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In this episode of Startups For The Rest Of Us, Rob along with guest Ruben Gamez answer a number of listener questions on topics including current marketing tactics, scaling from 5 to 10 employees, SaaS longevity and more.
Items mentioned in this episode:
- Docsketch
- Bidsketch
- MicroConf Connect
- Peldi’ s article about profit sharing
- Quiet Light Brokerage
- FE International
- Empire Flippers
Rob: In this week’s episode of Startups for the Rest of Us, I’m joined by Ruben Gomez as we run through listener questions covering topics like marketing approaches that are working today, moving from 5–10 employees, SaaS longevity, and several other questions. This is Startups for the Rest of Us Episode 484.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome in building, launching, and growing startups. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Ruben Gomez, we’re here to share our experiences to help you avoid the mistakes we’ve made.
It’s a Q&A episode, one of the listener favorites. We’ve got a bunch of really good questions today, and I’m happy to welcome Ruben Gomez back on the show. You may remember him from an interview we did a couple of months back, but he started BidSketch, which is a proposal software. It’s a SaaS app. He started that back in (I believe it was) 2009. He was one of the early SaaS bootstrappers, and over the past couple of years, he’s been building another product called DocSketch, which is electronic signatures. He’s experiencing quite a bit of success with that as well.
Ruben is a wealth of knowledge. He’s a very thoughtful founder, and he is just meticulous and disciplined. I say that in some of the intros here. He is almost the definition of those things. He’s detail-oriented, he’s very thoughtful about the direction and the moves that he takes with his companies, and he is someone who I would bet on any day because he does things in such a repeatable fashion and has a wealth of experience under his belt. I’m super excited to have him on the show today.
Before we dive into our conversation where we answer a handful of listener questions including several voicemails—I think we had three voicemails today—I want to remind you again about MicroConf Connect. Go to microconfconnect.com. It is MicroConf’s year-round always on Slack channel. We’re currently accepting applicants. It’s for founders, aspiring founders, and folks who want to be in the self-funded and indie-funded community.
In addition, we’ve had several new reviews over the past couple of months. I won’t bore you by reading them on the show right now, but if you have yet to give us a five-star review or to leave a comment, if the show has been helpful for you, if you feel like you’ve gotten value over the past many years we’ve been doing it, we would really appreciate a five-star or a couple of sentences. It helps us stay motivated and keep cracking the show up. With that, let’s dive into listener questions.
Ruben, thanks so much for coming back on the show.
Ruben: Thanks for the invite.
Rob: It’s going to be fun. I think you have some good insight on a lot of these questions today. Our first question is from Will, and it’s actually a question that I don’t think you and I have a lot of insight into, so I’ve called in a remote correspondence to help us out with that. The question is, “Are there any good places that you know of to pick up more stuff on affiliate marketing? One thing that came out of this past year is that I can write a lot faster and more effectively than I thought. I’m not convinced that writing code is even my strong suit even though lots of people tell me it is. I’d like to explore options in this area a bit more but I’d like to borrow your BS filter for a minute. The trouble with people teaching affiliate marketing is that they’re also affiliate marketers, and the signal-to-noise ratio is brutal. Thanks, Will.”
That’s been my experience as well, Ruben. Before we recorded, you mentioned that you haven’t been in the affiliate marketing area for a while.
Ruben: No, but I like that comment that most of the people selling courses are affiliate marketers as well, so it’s really hard to know what’s legit.
Rob: Exactly, I think you’re dead on, Will, so what I did is I tapped a friend and TinySeed mentor, MicroConf speaker, Taylor Hendrickson, who does exist in that space, a lot B2C stuff and affiliate space, and let’s turn it over to Taylor.
Taylor: Hey, thanks for the question, Will. Again, my name’s Taylor, and I’ve been doing affiliate marketing in one form or another since before the Panda update in Google, which for you non-nerds out there, it’s almost 10 years now. You’re completely right and that most people out there who are “teaching” affiliate marketing actually aren’t good at it themselves or just regurgitating the same information they’ve seen or have posted billions of times, that doesn’t actually help anything or anybody.
For that reason, I actually really don’t have any good courses or resources to point to on affiliate marketing, who aren’t just hawking the same stuff everybody else is, but one of us did provide a little bit more perspective or way of thinking about affiliate marketing that I think will help guide you in the right direction you’re looking for.
The main core of affiliate marketing is the same main core as normal business you get into. It’s solving a defined set of problems for a defined audience. When you look at who’s doing that well in affiliate marketing, look at places like Wirecutter, all they’re doing is recommending the best version of whatever the problem people were coming to the website for in exchange for the commission. They know that the only reason they have an audience (were bought for untold millions of dollars by The New York Times) is because they provide amazing value to the people coming there, looking for solutions to their specific problems. I’d recommend the same thing for anybody looking to get into affiliate marketing.
How can you provide value to a very specific audience with very specific problems? By recommending things that you would actually recommend to a friend or a loved one, not just what pays the highest affiliate commission or just random things you’re trying to do to make a quick buck. People see through that really quick.
If anybody is promising those one-click riches, anything that seems a little too good to be true, or actually doesn’t stand the test of, “Will this last for another five years?” completely run the other direction because they are probably a charlatan. I know this doesn’t quite answer the question you are asking, but hopefully gives some perspective as to how to think about this industry better. Now back to you, Rob.
Rob: Thank you so much, Taylor, for being our on-site correspondent for the affiliate marketing question. Our next question is a voicemail around new modes and methods of marketing.
Donald: Hey Rob, waves to Mike. My name’s Donald, a long time listener. You both kept me going through tough times, so I really appreciate that. I’m a recent returnee to my home country of Ireland, but I’ve been in tech networks and security for a long time back at […]. I built my first self-funded SaaS app in 2018. It did live technical screening of engineering skills and engineer skills, but have failed to get traction for a ton of reasons. I somewhat intentionally did things backwards like built it first, as I was new to Rails and web apps, so is learning as I went. I failed at marketing, failed to get paying customers, albeit I did demo for some large and small orgs and experimented with a whole host of cold and warm methods to get leads.
After nearly giving up, I ended up pivoting pansift.com a few months ago to a SaaS GitHub app in the detection tech space. It now automatically honey tokens your deployed branches. Effectively, it’s kind of like a breach detection app for SaaS and infrastructure codes that enables the attacker detection in minutes rather than months. There is some customer education required for both security teams or engineering teams, and I’m trying to figure out positioning in pricing, but my traffic is currently almost nonexistent. As I restart my marketing efforts, I’m struck by the recent vibe I’m hearing on the podcast and elsewhere that an email list and existing audience doesn’t really cut it for SaaS any longer.
Apart from one-to-one, hand-to-hand combat, customer-by-customer, are there any other new or nontraditional avenues I should or could be exploring for marketing rather than content marketing SEO, PPC, giving talks, doing podcasts, or going to conferences, any help or guidance, much appreciated. I love what you’re both doing. Thank you.
Rob: Thanks so much for the question. I think I want to chime in real quick, Ruben, before I throw it over to you, I’ve heard a couple of people quote back to me that on the podcast, I’ve said that having an existing audience doesn’t help. I want to really want to clarify that because if you have an existing audience that is a B2B-focused audience, and they could potentially be a customer of your SaaS app, I think there’s a huge value in that, specialty of 10,000 or 30,000 on an email list.
When I talk about this audience thing not being the end-all-be-all of SaaS is that I’ve seen the kind of B2C marketers have a large audience of kind of wannapreneurs or folks who are just looking for that opportunity to make a million, to make money online crowd. They try to launch a SaaS app for them, and they realize that none of them want to pay. The churn is through the roof and it’s a bunch of mess with it. SaaS is really hard. It’s a lot harder than selling info products.
That’s more what I’m saying or trying to say. If you have an info product audience, you’re making hundreds of thousands a year, and you think that you can switch to SaaS and make hundreds of thousands a year, I’ve never seen anyone do that well. Does that make sense, and do you agree or disagree with that?
Ruben: Yeah, I completely agree. That sort of the Internet marketing space where basically most of it is usually info products where it happens a lot. Selling in that way, selling to people, they’re trying to buy education courses and other info products is different from selling a SaaS. So yeah, I’ve never seen it. I’ve known several people have tried to do it that had big audiences that were successful with info products, and really usually struggle when it comes to selling SaaS just because it’s different.
Rob: Yeah, I agree. I think the one example that I can think of that work was click-on with Leadpages, but it was all annual plans, it was pretty high pressure sales if you went to their webinars. It was really marketed in a very specific way, and frankly, they struggled with that longer term. That’s the day they got big quickly but that had its own drag on the business.
Ruben: Yeah, there are a couple that have done it. It’s not everyone, but most people are not going to be able to do it. The other one that I can think of is ClickFunnels, what’s his name, Brunson something.
Rob: Russell Brunson.
Ruben: Yeah.
Rob: So, Donald mentioned a bunch of stuff. He was saying content marketing, SEO, pay per click, one-on-one, I think he was meaning like cold email, speaking at conferences, going on podcasts. All that stuff still works, right?
Ruben: It does. Some of it is harder than it used to be, like paid ads are generally more expensive across the board, content marketing back in the day you could do a volume thing, just publish two, three, four, five posts a week. The more you published, the more traffic you got. In some ways, it used to be easier, but things have changed. I’m not sure that I’d say that it’s a lot harder. It’s a little bit harder, but it’s also different. It’s about just getting educated about what’s working nowadays, I think it’s part of it.
I think one of the things that he mentioned was that he was trying to figure out positioning and pricing, and things like that. I don’t know about you, but when I hear something like that, I’d be kind of hesitant to start looking at channels that a lot of people aren’t using, that aren’t proven because in my mind, I would need to figure out that I can sell this product, who the customer is, how does a customer buy, that this is going to work, that I have a funnel that works before I start exploring other channels, channels that are a little unusual or something like that. What do you think about that?
Rob: I think you’re right. It sounds like he’s in customer development almost. Maybe his product is to the point people can use it, but if you don’t have positioning and pricing down, I really wouldn’t start marketing yet. I would be doing a lot of sales. A lot of people equate the two as the same, but they’re very different. I see sales is really a one-on-one act even if you draw in all the leads through marketing techniques, then the sales becomes conversations, and that’s where in his case, I’d be looking to have a lot of conversations and try to pick out their language to figure out positioning.
Ruben: Yeah. You learn so much from those conversations that later help you do marketing in a better way. Otherwise, you’re just guessing. I don’t know this category, so maybe if this category has a lot of competitors, they’re doing really well, it’s pretty established, and you know that this type of product works, I think that’s a different situation where you can have a little bit more confidence. But it still pays to do that up front work, I think.
Rob: Right, and this is where if I were in Donald’s shoes a year ago, I would’ve been building an email list. I would have been trying to build that launch list of people who are interested in this product everywhere I went. I would speak about it when it’s a podcast, speaking in front of an audience or whatever. Whether that list is 200 or 2000 people, that’s your easy farm for customer development where you just have tons of conversations.
If he’s starting from a cold stop, that’s definitely not where I would want to be. But almost everything he listed still works today. Cold email, content marketing, SEO, pay-per-click, podcast tour, speaking, it’s less scalable, but it can get you in front of the right people. The only two others that I would throw in that are in my mental shortlist, and that I see working with MicroConf and TinySeed folks are integrations. Integration marketing where you get both sides to promote, which you were the first person I ever saw do that well way back in the day, probably a decade ago now.
The other one is (and it really depends on your space) is to be higher priced, be the enterprise, but its trade shows. It’s going and being in a booth. I know that a lot of us roll our eyes at that when we want to be self-service SaaS, but I will say there’s more than one company I am deeply involved with that is killing it with trade shows, and they’re absolutely worth every dollar they spend.
Ruben: I’ve always known people that have apps or that serve customers that are a little bit older school (I would say), and they do really well on those. I could hear that those are still doing good.
Rob: I know, and there are obviously many others. I have a long list in a Google Doc, but I also refer people to the book traction by Justin Mares and Gabriel Weinberg for just a list. I think there’s 20 in there. The tactics that are in the book are a few years old now. They may or may not work specifically, but that’s a laundry list that I would start from if I had nothing in the chambers.
Ruben: One thing that I would mention for him, given that his product is technical, maybe looking at what some people are calling engineering as marketing. Free tools is a big one. We’ve had some success with that where we get a lot of traffic doing that. I’ve known other people that have done really well with that. The only thing that I would say about that is that a lot of developers might get excited about those and think that all you have to do is build a calculator or a free tool, put it out there, and you’re just going to get traffic from it.
It’s a product. Building the tools is maybe 20% of it, and then 80% is promoting and marketing. You have to figure out how you’re going to get traffic with it. For us, it was SEO. First figure out the keywords that we’re targeting, this is the traffic that we’re going to get from it, build out the tool, and promote it to start getting that traffic.
Bryan Harris from this company called Growth Tools—it used to be called Videofruit—has a lot of free tools. His approach is very different from mine. His approach is partnerships and paid acquisition to promote the free tools. It’s working really well. He’s written a lot about it. I recommend checking out his stuff.
Rob: That’s a good suggestion. If you are marketing to engineers, then working in public ala […] Derrick Reimer, basically on Twitter posting stuff once a day or twice a week with code snippets—developers love that kind of stuff—recording a short screencast if you’re you actually coding something up. I think that uniquely works in that space and almost nowhere else, maybe with designers or something.
Ruben: I think related to that, something that probably works with almost any product in any space, is basically look at who’s doing a good job attracting that type of customer. It doesn’t have to be just related products. I really like looking at things that are just different. I have a SaaS, but maybe I’ll look at somebody who’s running a podcast, who does a really good job of attracting that type of audience or somebody who’s running a downloadable tool, or a different type of SaaS that’s not competitive in any way, and see what they’re doing. It’s always amazing what you’ll learn from it.
Rob: Thanks for the question. I hope that was helpful. Our next question is a voicemail about the most common employment arrangements in early stage startups.
Sean: Hey, My name’s Sean. I’ve been listening to your stuff for a little while now. I’m not a founder yet, but I love everything you guys do on the podcast and through MicroConf. I’m hoping to find a project to start soon, but for the meantime, I’ll keep listening and thinking. Anyway, my question is, and you may have quoted this before so my apologies. If you haven’t, what are the most common employment arrangements with early stage, no or low funding startups that you typically see?
Rob: Good question, Sean. I believe we have discussed this before, but it is likely hundreds of episodes ago. Ruben, you have thoughts on this?
Ruben: Generally, when you’re starting off, you don’t have a lot of money. Most people that I know (including myself) start off with contractors, part-time then full-time, no equity even when you bring on full-time people, no health insurance early on. It’s being really efficient with the money that you have. Later on, a little bit later, when you start growing a team and stuff but still no equity, I think the thing that I’ve been hearing a little bit more nowadays is that some people are exploring profit sharing a little bit more. At some point, you had health insurance there.
Rob: Right, when you have enough money to think about it. I think for us, it was when we were maybe 3-4 employees. I agree with you, it was part-time contractors for me for years and then you hit a certain point where everyone’s full-time and it kind of makes sense to bring them onboard, they have a bunch of institutional knowledge. Start paying them W-2, it’s more expensive, and you do start offering some benefits. I think the profit sharing is what I’ve seen done most in the bootstrap space just because some bootstrappers are really averse to giving away equity or it just complicates things to have anyone else on the cap table.
Ruben: If I have an LLC, if I wanted to do that for my company, I’d have to change that, wouldn’t I?
Rob: No, you can giveaway units. You can give units. You can do an RS user to restricted stock units. I believe there’s restricted units of LLCs and the vesting just isn’t as straightforward as a thing. That’s the other thing, I really haven’t seen people who haven’t taken any funding. I haven’t seen anyone who’s done stock options versus just an equity grant that vest over a few years. Even though that’s pretty rare and most of it has just been either nothing or it’s been profit sharing, I think it is the general rule in our space versus with Silicon Valley. With a venture-funded startup, there are options everywhere. That’s the currency.
Ruben: Back in the day, and it’s still pretty good, Peldi wrote a good post about profit sharing. If anyone ever wants to explore that, I know a lot of people have used that as a model or the way that they’re doing their profit sharing.
Rob: That’s the one I refer everyone to as well. It’s kind of the best write up I’ve seen. Thanks for that question, Sean. I know you had another one, and we’re going to roll that right here.
Sean: Another question. I’d love to see what the number of hours per week worked is sliced by company maturity or age. I have some assumption about what curve for what that might look like, founders who are in the MicroConf community trying to also double lifestyle and maintainable business? Again, thanks for everything you guys do. I love listening to the podcast. I know you already said you get this a lot, but I love the variety. The variety is great. Thanks a lot. All right. Bye.
Rob: That’s a good question. In fact, I have asked the statistician and data scientist who analyze the data to do that analysis. Hopefully, maybe next week or in the next few weeks, I will have that data, discuss it on the show, and address it then.
Daniel: Hi, this is Daniel. I’m a long-time listener, first time caller. My question is about the transition from being a small team where I run everything to a still small team where I simply can’t do that anymore. I’ve been selling a Word add-in since 2009, took on the first employee in 2015, but this year we’ve completed our transition from being a one-off permanent license to being an annual license. Suddenly, in a space of 6 months, we’re going from a team of 5 to a team of 10, and this just changes everything.
We suddenly have a staff manual and suddenly it’s crazy that people send me leave requests, which they always did before, but now they have line managers now. It seems crazy that I’m still processing expenses and a dozen other small things like that. I’m finding it quite hard to get helpful guidance because everything I see is written for companies that are either smaller than us or larger than us.
My question to you is, knowing that this transition is hard (and you’ve mentioned on the show several times that it is a hard transition), what are the things you see that are mostly likely to break? What systems should I be looking to put in place? And how do I avoid just becoming a glorified admin person? Thanks for your help.
Rob: Thanks for that question, Daniel. Daniel also sent an email where he said, of the ten people on the team, the breakdown is him, six engineers, one customer success, one part-time QA, one part-time growth marketer, and one admin. With that, I’m curious to hear your thoughts.
Ruben: I know a lot of people struggle with the people side. It’s not something that I struggled with a lot. Maybe because before I had my product, I managed a group of people and I went through all the stages from it just being myself to 3 people, 5 people, 10, all the way up to past 30 people. And I studied a lot throughout all of those stages.
Thinking about it more, I think it can be a little bit tricky when you get (let’s say) from 5–10 versus 5–15 or 5–20. When you’re at 15–20 people, it’s a lot more clear that you can’t do everything yourself. You can’t be as involved yourself. You have to depend on others. When you’re in that 8, 9, 10 zone, maybe it’s a little tricky because you can technically do it. You can have most of those people reporting to you directly, but it gets tricky because you’re so busy feeling like an admin doing all the stuff and just managing people.
I would probably say, mindset is one of those things that I would think about your team being bigger than it actually is because it probably will be bigger soon, and the things that you need to do to manage effectively, to have it, you can’t be managing everybody directly. Breaking your people up into small teams, having other people on your team lead and own their positions, are really big. It’s hard to run a team of that size without doing that, and then be having time to do other things. Those are just some of the things that I’d think about.
Also, read. I see a lot of people in our space, it feels like they’re constantly figuring this out for the first time, but there are decades of information about managing teams and a lot of it is useful. It doesn’t have to be specific to startups or a certain size. A couple of books—Traction—I forgot the other author. Not the marketing one. I’ve heard it’s pretty practical and a lot of people seem to like it.
Rob: […] I forgot that author, too, but here it’s the Entrepreneurial OS or EOS. If you search that on Amazon, it’ll get you to the book.
Ruben: Right, and just from talking to people that have read it, a lot of the stuff that they’ve implemented based off that book is stuff that I’ve implemented over the years. It sounds really in line with a lot of the way that people (especially in our space) operate their businesses at these sizes, so check that out. I also like One Minute Manager. That one is one that I really like and I read every once in a while.
Rob: And it’s Traction by Gino Wickman. I agree with everything you said. Actually, I made notes as I was listening to the voicemail, and one of the first ones I said when he said, “What systems should I put in place?” is to have managers that are not just you because you cannot have 12 direct reports. Right now, you have nine or maybe you do have line managers, I don’t know. A mistake that I made with Drip is that everyone reported to me the whole time. There were a bunch of reasons. There were excuses why I didn’t do it, is really the bottom line. It took a toll on me and it’s something that I wouldn’t do again.
I think something else that I noticed is that when I look at your line-up, it’s very product-heavy. You have no sales people and you only have a part-time marketer out of 10 people. To me, that feels off. I would consider, can you grow the business a little faster if that growth marketer was full-time or if you had a salesperson?
The reason leads are still coming to you is because you don’t have anyone else doing sales. I would consider (in a short-term) typically customer success people are often pretty good at sales. Without a quota and all the stuff, they may not be as good as if you went the full process, but customer success people know your product. They know how to talk to people. That is what we did when we only had one customer success person. She did both those roles, and I think that was a good move we made.
Another I would think about, specifically to the phrase of, “How do I avoid becoming a glorified admin,” I would seriously consider at what point here do you need to hire even a part-time Director of Operations or Director of HR? It seems really early to that, but if you’re running your own payroll, you’re thinking about your own books and your accounting, you’re dealing with the state or local governments with the taxes, there’s always unemployment, there’s like three different accounts in every state where you hire someone, and it’s so hard to outsource. It’s like Gusto or any of these payroll providers. They say they do a lot of it, but they don’t do that stuff. You need a PEO (at least in the US) to do that, and that becomes very expensive.
Another mistake I made is that I wished I hired someone to handle a lot more of the day-to-day ops. In the old days, they called them an office manager. They did all of that stuff, kept the personnel files and did a lot of the payroll, the bookkeeping, the accounting, the invoicing, accounts payable, accounts receivable, all of that. Everything was under their purview.
We don’t have all those things necessarily if you’re selling software, but I do think finding someone really competent, who you can hand that off and completely delegate it. Not someone you’re telling what to do day-to-day because you already have an admin, but is that admin competent or experienced enough to really come in and take charge or do you need to go out and find that ops person to get yourself out of that role?
Thanks again for the questions, Daniel. Hope that was helpful.
Our next question is from long-time listener, Mr. James Kennedy. He’s also spoken at a couple of MicroConfs. He says, “It’s clear from the number of people writing into the show with a million-dollar or more SaaS businesses that the community has really come a long way.” I’d like to hear your thoughts on where to go after you’ve replaced the day job. If it’s become a grind, then selling your apps seems obvious, but it’s not a grind, what’s next? There’s always the fear that it all goes south. Most are probably over-invested in a single startup that works. Who have you seen that has handled managing this risk while still running their company and how do they do it? James.”
And he says, “PS, the podcast has never been stronger. It’s still great to hear from Mike, but the extra TinySeed tales and variety of new guests has invigorated the whole thing.” Thanks for that, James. To his question, your thoughts on that, Ruben?
Ruben: Yeah. He said after quitting the day job. I’m assuming it’s way after because right after you quit the day job, it’s still pretty early, and it’s basically at that point, grow the company. But after growing the company maybe for a couple of more years, good revenue, getting people on board (or not, depending on that company). Some people sell, and this has really always been interesting to me. People run their companies, like they’re going to be around forever.
It’s really interesting to me that there’s that mindset in our space where things are changing all of the time and companies are dying. Like in that question, I don’t remember exactly how it was phased, but something about that it can all go away at some point. I have that. I know a lot of people that also have that thought, but I do know other people that it’s not even a thought for them, which I find really interesting.
I think that’s not so good. It’s cool if you want to run the company for a long time but at some point, I think it’s really important for the founder to take some money off the table in some way, shape, or form. If you don’t sell, then sell part of the company or what I’ve done at periods of time is basically use the company almost like a cash machine. If it’s really profitable and you’re efficient with how you’re acquiring customers and all that stuff, I know a couple of people that are currently doing that as well.
I think being in that stage where you’re not that profitable, you have a lot of employees for the amount of revenue that you’re bringing in, running that company in that way for a long time, and expecting it to be around forever and not taking any money off the table, it’s a really risky way of doing things. What do you think?
Rob: I was going to say the same thing. There’s selling. It used to be that it was really hard to sell these small apps. There was no market for them. There was no Quiet Light, FE International, Empire Flippers. It was person-to-person. You’d go on a website and you’d get 1X your annual revenue of something. It was great for buyers, but really bad if you wanted to exit. But there’s so much money coming into the space now. Both through these brokers but also just strategic acquirers where they actually do come in. Strategic or private equity buyers if you’re over a million, where they will pay you revenue in multiples now. You sell a business doing a million dollars for $2 million or $3 million, that’s crazy.
It’s doing a million dollars, and after payroll and all your expenses, you’re making $100,000 or something because you’re growing so fast, and yet, you sell that for $2 million or $3 million, I have seen this happen now. Josh with Baremetrics. We talked an episode or two ago about how he got an offer for 3.75 revenue. It was a $5 million offer. That certainly doesn’t happen every day, but it’s a lot more common than people would believe, I’ll put it that way.
Soon as you go above north $1 million is where that happens. Obviously, I’ve sold a bunch of companies. I’ve either sold or shut down every company I’ve ever had, so I’m not saying you should or shouldn’t sell, but it wasn’t an option. Then it became an option, and now, we know what you just said is selling part of your company, selling 20%. Obviously, look for similar evaluation to a partner who is still a minority partner, doesn’t have control, and it’s not venture capital. It’s for you to literally take the money off the table.
A founder running a million-dollar app that (let’s say) is worth “someone might be willing to pay $2½ million for it.” If you could sell 20% for half a million dollars and put that half a million in the bank, personally, I would’ve slept way better at night when I was running any of my companies, and I wish that that have been more of an option. It is now becoming more of an option. There are folks who have set up funds. Now, there’s only a handful. It’s still an emerging thing. Much like into that VC tiny seed stuff, that’s still this emerging frontier. There’s also this partial cash-out equity that I’m seeing happens. I think it’s an intriguing idea.
Ruben: Yeah. It makes a lot of sense and I’m glad that those types of options are available nowadays. This is still good for people who are in the VC space, getting funding at ridiculous amounts. Mainly because the founder is taking money off the table as well.
Rob: Yup. Typically, it’s like oftentimes, the second round, the Series B founders will take money off the table to be able to sleep better at night. It over-invested in one startup is a good way to think about it.
The last thing that we haven’t discussed is—I’ve seen some folks—find a CEO to run the thing. You couldn’t do that in the stages but if you’re north of a million, is there a budget there? If you decided you did want to step away, can you find someone who is really good enough that you trust to keep the company going while you step away to do something else? I think this is a little bit like the model.
When we look at the folks who have run SaaS apps for really long periods of time, like the Basecamp guys, they’re not still working on that first product. They would be bored out of their mind. We get too bored with stuff. They’re rewritten it multiple times now. They’ve launched Haystack. They launched a bunch of stuff over the years, so that’s how they stay invested. If you think about it, they’re just starting a bunch of companies, but really, they’re not. They’re just starting a bunch of products under the umbrella, the company.
That’s a dream scenario, and I think most of us can’t do that, but if that’s what you need, if you feel like, “Well, I have these companies running really well, and I can find someone good to run it,” there’s obviously huge risk here, right? You find the wrong person and the company tanks. Maybe you sell part of it to take money off the table, you find someone to replace you, and then go on to do your next act. Is that something of interest?
Ruben: Yeah, I’ve known several that have done this. I’ve actually known people that have had success doing it, then basically ended up with the wrong person and had to come back.
Rob: Yeah, and it’s something I have never done. It always seems really scary to me, like I couldn’t find the right person and on, and on, and on. Insert a bunch of excuses here about why I didn’t do it, but it is something I wish I had potentially evaluated earlier with some of the apps that I’ve had. Thanks for that question, James. I hope that was helpful.
Our next question is about starting with no audience and selling at higher price points. The person says, “In two previous podcast episodes, I’ve heard you talk about startups having no audiences and selling their product with significant MRR. I’d love to hear more about this. I started my own SaaS product early this year and I’m doing the cold outreach route with some success. However, apart from what Steli Efti writes, there are very few other resources as to how to get going when you’re first starting out.”
This was another one where I wasn’t saying don’t start with no audience. I was saying taking that B2C audience and trying to transition. Yeah, we already covered this, but the idea is I think having an audience would be great but if you don’t, how do you start selling at higher price points? To me, it’s like cold email is the one that everyone does because it’s worth doing.
I think AdWords is another one that’s really expensive, but if you have any type of cash to pour into it, you don’t need that many leads if you are selling at higher price points. It is going to be so consultative anyway, that you’re going to be getting in demos and conversations with folks. What are your thoughts on this, Ruben?
Ruben: I’m wondering what people mean when they say “no audience.” You covered it a little bit, but are they thinking just any sort of audience at all or more like the personal brand type of thing?
Rob: I think she means no reach, really no audience.
Ruben: Nothing? Starting from the ground?
Rob: Yeah, kind of like no launch email lists, because if you have an email list that was interested in hearing about the product when it launches, then you would just do that, but I think she does mean like, “I’ve made a traditional developer mistake. I built some stuff maybe, I was having conversations, but I did know marketing.” Start marketing the day you start quoting. Start marketing before you start quoting. Just take my advice, please, so that you don’t wind up in this position, but it’s obviously very common for people to wind up in that position.
Ruben: Yeah. Even if you’re not in that position by the time that you launch, everybody starts off that way or most people do. You start with nothing then you build it up. Really, it’s just marketing. It’s just in the earliest stages when you don’t have anything, kind of going back to the first question. It’s about figuring out who your target customer is. How do they buy? Where do they hang out? Then, doing things that will lit up their work that take time to build up. Some things are a little bit faster, like paid acquisition if you can make that work.
Most people that I know don’t make that work very early on. Maybe there are just too many unknowns at that point. Partnerships which work really well at any stage, I’ve seen a lot of people make those work. They’re good because you can get in front of a big audience really quickly. It does take some work but I like those. And I really like SEO, which takes time. I tend to start SEO and content marketing before launching the product because I have experience with it, and I’m confident that I can do the research to get the right keywords and do the work to start ranking for terms.
By the time that the product is released, I think for a lot of people, before investing a lot of time in SEO and content marketing, I probably just get more confidence in the product, in what I’m selling, and that it’s going to work before really investing heavily in that. Investing some time in that is always good but I’d probably start with some of the other things first.
Rob: I think that’s a really good answer. I don’t have much to add to that. Ruben, thanks again for coming on the show.
Ruben: Thanks for the invite. These are fun. I like the Q&A. I once listened to them, and now actually participating in one.
Rob: That’s great. Folks want to find out more about what you’re up to, they can go to docsketch.com, which is an electronic signature app—you’re killing it over there—as well as bidsketch.com, which is proposal software for everyone now. I think back. You did such a good lead and expand. Proposal software made for designers. That was the first year or something, and then the next 9 or 10 years has been proposal software.
Ruben: Yeah, now that’s like 10% of the customer base.
Rob: Yeah, but I got you traction in the early days.
Ruben: Yup.
Rob: Thanks again. Talk to you soon.
Ruben: All right, thanks.
Rob: Thanks again to Ruben for coming on the show. If you want to find him on Twitter, his username is @earthlingworks.
We only have a handful of questions for our next Q&A show, so if you have a question for us, you can leave a voicemail at (888) 801-9690 or email questions@startupsfortherestofus.com, and you can attach a voicemail. Voicemails always go to the top of the stack or send a text question and I’ll read it out for you.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. You can subscribe to us in any podcatcher. Visit startupsfortherestofus.com for a full transcript of each episode. Thank you for listening. I’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome in building, launching, and growing startups. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Ruben Gomez, we’re here to share our experiences to help you avoid the mistakes we’ve made.
It’s a Q&A episode, one of the listener favorites. We’ve got a bunch of really good questions today, and I’m happy to welcome Ruben Gomez back on the show. You may remember him from an interview we did a couple of months back, but he started BidSketch, which is a proposal software. It’s a SaaS app. He started that back in (I believe it was) 2009. He was one of the early SaaS bootstrappers, and over the past couple of years, he’s been building another product called DocSketch, which is electronic signatures. He’s experiencing quite a bit of success with that as well.
Ruben is a wealth of knowledge. He’s a very thoughtful founder, and he is just meticulous and disciplined. I say that in some of the intros here. He is almost the definition of those things. He’s detail-oriented, he’s very thoughtful about the direction and the moves that he takes with his companies, and he is someone who I would bet on any day because he does things in such a repeatable fashion and has a wealth of experience under his belt. I’m super excited to have him on the show today.
Before we dive into our conversation where we answer a handful of listener questions including several voicemails—I think we had three voicemails today—I want to remind you again about MicroConf Connect. Go to microconfconnect.com. It is MicroConf’s year-round always on Slack channel. We’re currently accepting applicants. It’s for founders, aspiring founders, and folks who want to be in the self-funded and indie-funded community.
In addition, we’ve had several new reviews over the past couple of months. I won’t bore you by reading them on the show right now, but if you have yet to give us a five-star review or to leave a comment, if the show has been helpful for you, if you feel like you’ve gotten value over the past many years we’ve been doing it, we would really appreciate a five-star or a couple of sentences. It helps us stay motivated and keep cracking the show up. With that, let’s dive into listener questions.
Ruben, thanks so much for coming back on the show.
Ruben: Thanks for the invite.
Rob: It’s going to be fun. I think you have some good insight on a lot of these questions today. Our first question is from Will, and it’s actually a question that I don’t think you and I have a lot of insight into, so I’ve called in a remote correspondence to help us out with that. The question is, “Are there any good places that you know of to pick up more stuff on affiliate marketing? One thing that came out of this past year is that I can write a lot faster and more effectively than I thought. I’m not convinced that writing code is even my strong suit even though lots of people tell me it is. I’d like to explore options in this area a bit more but I’d like to borrow your BS filter for a minute. The trouble with people teaching affiliate marketing is that they’re also affiliate marketers, and the signal-to-noise ratio is brutal. Thanks, Will.”
That’s been my experience as well, Ruben. Before we recorded, you mentioned that you haven’t been in the affiliate marketing area for a while.
Ruben: No, but I like that comment that most of the people selling courses are affiliate marketers as well, so it’s really hard to know what’s legit.
Rob: Exactly, I think you’re dead on, Will, so what I did is I tapped a friend and TinySeed mentor, MicroConf speaker, Taylor Hendrickson, who does exist in that space, a lot B2C stuff and affiliate space, and let’s turn it over to Taylor.
Taylor: Hey, thanks for the question, Will. Again, my name’s Taylor, and I’ve been doing affiliate marketing in one form or another since before the Panda update in Google, which for you non-nerds out there, it’s almost 10 years now. You’re completely right and that most people out there who are “teaching” affiliate marketing actually aren’t good at it themselves or just regurgitating the same information they’ve seen or have posted billions of times, that doesn’t actually help anything or anybody.
For that reason, I actually really don’t have any good courses or resources to point to on affiliate marketing, who aren’t just hawking the same stuff everybody else is, but one of us did provide a little bit more perspective or way of thinking about affiliate marketing that I think will help guide you in the right direction you’re looking for.
The main core of affiliate marketing is the same main core as normal business you get into. It’s solving a defined set of problems for a defined audience. When you look at who’s doing that well in affiliate marketing, look at places like Wirecutter, all they’re doing is recommending the best version of whatever the problem people were coming to the website for in exchange for the commission. They know that the only reason they have an audience (were bought for untold millions of dollars by The New York Times) is because they provide amazing value to the people coming there, looking for solutions to their specific problems. I’d recommend the same thing for anybody looking to get into affiliate marketing.
How can you provide value to a very specific audience with very specific problems? By recommending things that you would actually recommend to a friend or a loved one, not just what pays the highest affiliate commission or just random things you’re trying to do to make a quick buck. People see through that really quick.
If anybody is promising those one-click riches, anything that seems a little too good to be true, or actually doesn’t stand the test of, “Will this last for another five years?” completely run the other direction because they are probably a charlatan. I know this doesn’t quite answer the question you are asking, but hopefully gives some perspective as to how to think about this industry better. Now back to you, Rob.
Rob: Thank you so much, Taylor, for being our on-site correspondent for the affiliate marketing question. Our next question is a voicemail around new modes and methods of marketing.
Donald: Hey Rob, waves to Mike. My name’s Donald, a long time listener. You both kept me going through tough times, so I really appreciate that. I’m a recent returnee to my home country of Ireland, but I’ve been in tech networks and security for a long time back at […]. I built my first self-funded SaaS app in 2018. It did live technical screening of engineering skills and engineer skills, but have failed to get traction for a ton of reasons. I somewhat intentionally did things backwards like built it first, as I was new to Rails and web apps, so is learning as I went. I failed at marketing, failed to get paying customers, albeit I did demo for some large and small orgs and experimented with a whole host of cold and warm methods to get leads.
After nearly giving up, I ended up pivoting pansift.com a few months ago to a SaaS GitHub app in the detection tech space. It now automatically honey tokens your deployed branches. Effectively, it’s kind of like a breach detection app for SaaS and infrastructure codes that enables the attacker detection in minutes rather than months. There is some customer education required for both security teams or engineering teams, and I’m trying to figure out positioning in pricing, but my traffic is currently almost nonexistent. As I restart my marketing efforts, I’m struck by the recent vibe I’m hearing on the podcast and elsewhere that an email list and existing audience doesn’t really cut it for SaaS any longer.
Apart from one-to-one, hand-to-hand combat, customer-by-customer, are there any other new or nontraditional avenues I should or could be exploring for marketing rather than content marketing SEO, PPC, giving talks, doing podcasts, or going to conferences, any help or guidance, much appreciated. I love what you’re both doing. Thank you.
Rob: Thanks so much for the question. I think I want to chime in real quick, Ruben, before I throw it over to you, I’ve heard a couple of people quote back to me that on the podcast, I’ve said that having an existing audience doesn’t help. I want to really want to clarify that because if you have an existing audience that is a B2B-focused audience, and they could potentially be a customer of your SaaS app, I think there’s a huge value in that, specialty of 10,000 or 30,000 on an email list.
When I talk about this audience thing not being the end-all-be-all of SaaS is that I’ve seen the kind of B2C marketers have a large audience of kind of wannapreneurs or folks who are just looking for that opportunity to make a million, to make money online crowd. They try to launch a SaaS app for them, and they realize that none of them want to pay. The churn is through the roof and it’s a bunch of mess with it. SaaS is really hard. It’s a lot harder than selling info products.
That’s more what I’m saying or trying to say. If you have an info product audience, you’re making hundreds of thousands a year, and you think that you can switch to SaaS and make hundreds of thousands a year, I’ve never seen anyone do that well. Does that make sense, and do you agree or disagree with that?
Ruben: Yeah, I completely agree. That sort of the Internet marketing space where basically most of it is usually info products where it happens a lot. Selling in that way, selling to people, they’re trying to buy education courses and other info products is different from selling a SaaS. So yeah, I’ve never seen it. I’ve known several people have tried to do it that had big audiences that were successful with info products, and really usually struggle when it comes to selling SaaS just because it’s different.
Rob: Yeah, I agree. I think the one example that I can think of that work was click-on with Leadpages, but it was all annual plans, it was pretty high pressure sales if you went to their webinars. It was really marketed in a very specific way, and frankly, they struggled with that longer term. That’s the day they got big quickly but that had its own drag on the business.
Ruben: Yeah, there are a couple that have done it. It’s not everyone, but most people are not going to be able to do it. The other one that I can think of is ClickFunnels, what’s his name, Brunson something.
Rob: Russell Brunson.
Ruben: Yeah.
Rob: So, Donald mentioned a bunch of stuff. He was saying content marketing, SEO, pay per click, one-on-one, I think he was meaning like cold email, speaking at conferences, going on podcasts. All that stuff still works, right?
Ruben: It does. Some of it is harder than it used to be, like paid ads are generally more expensive across the board, content marketing back in the day you could do a volume thing, just publish two, three, four, five posts a week. The more you published, the more traffic you got. In some ways, it used to be easier, but things have changed. I’m not sure that I’d say that it’s a lot harder. It’s a little bit harder, but it’s also different. It’s about just getting educated about what’s working nowadays, I think it’s part of it.
I think one of the things that he mentioned was that he was trying to figure out positioning and pricing, and things like that. I don’t know about you, but when I hear something like that, I’d be kind of hesitant to start looking at channels that a lot of people aren’t using, that aren’t proven because in my mind, I would need to figure out that I can sell this product, who the customer is, how does a customer buy, that this is going to work, that I have a funnel that works before I start exploring other channels, channels that are a little unusual or something like that. What do you think about that?
Rob: I think you’re right. It sounds like he’s in customer development almost. Maybe his product is to the point people can use it, but if you don’t have positioning and pricing down, I really wouldn’t start marketing yet. I would be doing a lot of sales. A lot of people equate the two as the same, but they’re very different. I see sales is really a one-on-one act even if you draw in all the leads through marketing techniques, then the sales becomes conversations, and that’s where in his case, I’d be looking to have a lot of conversations and try to pick out their language to figure out positioning.
Ruben: Yeah. You learn so much from those conversations that later help you do marketing in a better way. Otherwise, you’re just guessing. I don’t know this category, so maybe if this category has a lot of competitors, they’re doing really well, it’s pretty established, and you know that this type of product works, I think that’s a different situation where you can have a little bit more confidence. But it still pays to do that up front work, I think.
Rob: Right, and this is where if I were in Donald’s shoes a year ago, I would’ve been building an email list. I would have been trying to build that launch list of people who are interested in this product everywhere I went. I would speak about it when it’s a podcast, speaking in front of an audience or whatever. Whether that list is 200 or 2000 people, that’s your easy farm for customer development where you just have tons of conversations.
If he’s starting from a cold stop, that’s definitely not where I would want to be. But almost everything he listed still works today. Cold email, content marketing, SEO, pay-per-click, podcast tour, speaking, it’s less scalable, but it can get you in front of the right people. The only two others that I would throw in that are in my mental shortlist, and that I see working with MicroConf and TinySeed folks are integrations. Integration marketing where you get both sides to promote, which you were the first person I ever saw do that well way back in the day, probably a decade ago now.
The other one is (and it really depends on your space) is to be higher priced, be the enterprise, but its trade shows. It’s going and being in a booth. I know that a lot of us roll our eyes at that when we want to be self-service SaaS, but I will say there’s more than one company I am deeply involved with that is killing it with trade shows, and they’re absolutely worth every dollar they spend.
Ruben: I’ve always known people that have apps or that serve customers that are a little bit older school (I would say), and they do really well on those. I could hear that those are still doing good.
Rob: I know, and there are obviously many others. I have a long list in a Google Doc, but I also refer people to the book traction by Justin Mares and Gabriel Weinberg for just a list. I think there’s 20 in there. The tactics that are in the book are a few years old now. They may or may not work specifically, but that’s a laundry list that I would start from if I had nothing in the chambers.
Ruben: One thing that I would mention for him, given that his product is technical, maybe looking at what some people are calling engineering as marketing. Free tools is a big one. We’ve had some success with that where we get a lot of traffic doing that. I’ve known other people that have done really well with that. The only thing that I would say about that is that a lot of developers might get excited about those and think that all you have to do is build a calculator or a free tool, put it out there, and you’re just going to get traffic from it.
It’s a product. Building the tools is maybe 20% of it, and then 80% is promoting and marketing. You have to figure out how you’re going to get traffic with it. For us, it was SEO. First figure out the keywords that we’re targeting, this is the traffic that we’re going to get from it, build out the tool, and promote it to start getting that traffic.
Bryan Harris from this company called Growth Tools—it used to be called Videofruit—has a lot of free tools. His approach is very different from mine. His approach is partnerships and paid acquisition to promote the free tools. It’s working really well. He’s written a lot about it. I recommend checking out his stuff.
Rob: That’s a good suggestion. If you are marketing to engineers, then working in public ala […] Derrick Reimer, basically on Twitter posting stuff once a day or twice a week with code snippets—developers love that kind of stuff—recording a short screencast if you’re you actually coding something up. I think that uniquely works in that space and almost nowhere else, maybe with designers or something.
Ruben: I think related to that, something that probably works with almost any product in any space, is basically look at who’s doing a good job attracting that type of customer. It doesn’t have to be just related products. I really like looking at things that are just different. I have a SaaS, but maybe I’ll look at somebody who’s running a podcast, who does a really good job of attracting that type of audience or somebody who’s running a downloadable tool, or a different type of SaaS that’s not competitive in any way, and see what they’re doing. It’s always amazing what you’ll learn from it.
Rob: Thanks for the question. I hope that was helpful. Our next question is a voicemail about the most common employment arrangements in early stage startups.
Sean: Hey, My name’s Sean. I’ve been listening to your stuff for a little while now. I’m not a founder yet, but I love everything you guys do on the podcast and through MicroConf. I’m hoping to find a project to start soon, but for the meantime, I’ll keep listening and thinking. Anyway, my question is, and you may have quoted this before so my apologies. If you haven’t, what are the most common employment arrangements with early stage, no or low funding startups that you typically see?
Rob: Good question, Sean. I believe we have discussed this before, but it is likely hundreds of episodes ago. Ruben, you have thoughts on this?
Ruben: Generally, when you’re starting off, you don’t have a lot of money. Most people that I know (including myself) start off with contractors, part-time then full-time, no equity even when you bring on full-time people, no health insurance early on. It’s being really efficient with the money that you have. Later on, a little bit later, when you start growing a team and stuff but still no equity, I think the thing that I’ve been hearing a little bit more nowadays is that some people are exploring profit sharing a little bit more. At some point, you had health insurance there.
Rob: Right, when you have enough money to think about it. I think for us, it was when we were maybe 3-4 employees. I agree with you, it was part-time contractors for me for years and then you hit a certain point where everyone’s full-time and it kind of makes sense to bring them onboard, they have a bunch of institutional knowledge. Start paying them W-2, it’s more expensive, and you do start offering some benefits. I think the profit sharing is what I’ve seen done most in the bootstrap space just because some bootstrappers are really averse to giving away equity or it just complicates things to have anyone else on the cap table.
Ruben: If I have an LLC, if I wanted to do that for my company, I’d have to change that, wouldn’t I?
Rob: No, you can giveaway units. You can give units. You can do an RS user to restricted stock units. I believe there’s restricted units of LLCs and the vesting just isn’t as straightforward as a thing. That’s the other thing, I really haven’t seen people who haven’t taken any funding. I haven’t seen anyone who’s done stock options versus just an equity grant that vest over a few years. Even though that’s pretty rare and most of it has just been either nothing or it’s been profit sharing, I think it is the general rule in our space versus with Silicon Valley. With a venture-funded startup, there are options everywhere. That’s the currency.
Ruben: Back in the day, and it’s still pretty good, Peldi wrote a good post about profit sharing. If anyone ever wants to explore that, I know a lot of people have used that as a model or the way that they’re doing their profit sharing.
Rob: That’s the one I refer everyone to as well. It’s kind of the best write up I’ve seen. Thanks for that question, Sean. I know you had another one, and we’re going to roll that right here.
Sean: Another question. I’d love to see what the number of hours per week worked is sliced by company maturity or age. I have some assumption about what curve for what that might look like, founders who are in the MicroConf community trying to also double lifestyle and maintainable business? Again, thanks for everything you guys do. I love listening to the podcast. I know you already said you get this a lot, but I love the variety. The variety is great. Thanks a lot. All right. Bye.
Rob: That’s a good question. In fact, I have asked the statistician and data scientist who analyze the data to do that analysis. Hopefully, maybe next week or in the next few weeks, I will have that data, discuss it on the show, and address it then.
Daniel: Hi, this is Daniel. I’m a long-time listener, first time caller. My question is about the transition from being a small team where I run everything to a still small team where I simply can’t do that anymore. I’ve been selling a Word add-in since 2009, took on the first employee in 2015, but this year we’ve completed our transition from being a one-off permanent license to being an annual license. Suddenly, in a space of 6 months, we’re going from a team of 5 to a team of 10, and this just changes everything.
We suddenly have a staff manual and suddenly it’s crazy that people send me leave requests, which they always did before, but now they have line managers now. It seems crazy that I’m still processing expenses and a dozen other small things like that. I’m finding it quite hard to get helpful guidance because everything I see is written for companies that are either smaller than us or larger than us.
My question to you is, knowing that this transition is hard (and you’ve mentioned on the show several times that it is a hard transition), what are the things you see that are mostly likely to break? What systems should I be looking to put in place? And how do I avoid just becoming a glorified admin person? Thanks for your help.
Rob: Thanks for that question, Daniel. Daniel also sent an email where he said, of the ten people on the team, the breakdown is him, six engineers, one customer success, one part-time QA, one part-time growth marketer, and one admin. With that, I’m curious to hear your thoughts.
Ruben: I know a lot of people struggle with the people side. It’s not something that I struggled with a lot. Maybe because before I had my product, I managed a group of people and I went through all the stages from it just being myself to 3 people, 5 people, 10, all the way up to past 30 people. And I studied a lot throughout all of those stages.
Thinking about it more, I think it can be a little bit tricky when you get (let’s say) from 5–10 versus 5–15 or 5–20. When you’re at 15–20 people, it’s a lot more clear that you can’t do everything yourself. You can’t be as involved yourself. You have to depend on others. When you’re in that 8, 9, 10 zone, maybe it’s a little tricky because you can technically do it. You can have most of those people reporting to you directly, but it gets tricky because you’re so busy feeling like an admin doing all the stuff and just managing people.
I would probably say, mindset is one of those things that I would think about your team being bigger than it actually is because it probably will be bigger soon, and the things that you need to do to manage effectively, to have it, you can’t be managing everybody directly. Breaking your people up into small teams, having other people on your team lead and own their positions, are really big. It’s hard to run a team of that size without doing that, and then be having time to do other things. Those are just some of the things that I’d think about.
