you think of corporate structure, a good friend of mine, Mike Erwin, who's also involved, he said, "You can't plan a structure without exit," -

Russ: Right.

WHurley: So you kind of have to know where you're going and right now this is not a, "Let's start a startup and try to get a lot of money and then get acquired by some marketing firm or some development house." This is, "Let's build a family." This is, "Let's build this amazing machine where people get treated fairly and equally and with respect and you have all of these diverse talents that are kind of in this structure that makes everyone reach beyond themselves." I mean, I'll tell you this: there are many a late-night meeting on video chat or in the offices where I felt like, "Wow, I got to go buy some books at Barnes & Noble and get caught up to speed on that," 'cause I thought I knew it but - it's very humbling, I think, for everyone involved. And so, it's like are we building a company? Sure. I mean, legally there's a company and there's a corporate structure and all of those things, but you know, did we set out to build the company, is that what we're doing? And the answer is no. I mean, we're building a family, albeit some people have accused it of being, you know, that like you're building a cult. But it's not a cult. It's just a bunch of people who are kind of tired of the standard rigmarole too. You know, we talked to a lot of our developers. There used to entrepreneurs that go and they get investment and they have, you know, 99 percent of the company and you know , you shave off a slice, a slice, a slice of the pie for the guy who's building in software, your entire company, and has all the value -

Russ: Right, right.

WHurley: - and then you sit there and you justify it in all the ways you can put at the end of the day, most corporate structures are inherently designed in a way where they take advantage, at least in the software industry, of the people who are doing the most work, right?

Russ: Right.

WHurley: You get 10,000 shares of nothing and it's no- doesn't even equal one lottery ticket. The model that we're choosing, the way we are electing to run it, from a business strategy side, is far more equal treatment for everyone involved and to be blunt, has already resulted in tons of loyalty from people that used to work with other people you might consider, you know, I would say coopetition, some people might say competition -

Russ: Right.

WHurley: - who now will only do work with us, right?

Russ: Right. When you lay out the LLC, you're having to sort of cut the pie up in those agreements correct?

WHurley: Right and the primary founders are, you know, the majority - again, think of it this way: why share in the corporate part of that pie because that's not where it's at. What you want to share in his you want to share in the profit, right?

Russ: Right, sure.

WHurley: I mean that's what people want.

Russ: Sure.

WHurley: Right, the long-term value of it is it's not going to be grown to sell. Why would you want that? It's not going to be, you know, it's not going to go public one day. There's no fascination or delusion, as I'd call it, about that. And so, you get an opportunity to participate in where the actual upside is right from the get-go.

Russ: Is that divided up by the way that the partnership is divided up or do you sort of try to do that - and I'm curious because you're doing this in a very avant-garde way - or is that divided up by project? A guy's got an idea -

WHurley: Well let's say, let's say - well let's say you're a developer.

Russ: Right.

WHurley: Okay? So if you're a developer and I bring you on board to do a project. It depends on the complexity and how much you're doing, but in most cases there's three founders and you get treated like a forced founder.

Russ: Okay.

WHurley: And you port one of our things to Pre, you're getting 25 percent of the profit on it.

Russ: Okay.

WHurley: You know, when we say profit, people always want to say, "Oh, well, are there all these hidden costs and craziness?" And actually, there are a few things. There's a little overhead, but it's very small. For example, you know in the iTunes store we have to give Apple 30 percent.

Russ: Right.

WHurley: Right? We can't give you a share of money we didn't make, but think about one of our developers on one of our apps we just released to the iTunes Store which is called Nutz with a Z. It's a memory matching game and it's very, very cool. It's got great art and great music. The developer on that is getting 25 percent. So every dollar we made, he's basically as if he is a partner.

Russ: Cool.

WHurley: So you know, you talk to a lot of people and when you realize why they haven't reached their dream and why we structured Chaotic Moon the way it is is kind of a dream engine if you will is the fact that most people's plan look like a three-step plan, right? And step one is, you know, fantastic idea, and step three is profit, and step two is a big question mark.

Russ: Right.

WHurley: You know? [Laughter] There's a lot that -

Russ: Right, right.

WHurley: - at everything that has to happen happens in between there.

Russ: Right.

WHurley: And so when, you know, by the way we structured it and sharing with entrepreneurs, they're getting treated, you know, in this very equal, very equitable way, then you find that we are kind of that second step. It's kind of step one, idea; step two, Chaotic Moon Studios, and step three is profit. And all of those things that happen in there by things that they don't want to do. They don't want to do the accounting. They don't want to form a business. They don't want to - especially if they have one app idea, right?

Russ: Right.