Also, read. I see a lot of people in our space, it feels like they’re constantly figuring this out for the first time, but there are decades of information about managing teams and a lot of it is useful. It doesn’t have to be specific to startups or a certain size. A couple of books—Traction—I forgot the other author. Not the marketing one. I’ve heard it’s pretty practical and a lot of people seem to like it.
Rob: […] I forgot that author, too, but here it’s the Entrepreneurial OS or EOS. If you search that on Amazon, it’ll get you to the book.
Ruben: Right, and just from talking to people that have read it, a lot of the stuff that they’ve implemented based off that book is stuff that I’ve implemented over the years. It sounds really in line with a lot of the way that people (especially in our space) operate their businesses at these sizes, so check that out. I also like One Minute Manager. That one is one that I really like and I read every once in a while.
Rob: And it’s Traction by Gino Wickman. I agree with everything you said. Actually, I made notes as I was listening to the voicemail, and one of the first ones I said when he said, “What systems should I put in place?” is to have managers that are not just you because you cannot have 12 direct reports. Right now, you have nine or maybe you do have line managers, I don’t know. A mistake that I made with Drip is that everyone reported to me the whole time. There were a bunch of reasons. There were excuses why I didn’t do it, is really the bottom line. It took a toll on me and it’s something that I wouldn’t do again.
I think something else that I noticed is that when I look at your line-up, it’s very product-heavy. You have no sales people and you only have a part-time marketer out of 10 people. To me, that feels off. I would consider, can you grow the business a little faster if that growth marketer was full-time or if you had a salesperson?
The reason leads are still coming to you is because you don’t have anyone else doing sales. I would consider (in a short-term) typically customer success people are often pretty good at sales. Without a quota and all the stuff, they may not be as good as if you went the full process, but customer success people know your product. They know how to talk to people. That is what we did when we only had one customer success person. She did both those roles, and I think that was a good move we made.
Another I would think about, specifically to the phrase of, “How do I avoid becoming a glorified admin,” I would seriously consider at what point here do you need to hire even a part-time Director of Operations or Director of HR? It seems really early to that, but if you’re running your own payroll, you’re thinking about your own books and your accounting, you’re dealing with the state or local governments with the taxes, there’s always unemployment, there’s like three different accounts in every state where you hire someone, and it’s so hard to outsource. It’s like Gusto or any of these payroll providers. They say they do a lot of it, but they don’t do that stuff. You need a PEO (at least in the US) to do that, and that becomes very expensive.
Another mistake I made is that I wished I hired someone to handle a lot more of the day-to-day ops. In the old days, they called them an office manager. They did all of that stuff, kept the personnel files and did a lot of the payroll, the bookkeeping, the accounting, the invoicing, accounts payable, accounts receivable, all of that. Everything was under their purview.
We don’t have all those things necessarily if you’re selling software, but I do think finding someone really competent, who you can hand that off and completely delegate it. Not someone you’re telling what to do day-to-day because you already have an admin, but is that admin competent or experienced enough to really come in and take charge or do you need to go out and find that ops person to get yourself out of that role?
Thanks again for the questions, Daniel. Hope that was helpful.
Our next question is from long-time listener, Mr. James Kennedy. He’s also spoken at a couple of MicroConfs. He says, “It’s clear from the number of people writing into the show with a million-dollar or more SaaS businesses that the community has really come a long way.” I’d like to hear your thoughts on where to go after you’ve replaced the day job. If it’s become a grind, then selling your apps seems obvious, but it’s not a grind, what’s next? There’s always the fear that it all goes south. Most are probably over-invested in a single startup that works. Who have you seen that has handled managing this risk while still running their company and how do they do it? James.”
And he says, “PS, the podcast has never been stronger. It’s still great to hear from Mike, but the extra TinySeed tales and variety of new guests has invigorated the whole thing.” Thanks for that, James. To his question, your thoughts on that, Ruben?
Ruben: Yeah. He said after quitting the day job. I’m assuming it’s way after because right after you quit the day job, it’s still pretty early, and it’s basically at that point, grow the company. But after growing the company maybe for a couple of more years, good revenue, getting people on board (or not, depending on that company). Some people sell, and this has really always been interesting to me. People run their companies, like they’re going to be around forever.
It’s really interesting to me that there’s that mindset in our space where things are changing all of the time and companies are dying. Like in that question, I don’t remember exactly how it was phased, but something about that it can all go away at some point. I have that. I know a lot of people that also have that thought, but I do know other people that it’s not even a thought for them, which I find really interesting.
I think that’s not so good. It’s cool if you want to run the company for a long time but at some point, I think it’s really important for the founder to take some money off the table in some way, shape, or form. If you don’t sell, then sell part of the company or what I’ve done at periods of time is basically use the company almost like a cash machine. If it’s really profitable and you’re efficient with how you’re acquiring customers and all that stuff, I know a couple of people that are currently doing that as well.
I think being in that stage where you’re not that profitable, you have a lot of employees for the amount of revenue that you’re bringing in, running that company in that way for a long time, and expecting it to be around forever and not taking any money off the table, it’s a really risky way of doing things. What do you think?
Rob: I was going to say the same thing. There’s selling. It used to be that it was really hard to sell these small apps. There was no market for them. There was no Quiet Light, FE International, Empire Flippers. It was person-to-person. You’d go on a website and you’d get 1X your annual revenue of something. It was great for buyers, but really bad if you wanted to exit. But there’s so much money coming into the space now. Both through these brokers but also just strategic acquirers where they actually do come in. Strategic or private equity buyers if you’re over a million, where they will pay you revenue in multiples now. You sell a business doing a million dollars for $2 million or $3 million, that’s crazy.
It’s doing a million dollars, and after payroll and all your expenses, you’re making $100,000 or something because you’re growing so fast, and yet, you sell that for $2 million or $3 million, I have seen this happen now. Josh with Baremetrics. We talked an episode or two ago about how he got an offer for 3.75 revenue. It was a $5 million offer. That certainly doesn’t happen every day, but it’s a lot more common than people would believe, I’ll put it that way.
Soon as you go above north $1 million is where that happens. Obviously, I’ve sold a bunch of companies. I’ve either sold or shut down every company I’ve ever had, so I’m not saying you should or shouldn’t sell, but it wasn’t an option. Then it became an option, and now, we know what you just said is selling part of your company, selling 20%. Obviously, look for similar evaluation to a partner who is still a minority partner, doesn’t have control, and it’s not venture capital. It’s for you to literally take the money off the table.
A founder running a million-dollar app that (let’s say) is worth “someone might be willing to pay $2½ million for it.” If you could sell 20% for half a million dollars and put that half a million in the bank, personally, I would’ve slept way better at night when I was running any of my companies, and I wish that that have been more of an option. It is now becoming more of an option. There are folks who have set up funds. Now, there’s only a handful. It’s still an emerging thing. Much like into that VC tiny seed stuff, that’s still this emerging frontier. There’s also this partial cash-out equity that I’m seeing happens. I think it’s an intriguing idea.
Ruben: Yeah. It makes a lot of sense and I’m glad that those types of options are available nowadays. This is still good for people who are in the VC space, getting funding at ridiculous amounts. Mainly because the founder is taking money off the table as well.
Rob: Yup. Typically, it’s like oftentimes, the second round, the Series B founders will take money off the table to be able to sleep better at night. It over-invested in one startup is a good way to think about it.
The last thing that we haven’t discussed is—I’ve seen some folks—find a CEO to run the thing. You couldn’t do that in the stages but if you’re north of a million, is there a budget there? If you decided you did want to step away, can you find someone who is really good enough that you trust to keep the company going while you step away to do something else? I think this is a little bit like the model.
When we look at the folks who have run SaaS apps for really long periods of time, like the Basecamp guys, they’re not still working on that first product. They would be bored out of their mind. We get too bored with stuff. They’re rewritten it multiple times now. They’ve launched Haystack. They launched a bunch of stuff over the years, so that’s how they stay invested. If you think about it, they’re just starting a bunch of companies, but really, they’re not. They’re just starting a bunch of products under the umbrella, the company.
That’s a dream scenario, and I think most of us can’t do that, but if that’s what you need, if you feel like, “Well, I have these companies running really well, and I can find someone good to run it,” there’s obviously huge risk here, right? You find the wrong person and the company tanks. Maybe you sell part of it to take money off the table, you find someone to replace you, and then go on to do your next act. Is that something of interest?
Ruben: Yeah, I’ve known several that have done this. I’ve actually known people that have had success doing it, then basically ended up with the wrong person and had to come back.
Rob: Yeah, and it’s something I have never done. It always seems really scary to me, like I couldn’t find the right person and on, and on, and on. Insert a bunch of excuses here about why I didn’t do it, but it is something I wish I had potentially evaluated earlier with some of the apps that I’ve had. Thanks for that question, James. I hope that was helpful.
Our next question is about starting with no audience and selling at higher price points. The person says, “In two previous podcast episodes, I’ve heard you talk about startups having no audiences and selling their product with significant MRR. I’d love to hear more about this. I started my own SaaS product early this year and I’m doing the cold outreach route with some success. However, apart from what Steli Efti writes, there are very few other resources as to how to get going when you’re first starting out.”
This was another one where I wasn’t saying don’t start with no audience. I was saying taking that B2C audience and trying to transition. Yeah, we already covered this, but the idea is I think having an audience would be great but if you don’t, how do you start selling at higher price points? To me, it’s like cold email is the one that everyone does because it’s worth doing.
I think AdWords is another one that’s really expensive, but if you have any type of cash to pour into it, you don’t need that many leads if you are selling at higher price points. It is going to be so consultative anyway, that you’re going to be getting in demos and conversations with folks. What are your thoughts on this, Ruben?
Ruben: I’m wondering what people mean when they say “no audience.” You covered it a little bit, but are they thinking just any sort of audience at all or more like the personal brand type of thing?
Rob: I think she means no reach, really no audience.
Ruben: Nothing? Starting from the ground?
Rob: Yeah, kind of like no launch email lists, because if you have an email list that was interested in hearing about the product when it launches, then you would just do that, but I think she does mean like, “I’ve made a traditional developer mistake. I built some stuff maybe, I was having conversations, but I did know marketing.” Start marketing the day you start quoting. Start marketing before you start quoting. Just take my advice, please, so that you don’t wind up in this position, but it’s obviously very common for people to wind up in that position.
Ruben: Yeah. Even if you’re not in that position by the time that you launch, everybody starts off that way or most people do. You start with nothing then you build it up. Really, it’s just marketing. It’s just in the earliest stages when you don’t have anything, kind of going back to the first question. It’s about figuring out who your target customer is. How do they buy? Where do they hang out? Then, doing things that will lit up their work that take time to build up. Some things are a little bit faster, like paid acquisition if you can make that work.
Most people that I know don’t make that work very early on. Maybe there are just too many unknowns at that point. Partnerships which work really well at any stage, I’ve seen a lot of people make those work. They’re good because you can get in front of a big audience really quickly. It does take some work but I like those. And I really like SEO, which takes time. I tend to start SEO and content marketing before launching the product because I have experience with it, and I’m confident that I can do the research to get the right keywords and do the work to start ranking for terms.
By the time that the product is released, I think for a lot of people, before investing a lot of time in SEO and content marketing, I probably just get more confidence in the product, in what I’m selling, and that it’s going to work before really investing heavily in that. Investing some time in that is always good but I’d probably start with some of the other things first.
Rob: I think that’s a really good answer. I don’t have much to add to that. Ruben, thanks again for coming on the show.
Ruben: Thanks for the invite. These are fun. I like the Q&A. I once listened to them, and now actually participating in one.
Rob: That’s great. Folks want to find out more about what you’re up to, they can go to docsketch.com, which is an electronic signature app—you’re killing it over there—as well as bidsketch.com, which is proposal software for everyone now. I think back. You did such a good lead and expand. Proposal software made for designers. That was the first year or something, and then the next 9 or 10 years has been proposal software.
Ruben: Yeah, now that’s like 10% of the customer base.
Rob: Yeah, but I got you traction in the early days.
Ruben: Yup.
Rob: Thanks again. Talk to you soon.
Ruben: All right, thanks.
Rob: Thanks again to Ruben for coming on the show. If you want to find him on Twitter, his username is @earthlingworks.
We only have a handful of questions for our next Q&A show, so if you have a question for us, you can leave a voicemail at (888) 801-9690 or email questions@startupsfortherestofus.com, and you can attach a voicemail. Voicemails always go to the top of the stack or send a text question and I’ll read it out for you.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. You can subscribe to us in any podcatcher. Visit startupsfortherestofus.com for a full transcript of each episode. Thank you for listening. I’ll see you next time.
Episode 483 | Building a Mindset for SaaS Growth with Andy Baldacci
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Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews growth marketer Andy Baldacci about how he got his start, his early days at Hubstaff, marketing for Groove, and he gives some practical tips/advice for the listeners.
Items mentioned in this episode:
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Episode 482 | The Value vs. Stress of Twitter, Pros and Cons of Remote Work, and Digital Minimalism – A Discussion Show with Derrick Reimer
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Show Notes
In this episode of Startups For The Rest Of Us, Rob does a discussion show format with guest Derrick Reimer. They discuss multiple topics including the pros/cons of remote work, value vs. stress of Twitter, and more.
Items mentioned in this episode:
- The Art of Product Podcast
- Derrickreimer.com
- StaticKit
- Baremetrics Blog Post: “I almost sold Baremetrics for $5M”
- Baremetrics Blog Post: “5 things I learned failing to sell Baremetrics for $5M”
Rob: Welcome to this week’s episode of Startups for the Rest of Us, I’m your host, Rob Walling. This week, I’m trying out a new episode format. It is a discussion show, so it’s a conversation between myself, my old friend Derrick Reimer, and we talk about a number of topics. We talk about the value versus the stress of Twitter and social media in general, the pros and cons of remote work. We talk about Cal Newport’s new book Digital Minimalism, and then we wind up talking about Josh Pigford’s blog post in the Baremetrics blog that’s titled, I Almost Sold Baremetrics for $5 Million.
What I like about this episode format is it’s pretty casual and we’re covering topics that I think are relevant to many of us and a lot of us are thinking about. I originally thought of structuring this in some type of news, round-table, or show where we’re talking about topics of today. We do that with a couple things, I think the ability to introduce topics that aren’t necessarily news articles or news headlines also works, and the fact that Derrick and I know each other as well as we do really helps with just the rapport in the conversation, it’s not stiff or stilted. I hope you feel the same way about that.
If you don’t recall who Derrick Reimer is, he and I have known each other for years. We met back when I lived in Fresno. He was a young kid who was participating in a startup competition that I was the judge of. He won a couple years in a row. Then, he was thinking about starting to do some consulting work and I said, “Look, why don’t you come, write some code for HitTail?”
He wrote all the early code for Drip and later on, became retroactive co-founder of Drip. So, he and I have known each other. We’ve worked together. He’s been on the show several times talking about starting an app on the side called Codetree that he sold for $128,000 a few years back. Then, he moved to Minneapolis when we sold Drip. So, he and I now live six or seven minutes apart.
We see each other once a month or so and it’s always a good time to hang out and chat. So, I wanted to mix up the format just a little bit and do something that’s not an interview, not keeping up with Mike Taber, not just question and answer, but actually just bringing topics to the table that (I think) might be of interest to you. So let me know what you think.
You can tweet me @robwalling, you can email questions@startupsfortherestofus.com, or you can post a comment on this episode, episode 482 and just say, “Yeah, I enjoyed the mix-up of the show format and the fresh ideas in a conversation.” Or you can say, “Got five minutes in, didn’t hold my attention, and I was out.”
That helps me think about and consider maybe we had one of these to the line up every couple months. It doesn’t always have to be Derrick. I could bring on different co-hosts and folks to weigh in, so we have different perspectives.
And with that, let’s dive into the show. Derrick Reimer, thank you for joining me on the show.
Derrick: Hey, thanks for having me again.
Rob: Yeah, I think this is going to be a fun one today, just talking through some interesting topics. I had a few in mind over the past couple weeks, some things have come up where I’m like, “You know, I really want to discuss these with someone,” and I don’t know who to bring on the show to do it. Then, you and I were having dinner last night and we got on some really good conversation topics, so I figured we could jump on the mic and record a few of these.
Derrick: Yeah, we both are a couple of old-fashioned, but we probably should have brought our mics, to be honest.
Rob: I know, I agree. One thing you kicked off with was just talking about something on a lot of our minds, social media in general but Twitter specifically, because that’s big in our circles and the value versus the stress of it.
Derrick: Yeah, for me, my personal journey with it has been the last remaining piece of social media that I really use these days. I’ve given up Facebook, technically, I have an Instagram account but I don’t really use it, and I’m not really hooked on checking those things. But Twitter is a tricky one and I think it is for a lot of people in the text space because it’s where a lot of our industry news is coming from, where a lot of the camaraderie among software developers and start up people is happening. There’s not really (to my knowledge) another platform like it.
There are niche communities in Slack and things like that, but Twitter is the public square for that. It’s been a struggle (I think) for the last few years. I’ve been saying things like, “Yeah, I’ve given up all social media,” but I can’t on Twitter because that’s where work stuff happens. I just become so aware that, for me (and I think it varies from person to person how they deal with it) it’s like Twitter is always the default. I hit a rough spot on something I’m working on and what’s my first inclination is to go check Twitter, go get a dopamine hit, and I’m over it at this point.
Rob: Do you still have it on your phone?
Derrick: I took it off my phone (which has been good) and I actually did another trick where I put all my apps in one folder, so now I just have like a blank desktop screen essentially on my phone. I keep email on there, for example, because I just want to be able to do email mobily, but I don’t want it to be something I compulsively check if I have a break during my day. That’s been a good way to deter that.
Rob: When you put them all in one folder, was it just to make them hard to find?
Derrick: Yeah. It’s like I had muscle memory built where I knew where to tap my thumb subconsciously to open email and now it adds friction to that.
Rob: Yeah, I do that. I’m compulsive with email and Slack, specifically the TinySeed Slack. I don’t do it with Twitter or Facebook and I’ve never really had that problem, but I definitely can see getting into that habit and I try to avoid it. I think the thing with Twitter is I check Twitter a couple times a week and (for me) that’s a pretty healthy balance.
I might post to it more often. A few months ago, I was posting every day and I fell off that wagon. I’d like to do that again, but checking it all the time is not healthy. That’s what you were saying last night. It doesn’t feel good because you’re going for the dopamine hit of someone replying to you, a conversation, likes, or retweets?
Derrick: Yeah. I don’t know if I’m feeling particularly just unsure about something I’m working on or just my business in general, all these existential mini crises we have all the time into building startups. That’s an easy place to turn where I’m going to share some piece of work that I’m doing and it’s going to have some marketing benefit. It’s going to increase awareness about what I’m doing and hope people will spread it around. Maybe someone new will discover my app.
I can justify that there’s some benefit to it, so then I’ll share something and it feels good to get people liking, engaging, and commenting, but it’s pretty hollow and it’s a veneer that’s providing a short-term benefit, but I don’t think it’s the healthiest way to engage with that. Then, when you don’t get the response that you were hoping for, then you feel bad. It’s like, “Why am I doing this in the first place?” This is not a solid way to go.
Rob: Yeah and the struggle is that it’s not just the social aspect. I know you got off Facebook years ago and I think it was easier to justify because there was no work component. There was no way Facebook was going to help you build or grow a company, whereas Twitter might (and I want to put it in italics and bold). We know folks who have personal brands on Twitter, social media empires. I don’t know of anyone who has built a SaaS app and the marketing was all Twitter.
I view Twitter as you can get a small audience and you can get those first few customers or you can get the first people who are going to give you good feedback. It’s part of just building that relationship with people, but realistically, once you have any type of product market fit and you’re actually trying to build a scalable marketing approach, Twitter is not it. If you’re looking at it purely as a utilitarian thing, there’s definitely times and places to do it and be on it, but with all the negatives, it does feel hard to justify to me.
Derrick: Yeah. You can definitely come into it with the strategy of like, “I know the best times a day to post where I’m going to maximize engagement,” I figured out some of those things for myself. Some of it, you can apply methodically. Other parts of it are a lot of the benefits that have come to me has been serendipitous and that’s where I have a little bit of fear that if I were to give this thing up, I don’t know what I’m giving up entirely. I don’t know what random encounters or interactions I might be missing out on and I think that’s for the fear that comes. This could be the thing that catapults my nascent start up into a different realm, if I were just there engaging in the community on Twitter. In reality, I’ve become pretty convinced that’s probably not a very good reason to accept all the negatives.
Rob: I keep doing it, yeah. You make a good point because it isn’t just finding customers, but what about that one relationship you build with the business development where someone says, “Let’s integrate. We’re a web host so let’s integrate.” You’re like a kid and you’re like. “Yeah, that could move the needle.” That’s what you’re saying, it’s like, “Do I want to miss out on those? What’s the potential?” and that’s where they get you. That’s where […], is it has all these negatives, and yet we still want to consider doing it.
Derrick: Yeah. If I think back, I’m frustrated by how many Twitter DMs have actually led to productive business meetings or chats and it’s like, “Why does that have to come to a Twitter DM?” because that’s just reinforcing that I struggle to actually get off of there, because people would have to find my email address or something.
Rob: Yeah, and it does seem like Twitter has declined pretty substantially in popularity. That’s been my sense and just the number of people on it. Obviously, the tech community, the Silicon Valley, plus MicroConf and just startups in general are on there. And the press. It does seem like there’s a lot of journalists, not just like TechCrunch but like Wall Street Journal, big-named journalists are on there and there’s certainly still some value. Remember Arab Spring, there is communication there, there is value to the world that that stuff is able to get out.
It really does seem like people have moved on to Instagram and what are the others? Snapchat, although I guess they’re on […] now. You mentioned TikTok last night and I was like, “Yeah, I’ve heard of that. No idea what it does.” I’m so old dude.
Derrick: Yeah, we’re getting old.
Rob: What are you going to do? If you listen like I was asked on stage, “Are you bullish or bearish on Twitter?” and I was like, “Bearish.” This was last year. I was on my 2016 or 2017 prediction. This is when Twitter was still going strong. There are going to be too many trolls. People are just going to move on, and the nature of social media is that it’s pretty rare for a platform to actually stick around for that long. People just move from one to the next.
I don’t love Twitter and struggle with a lot of stuff on it, although I am still on it. I think there are benefits, especially now with the MicroConf stuff, the podcast and all that. I’m not going to quit Twitter anytime soon, even though I do have some struggles with it. But I’m curious, you’re seriously thinking about getting off of it or quitting it basically. Is that right?
Derrick: Yeah. I’m getting dangerously close to that. For me, my big fear is how am I going to keep a similar type of connection to people in the industry who I’m not so close with? I’m texting or private messaging all the time. How am I going to maintain that? How am I going to still get up-to-the-minute news about stuff? I see a lot of things in the React community, for example. New things emerging or new releases of things and a lot of that I’m getting through Twitter right now.
It’s important for me to know about that because I’m building tooling in that ecosystem. I don’t always want to be the guy who’s a month behind late to the party knowing about stuff, but a lot of these you can think of it as, is that really so bad if you’re a few more days delayed in finding stuff out? Probably not. In that case, for me, I’m trying to look for what are some digests newsletters for example that are in the industry? I’m already a part of some of these.
The Changelog is one of them. They send a weekly summary of what’s happening in the open source world. There’s one for the Jamstack community, too, and I’m on that one. I get a lot of good info from that. These are probably good enough for the news part. For me it’s like, how am I going to keep connection to my “audience?”
The podcast is a good one side of a way to do that. Again, returning back to the fundamentals. My email list, my newsletter list, how can I invest there? The time I maybe would have spent on Twitter carve out some of that time to try to invest that in the email list. Those are some of the ways I’m thinking about it.
Rob: Those are good alternatives. I was going to propose that mailing list and a couple of those other things. The bottom line is, yes, you may miss out on some things, but take the time and invest in stuff. I would say, investment in stuff that is less ephemeral.
That’s what bothers me about social media. It’s just here today and gone tomorrow. It’s not a blog post. It’s not even a podcast episode people go back and listen to. It’s not a book that people will read for years.
With your email list, if you can invest in an email list and repost that on the blog, because email is a bit ephemeral even though it’s a pretty deep connection. That’s when I’ve been off because the entire time we were doing Drip, I was not on Twitter at all. It was the right choice. I didn’t quit it for life though, I came back. Obviously, I’m a little more active on it now, but I do hear what you’re saying. If you tried it for two weeks or 30 days, or something, my guess is you’re not going to want to go back.
Derrick: That’s a good segue, because I’ve been reading a book, Cal Newport’s latest book called Digital Minimalism, which is like Deep Work. A lot of people know about that one. It’s Deep Work principles applied to more of your personal life and how you interface with things like social media.
One of the things you he talks about in there and recommends doing is like a digital declutter. That’s a term he coined for. Basically, taking 30 days and eliminating the things that are causing you problems like social media, that are pulling at your brain and causing it to be distracted, and all the negative side effects that come with it.
Think of this as you’re eliminating all this stuff and then at the end of it, be really deliberate about what you add back in. Don’t think of this as just a temporary detox where you remove all and then at the end, I’ve reset and now I can go back to the way I was doing things.
I’m in the midst of one of those right now. I’m not deleting my Twitter account, but I’m not checking it. I started this off going on a trip where I had very little internet access. That forced me to step away from it and even coming back from that after five days, I already had much less desire to go check it. I do feel a certain amount of Zen just from that. That’s becoming a reinforcing thing already for me. The more time I spend off of it, the less drive I have to go and check it all the time. That’s been healthy, I think.
Rob: That’s cool. How long have you been doing that?
Derrick: Since really the turn of the New Year, so we’re about two weeks in. It’s been good.
Rob: It’s a trip when you change habits like that. How scary, you don’t know if it’s going to work, and then you get in a few days and suddenly you feel this clarity, and then trying to come back to it. I’ve done this with drinking alcohol, social media, or just anything. I enjoy it. There are pros and cons to each of those things. It’s like if I have an old fashion, I feel better. In the short-term, it’s a good thing. Much like checking Twitter. Then in the long-term, I question the value of doing that and going off of those things. Coming back, you just realize how much it impacts your day-to-day or just how it actually affects your life.
Derrick: Yeah.
Rob: And you were saying last night because I haven’t read Digital Minimalism, but you piggy-backed on it and it got you thinking about remote work.
Derrick: Yeah. A thing that he spends a fair amount of time talking about in the book is what does it mean to have relationships and have real connection with other human beings. This is heavily tied in with the era of social media there of text messaging. The fact that we rarely call each other anymore. We are always texting. There’s all these norms that were established in society and a lot of them were around lower fidelity means of communication.
He makes a good point. This is based on some research he pulls into his thesis. We’re wired after millennia of communicating with each other, talking to each other, being able to read non-verbals and verbals, the whole picture, and now we’re reducing our communication down to very binary things. If you think about what’s a reaction in Slack or a like on Twitter? It’s literally a binary piece of information. You compare that to all the richness that comes with someone reacting to something in person. You get to see their face, you get to see them smile, or see them look inquisitive. There’s just so much more you can get from it.
In the one sense, you can think of it as more efficient using these productivity tools like Slack, but on the other hand, how much communication are you missing out on and what does that do to our mental state? You make some pretty interesting points that there’s high rates of depression and mental health among college students in the generation that grew up with smartphones. That’s starting to become really evident. There’s been some research at universities about this and just a really sharp increase in a lot of these issues that weren’t a problem before.
You take all that, bundle that all up, and I start thinking about how are we architecting companies? How are we building teams? I feel like a struggle that you build a 100% remote company. How often do you really have that high fidelity communication with each other? That’s what got me thinking about that.
Rob: It’s tough. My personality is I want to go against the majority opinion. It’s like, “Hey, everyone’s raising venture capital.” “Cool. I’m going to go start one without venture capital,” and that’s going to be a bad thing that I talk about. Or, “Hey, all these Fortune 1000 companies or even venture capitalists want you to be located in one place.” “Cool. I’m going to go start a remote company.” That was what you do and it’s a natural thing that I want to do.
In addition, we have the Remote book by DHH and Jason Fried. It’s definitely a thing and we know tons of startups, especially more in the non-venture track space that we write in, that are remote. And there are advantages to it. You can hire people in cheaper locations. You can hire the best people around the world. Everyone doesn’t have to be local, all that stuff.
I see the value of that for sure, but I’ve always said that the situation we had with Drip where half of us were in one city, and I would have loved for all of us to be in one city. We just couldn’t find the talent in Fresno. Half of us were in one city and we were in the office 2-3 days a week. That was my dream setup and I wish every job that I worked and every company I run, because now with TinySeed, there’s three of us and then with MicroConf, there’s two of us, and we’re all remote.
While I don’t think we should all need to live in the same city—it wouldn’t be practical, because (again) we wanted to hire the best people, and Einar and I are co-founders, he’s in California and I’m in Minneapolis—I would love to see them once or twice a week in person, which is what we did back when we’re doing Drip. And that’s so healthy.
Derrick: Yeah it felt pretty ideal. The nice thing was we can write the rules for how this works. There was inherent flexibility, we weren’t always on the same days every week. If something in life happens and you need to be out of the office an extra day a week, no big deal. But to have that as the default, it felt really good, like hopping in front of a white board with […] getting to work through some tough problems. I was never able to reproduce the same benefits over digital means and maybe someone still needs to solve that. Maybe we’ll get there.
Rob: Yeah, that’s the question that’s like will VR solve that at some point? Can you imagine if VR was super, super high fidelity, you and I can look around, literally feel like we are in front of a whiteboard together, and to get social cues, to where it’s uncanny “Valley” type stuff, like you see these amazing video games or even a Pixar movie. Humans look human enough that you can pick up all the stuff. If you and I can be in a room and literally look like that, maybe that would do it.
It’s a bummer. Some of the things I enjoy the most are lunches and hanging out, but I don’t know if you need that. Maybe that’s the point where it’s solved because video chat isn’t enough. Zoom is not enough because you are not going to sit on a Zoom call for 2–4 hours and shoot the breeze and get those moments that you need.
Derrick: That’s the thing. A lot of the way we are thinking about building companies and the tools that we are building for them, it’s introverted Silicon Valley-type engineers who are helping architects how we socially interact with each other. There’s an inherent bias in that. The fact that we are all about using tools for productivity, an important part of building a healthy team is actually having a relationship that has nothing to do with direct productivity. That’s more of a long-ball type of thing. If we are going to build cohesion, we’re going to be able to go to lunch together.
A friend of mine shared this anecdote, coming back after a long break and catching up on work over the holidays. His wife was relaying this to him and she said, “How was work today?” He’s like, “It wasn’t a great day, but I got to see my friends.” It was powerful. That’s something that you don’t necessarily have if you just stay, show up, and be productive. If your day is not productive, then you feel like you had a good day. If you get to see your friends, you get to see the people you built relationships with, then perhaps you’ll feel a lot more well-balanced.
Rob: Yeah. In Slack, you get the emojis and you get some fun stuff shared on a random channel. That’s fun, but it’s definitely different and it’s hard. Think about with TinySeed, we are a remote accelerator, so this is an issue. We get together three or four times a year and those times are really cool when we’re together. There’s a lot of bonding that happens being in person. That’s something that we are going to be facing and trying to overcome for sure.
In a perfect world, again, I just like seeing people more often. I’m pretty introverted, too. To your point about Silicon Valley people building tools, introverted Silicon Valley people thinking that remote work is, I won’t say infallible but it is the ideal. I don’t think it is for most of the world. I don’t think it is especially for extroverts for people who want to be around other folks. The loneliness and isolation is absolutely being shown. They are doing research on it, there’s going to be a real swing here depending on personality type. There’s a lot here that is not as clear cut as just saying, “Here are the pros of remote work and therefore we should all do it,” because it’s nowhere near that clear-cut.
Derrick: I feel like I’m starting to look at a lot of these things that I previously saw as absolutes and I’m starting to see a lot more gray in them. There are benefits, but there’s also drawbacks and you have to weigh them against each other. One cool anecdote that was from Cal Newport’s book, he talks about the Amish and he talks about how a lot of people just assume that it’s this community of people that decided arbitrarily like, “This is the peak of technology and we shall not accept anymore technology.”
That’s what I thought for many years. It just feels very arbitrary, why are horse-drawn carriages better than cars? I don’t know. It’s just a form of technology. But he talks about if you actually learn about their culture, they always evaluate technology. They are very open to it, but they also evaluate the pros and cons against their value system.
Look at cars back in the early 1900s. They try to mount for a while and then they determine that people who are driving cars tended to leave the community, go to neighboring cities, and engage with people outside the community that led to a breakdown in relationships. They just decided like, “This is not coherent with our values, so we are not going to do it.” I think there’s something really powerful to being open to looking at pros and cons and weighing them against value systems and what you are trying to do.
Rob: Yeah and that’s the thing. There are so many fewer absolutes than we would like. They talk about how it’s a sign of intelligence being able to hold two conflicting ideas in your head at once. That’s what both of the things we just talked about are, Twitter and social media conflicting there has a lot of pros and cons.
The same thing with remote work where you can get a little too gung ho in either direction. I think it’s situational and having the willingness to really think it through on a case-by-case basis, to see the realities of it, and know no matter which choice I make, neither is ideal. That’s the hard part is that neither one is ideal. They are going to come with pretty major cons and figuring out how to work around them as best as you can.
As our last topic before we wrap up today, did you read that article, Josh Pigford almost sold Biometrics for $5 million. That was the title, I almost sold Biometrics for $5 million. He published it about six weeks ago.
Derrick: Yeah, I did check it out. It’s a pretty interesting read just because you don’t generally see this level of transparency about something like almost selling your company. It was pretty fascinating to see someone outline their thought process and what was going on through that.
Rob: I know. Super gutsy to do it. I think that’s why because there can be backlash. If you sell it, obviously it goes public that you sold it, but if you don’t sell it and you talk about doing it, there’s danger there. You could have customers leave. You can have employees be upset. Kudos to him for sharing that and sharing his thought process because it sounded tough. A really tough process.
To start with, he kicked it off and he said there’s always a price. Some people get too hung up. A lot of people are, “I’m never selling my business. Why would I sell my business?” I just don’t know. I don’t think that’s the right choice for most people. If you could become independent wealthy, why would you not do this? I don’t hold it against people certainly if you are going to keep your company but don’t just say something out of principle or out of some belief that this is the right thing to do to never sell your company. Think this through.
Now it’s easy. Let’s say I was running a company. It’s doing $50 million a year and I’m pulling $5 million or $10 million a year right off the top, which is totally easy to do with SaaS because it’s so profitable. If you really enjoy what you are doing, then yeah selling your company for $250 million. How much is it actually going to change your lifestyle?
You can afford a jet or whatever, but if you don’t want that and you are doing what you’re doing, why would you do that? But most of us are not in that situation. If you’re running an app doing a million or $5 million a year, somewhere in there, you are not pulling that much money off typically. Typically at that stage, you are in danger of riding it over the top, the growth can die, we can have a recession, you can get killed by a competitor. There’s all these things that could happen and selling a company for a 3X, 4X, or 5X revenue multiple, which Josh was offered 3.75 revenue.
You are doing $2 million a year and you are going to sell your company for $7.5 million, that is absolutely life changing. If you are making $150,000 or $200,000 a year and suddenly you can sell it for that, life-changing in the real sense of the word. It will change your life. You will have options that you never knew you had at that point.
Derrick: A lot of this talk of like why I would want to sell the thing. I’m working on my best idea. I can’t help but think of the Basecamp guys and that was their narrative for a long time. I feel like nowadays there’s a lot more nuance coming from them, which is really refreshing. Jason Fried was at MicroConf, was it last year or the year before?
Rob: Yeah, last year in 2019.
Derrick: Yeah, talking from the stage and he has been one, much more quick to plan the fact that they early on took some money off the table enough, to where him and JJ were millionaires after a couple of years and felt like, “Okay, we’ve made a healthy amount of return of this business. Now we can write it for longer.” A lot of founders go in blind and say, “Why would I want everyone to sell my company,” and yet, what usually ends up happening is that you are not as financially rewarded upfront as you would be if you were taking your raw skill set and having a salary job.
You’re foregoing a lot of money you could be making. A lot of opportunity cost and you are messing that into your equity that you have in your company. If you do end up five years down the line, things are competitive, whatever market conditions, and now suddenly you can’t achieve profitability, you are unable to sell it when you really want to, and you find yourself not able to extract a return from all of the investment that you’ve put into it.
For Basecamp to say, “Why would we want to sell?” because you were able to take some money off the table early on. Then, he also compared now Basecamp to like, “As if I’ve won the lottery and I’m taking the payout over time as opposed to a lump sum.” That totally makes sense.
Rob: Yup. The odds of them going to a business or something is infinitesimal and they get to work. They love their jobs, they have built a great team, and they get to build whatever they want. They’re building Basecamp version three, already built that. Jason Fried was talking a couple of weeks ago on Twitter, like they’re launching two more things this year. They really are a kid in a candy store.
If I were them, I wouldn’t sell, either, but I wouldn’t tell other people. I know they don’t tell other people not to, that’s not something. But I do think that people hear that and then take it upon themselves to think, “Well, I respect Jason Fried and […], I want to be like them, so I’m not going to sell my company either.” I don’t think that’s smart. I think you should evaluate.
Again, if I were Jason Fried, I would not sell Basecamp either because that sounds amazingly fun, but if you’re not in that situation, where you’re tens of millions a year in net profit is what he said, up from the market […], if you’re not in that situation and maybe you don’t enjoy your job, maybe you’re in a really competitive space, and you think that you could flat line.” Once your growth flat lines, your sales multiple plummets. There’s a really good time to sell and if you ride it over the top, suddenly you’re selling for 1X revenue or less. If you’re doubling every year, you’re selling for 4X or 5X revenue, again, it can be a life-changing amount of money or not.
I’m not encouraging people to sell. I think you should do what you want to do, but just really think things through. Back to that whole article we were talking about where Josh basically says, “Hey, there’s always a price. I wasn’t really that open to it,” but he got an offer for $4.95 million and it was like, “Wow, that would change my life.” Then he talks about just how it was a dead end and the buyers had claimed they had the money, but in actual hell, they got him under LOI (letter of intent), they went out and tried to raise money from investors, it was pretty dang shady. It was not cool. That must have been very, very hard.
Derrick: I can only imagine if that had been the case with our Drip story, because I just know how much stress we were under, you especially because you are really bearing the brunt of it, how long the process was, the due diligence stuff, just even getting to LOI. I’m glad that it moves a bit faster, like things didn’t drag out a year, and then Josh discovered this.
I guess on that sense it’s good that it didn’t go on too long, but even for as long as it did, I can only imagine how much you build up all this anticipation. You start to think, “Well, this is looking like it’s going to happen, they seemed very serious about it. Everything I’m hearing from them seems good.” It’s really hard to shift your mind into the gear of like, “I’m about to have a life-changing exit,” and then for that to be torn away is really a mental struggle.
Rob: Yeah. He said, “We’d spent nearly $20,000 on legal fees, months of time gathering all the docs, and they just disappeared. It was crushing. I was and still am furious with them. They wasted an epic amount of our time and money and then crawled into a new hole when they realized they couldn’t do the deal.” Crushing is an understatement, I would have probably crawled into a hole for weeks because your momentum is gone.
It’s one of those really hard decisions to make, but once you make it, you get a sense of peace about it and then that’s all you want. I remember almost hanging on to it too much because you don’t know if the deal is going to go through until it’s all signed. A month before we were selling Drip, it was like, “I’m so ready to sell this company. But I can’t say that out loud, because then if it doesn’t happen, I’ll be crushed.” I definitely feel his pain.
Derrick: Yeah, it’s tough. I don’t know how you could combat that. You have to enter the process, you have to trust what people are telling you initially. You had counsel, you had advisors and stuff, so I wonder how can you avoid that from happening or can you?
Rob: Yeah. I have no idea. I certainly did not and do not believe that I personally could. You would have to be someone of real fortitude to do it. I do like he links over to another article, where he says, “Five things I learned failing to sell my company,” and one of the things he says is avoid needing to sell. This is something a lot of people forget. If you need to sell, if you’re a desperate seller, you will have terms that are not as good.
Always having the abilities to, “Hey, we are growing, we are profitable. I don’t need to sell.” Those three sentiments will get you the best price, that plus getting a lot of different offers. That puts you in the driver’s seat. It’s the same thing with raising funding. Unfortunately, so many people go out to raise funding when they really, really need funding to do anything and nobody wants to fund those companies. They want to fund the companies that don’t need the funding as paradoxical as that sounds.
Derrick: Even on a small scale. When I sold Codetree, this is happening about around the same time that the Drip sale is going through. I was so focused on the Drip stuff that was going on and this was a side app that wasn’t really growing much, but was still just a nice side income for me. I decided it was time to not have to worry about that anymore, but even just having that, going into that with the mindset of like, “I want to sell this thing because it seems like the right time to do that, but I don’t have to,” it could just keep running on the side for a while and no big deal.
Even just going into the negotiation with that attitude. The seller then later on wrote a blog post about how they felt, like they were at a disadvantaged position because they could come in and say, “No, we really want $20,000 off.” My broker was like, “No, we don’t need to do that.” I’m like, “Cool, then tell them no.” Of course, I’m not going to do that, and then ultimately, I think, trying to keep that mindset of like, “If this doesn’t go through, no big deal. I don’t have to do this.” It helps.
Rob: Yeah, having your backs to the walls. Never good, whether you’re selling a car, selling a house. If you’re in a big hurry, you just get the worst deal. Kudos to Josh for that and for sharing. These are helpful things because (again) so many people don’t talk about it when deals fall through like this because it could have negative repercussions, but that’s something that I do love about our community, is that people are often willing to share experiences to help others avoid the mistakes they’ve made.
As we say in the intro, whether it’s to avoid the mistakes or just to understand, if I get into that situation, what will I do? What is this really like? That’s the other thing. If you have not heard of these stories, if you haven’t heard Josh, you haven’t heard you and I talk about selling Drip or any (I’ll say) real startup acquisition, then all you’ve heard is that on TechCrunch, that Instagram sold for $1 billion to Facebook over a weekend, when they had seven people and not much revenue. It’s like, “Well, that’s how startup acquisitions work.” It’s like, “No, they never do. Never.” This is like one in ten years does that.
The real startup acquisitions take a long time, they’re a grind, they’re typically for a revenue multiple or a net profit multiple if you’re running a different type of business or at a smaller revenue scale. There’s just a bunch of pretty common things that are realistic. If you don’t know that and you’ve only read the popular articles about the outliers, your sale is probably not going to be an outlier. So level-setting expectations with this post that Josh wrote is (I think) good.
Derrick: A helpful piece for the community archive for sure.
Rob: Yup, indeed. Thanks, man. Thanks for coming on the show.
Derrick: Yeah. It was a blast, thanks for having me.
Rob: If folks want to keep up with you, you release an episode every week, podcast episode at the Art of Product, you and your co-host Ben Orenstein. That’s a good bootstrap for podcasts over there. Then you are at @derrickreimer on Twitter. We’ll just send people there, but that is what it is.
Derrick: Yeah. Twitter and derrickreimer.com newsletter. Sign-up there.
Rob: That’s probably the one. That’s almost what we should recommend more, derrickreimer.com. I know you’ve blogged a bit over the years. I think all of us probably wish you blogged more.
Derrick: Yeah, it’s always the thing. It’s interesting to think about trying to do more, like higher frequency, less trying to spend 10 hours writing a piece, and think of it a little bit more like Twitter. That could be an interesting thing, too.
Rob: Sounds good, man.
Derrick: Cool. Thanks.
Rob: Thanks again to Derrick for coming on the show. He is working on his new startup. It’s called StaticKit, statickit.com. If you’re working on static sites stuff or interested in that whole ecosystem, he’s building some pretty interesting tools for static site builders.
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What I like about this episode format is it’s pretty casual and we’re covering topics that I think are relevant to many of us and a lot of us are thinking about. I originally thought of structuring this in some type of news, round-table, or show where we’re talking about topics of today. We do that with a couple things, I think the ability to introduce topics that aren’t necessarily news articles or news headlines also works, and the fact that Derrick and I know each other as well as we do really helps with just the rapport in the conversation, it’s not stiff or stilted. I hope you feel the same way about that.
If you don’t recall who Derrick Reimer is, he and I have known each other for years. We met back when I lived in Fresno. He was a young kid who was participating in a startup competition that I was the judge of. He won a couple years in a row. Then, he was thinking about starting to do some consulting work and I said, “Look, why don’t you come, write some code for HitTail?”
He wrote all the early code for Drip and later on, became retroactive co-founder of Drip. So, he and I have known each other. We’ve worked together. He’s been on the show several times talking about starting an app on the side called Codetree that he sold for $128,000 a few years back. Then, he moved to Minneapolis when we sold Drip. So, he and I now live six or seven minutes apart.
We see each other once a month or so and it’s always a good time to hang out and chat. So, I wanted to mix up the format just a little bit and do something that’s not an interview, not keeping up with Mike Taber, not just question and answer, but actually just bringing topics to the table that (I think) might be of interest to you. So let me know what you think.
You can tweet me @robwalling, you can email questions@startupsfortherestofus.com, or you can post a comment on this episode, episode 482 and just say, “Yeah, I enjoyed the mix-up of the show format and the fresh ideas in a conversation.” Or you can say, “Got five minutes in, didn’t hold my attention, and I was out.”
That helps me think about and consider maybe we had one of these to the line up every couple months. It doesn’t always have to be Derrick. I could bring on different co-hosts and folks to weigh in, so we have different perspectives.
And with that, let’s dive into the show. Derrick Reimer, thank you for joining me on the show.
Derrick: Hey, thanks for having me again.
Rob: Yeah, I think this is going to be a fun one today, just talking through some interesting topics. I had a few in mind over the past couple weeks, some things have come up where I’m like, “You know, I really want to discuss these with someone,” and I don’t know who to bring on the show to do it. Then, you and I were having dinner last night and we got on some really good conversation topics, so I figured we could jump on the mic and record a few of these.
Derrick: Yeah, we both are a couple of old-fashioned, but we probably should have brought our mics, to be honest.
Rob: I know, I agree. One thing you kicked off with was just talking about something on a lot of our minds, social media in general but Twitter specifically, because that’s big in our circles and the value versus the stress of it.
Derrick: Yeah, for me, my personal journey with it has been the last remaining piece of social media that I really use these days. I’ve given up Facebook, technically, I have an Instagram account but I don’t really use it, and I’m not really hooked on checking those things. But Twitter is a tricky one and I think it is for a lot of people in the text space because it’s where a lot of our industry news is coming from, where a lot of the camaraderie among software developers and start up people is happening. There’s not really (to my knowledge) another platform like it.
There are niche communities in Slack and things like that, but Twitter is the public square for that. It’s been a struggle (I think) for the last few years. I’ve been saying things like, “Yeah, I’ve given up all social media,” but I can’t on Twitter because that’s where work stuff happens. I just become so aware that, for me (and I think it varies from person to person how they deal with it) it’s like Twitter is always the default. I hit a rough spot on something I’m working on and what’s my first inclination is to go check Twitter, go get a dopamine hit, and I’m over it at this point.
Rob: Do you still have it on your phone?
Derrick: I took it off my phone (which has been good) and I actually did another trick where I put all my apps in one folder, so now I just have like a blank desktop screen essentially on my phone. I keep email on there, for example, because I just want to be able to do email mobily, but I don’t want it to be something I compulsively check if I have a break during my day. That’s been a good way to deter that.
Rob: When you put them all in one folder, was it just to make them hard to find?
Derrick: Yeah. It’s like I had muscle memory built where I knew where to tap my thumb subconsciously to open email and now it adds friction to that.
Rob: Yeah, I do that. I’m compulsive with email and Slack, specifically the TinySeed Slack. I don’t do it with Twitter or Facebook and I’ve never really had that problem, but I definitely can see getting into that habit and I try to avoid it. I think the thing with Twitter is I check Twitter a couple times a week and (for me) that’s a pretty healthy balance.
I might post to it more often. A few months ago, I was posting every day and I fell off that wagon. I’d like to do that again, but checking it all the time is not healthy. That’s what you were saying last night. It doesn’t feel good because you’re going for the dopamine hit of someone replying to you, a conversation, likes, or retweets?
Derrick: Yeah. I don’t know if I’m feeling particularly just unsure about something I’m working on or just my business in general, all these existential mini crises we have all the time into building startups. That’s an easy place to turn where I’m going to share some piece of work that I’m doing and it’s going to have some marketing benefit. It’s going to increase awareness about what I’m doing and hope people will spread it around. Maybe someone new will discover my app.
I can justify that there’s some benefit to it, so then I’ll share something and it feels good to get people liking, engaging, and commenting, but it’s pretty hollow and it’s a veneer that’s providing a short-term benefit, but I don’t think it’s the healthiest way to engage with that. Then, when you don’t get the response that you were hoping for, then you feel bad. It’s like, “Why am I doing this in the first place?” This is not a solid way to go.
Rob: Yeah and the struggle is that it’s not just the social aspect. I know you got off Facebook years ago and I think it was easier to justify because there was no work component. There was no way Facebook was going to help you build or grow a company, whereas Twitter might (and I want to put it in italics and bold). We know folks who have personal brands on Twitter, social media empires. I don’t know of anyone who has built a SaaS app and the marketing was all Twitter.
I view Twitter as you can get a small audience and you can get those first few customers or you can get the first people who are going to give you good feedback. It’s part of just building that relationship with people, but realistically, once you have any type of product market fit and you’re actually trying to build a scalable marketing approach, Twitter is not it. If you’re looking at it purely as a utilitarian thing, there’s definitely times and places to do it and be on it, but with all the negatives, it does feel hard to justify to me.
Derrick: Yeah. You can definitely come into it with the strategy of like, “I know the best times a day to post where I’m going to maximize engagement,” I figured out some of those things for myself. Some of it, you can apply methodically. Other parts of it are a lot of the benefits that have come to me has been serendipitous and that’s where I have a little bit of fear that if I were to give this thing up, I don’t know what I’m giving up entirely. I don’t know what random encounters or interactions I might be missing out on and I think that’s for the fear that comes. This could be the thing that catapults my nascent start up into a different realm, if I were just there engaging in the community on Twitter. In reality, I’ve become pretty convinced that’s probably not a very good reason to accept all the negatives.
Rob: I keep doing it, yeah. You make a good point because it isn’t just finding customers, but what about that one relationship you build with the business development where someone says, “Let’s integrate. We’re a web host so let’s integrate.” You’re like a kid and you’re like. “Yeah, that could move the needle.” That’s what you’re saying, it’s like, “Do I want to miss out on those? What’s the potential?” and that’s where they get you. That’s where […], is it has all these negatives, and yet we still want to consider doing it.
Derrick: Yeah. If I think back, I’m frustrated by how many Twitter DMs have actually led to productive business meetings or chats and it’s like, “Why does that have to come to a Twitter DM?” because that’s just reinforcing that I struggle to actually get off of there, because people would have to find my email address or something.
Rob: Yeah, and it does seem like Twitter has declined pretty substantially in popularity. That’s been my sense and just the number of people on it. Obviously, the tech community, the Silicon Valley, plus MicroConf and just startups in general are on there. And the press. It does seem like there’s a lot of journalists, not just like TechCrunch but like Wall Street Journal, big-named journalists are on there and there’s certainly still some value. Remember Arab Spring, there is communication there, there is value to the world that that stuff is able to get out.
It really does seem like people have moved on to Instagram and what are the others? Snapchat, although I guess they’re on […] now. You mentioned TikTok last night and I was like, “Yeah, I’ve heard of that. No idea what it does.” I’m so old dude.
Derrick: Yeah, we’re getting old.
Rob: What are you going to do? If you listen like I was asked on stage, “Are you bullish or bearish on Twitter?” and I was like, “Bearish.” This was last year. I was on my 2016 or 2017 prediction. This is when Twitter was still going strong. There are going to be too many trolls. People are just going to move on, and the nature of social media is that it’s pretty rare for a platform to actually stick around for that long. People just move from one to the next.
I don’t love Twitter and struggle with a lot of stuff on it, although I am still on it. I think there are benefits, especially now with the MicroConf stuff, the podcast and all that. I’m not going to quit Twitter anytime soon, even though I do have some struggles with it. But I’m curious, you’re seriously thinking about getting off of it or quitting it basically. Is that right?
Derrick: Yeah. I’m getting dangerously close to that. For me, my big fear is how am I going to keep a similar type of connection to people in the industry who I’m not so close with? I’m texting or private messaging all the time. How am I going to maintain that? How am I going to still get up-to-the-minute news about stuff? I see a lot of things in the React community, for example. New things emerging or new releases of things and a lot of that I’m getting through Twitter right now.
It’s important for me to know about that because I’m building tooling in that ecosystem. I don’t always want to be the guy who’s a month behind late to the party knowing about stuff, but a lot of these you can think of it as, is that really so bad if you’re a few more days delayed in finding stuff out? Probably not. In that case, for me, I’m trying to look for what are some digests newsletters for example that are in the industry? I’m already a part of some of these.
The Changelog is one of them. They send a weekly summary of what’s happening in the open source world. There’s one for the Jamstack community, too, and I’m on that one. I get a lot of good info from that. These are probably good enough for the news part. For me it’s like, how am I going to keep connection to my “audience?”
The podcast is a good one side of a way to do that. Again, returning back to the fundamentals. My email list, my newsletter list, how can I invest there? The time I maybe would have spent on Twitter carve out some of that time to try to invest that in the email list. Those are some of the ways I’m thinking about it.
Rob: Those are good alternatives. I was going to propose that mailing list and a couple of those other things. The bottom line is, yes, you may miss out on some things, but take the time and invest in stuff. I would say, investment in stuff that is less ephemeral.
That’s what bothers me about social media. It’s just here today and gone tomorrow. It’s not a blog post. It’s not even a podcast episode people go back and listen to. It’s not a book that people will read for years.
With your email list, if you can invest in an email list and repost that on the blog, because email is a bit ephemeral even though it’s a pretty deep connection. That’s when I’ve been off because the entire time we were doing Drip, I was not on Twitter at all. It was the right choice. I didn’t quit it for life though, I came back. Obviously, I’m a little more active on it now, but I do hear what you’re saying. If you tried it for two weeks or 30 days, or something, my guess is you’re not going to want to go back.
Derrick: That’s a good segue, because I’ve been reading a book, Cal Newport’s latest book called Digital Minimalism, which is like Deep Work. A lot of people know about that one. It’s Deep Work principles applied to more of your personal life and how you interface with things like social media.
One of the things you he talks about in there and recommends doing is like a digital declutter. That’s a term he coined for. Basically, taking 30 days and eliminating the things that are causing you problems like social media, that are pulling at your brain and causing it to be distracted, and all the negative side effects that come with it.
Think of this as you’re eliminating all this stuff and then at the end of it, be really deliberate about what you add back in. Don’t think of this as just a temporary detox where you remove all and then at the end, I’ve reset and now I can go back to the way I was doing things.
I’m in the midst of one of those right now. I’m not deleting my Twitter account, but I’m not checking it. I started this off going on a trip where I had very little internet access. That forced me to step away from it and even coming back from that after five days, I already had much less desire to go check it. I do feel a certain amount of Zen just from that. That’s becoming a reinforcing thing already for me. The more time I spend off of it, the less drive I have to go and check it all the time. That’s been healthy, I think.
Rob: That’s cool. How long have you been doing that?
Derrick: Since really the turn of the New Year, so we’re about two weeks in. It’s been good.
Rob: It’s a trip when you change habits like that. How scary, you don’t know if it’s going to work, and then you get in a few days and suddenly you feel this clarity, and then trying to come back to it. I’ve done this with drinking alcohol, social media, or just anything. I enjoy it. There are pros and cons to each of those things. It’s like if I have an old fashion, I feel better. In the short-term, it’s a good thing. Much like checking Twitter. Then in the long-term, I question the value of doing that and going off of those things. Coming back, you just realize how much it impacts your day-to-day or just how it actually affects your life.
Derrick: Yeah.
Rob: And you were saying last night because I haven’t read Digital Minimalism, but you piggy-backed on it and it got you thinking about remote work.
Derrick: Yeah. A thing that he spends a fair amount of time talking about in the book is what does it mean to have relationships and have real connection with other human beings. This is heavily tied in with the era of social media there of text messaging. The fact that we rarely call each other anymore. We are always texting. There’s all these norms that were established in society and a lot of them were around lower fidelity means of communication.
He makes a good point. This is based on some research he pulls into his thesis. We’re wired after millennia of communicating with each other, talking to each other, being able to read non-verbals and verbals, the whole picture, and now we’re reducing our communication down to very binary things. If you think about what’s a reaction in Slack or a like on Twitter? It’s literally a binary piece of information. You compare that to all the richness that comes with someone reacting to something in person. You get to see their face, you get to see them smile, or see them look inquisitive. There’s just so much more you can get from it.
In the one sense, you can think of it as more efficient using these productivity tools like Slack, but on the other hand, how much communication are you missing out on and what does that do to our mental state? You make some pretty interesting points that there’s high rates of depression and mental health among college students in the generation that grew up with smartphones. That’s starting to become really evident. There’s been some research at universities about this and just a really sharp increase in a lot of these issues that weren’t a problem before.
You take all that, bundle that all up, and I start thinking about how are we architecting companies? How are we building teams? I feel like a struggle that you build a 100% remote company. How often do you really have that high fidelity communication with each other? That’s what got me thinking about that.
Rob: It’s tough. My personality is I want to go against the majority opinion. It’s like, “Hey, everyone’s raising venture capital.” “Cool. I’m going to go start one without venture capital,” and that’s going to be a bad thing that I talk about. Or, “Hey, all these Fortune 1000 companies or even venture capitalists want you to be located in one place.” “Cool. I’m going to go start a remote company.” That was what you do and it’s a natural thing that I want to do.
In addition, we have the Remote book by DHH and Jason Fried. It’s definitely a thing and we know tons of startups, especially more in the non-venture track space that we write in, that are remote. And there are advantages to it. You can hire people in cheaper locations. You can hire the best people around the world. Everyone doesn’t have to be local, all that stuff.
I see the value of that for sure, but I’ve always said that the situation we had with Drip where half of us were in one city, and I would have loved for all of us to be in one city. We just couldn’t find the talent in Fresno. Half of us were in one city and we were in the office 2-3 days a week. That was my dream setup and I wish every job that I worked and every company I run, because now with TinySeed, there’s three of us and then with MicroConf, there’s two of us, and we’re all remote.
While I don’t think we should all need to live in the same city—it wouldn’t be practical, because (again) we wanted to hire the best people, and Einar and I are co-founders, he’s in California and I’m in Minneapolis—I would love to see them once or twice a week in person, which is what we did back when we’re doing Drip. And that’s so healthy.
Derrick: Yeah it felt pretty ideal. The nice thing was we can write the rules for how this works. There was inherent flexibility, we weren’t always on the same days every week. If something in life happens and you need to be out of the office an extra day a week, no big deal. But to have that as the default, it felt really good, like hopping in front of a white board with […] getting to work through some tough problems. I was never able to reproduce the same benefits over digital means and maybe someone still needs to solve that. Maybe we’ll get there.
Rob: Yeah, that’s the question that’s like will VR solve that at some point? Can you imagine if VR was super, super high fidelity, you and I can look around, literally feel like we are in front of a whiteboard together, and to get social cues, to where it’s uncanny “Valley” type stuff, like you see these amazing video games or even a Pixar movie. Humans look human enough that you can pick up all the stuff. If you and I can be in a room and literally look like that, maybe that would do it.
It’s a bummer. Some of the things I enjoy the most are lunches and hanging out, but I don’t know if you need that. Maybe that’s the point where it’s solved because video chat isn’t enough. Zoom is not enough because you are not going to sit on a Zoom call for 2–4 hours and shoot the breeze and get those moments that you need.
Derrick: That’s the thing. A lot of the way we are thinking about building companies and the tools that we are building for them, it’s introverted Silicon Valley-type engineers who are helping architects how we socially interact with each other. There’s an inherent bias in that. The fact that we are all about using tools for productivity, an important part of building a healthy team is actually having a relationship that has nothing to do with direct productivity. That’s more of a long-ball type of thing. If we are going to build cohesion, we’re going to be able to go to lunch together.
A friend of mine shared this anecdote, coming back after a long break and catching up on work over the holidays. His wife was relaying this to him and she said, “How was work today?” He’s like, “It wasn’t a great day, but I got to see my friends.” It was powerful. That’s something that you don’t necessarily have if you just stay, show up, and be productive. If your day is not productive, then you feel like you had a good day. If you get to see your friends, you get to see the people you built relationships with, then perhaps you’ll feel a lot more well-balanced.
Rob: Yeah. In Slack, you get the emojis and you get some fun stuff shared on a random channel. That’s fun, but it’s definitely different and it’s hard. Think about with TinySeed, we are a remote accelerator, so this is an issue. We get together three or four times a year and those times are really cool when we’re together. There’s a lot of bonding that happens being in person. That’s something that we are going to be facing and trying to overcome for sure.
In a perfect world, again, I just like seeing people more often. I’m pretty introverted, too. To your point about Silicon Valley people building tools, introverted Silicon Valley people thinking that remote work is, I won’t say infallible but it is the ideal. I don’t think it is for most of the world. I don’t think it is especially for extroverts for people who want to be around other folks. The loneliness and isolation is absolutely being shown. They are doing research on it, there’s going to be a real swing here depending on personality type. There’s a lot here that is not as clear cut as just saying, “Here are the pros of remote work and therefore we should all do it,” because it’s nowhere near that clear-cut.
Derrick: I feel like I’m starting to look at a lot of these things that I previously saw as absolutes and I’m starting to see a lot more gray in them. There are benefits, but there’s also drawbacks and you have to weigh them against each other. One cool anecdote that was from Cal Newport’s book, he talks about the Amish and he talks about how a lot of people just assume that it’s this community of people that decided arbitrarily like, “This is the peak of technology and we shall not accept anymore technology.”
That’s what I thought for many years. It just feels very arbitrary, why are horse-drawn carriages better than cars? I don’t know. It’s just a form of technology. But he talks about if you actually learn about their culture, they always evaluate technology. They are very open to it, but they also evaluate the pros and cons against their value system.
Look at cars back in the early 1900s. They try to mount for a while and then they determine that people who are driving cars tended to leave the community, go to neighboring cities, and engage with people outside the community that led to a breakdown in relationships. They just decided like, “This is not coherent with our values, so we are not going to do it.” I think there’s something really powerful to being open to looking at pros and cons and weighing them against value systems and what you are trying to do.
Rob: Yeah and that’s the thing. There are so many fewer absolutes than we would like. They talk about how it’s a sign of intelligence being able to hold two conflicting ideas in your head at once. That’s what both of the things we just talked about are, Twitter and social media conflicting there has a lot of pros and cons.
The same thing with remote work where you can get a little too gung ho in either direction. I think it’s situational and having the willingness to really think it through on a case-by-case basis, to see the realities of it, and know no matter which choice I make, neither is ideal. That’s the hard part is that neither one is ideal. They are going to come with pretty major cons and figuring out how to work around them as best as you can.
As our last topic before we wrap up today, did you read that article, Josh Pigford almost sold Biometrics for $5 million. That was the title, I almost sold Biometrics for $5 million. He published it about six weeks ago.
Derrick: Yeah, I did check it out. It’s a pretty interesting read just because you don’t generally see this level of transparency about something like almost selling your company. It was pretty fascinating to see someone outline their thought process and what was going on through that.
Rob: I know. Super gutsy to do it. I think that’s why because there can be backlash. If you sell it, obviously it goes public that you sold it, but if you don’t sell it and you talk about doing it, there’s danger there. You could have customers leave. You can have employees be upset. Kudos to him for sharing that and sharing his thought process because it sounded tough. A really tough process.
To start with, he kicked it off and he said there’s always a price. Some people get too hung up. A lot of people are, “I’m never selling my business. Why would I sell my business?” I just don’t know. I don’t think that’s the right choice for most people. If you could become independent wealthy, why would you not do this? I don’t hold it against people certainly if you are going to keep your company but don’t just say something out of principle or out of some belief that this is the right thing to do to never sell your company. Think this through.
Now it’s easy. Let’s say I was running a company. It’s doing $50 million a year and I’m pulling $5 million or $10 million a year right off the top, which is totally easy to do with SaaS because it’s so profitable. If you really enjoy what you are doing, then yeah selling your company for $250 million. How much is it actually going to change your lifestyle?
You can afford a jet or whatever, but if you don’t want that and you are doing what you’re doing, why would you do that? But most of us are not in that situation. If you’re running an app doing a million or $5 million a year, somewhere in there, you are not pulling that much money off typically. Typically at that stage, you are in danger of riding it over the top, the growth can die, we can have a recession, you can get killed by a competitor. There’s all these things that could happen and selling a company for a 3X, 4X, or 5X revenue multiple, which Josh was offered 3.75 revenue.
You are doing $2 million a year and you are going to sell your company for $7.5 million, that is absolutely life changing. If you are making $150,000 or $200,000 a year and suddenly you can sell it for that, life-changing in the real sense of the word. It will change your life. You will have options that you never knew you had at that point.
Derrick: A lot of this talk of like why I would want to sell the thing. I’m working on my best idea. I can’t help but think of the Basecamp guys and that was their narrative for a long time. I feel like nowadays there’s a lot more nuance coming from them, which is really refreshing. Jason Fried was at MicroConf, was it last year or the year before?
Rob: Yeah, last year in 2019.
Derrick: Yeah, talking from the stage and he has been one, much more quick to plan the fact that they early on took some money off the table enough, to where him and JJ were millionaires after a couple of years and felt like, “Okay, we’ve made a healthy amount of return of this business. Now we can write it for longer.” A lot of founders go in blind and say, “Why would I want everyone to sell my company,” and yet, what usually ends up happening is that you are not as financially rewarded upfront as you would be if you were taking your raw skill set and having a salary job.
You’re foregoing a lot of money you could be making. A lot of opportunity cost and you are messing that into your equity that you have in your company. If you do end up five years down the line, things are competitive, whatever market conditions, and now suddenly you can’t achieve profitability, you are unable to sell it when you really want to, and you find yourself not able to extract a return from all of the investment that you’ve put into it.
For Basecamp to say, “Why would we want to sell?” because you were able to take some money off the table early on. Then, he also compared now Basecamp to like, “As if I’ve won the lottery and I’m taking the payout over time as opposed to a lump sum.” That totally makes sense.
Rob: Yup. The odds of them going to a business or something is infinitesimal and they get to work. They love their jobs, they have built a great team, and they get to build whatever they want. They’re building Basecamp version three, already built that. Jason Fried was talking a couple of weeks ago on Twitter, like they’re launching two more things this year. They really are a kid in a candy store.
If I were them, I wouldn’t sell, either, but I wouldn’t tell other people. I know they don’t tell other people not to, that’s not something. But I do think that people hear that and then take it upon themselves to think, “Well, I respect Jason Fried and […], I want to be like them, so I’m not going to sell my company either.” I don’t think that’s smart. I think you should evaluate.
Again, if I were Jason Fried, I would not sell Basecamp either because that sounds amazingly fun, but if you’re not in that situation, where you’re tens of millions a year in net profit is what he said, up from the market […], if you’re not in that situation and maybe you don’t enjoy your job, maybe you’re in a really competitive space, and you think that you could flat line.” Once your growth flat lines, your sales multiple plummets. There’s a really good time to sell and if you ride it over the top, suddenly you’re selling for 1X revenue or less. If you’re doubling every year, you’re selling for 4X or 5X revenue, again, it can be a life-changing amount of money or not.
I’m not encouraging people to sell. I think you should do what you want to do, but just really think things through. Back to that whole article we were talking about where Josh basically says, “Hey, there’s always a price. I wasn’t really that open to it,” but he got an offer for $4.95 million and it was like, “Wow, that would change my life.” Then he talks about just how it was a dead end and the buyers had claimed they had the money, but in actual hell, they got him under LOI (letter of intent), they went out and tried to raise money from investors, it was pretty dang shady. It was not cool. That must have been very, very hard.
Derrick: I can only imagine if that had been the case with our Drip story, because I just know how much stress we were under, you especially because you are really bearing the brunt of it, how long the process was, the due diligence stuff, just even getting to LOI. I’m glad that it moves a bit faster, like things didn’t drag out a year, and then Josh discovered this.
I guess on that sense it’s good that it didn’t go on too long, but even for as long as it did, I can only imagine how much you build up all this anticipation. You start to think, “Well, this is looking like it’s going to happen, they seemed very serious about it. Everything I’m hearing from them seems good.” It’s really hard to shift your mind into the gear of like, “I’m about to have a life-changing exit,” and then for that to be torn away is really a mental struggle.
Rob: Yeah. He said, “We’d spent nearly $20,000 on legal fees, months of time gathering all the docs, and they just disappeared. It was crushing. I was and still am furious with them. They wasted an epic amount of our time and money and then crawled into a new hole when they realized they couldn’t do the deal.” Crushing is an understatement, I would have probably crawled into a hole for weeks because your momentum is gone.
It’s one of those really hard decisions to make, but once you make it, you get a sense of peace about it and then that’s all you want. I remember almost hanging on to it too much because you don’t know if the deal is going to go through until it’s all signed. A month before we were selling Drip, it was like, “I’m so ready to sell this company. But I can’t say that out loud, because then if it doesn’t happen, I’ll be crushed.” I definitely feel his pain.
Derrick: Yeah, it’s tough. I don’t know how you could combat that. You have to enter the process, you have to trust what people are telling you initially. You had counsel, you had advisors and stuff, so I wonder how can you avoid that from happening or can you?
Rob: Yeah. I have no idea. I certainly did not and do not believe that I personally could. You would have to be someone of real fortitude to do it. I do like he links over to another article, where he says, “Five things I learned failing to sell my company,” and one of the things he says is avoid needing to sell. This is something a lot of people forget. If you need to sell, if you’re a desperate seller, you will have terms that are not as good.
Always having the abilities to, “Hey, we are growing, we are profitable. I don’t need to sell.” Those three sentiments will get you the best price, that plus getting a lot of different offers. That puts you in the driver’s seat. It’s the same thing with raising funding. Unfortunately, so many people go out to raise funding when they really, really need funding to do anything and nobody wants to fund those companies. They want to fund the companies that don’t need the funding as paradoxical as that sounds.
Derrick: Even on a small scale. When I sold Codetree, this is happening about around the same time that the Drip sale is going through. I was so focused on the Drip stuff that was going on and this was a side app that wasn’t really growing much, but was still just a nice side income for me. I decided it was time to not have to worry about that anymore, but even just having that, going into that with the mindset of like, “I want to sell this thing because it seems like the right time to do that, but I don’t have to,” it could just keep running on the side for a while and no big deal.
Even just going into the negotiation with that attitude. The seller then later on wrote a blog post about how they felt, like they were at a disadvantaged position because they could come in and say, “No, we really want $20,000 off.” My broker was like, “No, we don’t need to do that.” I’m like, “Cool, then tell them no.” Of course, I’m not going to do that, and then ultimately, I think, trying to keep that mindset of like, “If this doesn’t go through, no big deal. I don’t have to do this.” It helps.
Rob: Yeah, having your backs to the walls. Never good, whether you’re selling a car, selling a house. If you’re in a big hurry, you just get the worst deal. Kudos to Josh for that and for sharing. These are helpful things because (again) so many people don’t talk about it when deals fall through like this because it could have negative repercussions, but that’s something that I do love about our community, is that people are often willing to share experiences to help others avoid the mistakes they’ve made.
As we say in the intro, whether it’s to avoid the mistakes or just to understand, if I get into that situation, what will I do? What is this really like? That’s the other thing. If you have not heard of these stories, if you haven’t heard Josh, you haven’t heard you and I talk about selling Drip or any (I’ll say) real startup acquisition, then all you’ve heard is that on TechCrunch, that Instagram sold for $1 billion to Facebook over a weekend, when they had seven people and not much revenue. It’s like, “Well, that’s how startup acquisitions work.” It’s like, “No, they never do. Never.” This is like one in ten years does that.
The real startup acquisitions take a long time, they’re a grind, they’re typically for a revenue multiple or a net profit multiple if you’re running a different type of business or at a smaller revenue scale. There’s just a bunch of pretty common things that are realistic. If you don’t know that and you’ve only read the popular articles about the outliers, your sale is probably not going to be an outlier. So level-setting expectations with this post that Josh wrote is (I think) good.
Derrick: A helpful piece for the community archive for sure.
Rob: Yup, indeed. Thanks, man. Thanks for coming on the show.
Derrick: Yeah. It was a blast, thanks for having me.
Rob: If folks want to keep up with you, you release an episode every week, podcast episode at the Art of Product, you and your co-host Ben Orenstein. That’s a good bootstrap for podcasts over there. Then you are at @derrickreimer on Twitter. We’ll just send people there, but that is what it is.
Derrick: Yeah. Twitter and derrickreimer.com newsletter. Sign-up there.
Rob: That’s probably the one. That’s almost what we should recommend more, derrickreimer.com. I know you’ve blogged a bit over the years. I think all of us probably wish you blogged more.
Derrick: Yeah, it’s always the thing. It’s interesting to think about trying to do more, like higher frequency, less trying to spend 10 hours writing a piece, and think of it a little bit more like Twitter. That could be an interesting thing, too.
Rob: Sounds good, man.
Derrick: Cool. Thanks.
Rob: Thanks again to Derrick for coming on the show. He is working on his new startup. It’s called StaticKit, statickit.com. If you’re working on static sites stuff or interested in that whole ecosystem, he’s building some pretty interesting tools for static site builders.
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Episode 481 | A Bluetick Update from Mike #Taber
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In this episode of Startups For The Rest Of Us, Rob checks in with Mike Taber’s progress with Bluetick. They talk about his big new customer, traction on the podcast tour, Mike’s outreach to his LinkedIn connections, and more.
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Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. This is episode 481 where I catch up with Mike Taber. He gives us an update on his recent progress with Bluetick.
It’s been about six weeks since we last spoke. Frankly, the last update was a little disappointing. Mike was not moving forward with the marketing things that I had encouraged him to do in October, November. He was kind of stuck and his motivation was not at an all time high. He’s definitely having a down month.
I appreciated the conversation this week. I think you’ll enjoy it. Things are definitely starting to tick up from Mike as I talk about in our conversation. The roller coaster metaphor (as completely cliche as it is) really matches up with our conversations. It’s 1–2 months, it tends to be about six weeks. You’ll just hear some episodes he’s crushing it and moving forward, in other episodes he’s not and his motivation’s low.
This week, he’s no different, but I hope you’ll enjoy this conversation. This is one that left me feeling a little better about things. My hope is that our conversations after this carries through. I think that’s something that Mike really needs and has really struggled with over the years—his momentum. He’ll have these good months—one, two, three months. But then, he hits this roadblock and can’t get past it. It really trips him up and stops momentum.
When you’re building a startup, as a founder, momentum is just so important. It’s important for your team. It’s important for your morale. It’s important just to stay sane while you’re trying to push this boulder up the hill once you get that momentum. It’s a lot easier to keep it going.
If you have no idea what I’m talking about. Mike Taber was essentially a former weekly co-host of Startups for the Rest of Us for about the first 450 episodes. He took a step back to focus on his startup, Bluetick, which is warm and cold email engagement. I enjoy these conversations because I think they’re valuable for you as a listener, to hear someone going through struggles, to hear them have to persevere as a founder, not have as much success as they’re trying to get. It is becoming more and more of me helping him think through things.
I think and hope I could give him some clarity so that he knows what he’s doing over the next four to six weeks. I try to cheer him on but also give him some tough love and accountability of, “You should have done that.” It’s not directly every episode an accountability session, but it definitely is a longitudinal look at a founder. I think we started these eight or nine months ago now, so it’s interesting. I’ve listened back to two or three episodes at a time to try to make sure I ask the right questions on the next one. It’s going to make a fascinating case study (I think) if we stitched this out over an extended period of time.
Mike has not committed to doing that over an extended period of time. I think it depends on a lot of factors, but it’s definitely becoming an interesting story (I think) that each of us can dip into every once in a while. He’s quite being open and honest. I’ll vouch for him that offline before and after, he and I had just a few minutes of conversation. It really isn’t other stuff going on that he’s not talking about both good and bad. There’s always some stuff in the works that’s a little early that we don’t touch on.
Really, this is what’s happening with him. I don’t have this big prepped conversation where we picked out the good or bad or whatever. He’s being an open book and I really appreciate that about Mike. I think it helps him think things through and keep moving forward. I also think that it helps all of us to follow someone’s story, to hear the struggles, and to hear how he’s pushing himself to make it through those. With that, let’s hear an update from Mike Taber on what he’s been up to on Bluetick.
Mikey T, how’s it going, man?
Mike: It’s going well. How are you?
Rob: Doing all right. Just wrapped up the State of Independent SaaS report and did my first livestream ever yesterday. I will just say it was really nerve-wracking. It was a 30 minute essentially with producers. Sander was there, of course, doing stuff, then there was a video guy that had the lower third. It felt like a cable access, new show or something. It was very intense. There were cameras, lights, and all that stuff. Fun, exhilarating, but completely adrenaline-filled and exhausting, just sitting and talking for 30 minutes. It was fun.
How about you? What have you been up to for the last six weeks since we talked?
Mike: Lots of stuff going on. I’m sure we’ll cover the vast majority over the next 30–40 minutes or so.
Rob: I’m excited to get into it. After the last episode, I did receive some feedback. There’s some comments on the website startupsfortherestofus.com/episodes/episode-475-a-bluetick-update-from-mike-taber. You can read those in there. There were mixed comments. Some people were really down on the fact that you hadn’t started the cold email outreach, the podcast tour, email outreach, or I guess it just started but there were no results. Other people were like, “Hang in there, Mike. Don’t let these things drag on forever. We’re rooting for you.”
My hope today is to dig into some of that stuff. I did listen back to some of our older conversations over the past. It’s been six or eight months now since we’ve been doing this kind of format. We retouch base every four to six weeks. The Google Audit stuff started a long time ago. That sealed .NET component has hung around in a very long time.
I think that’s the thing I want to look at today. I mentioned this a little bit last episode. I want to figure out how we can have things hang around for shorter amounts of time. We talked about them for months on hand. It feels like you’re not making progress on those fronts even though you might be on to some.
Before we were recording, my memory was, your big wins over the past six months have really been getting the Google Audit done and wrapped. Am I correct that that’s completely done? You haven’t had to spend any time on that?
Mike: Yes it is.
Rob: Cool, that’s good. Then, the other thing is something that we talked about last conversation where you said a new larger customer has signed up. I think it’s your biggest customer, actually. You were building some features, trying to keep them onboard. How has that gone since then over the past six weeks?
Mike: That customer is using the product. So far, it seems to be working well. I’d like to obviously see more of their users a little bit more actively engaged, but it’s kind of an ongoing process. So far, things are working out as far as I can tell. In terms of generally held, Bluetick is going well. Revenue is up in November, December, and it looks like it’ll be up in January as well. That’s a good sign, I guess. We’ll see how things go. I don’t know. It’s hard to put it in words as to not where things are at, but expectations do not always align with reality.
Rob: Sure. Even if you look back over the past three months, you’re saying revenues ticked up each month, which has not been the case a couple years prior to that. It’s been stagnant. It had been stagnant or slow the client from time to time. Can you give us any idea of scale? Probably without mentioning exact dollar amounts. When you say revenues up, is it up a few percentage points? Is it up pretty dramatically over that time period?
Mike: Over the past couple of months, I have to say it’s up maybe 30% or 40%, something like that. Maybe 50%.
Rob: Okay. How are you feeling about that?
Mike: I’m feeling good but it’s still short of where I would like. Revenue’s always going to be short of where you would like it to be. I feel really good about where things are headed. I spent a lot of time over a holiday break thinking about different things. You’ve mentioned how there were a couple of large things that were hanging over my head or Bluetick’s head in terms of where the product is at. It’s just not getting certain things done like Google Audit, for example. I made it a concerted effort to fully finish some of the things that I started now.
If I worked on the Google Audit, for example, my goal was to finish it, put a line in the sand, and say, “Look, even though there’s other things going on that are important, it needed to be paid attention to, I can’t just do 80% of this or 60% of it, then let it drop, and then move on to something else.” I need to take it all the way to the finish line as opposed to letting other things that maybe just as important to distract me. I’ve been making more of an effort to take things all the way to the finish line.
Rob: Yeah. I think that’s good to know about yourself. I have seen that in you for sure, the tendency to bounce from one thing to the next, to have that stuff that you do talk about for six months on podcast interview, and they feel like they hang around. There’s certainly a mental weight on your psyche if not in completely most things.
Mike: Yeah. That’s what I recognized, just the mental weight of those things. If there’s a couple of them, they start to stack up even though I’m bouncing back and forth between some of those things. I may be making progress on them, it doesn’t mean that they’re gone and out of the way. They still weigh on my mind. I think about them and there are times where I really shouldn’t be. It’s very distracting.
I got to a point where I made a list of distractions and said, “Look, I’m going to make an active decision to not pursue these things.” These are known distractions I basically written down. It’s like those shiny object syndrome for entrepreneurial ADD like, “Look. Recognize that these things are there, but I’ve made the decision to not go on this direction, and just walk away.”
Rob: Yeah. A really hard part about entrepreneurship is knowing what to work on next and try to prioritize. When you don’t have a boss, a lot of us came up through grammar school, high school, and college. Then you get through a job. Everyone’s telling you what to do. “Do this project.” “Do these worksheets.” “Write this code.” “Build this thing.”
Then, you’re a founder. It’s like, “I have 100 things I could work on. What do I do next?” It’s very, very hard to get used to. I think what you’re doing—locking it down and saying, “Whatever I decide to work on, I’m going to be deliberate about it. I’m going to see that through until it’s done.”—is a very strong way to do it.
A second topic are the distractions that then try to pull you away from those things. I’m curious to hear, you said you made a list of them. Is it stuff that we would expect like Twitter, Facebook, podcasts, audio books? Or was it other stuff?
Mike: It’s a combination of things. It’s stuff like that. It’s also things within the product where it’s like, “Look, this feels important but it actually doesn’t matter.” For example, there are certain new features that are on the list of things to do where I don’t feel that the features would be nice to have, but they’re not going to be things that drive revenue in any way, shape, or form. They would make the product better, but it’s not going to do anything for me, so don’t spend time on those things because that time could be better spent doing marketing, sales, demos and things like that.
Rob: Yeah. You’ve gone even a layer deeper. It’s not the superficial distractions of the world. You’re literally thinking, “Within my business, I have distractions that are so tantalizing,” like the siren song of, “We’re builders. We’re developers.” The siren song of building that next feature is always calling. We can always justify that our product isn’t as far along as it needs to be. That’s cool then.
You have two marketing efforts we talked about last time that you hadn’t started in mid-December. I’ll say I was disappointed or busting your chops. I really wished you had started these because I want you to get moving faster. The first one is this kind of warm/cold email where you’re sending it out, you have LinkedIn connections, Bluetick cancellations, other sales leads and all that stuff. I believed I have a quote in the dock. “It will definitely get kicked off by then,” because I said, “Do you think they will get kicked off by our next call?” You want to update us on that and what the status is?
Mike: Yes. I have started on that. Like I said, I was fortunate. I don’t know who I told this to and haven’t. I don’t remember if I messed this on the podcast last time, but I was fortunate enough to export my LinkedIn contacts before LinkedIn basically eliminated the ability to take the email addresses with them. I have all these email addresses. What I did is I went through, prioritize them, and said, “Who do I want to reach out to first? Who do I think is going to be either a contact who might be interested in purchasing Bluetick, or who would be interested in a position to either refer me to somebody else, or just give me direct feedback on a product and tell me whether or not it would be applicable in their business?”
Part of this was the discovery effort. Obviously, people that I’m connected to on LinkedIn are going to be more likely to respond to my emails. Even if I’m just saying, “Hey, can you take a look at this? Let me know whether it would be useful in your business or not? If so, I’d love to give you demo and try to get you onboarded as a customer. If not, I still want to have that conversation because I want to know why. Why would this product not be a good fit for your business?”
And use those essentially as votes. An affirmation of things I already believe or potentially new information about where Bluetick does fit in different businesses and where it doesn’t. Even if I hear something that I intuitively know or have already thought of before, I don’t care. It’s still a vote in that direction that is external. I can sit in my office all day long and think about these things. But getting those external votes to say X, Y, or Z, that’s important because it means that it’s more objective than me sitting there than looking at it and thinking about it.
I have kicked those off. My response rate is upwards of 50%. So far, I have been having tons of meetings going through every single one of them just writing down notes. I’ve got at least a page of notes if not two for every single person I’ve talked to and have a demo with. I’ve had a couple of calls that have gone like in an hour and a half, two hours before. I’m getting a lot of responses from them. Honestly, it’s kind of hard to keep up with them to be frank about it. I still have to keep going through those. I actually backed off and turned it off just so I could catch up a little bit but I’ve turned it back on and started sending those emails back out.
Rob: Yeah. The high response rate was because they’re warm, right?
Mike: Yes.
Rob: They have some connection to you. You said that it was like a personal email list, LinkedIn connections, and sales leads that never converted. That’s cool. That’s a nice resource to have. Are any of these converting to sales or trials? Or are they conversations? Are they all rejections that you’re then essentially doing customer development with?
Mike: Surprisingly—maybe not surprisingly—some of them have actually turned into customers. That’s probably part of the uptick and revenue for this month. I think the tactic I’ve taken with some of these were like the person is in a sales role. I say, “Look, I’m going to show you the product. I’m not going to tell you what it’s used for. I’m just going to show you what the features and functionality are. I want you to tell me what you would use it for.” In that way, I’m not leading the witness.
I’ve found that the people who are in the sales positions, I don’t want to say that it resonates with them as a sales tactic, but it really helps me because then they’re not being lead by me in terms of the things that I’m telling them they could be used for. They’re coming to me within their own words with what they would use it for. Yeah, some of those have definitely turned into sales.
I have one person who said, “Yeah. I would use it for this. I would use it for this. I’d use it for this. These couple of other things.” We talked about getting on and have them starting on a trial. Even offered me to introduce the product and do a demo for a couple of sales managers at their company where they’ve got I think 60 or 70 sales reps, something like that.
The thought was, “Hey. I can put you in front of these people because we’ve known each other. I trust that this is a decent product and does what you say it does.” I held back on that a little bit just because adding that many all at once is a little disconcerting, I’ll say, but I also want to be able to put him in a position where he’s using the product himself personally for his sales outreach efforts. Then, when they have an internal meeting, it’s not just, “Oh hey, my friend developed this and I think that you guys should use it,” but he can say, “I’m using it for these situations and these are the results. It’s working for that.”
Rob: Yeah, got it. It sounds like this has been going well. Is this a win? Is this the high of the last month, you think?
Mike: Oh, totally. I have one customer who’s onboard right now. Their billing just went through a couple of days ago. They’re in an organization where there’s either 10 sales reps and the manager of that person is looking at Bluetick directly and saying, “I want to see what the results are from this. I’m interested because the rest of the team might be able to use it, too.”
My previous thought have been, if I can get more into these situations where the multiuser counts are providing value, then obviously the revenue will follow from that. It looks like that is probably the right direction to go. I’m still having a lot of these conversations. I just want to see any of these direct outreach efforts. Any little bit helps, to be honest.
Rob: I would agree. I’m stoked to hear that you’re getting response rates up to 50% because that’s really nice. It sounds like you’re learning a ton, which is really nice, and you’re getting some prospects and potential customers, which I think is good. This is forward progress. It is more forward progress than you’ve had in the past several months. Bravo to that and glad that it’s working out. For me, it’s motivating to hear.
Does this motivate you? I know you’ve said there’s been a lot of conversations, but does this gear you up like, “Oh man, this is working,” like, “This is exciting”?
Mike: It does, yeah. I implemented a pause feature several months ago where customers, instead of cancelling, they can pause their accounts for a nominal fee on a monthly basis. I don’t know if I mentioned this about this part of the Google Audit. They’re really cagey about if you cancel a customer’s account and you keep their data around because Google says that it’s their data, not yours and the customers.
What I did was I said, “Well, in order to bypass that, I’ll implement this feature where you can pause your account,” at which point you’re technically still a customer of mine. I don’t need to delete your data. Four to five people who would cancel over the recent time period, switched over, and said, “Yeah. I’d like to pause my account.”
This week I have one of them came back. I had a call with them later this afternoon. Then another customer from a couple of years ago have come back as well. Yeah, that’s growth. You’re right. To answer your question directly, it is motivating to see this kind of stuff come through. Part of it is a mindset shift for some of the conclusions I came through over the holiday break. Some of it is just seeing quantifiable results from the things that I”m doing.
Rob: Yeah. You’re doing things in public again. You’re not just dealing with Google Audit and building some features. You’re out there and you’re taking risks by sending warm/cold email. You’re having conversations with customers, which can be a lot of work. It can be scary, you can get negative feedback, but you’re doing it and it’s working to at least some degree. I don’t know, I’m pretty excited about that.
Does coming on this show and recording this every month or two make you feel accountable to something? Do you ever think, “Man, I need to make some progress so that Rob does not bust my chops”?
Mike: You know that’s a really interesting question. I feel like before when I was on every week, not as much. If that makes sense. I feel like coming on less frequently, I feel like I should hold myself more accountable because I come on less frequently. If that makes sense.
Rob: Yeah. It’s easy when we’re here every seven days, it’s like how much can I get done, and talk about during that time? You’re always thinking, “Well, I got to talk about something,” but you can let yourself off the hook. So, good. That makes sense.
That was an aside, but I was thinking about that and listening to the last episode. I had said, “Hey, I’m going to ask you about this next time.” It truly was an accountability and has been. I’ve been trying to do that, so it’s good to hear it. So, cool. We’ll call that a win. I’ll obviously going to ask it again next time. It sounds like it’s working. Keep doing it, man. I’m totally rooting for you on that.
Then there’s the emails for podcast tour or to just go on podcast and those had started sending already. I believe you said you might’ve had one response or whatever. How’s all that going?
Mike: I scale that back a little bit because of the LinkedIn prospect that I was doing. I am starting to ramp that back up again. I’ve got a call next week with somebody. We’ll see what the schedule shakes out with. There’s a couple of others that I’m trying to figure out where on the schedule we can get together just because we’ve exchange calendars, go back and forth and stuff. That seems to be moving forward as well, but my list for that is much shorter as well. I don’t have 900 of them.
Rob: Yeah. If I were to choose between going on podcast and talking to customer prospects, guess which one I would do? It’s what you’re doing if one of those has to be scaled back. A podcast tour is a nice thing to do. I do feel like you could probably get it going at some point. As I said earlier, that’s not going to drive a bunch of customers. What’ll drive a bunch of customers is cold outreach, warm outreach, marketing funnels, and all the things we know about. I don’t have much of an issue with that.
I’m curious. I’m meant to ask when you were saying that some of the folks you’re talking to are interested. They’re either coming back on or they’re signing up. Why Bluetick? In their words. We’ve talked a lot about differentiation. I kept saying you either need a unique marketing channel. You need to rank number one in Google or you need to rank number one in some type of channel where you are capturing the customers.
Or you need to have this pretty unique selling proposition or a unique feature or some unique positioning when someone looks at your other nine or 109 competitors filling the space you’re in, that they say, “Wow, Bluetick is best at this and this is my need.” How do you differentiate? I’m curious what has come out of these conversations, if anything, that makes you think, “This is exactly why they’re signing up for Bluetick and not the other tools.”
Mike: I haven’t teased out some of the specifics of that. I’ve got some ideas. When people switch from other tools to Bluetick, most of the time it’s because they run into a problem that those tools aren’t very good at. Whether they can only have contact in one sequence at a time, or they’re missing emails because it relies on the Gmail API and it’s not checking the spam folder, or the notifications and stuff don’t get triggered.
I have direct access to the mailbox, so every email that comes in, I can process it versus years in Gmail API. You’re very dependent upon their scheduling on all of those things. Whereas Bluetick, it checks the mailbox every 10 minutes. And longer term, I have other plans to make that even faster, and reduce the process in time on my site.
That’s one of those things where I actively decided it’s good enough for now. It doesn’t need to be that good. Every 10 minutes is fine. There’s other ones out there, they take upwards an hour, or 6, or 12 hours. They get by, so what difference does it make? I’m already faster than that. It doesn’t make a difference.
I think one of the other things is that the workflow itself inside Bluetick, it’s weird because some people say it makes complete sense. Some people say, “I don’t understand this at all. I’d rather go use these other tools that work on the same way.”
Rob: Okay. I wonder long-term—I don’t think we’ve dived into this now—you’re saying you check more often. Is that right? Your data is more up-to-date or fresh? That’s a feature, not a benefit. I’m thinking, what’s the next thing on top of that? Is it like your data is always synced? Unlike other tools, you’re near real time acts. There’s a way to position it where Bluetick is the real neartime version that’s always accurate and everything you just listed. I don’t even remember. You were saying spam, trash, and folders. How does all that get combined into one or two bullets that are true benefits?
Mike: The benefit of it is if Bluetick sees the email, like a reply, it will pull the person out of the sequence. If there’s a delay, let’s say that there’s a four hour delay for some other tool, a reply can come in within that four hours. If the tool doesn’t see it, it can send out a follow-up. What happens is you receive an email that says, “Hey, you sent somebody an email replying to something.” Then they come back with an email and it says, “Hey. I haven’t heard back from you.” I’m just like, “I literally just sent you an email an hour or two ago. Why are you saying that you didn’t see it and that you haven’t heard back from me?” That’s the situation that you go in every 10 minutes […]
Rob: Yeah, that makes sense. It’s something we can look at and talk through in future episodes as you get more data. Something I wanted to touch on is the last episode, I asked about your motivation. I said, “How’s your motivation over the past six weeks?” You said, “It’s okay.” You said, “Sleep was fine but not great.” Then you started talking about front-end code. That’s what you launched into something like, “I get discouraged when I do that. Should I hire someone part time? I threw that out.” Has that come up again?
I get the feeling that if you get demotivated by thinking about front-end code, it takes a bunch of time. That’s something you naturally shy away from like a hot stove, even if it’s only your lizard brain and you’re not actively thinking or realizing that you’re shying away from that. Has that been an issue or are you so much in sales and marketing mode that it doesn’t matter because you’re really not building features right now?
Mike: I think it matters more when I run into problems with the front-end code. I’m struggling to get some of the CSS right or some of the pages to show up in a way that I want. I’ve kind of coached myself to be less anxious or particular about some of that stuff. It’s like, “This doesn’t look perfect but you know what? It works.” The interesting thing I also realized was that Bluetick works really well for the people who use it in the way that it’s supposed to be, which means that you’re not logging in into it very much, which is a really bizarre way to position your SaaS app.
Most of the time I think you want people to log into your app and use it as much as possible because you’re getting the most value out of it. Bluetick is actually the opposite where the less you login, the more value it could provide you because you got things automated and setup to run into the background. If something doesn’t look quite right or if there’s a dropdown that’s slightly on the wrong spot, it actually probably doesn’t matter nearly as much as I use to feel like it does.
As long as the data that you need shows up in the UI, that’s one of those that I kind of backed off and said that this doesn’t really matter as much. I agree there’s probably some of that that is influenced by the fact that I’m doing much more of the sales and marketing. Just showing the products to people and saying, “This is what it can do,” and less front-end development.
Rob: Right, cool. Other than that, how was your overall motivation? I think sleep ties into that. How was your sleep and your motivation? You sound up. You sound up to me. Last time, you didn’t. You sounded down. This is the roller coaster of entrepreneurship. That’s the beauty of doing this every month and two for months. Presumably, if you do these for years, you just see the ups and downs, and the ups and downs. Has that been reflected over the past six weeks? Or is it just the last week or few days that you felt that?
Mike: I felt really good for the past couple of weeks. Part of it could be just the result of getting past some of that front-end code. I had to redesign the UI. I put all the navigation at the top of the page. That was probably part of where my frustrations last time where coming from. I had to move everything and at the same time, not break all the code that was currently in place for it. It wasn’t quite as simple as I would’ve liked to move the navigation. Now that it’s done, I even enjoy going into the app more myself just because the navigation has been moved to the top. It’s easier to get around and less clicks to do different things. I definitely feel like that factors into it. Obviously, increasing MRR also helps. There’s that.
Rob: That’s a huge motivator and when things are going up in another right, you can put up with a lot of other stuff. That’s the mental battle.
Next, I’m curious about the sealed untestable .NET component. I’m curious on a couple of fronts because when I listen to backdoor conversations, we’ve gotten back and forth. I’ve been like, you should either do this and get it done. Don’t let it hang around. Either decide not to do it or decide to do it and do it soon. It sounds like it keeps you from building features that you need.
Then when I hear this update today where it’s like, “No, you’re selling. You’ve grown MRR substantially.” It makes me think, why are we even talking about this .NET component? Leave it and just keep going. Push it down the line. What’s your current thinking on it?
Mike: I feel the same way. I’ve gone back and forth on it a bunch of times. It’s like, “Do I really need to do that? Do I need to do it now?” The answer is, probably not. Do I want to because it’s technical debt that has been hanging over my head over for a while? It is distracting. I rather have it out of the way but at the same time it is a chunk of work to get done. It’s not stopping the product from doing what it does. I don’t know. I don’t have a great answer for you.
I think if I buckled down, just did it, knocked it out, and got it out of the way, I wouldn’t have to ever worry about it again. Or at least until other stuff happens. I do feel like I would probably have to address it in a semi near future if I’m starting to add in substantially larger accounts just because the back-end I don’t know.
I don’t know how far I can scale it up without adding more servers in which would mean that I need to reengineer how some of that stuff works. At that point, it would be a hornet’s nest to get into that code and start working with it, to try and separate it among multiple servers. I don’t know. I don’t have a great answer for you. I just don’t.
Rob: I don’t either, in this case. Given how limited you are, my bet is to leave it where it is, and sell. Revenue solves everything. In this case, profit really solves everything. In your case, just growing MRR, if you can keep doing that and focus 100% of your time on conversations, 100% of your time on selling, and grow another 50% over the next two months, technically that sucks. I hate it. It’s something you can circle back to.
I think the thing that I’m going to bust your chops about is when you get the point and you’re like, “I need to build these features in order to get these bigger customers on. I can’t because the sealed .NET component is keeping me from doing it. But I still don’t want to do it.” There’s going to come a time where you have to do this, I think. The technical debt is going to sink you, at least based on how you described it.