WHurley: So they have an app they're going to sell for $.99. Do they want to go even at LegalZoom and spend $200.00, you know, just to form an entity around the app?

Russ: Right, right, right.

WHurley: It's very - you know, I said it was advantageous for Chaotic Moon Studios, but it's as much or more advantageous for the people who have the ideas or who are participating on some level in the project.

Russ: Sure. It's very creative, what you're doing, this business structure, and you can just sort of feel that it's probably going to work, but do you also think that a lot of it is just based upon the fact that the way society and the economy is, like right now, is that good software developers, good software designers, it's prime time?

WHurley: Well, no mistake on the timing and I think you're right, it is a very good time because people need success now more than ever have and, you know, a lot of people were promised hope and feel that they don't have it and you have to get out there and do something for yourself. And doing it all by yourself is very hard as entrepreneur anyway. It's the entrepreneur's credo, right? Use it up, wear it out, make do or do without. That's hard, anyway, on a good day.

Russ: Sure.

WHurley: In a good economy.

Russ: Sure.

WHurley: And so letting people share in the upside is just a much better way of running the business. And also keeping it simple from a management standpoint. We have three founders, we make the decisions. We have a two thirds majority. It's simple, right? And so there's not a lot of wasted time and planning and running and operating. It's so we can get together at our meeting in the morning and we can make some decisions and we can have people building stuff that afternoon and moving forward. And I think you'll find that it's inherently advantageous to this particular industry because times are changing. Software development isn't months and hundreds of thousands of dollars anymore.

Russ: Right.

WHurley: People feared open source for years, commoditizing markets -

Russ: Right.

WHurley: - and they should have feared for $.99 app.

Russ: Right, absolutely.

WHurley: You know, Wired Magazine had a thing that I often refer to where they reviewed the Tom Tom app which is $99.00 and they said, you know, "Wired," you know "Does great stuff," and then, "Tired," was, "Ludicrously expensive." And you think about it and you're like, this lets a magic device in your pocket, right? You can just pull forth from your pocket and click a button and it talks to space and finds out where you are on a planet spinning around incredibly fast, within a meter, and tells you where everything else is in relation to you, and it's like is $99.00 too much for that? I don't know.

Russ: Great. Well, I got another question, though, about the structure so does Chaotic Moon Studios actually have office space?

WHurley: Yes we do.

Russ: Okay.

WHurley: We actually have a data center as well.

Russ: Okay but do you work more there or do you - does everybody work at their home workstation?

WHurley: So we do have developers that are, you know, around the world. So, until the start up visa passes Congress -

Russ: Right.

WHurley: - which we are very interested in.

Russ: Right.

WHurley: They can stay where they are at because that sounds, it sounds like a bunch of costs we don't need to take on.

Russ: Right.

WHurley: But I work from, like Row 27, Seat A most of the time as you know. So -

Russ: Right.

WHurley: - you know, am I there? No. But the Chief Scientist or Chief Architect, the core development staff and the core creative staff are all housed together. So you're looking at, depending on the day, walking into finding a group of somewhere between 15 and 30 people actively working on stuff and then we have a very large group of people outside, both content creators and development staff.

Russ: Okay. You already said it's not built to exit. So forecast for me - what would be ideal scenario be with Chaotic Moon Studios, say five years down the road? What would it be like?

WHurley: So you build a billion-dollar studio, right? If you listen to Larry Huston, be at Procter & Gamble, who's kind of the father of open innovation and you know, he's got company now where, you know, he's doing consulting in the kind of open innovation, open source areas.

Russ: Right.

WHurley: And he talks about, you know, the billion-dollar studio, right? Or the billion-dollar brand. You know, we plan on growing this huge. I mean, let's be very, very blunt. I didn't take three years planning it out with these guys and taking our time while we were doing other things and laying all of this groundwork cannot build something that I intend on, all things being equal, being the last thing I do, right? And by that I don't mean take it and sell it, I mean build something that is what all entrepreneurs and VCs promise but never follow through on, which is a sustainable business, right? A family.

Russ: Right.

WHurley: Everybody sells you on that dream.

Russ: Right.

WHurley: They say, "Oh, well what do you do?" We like, you know, I love when VCs say, "Well, we build sustainable businesses," and it's like, "Well then, your investors are going to be pissed," because if I was an institutional investor and I gave you $100 million -

Russ: Right.

WHurley: - I would want you to turn it into some other money and get it to me as quickly as possible.

Russ: Right. Right, cool, cool. Well, look. I want to ask some questions about you personally, growing up and what you were like. You got time to do that, too?

WHurley: Sure, why not?

Russ: All right. We're going to do that after this. You're listening to The BusinessMakers Show, heard here and online at theBusinessMakers.com.