I think that’s in the bank of my mind of don’t worry about it until you need to. Once you do, buckle down and do it. In two or three weeks, it’s done. You know what I mean? Stop everything. That’s how performance used to go.
Like with Drip, you just don’t do much work on it because you’re cranking on features, you’re selling it, you’re marketing it, you’re doing this stuff, and you’re grow, grow, grow. Then you hit the point where it’s like, “Oh, no. The database is about to fall over.” Unfortunately, it was a fire drill and it was all hands on deck. We pulled people off features, we go and upgrade the database. We do a lot of stuff. It bought us about 4–6 months more. That’s not sustainable. You don’t want to grow a business long-term over that. About the time you’re at $1 million or 20 employees, it’s too much. It’s too jarring and you needed a better process.
But when you’re as early, as scrappy, and as agile as you are, and you’re just trying to get to default alive or you have enough money to basically buy out your own time, I think you just have to. That’s how you have to operate.
Mike: Yeah. I would love to have that off out of the back of my head. For now, I’m kicking it down the road even more.
Rob: Yup. I think when you get there, it would be amazing if you could hire someone to do it. If you could bring in high-end senior engineer, you just bite the bullet, and eat some money. You show him what it is, you say it needed to go from there to there, you write up the spec to tell him exactly how you’re going to do it, and again, it’ll cost you. It’s not a $10 an hour developer.
Mike: Yeah. I hate to interrupt you at that one. I don’t know if I could outsource that. The reason is because there’s a lot of domain knowledge that I acquired based on just having written different prototypes and doing different things that I think would be difficult for somebody else to have or acquire. I’m not saying they couldn’t come up with a plan that I could interject and say, “Hey, if you do it this way, these things are going to break.” I don’t know.
Rob: Yeah, I hear you. Said every developer ever, Mike. This is really hard to do. I know you have domain knowledge. I know it’s not easy. I just think it’s possible and something you should consider.
This is the same thing that I think we both thought about MicroConf, that we brought Zander on. I thought that about marketing before I met people who are way better in marketing than I was. I was like, “I’m the only one that knows how to market this product. All the copies are my own.” Then I’d meet someone and I’m like, “Well, they’re better at this.”
It’s not cut and dry. I don’t really think we should go down this road right now, but it’s something I just know that it’s going to derail you for probably a month if I were to guess. Maybe longer. If you’re going full speed with marketing and sales, and you really are landing customers and growing, it would be a shame for you to have just put the brakes on that and switch over.
Mike: The fortunate thing is I think the way things are, I think you’re right. I think there’s definitely ways for me to make that work. One of which is if I hand it over to somebody, the interesting thing in Bluetick is I have a flag in the database that says, “What version of the backend storage extension are you using? If it’s version one, use this code. If it’s version two, use this code.” I could switch on an individual mailbox level. I could just use my mailboxes like a test, switch it over, and then upgrade it.
If things are working great, I could roll it out slowly to other customers as opposed to doing everything all at once. That’s what the real kicker. It’s a critical core […]. I can do it individually. It took a while to get to that point.
Rob: I think that’s the way you do it. That’s the speed bump way of doing it versus the […] way. Cool. That’s good.
Someone wrote in and made a comment. They asked if you ever took the Enneagram? I sent you, just for the record, I went, and paid $12. I said, “Merry Christmas,” and sent you an email with the link. I’m curious if you took it.
Mike: Yeah. I saw that email and I’m like, “You bastard.” I have no way out of it.
Rob: Because you gave me crap the last time. I was like, “Look. I’ll pay for it Mike. Just take and bust chops, right?” and you’re like, “Oh. No, you won’t.” I was like, “Can I pay for this in advance?” This is the best.
Mike: Yeah, I saw that. I did spent the time. I went through and took it. It was interesting. It was definitely better than the previous time I took it where everything came out even. This time, it gave me a spread of the different types. One that came to the top with a score of 22 was Type 6, the loyalist. Then the next one, both of them was the score of 20, it was Type 9, the peacemaker and Type 1, the reformer.
I read through it. I actually thought it was interesting enough that I printed it out, and I’m going back through it and highlight different things. I felt like after reading through the results and the description of the things, I felt like it was pretty dead on.
Rob: That’s cool. What is a key motivation? You’re like a 6 with 9 or 6 with, what was the third one you said?
Mike: 6 with 9 and 1.
Rob: Yeah. I’m looking through this description. If you’re on a computer, you can just Google Enneagram Type 6 with Type 9 and it will give you a combined thing, like loyalist and peacemaker. Some 6s and 9s find it difficult to say what is actually on their minds. There is a great tendency in this relationship to clam up, to be silently stubborn, defensive, and to make the other person guess what’s going on.
The thing I like about the Enneagram is there’s some positive but they definitely talk about blindspots a lot. Potential trip spots or issues. It can callout things that I think it’s that know yourself and try to figure out how to be better for it. If you think it’s pretty accurate, are there things that you’re going to do or have started doing that you think can help overcome some of these?
Mike: That’s what I was looking at. That’s why I printed it out and I was going back through it. The printout of the results for me was about 20 pages. It’s because there’s the top level one, then there’s two that are tied for second.
Rob: Yeah. That makes it complicated.
Mike: It does make it a little bit more complicated. Then things dropped off after these top three. I have to go through it a little bit more. I plan on highlighting different things that stick out to me, that they resonate really well with me. I just haven’t done that yet.
Rob: Yeah, that’s cool. Do that because I’m curious. The whole point of this was when I took it, some people on a leadership team that I’m on took it, it really dead point out that some of them, they were a couple threes. That’s the achiever, the success-oriented, pragmatic type, driven, images-conscious, their motivation is to achieve. They’re probably never going to stop wanting to achieve. Whether it’s nature or nurture or it’s something their parents said or did to them when they were kids or whether it’s just genetics, that’s what they want.
It was interesting to work with them because I kind of don’t care about that. I don’t need to make a dent in the universe. My thing was creating, building, and doing interesting things. I can’t remember. I was trying to look through, find what my number is. I don’t have the report. My memory’s mind was like a creator. It was a creative type. You’re motivated by creating things, putting them into the world, and having people using them.
Of course, there’s a bunch of negatives to that, too. You can bee too introverted. I don’t know. There’s stuff. All that to say, that was once again a confirmation, it helped me know myself a little more like, “Yeah, that’s right. I do need to be creating things.” I am most excited when I am creating new things rather than taking a company from $5–$50 million. In my opinion, not creating very much. That tends to be the place I really get bored with it, so it’s good for me to know that.
Running things for the long term, building processes, and have them on a scale, I’m going to do the same thing for 5 or 10 years. I can exist in an org like that but I need to be a person that’s creating things. That was the whole point of, “Hey, have you thought about taking it? So you can learn a little bit more about what motivates you.” Really, the motivation you talked about was flexibility. You’re like, “I want the flexibility that entrepreneurship offers.” I’m concerned that that’s just not enough motivation to keep you going when times get really tough and when sleep gets hard.
Mike: Yeah. I think what I like the most about the Enneagram was that it talked about different levels of the personality types. Within the levels, it’s essentially how healthy you are as a person within that level. They say, “If you’re unhealthy, you could turn into this other personality type at this level.” Or, “If you’re healthy, you can turn into this other personality type at a certain level.” I thought that that was the most interesting piece to me.
Like I said, when I was reading through some of these things, it was shocking to me how dead on it was. I’ll read a very little excerpt here from the personality Type 6 where it says, “Sixes do their best to be solid and responsible, but they are often troubled by an undercurrent of doubt and anxiety. In fact, sixes often seem a bit jittery and uneasy in general. They live in a state of worry then find something to worry about.” I’m like, “Yeah, I kind of do that sometimes.”
Like I said, some things just jumped out of me. It’s like that totally describes me. Then there were other ones like, “Yeah. That’s not really me.”
Rob: Yeah, cool. I’m glad you did that. I hope you’ll look through it. Maybe come back through their findings in terms of things that you think might motivate you.
That kind of wraps us up for today. I think the one question that I would like to find out is your high and your low over the past six weeks. Your high sound like the fact that it’s growth. The cold outreach is working. What’s been the lowest point for you, where you felt most discouraged, the biggest loss or whatever?
Mike: I think that implementing the client site. Some of the client-side features that I was working on before which I finished probably shortly after our call was just the trouble I was having with reorganizing the navigation to help better support some of the multi-user functions that I’m adding. That was just a real nightmare. It sucks.
Rob: Discouraging and that was what you touched on last month as you were doing it.
Mike: Yeah, there was that. I think there was one feature that I wanted to get to this other feature to implement. It ended up taking longer to finish the client-side navigation changes. I implemented this feature that allows customers to skip sending emails on public holidays. Christmas, for example. There’s a toggle in there that just says, “Don’t send these emails during the holidays,” and that happens to be one of them. It’s shocking how simple that code was to write on the back-end, but it just took way longer than I wanted it to to get into the product. It didn’t get in until after Christmas, which I really wanted to get in there beforehand, but it is what it is.
Rob: Cool, man. Thanks again for coming back. We’ll circle up with you here in the next month or two.
Mike: Sounds good.
Rob: All right, take it easy.
Mike: All right, bye.
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It’s been about six weeks since we last spoke. Frankly, the last update was a little disappointing. Mike was not moving forward with the marketing things that I had encouraged him to do in October, November. He was kind of stuck and his motivation was not at an all time high. He’s definitely having a down month.
I appreciated the conversation this week. I think you’ll enjoy it. Things are definitely starting to tick up from Mike as I talk about in our conversation. The roller coaster metaphor (as completely cliche as it is) really matches up with our conversations. It’s 1–2 months, it tends to be about six weeks. You’ll just hear some episodes he’s crushing it and moving forward, in other episodes he’s not and his motivation’s low.
This week, he’s no different, but I hope you’ll enjoy this conversation. This is one that left me feeling a little better about things. My hope is that our conversations after this carries through. I think that’s something that Mike really needs and has really struggled with over the years—his momentum. He’ll have these good months—one, two, three months. But then, he hits this roadblock and can’t get past it. It really trips him up and stops momentum.
When you’re building a startup, as a founder, momentum is just so important. It’s important for your team. It’s important for your morale. It’s important just to stay sane while you’re trying to push this boulder up the hill once you get that momentum. It’s a lot easier to keep it going.
If you have no idea what I’m talking about. Mike Taber was essentially a former weekly co-host of Startups for the Rest of Us for about the first 450 episodes. He took a step back to focus on his startup, Bluetick, which is warm and cold email engagement. I enjoy these conversations because I think they’re valuable for you as a listener, to hear someone going through struggles, to hear them have to persevere as a founder, not have as much success as they’re trying to get. It is becoming more and more of me helping him think through things.
I think and hope I could give him some clarity so that he knows what he’s doing over the next four to six weeks. I try to cheer him on but also give him some tough love and accountability of, “You should have done that.” It’s not directly every episode an accountability session, but it definitely is a longitudinal look at a founder. I think we started these eight or nine months ago now, so it’s interesting. I’ve listened back to two or three episodes at a time to try to make sure I ask the right questions on the next one. It’s going to make a fascinating case study (I think) if we stitched this out over an extended period of time.
Mike has not committed to doing that over an extended period of time. I think it depends on a lot of factors, but it’s definitely becoming an interesting story (I think) that each of us can dip into every once in a while. He’s quite being open and honest. I’ll vouch for him that offline before and after, he and I had just a few minutes of conversation. It really isn’t other stuff going on that he’s not talking about both good and bad. There’s always some stuff in the works that’s a little early that we don’t touch on.
Really, this is what’s happening with him. I don’t have this big prepped conversation where we picked out the good or bad or whatever. He’s being an open book and I really appreciate that about Mike. I think it helps him think things through and keep moving forward. I also think that it helps all of us to follow someone’s story, to hear the struggles, and to hear how he’s pushing himself to make it through those. With that, let’s hear an update from Mike Taber on what he’s been up to on Bluetick.
Mikey T, how’s it going, man?
Mike: It’s going well. How are you?
Rob: Doing all right. Just wrapped up the State of Independent SaaS report and did my first livestream ever yesterday. I will just say it was really nerve-wracking. It was a 30 minute essentially with producers. Sander was there, of course, doing stuff, then there was a video guy that had the lower third. It felt like a cable access, new show or something. It was very intense. There were cameras, lights, and all that stuff. Fun, exhilarating, but completely adrenaline-filled and exhausting, just sitting and talking for 30 minutes. It was fun.
How about you? What have you been up to for the last six weeks since we talked?
Mike: Lots of stuff going on. I’m sure we’ll cover the vast majority over the next 30–40 minutes or so.
Rob: I’m excited to get into it. After the last episode, I did receive some feedback. There’s some comments on the website startupsfortherestofus.com/episodes/episode-475-a-bluetick-update-from-mike-taber. You can read those in there. There were mixed comments. Some people were really down on the fact that you hadn’t started the cold email outreach, the podcast tour, email outreach, or I guess it just started but there were no results. Other people were like, “Hang in there, Mike. Don’t let these things drag on forever. We’re rooting for you.”
My hope today is to dig into some of that stuff. I did listen back to some of our older conversations over the past. It’s been six or eight months now since we’ve been doing this kind of format. We retouch base every four to six weeks. The Google Audit stuff started a long time ago. That sealed .NET component has hung around in a very long time.
I think that’s the thing I want to look at today. I mentioned this a little bit last episode. I want to figure out how we can have things hang around for shorter amounts of time. We talked about them for months on hand. It feels like you’re not making progress on those fronts even though you might be on to some.
Before we were recording, my memory was, your big wins over the past six months have really been getting the Google Audit done and wrapped. Am I correct that that’s completely done? You haven’t had to spend any time on that?
Mike: Yes it is.
Rob: Cool, that’s good. Then, the other thing is something that we talked about last conversation where you said a new larger customer has signed up. I think it’s your biggest customer, actually. You were building some features, trying to keep them onboard. How has that gone since then over the past six weeks?
Mike: That customer is using the product. So far, it seems to be working well. I’d like to obviously see more of their users a little bit more actively engaged, but it’s kind of an ongoing process. So far, things are working out as far as I can tell. In terms of generally held, Bluetick is going well. Revenue is up in November, December, and it looks like it’ll be up in January as well. That’s a good sign, I guess. We’ll see how things go. I don’t know. It’s hard to put it in words as to not where things are at, but expectations do not always align with reality.
Rob: Sure. Even if you look back over the past three months, you’re saying revenues ticked up each month, which has not been the case a couple years prior to that. It’s been stagnant. It had been stagnant or slow the client from time to time. Can you give us any idea of scale? Probably without mentioning exact dollar amounts. When you say revenues up, is it up a few percentage points? Is it up pretty dramatically over that time period?
Mike: Over the past couple of months, I have to say it’s up maybe 30% or 40%, something like that. Maybe 50%.
Rob: Okay. How are you feeling about that?
Mike: I’m feeling good but it’s still short of where I would like. Revenue’s always going to be short of where you would like it to be. I feel really good about where things are headed. I spent a lot of time over a holiday break thinking about different things. You’ve mentioned how there were a couple of large things that were hanging over my head or Bluetick’s head in terms of where the product is at. It’s just not getting certain things done like Google Audit, for example. I made it a concerted effort to fully finish some of the things that I started now.
If I worked on the Google Audit, for example, my goal was to finish it, put a line in the sand, and say, “Look, even though there’s other things going on that are important, it needed to be paid attention to, I can’t just do 80% of this or 60% of it, then let it drop, and then move on to something else.” I need to take it all the way to the finish line as opposed to letting other things that maybe just as important to distract me. I’ve been making more of an effort to take things all the way to the finish line.
Rob: Yeah. I think that’s good to know about yourself. I have seen that in you for sure, the tendency to bounce from one thing to the next, to have that stuff that you do talk about for six months on podcast interview, and they feel like they hang around. There’s certainly a mental weight on your psyche if not in completely most things.
Mike: Yeah. That’s what I recognized, just the mental weight of those things. If there’s a couple of them, they start to stack up even though I’m bouncing back and forth between some of those things. I may be making progress on them, it doesn’t mean that they’re gone and out of the way. They still weigh on my mind. I think about them and there are times where I really shouldn’t be. It’s very distracting.
I got to a point where I made a list of distractions and said, “Look, I’m going to make an active decision to not pursue these things.” These are known distractions I basically written down. It’s like those shiny object syndrome for entrepreneurial ADD like, “Look. Recognize that these things are there, but I’ve made the decision to not go on this direction, and just walk away.”
Rob: Yeah. A really hard part about entrepreneurship is knowing what to work on next and try to prioritize. When you don’t have a boss, a lot of us came up through grammar school, high school, and college. Then you get through a job. Everyone’s telling you what to do. “Do this project.” “Do these worksheets.” “Write this code.” “Build this thing.”
Then, you’re a founder. It’s like, “I have 100 things I could work on. What do I do next?” It’s very, very hard to get used to. I think what you’re doing—locking it down and saying, “Whatever I decide to work on, I’m going to be deliberate about it. I’m going to see that through until it’s done.”—is a very strong way to do it.
A second topic are the distractions that then try to pull you away from those things. I’m curious to hear, you said you made a list of them. Is it stuff that we would expect like Twitter, Facebook, podcasts, audio books? Or was it other stuff?
Mike: It’s a combination of things. It’s stuff like that. It’s also things within the product where it’s like, “Look, this feels important but it actually doesn’t matter.” For example, there are certain new features that are on the list of things to do where I don’t feel that the features would be nice to have, but they’re not going to be things that drive revenue in any way, shape, or form. They would make the product better, but it’s not going to do anything for me, so don’t spend time on those things because that time could be better spent doing marketing, sales, demos and things like that.
Rob: Yeah. You’ve gone even a layer deeper. It’s not the superficial distractions of the world. You’re literally thinking, “Within my business, I have distractions that are so tantalizing,” like the siren song of, “We’re builders. We’re developers.” The siren song of building that next feature is always calling. We can always justify that our product isn’t as far along as it needs to be. That’s cool then.
You have two marketing efforts we talked about last time that you hadn’t started in mid-December. I’ll say I was disappointed or busting your chops. I really wished you had started these because I want you to get moving faster. The first one is this kind of warm/cold email where you’re sending it out, you have LinkedIn connections, Bluetick cancellations, other sales leads and all that stuff. I believed I have a quote in the dock. “It will definitely get kicked off by then,” because I said, “Do you think they will get kicked off by our next call?” You want to update us on that and what the status is?
Mike: Yes. I have started on that. Like I said, I was fortunate. I don’t know who I told this to and haven’t. I don’t remember if I messed this on the podcast last time, but I was fortunate enough to export my LinkedIn contacts before LinkedIn basically eliminated the ability to take the email addresses with them. I have all these email addresses. What I did is I went through, prioritize them, and said, “Who do I want to reach out to first? Who do I think is going to be either a contact who might be interested in purchasing Bluetick, or who would be interested in a position to either refer me to somebody else, or just give me direct feedback on a product and tell me whether or not it would be applicable in their business?”
Part of this was the discovery effort. Obviously, people that I’m connected to on LinkedIn are going to be more likely to respond to my emails. Even if I’m just saying, “Hey, can you take a look at this? Let me know whether it would be useful in your business or not? If so, I’d love to give you demo and try to get you onboarded as a customer. If not, I still want to have that conversation because I want to know why. Why would this product not be a good fit for your business?”
And use those essentially as votes. An affirmation of things I already believe or potentially new information about where Bluetick does fit in different businesses and where it doesn’t. Even if I hear something that I intuitively know or have already thought of before, I don’t care. It’s still a vote in that direction that is external. I can sit in my office all day long and think about these things. But getting those external votes to say X, Y, or Z, that’s important because it means that it’s more objective than me sitting there than looking at it and thinking about it.
I have kicked those off. My response rate is upwards of 50%. So far, I have been having tons of meetings going through every single one of them just writing down notes. I’ve got at least a page of notes if not two for every single person I’ve talked to and have a demo with. I’ve had a couple of calls that have gone like in an hour and a half, two hours before. I’m getting a lot of responses from them. Honestly, it’s kind of hard to keep up with them to be frank about it. I still have to keep going through those. I actually backed off and turned it off just so I could catch up a little bit but I’ve turned it back on and started sending those emails back out.
Rob: Yeah. The high response rate was because they’re warm, right?
Mike: Yes.
Rob: They have some connection to you. You said that it was like a personal email list, LinkedIn connections, and sales leads that never converted. That’s cool. That’s a nice resource to have. Are any of these converting to sales or trials? Or are they conversations? Are they all rejections that you’re then essentially doing customer development with?
Mike: Surprisingly—maybe not surprisingly—some of them have actually turned into customers. That’s probably part of the uptick and revenue for this month. I think the tactic I’ve taken with some of these were like the person is in a sales role. I say, “Look, I’m going to show you the product. I’m not going to tell you what it’s used for. I’m just going to show you what the features and functionality are. I want you to tell me what you would use it for.” In that way, I’m not leading the witness.
I’ve found that the people who are in the sales positions, I don’t want to say that it resonates with them as a sales tactic, but it really helps me because then they’re not being lead by me in terms of the things that I’m telling them they could be used for. They’re coming to me within their own words with what they would use it for. Yeah, some of those have definitely turned into sales.
I have one person who said, “Yeah. I would use it for this. I would use it for this. I’d use it for this. These couple of other things.” We talked about getting on and have them starting on a trial. Even offered me to introduce the product and do a demo for a couple of sales managers at their company where they’ve got I think 60 or 70 sales reps, something like that.
The thought was, “Hey. I can put you in front of these people because we’ve known each other. I trust that this is a decent product and does what you say it does.” I held back on that a little bit just because adding that many all at once is a little disconcerting, I’ll say, but I also want to be able to put him in a position where he’s using the product himself personally for his sales outreach efforts. Then, when they have an internal meeting, it’s not just, “Oh hey, my friend developed this and I think that you guys should use it,” but he can say, “I’m using it for these situations and these are the results. It’s working for that.”
Rob: Yeah, got it. It sounds like this has been going well. Is this a win? Is this the high of the last month, you think?
Mike: Oh, totally. I have one customer who’s onboard right now. Their billing just went through a couple of days ago. They’re in an organization where there’s either 10 sales reps and the manager of that person is looking at Bluetick directly and saying, “I want to see what the results are from this. I’m interested because the rest of the team might be able to use it, too.”
My previous thought have been, if I can get more into these situations where the multiuser counts are providing value, then obviously the revenue will follow from that. It looks like that is probably the right direction to go. I’m still having a lot of these conversations. I just want to see any of these direct outreach efforts. Any little bit helps, to be honest.
Rob: I would agree. I’m stoked to hear that you’re getting response rates up to 50% because that’s really nice. It sounds like you’re learning a ton, which is really nice, and you’re getting some prospects and potential customers, which I think is good. This is forward progress. It is more forward progress than you’ve had in the past several months. Bravo to that and glad that it’s working out. For me, it’s motivating to hear.
Does this motivate you? I know you’ve said there’s been a lot of conversations, but does this gear you up like, “Oh man, this is working,” like, “This is exciting”?
Mike: It does, yeah. I implemented a pause feature several months ago where customers, instead of cancelling, they can pause their accounts for a nominal fee on a monthly basis. I don’t know if I mentioned this about this part of the Google Audit. They’re really cagey about if you cancel a customer’s account and you keep their data around because Google says that it’s their data, not yours and the customers.
What I did was I said, “Well, in order to bypass that, I’ll implement this feature where you can pause your account,” at which point you’re technically still a customer of mine. I don’t need to delete your data. Four to five people who would cancel over the recent time period, switched over, and said, “Yeah. I’d like to pause my account.”
This week I have one of them came back. I had a call with them later this afternoon. Then another customer from a couple of years ago have come back as well. Yeah, that’s growth. You’re right. To answer your question directly, it is motivating to see this kind of stuff come through. Part of it is a mindset shift for some of the conclusions I came through over the holiday break. Some of it is just seeing quantifiable results from the things that I”m doing.
Rob: Yeah. You’re doing things in public again. You’re not just dealing with Google Audit and building some features. You’re out there and you’re taking risks by sending warm/cold email. You’re having conversations with customers, which can be a lot of work. It can be scary, you can get negative feedback, but you’re doing it and it’s working to at least some degree. I don’t know, I’m pretty excited about that.
Does coming on this show and recording this every month or two make you feel accountable to something? Do you ever think, “Man, I need to make some progress so that Rob does not bust my chops”?
Mike: You know that’s a really interesting question. I feel like before when I was on every week, not as much. If that makes sense. I feel like coming on less frequently, I feel like I should hold myself more accountable because I come on less frequently. If that makes sense.
Rob: Yeah. It’s easy when we’re here every seven days, it’s like how much can I get done, and talk about during that time? You’re always thinking, “Well, I got to talk about something,” but you can let yourself off the hook. So, good. That makes sense.
That was an aside, but I was thinking about that and listening to the last episode. I had said, “Hey, I’m going to ask you about this next time.” It truly was an accountability and has been. I’ve been trying to do that, so it’s good to hear it. So, cool. We’ll call that a win. I’ll obviously going to ask it again next time. It sounds like it’s working. Keep doing it, man. I’m totally rooting for you on that.
Then there’s the emails for podcast tour or to just go on podcast and those had started sending already. I believe you said you might’ve had one response or whatever. How’s all that going?
Mike: I scale that back a little bit because of the LinkedIn prospect that I was doing. I am starting to ramp that back up again. I’ve got a call next week with somebody. We’ll see what the schedule shakes out with. There’s a couple of others that I’m trying to figure out where on the schedule we can get together just because we’ve exchange calendars, go back and forth and stuff. That seems to be moving forward as well, but my list for that is much shorter as well. I don’t have 900 of them.
Rob: Yeah. If I were to choose between going on podcast and talking to customer prospects, guess which one I would do? It’s what you’re doing if one of those has to be scaled back. A podcast tour is a nice thing to do. I do feel like you could probably get it going at some point. As I said earlier, that’s not going to drive a bunch of customers. What’ll drive a bunch of customers is cold outreach, warm outreach, marketing funnels, and all the things we know about. I don’t have much of an issue with that.
I’m curious. I’m meant to ask when you were saying that some of the folks you’re talking to are interested. They’re either coming back on or they’re signing up. Why Bluetick? In their words. We’ve talked a lot about differentiation. I kept saying you either need a unique marketing channel. You need to rank number one in Google or you need to rank number one in some type of channel where you are capturing the customers.
Or you need to have this pretty unique selling proposition or a unique feature or some unique positioning when someone looks at your other nine or 109 competitors filling the space you’re in, that they say, “Wow, Bluetick is best at this and this is my need.” How do you differentiate? I’m curious what has come out of these conversations, if anything, that makes you think, “This is exactly why they’re signing up for Bluetick and not the other tools.”
Mike: I haven’t teased out some of the specifics of that. I’ve got some ideas. When people switch from other tools to Bluetick, most of the time it’s because they run into a problem that those tools aren’t very good at. Whether they can only have contact in one sequence at a time, or they’re missing emails because it relies on the Gmail API and it’s not checking the spam folder, or the notifications and stuff don’t get triggered.
I have direct access to the mailbox, so every email that comes in, I can process it versus years in Gmail API. You’re very dependent upon their scheduling on all of those things. Whereas Bluetick, it checks the mailbox every 10 minutes. And longer term, I have other plans to make that even faster, and reduce the process in time on my site.
That’s one of those things where I actively decided it’s good enough for now. It doesn’t need to be that good. Every 10 minutes is fine. There’s other ones out there, they take upwards an hour, or 6, or 12 hours. They get by, so what difference does it make? I’m already faster than that. It doesn’t make a difference.
I think one of the other things is that the workflow itself inside Bluetick, it’s weird because some people say it makes complete sense. Some people say, “I don’t understand this at all. I’d rather go use these other tools that work on the same way.”
Rob: Okay. I wonder long-term—I don’t think we’ve dived into this now—you’re saying you check more often. Is that right? Your data is more up-to-date or fresh? That’s a feature, not a benefit. I’m thinking, what’s the next thing on top of that? Is it like your data is always synced? Unlike other tools, you’re near real time acts. There’s a way to position it where Bluetick is the real neartime version that’s always accurate and everything you just listed. I don’t even remember. You were saying spam, trash, and folders. How does all that get combined into one or two bullets that are true benefits?
Mike: The benefit of it is if Bluetick sees the email, like a reply, it will pull the person out of the sequence. If there’s a delay, let’s say that there’s a four hour delay for some other tool, a reply can come in within that four hours. If the tool doesn’t see it, it can send out a follow-up. What happens is you receive an email that says, “Hey, you sent somebody an email replying to something.” Then they come back with an email and it says, “Hey. I haven’t heard back from you.” I’m just like, “I literally just sent you an email an hour or two ago. Why are you saying that you didn’t see it and that you haven’t heard back from me?” That’s the situation that you go in every 10 minutes […]
Rob: Yeah, that makes sense. It’s something we can look at and talk through in future episodes as you get more data. Something I wanted to touch on is the last episode, I asked about your motivation. I said, “How’s your motivation over the past six weeks?” You said, “It’s okay.” You said, “Sleep was fine but not great.” Then you started talking about front-end code. That’s what you launched into something like, “I get discouraged when I do that. Should I hire someone part time? I threw that out.” Has that come up again?
I get the feeling that if you get demotivated by thinking about front-end code, it takes a bunch of time. That’s something you naturally shy away from like a hot stove, even if it’s only your lizard brain and you’re not actively thinking or realizing that you’re shying away from that. Has that been an issue or are you so much in sales and marketing mode that it doesn’t matter because you’re really not building features right now?
Mike: I think it matters more when I run into problems with the front-end code. I’m struggling to get some of the CSS right or some of the pages to show up in a way that I want. I’ve kind of coached myself to be less anxious or particular about some of that stuff. It’s like, “This doesn’t look perfect but you know what? It works.” The interesting thing I also realized was that Bluetick works really well for the people who use it in the way that it’s supposed to be, which means that you’re not logging in into it very much, which is a really bizarre way to position your SaaS app.
Most of the time I think you want people to log into your app and use it as much as possible because you’re getting the most value out of it. Bluetick is actually the opposite where the less you login, the more value it could provide you because you got things automated and setup to run into the background. If something doesn’t look quite right or if there’s a dropdown that’s slightly on the wrong spot, it actually probably doesn’t matter nearly as much as I use to feel like it does.
As long as the data that you need shows up in the UI, that’s one of those that I kind of backed off and said that this doesn’t really matter as much. I agree there’s probably some of that that is influenced by the fact that I’m doing much more of the sales and marketing. Just showing the products to people and saying, “This is what it can do,” and less front-end development.
Rob: Right, cool. Other than that, how was your overall motivation? I think sleep ties into that. How was your sleep and your motivation? You sound up. You sound up to me. Last time, you didn’t. You sounded down. This is the roller coaster of entrepreneurship. That’s the beauty of doing this every month and two for months. Presumably, if you do these for years, you just see the ups and downs, and the ups and downs. Has that been reflected over the past six weeks? Or is it just the last week or few days that you felt that?
Mike: I felt really good for the past couple of weeks. Part of it could be just the result of getting past some of that front-end code. I had to redesign the UI. I put all the navigation at the top of the page. That was probably part of where my frustrations last time where coming from. I had to move everything and at the same time, not break all the code that was currently in place for it. It wasn’t quite as simple as I would’ve liked to move the navigation. Now that it’s done, I even enjoy going into the app more myself just because the navigation has been moved to the top. It’s easier to get around and less clicks to do different things. I definitely feel like that factors into it. Obviously, increasing MRR also helps. There’s that.
Rob: That’s a huge motivator and when things are going up in another right, you can put up with a lot of other stuff. That’s the mental battle.
Next, I’m curious about the sealed untestable .NET component. I’m curious on a couple of fronts because when I listen to backdoor conversations, we’ve gotten back and forth. I’ve been like, you should either do this and get it done. Don’t let it hang around. Either decide not to do it or decide to do it and do it soon. It sounds like it keeps you from building features that you need.
Then when I hear this update today where it’s like, “No, you’re selling. You’ve grown MRR substantially.” It makes me think, why are we even talking about this .NET component? Leave it and just keep going. Push it down the line. What’s your current thinking on it?
Mike: I feel the same way. I’ve gone back and forth on it a bunch of times. It’s like, “Do I really need to do that? Do I need to do it now?” The answer is, probably not. Do I want to because it’s technical debt that has been hanging over my head over for a while? It is distracting. I rather have it out of the way but at the same time it is a chunk of work to get done. It’s not stopping the product from doing what it does. I don’t know. I don’t have a great answer for you.
I think if I buckled down, just did it, knocked it out, and got it out of the way, I wouldn’t have to ever worry about it again. Or at least until other stuff happens. I do feel like I would probably have to address it in a semi near future if I’m starting to add in substantially larger accounts just because the back-end I don’t know.
I don’t know how far I can scale it up without adding more servers in which would mean that I need to reengineer how some of that stuff works. At that point, it would be a hornet’s nest to get into that code and start working with it, to try and separate it among multiple servers. I don’t know. I don’t have a great answer for you. I just don’t.
Rob: I don’t either, in this case. Given how limited you are, my bet is to leave it where it is, and sell. Revenue solves everything. In this case, profit really solves everything. In your case, just growing MRR, if you can keep doing that and focus 100% of your time on conversations, 100% of your time on selling, and grow another 50% over the next two months, technically that sucks. I hate it. It’s something you can circle back to.
I think the thing that I’m going to bust your chops about is when you get the point and you’re like, “I need to build these features in order to get these bigger customers on. I can’t because the sealed .NET component is keeping me from doing it. But I still don’t want to do it.” There’s going to come a time where you have to do this, I think. The technical debt is going to sink you, at least based on how you described it.
I think that’s in the bank of my mind of don’t worry about it until you need to. Once you do, buckle down and do it. In two or three weeks, it’s done. You know what I mean? Stop everything. That’s how performance used to go.
Like with Drip, you just don’t do much work on it because you’re cranking on features, you’re selling it, you’re marketing it, you’re doing this stuff, and you’re grow, grow, grow. Then you hit the point where it’s like, “Oh, no. The database is about to fall over.” Unfortunately, it was a fire drill and it was all hands on deck. We pulled people off features, we go and upgrade the database. We do a lot of stuff. It bought us about 4–6 months more. That’s not sustainable. You don’t want to grow a business long-term over that. About the time you’re at $1 million or 20 employees, it’s too much. It’s too jarring and you needed a better process.
But when you’re as early, as scrappy, and as agile as you are, and you’re just trying to get to default alive or you have enough money to basically buy out your own time, I think you just have to. That’s how you have to operate.
Mike: Yeah. I would love to have that off out of the back of my head. For now, I’m kicking it down the road even more.
Rob: Yup. I think when you get there, it would be amazing if you could hire someone to do it. If you could bring in high-end senior engineer, you just bite the bullet, and eat some money. You show him what it is, you say it needed to go from there to there, you write up the spec to tell him exactly how you’re going to do it, and again, it’ll cost you. It’s not a $10 an hour developer.
Mike: Yeah. I hate to interrupt you at that one. I don’t know if I could outsource that. The reason is because there’s a lot of domain knowledge that I acquired based on just having written different prototypes and doing different things that I think would be difficult for somebody else to have or acquire. I’m not saying they couldn’t come up with a plan that I could interject and say, “Hey, if you do it this way, these things are going to break.” I don’t know.
Rob: Yeah, I hear you. Said every developer ever, Mike. This is really hard to do. I know you have domain knowledge. I know it’s not easy. I just think it’s possible and something you should consider.
This is the same thing that I think we both thought about MicroConf, that we brought Zander on. I thought that about marketing before I met people who are way better in marketing than I was. I was like, “I’m the only one that knows how to market this product. All the copies are my own.” Then I’d meet someone and I’m like, “Well, they’re better at this.”
It’s not cut and dry. I don’t really think we should go down this road right now, but it’s something I just know that it’s going to derail you for probably a month if I were to guess. Maybe longer. If you’re going full speed with marketing and sales, and you really are landing customers and growing, it would be a shame for you to have just put the brakes on that and switch over.
Mike: The fortunate thing is I think the way things are, I think you’re right. I think there’s definitely ways for me to make that work. One of which is if I hand it over to somebody, the interesting thing in Bluetick is I have a flag in the database that says, “What version of the backend storage extension are you using? If it’s version one, use this code. If it’s version two, use this code.” I could switch on an individual mailbox level. I could just use my mailboxes like a test, switch it over, and then upgrade it.
If things are working great, I could roll it out slowly to other customers as opposed to doing everything all at once. That’s what the real kicker. It’s a critical core […]. I can do it individually. It took a while to get to that point.
Rob: I think that’s the way you do it. That’s the speed bump way of doing it versus the […] way. Cool. That’s good.
Someone wrote in and made a comment. They asked if you ever took the Enneagram? I sent you, just for the record, I went, and paid $12. I said, “Merry Christmas,” and sent you an email with the link. I’m curious if you took it.
Mike: Yeah. I saw that email and I’m like, “You bastard.” I have no way out of it.
Rob: Because you gave me crap the last time. I was like, “Look. I’ll pay for it Mike. Just take and bust chops, right?” and you’re like, “Oh. No, you won’t.” I was like, “Can I pay for this in advance?” This is the best.
Mike: Yeah, I saw that. I did spent the time. I went through and took it. It was interesting. It was definitely better than the previous time I took it where everything came out even. This time, it gave me a spread of the different types. One that came to the top with a score of 22 was Type 6, the loyalist. Then the next one, both of them was the score of 20, it was Type 9, the peacemaker and Type 1, the reformer.
I read through it. I actually thought it was interesting enough that I printed it out, and I’m going back through it and highlight different things. I felt like after reading through the results and the description of the things, I felt like it was pretty dead on.
Rob: That’s cool. What is a key motivation? You’re like a 6 with 9 or 6 with, what was the third one you said?
Mike: 6 with 9 and 1.
Rob: Yeah. I’m looking through this description. If you’re on a computer, you can just Google Enneagram Type 6 with Type 9 and it will give you a combined thing, like loyalist and peacemaker. Some 6s and 9s find it difficult to say what is actually on their minds. There is a great tendency in this relationship to clam up, to be silently stubborn, defensive, and to make the other person guess what’s going on.
The thing I like about the Enneagram is there’s some positive but they definitely talk about blindspots a lot. Potential trip spots or issues. It can callout things that I think it’s that know yourself and try to figure out how to be better for it. If you think it’s pretty accurate, are there things that you’re going to do or have started doing that you think can help overcome some of these?
Mike: That’s what I was looking at. That’s why I printed it out and I was going back through it. The printout of the results for me was about 20 pages. It’s because there’s the top level one, then there’s two that are tied for second.
Rob: Yeah. That makes it complicated.
Mike: It does make it a little bit more complicated. Then things dropped off after these top three. I have to go through it a little bit more. I plan on highlighting different things that stick out to me, that they resonate really well with me. I just haven’t done that yet.
Rob: Yeah, that’s cool. Do that because I’m curious. The whole point of this was when I took it, some people on a leadership team that I’m on took it, it really dead point out that some of them, they were a couple threes. That’s the achiever, the success-oriented, pragmatic type, driven, images-conscious, their motivation is to achieve. They’re probably never going to stop wanting to achieve. Whether it’s nature or nurture or it’s something their parents said or did to them when they were kids or whether it’s just genetics, that’s what they want.
It was interesting to work with them because I kind of don’t care about that. I don’t need to make a dent in the universe. My thing was creating, building, and doing interesting things. I can’t remember. I was trying to look through, find what my number is. I don’t have the report. My memory’s mind was like a creator. It was a creative type. You’re motivated by creating things, putting them into the world, and having people using them.
Of course, there’s a bunch of negatives to that, too. You can bee too introverted. I don’t know. There’s stuff. All that to say, that was once again a confirmation, it helped me know myself a little more like, “Yeah, that’s right. I do need to be creating things.” I am most excited when I am creating new things rather than taking a company from $5–$50 million. In my opinion, not creating very much. That tends to be the place I really get bored with it, so it’s good for me to know that.
Running things for the long term, building processes, and have them on a scale, I’m going to do the same thing for 5 or 10 years. I can exist in an org like that but I need to be a person that’s creating things. That was the whole point of, “Hey, have you thought about taking it? So you can learn a little bit more about what motivates you.” Really, the motivation you talked about was flexibility. You’re like, “I want the flexibility that entrepreneurship offers.” I’m concerned that that’s just not enough motivation to keep you going when times get really tough and when sleep gets hard.
Mike: Yeah. I think what I like the most about the Enneagram was that it talked about different levels of the personality types. Within the levels, it’s essentially how healthy you are as a person within that level. They say, “If you’re unhealthy, you could turn into this other personality type at this level.” Or, “If you’re healthy, you can turn into this other personality type at a certain level.” I thought that that was the most interesting piece to me.
Like I said, when I was reading through some of these things, it was shocking to me how dead on it was. I’ll read a very little excerpt here from the personality Type 6 where it says, “Sixes do their best to be solid and responsible, but they are often troubled by an undercurrent of doubt and anxiety. In fact, sixes often seem a bit jittery and uneasy in general. They live in a state of worry then find something to worry about.” I’m like, “Yeah, I kind of do that sometimes.”
Like I said, some things just jumped out of me. It’s like that totally describes me. Then there were other ones like, “Yeah. That’s not really me.”
Rob: Yeah, cool. I’m glad you did that. I hope you’ll look through it. Maybe come back through their findings in terms of things that you think might motivate you.
That kind of wraps us up for today. I think the one question that I would like to find out is your high and your low over the past six weeks. Your high sound like the fact that it’s growth. The cold outreach is working. What’s been the lowest point for you, where you felt most discouraged, the biggest loss or whatever?
Mike: I think that implementing the client site. Some of the client-side features that I was working on before which I finished probably shortly after our call was just the trouble I was having with reorganizing the navigation to help better support some of the multi-user functions that I’m adding. That was just a real nightmare. It sucks.
Rob: Discouraging and that was what you touched on last month as you were doing it.
Mike: Yeah, there was that. I think there was one feature that I wanted to get to this other feature to implement. It ended up taking longer to finish the client-side navigation changes. I implemented this feature that allows customers to skip sending emails on public holidays. Christmas, for example. There’s a toggle in there that just says, “Don’t send these emails during the holidays,” and that happens to be one of them. It’s shocking how simple that code was to write on the back-end, but it just took way longer than I wanted it to to get into the product. It didn’t get in until after Christmas, which I really wanted to get in there beforehand, but it is what it is.
Rob: Cool, man. Thanks again for coming back. We’ll circle up with you here in the next month or two.
Mike: Sounds good.
Rob: All right, take it easy.
Mike: All right, bye.
Rob: Thanks again to Mike for coming on the show. I always appreciate our conversations. If you have a question from Mike or for me or for prior guests or just in general, for the show, about startups, Star Wars, Dungeons and Dragons, leave us a voicemail at (888) 801-9690, or email us at questions@startupsfortherestofus.com.
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Episode 480 | Stairstepping Your Way to SaaS with Christopher Gimmer
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Show Notes
In this episode of Startups For The Rest Of Us, Rob talks with Christopher Gimmer of Snappa, about his journey to making SaaS his full-time income. He details how he stair-stepped his way from small apps and products to 7 figure SaaS.
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Rob: In this episode of Startups for the Rest of Us, I talk with Christopher Gimmer about stair-stepping your way to SaaS. This is Startups for the Rest of Us Episode 480.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing ambitious startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Chris Gimmer, we are here to share our experiences to help you avoid the mistakes we made.
Welcome back to the show. Thanks for joining me this week. Pretty interesting story this week, Christopher Gimmer did a talk at MicroConf Starter back in April. He and his co-founder really stair-stepped. They launched an app that had one-time sales, it was a marketplace. They grew that to where it plateaued which wasn’t enough they could live on, and they saw an opportunity and started a B2C type stock photo site. I guess it’s not B2C, but kind of B2b and used that to parlay into a SaaS app.
I don’t want to belabor it as we get into Chris’ entire experience in the interview. One thing I really liked about Chris’ story is that he and his co-founder learned small things first and they didn’t try to go play in the major leagues when they didn’t have the skills to do that. They went and they played little league, then they went and played highschool ball, then they played college ball, then they played minor leagues, and then they played major leagues, that is that repeatable meticulous disciplined way that I’ve always believed in starting startups.
It’s not trying to raise hundreds of millions and take this bid luckshot that you may or may not have the skills or the confidence or whatever to do, but after listening to Chris’ story, you know that even if he were to exit his company today that he has the skill set that he can take with him to the next thing and it becomes this repeatable startups, building real products, selling to real customers for real money. Without further ado, let’s dive into our conversation.
Christopher Gimmer, thank you so much for joining me on this show today.
Christopher: Thanks for having me.
Rob: We are here today to talk about Snappa. Your startup that’s at snappa.com and your headline is, “Create online graphics in a snap. Whip up graphics for social media, ads, blogs and more even if you are not a graphic designer.” You did a talk about nine months ago at MicroConf Starter and it was a really interesting tale of your journey with your co-founder across six or seven years, multiple apps to how you got to where you are today. You and I were just talking before with a call, that you expect to hit a million dollars in ARR in the next month or two. Congratulations on that.
Christopher: Thanks very much.
Rob: You guys launched Snappa in November of 2015. You had $4000 MRR at the end of the first month, is that right?
Christopher: Yeah, we have built up a bit of a list before we officially launched and we had a beta period, so we had an audience launch too. Within a month of launching, we did hit about $4000 in MRR.
Rob: Which is obviously good. We are going to dig into that in this episode of how you got there and how you parlayed and stair-stepped your way up multiple apps. It’s a pretty interesting story. By April of 2019 which is about nine months ago, you guys were about $62,000 MRR, that’s what you mentioned in the talk and then you are just about to hit the magic $83,333.33 and for those who wanted to know, that is one million ARR.
It sounds odd when you say it in MRR, but in ARR it’s so cool to say, “Yeah, I run a seven figure business.” You are looking forward to that day?
Christopher: Yeah. Marc (my co-founder) and I remember when we first started Snappa, we are like, “Man, if we could just get to $10,000 MRR, life would just be magical.” Obviously, you end up hitting that and then everyone just talks about the $1 million in ARR and the seven figure. Once we […] full-time on Snappa and we are making a living off it, that next yardstick is super arbitrary, but I love to get to that $1 million ARR. So, we’ll definitely celebrate when we hit it most likely next month.
Rob: That’s cool. Do you have plans of what you’ll do? Are you and your co-founder remote? Are you able to get together and have a glass of champagne together?
Christopher: We both live in Ottawa. We are pretty much like bestfriends so we hang out quite a bit. We might do something special, we haven’t planned exactly what yet, but we will definitely do something.
Rob: If there’s anything I’ve learned from my wife who is (for folks who do not know) Sherry Walling, she’s a psychologist and she works with founders is to celebrate those wins because they are (unfortunately) few and far between. There’s a lot more struggle than there is the wins and I have never been good at celebrating the wins. She has forced me to do it and I think it’s a good thing for everybody. Frankly, the win is not just you and your co-founder. It’s like taking your wife out to dinner or your fiancée out to a great dinner or a great trip.
That’s the thing, the whole family had to put up with me when I was growing up my app. I’m sure your girlfriend (now your fiancée) has had to put up with a lot of crap from you as well. I think we all deserve to have those wins when they come in.
Christopher: Yeah, definitely. She’ll be excited to hear that.
Rob: Yeah, totally. Something about your story lines up with both stair-stepping that I talk about a lot, but also this concept or quote that I keep throwing out of, “Doing things in public creates opportunity.” You went through multiple apps to get to where you are now. You had one in 2012 that is unrelated, but was it in 2013 where you launched BootstrapBay?
Christopher: It was 2014.
Rob: That was a theme marketplace for bootstrap which is a CSS Framework. Tell me about how you guys thought what the goal was there in launching that. Was it, “We want to launch a business. Very much the dream of us is to get to the point where it’s supporting us full-time”?
Christopher: Yeah, that was definitely the goal of BootstrapBay. Marc and I were actually both working in the government. That’s how we met and it was funny because we were two of the youngest guys in the office. Naturally, we just started hanging out and became friends.
One day, Marc pulled me into his office and he was like, “I want to show you something.” It was almost a Zillow type of website, like a real estate website, and I was like, “Wow, you can actually program.” I had no idea because he was doing something not related at work. That kicked off the journey of me and him just trying to figure stuff out and see if we can launch a business that could enable to support our jobs.
The goal of BootstrapBay was something that we could do while we are still working in our jobs full-time and hopefully the idea was we can make enough money from it so that we can quit and go full-time on it. It wasn’t necessarily a project that we are super passionate about and that we were planning on running for the next 10 or 20 years.
Rob: That’s interesting. Why start it as a marketplace where you have to essentially get buyers and sellers rather than build out a bunch of your themes and sell them. You are basically a digital product company instead of a marketplace.
Christopher: Essentially, funnily enough we started reading about keyword research and SEO. Initially, we are actually looking for things that we can draw up […] or whatever. Marc stumbled across this bootstrap themes and bootstrap templates as a keyword that was getting a lot of search volume. At the time didn’t have crazy competition like ThemeForest, then you can have its own own bootstrap category. There was one major market place at that time which is called WrapBootstrap. I think it’s still really big today. For a variety of reasons and being super naive, we thought we could build something better than this.
In order to exceed the market place, Marc designed the first three or four themes. But we just thought it would be more scalable if we were able to get other theme authors on board and add more supply to the market place than we could generate on our own. That’s how it happened.
Rob: Was BootstrapBay a successful business? Can you give us an idea of how much revenue it brought in for you?
Christopher: The peak month was during about $8000 to $10,000. Once we paid out all the theme authors, I think we are profiting maybe $4000 or something. It was maybe a decent side hustle business, but we essentially got to the point where we are having trouble growing strictly through our SEO because our margins and lifetime value wasn’t high enough. We just couldn’t put any money into paid ads. We just started plateauing after a bout a year. We knew it was going to be an uphill battle from there which was why we started thinking about other stuff that we can launch.
Rob: No recurring revenue and the funnel is only so wide. There’s only so many people searching for bootstrap themes.
Christopher: The other problem was (like I mentioned) being the top marketplace and as you know, […] and it was something I learned after the fact is when you are the dominant marketplace and you got the first […] advantage, it was just so hard to unsee them, so we were ranking number two or three and the number one guy was just cleaning up. We knew it was going to be a really tough battle. One that we really didn’t want to keep fighting.
Rob: As you said, a nice side hustle because obviously $4000 a month is nothing to sneeze at. I have this concept of four competitive advantages when you launch a SaaS app. One is who you know, so it’s your network. The second is who knows you, so it’s your audience. The third is being early to a space, say Josh with Barametrics was early. In this case you guys were early. You were able to get in. You weren’t the first, but you were early enough that you were able to get in. Can you imagine launching a bootstrap themes marketplace now?
Christopher: It would be really difficult. We were even too late, but we were still early enough where the really big players hadn’t specifically focused on it. If we were to do that today, there’s no way we would have gotten any traction at all, quite frankly.
Rob: Yeah, It’ll be painful. You plateaued with that business and I think of it as a step one if I were to overlay this stair-step approach in bootstrapping. It was a nice step one on business. It brought in non recurring revenue. It brought in enough money that it made it worthwhile and it was a success. You gained experience, probably gained confidence in your skills both you and your co-founder.
You had a little bit of audience, I’ll say. Not audience in the blog or podcast type where people are looking at you as a personal brand but audience in the sense of traffic. You just had a lot of traffic coming in. Then you built out your SEO and your content skill set. You went from there and you started a StockSnap, stocksnap.io. Can you tell us about the unique opportunity you almost stumbled upon that led you from BootstrapBay to StockSnap?
Christopher: One of the ways we ended up growing BootstrapBay was primarily through content marketing and SEO. We ended up writing a blogpost about where to find free stock photos. This is when a lot of these really new creative comments started popping up like on […] today are really big. So when we had written that blogpost of where to get free stock photos, we started sharing it around Reddit, social media and whatnot. Out of all places, it went viral on StumbleUpon which I don’t even know if that site still exists today.
Next thing you know, we start ranking on the first page of Google for free stock photos. I figured it out at some point that would die off, but the traffic just kept increasing month over month. We were in this interesting position where we are getting so much traffic with just this one blogpost and we looked at all the websites that were linking to at the time and we noticed—again this is in the early days—that none of them had search functionality. A lot of them were releasing 10 new photos every 10 days or something to that effect. We thought, “Why don’t we just create our own stock photo site that you can actually search?”
Marc went ahead and I think it took them about three months and he ended up building what became StockSnap. Of course because we have all of that traffic coming to the blogpost, we just linked to ourselves as source and the next thing you know, we started getting a bunch of traffic to stocksnap.io.
Rob: At that point, were you thinking, “We want to start another business. BookstrapBay has plateaued and we are going to autopilot it. If we launch StockSnap, we are going to turn that into a business”? Or was it just a fun larch that you went, “Hey, I got all this traffic might as well put a website up”?
Christopher: Yes, that was the thinking. At this point, BootstrapBay was plateauing. We knew that it wasn’t going to be the business that would enable us to quit our jobs and everything. We just saw this opportunity and we knew that a free stock photo site is just something that is always going to have value. We just saw it as an opportunity that is like, “Hey, if we build this up now and we start getting a lot of traffic to this website, we will almost certainly be able to either monetize the website itself through ads or use that as a springboard to launch some other app down the road.”
To be honest, we started thinking about SaaS at that point and I had this idea in the back of my head for this graphic design tool for marketers or entrepreneurs, if you will, because I was always struggling to put these images together whenever I needed to add a featured image to whatever blogspot. That was the thinking of, “We are getting all this traffic to the blog post. Why not divert some of it to one of our properties which could be very valuable to us down the line?”
Rob: That makes sense. Did you wind up making revenue from StockSnap?
Christopher: Yes. After we launched StockSnap, like I said at that point we really started exploring the idea of a SaaS app which obviously became Snappa. I think we had one […] ad placement or something like that, which was bringing in maybe $1000 or $2000 a month in advertising, but almost from the start, we started using StockSnap as a way of promoting Snappa as opposed to really trying to monetize the website as much as we can.
Rob: That makes sense. With BootstrapBay and StockSnap, obviously people know the end result that you started Snappa […]. Do you still own those other properties or did you exit from them?
Christopher: We ended up selling them off. StockSnap was a bit of a more difficult decision in the sense that it’s still bringing in quite a bit of traffic, but when we first launched Snappa, probably 80% or maybe 90% of our leads were coming in from StockSnap whereas by the time we sold it, I think it only made up 10% or 15% of our leads because we had really built up our content and SEO and word of mouth. At that point, we decided that it just makes much more sense to put a bunch of cash in our bank account and focus on one thing as opposed to trying to maintain two separate properties.
Rob: That makes sense and by that time you had a SaaS app that you are focused on which we know takes a lot of attention. I’m curious. We glossed over several years of work here. We almost made it sound easy, like you stumbled into this thing and you ranked number one in Google for this free stock photos, which is very hard to do. In my experience, this kind of stuff is a grind, especially when you are learning it from scratch. Learning SEO to get as good as you guys are as well as content side of things, that’s really what your wheelhouse has become, is this social promotion of getting organic traffic for high competition terms.
How long did that take you to learn and did you feel like it was something where you are just grinding it out, not getting results for a while and it suddenly clicked? Or what is that process like?
Christopher: As you mentioned at the top of the interview, the first thing we ever launched back in 2012 was actually a […] website. Without going to much into it, that was basically a year of work that was not successful ultimately. Then there is actually another app in 2013 which didn’t go anywhere. There is basically two years that we are working on stuff and we got absolutely nowhere. I think a lot of people might have just given up at that point. So before BootstrapBay is when I realized I don’t know what I’m doing regards to marketing and I just read tons of blogpost and listened to tons of podcasts and videos.
At least with BootstrapBay at that point, I had built up some knowledge in terms of how to do it, but obviously you have to put that practice into motion. But even with BootstrapBay, the first three or four months, as you know SEO takes a long time. It was a lot of trial and error. A lot of blogpost didn’t end up working out, but the more you try and the more content you put out there, you start to realize what works and you get a little bit of process and a little bit of formula going.
I would say about six month to a year into it, at least in BootstrapBay we started figuring out the content side of things. With that being said, we did plateau and what was the next frustrating thing was we are a year into this business, it’s still spinning off a couple of thousand for the both of us. How are we going to get to that next level? At that time, we didn’t know that everything will work out, but we start questioning, “Is it worth it? Should we really be spending our nights and weekends trying to get this going?” We just have to persevere.
Rob: That’s what I like about your story is you really didn’t have these marketing skills and you went out and through founder forum you just learned things that were probably difficult trial and error. You grounded out and you start this site and it’s in a small niche. I’ll say bootstrap is not the most massive niche in the world and you learned the skill set in a less competitive space.
You didn’t start an ESP. You didn’t start a CRM. You didn’t start some massive SaaS app as your first effort. You started a couple of small things, BootstrapBay gets some traction, then you learned SEO and content really well, and then StockPhotos is one level harder than that. The Snappa stuff is still on the same boat, but it’s a very wide funnel, and if you didn’t have the four or five years of learning before that, starting Snappa would have been really hard without the skills. Do you think you could have even succeeded without the knowledge you have gained from the other failed and successful efforts?
Christopher: I think there’s two things that made Snappa successful. Number one was everything that you alluded to. The first couple of things that we launched, we just didn’t really know what we are doing. It took awhile to really learn those content and SEO skills and how to get traction. Just how to actually grow a software application or any kind of website to be frank.
The second thing that made it possible was having that existing funnel of traffic through StockSnap. As you know, the lower the price point, the more customers you need to make an app sustainable. It would have been extremely difficult if day one of launching Snappa we have no existing list or no existing user base that we can tap into to kind of get that going. That’s really why we were able to get up to $4000 MRR just after a month, because we had all of that list and that user base built up already.
Rob: Talk to me then about Snappa. You mentioned in your MicroConf talk, I remember you mentioned it. You built it to solve a problem that you yourself were facing. What was that problem?
Christopher: As you mentioned, I was doing a lot of content marketing for BootstrapBay. For each blog post, we need to create a featured image, and also some images within the content itself. I was doing a lot of this stuff and Photoshop. We didn’t really have the money at the time to hire a designer. Mark was pretty good with Photoshop, but he’s working on development which is more of a top priority.
I just thought, “Man, it would be nice if there was a tool that just made a lot of this easier.” When I did some brief market research at that time, I found that the tools are either too simplistic—it was essentially a code generator—or they were still too complicated. I thought there was a need to create something that was kind of in the middle where it was still super easy to use but still not overly complicated, that really anyone can just pick up and use it.
Rob: Talk me through the customer development you did to validate that, because there’s the old adage, “You should build stuff for yourself, solve a problem you have,” but I always caveat that with, “Yeah, but make sure other people have it, too, and make sure they’re willing to pay for that.” How did you do those things?
Christopher: Because we had StockSnap, we had an email list of people. The first thing that I did was email our list and just asked what they were using their stock photos for. As I kind of expected, a good percentage of those were using it for either social media or content marketing, which was kind of our target audience or what we thought would be our target audience.
For the people that did answer saying that they were using it for content and social media, I asked if anyone would be willing to hop on at 10-15 minute call just to learn about how they’re using the software, those and whatnot.
I ended up getting a call with (I think) around 15-20 people in the end. I was just asking them questions about exactly what they’re using the photos for and then going a step further in terms of what tools they were currently using to create graphics, what their process was like, who’s involved with that process, and taking a lot of the questions that I learned from the Lean Customer Development book.
The number one takeaway from that book is basically not to ask leading questions. I never once asked, “Hey, this is what I’m building, do you think this is a good idea?” or any kind of those leading questions. I was essentially trying to see if they would mention (without me poking them) whether or not they had pain points with the existing solutions.
After about 15-20 of those calls, a lot of people did mention or said things like, “Yeah, right now I’m using Photoshop and it’s a huge pain and takes too much time,” or, “Yeah, I tried this app out, but it’s not really that great,” or, “Yeah, we use an in-house graphic designer, but the turnaround time is sometimes 2-3 days. I wish I can just do it myself.”
When I heard enough of those kinds of comments, it gave us enough confidence to at least go ahead and start building some sort of MVP for Snappa.
Rob: Super cool. Mark is a developer. Did he just sit down and start hacking it out?
Christopher: Yeah, that was pretty much it. Like I said, we’ve built things in the past that didn’t really work out. We wanted to make sure that there is going to be a market for this because this is by far going to be the biggest and most complicated thing that he’s ever built. We wanted to really make sure that this could be a viable business. Once we had that validation, then Mark went ahead and just locked himself in the basement and started hacking away.
Rob: It feels like the story kind of writes itself from there. You have a lot of SEO and content skills. You applied that, you cross promoted from StockSnap, you had this existing audience, existing traffic sources that you then promoted in order to grow Snappa. I am curious. A couple of things, a couple of questions that I want to touch on before we wrap. One is, early on you said, “When we first started talking about building an app, we said, ‘Wouldn’t it be magical to hit $10,000?’” Was it magical when you hit $10,000?
Christopher: Yeah, it was actually. I don’t remember if it was exactly $10,000 but it was magical the moment that we knew that this was going to sustain us. We didn’t have to go back to our jobs, the business has legs. At some point, we would be able to probably hire more team members just to know that we had done it. It had taken us, like I said, the first thing we had launched in 2012. This is several years in the making. It truly did feel magical and we still feel very fortunate today that we’re able to do this.
Rob: Yeah, I agree. How large is your team at this point?
Christopher: Now we have four full-time team members and they’re awesome. Another thing that I really didn’t anticipate was how much more fun it is working with a team. We’re really fortunate to have such awesome people working with us at this point. We have four full-time and then we also work with a couple like freelancers and writers and stuff like that.
Rob: That’s good, that’s a pretty capital-efficient business to only have four folks working on it. Another question for you is your price points. On an annual basis, you’re $10 and $20 a month on a monthly basis, you’re $15 and $30. When I see an app like that, I think ouch. You’re probably going to have (just from the outside, I don’t know all your numbers) high churn, I would expect a low average revenue per user, which means you’re pretty limited in how you can market like you’re not going to run AdWords as an example because you don’t have the lifetime value. How has that been? Am I relatively on the mark? How has that been for you guys?
Christopher: Well, 100% you’re definitely on the mark. As you can imagine, we have probably higher churn than some of the other apps or founders that you’ve had on the show and that just goes with the territory of the low price point. That’s always been a challenge and enough reason why we had to get really good in organic (in particular) and why we focus a lot of time and effort on content marketing and SEO.
At this point, we don’t do any paid advertising whatsoever. We really do rely on word of mouth, SEO, and content, just giving a really good experience so that people talk about us. We get mentioned in blog posts and just have a sustainable and repeatable way of acquiring users.
One thing that’s interesting, though, that maybe not a lot of people think about is I think you had the founder of, was it Userlist that you had? That you were talking to a couple…
Rob: Jane Portman?
Christopher: Yeah. It was funny because I remember she was talking about how it’s difficult to get people to either try the app or switch to Userlist. I think on one hand, it’s really nice to have a low churn app, because once they kind of get in, usually they stick around and maybe it’s easier to build a sustainable business that way. But on the other hand with an app like Snappa, we’re premium, you can try it out, and really within a couple of minutes of even trying out Snappa, you’re going to know whether it’s going to provide value to you. The flip side of high churn is that our activation rates and the top of the funnel converts super well. That’s one thing that maybe some people don’t consider with these types of apps.
Rob: Yeah, there’s almost no switching cost. It’s just learning which buttons to click, but they don’t have to migrate stuff over. I agree, I think that’s a real advantage to it and I think longer term, I think an app like a Userlist or my experiences with Drip was, there was a lot of switching cost. It was harder to get people in. The churn was really low once they got in, but you’re right, the growth was tough. The growth was hard fought, but once you got that growth, it was there. It was locked in.
I think that’s where it cuts two ways. At Snappa, your funnel is so much wider. The number of people that visit your website, the number of people that sign up for a trial, and the number of people that probably start paying you is astronomically higher than what we had at Drip, as an example. I think that that is a unique advantage especially when your skill set is SEO and content, which tend to be wide funnel things. Not always, but especially in these spaces, you’ve been playing deliberately, these are wide funnels. That allows you to have this low price point and it allows you to not need to run ads but still grow business to seven figures.
Christopher: Yeah, I’d say that’s super accurate. Don’t get me wrong with low churns to go along with what we have. You learn that the market that you choose (to some extent) controls how high a churn’s going to be and that kind of stuff. We’ve learned to just embrace and accept it, and just stick to our lane, so to speak.
Rob: Yeah, it makes sense. I’m going to assume that if we look back, let’s say over the past year or even I guess ahead two months, you’re about to hit $1 million in ARR and I’m going to assume that that might be the high point of the year in terms of the business. What was a low point or the hardest part about the past year? A specific time that you felt like you were really grinding it out.
Christopher: I would say the last year. There wasn’t too much low point, but in 2018, I think it was around 2018, growth is really slow and we’re ready to start to plateau. At that point, we had, I don’t know if it was a combination of shiny object syndrome or we were so scared of competition because there’s actually quite a bit of competition in our space and we have a lot of really well-funded competitors.
We went down this rabbit hole of, we need to find a new business or we need to find another route because at some point, we’re just going to plateau and we’re not going to grow. I think we really took our eye off the prize, so to speak. That was a really tough year just seeing growth plateauing a little bit, trying to get these other projects and spinning our wheels there. I think that was tough.
In 2019 funny enough, we realized, “Hey, we’re in a really good position. We have this app.” I almost felt like we were taking it for granted or we realized that we were taking it for granted, so we said, “We’re not going to start any new side projects. We’re going to buckle down, we’re going to figure out how to get growth back on track.” We really focused back on the business and we promised ourselves that we would never consider launching another project until we hit $1 million ARR. It’s funny how that worked out.
Rob: Yeah, that makes sense, just refocusing. That’s the thing, these founder stories are almost never straight lines. It’s very, very rare. You hear the myth of people starting whatever, Uber, Facebook, Lyft, these big companies and they do a lot of side projects, there was a lot of uncertainty, and I think our stories in our own ecosystem are very similar where you often have multiple projects going at once. You don’t really know which one’s going to succeed often and you’re just trying to figure it out as you go.
I think the last question before we wrap is, you mentioned something to me about a pricing experiment that you ran, that goes against that “charge more” idea. As I said, when we talked about it, well yeah, you can always charge more until you can’t, or until people aren’t willing to pay that. There’s always a ceiling to this stuff. Talk us through what you did with your annual and your monthly pricing, and how that worked out.
Christopher: I’ve obviously been to a few MicroConfs now and one of our recurring themes is always to charge more. I’ve just always been really scared to do that again, especially because we’re serving the lower end of the SMB market. We’re in a really competitive space, but I thought, whatever. There’s enough people telling me to just charge more. We’ll go ahead and run the experiment.
What we did was we kept our annual price the same which is $120 a year for the program and then we bumped up the price of the monthly prescription from $15 to $19 a month. We were thinking more people and to send the annual plan which would obviously help out with the churn. Assuming that our conversion stay relatively the same because we’re getting the $19 a month price point even if the churn is a bit higher, all in all it should work out.
After running that—we ran it for a couple months—we realized pretty quickly that the churn had just spiked up way too high for our comfort, and the conversion rates had actually dropped more than we had anticipated. We ended up reverting back to the pricing.
I’m glad that we ran the experiment because at least now we can put that to rest, but it was just more proof that charge more, or charge less, or whatever isn’t always the best advice. It’s really a case-by-case basis, and that it just depends on a variety of factors really.
Rob: Sure. Charge more is a really great advice if you’ve never heard it before, because most people tend to charge too little when they launch. Most of us think our apps are not worth what they actually are. It’s definitely good advice. But obviously, the further you get in, if you’ve experimented, if you know your customers, there’s a certain point where pricing elasticity may or may not be there, and you’re also in a pretty price-sensitive space. You’re in a prosumer, I’d like to think one notch above consumers, so there’s going to be price sensitivity there.
The lesson I take away from it is: (a) experiment because now you know. You don’t have to think about it every month, every week, “Should I be charging more?” and, (b) you were scared to do it, but you did it anyway, and it sounds like it was a relatively easy experiment to undo which are the best. You just revert back. You just change the pricing back. Now, you have one cohort of people or something who are paying a little less I’d imagine, but that’s a small price to pay to have the knowledge that you probably are towards the top of your range right now.
Christopher: Yeah, for sure. The way that we did it was basically any new customers, they would see that new price point, and then once we reverted back, if there were any customers that were on that $19 a month plan, we just put them back on that $15 month. Now there’s no one on that increased price. It was a relatively safe way to do it and obviously, there’s no backlash as a result.
Rob: Yeah, that makes sense. I said people paying less at the pricing reverse, but whatever. Cool. We’re going to wrap up. If folks want to check out Snappa, it’s at snappa.com just like it sounds. You are @cgimmer on Twitter. Any place else folks should check out?
Christopher: That’s about it. I’m trying to make an effort to do more blogging on my personal site this year chrisgimmer.com. There’s only a few posts on there. Twitter is probably the best place for now.
Rob: Aren’t we all trying to blog a little more? I say that every year. It’s just so hard to find the time to write.
Christopher: Yeah. Essentially, my goal for this year is one post a month which I think is super reasonable and I think I’ll be able to hold myself to that and then we’ll see how that goes.
Rob: Sounds good man. Thanks again for coming on the show.
Christopher: My pleasure. I’m a huge fan of the podcast, so I’m happy to be on here.
Rob: Awesome. Thanks again to Chris for coming on the show. If you have a question, if you’re curious about part of Chris’s story, if you have questions about SEO or content marketing, feel free to either tweet me @robwalling or send them into questions@startupsfortherestofus.com. If I get questions, I might invite Chris back on the show to share some of the skills, because he has hard technical skills in this SEO and content space, and he’s done a lot to grow. This business has really wide funnels and has a lot of knowledge there. If you want to hear more about that, I’m happy to have another conversation with Chris.
You can also leave me a voicemail at (888) 801-9690 or just email that question to our email address and attach a file via Dropbox or Google Drive. This podcast’s theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us by searching for Startups and we would love a 5-star review in whatever pod catcher you use. If you want a full transcript to this episode, wait a couple of days after it goes live then head to startupsfortherestofus.com, full, searchable transcripts of every episode. Thank you for listening. I’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing ambitious startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Chris Gimmer, we are here to share our experiences to help you avoid the mistakes we made.
Welcome back to the show. Thanks for joining me this week. Pretty interesting story this week, Christopher Gimmer did a talk at MicroConf Starter back in April. He and his co-founder really stair-stepped. They launched an app that had one-time sales, it was a marketplace. They grew that to where it plateaued which wasn’t enough they could live on, and they saw an opportunity and started a B2C type stock photo site. I guess it’s not B2C, but kind of B2b and used that to parlay into a SaaS app.
I don’t want to belabor it as we get into Chris’ entire experience in the interview. One thing I really liked about Chris’ story is that he and his co-founder learned small things first and they didn’t try to go play in the major leagues when they didn’t have the skills to do that. They went and they played little league, then they went and played highschool ball, then they played college ball, then they played minor leagues, and then they played major leagues, that is that repeatable meticulous disciplined way that I’ve always believed in starting startups.
It’s not trying to raise hundreds of millions and take this bid luckshot that you may or may not have the skills or the confidence or whatever to do, but after listening to Chris’ story, you know that even if he were to exit his company today that he has the skill set that he can take with him to the next thing and it becomes this repeatable startups, building real products, selling to real customers for real money. Without further ado, let’s dive into our conversation.
Christopher Gimmer, thank you so much for joining me on this show today.
Christopher: Thanks for having me.
Rob: We are here today to talk about Snappa. Your startup that’s at snappa.com and your headline is, “Create online graphics in a snap. Whip up graphics for social media, ads, blogs and more even if you are not a graphic designer.” You did a talk about nine months ago at MicroConf Starter and it was a really interesting tale of your journey with your co-founder across six or seven years, multiple apps to how you got to where you are today. You and I were just talking before with a call, that you expect to hit a million dollars in ARR in the next month or two. Congratulations on that.
Christopher: Thanks very much.
Rob: You guys launched Snappa in November of 2015. You had $4000 MRR at the end of the first month, is that right?
Christopher: Yeah, we have built up a bit of a list before we officially launched and we had a beta period, so we had an audience launch too. Within a month of launching, we did hit about $4000 in MRR.
Rob: Which is obviously good. We are going to dig into that in this episode of how you got there and how you parlayed and stair-stepped your way up multiple apps. It’s a pretty interesting story. By April of 2019 which is about nine months ago, you guys were about $62,000 MRR, that’s what you mentioned in the talk and then you are just about to hit the magic $83,333.33 and for those who wanted to know, that is one million ARR.
It sounds odd when you say it in MRR, but in ARR it’s so cool to say, “Yeah, I run a seven figure business.” You are looking forward to that day?
Christopher: Yeah. Marc (my co-founder) and I remember when we first started Snappa, we are like, “Man, if we could just get to $10,000 MRR, life would just be magical.” Obviously, you end up hitting that and then everyone just talks about the $1 million in ARR and the seven figure. Once we […] full-time on Snappa and we are making a living off it, that next yardstick is super arbitrary, but I love to get to that $1 million ARR. So, we’ll definitely celebrate when we hit it most likely next month.
Rob: That’s cool. Do you have plans of what you’ll do? Are you and your co-founder remote? Are you able to get together and have a glass of champagne together?
Christopher: We both live in Ottawa. We are pretty much like bestfriends so we hang out quite a bit. We might do something special, we haven’t planned exactly what yet, but we will definitely do something.
Rob: If there’s anything I’ve learned from my wife who is (for folks who do not know) Sherry Walling, she’s a psychologist and she works with founders is to celebrate those wins because they are (unfortunately) few and far between. There’s a lot more struggle than there is the wins and I have never been good at celebrating the wins. She has forced me to do it and I think it’s a good thing for everybody. Frankly, the win is not just you and your co-founder. It’s like taking your wife out to dinner or your fiancée out to a great dinner or a great trip.
That’s the thing, the whole family had to put up with me when I was growing up my app. I’m sure your girlfriend (now your fiancée) has had to put up with a lot of crap from you as well. I think we all deserve to have those wins when they come in.
Christopher: Yeah, definitely. She’ll be excited to hear that.
Rob: Yeah, totally. Something about your story lines up with both stair-stepping that I talk about a lot, but also this concept or quote that I keep throwing out of, “Doing things in public creates opportunity.” You went through multiple apps to get to where you are now. You had one in 2012 that is unrelated, but was it in 2013 where you launched BootstrapBay?
Christopher: It was 2014.
Rob: That was a theme marketplace for bootstrap which is a CSS Framework. Tell me about how you guys thought what the goal was there in launching that. Was it, “We want to launch a business. Very much the dream of us is to get to the point where it’s supporting us full-time”?
Christopher: Yeah, that was definitely the goal of BootstrapBay. Marc and I were actually both working in the government. That’s how we met and it was funny because we were two of the youngest guys in the office. Naturally, we just started hanging out and became friends.
One day, Marc pulled me into his office and he was like, “I want to show you something.” It was almost a Zillow type of website, like a real estate website, and I was like, “Wow, you can actually program.” I had no idea because he was doing something not related at work. That kicked off the journey of me and him just trying to figure stuff out and see if we can launch a business that could enable to support our jobs.
The goal of BootstrapBay was something that we could do while we are still working in our jobs full-time and hopefully the idea was we can make enough money from it so that we can quit and go full-time on it. It wasn’t necessarily a project that we are super passionate about and that we were planning on running for the next 10 or 20 years.
Rob: That’s interesting. Why start it as a marketplace where you have to essentially get buyers and sellers rather than build out a bunch of your themes and sell them. You are basically a digital product company instead of a marketplace.
Christopher: Essentially, funnily enough we started reading about keyword research and SEO. Initially, we are actually looking for things that we can draw up […] or whatever. Marc stumbled across this bootstrap themes and bootstrap templates as a keyword that was getting a lot of search volume. At the time didn’t have crazy competition like ThemeForest, then you can have its own own bootstrap category. There was one major market place at that time which is called WrapBootstrap. I think it’s still really big today. For a variety of reasons and being super naive, we thought we could build something better than this.
In order to exceed the market place, Marc designed the first three or four themes. But we just thought it would be more scalable if we were able to get other theme authors on board and add more supply to the market place than we could generate on our own. That’s how it happened.
Rob: Was BootstrapBay a successful business? Can you give us an idea of how much revenue it brought in for you?
Christopher: The peak month was during about $8000 to $10,000. Once we paid out all the theme authors, I think we are profiting maybe $4000 or something. It was maybe a decent side hustle business, but we essentially got to the point where we are having trouble growing strictly through our SEO because our margins and lifetime value wasn’t high enough. We just couldn’t put any money into paid ads. We just started plateauing after a bout a year. We knew it was going to be an uphill battle from there which was why we started thinking about other stuff that we can launch.
Rob: No recurring revenue and the funnel is only so wide. There’s only so many people searching for bootstrap themes.
Christopher: The other problem was (like I mentioned) being the top marketplace and as you know, […] and it was something I learned after the fact is when you are the dominant marketplace and you got the first […] advantage, it was just so hard to unsee them, so we were ranking number two or three and the number one guy was just cleaning up. We knew it was going to be a really tough battle. One that we really didn’t want to keep fighting.
Rob: As you said, a nice side hustle because obviously $4000 a month is nothing to sneeze at. I have this concept of four competitive advantages when you launch a SaaS app. One is who you know, so it’s your network. The second is who knows you, so it’s your audience. The third is being early to a space, say Josh with Barametrics was early. In this case you guys were early. You were able to get in. You weren’t the first, but you were early enough that you were able to get in. Can you imagine launching a bootstrap themes marketplace now?
Christopher: It would be really difficult. We were even too late, but we were still early enough where the really big players hadn’t specifically focused on it. If we were to do that today, there’s no way we would have gotten any traction at all, quite frankly.
Rob: Yeah, It’ll be painful. You plateaued with that business and I think of it as a step one if I were to overlay this stair-step approach in bootstrapping. It was a nice step one on business. It brought in non recurring revenue. It brought in enough money that it made it worthwhile and it was a success. You gained experience, probably gained confidence in your skills both you and your co-founder.
You had a little bit of audience, I’ll say. Not audience in the blog or podcast type where people are looking at you as a personal brand but audience in the sense of traffic. You just had a lot of traffic coming in. Then you built out your SEO and your content skill set. You went from there and you started a StockSnap, stocksnap.io. Can you tell us about the unique opportunity you almost stumbled upon that led you from BootstrapBay to StockSnap?
Christopher: One of the ways we ended up growing BootstrapBay was primarily through content marketing and SEO. We ended up writing a blogpost about where to find free stock photos. This is when a lot of these really new creative comments started popping up like on […] today are really big. So when we had written that blogpost of where to get free stock photos, we started sharing it around Reddit, social media and whatnot. Out of all places, it went viral on StumbleUpon which I don’t even know if that site still exists today.
Next thing you know, we start ranking on the first page of Google for free stock photos. I figured it out at some point that would die off, but the traffic just kept increasing month over month. We were in this interesting position where we are getting so much traffic with just this one blogpost and we looked at all the websites that were linking to at the time and we noticed—again this is in the early days—that none of them had search functionality. A lot of them were releasing 10 new photos every 10 days or something to that effect. We thought, “Why don’t we just create our own stock photo site that you can actually search?”
Marc went ahead and I think it took them about three months and he ended up building what became StockSnap. Of course because we have all of that traffic coming to the blogpost, we just linked to ourselves as source and the next thing you know, we started getting a bunch of traffic to stocksnap.io.
Rob: At that point, were you thinking, “We want to start another business. BookstrapBay has plateaued and we are going to autopilot it. If we launch StockSnap, we are going to turn that into a business”? Or was it just a fun larch that you went, “Hey, I got all this traffic might as well put a website up”?
Christopher: Yes, that was the thinking. At this point, BootstrapBay was plateauing. We knew that it wasn’t going to be the business that would enable us to quit our jobs and everything. We just saw this opportunity and we knew that a free stock photo site is just something that is always going to have value. We just saw it as an opportunity that is like, “Hey, if we build this up now and we start getting a lot of traffic to this website, we will almost certainly be able to either monetize the website itself through ads or use that as a springboard to launch some other app down the road.”
To be honest, we started thinking about SaaS at that point and I had this idea in the back of my head for this graphic design tool for marketers or entrepreneurs, if you will, because I was always struggling to put these images together whenever I needed to add a featured image to whatever blogspot. That was the thinking of, “We are getting all this traffic to the blog post. Why not divert some of it to one of our properties which could be very valuable to us down the line?”
Rob: That makes sense. Did you wind up making revenue from StockSnap?
Christopher: Yes. After we launched StockSnap, like I said at that point we really started exploring the idea of a SaaS app which obviously became Snappa. I think we had one […] ad placement or something like that, which was bringing in maybe $1000 or $2000 a month in advertising, but almost from the start, we started using StockSnap as a way of promoting Snappa as opposed to really trying to monetize the website as much as we can.
Rob: That makes sense. With BootstrapBay and StockSnap, obviously people know the end result that you started Snappa […]. Do you still own those other properties or did you exit from them?
Christopher: We ended up selling them off. StockSnap was a bit of a more difficult decision in the sense that it’s still bringing in quite a bit of traffic, but when we first launched Snappa, probably 80% or maybe 90% of our leads were coming in from StockSnap whereas by the time we sold it, I think it only made up 10% or 15% of our leads because we had really built up our content and SEO and word of mouth. At that point, we decided that it just makes much more sense to put a bunch of cash in our bank account and focus on one thing as opposed to trying to maintain two separate properties.
Rob: That makes sense and by that time you had a SaaS app that you are focused on which we know takes a lot of attention. I’m curious. We glossed over several years of work here. We almost made it sound easy, like you stumbled into this thing and you ranked number one in Google for this free stock photos, which is very hard to do. In my experience, this kind of stuff is a grind, especially when you are learning it from scratch. Learning SEO to get as good as you guys are as well as content side of things, that’s really what your wheelhouse has become, is this social promotion of getting organic traffic for high competition terms.
How long did that take you to learn and did you feel like it was something where you are just grinding it out, not getting results for a while and it suddenly clicked? Or what is that process like?
Christopher: As you mentioned at the top of the interview, the first thing we ever launched back in 2012 was actually a […] website. Without going to much into it, that was basically a year of work that was not successful ultimately. Then there is actually another app in 2013 which didn’t go anywhere. There is basically two years that we are working on stuff and we got absolutely nowhere. I think a lot of people might have just given up at that point. So before BootstrapBay is when I realized I don’t know what I’m doing regards to marketing and I just read tons of blogpost and listened to tons of podcasts and videos.
At least with BootstrapBay at that point, I had built up some knowledge in terms of how to do it, but obviously you have to put that practice into motion. But even with BootstrapBay, the first three or four months, as you know SEO takes a long time. It was a lot of trial and error. A lot of blogpost didn’t end up working out, but the more you try and the more content you put out there, you start to realize what works and you get a little bit of process and a little bit of formula going.
I would say about six month to a year into it, at least in BootstrapBay we started figuring out the content side of things. With that being said, we did plateau and what was the next frustrating thing was we are a year into this business, it’s still spinning off a couple of thousand for the both of us. How are we going to get to that next level? At that time, we didn’t know that everything will work out, but we start questioning, “Is it worth it? Should we really be spending our nights and weekends trying to get this going?” We just have to persevere.
Rob: That’s what I like about your story is you really didn’t have these marketing skills and you went out and through founder forum you just learned things that were probably difficult trial and error. You grounded out and you start this site and it’s in a small niche. I’ll say bootstrap is not the most massive niche in the world and you learned the skill set in a less competitive space.
You didn’t start an ESP. You didn’t start a CRM. You didn’t start some massive SaaS app as your first effort. You started a couple of small things, BootstrapBay gets some traction, then you learned SEO and content really well, and then StockPhotos is one level harder than that. The Snappa stuff is still on the same boat, but it’s a very wide funnel, and if you didn’t have the four or five years of learning before that, starting Snappa would have been really hard without the skills. Do you think you could have even succeeded without the knowledge you have gained from the other failed and successful efforts?
Christopher: I think there’s two things that made Snappa successful. Number one was everything that you alluded to. The first couple of things that we launched, we just didn’t really know what we are doing. It took awhile to really learn those content and SEO skills and how to get traction. Just how to actually grow a software application or any kind of website to be frank.
The second thing that made it possible was having that existing funnel of traffic through StockSnap. As you know, the lower the price point, the more customers you need to make an app sustainable. It would have been extremely difficult if day one of launching Snappa we have no existing list or no existing user base that we can tap into to kind of get that going. That’s really why we were able to get up to $4000 MRR just after a month, because we had all of that list and that user base built up already.
Rob: Talk to me then about Snappa. You mentioned in your MicroConf talk, I remember you mentioned it. You built it to solve a problem that you yourself were facing. What was that problem?
Christopher: As you mentioned, I was doing a lot of content marketing for BootstrapBay. For each blog post, we need to create a featured image, and also some images within the content itself. I was doing a lot of this stuff and Photoshop. We didn’t really have the money at the time to hire a designer. Mark was pretty good with Photoshop, but he’s working on development which is more of a top priority.
I just thought, “Man, it would be nice if there was a tool that just made a lot of this easier.” When I did some brief market research at that time, I found that the tools are either too simplistic—it was essentially a code generator—or they were still too complicated. I thought there was a need to create something that was kind of in the middle where it was still super easy to use but still not overly complicated, that really anyone can just pick up and use it.
Rob: Talk me through the customer development you did to validate that, because there’s the old adage, “You should build stuff for yourself, solve a problem you have,” but I always caveat that with, “Yeah, but make sure other people have it, too, and make sure they’re willing to pay for that.” How did you do those things?
Christopher: Because we had StockSnap, we had an email list of people. The first thing that I did was email our list and just asked what they were using their stock photos for. As I kind of expected, a good percentage of those were using it for either social media or content marketing, which was kind of our target audience or what we thought would be our target audience.
For the people that did answer saying that they were using it for content and social media, I asked if anyone would be willing to hop on at 10-15 minute call just to learn about how they’re using the software, those and whatnot.
I ended up getting a call with (I think) around 15-20 people in the end. I was just asking them questions about exactly what they’re using the photos for and then going a step further in terms of what tools they were currently using to create graphics, what their process was like, who’s involved with that process, and taking a lot of the questions that I learned from the Lean Customer Development book.
The number one takeaway from that book is basically not to ask leading questions. I never once asked, “Hey, this is what I’m building, do you think this is a good idea?” or any kind of those leading questions. I was essentially trying to see if they would mention (without me poking them) whether or not they had pain points with the existing solutions.
After about 15-20 of those calls, a lot of people did mention or said things like, “Yeah, right now I’m using Photoshop and it’s a huge pain and takes too much time,” or, “Yeah, I tried this app out, but it’s not really that great,” or, “Yeah, we use an in-house graphic designer, but the turnaround time is sometimes 2-3 days. I wish I can just do it myself.”
When I heard enough of those kinds of comments, it gave us enough confidence to at least go ahead and start building some sort of MVP for Snappa.
Rob: Super cool. Mark is a developer. Did he just sit down and start hacking it out?
Christopher: Yeah, that was pretty much it. Like I said, we’ve built things in the past that didn’t really work out. We wanted to make sure that there is going to be a market for this because this is by far going to be the biggest and most complicated thing that he’s ever built. We wanted to really make sure that this could be a viable business. Once we had that validation, then Mark went ahead and just locked himself in the basement and started hacking away.
Rob: It feels like the story kind of writes itself from there. You have a lot of SEO and content skills. You applied that, you cross promoted from StockSnap, you had this existing audience, existing traffic sources that you then promoted in order to grow Snappa. I am curious. A couple of things, a couple of questions that I want to touch on before we wrap. One is, early on you said, “When we first started talking about building an app, we said, ‘Wouldn’t it be magical to hit $10,000?’” Was it magical when you hit $10,000?
Christopher: Yeah, it was actually. I don’t remember if it was exactly $10,000 but it was magical the moment that we knew that this was going to sustain us. We didn’t have to go back to our jobs, the business has legs. At some point, we would be able to probably hire more team members just to know that we had done it. It had taken us, like I said, the first thing we had launched in 2012. This is several years in the making. It truly did feel magical and we still feel very fortunate today that we’re able to do this.
Rob: Yeah, I agree. How large is your team at this point?
Christopher: Now we have four full-time team members and they’re awesome. Another thing that I really didn’t anticipate was how much more fun it is working with a team. We’re really fortunate to have such awesome people working with us at this point. We have four full-time and then we also work with a couple like freelancers and writers and stuff like that.
Rob: That’s good, that’s a pretty capital-efficient business to only have four folks working on it. Another question for you is your price points. On an annual basis, you’re $10 and $20 a month on a monthly basis, you’re $15 and $30. When I see an app like that, I think ouch. You’re probably going to have (just from the outside, I don’t know all your numbers) high churn, I would expect a low average revenue per user, which means you’re pretty limited in how you can market like you’re not going to run AdWords as an example because you don’t have the lifetime value. How has that been? Am I relatively on the mark? How has that been for you guys?
Christopher: Well, 100% you’re definitely on the mark. As you can imagine, we have probably higher churn than some of the other apps or founders that you’ve had on the show and that just goes with the territory of the low price point. That’s always been a challenge and enough reason why we had to get really good in organic (in particular) and why we focus a lot of time and effort on content marketing and SEO.
At this point, we don’t do any paid advertising whatsoever. We really do rely on word of mouth, SEO, and content, just giving a really good experience so that people talk about us. We get mentioned in blog posts and just have a sustainable and repeatable way of acquiring users.
One thing that’s interesting, though, that maybe not a lot of people think about is I think you had the founder of, was it Userlist that you had? That you were talking to a couple…
Rob: Jane Portman?
Christopher: Yeah. It was funny because I remember she was talking about how it’s difficult to get people to either try the app or switch to Userlist. I think on one hand, it’s really nice to have a low churn app, because once they kind of get in, usually they stick around and maybe it’s easier to build a sustainable business that way. But on the other hand with an app like Snappa, we’re premium, you can try it out, and really within a couple of minutes of even trying out Snappa, you’re going to know whether it’s going to provide value to you. The flip side of high churn is that our activation rates and the top of the funnel converts super well. That’s one thing that maybe some people don’t consider with these types of apps.
Rob: Yeah, there’s almost no switching cost. It’s just learning which buttons to click, but they don’t have to migrate stuff over. I agree, I think that’s a real advantage to it and I think longer term, I think an app like a Userlist or my experiences with Drip was, there was a lot of switching cost. It was harder to get people in. The churn was really low once they got in, but you’re right, the growth was tough. The growth was hard fought, but once you got that growth, it was there. It was locked in.
I think that’s where it cuts two ways. At Snappa, your funnel is so much wider. The number of people that visit your website, the number of people that sign up for a trial, and the number of people that probably start paying you is astronomically higher than what we had at Drip, as an example. I think that that is a unique advantage especially when your skill set is SEO and content, which tend to be wide funnel things. Not always, but especially in these spaces, you’ve been playing deliberately, these are wide funnels. That allows you to have this low price point and it allows you to not need to run ads but still grow business to seven figures.
Christopher: Yeah, I’d say that’s super accurate. Don’t get me wrong with low churns to go along with what we have. You learn that the market that you choose (to some extent) controls how high a churn’s going to be and that kind of stuff. We’ve learned to just embrace and accept it, and just stick to our lane, so to speak.
Rob: Yeah, it makes sense. I’m going to assume that if we look back, let’s say over the past year or even I guess ahead two months, you’re about to hit $1 million in ARR and I’m going to assume that that might be the high point of the year in terms of the business. What was a low point or the hardest part about the past year? A specific time that you felt like you were really grinding it out.
Christopher: I would say the last year. There wasn’t too much low point, but in 2018, I think it was around 2018, growth is really slow and we’re ready to start to plateau. At that point, we had, I don’t know if it was a combination of shiny object syndrome or we were so scared of competition because there’s actually quite a bit of competition in our space and we have a lot of really well-funded competitors.
We went down this rabbit hole of, we need to find a new business or we need to find another route because at some point, we’re just going to plateau and we’re not going to grow. I think we really took our eye off the prize, so to speak. That was a really tough year just seeing growth plateauing a little bit, trying to get these other projects and spinning our wheels there. I think that was tough.
In 2019 funny enough, we realized, “Hey, we’re in a really good position. We have this app.” I almost felt like we were taking it for granted or we realized that we were taking it for granted, so we said, “We’re not going to start any new side projects. We’re going to buckle down, we’re going to figure out how to get growth back on track.” We really focused back on the business and we promised ourselves that we would never consider launching another project until we hit $1 million ARR. It’s funny how that worked out.
Rob: Yeah, that makes sense, just refocusing. That’s the thing, these founder stories are almost never straight lines. It’s very, very rare. You hear the myth of people starting whatever, Uber, Facebook, Lyft, these big companies and they do a lot of side projects, there was a lot of uncertainty, and I think our stories in our own ecosystem are very similar where you often have multiple projects going at once. You don’t really know which one’s going to succeed often and you’re just trying to figure it out as you go.
I think the last question before we wrap is, you mentioned something to me about a pricing experiment that you ran, that goes against that “charge more” idea. As I said, when we talked about it, well yeah, you can always charge more until you can’t, or until people aren’t willing to pay that. There’s always a ceiling to this stuff. Talk us through what you did with your annual and your monthly pricing, and how that worked out.
Christopher: I’ve obviously been to a few MicroConfs now and one of our recurring themes is always to charge more. I’ve just always been really scared to do that again, especially because we’re serving the lower end of the SMB market. We’re in a really competitive space, but I thought, whatever. There’s enough people telling me to just charge more. We’ll go ahead and run the experiment.
What we did was we kept our annual price the same which is $120 a year for the program and then we bumped up the price of the monthly prescription from $15 to $19 a month. We were thinking more people and to send the annual plan which would obviously help out with the churn. Assuming that our conversion stay relatively the same because we’re getting the $19 a month price point even if the churn is a bit higher, all in all it should work out.
After running that—we ran it for a couple months—we realized pretty quickly that the churn had just spiked up way too high for our comfort, and the conversion rates had actually dropped more than we had anticipated. We ended up reverting back to the pricing.
I’m glad that we ran the experiment because at least now we can put that to rest, but it was just more proof that charge more, or charge less, or whatever isn’t always the best advice. It’s really a case-by-case basis, and that it just depends on a variety of factors really.
Rob: Sure. Charge more is a really great advice if you’ve never heard it before, because most people tend to charge too little when they launch. Most of us think our apps are not worth what they actually are. It’s definitely good advice. But obviously, the further you get in, if you’ve experimented, if you know your customers, there’s a certain point where pricing elasticity may or may not be there, and you’re also in a pretty price-sensitive space. You’re in a prosumer, I’d like to think one notch above consumers, so there’s going to be price sensitivity there.
The lesson I take away from it is: (a) experiment because now you know. You don’t have to think about it every month, every week, “Should I be charging more?” and, (b) you were scared to do it, but you did it anyway, and it sounds like it was a relatively easy experiment to undo which are the best. You just revert back. You just change the pricing back. Now, you have one cohort of people or something who are paying a little less I’d imagine, but that’s a small price to pay to have the knowledge that you probably are towards the top of your range right now.
Christopher: Yeah, for sure. The way that we did it was basically any new customers, they would see that new price point, and then once we reverted back, if there were any customers that were on that $19 a month plan, we just put them back on that $15 month. Now there’s no one on that increased price. It was a relatively safe way to do it and obviously, there’s no backlash as a result.
Rob: Yeah, that makes sense. I said people paying less at the pricing reverse, but whatever. Cool. We’re going to wrap up. If folks want to check out Snappa, it’s at snappa.com just like it sounds. You are @cgimmer on Twitter. Any place else folks should check out?
Christopher: That’s about it. I’m trying to make an effort to do more blogging on my personal site this year chrisgimmer.com. There’s only a few posts on there. Twitter is probably the best place for now.
Rob: Aren’t we all trying to blog a little more? I say that every year. It’s just so hard to find the time to write.
Christopher: Yeah. Essentially, my goal for this year is one post a month which I think is super reasonable and I think I’ll be able to hold myself to that and then we’ll see how that goes.
Rob: Sounds good man. Thanks again for coming on the show.
Christopher: My pleasure. I’m a huge fan of the podcast, so I’m happy to be on here.
Rob: Awesome. Thanks again to Chris for coming on the show. If you have a question, if you’re curious about part of Chris’s story, if you have questions about SEO or content marketing, feel free to either tweet me @robwalling or send them into questions@startupsfortherestofus.com. If I get questions, I might invite Chris back on the show to share some of the skills, because he has hard technical skills in this SEO and content space, and he’s done a lot to grow. This business has really wide funnels and has a lot of knowledge there. If you want to hear more about that, I’m happy to have another conversation with Chris.
You can also leave me a voicemail at (888) 801-9690 or just email that question to our email address and attach a file via Dropbox or Google Drive. This podcast’s theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us by searching for Startups and we would love a 5-star review in whatever pod catcher you use. If you want a full transcript to this episode, wait a couple of days after it goes live then head to startupsfortherestofus.com, full, searchable transcripts of every episode. Thank you for listening. I’ll see you next time.
Episode 479 | Two-Sided Marketplaces, Hotseats, Forgotten Subscriptions, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob along with Tracy Osborn , answer a number of listener questions on topics including founder hotseats, forgotten subscriptions, two-sided market places and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Today I’m joined by Tracy Osborn and we answer listener questions on two-sided marketplaces, mastermind hotseats, forgotten subscriptions, and more questions from listeners like yourself. This is Startups for the Rest of Us episode 479.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Tracy Osborn, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. Each week, on the show, we cover topics relating to building and growing startups. We’re ambitious founders, but we’re not willing to sacrifice our life or health to grow our company. This week, we dig into the mail bag and we answer four or five listener questions. Some good questions came through this week.
I hope you enjoy my conversation with Tracy Osborn, who’s been on the show several times. She’s answered listener questions with me, she’s also was the founder of WeddingLovely, which was a two-sided wedding marketplace. I had interviewed her maybe 20 episodes ago if you want to go back and check that out for her expertise. I always like to save the two-sided marketplace questions for her since she lived that dream (so to speak) for four or five years.
We have several different show formats, oftentimes I will interview a founder and dig into their struggles, their failures, and their victories. We have these listener question episodes, sometimes we have breaking news, we get updates from a founder, Mike Taber, every 4-6 weeks. And of course we have our seats now and again.
The 2020 State of Independent SaaS Report is almost done. I’m putting the finishing touches on that. I’ve commented last episode how much time that’s taken. I’m super proud of what we put together, I’m stoked every revision I get back from the designers, gets me more excited.
I’m doing a live video stream of some key takeaways of that report in about two weeks. If you want to be sure to hear about that, head to stateofindiesaas.com and that’ll redirect you into MicroConf to a landing page. Enter your email and you’ll definitely get an email when that livestream is going to go live. It’s going to be about 20-30 minutes.
I’m doing it kind of a conference doc where I’m really presenting findings and what I think they mean and there has been some surprises that we’ve seen in the data and then some not so surprises. It’s fun to cover both sides of those. I hope you join me for that in just a couple of weeks. With that, let’s dive into this episode.
Tracy, thanks so much for coming back on the show.
Tracy: Happy to be here.
Rob: I am excited to dig into some listener questions today and specifically, I handpicked the first two because they’re about two-sided marketplaces. As people heard in the intro, you ran one for several years. I was saving those for when you’re back on the show.
Tracy: Very cool. I’m really excited to answer those.
Rob: Let’s dive into the first one. Unfortunately, it was a voicemail that we received several months ago and due to some technical glitches, I can no longer get at the audio file. But in essence the caller sent a voicemail in, and he said, “Look, I’m starting a two-sided marketplace. Obviously, we need both sides to be successful and only the businesses pay.” It’s a business on one side and consumers on the other. The business is I believe pay the subscription. Which side should they focus their marketing budget on?
Tracy: This is a fun one. It goes to the problem of marketplaces where the beginning part, the start of a marketplace is really hard because you need to get both sides of the marketplace. For WeddingLovely, the marketplace I’ve ran before, I need to get both the businesses on WeddingLovely, but also the consumers for those businesses so that they would have customers through my marketplace.
What I did to WeddingLovely and this is probably why I recommend to anyone who is running a marketplace, is to focus on bringing in as much revenue as possible, especially if you’re doing a bootstrap business, which means that you need to focus your marketing budget on the business side. But obviously you need to have some way of bringing in the other side of the marketplace.
What I recommend here is to look for ways that you can use, the side that you’re spending your marketing budget on, for instance, the businesses. What can you do to incentivize them to bring in the other side of the marketplace?
For example with WeddingLovely, I worked with the business on WeddingLovely, the wedding businesses, to give them the tools to bring in the people that they worked with, to bring them on the platform and encourage them to use WeddingLovely on the other side. My marketing budget was going to those businesses, but those in essence trickling down the other side by utilizing those businesses to bring in the people that they’re working with.
In essence I would recommend to spend your marketing budget on the people who are bringing you revenue, but do your best to incentivize the people that you’re working with, that you’re spending those revenue dollars on, bring in the customers that they work with, bring in the other side of the marketplace. So that you’re more efficient with the money that you’re spending on the marketing budget, but you’re still bringing in both sides of that marketplace.
Rob: I think that’s a savvy way to do it. The way I think about this is oftentimes, businesses marketing to other businesses need to spend a lot of money. You need to have higher quality content, you need to spend ads, nurture, and convince them why they should pay. There’s a huge job, and that’s just the job of any standard SaaS app.
On the flip side, businesses market to consumers frequently do it with virality, they do it with content, they do it with Instagram posts, giveaways. There’s things that you can do that they’re just so different. They’re so different in terms of the approaches. I think it’s not that you can do it more inexpensively with consumers, but I do think that given that we see people selling B2C ebooks for $10, $20 or $30, there’s obviously ways to acquire customers that are a lot cheaper than there are to acquire that big SaaS customer, where you’re paying $100, $500, or $1000 to close that account versus acquire someone for $10, $20, or $30. It’s such a different game.
In that sense, I agree with you and then I would put marketing budget towards the folks who are going to be paying you. I think there are guerilla, scrappy, bootstrappery ways to go after the consumer side of it. One of them is what you said, it’s to get the businesses to bring their critical mass to you. I think that’s a great way to do it. There’s models for B2C marketing. We won’t go there, but that’s what I would focus on as the cheaper and more expensive ways to get consumers to join up.
Tracy: Next question comes in from Anthony. He says, “Hi. I listen to a bunch of episodes, so I apologize if this was covered. I heard a couple episodes on marketplaces and how to get them going from a cold start, but I don’t think you’ve touched on the ‘come for the tools, stay for the network’ strategy, where you build a SaaS tool for one or both sides of the marketplace, and is useful regardless of the existence of the marketplace.” He also brings in a link to a Strife article that covers a little of this, which is a really cool link and I’m pretty sure you can add it to the show notes. What do you think?
Rob: I think it’s a great idea. In fact, if I personally were to go after a two-sided marketplace, which I tell people not to do, don’t do it. If you’re listening to this, don’t do it. It’s just so hard. Unless you have funding, or unless you’re a second-time founder, or unless you really have a unique insight or unique reach, or you already have an audience that essentially makes it more of a one-sided marketplace.
If you look at how Joel Spolsky and Jeff Atwood started Stack Overflow, that’s very much a two-sided marketplace. You need people asking questions and answering them. It’s both one-sided and two-sided because it’s the same audience, but they’re doing two things. They didn’t just go start from scratch. Community sites, two-sided marketplace is very hard to start, but they brought their massive blog audiences to it.
If you have that type of unique reach into a space, I would say consider doing this. All that said, if I were going to do it, start a two-sided marketplace, I would do it in a space where I have reach. If you think about TinySeed, it’s a two-sided marketplace because you need to bring investors in and get them to put money into a fund, and then you need to have enough reach into the founder space that folks will come to you. You essentially have a deal saying, “Hey, we want to be funded by you.” It’s a tough thing to manage from a cold stop.
I would do it in a space where I have reach or I would do it with a tool like this because having that utility, having a SaaS app that these businesses need, that you either give away just to draw them or that you give at an inexpensive price point in order to get the network effect going, is really an interesting way to do it.
Sean Ellis did this in reverse. He essentially started growthhackers.com and he used his reputation as a marketing expert (and he had a bit of an audience). He got a network effect and built it up—it’s like a social news site for growth hackers in essence—then, he built software on top of that. Actually, I believe later just totally pivoted into the SaaS aspect of it. It’s an interesting reverse model of what the question asker was asking, but I do think there are many ways to go about this.
Tracy: The one thing I would caution, the article on Strife talks about Hipcamp and how Hipcamp now allows you to book private campsites. I’m not totally familiar with Hipcamp. It’s a two-sided marketplace for private campgrounds, but it started out as a tool for people to find what campgrounds are out there, what’s available, and they sounded like they scraped a bunch of publicly available list in order to take all those data into one place.
The two-sided marketplace didn’t exist in the beginning, and we are talking about adding a tool or a launcher of two-sided marketplace. I feel like one needs to come after another, they can’t really do them concurrently because then you’re splitting your focus between two separate products, two different things you have to work about. One leads into the other.
That was one of the problems I had with WeddingLovely. There was a wedding at the marketplace when I launched a tool for people to plan their wedding. Then, all of a sudden I was a solo founder with two products that I was working on, two products to support, and it became really hard to do both. A marketplace is hard on its own. Supporting a tool and a marketplace can be tougher, especially if your tool is pretty significant.
That’s just one thing I want to bring up to caution against. It could be a good way. I agree that marketplaces are really, really hard. It’s part of the reason why WeddingLovely didn’t succeed, especially since I was a semi-bootstrapped founder, trying to run everything myself. Adding a tool on my own plate, did not help the situation actually. That probably significantly hurt it.
Rob: It’s like doing it on hard mode.
Tracy: Totally.
Rob: It’s like, let’s start a SaaS app and have all these other stuff, two-sided marketplace stuff to worry about. Like it’s not hard enough just starting and marketing a SaaS app. With that said, still, that’s what I would do. But I’m a SaaS person. That’s what would draw me to a two-sided marketplace, is the appeal of being able to build a product. There is a little bit of personal preference in there. It’s like know what you’re getting into. I think that’s really the moral.
Tracy: Actually, now that you mentioned this, building the app was me just being frustrated about running the marketplace and being something else to focus on, which leads into it, some of the other issues I had running this business. But it was a fun, different project to work on that would also help my business. I agree on that aspect.
Next question comes in from Simon. Simon writes, “Hey, Rob. I received the TinySeed update. I went through the list of podcast because I was curious about one thing. What is the type of mastermind you’re running with the hot seat implementation? I heard a bit about it on Peter Suhm/Matt Wensing episodes in Croatia, which is out of beta, but it left me curious, maybe you have some more info for me. Thanks and keep rocking.”
I find this question actually really interesting because before I started at TinySeed, I, myself, wasn’t totally aware about hotseats, masterminds, and these other things. I never participated in the mastermind myself. One of the things we’re doing at TinySeed for the next incoming batch is I wrote a little bit of a guide. I thought when I didn’t know what the hotseats were, I’m like, “Oh, but of course. Everyone else knows,” and just rolled with it. But we did find that a few of the founders were also unaware about how they work, so I wrote this little guide. Maybe you can go ahead and give an overview. I just want to say that I feel like it’s not obvious and not completely common that everyone knows how hotseats work.
Rob: Totally, yeah. It’s that shorthand where we get and we talk MRR and LTV, and the first time you listen to this podcast, you’re like, “What are all these acronyms mean? I think masterminds, hotseats, founder treats and all that stuff is the same.”
Mastermind is really just a phrase that we’ve adopted from Internet marketers, to be honest. In that context, there are people that would start these like, “$5000 a month mastermind and you worked with the Internet marketer, and he’s going to help you grow this big business.” I think they have a reputation that I don’t love, but in the startup space, it really does capture this idea of two, three, four founders are getting the other on on a regular basis, whether via Zoom or other video chat or whether it’s in person, really going deep on their businesses and having that implied NDA, confidentiality, and sharing their struggles.
This is especially helpful if you don’t have a co-founder. That someone’s along on the journey that is not your spouse, not your significant other, that you can complain to, that you can rant about, that you can celebrate wins with, who’s there on the journey so you don’t have to call someone and say, “Hey. I’m running this company and here’s the background for the past 12 months on what I’ve been doing and here’s my headspace.” It’s so hard to do that.
In the mastermind context, whether it’s weekly, biweekly, monthly, people know what’s going on and they’re following your story in a way that you can’t share on a podcast, because you need ultra-transparency and that kind of stuff. That’s in general how I think about a startup mastermind, and we actually did a whole episode on what they are. Go to startupsfortherestofus.com, search for startups mastermind, and Mike and I went through that a few years ago.
Within a mastermind, so what do you do? You’re on a call for an hour or 90 minutes. What do you actually do? There’s two formats that I’ve seen. One is just pure round-robin. If there are three people and you’re on it for 45 minutes, then each person gets 15 minutes.
The other format that I’ve experienced with and been familiar with is a hot seat format. That’s where, if there are three people, 45 minutes, two of the founders maybe give five-minute updates; this is what’s going on. Then, the other founder takes the other 35 minutes and go way deep on a single issue or a single problem they’re facing. They ask for advice and thoughts, it’s a white board session, they’re thinking that through, and how can you help. It’s all the stuff. So, a hotseat really just means I have a lot of time to dig into something. You can talk about how we’ve implemented that with the TinySeed batch calls because it’s evolved a little bit over time, but there’s different value from each format, right?
Tracy: Yeah. It’s nice to hear what we do with the TinySeed call formats and we’ve gotten a lot of questions about that actually in the application since how we run our calls. It’s 50%, maybe 70% hotseat format and then 30% the round robin everyone gets a chance to talk. The way I look at it with the round robin is that I want to say people are going to get their problems solved, but really it’s harder in the round robin format because everyone’s concentrating on their own issues, and it’s a way for us to give people a place to talk out loud, to think about their own issues, because there is less feedback when you have short amount of time and everyone is participating. You have less time for people to give feedback.
With the hotseats, that’s when it’s really like, “Okay, cool. We’re going to sit down, we’re actually going to solve the problem.” That doesn’t mean you can’t have that problem solving part on those round robin formats, but it’s a lot harder when you’re telling everybody you have an even small period of time in order to share your problem as compared to being like, “Okay, cool. We’re really going to think over this one thing.”
That’s one of the things that I think about a lot with the TinySeed calls and how they work. Again, I want to emphasize that I totally want people to have their problem solved more on the round robin format, but the shorter amount of time makes it a little bit harder.
Rob: I hope that was helpful. That’s our rundown. We actually have two episodes where we spent the whole episode talking about it. Episode 167 from 2014, How to Organize and Run a Startup Mastermind, and episode 277, Five Ways to Structure Your Startup Mastermind. And I believe that’s when Mike and I went back and forth because I like round robin in general for the weekly or monthly masterminds that I’m in. And he likes a hotseat, I believe. We were going back and forth. Then I’ve since changed my opinions on that as well. If you want to know more about masterminds, head to those episodes.
Tracy: Awesome. Next question comes from Mike and he asks, “Has there ever been any public numbers on how much a SaaS’ monthly revenue comes from forgotten subscriptions or lost users? Those users who are paying, but never use the service/content. As an owner, do you think there’s any moral responsibility for us to stop charging these people at a certain point?”
Rob: Good question, Mike. I’ve never heard of public data. I know that I’ve seen private data across the number of SaaS apps and it really depends on the niche. In all honesty, if you are doing high pressure sales tactics to that Internet marketee, aspiring entrepreneur audience, and you’re selling annual plans, these numbers are 50%–60% of people who have paid for that year, maybe even 70%, and never use that much like the ebooks people buy that they never read, the video courses people buy that they want to get to and never do.
I think a normal range depends on exactly how you measure inactivity, but I’d say between about 15% and 25% is the healthy SaaS app range, which sounds really high. Even right now, I’m paying for a couple of SaaS subscriptions and we’re technically inactive. I believe I have three right now that one I’m leaving for data purposes until we totally transition to a new system, another one I signed up, the trial ended, I’m just extending my trial, so I’m like two months of paying and I haven’t yet flipped the switch in moving something live.
With those, I don’t feel like I wouldn’t want the owner of that SaaS company to come to me and say, “Hey, I want to shut these down because I’m leaving it on purpose.” Obviously, someone forgets about it. Moral responsibility, I guess you could ping people. It’s more about moral responsibility to get people activated. It’s how it think about it.
I build apps to provide value to people, and if they’re not getting that value out of it, then I feel like I’m failing them in the sense that I didn’t educate them well enough to learn how to use it, they don’t know what to do next. That’s how I think about it. I don’t know what you think about it, Tracy.
Tracy: I think this goes from, I can’t remember who, but I feel like there has been a few services out there that have gotten public to say, “We had a certain amount of customers who aren’t using our app. We’re going to do the right thing and make sure they’re not being charged or they’ve been removed or whatnot.” They’re promoting it as, look how moral we are being.
If you want to go that way, then sure, but if you’re a large company, you have the privilege to: (a) remove that revenue and not have to worry about that, and (b) also, we have the analytics and the things in place so they can see who is actively using the app, they have the time to dig into those numbers, they have the time to spend the time to remove those people. Anyone who is a small business who’s bootstrapped or whatnot, that doesn’t have a lot of time, has to be really efficient with our time, I want to say, “Hey, cool. That’s a great moral thing to do,” but I don’t think a lot of small businesses have the time to do that. If that makes sense.
I want to say that it’s totally fine if you don’t feel like you have to spend the time working on those kind of things that is going to lose you revenue when you could be spending the time, like you said, improving your app, improving your activation number, spending your marketing dollars, and working on getting the word out. I just want to reassure that there’s no problem with not having the time to do this moral revenue losing thing as a small app, even though there are people out there who have that ability.
Rob: I think it’s a good point you raised, is just to even look into it, it takes time. And time is the most valuable asset of a founder, especially when you’re a one-person or a three-person team. The revenue is an issue as well. What if you went out and sought everyone out and you email them, and you double check, “Hey, I’m going to cancel your account. Do you want to cancel? Are you sure, are you sure?” That is a campaign on its own. You’re going to do that and then you’re going to lose 15% or 20% of your MRR.
If that’s something you want to do, then go do it. I don’t know anyone that’s done it. You mentioned examples of folks that do it. I certainly don’t think there’s anything wrong with that. It’s interesting just to look across the landscape of the way we used to buy software as paid as a one time fee, and then you had to buy it when the next major version came out.
You bought Microsoft Word and then you had it for three or four years, and it didn’t matter if you used it or not, you paid that fee up front, $100 or $200. Microsoft Office was so cost prohibitive that they have student versions and they’re giving it away in India and Africa and stuff because it is expensive. Whether you paid for it and used it five times, or whether you paid for it and used it solid for three years, you paid the same amount.
We’ve transitioned to subscription things, and I think that’s way better for the consumer, because now we can cancel. That’s why SaaS is so hard to grow. When people aren’t using it, you haven’t got that big chunk of money up front. In my opinion, if you make it easy for people to cancel and with every app I’ve ever had, we email a monthly receipt. Every month, you get an email that you’ve been charged this month, this is your bill date, and this and that. You’re getting notified. I’d imagine there’s some apps out there that don’t do that and they try to hide behind it or they hope you forget and never check your credit card statements. Don’t do that. I don’t think that’s ethical.
But if you’re pinging people, when email receipts go out, we used to get a response and it’s like, “Hey, I meant to cancel this. Can I get a refund?” which we would do. We would definitely get cancellations from receipts. If we’re optimizing for non-cancellation, we would have removed our email receipts, we would have removed the cancellation button in the app and made you email support or you haven’t […] call support like Comcast or whoever does.
That’s the way to game things and that’s where I think you get on the immoral or unethical approach. I think what I’ve outlined, which is you’re notifying them, they’re well aware you’re doing it, you’re trying to get people onboarded, I feel like you’re doing what you can. You can’t force someone to use your app.
Tracy: Totally. Next question comes from Poco. He writes, “Firstly, thank you so much for all the great work and resources you offer. Do you know of any podcast similar to yours that specializes or also covers B2C stuff?”
Rob: Shorter answer is no. The long answer is the reason is because there is really no such thing as B2C SaaS. I think Lars […] said this on an early mentor call, but I’ve thought about this for years. What company can you think of that is not an entertainment company. Netflix and Spotify, I wouldn’t consider SaaS, they’re more content delivery.
Even Dropbox, which started as a consumer company, look at their public filings now. There’s a reason they went after enterprise. They are an enterprise company, the consumers that is lead gen. It’s just so we all are comfortable using their software, so that when you go to the company, and they want to sell to a 10,000-person enterprise, everybody’s already familiar with it.
It’s the same reason Apple computer gave away an Apple IIe back in 1980–1981. They gave an Apple IIe to every public school in California. They did it so that kids could learn computers, but also, they were familiar with the Apple operating system in essence and that when they went home, if their parents said, “Oh, what kind of computer we should get?” The kid would say, “I bought an Apple IIe,” they’re familiar with it.
I’m totally open to listening to this and you know of a B2C software. It’s basically what he’s saying, a podcast that focuses on B2C software, please write in questions@startupsfortherestofus.com or post a comment on this episode. Do you know of any, Tracy?
Tracy: I’m glad that you didn’t because I didn’t as well. I was wracking my brain and hoping that you had a good one to respond with. But yeah, I agree with you on all those points.
Rob: I’m sure there’s someone building mobile apps out there who’s doing a podcast. The B2C side tends to be training courses, information, sometimes it’s dietary stuff like I need a paleo meal planning app, or meditation, wellness. I think that’s the kind of stuff that focus on and I don’t know of any podcast that focus on that. Aside from one-off, like if you listen to This Week In Startups, Jason Calacanis interviews founders and you’ll see B2C founders come through there. That might be the one place that I’d go if I were looking for this.
Tracy: I think that’s all the questions we have.
Rob: We’re wrapped up for the day. That’s great. Short episode. Folks want to find you online, tracymakes.com or @tracymakes on Twitter.
Tracy: I’m off to correct you. It’s tracyosborn.com.
Rob: Oh, good. I’m glad you corrected me. I’m confused when the domain doesn’t match the twitter handle.
Tracy: If I could get @tracyosborn on Twitter, I would. Alas, there is another person.
Rob: There is another Tracy Osborn. I went out and bought robwalling.com two years ago from a different Rob Walling, and one of the bigger reasons is I just wanted all my handles to match and I got tired of saying, no one could remember what my website was softwarebyrob.com, because back in 2005, that was what you did. You didn’t just put your name.com, I don’t know why. It just wasn’t a common thing to do and now it makes so much more sense.
Thanks again to Tracy for joining me on the show today. We answered a lot of listener questions. And if you have a question that you’d like to hear answered on the show whether by me or myself with a guest, leave us a voicemail at (888) 801-9690. You can always email us, it’s questions@startupsfortherestofus.com. You can attach a Dropbox link, what have you.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us by searching for startups in any pod catcher. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. I’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Tracy Osborn, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. Each week, on the show, we cover topics relating to building and growing startups. We’re ambitious founders, but we’re not willing to sacrifice our life or health to grow our company. This week, we dig into the mail bag and we answer four or five listener questions. Some good questions came through this week.
I hope you enjoy my conversation with Tracy Osborn, who’s been on the show several times. She’s answered listener questions with me, she’s also was the founder of WeddingLovely, which was a two-sided wedding marketplace. I had interviewed her maybe 20 episodes ago if you want to go back and check that out for her expertise. I always like to save the two-sided marketplace questions for her since she lived that dream (so to speak) for four or five years.
We have several different show formats, oftentimes I will interview a founder and dig into their struggles, their failures, and their victories. We have these listener question episodes, sometimes we have breaking news, we get updates from a founder, Mike Taber, every 4-6 weeks. And of course we have our seats now and again.
The 2020 State of Independent SaaS Report is almost done. I’m putting the finishing touches on that. I’ve commented last episode how much time that’s taken. I’m super proud of what we put together, I’m stoked every revision I get back from the designers, gets me more excited.
I’m doing a live video stream of some key takeaways of that report in about two weeks. If you want to be sure to hear about that, head to stateofindiesaas.com and that’ll redirect you into MicroConf to a landing page. Enter your email and you’ll definitely get an email when that livestream is going to go live. It’s going to be about 20-30 minutes.
I’m doing it kind of a conference doc where I’m really presenting findings and what I think they mean and there has been some surprises that we’ve seen in the data and then some not so surprises. It’s fun to cover both sides of those. I hope you join me for that in just a couple of weeks. With that, let’s dive into this episode.
Tracy, thanks so much for coming back on the show.
Tracy: Happy to be here.
Rob: I am excited to dig into some listener questions today and specifically, I handpicked the first two because they’re about two-sided marketplaces. As people heard in the intro, you ran one for several years. I was saving those for when you’re back on the show.
Tracy: Very cool. I’m really excited to answer those.
Rob: Let’s dive into the first one. Unfortunately, it was a voicemail that we received several months ago and due to some technical glitches, I can no longer get at the audio file. But in essence the caller sent a voicemail in, and he said, “Look, I’m starting a two-sided marketplace. Obviously, we need both sides to be successful and only the businesses pay.” It’s a business on one side and consumers on the other. The business is I believe pay the subscription. Which side should they focus their marketing budget on?
Tracy: This is a fun one. It goes to the problem of marketplaces where the beginning part, the start of a marketplace is really hard because you need to get both sides of the marketplace. For WeddingLovely, the marketplace I’ve ran before, I need to get both the businesses on WeddingLovely, but also the consumers for those businesses so that they would have customers through my marketplace.
What I did to WeddingLovely and this is probably why I recommend to anyone who is running a marketplace, is to focus on bringing in as much revenue as possible, especially if you’re doing a bootstrap business, which means that you need to focus your marketing budget on the business side. But obviously you need to have some way of bringing in the other side of the marketplace.
What I recommend here is to look for ways that you can use, the side that you’re spending your marketing budget on, for instance, the businesses. What can you do to incentivize them to bring in the other side of the marketplace?
For example with WeddingLovely, I worked with the business on WeddingLovely, the wedding businesses, to give them the tools to bring in the people that they worked with, to bring them on the platform and encourage them to use WeddingLovely on the other side. My marketing budget was going to those businesses, but those in essence trickling down the other side by utilizing those businesses to bring in the people that they’re working with.
In essence I would recommend to spend your marketing budget on the people who are bringing you revenue, but do your best to incentivize the people that you’re working with, that you’re spending those revenue dollars on, bring in the customers that they work with, bring in the other side of the marketplace. So that you’re more efficient with the money that you’re spending on the marketing budget, but you’re still bringing in both sides of that marketplace.
Rob: I think that’s a savvy way to do it. The way I think about this is oftentimes, businesses marketing to other businesses need to spend a lot of money. You need to have higher quality content, you need to spend ads, nurture, and convince them why they should pay. There’s a huge job, and that’s just the job of any standard SaaS app.
On the flip side, businesses market to consumers frequently do it with virality, they do it with content, they do it with Instagram posts, giveaways. There’s things that you can do that they’re just so different. They’re so different in terms of the approaches. I think it’s not that you can do it more inexpensively with consumers, but I do think that given that we see people selling B2C ebooks for $10, $20 or $30, there’s obviously ways to acquire customers that are a lot cheaper than there are to acquire that big SaaS customer, where you’re paying $100, $500, or $1000 to close that account versus acquire someone for $10, $20, or $30. It’s such a different game.
In that sense, I agree with you and then I would put marketing budget towards the folks who are going to be paying you. I think there are guerilla, scrappy, bootstrappery ways to go after the consumer side of it. One of them is what you said, it’s to get the businesses to bring their critical mass to you. I think that’s a great way to do it. There’s models for B2C marketing. We won’t go there, but that’s what I would focus on as the cheaper and more expensive ways to get consumers to join up.
Tracy: Next question comes in from Anthony. He says, “Hi. I listen to a bunch of episodes, so I apologize if this was covered. I heard a couple episodes on marketplaces and how to get them going from a cold start, but I don’t think you’ve touched on the ‘come for the tools, stay for the network’ strategy, where you build a SaaS tool for one or both sides of the marketplace, and is useful regardless of the existence of the marketplace.” He also brings in a link to a Strife article that covers a little of this, which is a really cool link and I’m pretty sure you can add it to the show notes. What do you think?
Rob: I think it’s a great idea. In fact, if I personally were to go after a two-sided marketplace, which I tell people not to do, don’t do it. If you’re listening to this, don’t do it. It’s just so hard. Unless you have funding, or unless you’re a second-time founder, or unless you really have a unique insight or unique reach, or you already have an audience that essentially makes it more of a one-sided marketplace.
If you look at how Joel Spolsky and Jeff Atwood started Stack Overflow, that’s very much a two-sided marketplace. You need people asking questions and answering them. It’s both one-sided and two-sided because it’s the same audience, but they’re doing two things. They didn’t just go start from scratch. Community sites, two-sided marketplace is very hard to start, but they brought their massive blog audiences to it.
If you have that type of unique reach into a space, I would say consider doing this. All that said, if I were going to do it, start a two-sided marketplace, I would do it in a space where I have reach. If you think about TinySeed, it’s a two-sided marketplace because you need to bring investors in and get them to put money into a fund, and then you need to have enough reach into the founder space that folks will come to you. You essentially have a deal saying, “Hey, we want to be funded by you.” It’s a tough thing to manage from a cold stop.
I would do it in a space where I have reach or I would do it with a tool like this because having that utility, having a SaaS app that these businesses need, that you either give away just to draw them or that you give at an inexpensive price point in order to get the network effect going, is really an interesting way to do it.
Sean Ellis did this in reverse. He essentially started growthhackers.com and he used his reputation as a marketing expert (and he had a bit of an audience). He got a network effect and built it up—it’s like a social news site for growth hackers in essence—then, he built software on top of that. Actually, I believe later just totally pivoted into the SaaS aspect of it. It’s an interesting reverse model of what the question asker was asking, but I do think there are many ways to go about this.
Tracy: The one thing I would caution, the article on Strife talks about Hipcamp and how Hipcamp now allows you to book private campsites. I’m not totally familiar with Hipcamp. It’s a two-sided marketplace for private campgrounds, but it started out as a tool for people to find what campgrounds are out there, what’s available, and they sounded like they scraped a bunch of publicly available list in order to take all those data into one place.
The two-sided marketplace didn’t exist in the beginning, and we are talking about adding a tool or a launcher of two-sided marketplace. I feel like one needs to come after another, they can’t really do them concurrently because then you’re splitting your focus between two separate products, two different things you have to work about. One leads into the other.
That was one of the problems I had with WeddingLovely. There was a wedding at the marketplace when I launched a tool for people to plan their wedding. Then, all of a sudden I was a solo founder with two products that I was working on, two products to support, and it became really hard to do both. A marketplace is hard on its own. Supporting a tool and a marketplace can be tougher, especially if your tool is pretty significant.
That’s just one thing I want to bring up to caution against. It could be a good way. I agree that marketplaces are really, really hard. It’s part of the reason why WeddingLovely didn’t succeed, especially since I was a semi-bootstrapped founder, trying to run everything myself. Adding a tool on my own plate, did not help the situation actually. That probably significantly hurt it.
Rob: It’s like doing it on hard mode.
Tracy: Totally.
Rob: It’s like, let’s start a SaaS app and have all these other stuff, two-sided marketplace stuff to worry about. Like it’s not hard enough just starting and marketing a SaaS app. With that said, still, that’s what I would do. But I’m a SaaS person. That’s what would draw me to a two-sided marketplace, is the appeal of being able to build a product. There is a little bit of personal preference in there. It’s like know what you’re getting into. I think that’s really the moral.
Tracy: Actually, now that you mentioned this, building the app was me just being frustrated about running the marketplace and being something else to focus on, which leads into it, some of the other issues I had running this business. But it was a fun, different project to work on that would also help my business. I agree on that aspect.
Next question comes in from Simon. Simon writes, “Hey, Rob. I received the TinySeed update. I went through the list of podcast because I was curious about one thing. What is the type of mastermind you’re running with the hot seat implementation? I heard a bit about it on Peter Suhm/Matt Wensing episodes in Croatia, which is out of beta, but it left me curious, maybe you have some more info for me. Thanks and keep rocking.”
I find this question actually really interesting because before I started at TinySeed, I, myself, wasn’t totally aware about hotseats, masterminds, and these other things. I never participated in the mastermind myself. One of the things we’re doing at TinySeed for the next incoming batch is I wrote a little bit of a guide. I thought when I didn’t know what the hotseats were, I’m like, “Oh, but of course. Everyone else knows,” and just rolled with it. But we did find that a few of the founders were also unaware about how they work, so I wrote this little guide. Maybe you can go ahead and give an overview. I just want to say that I feel like it’s not obvious and not completely common that everyone knows how hotseats work.
Rob: Totally, yeah. It’s that shorthand where we get and we talk MRR and LTV, and the first time you listen to this podcast, you’re like, “What are all these acronyms mean? I think masterminds, hotseats, founder treats and all that stuff is the same.”
Mastermind is really just a phrase that we’ve adopted from Internet marketers, to be honest. In that context, there are people that would start these like, “$5000 a month mastermind and you worked with the Internet marketer, and he’s going to help you grow this big business.” I think they have a reputation that I don’t love, but in the startup space, it really does capture this idea of two, three, four founders are getting the other on on a regular basis, whether via Zoom or other video chat or whether it’s in person, really going deep on their businesses and having that implied NDA, confidentiality, and sharing their struggles.
This is especially helpful if you don’t have a co-founder. That someone’s along on the journey that is not your spouse, not your significant other, that you can complain to, that you can rant about, that you can celebrate wins with, who’s there on the journey so you don’t have to call someone and say, “Hey. I’m running this company and here’s the background for the past 12 months on what I’ve been doing and here’s my headspace.” It’s so hard to do that.
In the mastermind context, whether it’s weekly, biweekly, monthly, people know what’s going on and they’re following your story in a way that you can’t share on a podcast, because you need ultra-transparency and that kind of stuff. That’s in general how I think about a startup mastermind, and we actually did a whole episode on what they are. Go to startupsfortherestofus.com, search for startups mastermind, and Mike and I went through that a few years ago.
Within a mastermind, so what do you do? You’re on a call for an hour or 90 minutes. What do you actually do? There’s two formats that I’ve seen. One is just pure round-robin. If there are three people and you’re on it for 45 minutes, then each person gets 15 minutes.
The other format that I’ve experienced with and been familiar with is a hot seat format. That’s where, if there are three people, 45 minutes, two of the founders maybe give five-minute updates; this is what’s going on. Then, the other founder takes the other 35 minutes and go way deep on a single issue or a single problem they’re facing. They ask for advice and thoughts, it’s a white board session, they’re thinking that through, and how can you help. It’s all the stuff. So, a hotseat really just means I have a lot of time to dig into something. You can talk about how we’ve implemented that with the TinySeed batch calls because it’s evolved a little bit over time, but there’s different value from each format, right?
Tracy: Yeah. It’s nice to hear what we do with the TinySeed call formats and we’ve gotten a lot of questions about that actually in the application since how we run our calls. It’s 50%, maybe 70% hotseat format and then 30% the round robin everyone gets a chance to talk. The way I look at it with the round robin is that I want to say people are going to get their problems solved, but really it’s harder in the round robin format because everyone’s concentrating on their own issues, and it’s a way for us to give people a place to talk out loud, to think about their own issues, because there is less feedback when you have short amount of time and everyone is participating. You have less time for people to give feedback.
With the hotseats, that’s when it’s really like, “Okay, cool. We’re going to sit down, we’re actually going to solve the problem.” That doesn’t mean you can’t have that problem solving part on those round robin formats, but it’s a lot harder when you’re telling everybody you have an even small period of time in order to share your problem as compared to being like, “Okay, cool. We’re really going to think over this one thing.”
That’s one of the things that I think about a lot with the TinySeed calls and how they work. Again, I want to emphasize that I totally want people to have their problem solved more on the round robin format, but the shorter amount of time makes it a little bit harder.
Rob: I hope that was helpful. That’s our rundown. We actually have two episodes where we spent the whole episode talking about it. Episode 167 from 2014, How to Organize and Run a Startup Mastermind, and episode 277, Five Ways to Structure Your Startup Mastermind. And I believe that’s when Mike and I went back and forth because I like round robin in general for the weekly or monthly masterminds that I’m in. And he likes a hotseat, I believe. We were going back and forth. Then I’ve since changed my opinions on that as well. If you want to know more about masterminds, head to those episodes.
Tracy: Awesome. Next question comes from Mike and he asks, “Has there ever been any public numbers on how much a SaaS’ monthly revenue comes from forgotten subscriptions or lost users? Those users who are paying, but never use the service/content. As an owner, do you think there’s any moral responsibility for us to stop charging these people at a certain point?”
Rob: Good question, Mike. I’ve never heard of public data. I know that I’ve seen private data across the number of SaaS apps and it really depends on the niche. In all honesty, if you are doing high pressure sales tactics to that Internet marketee, aspiring entrepreneur audience, and you’re selling annual plans, these numbers are 50%–60% of people who have paid for that year, maybe even 70%, and never use that much like the ebooks people buy that they never read, the video courses people buy that they want to get to and never do.
I think a normal range depends on exactly how you measure inactivity, but I’d say between about 15% and 25% is the healthy SaaS app range, which sounds really high. Even right now, I’m paying for a couple of SaaS subscriptions and we’re technically inactive. I believe I have three right now that one I’m leaving for data purposes until we totally transition to a new system, another one I signed up, the trial ended, I’m just extending my trial, so I’m like two months of paying and I haven’t yet flipped the switch in moving something live.
With those, I don’t feel like I wouldn’t want the owner of that SaaS company to come to me and say, “Hey, I want to shut these down because I’m leaving it on purpose.” Obviously, someone forgets about it. Moral responsibility, I guess you could ping people. It’s more about moral responsibility to get people activated. It’s how it think about it.
I build apps to provide value to people, and if they’re not getting that value out of it, then I feel like I’m failing them in the sense that I didn’t educate them well enough to learn how to use it, they don’t know what to do next. That’s how I think about it. I don’t know what you think about it, Tracy.
Tracy: I think this goes from, I can’t remember who, but I feel like there has been a few services out there that have gotten public to say, “We had a certain amount of customers who aren’t using our app. We’re going to do the right thing and make sure they’re not being charged or they’ve been removed or whatnot.” They’re promoting it as, look how moral we are being.
If you want to go that way, then sure, but if you’re a large company, you have the privilege to: (a) remove that revenue and not have to worry about that, and (b) also, we have the analytics and the things in place so they can see who is actively using the app, they have the time to dig into those numbers, they have the time to spend the time to remove those people. Anyone who is a small business who’s bootstrapped or whatnot, that doesn’t have a lot of time, has to be really efficient with our time, I want to say, “Hey, cool. That’s a great moral thing to do,” but I don’t think a lot of small businesses have the time to do that. If that makes sense.
I want to say that it’s totally fine if you don’t feel like you have to spend the time working on those kind of things that is going to lose you revenue when you could be spending the time, like you said, improving your app, improving your activation number, spending your marketing dollars, and working on getting the word out. I just want to reassure that there’s no problem with not having the time to do this moral revenue losing thing as a small app, even though there are people out there who have that ability.
Rob: I think it’s a good point you raised, is just to even look into it, it takes time. And time is the most valuable asset of a founder, especially when you’re a one-person or a three-person team. The revenue is an issue as well. What if you went out and sought everyone out and you email them, and you double check, “Hey, I’m going to cancel your account. Do you want to cancel? Are you sure, are you sure?” That is a campaign on its own. You’re going to do that and then you’re going to lose 15% or 20% of your MRR.
If that’s something you want to do, then go do it. I don’t know anyone that’s done it. You mentioned examples of folks that do it. I certainly don’t think there’s anything wrong with that. It’s interesting just to look across the landscape of the way we used to buy software as paid as a one time fee, and then you had to buy it when the next major version came out.
You bought Microsoft Word and then you had it for three or four years, and it didn’t matter if you used it or not, you paid that fee up front, $100 or $200. Microsoft Office was so cost prohibitive that they have student versions and they’re giving it away in India and Africa and stuff because it is expensive. Whether you paid for it and used it five times, or whether you paid for it and used it solid for three years, you paid the same amount.
We’ve transitioned to subscription things, and I think that’s way better for the consumer, because now we can cancel. That’s why SaaS is so hard to grow. When people aren’t using it, you haven’t got that big chunk of money up front. In my opinion, if you make it easy for people to cancel and with every app I’ve ever had, we email a monthly receipt. Every month, you get an email that you’ve been charged this month, this is your bill date, and this and that. You’re getting notified. I’d imagine there’s some apps out there that don’t do that and they try to hide behind it or they hope you forget and never check your credit card statements. Don’t do that. I don’t think that’s ethical.
But if you’re pinging people, when email receipts go out, we used to get a response and it’s like, “Hey, I meant to cancel this. Can I get a refund?” which we would do. We would definitely get cancellations from receipts. If we’re optimizing for non-cancellation, we would have removed our email receipts, we would have removed the cancellation button in the app and made you email support or you haven’t […] call support like Comcast or whoever does.
That’s the way to game things and that’s where I think you get on the immoral or unethical approach. I think what I’ve outlined, which is you’re notifying them, they’re well aware you’re doing it, you’re trying to get people onboarded, I feel like you’re doing what you can. You can’t force someone to use your app.
Tracy: Totally. Next question comes from Poco. He writes, “Firstly, thank you so much for all the great work and resources you offer. Do you know of any podcast similar to yours that specializes or also covers B2C stuff?”
Rob: Shorter answer is no. The long answer is the reason is because there is really no such thing as B2C SaaS. I think Lars […] said this on an early mentor call, but I’ve thought about this for years. What company can you think of that is not an entertainment company. Netflix and Spotify, I wouldn’t consider SaaS, they’re more content delivery.
Even Dropbox, which started as a consumer company, look at their public filings now. There’s a reason they went after enterprise. They are an enterprise company, the consumers that is lead gen. It’s just so we all are comfortable using their software, so that when you go to the company, and they want to sell to a 10,000-person enterprise, everybody’s already familiar with it.
It’s the same reason Apple computer gave away an Apple IIe back in 1980–1981. They gave an Apple IIe to every public school in California. They did it so that kids could learn computers, but also, they were familiar with the Apple operating system in essence and that when they went home, if their parents said, “Oh, what kind of computer we should get?” The kid would say, “I bought an Apple IIe,” they’re familiar with it.
I’m totally open to listening to this and you know of a B2C software. It’s basically what he’s saying, a podcast that focuses on B2C software, please write in questions@startupsfortherestofus.com or post a comment on this episode. Do you know of any, Tracy?
Tracy: I’m glad that you didn’t because I didn’t as well. I was wracking my brain and hoping that you had a good one to respond with. But yeah, I agree with you on all those points.
Rob: I’m sure there’s someone building mobile apps out there who’s doing a podcast. The B2C side tends to be training courses, information, sometimes it’s dietary stuff like I need a paleo meal planning app, or meditation, wellness. I think that’s the kind of stuff that focus on and I don’t know of any podcast that focus on that. Aside from one-off, like if you listen to This Week In Startups, Jason Calacanis interviews founders and you’ll see B2C founders come through there. That might be the one place that I’d go if I were looking for this.
Tracy: I think that’s all the questions we have.
Rob: We’re wrapped up for the day. That’s great. Short episode. Folks want to find you online, tracymakes.com or @tracymakes on Twitter.
Tracy: I’m off to correct you. It’s tracyosborn.com.
Rob: Oh, good. I’m glad you corrected me. I’m confused when the domain doesn’t match the twitter handle.
Tracy: If I could get @tracyosborn on Twitter, I would. Alas, there is another person.
Rob: There is another Tracy Osborn. I went out and bought robwalling.com two years ago from a different Rob Walling, and one of the bigger reasons is I just wanted all my handles to match and I got tired of saying, no one could remember what my website was softwarebyrob.com, because back in 2005, that was what you did. You didn’t just put your name.com, I don’t know why. It just wasn’t a common thing to do and now it makes so much more sense.
Thanks again to Tracy for joining me on the show today. We answered a lot of listener questions. And if you have a question that you’d like to hear answered on the show whether by me or myself with a guest, leave us a voicemail at (888) 801-9690. You can always email us, it’s questions@startupsfortherestofus.com. You can attach a Dropbox link, what have you.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us by searching for startups in any pod catcher. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. I’ll see you next time.
Episode 478 | A Few Things I Learned in 2019
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Show Notes
In this episode of Startups For The Rest Of Us, Rob reflects back on his goals of 2019 and shares some lessons that are broadly applicable to founders/entrepreneurs. He also shares how he “unplugged” from the internet/devices while on a recent vacation with his family and the benefits he experienced.
Items mentioned in this episode:
Hey, welcome to Startups for the Rest of Us. I’m your host, Rob Walling. This is episode 478 and I’m going to fly solo today. Here I sit, just a couple of days after the New Year. I just had a ton of reflection, it’s really interesting.
I’m going to cover a couple of things today. I want to talk a little bit about unplugging, based on recent experience that I had going to the Dominican Republic with my family. It was my first time there. I unplugged, we unplugged for half of the trip. It was four days with no wifi and no Internet at all. I want to talk a little bit about that experience and the impact that it had on me, something that I want to make a habit of in this coming year.
I also want to revisit my 2019 goals. I know often around this time of the year, Mike and I revisit our prior year goals and we look ahead at the next year’s. I’m not going to do something nearly so formal, but I did want to talk through quickly, some of the goals that I had set for 2019. I have some other reflections on 2019, some lessons that I learned, that I think are pretty broadly applicable to founders and people doing hard things, ambitious folks trying to build something that is difficult.
If nothing else, I hope that you leave this episode with a sense that we’re all going through the same thing, we all experience these same thoughts, and experiences are very similar ones as we do these. It’s this feeling of, “Wow, I’m not moving fast as I want,” or, “I’m not very good at this,” or, “This is scary and I don’t really want to do this anymore. How am I going to fix this?” that type of thing. As I reflected back on stuff that’s happened over the past 12 months, it has been an absolute whirlwind. I want to talk through some of that today.
To start, over Christmas and New Years, I spent eight days in the Dominican Republic with my family. As I said, I had bever been, my kids had never been, but Sherry had, either spoken in an event or been in a retreat there earlier last year. She booked eight days for us and the later half of that was completely off the grid.
It was scary at first. I will admit. It’s weird, I’m not on Twitter and Facebook all the time, and I’m not in Slack all the time. I don’t need that constant dopamine rush of an app giving me feedback. It’s just not how I’m built. I shouldn’t say that’s not how I’m built because I have been there at times, but I’ve been very deliberate about not allowing myself to fall into that trap. Yet, I found myself frequently thinking of something, wanting to just know the answer right then, and wanting to Google it. Realizing, “Oh, I want to listen to that book,” going to Audible and not being able to download it. It was this slow grind on me, this realization of how reliant I am on external inputs.
I’ve always consumed a lot of media, typically reading books, listening to books, listening to podcasts. I do that because it gives me new ideas and fresh perspectives that allows me to view my day-to-day job in a different way, but it also allows me to come on this show and not say the same things over and over, to have an evolving perspective.
What I also realized is if anything, I consume a bit too much. Even though I feel I have a pretty good balance of consumption in production, in producing things, podcasts, conferences, accelerator or whatever, I realized during this four-day Internet fast that my mind wandered in glorious ways. I got so deep into topics that I just wouldn’t have stumbled upon, how I not had this time.
This wasn’t a retreat. I’d like to take a retreat once a year, maybe twice a year if I really need it. Typically, it’s a once a year cadence where I ask questions, then I sit down and write stuff. This was and that. I was with the family, I was not asking specific questions, I was really casually moving from one topic to the next, and it led to some real ground breaking insights, to some problems, or just issues that MicroConf expansion over the next 12-18 months, has a lot of logistics and a lot of things that we’re thinking about. How can we do this well? How can we make this better? I just had a lot of thoughts on it that didn’t have the space to come out in my day-to-day and creative ideas bring seemingly from nowhere, but they weren’t from nowhere. It’s all the thinking, the note taking, and just the 10,000 hours of going through this process. I think it was a real reminder for me to do this more often.
As I said, I only want to do a retreat every year or so. I actually think I want to do this off the grid thing quarterly. I feel like I could do it once a month, in all honesty. It was calming and soothing to just go away, turn off the Internet, and think about things. You can tell it rock my world, so that’s something that I want to try to do in 2020, is do this off the grid.
Bill Gates used to call it “think weeks” and I think he only did it once a year, but I wouldn’t necessarily go out with the intent of reading a bunch of books and synthesizing information. It really is, what are the broader issues at hand that I want to think about, but it’s also just let your mind wander almost in a meditative state, let the issues show themselves, let the thought show themselves, and let these creative insights come. That was a bigger realization for me.
If you already do that, I’m impressed. If you have never done this, obviously, it’s easier said than done given how busy all of our schedules are. It was pretty eye-opening to me, it is something that I believe is a practice that I am lacking in and I want to do better. That was unplugging.
Second topic I want to cover are goals that I had set for 2019. Really, I had four goals that I had set about. The first was exercise two or three times a week. I mostly achieved that. I was way ahead of it for a while. Once winter came, travel got in the way. I have absolutely fallen off the wagon. I feel that’s mostly a thumbs up-ish for me and it’s something that I need to keep doing especially as I get older. My birthday was just five day ago, so I’m another year older and I need to keep thinking about it.
I hate exercise. I just don’t want it. I never liked it. I was always an athlete in highschool and college, so I didn’t need to exercise, because that’s just what I did. It was built into this routine of, you go in your practice for two hours and you’re in this amazing shape, but that where I’m at. I have to set this goal for myself, otherwise, I don’t do it. That was number one.
Second one was to continue pushing TinySeed forward. It was to get the first batch chosen. It was to get the first batch to have a noticeable impact on their growth and not just me, obviously, but the program itself, the mentors. To make TinySeed essentially the preeminent accelerator for bootstrapper and for folks who don’t want to shoot the moon and who want to build this ambitious yet sane stuff for startups. I feel like that is on, or ahead of schedule with everything that I had envisioned and spoken with my co-founder, Einar. That feels like a win to me.
At this point, things are continuing to roll and frankly accelerating, both with TinySeed and the applications for batch two. We had a lot more folks with revenue, we had a lot more folks with tractions in the second application process. With MicroConf expansion, the way the podcast has continued, even though Mike has taken a step back, a lot of things are hitting on all cylinders. It hasn’t been easy and I’ll get into that a little later in this episode, but in taking stock on what happened in 2019, I’m pinching myself a little bit.
It’s interesting. I got an email last night actually and it was from Squarespace. It said, “Hey, your website, tinyseed.com is about to renew on the annual plan.” I emailed Einar and I said, “It was only a year ago that we started our first application process and that we had a website.” Before that, we did a landing page or something for a couple of months prior, but that’s it. It feels like it’s been two or three years based on how fast things have moved and how ambitious we’ve been with it, but how things have come together.
Not everything comes together, that’s for sure, but there was so much work to be done when this Squarespace site went live and we started taking applications. It’s that sense of we didn’t have a bunch of systems in place. We didn’t have much of employees. We didn’t have a bunch of funding. It was the two of us and we are raising enough money to trying to do the first batch. We didn’t have an amazing application process. It was a Google form that fed into a Google Sheet, that when people ask, “Hey, I’d love to get a confirmation email.” I sat and thought, am I going to write some code to make it to this? Am I going to have to go back and hack PHP, or learn Ruby to make it do this?
Of course, I remembered Zapier monitoring Google Doc and say, “That was it, it was just gum and bailing wire, and you’re just trying to keep it together,” but the outward appearance was not that. The fact that I was sifting through 880 something rows in a Google Sheet, trying to sort things, interview people, and doing 70 something calls, it’s the image of that duck that’s on the water. From above, it looks calm, but underneath you’re just paddling like crazy. This is as much as startup is as anything I’ve ever done in terms of the uncertainty and just the scrappiness that you have to do.
In that startup life, I used to work with a guy who would say, “In startup world, a week is a month, a month is a quarter, a quarter is like a year, because you’re moving so fast.” That’s been a big reflection of me. I think something I’m pleased about with 2019 is, I don’t work a ton of hours. I don’t work 50-hour weeks. I work normal work weeks. I take time off to reflect, and I feel like that.
My advice to you if you’re not already thinking this way is that’s how you play long ball. That’s how you do this for 15 or 20 years because being an entrepreneur is very, very hard. As we know, it’s extremely stressful. If you work this 50–60 hour weeks, you can do it for a short period of time, but over time, it degrades your ability to produce. Anyway, that’s the reflection on TinySeed. I’m going to talk a little bit more about MicroConf in the podcast in a couple of minutes.
My third goal was to not not freak out when the stock market crashed in 2019. That just didn’t it happen. That was more of a prediction than anything. I’m not sure if that was actually a goal.
The last goal that I completely failed on was to write, or re-write a book. That one has been on my list for years and it’s always been a Plan B, that if I have time, I really want to re-write Start Small, Stay Small. I still get a lot of emails about it. It’s still 90% applicable, but it’s dated. Some of the links don’t work and there’s just certain tactics that don’t work. I’m at the point where I kind of throw my hands up, like is this something I think I can pull off in the next year? I just don’t know. I need to get more thoughts to doing that.
The interesting thing for me is my day-to-day work, not my personal life, but work life has really come down to three things: MicroConf, this podcast, and TinySeed. I’ve already talked a bit about TinySeed and what we did last year. A question I get (actually often) is, “How do you get so much done or how do you run all three of these things? They seemed very time consuming.” It’s often hard. I’ll answer, “Well, I have a Trello board and I have a process, all these and all that,” and that’s part of it, being efficient, being fast with email, and delegating all these stuff.
I think the biggest thing that has saved me hundreds of hours, if not thousands, is this division of responsibilities to extremely capable people. It didn’t happen by accident, but it’s something that I’ve learned over the years. Some people get here really quickly. Some people immediately think, “I need senior project thinkers who can get things done.”
I started with a very limited budget because I was a bootstrapper, with basically no budget and a salary for my day job. I went for a work week route in 2007 and started hiring VAs, which are very task-based people. You need heavy process. That worked for that stage, so I hung on to that stage too long, that stage of task-based people.
That was really right before Drip and it wasn’t until Drip where I realized, “Wow, hiring project people, where they can handle an entire project, even if they need some training, they’re more expensive than task based, but they’re such a step-up in terms of how much you can delegate, much you can give and expect results.”
I think the next step up is a product person. Someone who isn’t just working on a project and managing that in timelines and dates because you can find a lot of project managers, but how many product people can you find? By product, I don’t mean software, I mean a podcast, if you think about it, is a product. A producer could produce it in a way that’s really at a high level. That’s better than someone who, you’re just like, “Okay, these are the dates and these are the timelines of the podcast. This is who needs to be on.”I was actually thinking about how do I make this better, how do I think ahead and add things to this.
The same thing with your software product that you’re managing. Obviously, it’s a product. The same thing with MicroConf. That’s a product if you think about it. It’s a bunch of different smaller events. Now, it’s online stuff. It’s the state of indie SaaS report and the live video stream that’s going to come along with it, the Slack channel and all of that. It’s all really product-based thinking.
While I could sit down with someone and outline, “Hey, week-to-week, month-to-month, this is what needs to happen and someone could logistically do it.” How do you find someone who’s one layer above that? As a product thinker, something with TinySeed as an accelerator. It’s a bit of a luxury, but it’s a realization I’ve had that there is no chance that MicroConf, TinySeed, and the podcast could all exist at the level that it does, without many product-based thinkers.
That started off as Einar and myself, and then Tracy joined the team to be thinking about TinySeed. It’s not just how do we run TinySeed, but it’s how do we make it better constantly and new suggestions of how do we improve this process. I talked about our application process for batch one, that was bailing wire and duct tape. When the second one came around, Tracy evaluated all these tools, just went off, and made recommendations to us. Basically made a decision to make this thing better and more manageable. It is, it’s better. We look at it as v2.0 of our whole process.
As we expand, because we’re going to fund more companies with this second batch than we did in the first, obviously, batch three, four, five will expand from there. These things have to get better. I think that the scrappiness of that initial one of just getting it done is what a lot of us founders are really good at. How can you find a person if you’re not good, I’m not great at, then putting that into writing, communicating a process, and improving upon that process constantly iterating, that’s not my strong suit. But that’s okay because you can find people, you can hire people, you can work with people who can help you with that. That’s where you’re really going to level up, is where you figure out your strengths. You double down on those and how do you backfill against your weaknesses.
Speaking of the podcast, I have to admit, I haven’t talked about this on the show. With episode 448, when Mike and I had a really intense conversation about him stepping back, focusing on Bluetick, and whether or not he should, that whole thing (again, if you haven’t listened to that) is one of the best episodes of this entire (almost) 500 episode run, in my opinion.
I was kind of scared after that because how do you take something that has been running for close to 10 years with two people, has a very defined format, we have not iterated very much on the format, and how do you reinvent it in a way that hopefully: (a) isn’t the worst, (b) isn’t just as good but is actually better, how do you do that? That’s a task that I was faced with back in that May–June time frame. It’s close to seven months now.
I’ve done some experiments. I’ve tried different show formats, Q&A with different people. Obviously, have been doing interviews but trying to do interviews in a different way than everyone else does, hot seats, there are some solo episodes like this, but there was a lot of uncertainty there for me. I certainly felt more trepidation and angst about keeping it going and I how I would do that. I was also highly motivated.
There’s this interesting thing growing up. It was not an option for me and my siblings to quit things. I don’t want to sound like the old guy who walked uphill both ways in the snow, which I did not do (I rode a bus to school), but being in school, I was one of the scholar athletes where I got straight As and also played two sports. It was just a given, that I got on the bus at 7:30 and my parents pick me up after football practice at 7:00 or 7:30. It was just 12-hour days and I never once thought this is hard, I shouldn’t do this. It was just, this is what we do as scholar athletes or as entrepreneurs. We do the hard things. I think it’s almost easier when you don’t question them. There was, of course, a certain point you can drive yourself to depression, there’s health issues, there’s a bunch of stuff.
When Mike took a step back, I never once thought, “Well, I guess we should shut the show down. I guess we should end the podcast,” because it’s just not an option to quit. Again, there are exceptions. It’s an option to quit if your startup isn’t working, you’re going bankrupt. There are things, there are ways, but in these scenarios where it’s not everything falling off a cliff, but it’s like this is hard, or this is a mental challenge, or a physical challenge, for that matter, which is what it was growing up in highschool and college. It was hard workouts, it was staying up then to try to finish homework, it was being tired a lot, that kind of stuff. Again, it’s just wasn’t an option not to do it. I think that’s a skill. That skill of hard work and the ability to not just question things, I think has served me well.
The feedback I’ve gotten on the new podcast format has been overwhelmingly positive. I’ve loved the constructive feedback I have received and I’m making tweaks to the show format, the week-to-week stuff. I plan on once again continue to double down on the show in 2020. My love that I have, the freedom to experiment with things, and sometimes they work and sometimes they don’t. I love that I have the time to do it.
I know I have a limited time, given everything else, but it is in line with MicroConf and even with TinySeed, the ability to do TinySeed Tales. I wanted to do TinySeed Tales for five years, that high level of NPR production. Didn’t have the time, didn’t have the budget, and this moment is essentially was an excuse for me to do that. We are certainly looking at a season two of TinySeed Tales. Plan to keep doing that based on the feedback I received.
One more reflection on 2019 I wanted to share with you before I wrap is once again that reinforcement, that running something on autopilot or doing something for the second, third, fourth, fifth time is not that hard. But launching new things is extremely time consuming in way more than you think it’s going to be. This is the reason why I always advise people who say, “Hey, I’m going to try to launch or grow two pruducts at the same time, even two info products,” to don’t do that. Grow one, get it to a plateau, auto-pilot it as much as you can, and focus on the other, because launching two things is time consuming, it’s mentally taxing.
With MicroConf, we’ve done 19 of them, our 20th, and our 21st are here in a couple of months. We’re pretty good at them at this point. Obviously, we can always improve, but it’s not a decision point of everything of what should the format be? What should the meals be? What should the schedule be? Really, it’s a known quantity. Even if we revamp it and tweak it each year, that’s a known quantity. It isn’t as time-consuming as something that you think is going to be pretty quick. Like the example that I’m experiencing, that I just spent five hours yesterday working on, is a state of independent SaaS survey and report. I literally thought that I could hire a designer, hire a statistician, then draft a survey, and hand most of it off to be done. That has not been the case.
We are literally hundreds, hundreds of person hours into this, including the designer statistician and my time. It has been so much more of my time than I estimated or anticipated. It’s worth it. Like the results, I’m starting to see we have versions of the report now that we’re tweaking and it’s absolutely worth every minute and every dollar that we’re spending on it. But it is that reminder to me that everything is new, everything is a decision, and everything has to be thought through from square one, about how we word things, the look, the feel, how we analyze, and what assumptions we’re making. It’s just that everything is new.
That’s the same thing when you’re building a product. You don’t know what features to build next, what customer to listen to, and everything is new. You don’t know if your pricing is off, you don’t know if your messaging is off, you don’t know if your positioning is off, you don’t know if your brand is off, or all of those things is on and only one os off. It’s just so hard, there’s so many variables, so many decisions to make. This is why launching new things is time consuming, it’s mentally taxing, and it really takes a founder mentality to do it.
You can’t hand off a task that requires a founder to a project person, or oftentimes, even a really good product person has a tough time doing something from scratch. There’s this very unique skill set that takes something from zero to one, in that sense, from zero to existence. It’s really hard. I do believe it’s something that we get better at the more you do. I also think that it’s one of the hardest things that I’ve done over and over.
There’s this old marketing adage, you launch a new product to an existing audience or existing products to a new audience, but never do both at once. That means a new product to a new audience. Frankly, at some point in your career, you have to, because nobody starts out without an audience or a product and that is the hardest part. As you’re grinding it out, as you’re struggling through these decisions, the uncertainty of what you’re doing, rethinking your pricing and thinking, “Wow, everyone else has this figured out, why don’t I know what to do? Why don’t I know the right answer?” The answer is, no one else really does either.
In closing, I’m not sure if there has been a year in recent memory that I have looked forward to more than 2020. For me, personally, it’s a lot of friends. I’m enjoying the podcast, loving, doubling down on that. I’m loving the way that TinySeed is expanding and I’m super stoked, honestly, about MicroConf in the expansion. It’s just everything that I’ve been working on for 15 years has come together in a way that I don’t think I could have imagined. It makes the hard days and the set backs so much easier to fight through when you have the winds along the way and when you have good people, talented people that you really enjoy working with, and that essentially you’re constantly collaborating with to make whatever it is that you’re working on better.
With that, I’ll wrap up this episode, I wish you a prosperous, a successful, and a happy 2020. Thank you so much for being a listener of Startups for the Rest of Us for all these years. In a couple of months, we’re going to be at our 500th episode, 10 years, and it comes even before that point. It’s just a pleasure to be able to get on the mic and talk to you every week.
Thank you so much for listening. Thank you for all your support, your feedback, and your comments. I’ll see you next time.
I’m going to cover a couple of things today. I want to talk a little bit about unplugging, based on recent experience that I had going to the Dominican Republic with my family. It was my first time there. I unplugged, we unplugged for half of the trip. It was four days with no wifi and no Internet at all. I want to talk a little bit about that experience and the impact that it had on me, something that I want to make a habit of in this coming year.
I also want to revisit my 2019 goals. I know often around this time of the year, Mike and I revisit our prior year goals and we look ahead at the next year’s. I’m not going to do something nearly so formal, but I did want to talk through quickly, some of the goals that I had set for 2019. I have some other reflections on 2019, some lessons that I learned, that I think are pretty broadly applicable to founders and people doing hard things, ambitious folks trying to build something that is difficult.
If nothing else, I hope that you leave this episode with a sense that we’re all going through the same thing, we all experience these same thoughts, and experiences are very similar ones as we do these. It’s this feeling of, “Wow, I’m not moving fast as I want,” or, “I’m not very good at this,” or, “This is scary and I don’t really want to do this anymore. How am I going to fix this?” that type of thing. As I reflected back on stuff that’s happened over the past 12 months, it has been an absolute whirlwind. I want to talk through some of that today.
To start, over Christmas and New Years, I spent eight days in the Dominican Republic with my family. As I said, I had bever been, my kids had never been, but Sherry had, either spoken in an event or been in a retreat there earlier last year. She booked eight days for us and the later half of that was completely off the grid.
It was scary at first. I will admit. It’s weird, I’m not on Twitter and Facebook all the time, and I’m not in Slack all the time. I don’t need that constant dopamine rush of an app giving me feedback. It’s just not how I’m built. I shouldn’t say that’s not how I’m built because I have been there at times, but I’ve been very deliberate about not allowing myself to fall into that trap. Yet, I found myself frequently thinking of something, wanting to just know the answer right then, and wanting to Google it. Realizing, “Oh, I want to listen to that book,” going to Audible and not being able to download it. It was this slow grind on me, this realization of how reliant I am on external inputs.
I’ve always consumed a lot of media, typically reading books, listening to books, listening to podcasts. I do that because it gives me new ideas and fresh perspectives that allows me to view my day-to-day job in a different way, but it also allows me to come on this show and not say the same things over and over, to have an evolving perspective.
What I also realized is if anything, I consume a bit too much. Even though I feel I have a pretty good balance of consumption in production, in producing things, podcasts, conferences, accelerator or whatever, I realized during this four-day Internet fast that my mind wandered in glorious ways. I got so deep into topics that I just wouldn’t have stumbled upon, how I not had this time.
This wasn’t a retreat. I’d like to take a retreat once a year, maybe twice a year if I really need it. Typically, it’s a once a year cadence where I ask questions, then I sit down and write stuff. This was and that. I was with the family, I was not asking specific questions, I was really casually moving from one topic to the next, and it led to some real ground breaking insights, to some problems, or just issues that MicroConf expansion over the next 12-18 months, has a lot of logistics and a lot of things that we’re thinking about. How can we do this well? How can we make this better? I just had a lot of thoughts on it that didn’t have the space to come out in my day-to-day and creative ideas bring seemingly from nowhere, but they weren’t from nowhere. It’s all the thinking, the note taking, and just the 10,000 hours of going through this process. I think it was a real reminder for me to do this more often.
As I said, I only want to do a retreat every year or so. I actually think I want to do this off the grid thing quarterly. I feel like I could do it once a month, in all honesty. It was calming and soothing to just go away, turn off the Internet, and think about things. You can tell it rock my world, so that’s something that I want to try to do in 2020, is do this off the grid.
Bill Gates used to call it “think weeks” and I think he only did it once a year, but I wouldn’t necessarily go out with the intent of reading a bunch of books and synthesizing information. It really is, what are the broader issues at hand that I want to think about, but it’s also just let your mind wander almost in a meditative state, let the issues show themselves, let the thought show themselves, and let these creative insights come. That was a bigger realization for me.
If you already do that, I’m impressed. If you have never done this, obviously, it’s easier said than done given how busy all of our schedules are. It was pretty eye-opening to me, it is something that I believe is a practice that I am lacking in and I want to do better. That was unplugging.
Second topic I want to cover are goals that I had set for 2019. Really, I had four goals that I had set about. The first was exercise two or three times a week. I mostly achieved that. I was way ahead of it for a while. Once winter came, travel got in the way. I have absolutely fallen off the wagon. I feel that’s mostly a thumbs up-ish for me and it’s something that I need to keep doing especially as I get older. My birthday was just five day ago, so I’m another year older and I need to keep thinking about it.
I hate exercise. I just don’t want it. I never liked it. I was always an athlete in highschool and college, so I didn’t need to exercise, because that’s just what I did. It was built into this routine of, you go in your practice for two hours and you’re in this amazing shape, but that where I’m at. I have to set this goal for myself, otherwise, I don’t do it. That was number one.
Second one was to continue pushing TinySeed forward. It was to get the first batch chosen. It was to get the first batch to have a noticeable impact on their growth and not just me, obviously, but the program itself, the mentors. To make TinySeed essentially the preeminent accelerator for bootstrapper and for folks who don’t want to shoot the moon and who want to build this ambitious yet sane stuff for startups. I feel like that is on, or ahead of schedule with everything that I had envisioned and spoken with my co-founder, Einar. That feels like a win to me.
At this point, things are continuing to roll and frankly accelerating, both with TinySeed and the applications for batch two. We had a lot more folks with revenue, we had a lot more folks with tractions in the second application process. With MicroConf expansion, the way the podcast has continued, even though Mike has taken a step back, a lot of things are hitting on all cylinders. It hasn’t been easy and I’ll get into that a little later in this episode, but in taking stock on what happened in 2019, I’m pinching myself a little bit.
It’s interesting. I got an email last night actually and it was from Squarespace. It said, “Hey, your website, tinyseed.com is about to renew on the annual plan.” I emailed Einar and I said, “It was only a year ago that we started our first application process and that we had a website.” Before that, we did a landing page or something for a couple of months prior, but that’s it. It feels like it’s been two or three years based on how fast things have moved and how ambitious we’ve been with it, but how things have come together.
Not everything comes together, that’s for sure, but there was so much work to be done when this Squarespace site went live and we started taking applications. It’s that sense of we didn’t have a bunch of systems in place. We didn’t have much of employees. We didn’t have a bunch of funding. It was the two of us and we are raising enough money to trying to do the first batch. We didn’t have an amazing application process. It was a Google form that fed into a Google Sheet, that when people ask, “Hey, I’d love to get a confirmation email.” I sat and thought, am I going to write some code to make it to this? Am I going to have to go back and hack PHP, or learn Ruby to make it do this?
Of course, I remembered Zapier monitoring Google Doc and say, “That was it, it was just gum and bailing wire, and you’re just trying to keep it together,” but the outward appearance was not that. The fact that I was sifting through 880 something rows in a Google Sheet, trying to sort things, interview people, and doing 70 something calls, it’s the image of that duck that’s on the water. From above, it looks calm, but underneath you’re just paddling like crazy. This is as much as startup is as anything I’ve ever done in terms of the uncertainty and just the scrappiness that you have to do.
In that startup life, I used to work with a guy who would say, “In startup world, a week is a month, a month is a quarter, a quarter is like a year, because you’re moving so fast.” That’s been a big reflection of me. I think something I’m pleased about with 2019 is, I don’t work a ton of hours. I don’t work 50-hour weeks. I work normal work weeks. I take time off to reflect, and I feel like that.
My advice to you if you’re not already thinking this way is that’s how you play long ball. That’s how you do this for 15 or 20 years because being an entrepreneur is very, very hard. As we know, it’s extremely stressful. If you work this 50–60 hour weeks, you can do it for a short period of time, but over time, it degrades your ability to produce. Anyway, that’s the reflection on TinySeed. I’m going to talk a little bit more about MicroConf in the podcast in a couple of minutes.
My third goal was to not not freak out when the stock market crashed in 2019. That just didn’t it happen. That was more of a prediction than anything. I’m not sure if that was actually a goal.
The last goal that I completely failed on was to write, or re-write a book. That one has been on my list for years and it’s always been a Plan B, that if I have time, I really want to re-write Start Small, Stay Small. I still get a lot of emails about it. It’s still 90% applicable, but it’s dated. Some of the links don’t work and there’s just certain tactics that don’t work. I’m at the point where I kind of throw my hands up, like is this something I think I can pull off in the next year? I just don’t know. I need to get more thoughts to doing that.
The interesting thing for me is my day-to-day work, not my personal life, but work life has really come down to three things: MicroConf, this podcast, and TinySeed. I’ve already talked a bit about TinySeed and what we did last year. A question I get (actually often) is, “How do you get so much done or how do you run all three of these things? They seemed very time consuming.” It’s often hard. I’ll answer, “Well, I have a Trello board and I have a process, all these and all that,” and that’s part of it, being efficient, being fast with email, and delegating all these stuff.
I think the biggest thing that has saved me hundreds of hours, if not thousands, is this division of responsibilities to extremely capable people. It didn’t happen by accident, but it’s something that I’ve learned over the years. Some people get here really quickly. Some people immediately think, “I need senior project thinkers who can get things done.”
I started with a very limited budget because I was a bootstrapper, with basically no budget and a salary for my day job. I went for a work week route in 2007 and started hiring VAs, which are very task-based people. You need heavy process. That worked for that stage, so I hung on to that stage too long, that stage of task-based people.
That was really right before Drip and it wasn’t until Drip where I realized, “Wow, hiring project people, where they can handle an entire project, even if they need some training, they’re more expensive than task based, but they’re such a step-up in terms of how much you can delegate, much you can give and expect results.”
I think the next step up is a product person. Someone who isn’t just working on a project and managing that in timelines and dates because you can find a lot of project managers, but how many product people can you find? By product, I don’t mean software, I mean a podcast, if you think about it, is a product. A producer could produce it in a way that’s really at a high level. That’s better than someone who, you’re just like, “Okay, these are the dates and these are the timelines of the podcast. This is who needs to be on.”I was actually thinking about how do I make this better, how do I think ahead and add things to this.
The same thing with your software product that you’re managing. Obviously, it’s a product. The same thing with MicroConf. That’s a product if you think about it. It’s a bunch of different smaller events. Now, it’s online stuff. It’s the state of indie SaaS report and the live video stream that’s going to come along with it, the Slack channel and all of that. It’s all really product-based thinking.
While I could sit down with someone and outline, “Hey, week-to-week, month-to-month, this is what needs to happen and someone could logistically do it.” How do you find someone who’s one layer above that? As a product thinker, something with TinySeed as an accelerator. It’s a bit of a luxury, but it’s a realization I’ve had that there is no chance that MicroConf, TinySeed, and the podcast could all exist at the level that it does, without many product-based thinkers.
That started off as Einar and myself, and then Tracy joined the team to be thinking about TinySeed. It’s not just how do we run TinySeed, but it’s how do we make it better constantly and new suggestions of how do we improve this process. I talked about our application process for batch one, that was bailing wire and duct tape. When the second one came around, Tracy evaluated all these tools, just went off, and made recommendations to us. Basically made a decision to make this thing better and more manageable. It is, it’s better. We look at it as v2.0 of our whole process.
As we expand, because we’re going to fund more companies with this second batch than we did in the first, obviously, batch three, four, five will expand from there. These things have to get better. I think that the scrappiness of that initial one of just getting it done is what a lot of us founders are really good at. How can you find a person if you’re not good, I’m not great at, then putting that into writing, communicating a process, and improving upon that process constantly iterating, that’s not my strong suit. But that’s okay because you can find people, you can hire people, you can work with people who can help you with that. That’s where you’re really going to level up, is where you figure out your strengths. You double down on those and how do you backfill against your weaknesses.
Speaking of the podcast, I have to admit, I haven’t talked about this on the show. With episode 448, when Mike and I had a really intense conversation about him stepping back, focusing on Bluetick, and whether or not he should, that whole thing (again, if you haven’t listened to that) is one of the best episodes of this entire (almost) 500 episode run, in my opinion.
I was kind of scared after that because how do you take something that has been running for close to 10 years with two people, has a very defined format, we have not iterated very much on the format, and how do you reinvent it in a way that hopefully: (a) isn’t the worst, (b) isn’t just as good but is actually better, how do you do that? That’s a task that I was faced with back in that May–June time frame. It’s close to seven months now.
I’ve done some experiments. I’ve tried different show formats, Q&A with different people. Obviously, have been doing interviews but trying to do interviews in a different way than everyone else does, hot seats, there are some solo episodes like this, but there was a lot of uncertainty there for me. I certainly felt more trepidation and angst about keeping it going and I how I would do that. I was also highly motivated.
There’s this interesting thing growing up. It was not an option for me and my siblings to quit things. I don’t want to sound like the old guy who walked uphill both ways in the snow, which I did not do (I rode a bus to school), but being in school, I was one of the scholar athletes where I got straight As and also played two sports. It was just a given, that I got on the bus at 7:30 and my parents pick me up after football practice at 7:00 or 7:30. It was just 12-hour days and I never once thought this is hard, I shouldn’t do this. It was just, this is what we do as scholar athletes or as entrepreneurs. We do the hard things. I think it’s almost easier when you don’t question them. There was, of course, a certain point you can drive yourself to depression, there’s health issues, there’s a bunch of stuff.
When Mike took a step back, I never once thought, “Well, I guess we should shut the show down. I guess we should end the podcast,” because it’s just not an option to quit. Again, there are exceptions. It’s an option to quit if your startup isn’t working, you’re going bankrupt. There are things, there are ways, but in these scenarios where it’s not everything falling off a cliff, but it’s like this is hard, or this is a mental challenge, or a physical challenge, for that matter, which is what it was growing up in highschool and college. It was hard workouts, it was staying up then to try to finish homework, it was being tired a lot, that kind of stuff. Again, it’s just wasn’t an option not to do it. I think that’s a skill. That skill of hard work and the ability to not just question things, I think has served me well.
The feedback I’ve gotten on the new podcast format has been overwhelmingly positive. I’ve loved the constructive feedback I have received and I’m making tweaks to the show format, the week-to-week stuff. I plan on once again continue to double down on the show in 2020. My love that I have, the freedom to experiment with things, and sometimes they work and sometimes they don’t. I love that I have the time to do it.
I know I have a limited time, given everything else, but it is in line with MicroConf and even with TinySeed, the ability to do TinySeed Tales. I wanted to do TinySeed Tales for five years, that high level of NPR production. Didn’t have the time, didn’t have the budget, and this moment is essentially was an excuse for me to do that. We are certainly looking at a season two of TinySeed Tales. Plan to keep doing that based on the feedback I received.
One more reflection on 2019 I wanted to share with you before I wrap is once again that reinforcement, that running something on autopilot or doing something for the second, third, fourth, fifth time is not that hard. But launching new things is extremely time consuming in way more than you think it’s going to be. This is the reason why I always advise people who say, “Hey, I’m going to try to launch or grow two pruducts at the same time, even two info products,” to don’t do that. Grow one, get it to a plateau, auto-pilot it as much as you can, and focus on the other, because launching two things is time consuming, it’s mentally taxing.
With MicroConf, we’ve done 19 of them, our 20th, and our 21st are here in a couple of months. We’re pretty good at them at this point. Obviously, we can always improve, but it’s not a decision point of everything of what should the format be? What should the meals be? What should the schedule be? Really, it’s a known quantity. Even if we revamp it and tweak it each year, that’s a known quantity. It isn’t as time-consuming as something that you think is going to be pretty quick. Like the example that I’m experiencing, that I just spent five hours yesterday working on, is a state of independent SaaS survey and report. I literally thought that I could hire a designer, hire a statistician, then draft a survey, and hand most of it off to be done. That has not been the case.
We are literally hundreds, hundreds of person hours into this, including the designer statistician and my time. It has been so much more of my time than I estimated or anticipated. It’s worth it. Like the results, I’m starting to see we have versions of the report now that we’re tweaking and it’s absolutely worth every minute and every dollar that we’re spending on it. But it is that reminder to me that everything is new, everything is a decision, and everything has to be thought through from square one, about how we word things, the look, the feel, how we analyze, and what assumptions we’re making. It’s just that everything is new.
That’s the same thing when you’re building a product. You don’t know what features to build next, what customer to listen to, and everything is new. You don’t know if your pricing is off, you don’t know if your messaging is off, you don’t know if your positioning is off, you don’t know if your brand is off, or all of those things is on and only one os off. It’s just so hard, there’s so many variables, so many decisions to make. This is why launching new things is time consuming, it’s mentally taxing, and it really takes a founder mentality to do it.
You can’t hand off a task that requires a founder to a project person, or oftentimes, even a really good product person has a tough time doing something from scratch. There’s this very unique skill set that takes something from zero to one, in that sense, from zero to existence. It’s really hard. I do believe it’s something that we get better at the more you do. I also think that it’s one of the hardest things that I’ve done over and over.
There’s this old marketing adage, you launch a new product to an existing audience or existing products to a new audience, but never do both at once. That means a new product to a new audience. Frankly, at some point in your career, you have to, because nobody starts out without an audience or a product and that is the hardest part. As you’re grinding it out, as you’re struggling through these decisions, the uncertainty of what you’re doing, rethinking your pricing and thinking, “Wow, everyone else has this figured out, why don’t I know what to do? Why don’t I know the right answer?” The answer is, no one else really does either.
In closing, I’m not sure if there has been a year in recent memory that I have looked forward to more than 2020. For me, personally, it’s a lot of friends. I’m enjoying the podcast, loving, doubling down on that. I’m loving the way that TinySeed is expanding and I’m super stoked, honestly, about MicroConf in the expansion. It’s just everything that I’ve been working on for 15 years has come together in a way that I don’t think I could have imagined. It makes the hard days and the set backs so much easier to fight through when you have the winds along the way and when you have good people, talented people that you really enjoy working with, and that essentially you’re constantly collaborating with to make whatever it is that you’re working on better.
With that, I’ll wrap up this episode, I wish you a prosperous, a successful, and a happy 2020. Thank you so much for being a listener of Startups for the Rest of Us for all these years. In a couple of months, we’re going to be at our 500th episode, 10 years, and it comes even before that point. It’s just a pleasure to be able to get on the mic and talk to you every week.
Thank you so much for listening. Thank you for all your support, your feedback, and your comments. I’ll see you next time.
Episode 477 | Assessing Product-Market Fit, How to Find a Mastermind, and More Listener Questions with Brian Casel
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Brian Casel of Audience Ops, answer a number of listener questions on topics including assessing product market fit, finding a mastermind and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. This week, Brian Castle joins me on the show. We talked about assessing product/market fit, how to find a mastermind, and answer many more listener questions. This is Startups for the Rest of Us episode 477.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing ambitious startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Brian Castle, we’re here to share our experiences to help you avoid making mistakes we made.
Welcome back to the show. We have a listener question episode today, Brian Castle, who you may know from BootstrappedWeb Podcast. He was also on the show just a few weeks back talking about his experience growing a productized service called Audience Ops. It’s a content creation service that he grew, then had a 40% decline in revenue, and then built it back up through 2016-2017, and then he taught himself how to code and has since launched an early stage SaaS called ProcessKit.
Brian has a myriad of experiences under his belt. He’s still an early stage SaaS founder but he has a lot of productized service experience. He’s a blogger and podcaster. I enjoyed the conversation today. I felt like we attacked some pretty interesting questions in a very Startups for the Rest of Us kind of approach—building the ambitious startups, being meticulous, disciplined, repeatable, taking on these questions in a pragmatic way, and answering in a way that we would approach them.
Before we dive in, I’ve had a few questions about what I’ve been up to lately. I think the biggest thing I’ve been focusing on is TinySeed batch two. Applications closed about a month ago. I know I’m having a ton of conversations with the founders of companies who applied to be part of TinySeed and that’s been super exciting. Moving on that process, it’s super time consuming but it’s critical to making this whole ecosystem work. I’m just really digging in and spending a lot of time on that in addition to working on MicroConf stuff.
In fact, to the state of independent SaaS, the survey that we ran a couple of months ago, that report is almost done. We’re putting the finishing touches in the next week or two. I’m going to be doing a live video presentation of the high-level findings and the most important findings of it here in just a couple of weeks at the end of January.
If you’ve already responded to the survey itself and included your email, we’ll certainly notify you once that’s available. If you’re not on the list, obviously, microconf.com, that would be the place to get on that list. I think it says “[2:42] SaaS report” or something in the header, there’s a landing page where you can find about that. Whether you come to the live video event or not, we will have a full PDF report of that that will be made available.
There’s some crazy, interesting, findings. I’m super stoked to be digging in this data. I have this mental model of how these all shakes down but to actually have data to look at and to sift through, and to see which of my assumptions, and my experiences match up with that, and which are, perhaps, contrary or countered by the data has been super fascinating. I’m enjoying it a lot. I can’t wait for us to share that with you and the rest of the MicroConf community.
With that, let’s start answering questions with Brian Castle. Brian Castle, thanks so much for coming back on the show.
Brian: Hey, Rob. Thanks for having me on.
Rob: Absolutely, man. We’re going to answer some questions today. I think you said the Question & Answer episodes are some of your favorites. Is that right?
Brian: Yeah. I was just going to say yeah. This is one of my favorite types of Startups for the Rest of Us episodes. I’m excited to dive in.
Rob: It’ll be fun. I’ve already reminded people in the intro of your areas of expertise and everything. We have some voicemails to kick us off. We actually have a comment; there’s an interesting one about how to accept payment by check in a clever way that I had never heard about. I’m really interested to hear…
Brian: I saw that one.
Rob: … your take on it. I was like, “Hey, I learned something. That’s great.” Let’s kick us off with our first voicemail which is a question about the product market fit survey.
“Hey, Rob. This is Daniel from [00:04:13]. I’m curious whether you ever come across the product/market fit survey methodology and what your thoughts on it might be or if there’s other quantitative number-based survey methodology you’ve used to assess customer feedback? Thanks a lot.”
Rob: To give listeners a little bit of an idea, I’m pretty sure he’s talking about the Sean Ellis’ product/market fit survey which is one question and then with a follow up and it’s, “How disappointed would you be if this X product went away? You’re no longer able to use X product.” The answers are: Don’t care, mildly disappointed, really disappointed, somewhat disappointed. It’s four or five different options. If someone selects the top two of being really disappointed or incredibly disappointed—the topmost severe disappointment—if at least 40% of your current customers select that then Sean Ellis said that’s when he deems you have product/market fit.
I like this survey. I respect the hell out of Sean Ellis; he’s a great growth marketer. I like this survey because it gives you data and information. I think one of the cons is I don’t see the product/market fit as binary. This makes it look like, below 40%, you’re not; above 40%, you are. I feel more like it’s a gradient where it’s a spectrum of having product/market fit with certain audiences and often times, you have a little bit of a product/market fit but not a lot. When you start getting a lot, you really, really, know it.
With that context for the listeners, I’m curious, Brian, to hear your thoughts on this.
Brian: I definitely, completely, agree about what is product/market fit and that is not binary, 100%. We don’t have a lot of context in terms of what the questionnaire wants to use the survey for. What’s its current situation? Is it a new idea? Is it doing customer research to validate it? Or is it an existing SaaS with 1000+ users and maybe considering doing a pricing change or something? What is the goal for using that sort of survey?
I think the usefulness of it really depends on different situations. Without knowing that background, I have a couple of thoughts on this. I really do like using surveys in general. I’ve seen that one. I’ve seen different versions of it. There are all sorts of good questions that you can include but I always want to really stress that it’s really important to couple pure data from surveys especially if you can have enough responses to have meaningful data with actual conversations with customers. You’re really going to find much more real information from actual conversations or just understanding the language that people use or their body language and things like that.
One thing I do a lot in all of my products, especially early on during the validation stage but even ongoing, I even put this into an automation flows that happen all year long where a person gets a survey, asks a few questions like that like, “How did you hear about this? What’s the problem you’re trying to solve? What are the current solutions that you’re currently using for? Currently paying for?” A lot of those I actually have free form text answers. I could use multiple choice and you can get harder data that way. But I like freeform because it gets them at least typing. Then I can read those responses then I’ll handpick the ones that just gave a lot of information. They seem really into this problem and they want to answer questions about it. Then I’ll personally invite them to call us. That’s usually the flow—survey to reading their responses to picking out people then talking to them.
Rob: Yeah. I think that’s a really good way to do it. I agree with you that talking to customers is going to get you so much more contacts than a survey. With that said, I should’ve Googled this survey before, so I wasn’t stumbling around describing it. The question is, “How would you feel if you could no longer use the product name?” There’s only four choices. I remember there being five maybe it changed over the years. But it’s very disappointing, somewhat disappointed, not disappointed, not applicable, and no longer using the product. It’s a 40% or more say very disappointed.
I’ve run this survey with three and maybe four different products. I remember it being harsh. HitTail was growing very quickly. Everything was working. It was a smaller scale app. It peaked in low-mid six figures of annual recurring revenue. But it was growing and it seemed like people were using it. When I did it, I didn’t get 40% that were very disappointed. I think it was 25%-29% range. I remember being pretty shocked by that and also disappointed. I remember running it with Drip. I’ve run it with two others before that. I have no memory of what the answers were.
I remember running with Drip. This is when Drip was really starting to take off, it was starting to grow very quickly, and I knew we were onto something. People were coming in, and churn was really low. I think we might’ve hit negative at that point. We sent this out. I remember being just like, “Oh. This is going to be a 70%.” I think it was a 43%. I remember being shocked. It’s a harsh judge. I guess what I’m saying is this, it really is a high bar that if you get near 40%, you’re probably doing pretty well with your product.
Brian: Yeah. Especially, since it’s just one question, it’s sort of like jumping off point to go dig in deeper. It’s like, you do the survey, you get the data back. It’s below 40% or above 40%. “What does that mean?” I don’t think that should mean, “Let’s go change everything and the product now.” I think that should mean, “Let’s go talk to customers.” Then understand what the underlying issues are that leads to that number.
Rob: Yes, indeed. All right. Our next question is from a longtime listener and many time MicroConf attendee, Andrew Connell [00:10:10].
“Hey, Mike and Rob. First, kudos to Mike for being so open and honest about Bluetick and what you’re working through. Hearing what and how someone else is working through the issues that you’ve got such as what you’re doing is one of the most hopeful resources for the rest of us. Thanks a lot, good luck, and keep it up.
Now, for a bit of a show feedback, and questions, I love the new format. Change is always good and it’s nice to see the change. From a fellow podcaster who’s been doing this for six years on my show, I like that listeners develop a connection to the host. A change in the format is just like moving houses; it’s still in the same family, but the environment has changed. Well done and keep it up.
This podcast, this community, and MicroConf has done a lot for me since discovering it six years ago. However, I now feel like a fish out of water. My business is in info products. Mostly, one-time sales but some description stuff. It’s not something I’d call SaaS though. This is an awesome community and dominated by SaaS businesses, topics, questions, tactics, etc. MicroConf even feels more like it’s microSaaSconf these days and that’s coming from a four- or five-time attendee. I’m sure there’s plenty of stuff that applies to different businesses, but I suspect you get my point. I don’t want you to take that as a complaint or a gripe. It’s just an observation. Maybe it’s unfair but I’m a firm believer in doing your thing. You guys keep it up and do what you’re doing. I’m curious on what you would think about this.
My question is more about advice on other communities to explore. Over the last year, I’ve been looking into the different conferences trying to find other podcasts and communities niching down to just the info product world. Info products and non-SaaS businesses have some very specific challenges. There had been other challenges that SaaS businesses have. From the last few years of MicroConf, I suspect that there’s a pretty good tight of community because we bond together and have a pretty good side of meetups and dinners of considerable sizes. Maybe I’m wrong or maybe there are other listeners who hear this commoner question who may identify with it as well.
I guess I should have told you who I am, I forgot to mention at the beginning, this is Andrew Connell from [inaudible 00:12:10]. Keep it up and just curious to hear what you guys think about this. Thanks.
Rob: What do you think, sir?
Brian: Yeah. A few things, I think within the MicroConf community, people might be surprised even though it clearly has the emphasis on software and SaaS. That’s certainly true from the speakers and the overall themes of these conferences. I can personally say for sure that I’m friends with multiple people who return to MicroConf every year and they do not own SaaS businesses. They ran ecommerce businesses, I know some info product people, and those who are in that community. I think that’s a really good thing. I think you can still find those people within MicroConf.
Outside of that, one to consider would be Dynamite Circle from Dan and Ian from the Tropical MBA podcast. I was active in that for a while; not so much recently. That community is pretty sizeable similar to the MicroConf community as well. It has a wider variety. There are some info products stuff. There’s ecommerce folks in there, some stuff related to travel, and working from anywhere. That’s a good one to look into. I don’t know about info product stuff specifically in terms of communities, that could be hard to find, but those are my thoughts.
Rob: Yeah. Tropical MBA or Dynamite Circle is what I was going to suggest as well. Good community. I’ve always considered them like a sister podcast to us. They’re more about being a digital nomad but also have a nice variety of e-com and content websites. There’s a lot of Amazon and ecommerce sellers. There have been some WordPress folks and even some SaaS folks who straddled both lines. Like that community. I spoke at their event at Bangkok in 2014, I believe. It had been a long time. I admire what they’re up to.
There is a Rhodium Weekend or Rhodium. The Rhodium community from Chris Yates is very authentic community similar to MicroConf in the sense that Chris has just groomed it over the years. There’s just a lot of good people. That’s more of a buying and selling website but there are definitely folks there who do info products.
The thing is that then you get into the internet marketing stuff. You can look at DigitalMarketer and the digitalmarketer.com from Ryan Deiss. That’s an online training. I believe they run traffic and conversions. You can go to that conference. It’s more about marketing and less about the product. That’s where software and SaaS are pretty unique. We do get together and geek out about our products in addition to other things. The product is the thing that unites us.
Whereas Dynamite Circle, it’s not the product you have. It’s more of the travelling and going against the standard script of the rest of the world. That’s the unifying factor. Whereas with eCommerceFuel—and other community—they are more like us where they unite around ecommerce. I would agree with you that I still think that we do get info product questions. I have a course although I took it off of Udemy because Udemy, I don’t know if you’ve seen it lately, but it’s kind of a train wreck as a seller. They just keep changing the terms. It was more headache than it was worth.
I had a course on there about hiring BAs. I have multiple books. I’m a big believer in info products especially in that stair step—that step one to get you to the point of quickly buying out your time. I think they’re fantastic. For me, personally, long term, that recurring revenue, that growth, that high sales multiple, if you just had to sell, that’s the beauty of SaaS. That’s why I think so many more people aspire to run a SaaS company than aspire to run an info product empire. I also think there’s a lot more opportunity and there’s just a lot more people successfully doing it.
Obviously, there are folks, yes, can you make a $100,000 or $200,000 or $1,000,000 in an info product launch? Of course. We see people doing it. But they’re really few and far between. It’s a hamster wheel of content creation. Again, it doesn’t have the sales multiple that SaaS do and all of that stuff. I think they’re fantastic for a certain purpose, but I haven’t come across a whole community that is united around just building and aspiring to do info products.
Brian: Yeah. I’ll just add one shameless plug here if you don’t mind. I run the Productize which is a course but it’s also a community. We’ve got a pretty good Slack community in there now. It’s for people who are primarily consultants and they’re looking to step up to running a business with the team and a productized service business. There are folks there who coupled that with training program. There are some software people, WordPress people in there too. You’ve got a good little chat going in there in the Slack group for people who are going through that transition phase, so that’s another good one.
Rob: Glad you mentioned it. productizecourse.com is where you’ll go to find out more about that. Thanks for the question, Andrew. I really appreciate it. I hope to run into you at the next MicroConf.
Our third voicemail of the day is an interesting one. It’s about building a very similar app and making it more stable. He’s wondering if that’s competitive advantage worth pursuing.
“Hey, guys. I want to start by saying thank you for the work that you put into this show. I find it to be truly inspirational so keep up the good work. I’m working on my first SaaS app. I’m a web developer by day. I work on it on nights and weekends. The idea for the product actually came from my wife. She works in a totally separate industry and interacts with a certain SaaS app on a pretty regular basis. One day she was describing to me how frustrated she was with this app. It was slow, unintuitive, and sometimes experience downtime during the middle of the day.
I sat down with her to take a look at it. It really seemed like it was on a shaky foundation from a technical perspective. However, it’s the only product that meets the specific needs that it solves which is why her company uses it. Our current working hypothesis is that if we build a more stable, intuitive, and functional version of the app that has feature parity, we will have enough differentiation to break into the market. What’s your take on this? Do you think functional superiority with the same set of features is enough to differentiate us? Or should we be thinking about extra features that would set us apart from them? Thanks, appreciate it.”
Rob: Mr. Castle, what are your thoughts on this one?
Brian: Yeah. It’s a good question. I like the fact that your wife is a user of this other software so you have that really close used case where you can get that personal research into how she and the other members of the company use the product. That’s always good. You probably want to expand beyond that and maybe talk to her coworkers or other people who are using it. I also like the fact that there is this solution out there in the market. It proves that some people do buy the solution, but it’s not overcrowded from what it sounds like.
I would also just have the question in your mind to understand how easy it is to reach that market. I don’t think you mentioned what type of company it is or which industry it is. Even though you might be able to build something for that market, how easy it is to go find other people who are in your wife’s position in other companies throughout the world or throughout the country or the region? I think that gets to that question of product founder fit.
Sure, you might be able to build the same product or achieve feature parity, but do you have the inroads or the communities or the channels to be able to reach those people? I know there are enough of them. I think that’s something you can certainly vet out over the next few months.
Rob: Yeah. I like the pros you pointed out. I think the fact that they proved the market out by having this app is good. I’ve mixed emotions about this one. I think you need to ask more questions. The first question I have is we can all, with our high standards, and our impeccable taste in UX, and usability go use an app and say, “Oh my gosh, that app sucks. I could build it better.” Do their users care at all? Do they care at all? Do they care one bit?
An example: I was a contractor/contract developer for a consulting firm that was redoing an app for the Los Angeles County. They spent a million bucks and they paid us to build all these stuff. The old app was literally a main frame, it was a terminal app that they would log into. The UX is typing. It was just wasn’t particularly fun, it was hard to train people, it was a pain in the butt. The delete key didn’t work, command this didn’t work, there was no undo, there were all these things you couldn’t do.
We built a modern, quick web front end on it and a bunch of the users were either so used to the old UI that they were like, “Oh, I used to like type this and then hit three tabs and it got me to the other thing and this doesn’t do that.” I’m like, “Yeah, you don’t need to do any of that. You just do one click and it auto populates from this XML import.” They’re like, “Oh well, this just seems complicated.”
Change is hard—I guess is one thing—and also, a lot of people just don’t care, and they’re used to using something. That’d be the first thing I would really try to stress out is like, “Does everyone at your wife’s work, are they complaining about this software and just dying for a better solution. Do they really, really need something better or do they not care?”
Second thing I would ask is, what are switching cost? Because without knowing that, if it’s just an export of a CSV and an import of CSV and everything is set up, awesome. But if its switching cost is to retrain someone or retrain your whole team on it and move a bunch of data and do a bunch of other stuff, that’s tough. If everyone’s on annual contracts, that means you only have a once a year when you can basically get to those prospects because they can’t just cancel for the next month. Once they’re on a year contract, they won’t get there. Think about switching cost and I would inquire about those.
The last one is one that Brian brought up, and it was a first one that came to me is you build a better product, can you get in front of the users? What are the traffic channels? How expensive are they? Are these people online? If they’re not online, you’re talking about customer pain. I’ve talked about competitor pain and customer pain, in this case, you probably won’t have competitor pain. You’re going to be the pain to your competitor because you’re going to build a better product. But you will have customer pain. Or could feasibly have customer pain if it’s more of a brick and mortar type business where you can’t just run some Facebook ads or do some content marketing and generate a bunch of leads where it’s literally cold calling or going to the events or whatever.
Since you haven’t told this about the industry, we’re just completely conjecturing here. I’m not saying you shouldn’t do it, but these are the three yellow flags or the three big questions I would have with just doing this approach. But can this approach work? Absolutely. Look at what Xero has done competing against Quickbooks, most people don’t like Quickbooks and Xero built a web-based admin or a web-based competitor to it. I think the fact that there was Infusionsoft and then Drip and ConvertKit and all these other tools were able to come in and do similar things, that’s what we were doing. We’re trying to build easier-to-use, more modern with the integrations we wanted, just a more pleasant experience overall and it worked. It can definitely work but I think you need to answer some questions before you dive in with both feet.
Brian: Yeah. Just one quick thing to add–kind of a low hanging fruit. First thing to do on that last point to figure out how could you actually reach this market. A question to ask your wife is to understand how her company bought the software that they’re currently using. Whether she bought it or a manager or somebody else was the decision maker. Did they go through an enterprise sales process or did they just Google and find the website and buy it that way? Did they pay monthly, did they pay annually? I think those are better questions to understand than even how the product works, to understand what you’re actually getting into.
Rob: Totally agree. That’s a good point. Thank you for the question, hope that was helpful. Our next question is not a question, but a comment from Kenneth Caw and he has written in a few months in the past. He says, “Hey, Rob, enterprise sales guy here wants some help,” and he has actually written in when I had David Heller on the show to do a hot seat about enterprise sales and he had written in with a bunch of good suggestions. He says, “A lot of people don’t know this, but Stripe actually released a way to receive payments by paper check this year.” This was a question that I believe in the Laura Roeder Q&A episode. We were asked, “How do you manage paper checks and how do you keep track of them and this and that?”
He’s pointing now Stripe can do it. He said, “This makes things so much easier since they provide your customers and the address for the check to be sent to, receive and process it on your behalf.” That’s crazy. “Coincidentally enough, we used to do the same thing as you did with Drip, which is to set a discount code to the customer in Stripe and then put reminders in and then check it. When payment is due, once a year, we deal with six figure checks sometimes, so this has been a total efficiency improvement since Stripe deals with the invoicing, follow-up reminders, analytics tracking, repayments, etc. Best of all as a remote company, we don’t need to depend on someone making a trip to our company’s PO box to look for the check.”
I’m not sure why Stripe doesn’t advertise this enough, but you should let your listeners know about that. Since all one has to do is simply enable a checkbox—pun intended—in Stripe, which saves us bootstrappers precious time and resources managing this. Plus, it gives you an additional reason to deal with enterprise customers that want to do pay by checks.” Big smiley face because Ken is of course an enterprise sales guy.
Thank you so much, Ken, for writing in. Did you have any idea about this, Brian?
Brian: I had zero idea about this.
Rob: I never heard of that. That’s a great service. When he said by check I thought he was going to say, and his subject line is this payment by check, use Stripe. I thought he was going to talk about e-checks where it’s like just an ACH thing where you get the routing number. But I mean literally, an address the mail to check, that is bravo, Stripe.
Brian: That really is pretty incredible. I knew about the ACH thing. I kept promotional emails from Stripe. I have not received anything about this feature. It seems like a pretty killer feature.
Rob: Yeah.
Brian: I’m curious about your thoughts on accepting checks in general. I’ve seen this in my business in Audience Ops, I’ve had quite a few leads actually, ask for the ability to purchase our service using a check or having us invoice them and then them paying us like a more traditional agency or consulting model. I’ve refused those. We only stick to credit card and debit cards through Stripe subscriptions. I know for a fact that I have left some money on the table because of that, but I opt that way because I just don’t want to deal with chasing people down for checks in the mail.
Rob: Yeah, that’s the tradeoff. At Drip, once we started accepting checks, it was late, it was after we had a much larger team. There were salespeople that could manage it. That really is what it is. It’s like putting something on your calendar to remind you to check in with someone. But the bigger thing we did is we just said we had a minimum for a check. If I were in your shoes, I would only accept it for annual prepay. I would not do it on a monthly basis. It’s like, “Hey, if you really want to pay via check, then you gotta pay 12 grand all at once or 24 grand or whatever the price point is.” That would be how I would approach it at your scale because it’s not a requirement.
But yeah, once you get up in the 25K and up, maybe even 20K and up annual contract value, you need to start doing that at least in the B2B SaaS base. It’s great that Stripe accepts it. Obviously, it’s enough of a pain point that they started doing that. They wouldn’t have done that if people weren’t asking for it. But I also think then I wonder it says, they’ll take care of all the reminders and all that stuff that’s pretty fascinating. I’d like to almost investigate this a little more because again, we had to hand build something that reminded a salesperson to reach out and make sure that the check came through.
Brian: Yeah, for sure. The other thing that I would at least keep in mind for my business is that we’re a recurring service and that’s part of the reason why we don’t do checks is that we need the payments to keep coming in so that our team keeps working. If there’s a delay, then we would need to know to pause the service for a period of time. I guess if this works automatically through Stripe and then Stripe can just mark it as unpaid or paid, then that can be your indicator.
The other question that I would wonder about is international payments. Because that’s sort of a headache that we’ve seen just because credit cards internationally tends to decline, especially for higher dollar amounts more often than like US-based for whatever reason. We’ve had to fix failed payments more often with international. I wonder if this could somehow help that. I’m not sure.
Rob: My guess is no. I’ve not even Googled this, but international checks are so complicated with the banking that I would guess that would be a V2 if they were going to try to tackle it. There’s also big fees attached to it with sending checks and trying to cash them. If you send a US check to a Canadian or vice versa, there’s this big fee they charge to do that internationally. We experience all the same stuff you’re saying with the international credit cards being declined more often than that. I don’t think this would help.
Also, one other thing to throw in is, I wonder how much Stripe charges as a fee for doing that. This is something to think about. If you’re signing a $30,000 annual contract, a 3% fee on that is $900. That’s where it starts to make sense to maybe take a check because you can basically cash that for free. If Stripe’s still charging 3%, you have to think about that, but if it’s more like ACH where it’s half a percent or 1%, this could totally be worth it.
Thanks again for the info, Ken. Always appreciate your insights. Next question is from [Mereck 00:29:46] and he says, “Hey guys, great show. Would love to get your thoughts. I’m a cofounder in a small software house.” I think he’s an agency. Because they’re consulting from their hired hourly or by project. “The issue is that my cofounder doesn’t help company anymore. He made some significant contributions in the early days including his know-how, some money investing directly and working for free. But right now, because of an unplanned change of direction in the company, and a change of the market situation, we can’t find paid work for him. Not because he does not have value to give to the market, but for now the company is too small for two founders/CEOs.
He was upfront about his expectations about work and skills in the company and he still help out a few hours a week for free. No hard feelings between us, we aren’t looking for a legal resolution. I’m wondering if we should wait for the company to grow, if we should return him the money he invested, buy out his shares, or what you think? Thank you so much for your thought.”
This is an interesting one. We don’t often get a lot of too many consulting questions. But I feel this could happen with a SaaS startup. Skills no longer and neither might be an interesting one. I guess if you’re a salesperson, co-founded it and then you decide to go way down market and not need sales, that can be something. Curious if you have thoughts on this, Brian.
Brian: This one is tough. I don’t know all the details on this. One thing that stuck out to me is that he talked about refunding the money that he invested. I guess the partner’s actually put up some of their own cash other than just putting in their time. If it were just time and you’re talking about giving him compensation for the time that he spent, that’s a tricky one because you should have some agreement going into this thing that, “Hey, we’re all investing in this idea. We don’t know if it’s going to go anywhere. There’s no promises.”
Then there’s the question of, how was the initial partnership agreement drawn up, if there was any, which there really should, generally speaking. And there’s the concept of vesting and a vesting schedule. One model that I think we’ve seen recently is the user list. You spoke to Jane about this, is that right? They sort of paused her vesting so that her initial time was still–that value remained, but then from a certain date going forward, she’s phased out a bit. That’s one model to look out.
Rob: I think consulting firms don’t normally vest, but in this case that would’ve been super helpful. If he was above a certain number of hours per week or whatever he was vesting and then at the time that he leaves then yeah, you do, he either leaves it in until it grows. It’s up to him. If he owns 10, 20% of the company and he only vested that much, then he could say, “Hey, please buy me out.” And then you have to figure out, “Hey, we can buy it out over a year or two. We can pay this much per month out of cash flow.” Or if he wanted to grow, he could gamble and leave it in and expect the company will grow and it’ll be worth more when you get there.
I believe our consulting firms, obviously, there’s going to be a range, but I think valuations are around one times annual revenue. I don’t know if it’s looking ahead or looking back. I’m not exactly sure. But someone in the community might have more info on that. But I know the multiples compared to SaaS is pretty low because it is just hours. It’s a […] for hour-type thing.
Brian: Recurring contracts can help improve that.
Rob: Exactly. But assuming that he’s fully vested, and he owns a third or half of the company, I really do think it’s a conversation. I don’t think there is anything you should do here. I think it’s up to the two of you. With consulting firms, they can have pretty good profit margins. The cash coming off could be used to buy him out. I think that’s probably the long-term play. Say, you don’t have someone with stock who really isn’t working on the business.
The hard part is how to value if he’s doing all this work for free. I don’t know how you guys figure that part out. It’s just what’s fair there? Do you agree on hourly rate and try to estimate? Or is that just what created the value in the company and his stock reflects the value of that in essence.
Brian: Again, we don’t really know all the details here, but if it’s purely consulting and the work that he was involved when the work existed was just consulting project that started and finished, then I think that the question is, “How much does his contribution to those projects live on after he stops working in the company?” I think the simplest view is split whatever revenue came from those projects 50-50, whatever your partnership agreement was, and then new projects going forward that he’s not involved in, he doesn’t really have a part in those. That would be a simple way to look at it.
The other thing to consider depending on how big the numbers are that we’re talking about here and everything else, you might want to just talk to a third party. I know that there are professional arbitrators, but there are people in this community who…
Rob: It’s like mediators. That’s a good way to think about it is to get someone, other party, to just give you guys some direct advice knowing all the details because that’s the problem is, I think there’s some gaps here. Hope that was helpful, [Mereck 00:35:03]. Wish you the best of luck figuring that out.
Our next question is from Fred Myer and he’s asking for some advice for finding or starting a mastermind. He says, “Hi, I’m a web developer and owner of two lifestyle businesses looking for a mastermind to start or join. The easy to Google options don’t seem attractive. Do you have any advice on finding or starting a good mastermind?”
I’m going to assume that since he’s a web developer, he’s looking for a software-oriented mastermind. My recommendation is always Ken Wallace’s mastermindjam.com if you really have no network. My first recommendation is always, go to your network, go to events, be part of the Startups For the Rest of Us and the MicroConf community and you’ll find people. But if you haven’t done that, can’t do that, whatever, MastermindJam is a good alternative that Ken matches people up. What do you think, Brian?
Brian: Yeah. Totally agree. I recommend MastermindJam all the time. I also recommend going to conferences like MicroConf, like the upcoming MicroConf locals, that should be a good one too for this. Yeah, just getting into communities like that. In the past, when I was really early on in this industry and I didn’t know too many people, I had a bit more focus on my local community. I would go to local meetups. At the time I was into web design and WordPress, I went to local web design and web development and WordPress meetups. I met some really good friends through that. That turned into local mastermind groups.
These days, I’m not in a weekly mastermind currently like I was for a while. But my mastermind group now was borne out of the MicroConf community where we do TinyConfs a couple times a year. We all fly to one place and have a deep dive. We chat on Slack throughout the year. I find that that’s a good format for me right now.
Rob: Yeah. I think that makes a lot of sense. Sir, we are all out of time for today. If folks want to keep up with you, they can head to, let’s see, there’s productizecourse.com, there is audienceops.com which is your productized service where you and your team create content for content marketing for folks on a subscription basis, and castlejam.com, is that your personal website?
Good. Good call. Are you still @casjam on Twitter?
Brian: Yeah, my teenage AIM screen name lives on through Twitter.
Rob: I know. I registered software by rob.com in 2004, 2005 and started blogging. It’s like, “Why didn’t I just registered my name?” Maybe it was taken or maybe I didn’t think about it, but years later—it was literally in the past, probably 18 months—finally, I bought robwalling.com from the previous owner and redirected in it. It’s just so much easier. It’s so much more memorable. It’s like once people remember your name they can find you versus trying to remember this derivative of your name.
Brian: My whole life I’ve had people mispronouncing and misspelling my last name because they think it’s like the word castle. But then in recent years I’d have people mispronounce or not understand even what casjam even means which it doesn’t really mean anything. I just got sick of explaining that whole thing. It’s my name. That’s where my blog and newsletter and links to my podcasts and products and all that’s on there.
Rob: That’s the center. Very cool. If folks, they listen to this podcast, they will like the Bootstrapped Web podcast where you and Jordan Gall chat every week or so about this kind of stuff. I’m a long-time listener, long time first time; long time listener, first time caller. Anyways, alright man, I’ll let you go. It was a pleasure having you.
Brian: Yeah, good time answering these questions. Thanks for having me on, Rob.
Rob: Absolutely. That wraps us up for the day. If you have a question that you want answered in a future episode of the show whether by me or a guest, you can leave us a voicemail at 888-801-9690. You can email questions@startupsfortherestofus.com. Obviously, you can have just plain text in there, you can attach an MP3 […] Dropbox link to an AIFF. You know the drill.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. If you’re not subscribed to Startups For the Rest of Us, you really should be, you’re missing out. Search for startups in any pod catcher. Visit startupsfortherestofus.com for full transcript of every episode posted within a week, maybe two of when the episode goes live, but continue to hear that the search for transcripts are super helpful for people so we will continue to do those. Thank you for listening. I’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing ambitious startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Brian Castle, we’re here to share our experiences to help you avoid making mistakes we made.
Welcome back to the show. We have a listener question episode today, Brian Castle, who you may know from BootstrappedWeb Podcast. He was also on the show just a few weeks back talking about his experience growing a productized service called Audience Ops. It’s a content creation service that he grew, then had a 40% decline in revenue, and then built it back up through 2016-2017, and then he taught himself how to code and has since launched an early stage SaaS called ProcessKit.
Brian has a myriad of experiences under his belt. He’s still an early stage SaaS founder but he has a lot of productized service experience. He’s a blogger and podcaster. I enjoyed the conversation today. I felt like we attacked some pretty interesting questions in a very Startups for the Rest of Us kind of approach—building the ambitious startups, being meticulous, disciplined, repeatable, taking on these questions in a pragmatic way, and answering in a way that we would approach them.
Before we dive in, I’ve had a few questions about what I’ve been up to lately. I think the biggest thing I’ve been focusing on is TinySeed batch two. Applications closed about a month ago. I know I’m having a ton of conversations with the founders of companies who applied to be part of TinySeed and that’s been super exciting. Moving on that process, it’s super time consuming but it’s critical to making this whole ecosystem work. I’m just really digging in and spending a lot of time on that in addition to working on MicroConf stuff.
In fact, to the state of independent SaaS, the survey that we ran a couple of months ago, that report is almost done. We’re putting the finishing touches in the next week or two. I’m going to be doing a live video presentation of the high-level findings and the most important findings of it here in just a couple of weeks at the end of January.
If you’ve already responded to the survey itself and included your email, we’ll certainly notify you once that’s available. If you’re not on the list, obviously, microconf.com, that would be the place to get on that list. I think it says “[2:42] SaaS report” or something in the header, there’s a landing page where you can find about that. Whether you come to the live video event or not, we will have a full PDF report of that that will be made available.
There’s some crazy, interesting, findings. I’m super stoked to be digging in this data. I have this mental model of how these all shakes down but to actually have data to look at and to sift through, and to see which of my assumptions, and my experiences match up with that, and which are, perhaps, contrary or countered by the data has been super fascinating. I’m enjoying it a lot. I can’t wait for us to share that with you and the rest of the MicroConf community.
With that, let’s start answering questions with Brian Castle. Brian Castle, thanks so much for coming back on the show.
Brian: Hey, Rob. Thanks for having me on.
Rob: Absolutely, man. We’re going to answer some questions today. I think you said the Question & Answer episodes are some of your favorites. Is that right?
Brian: Yeah. I was just going to say yeah. This is one of my favorite types of Startups for the Rest of Us episodes. I’m excited to dive in.
Rob: It’ll be fun. I’ve already reminded people in the intro of your areas of expertise and everything. We have some voicemails to kick us off. We actually have a comment; there’s an interesting one about how to accept payment by check in a clever way that I had never heard about. I’m really interested to hear…
Brian: I saw that one.
Rob: … your take on it. I was like, “Hey, I learned something. That’s great.” Let’s kick us off with our first voicemail which is a question about the product market fit survey.
“Hey, Rob. This is Daniel from [00:04:13]. I’m curious whether you ever come across the product/market fit survey methodology and what your thoughts on it might be or if there’s other quantitative number-based survey methodology you’ve used to assess customer feedback? Thanks a lot.”
Rob: To give listeners a little bit of an idea, I’m pretty sure he’s talking about the Sean Ellis’ product/market fit survey which is one question and then with a follow up and it’s, “How disappointed would you be if this X product went away? You’re no longer able to use X product.” The answers are: Don’t care, mildly disappointed, really disappointed, somewhat disappointed. It’s four or five different options. If someone selects the top two of being really disappointed or incredibly disappointed—the topmost severe disappointment—if at least 40% of your current customers select that then Sean Ellis said that’s when he deems you have product/market fit.
I like this survey. I respect the hell out of Sean Ellis; he’s a great growth marketer. I like this survey because it gives you data and information. I think one of the cons is I don’t see the product/market fit as binary. This makes it look like, below 40%, you’re not; above 40%, you are. I feel more like it’s a gradient where it’s a spectrum of having product/market fit with certain audiences and often times, you have a little bit of a product/market fit but not a lot. When you start getting a lot, you really, really, know it.
With that context for the listeners, I’m curious, Brian, to hear your thoughts on this.
Brian: I definitely, completely, agree about what is product/market fit and that is not binary, 100%. We don’t have a lot of context in terms of what the questionnaire wants to use the survey for. What’s its current situation? Is it a new idea? Is it doing customer research to validate it? Or is it an existing SaaS with 1000+ users and maybe considering doing a pricing change or something? What is the goal for using that sort of survey?
I think the usefulness of it really depends on different situations. Without knowing that background, I have a couple of thoughts on this. I really do like using surveys in general. I’ve seen that one. I’ve seen different versions of it. There are all sorts of good questions that you can include but I always want to really stress that it’s really important to couple pure data from surveys especially if you can have enough responses to have meaningful data with actual conversations with customers. You’re really going to find much more real information from actual conversations or just understanding the language that people use or their body language and things like that.
One thing I do a lot in all of my products, especially early on during the validation stage but even ongoing, I even put this into an automation flows that happen all year long where a person gets a survey, asks a few questions like that like, “How did you hear about this? What’s the problem you’re trying to solve? What are the current solutions that you’re currently using for? Currently paying for?” A lot of those I actually have free form text answers. I could use multiple choice and you can get harder data that way. But I like freeform because it gets them at least typing. Then I can read those responses then I’ll handpick the ones that just gave a lot of information. They seem really into this problem and they want to answer questions about it. Then I’ll personally invite them to call us. That’s usually the flow—survey to reading their responses to picking out people then talking to them.
Rob: Yeah. I think that’s a really good way to do it. I agree with you that talking to customers is going to get you so much more contacts than a survey. With that said, I should’ve Googled this survey before, so I wasn’t stumbling around describing it. The question is, “How would you feel if you could no longer use the product name?” There’s only four choices. I remember there being five maybe it changed over the years. But it’s very disappointing, somewhat disappointed, not disappointed, not applicable, and no longer using the product. It’s a 40% or more say very disappointed.
I’ve run this survey with three and maybe four different products. I remember it being harsh. HitTail was growing very quickly. Everything was working. It was a smaller scale app. It peaked in low-mid six figures of annual recurring revenue. But it was growing and it seemed like people were using it. When I did it, I didn’t get 40% that were very disappointed. I think it was 25%-29% range. I remember being pretty shocked by that and also disappointed. I remember running it with Drip. I’ve run it with two others before that. I have no memory of what the answers were.
I remember running with Drip. This is when Drip was really starting to take off, it was starting to grow very quickly, and I knew we were onto something. People were coming in, and churn was really low. I think we might’ve hit negative at that point. We sent this out. I remember being just like, “Oh. This is going to be a 70%.” I think it was a 43%. I remember being shocked. It’s a harsh judge. I guess what I’m saying is this, it really is a high bar that if you get near 40%, you’re probably doing pretty well with your product.
Brian: Yeah. Especially, since it’s just one question, it’s sort of like jumping off point to go dig in deeper. It’s like, you do the survey, you get the data back. It’s below 40% or above 40%. “What does that mean?” I don’t think that should mean, “Let’s go change everything and the product now.” I think that should mean, “Let’s go talk to customers.” Then understand what the underlying issues are that leads to that number.
Rob: Yes, indeed. All right. Our next question is from a longtime listener and many time MicroConf attendee, Andrew Connell [00:10:10].
“Hey, Mike and Rob. First, kudos to Mike for being so open and honest about Bluetick and what you’re working through. Hearing what and how someone else is working through the issues that you’ve got such as what you’re doing is one of the most hopeful resources for the rest of us. Thanks a lot, good luck, and keep it up.
Now, for a bit of a show feedback, and questions, I love the new format. Change is always good and it’s nice to see the change. From a fellow podcaster who’s been doing this for six years on my show, I like that listeners develop a connection to the host. A change in the format is just like moving houses; it’s still in the same family, but the environment has changed. Well done and keep it up.
This podcast, this community, and MicroConf has done a lot for me since discovering it six years ago. However, I now feel like a fish out of water. My business is in info products. Mostly, one-time sales but some description stuff. It’s not something I’d call SaaS though. This is an awesome community and dominated by SaaS businesses, topics, questions, tactics, etc. MicroConf even feels more like it’s microSaaSconf these days and that’s coming from a four- or five-time attendee. I’m sure there’s plenty of stuff that applies to different businesses, but I suspect you get my point. I don’t want you to take that as a complaint or a gripe. It’s just an observation. Maybe it’s unfair but I’m a firm believer in doing your thing. You guys keep it up and do what you’re doing. I’m curious on what you would think about this.
My question is more about advice on other communities to explore. Over the last year, I’ve been looking into the different conferences trying to find other podcasts and communities niching down to just the info product world. Info products and non-SaaS businesses have some very specific challenges. There had been other challenges that SaaS businesses have. From the last few years of MicroConf, I suspect that there’s a pretty good tight of community because we bond together and have a pretty good side of meetups and dinners of considerable sizes. Maybe I’m wrong or maybe there are other listeners who hear this commoner question who may identify with it as well.
I guess I should have told you who I am, I forgot to mention at the beginning, this is Andrew Connell from [inaudible 00:12:10]. Keep it up and just curious to hear what you guys think about this. Thanks.
Rob: What do you think, sir?
Brian: Yeah. A few things, I think within the MicroConf community, people might be surprised even though it clearly has the emphasis on software and SaaS. That’s certainly true from the speakers and the overall themes of these conferences. I can personally say for sure that I’m friends with multiple people who return to MicroConf every year and they do not own SaaS businesses. They ran ecommerce businesses, I know some info product people, and those who are in that community. I think that’s a really good thing. I think you can still find those people within MicroConf.
Outside of that, one to consider would be Dynamite Circle from Dan and Ian from the Tropical MBA podcast. I was active in that for a while; not so much recently. That community is pretty sizeable similar to the MicroConf community as well. It has a wider variety. There are some info products stuff. There’s ecommerce folks in there, some stuff related to travel, and working from anywhere. That’s a good one to look into. I don’t know about info product stuff specifically in terms of communities, that could be hard to find, but those are my thoughts.
Rob: Yeah. Tropical MBA or Dynamite Circle is what I was going to suggest as well. Good community. I’ve always considered them like a sister podcast to us. They’re more about being a digital nomad but also have a nice variety of e-com and content websites. There’s a lot of Amazon and ecommerce sellers. There have been some WordPress folks and even some SaaS folks who straddled both lines. Like that community. I spoke at their event at Bangkok in 2014, I believe. It had been a long time. I admire what they’re up to.
There is a Rhodium Weekend or Rhodium. The Rhodium community from Chris Yates is very authentic community similar to MicroConf in the sense that Chris has just groomed it over the years. There’s just a lot of good people. That’s more of a buying and selling website but there are definitely folks there who do info products.
The thing is that then you get into the internet marketing stuff. You can look at DigitalMarketer and the digitalmarketer.com from Ryan Deiss. That’s an online training. I believe they run traffic and conversions. You can go to that conference. It’s more about marketing and less about the product. That’s where software and SaaS are pretty unique. We do get together and geek out about our products in addition to other things. The product is the thing that unites us.
Whereas Dynamite Circle, it’s not the product you have. It’s more of the travelling and going against the standard script of the rest of the world. That’s the unifying factor. Whereas with eCommerceFuel—and other community—they are more like us where they unite around ecommerce. I would agree with you that I still think that we do get info product questions. I have a course although I took it off of Udemy because Udemy, I don’t know if you’ve seen it lately, but it’s kind of a train wreck as a seller. They just keep changing the terms. It was more headache than it was worth.
I had a course on there about hiring BAs. I have multiple books. I’m a big believer in info products especially in that stair step—that step one to get you to the point of quickly buying out your time. I think they’re fantastic. For me, personally, long term, that recurring revenue, that growth, that high sales multiple, if you just had to sell, that’s the beauty of SaaS. That’s why I think so many more people aspire to run a SaaS company than aspire to run an info product empire. I also think there’s a lot more opportunity and there’s just a lot more people successfully doing it.
Obviously, there are folks, yes, can you make a $100,000 or $200,000 or $1,000,000 in an info product launch? Of course. We see people doing it. But they’re really few and far between. It’s a hamster wheel of content creation. Again, it doesn’t have the sales multiple that SaaS do and all of that stuff. I think they’re fantastic for a certain purpose, but I haven’t come across a whole community that is united around just building and aspiring to do info products.
Brian: Yeah. I’ll just add one shameless plug here if you don’t mind. I run the Productize which is a course but it’s also a community. We’ve got a pretty good Slack community in there now. It’s for people who are primarily consultants and they’re looking to step up to running a business with the team and a productized service business. There are folks there who coupled that with training program. There are some software people, WordPress people in there too. You’ve got a good little chat going in there in the Slack group for people who are going through that transition phase, so that’s another good one.
Rob: Glad you mentioned it. productizecourse.com is where you’ll go to find out more about that. Thanks for the question, Andrew. I really appreciate it. I hope to run into you at the next MicroConf.
Our third voicemail of the day is an interesting one. It’s about building a very similar app and making it more stable. He’s wondering if that’s competitive advantage worth pursuing.
“Hey, guys. I want to start by saying thank you for the work that you put into this show. I find it to be truly inspirational so keep up the good work. I’m working on my first SaaS app. I’m a web developer by day. I work on it on nights and weekends. The idea for the product actually came from my wife. She works in a totally separate industry and interacts with a certain SaaS app on a pretty regular basis. One day she was describing to me how frustrated she was with this app. It was slow, unintuitive, and sometimes experience downtime during the middle of the day.
I sat down with her to take a look at it. It really seemed like it was on a shaky foundation from a technical perspective. However, it’s the only product that meets the specific needs that it solves which is why her company uses it. Our current working hypothesis is that if we build a more stable, intuitive, and functional version of the app that has feature parity, we will have enough differentiation to break into the market. What’s your take on this? Do you think functional superiority with the same set of features is enough to differentiate us? Or should we be thinking about extra features that would set us apart from them? Thanks, appreciate it.”
Rob: Mr. Castle, what are your thoughts on this one?
Brian: Yeah. It’s a good question. I like the fact that your wife is a user of this other software so you have that really close used case where you can get that personal research into how she and the other members of the company use the product. That’s always good. You probably want to expand beyond that and maybe talk to her coworkers or other people who are using it. I also like the fact that there is this solution out there in the market. It proves that some people do buy the solution, but it’s not overcrowded from what it sounds like.
I would also just have the question in your mind to understand how easy it is to reach that market. I don’t think you mentioned what type of company it is or which industry it is. Even though you might be able to build something for that market, how easy it is to go find other people who are in your wife’s position in other companies throughout the world or throughout the country or the region? I think that gets to that question of product founder fit.
Sure, you might be able to build the same product or achieve feature parity, but do you have the inroads or the communities or the channels to be able to reach those people? I know there are enough of them. I think that’s something you can certainly vet out over the next few months.
Rob: Yeah. I like the pros you pointed out. I think the fact that they proved the market out by having this app is good. I’ve mixed emotions about this one. I think you need to ask more questions. The first question I have is we can all, with our high standards, and our impeccable taste in UX, and usability go use an app and say, “Oh my gosh, that app sucks. I could build it better.” Do their users care at all? Do they care at all? Do they care one bit?
An example: I was a contractor/contract developer for a consulting firm that was redoing an app for the Los Angeles County. They spent a million bucks and they paid us to build all these stuff. The old app was literally a main frame, it was a terminal app that they would log into. The UX is typing. It was just wasn’t particularly fun, it was hard to train people, it was a pain in the butt. The delete key didn’t work, command this didn’t work, there was no undo, there were all these things you couldn’t do.
We built a modern, quick web front end on it and a bunch of the users were either so used to the old UI that they were like, “Oh, I used to like type this and then hit three tabs and it got me to the other thing and this doesn’t do that.” I’m like, “Yeah, you don’t need to do any of that. You just do one click and it auto populates from this XML import.” They’re like, “Oh well, this just seems complicated.”
Change is hard—I guess is one thing—and also, a lot of people just don’t care, and they’re used to using something. That’d be the first thing I would really try to stress out is like, “Does everyone at your wife’s work, are they complaining about this software and just dying for a better solution. Do they really, really need something better or do they not care?”
Second thing I would ask is, what are switching cost? Because without knowing that, if it’s just an export of a CSV and an import of CSV and everything is set up, awesome. But if its switching cost is to retrain someone or retrain your whole team on it and move a bunch of data and do a bunch of other stuff, that’s tough. If everyone’s on annual contracts, that means you only have a once a year when you can basically get to those prospects because they can’t just cancel for the next month. Once they’re on a year contract, they won’t get there. Think about switching cost and I would inquire about those.
The last one is one that Brian brought up, and it was a first one that came to me is you build a better product, can you get in front of the users? What are the traffic channels? How expensive are they? Are these people online? If they’re not online, you’re talking about customer pain. I’ve talked about competitor pain and customer pain, in this case, you probably won’t have competitor pain. You’re going to be the pain to your competitor because you’re going to build a better product. But you will have customer pain. Or could feasibly have customer pain if it’s more of a brick and mortar type business where you can’t just run some Facebook ads or do some content marketing and generate a bunch of leads where it’s literally cold calling or going to the events or whatever.
Since you haven’t told this about the industry, we’re just completely conjecturing here. I’m not saying you shouldn’t do it, but these are the three yellow flags or the three big questions I would have with just doing this approach. But can this approach work? Absolutely. Look at what Xero has done competing against Quickbooks, most people don’t like Quickbooks and Xero built a web-based admin or a web-based competitor to it. I think the fact that there was Infusionsoft and then Drip and ConvertKit and all these other tools were able to come in and do similar things, that’s what we were doing. We’re trying to build easier-to-use, more modern with the integrations we wanted, just a more pleasant experience overall and it worked. It can definitely work but I think you need to answer some questions before you dive in with both feet.
Brian: Yeah. Just one quick thing to add–kind of a low hanging fruit. First thing to do on that last point to figure out how could you actually reach this market. A question to ask your wife is to understand how her company bought the software that they’re currently using. Whether she bought it or a manager or somebody else was the decision maker. Did they go through an enterprise sales process or did they just Google and find the website and buy it that way? Did they pay monthly, did they pay annually? I think those are better questions to understand than even how the product works, to understand what you’re actually getting into.
Rob: Totally agree. That’s a good point. Thank you for the question, hope that was helpful. Our next question is not a question, but a comment from Kenneth Caw and he has written in a few months in the past. He says, “Hey, Rob, enterprise sales guy here wants some help,” and he has actually written in when I had David Heller on the show to do a hot seat about enterprise sales and he had written in with a bunch of good suggestions. He says, “A lot of people don’t know this, but Stripe actually released a way to receive payments by paper check this year.” This was a question that I believe in the Laura Roeder Q&A episode. We were asked, “How do you manage paper checks and how do you keep track of them and this and that?”
He’s pointing now Stripe can do it. He said, “This makes things so much easier since they provide your customers and the address for the check to be sent to, receive and process it on your behalf.” That’s crazy. “Coincidentally enough, we used to do the same thing as you did with Drip, which is to set a discount code to the customer in Stripe and then put reminders in and then check it. When payment is due, once a year, we deal with six figure checks sometimes, so this has been a total efficiency improvement since Stripe deals with the invoicing, follow-up reminders, analytics tracking, repayments, etc. Best of all as a remote company, we don’t need to depend on someone making a trip to our company’s PO box to look for the check.”
I’m not sure why Stripe doesn’t advertise this enough, but you should let your listeners know about that. Since all one has to do is simply enable a checkbox—pun intended—in Stripe, which saves us bootstrappers precious time and resources managing this. Plus, it gives you an additional reason to deal with enterprise customers that want to do pay by checks.” Big smiley face because Ken is of course an enterprise sales guy.
Thank you so much, Ken, for writing in. Did you have any idea about this, Brian?
Brian: I had zero idea about this.
Rob: I never heard of that. That’s a great service. When he said by check I thought he was going to say, and his subject line is this payment by check, use Stripe. I thought he was going to talk about e-checks where it’s like just an ACH thing where you get the routing number. But I mean literally, an address the mail to check, that is bravo, Stripe.
Brian: That really is pretty incredible. I knew about the ACH thing. I kept promotional emails from Stripe. I have not received anything about this feature. It seems like a pretty killer feature.
Rob: Yeah.
Brian: I’m curious about your thoughts on accepting checks in general. I’ve seen this in my business in Audience Ops, I’ve had quite a few leads actually, ask for the ability to purchase our service using a check or having us invoice them and then them paying us like a more traditional agency or consulting model. I’ve refused those. We only stick to credit card and debit cards through Stripe subscriptions. I know for a fact that I have left some money on the table because of that, but I opt that way because I just don’t want to deal with chasing people down for checks in the mail.
Rob: Yeah, that’s the tradeoff. At Drip, once we started accepting checks, it was late, it was after we had a much larger team. There were salespeople that could manage it. That really is what it is. It’s like putting something on your calendar to remind you to check in with someone. But the bigger thing we did is we just said we had a minimum for a check. If I were in your shoes, I would only accept it for annual prepay. I would not do it on a monthly basis. It’s like, “Hey, if you really want to pay via check, then you gotta pay 12 grand all at once or 24 grand or whatever the price point is.” That would be how I would approach it at your scale because it’s not a requirement.
But yeah, once you get up in the 25K and up, maybe even 20K and up annual contract value, you need to start doing that at least in the B2B SaaS base. It’s great that Stripe accepts it. Obviously, it’s enough of a pain point that they started doing that. They wouldn’t have done that if people weren’t asking for it. But I also think then I wonder it says, they’ll take care of all the reminders and all that stuff that’s pretty fascinating. I’d like to almost investigate this a little more because again, we had to hand build something that reminded a salesperson to reach out and make sure that the check came through.
Brian: Yeah, for sure. The other thing that I would at least keep in mind for my business is that we’re a recurring service and that’s part of the reason why we don’t do checks is that we need the payments to keep coming in so that our team keeps working. If there’s a delay, then we would need to know to pause the service for a period of time. I guess if this works automatically through Stripe and then Stripe can just mark it as unpaid or paid, then that can be your indicator.
The other question that I would wonder about is international payments. Because that’s sort of a headache that we’ve seen just because credit cards internationally tends to decline, especially for higher dollar amounts more often than like US-based for whatever reason. We’ve had to fix failed payments more often with international. I wonder if this could somehow help that. I’m not sure.
Rob: My guess is no. I’ve not even Googled this, but international checks are so complicated with the banking that I would guess that would be a V2 if they were going to try to tackle it. There’s also big fees attached to it with sending checks and trying to cash them. If you send a US check to a Canadian or vice versa, there’s this big fee they charge to do that internationally. We experience all the same stuff you’re saying with the international credit cards being declined more often than that. I don’t think this would help.
Also, one other thing to throw in is, I wonder how much Stripe charges as a fee for doing that. This is something to think about. If you’re signing a $30,000 annual contract, a 3% fee on that is $900. That’s where it starts to make sense to maybe take a check because you can basically cash that for free. If Stripe’s still charging 3%, you have to think about that, but if it’s more like ACH where it’s half a percent or 1%, this could totally be worth it.
Thanks again for the info, Ken. Always appreciate your insights. Next question is from [Mereck 00:29:46] and he says, “Hey guys, great show. Would love to get your thoughts. I’m a cofounder in a small software house.” I think he’s an agency. Because they’re consulting from their hired hourly or by project. “The issue is that my cofounder doesn’t help company anymore. He made some significant contributions in the early days including his know-how, some money investing directly and working for free. But right now, because of an unplanned change of direction in the company, and a change of the market situation, we can’t find paid work for him. Not because he does not have value to give to the market, but for now the company is too small for two founders/CEOs.
He was upfront about his expectations about work and skills in the company and he still help out a few hours a week for free. No hard feelings between us, we aren’t looking for a legal resolution. I’m wondering if we should wait for the company to grow, if we should return him the money he invested, buy out his shares, or what you think? Thank you so much for your thought.”
This is an interesting one. We don’t often get a lot of too many consulting questions. But I feel this could happen with a SaaS startup. Skills no longer and neither might be an interesting one. I guess if you’re a salesperson, co-founded it and then you decide to go way down market and not need sales, that can be something. Curious if you have thoughts on this, Brian.
Brian: This one is tough. I don’t know all the details on this. One thing that stuck out to me is that he talked about refunding the money that he invested. I guess the partner’s actually put up some of their own cash other than just putting in their time. If it were just time and you’re talking about giving him compensation for the time that he spent, that’s a tricky one because you should have some agreement going into this thing that, “Hey, we’re all investing in this idea. We don’t know if it’s going to go anywhere. There’s no promises.”
Then there’s the question of, how was the initial partnership agreement drawn up, if there was any, which there really should, generally speaking. And there’s the concept of vesting and a vesting schedule. One model that I think we’ve seen recently is the user list. You spoke to Jane about this, is that right? They sort of paused her vesting so that her initial time was still–that value remained, but then from a certain date going forward, she’s phased out a bit. That’s one model to look out.
Rob: I think consulting firms don’t normally vest, but in this case that would’ve been super helpful. If he was above a certain number of hours per week or whatever he was vesting and then at the time that he leaves then yeah, you do, he either leaves it in until it grows. It’s up to him. If he owns 10, 20% of the company and he only vested that much, then he could say, “Hey, please buy me out.” And then you have to figure out, “Hey, we can buy it out over a year or two. We can pay this much per month out of cash flow.” Or if he wanted to grow, he could gamble and leave it in and expect the company will grow and it’ll be worth more when you get there.
I believe our consulting firms, obviously, there’s going to be a range, but I think valuations are around one times annual revenue. I don’t know if it’s looking ahead or looking back. I’m not exactly sure. But someone in the community might have more info on that. But I know the multiples compared to SaaS is pretty low because it is just hours. It’s a […] for hour-type thing.
Brian: Recurring contracts can help improve that.
Rob: Exactly. But assuming that he’s fully vested, and he owns a third or half of the company, I really do think it’s a conversation. I don’t think there is anything you should do here. I think it’s up to the two of you. With consulting firms, they can have pretty good profit margins. The cash coming off could be used to buy him out. I think that’s probably the long-term play. Say, you don’t have someone with stock who really isn’t working on the business.
The hard part is how to value if he’s doing all this work for free. I don’t know how you guys figure that part out. It’s just what’s fair there? Do you agree on hourly rate and try to estimate? Or is that just what created the value in the company and his stock reflects the value of that in essence.
Brian: Again, we don’t really know all the details here, but if it’s purely consulting and the work that he was involved when the work existed was just consulting project that started and finished, then I think that the question is, “How much does his contribution to those projects live on after he stops working in the company?” I think the simplest view is split whatever revenue came from those projects 50-50, whatever your partnership agreement was, and then new projects going forward that he’s not involved in, he doesn’t really have a part in those. That would be a simple way to look at it.
The other thing to consider depending on how big the numbers are that we’re talking about here and everything else, you might want to just talk to a third party. I know that there are professional arbitrators, but there are people in this community who…
Rob: It’s like mediators. That’s a good way to think about it is to get someone, other party, to just give you guys some direct advice knowing all the details because that’s the problem is, I think there’s some gaps here. Hope that was helpful, [Mereck 00:35:03]. Wish you the best of luck figuring that out.
Our next question is from Fred Myer and he’s asking for some advice for finding or starting a mastermind. He says, “Hi, I’m a web developer and owner of two lifestyle businesses looking for a mastermind to start or join. The easy to Google options don’t seem attractive. Do you have any advice on finding or starting a good mastermind?”
I’m going to assume that since he’s a web developer, he’s looking for a software-oriented mastermind. My recommendation is always Ken Wallace’s mastermindjam.com if you really have no network. My first recommendation is always, go to your network, go to events, be part of the Startups For the Rest of Us and the MicroConf community and you’ll find people. But if you haven’t done that, can’t do that, whatever, MastermindJam is a good alternative that Ken matches people up. What do you think, Brian?
Brian: Yeah. Totally agree. I recommend MastermindJam all the time. I also recommend going to conferences like MicroConf, like the upcoming MicroConf locals, that should be a good one too for this. Yeah, just getting into communities like that. In the past, when I was really early on in this industry and I didn’t know too many people, I had a bit more focus on my local community. I would go to local meetups. At the time I was into web design and WordPress, I went to local web design and web development and WordPress meetups. I met some really good friends through that. That turned into local mastermind groups.
These days, I’m not in a weekly mastermind currently like I was for a while. But my mastermind group now was borne out of the MicroConf community where we do TinyConfs a couple times a year. We all fly to one place and have a deep dive. We chat on Slack throughout the year. I find that that’s a good format for me right now.
Rob: Yeah. I think that makes a lot of sense. Sir, we are all out of time for today. If folks want to keep up with you, they can head to, let’s see, there’s productizecourse.com, there is audienceops.com which is your productized service where you and your team create content for content marketing for folks on a subscription basis, and castlejam.com, is that your personal website?
Good. Good call. Are you still @casjam on Twitter?
Brian: Yeah, my teenage AIM screen name lives on through Twitter.
Rob: I know. I registered software by rob.com in 2004, 2005 and started blogging. It’s like, “Why didn’t I just registered my name?” Maybe it was taken or maybe I didn’t think about it, but years later—it was literally in the past, probably 18 months—finally, I bought robwalling.com from the previous owner and redirected in it. It’s just so much easier. It’s so much more memorable. It’s like once people remember your name they can find you versus trying to remember this derivative of your name.
Brian: My whole life I’ve had people mispronouncing and misspelling my last name because they think it’s like the word castle. But then in recent years I’d have people mispronounce or not understand even what casjam even means which it doesn’t really mean anything. I just got sick of explaining that whole thing. It’s my name. That’s where my blog and newsletter and links to my podcasts and products and all that’s on there.
Rob: That’s the center. Very cool. If folks, they listen to this podcast, they will like the Bootstrapped Web podcast where you and Jordan Gall chat every week or so about this kind of stuff. I’m a long-time listener, long time first time; long time listener, first time caller. Anyways, alright man, I’ll let you go. It was a pleasure having you.
Brian: Yeah, good time answering these questions. Thanks for having me on, Rob.
Rob: Absolutely. That wraps us up for the day. If you have a question that you want answered in a future episode of the show whether by me or a guest, you can leave us a voicemail at 888-801-9690. You can email questions@startupsfortherestofus.com. Obviously, you can have just plain text in there, you can attach an MP3 […] Dropbox link to an AIFF. You know the drill.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. If you’re not subscribed to Startups For the Rest of Us, you really should be, you’re missing out. Search for startups in any pod catcher. Visit startupsfortherestofus.com for full transcript of every episode posted within a week, maybe two of when the episode goes live, but continue to hear that the search for transcripts are super helpful for people so we will continue to do those. Thank you for listening. I’ll see you next time.
Episode 476 | “We Went from Hundreds of Free Trials to a Few Dozen…On Purpose” with Jordan Gal
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Show Notes
In this episode of Startups For The Rest Of Us, Rob talks with Jordan Gal of CartHook about his big move to stop his free trials, move to demos, and increase his prices.
Items mentioned in this episode:
- CartHook
- Bootstrapped Web Podcast
- CartHook Pricing Change Blog Post
- Lincoln Murphy blog post about Qualification
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on this show, we cover topics related to building and growing ambitious yet sustainable startups.
This week’s guest is Jordan Gal. You may know him from BootstrappedWeb. Also, the founder of CartHook. In this episode of Startups for the Rest of Us, I talk with Jordan about what I’ve seen as one of the gutsiest price increases and sales process changes by going up market that I’ve ever seen. The quote that I’m using in the title is, “We went from hundreds of free trials to a few dozen on purpose.” This is Startups for the Rest of Us episode 476.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome in building, launching, and growing startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Jordan Gal, we’re here to share experiences to help you avoid the mistakes we’ve made.
It’s a great conversation today. In fact, often times I say we have many different episode formats. This one is less of an interview and it’s more of me and just letting Jordan go on this topic. He thought about it so deeply with his team. It was their realization of, “Our churn is way too high and we’re just running on this treadmill that is getting faster and faster, and the business doesn’t feel healthy. How do we fix that? It’s not one tactic. It’s not changing, making people email to cancel you. It’s not moving to annual plans. It’s not the little tactics. How do we revamp our entire sales, onboarding, pricing process, and go up market to change the nature of our business?” That’s what we’ll talk about today.
You can tell during the interview that I’m obviously impacted by it. I was impacted from the outside. I’m an angel investor in CartHook. CartHook has raised a small amount of money. It’s still very much in that bootstrap indie-funded mindset. Jordan is super capital efficient. He’s not on the constant churn to raise that Series A to Series B and go there. He hasn’t raised that institutional money that forces him to go after that. He’s very much like a Brennan Dunn […] with the RightMessage.
A lot of the other companies we hear about that are in our MicroConf community, they’re in the Startups for the Rest of Us community, they’ve raised a small amount of money to hit that escape velocity. They’re not looking to unicorn or bust. They’re not looking to be that one billion dollar company, necessarily. Jordan’s in that camp. I love the way he’s meticulous. He really thinks these decisions through. I really enjoyed the conversation today.
To set the stage, if you haven’t heard of Jordan, years ago he ran an ecommerce company, ecommerce business. If I recall, it was with his brother. Maybe his dad. It was like a family member. They sold that. He had a small exit there. Then, he wanted to start a SaaS or a software tools for ecommerce. He wound up starting CartHook. Originally, it was just cart abandonment emails and they’ve since stopped doing that.
They eventually got to the point where CartHook essentially replaces the checkout on Shopify. The headline of CartHook is “Maximize Conversion Rate and Grow Average Order Value Today.” They have a real competitive advantage that’s very much differentiated from a lot of the other products in the ecom space, and he’s got a lot of traction.
As we talked about during the interview, they’re doing several million dollars in ARR, which is a big deal. They’re in the 25-30 employee range. He’s really just been grinding it out for years to get there.
What I like about this conversation is I was getting investor updates and then I saw a blog post where Jordan was talking about increasing prices. That’s always such a dicey proposition. I then started chatting about it. I asked him what the thought process was and how they’ve gotten blowback. They basically led to the conversation that we have here on the podcast today.
Without further ado, let’s dive into the interview with Jordan Gal. Jordan, thank you so much for coming on the show.
Jordan: Rob, thanks very much for having me on.
Rob: It’s great to chat again. There’s a lot that we’re going to dig into today. It’s been a fascinating journey. From the outside, I have an inside seat as an investor in CartHook. I’ve watched this transformation that you’ve taken over the past year or so. I’m really fascinated to begin with that.
The nugget for this episode actually came when I saw you raised prices. You did it so well, you did it so elegantly with (I believe) almost no pushback. I read a blog post, it was a blog post that you put on the CartHook blog, and I was like, “Man, I really want to get you on the show to just talk about what the thought process was there.” There was so much more to it. It wasn’t just a price increase. There’s this whole story that were going to dig into today. You want to kick people off with letting us know where we’re headed today?
Jordan: This is a topic I’m excited to talk about, something that I’m proud of. The best way to get started is to give some context around what these decisions are, what they entail, and why we got to a point of wanting to take these bigger actions.
What I need to do is to ask everyone to go back with me for about a year. The history of our checkout product, 2017, is when we came out with it. It was very difficult, technically. It was just one challenge after another. Then, we released a version two where we made a lot of big fixes. That’s when we start to hit traction.
2018 was our big year of growth, where we 3X revenue and got to multiple millions in ARR. That was this wild ride. It was fun. I look back on that year very fondly. That’s how I always want to feel.
The holidays in ecommerce are always big, obviously. Black Friday, Cyber Monday, and then the holidays. The end of 2018 for us was gangbusters. Then, January–February 2019 comes around. We start to be able to catch our breath, really look at the company, and analyze how things are going. There was one number that stood out that was a problem. It was an obvious problem and something that could not be ignored. That was churn.
In January–February 2019, we’re cruising at 12%-14% monthly churn. Ecommerce itself has high churn. There’s a reason Shopify does not disclose their churn rate because it’s much higher than other software companies. It’s partly the nature of ecommerce, the nature of the market, whatever else. Still, 12%-14% monthly is unsustainable.
On first glance, it looks like the company’s a washing machine. It’s just bringing people in, spitting them out, and that’s not going to work out for the long-term. When we started to really analyze it more deeply, what we realized is that the situation was not nearly as bad as 12%-14% looked. What was happening was that we were attracting a top tier of merchants that really fit with our product. What they were selling, the way the company was set up in terms of the number of people, how technically savvy they were, all these characteristics from revenue point of view, cultural point of view, product point of view, and so on. We really lined up with this nicely. Those customers were sticking around for the longer-term.
The issue was that we were also attracting this lower-end merchant that did not fit with our business. It didn’t fit with the software, sophistication level required, pricing, all that. That large chunk was not staying. Those customers were coming in, doing a free trial, either leaving before the free trial ended, or paying once or twice, then leaving after that. There was a real bifurcation in these two populations.
The challenge was, how do we improve the health of our business, overall? We had a few goals. Why don’t I list out a few of the goals that we came up with when we start to tackle this? We wanted to do things like take more control of our business. A lot of it felt like we were not in control. We just had a ton of word of mouth. It was just a bunch of incoming demand. That did not feel like we were really controlling who was walking into the system. We obviously needed to reduce churn significantly.
At the same time, we also wanted to increase our pricing to align with the value we provide. We hadn’t changed our pricing since we launched and we were significantly better than we had launched. Overall, the saying that we came up with was “fewer, more qualified merchants.” That was our goal. To work with fewer merchants that were much better fit and much bigger overall. Those were the goals.
The way we did it was changing two big things. We changed our pricing and we changed our process. You started off this conversation talking about a pricing change. From the outside, it really looks like a pricing change. In reality, it’s more of a process change like a sales process, like how we bring people onboard. The pricing change served that larger process change.
Rob: Yeah, that makes a lot of sense. I have a couple of questions for you. You used this phrase, “To take control of our business.” You touched on that a little bit, but is it that you’re controlling who comes through the gate such that you only deal with customers that you deemed are nice or that are qualified? Or is it taking control? Are there any other aspects to that?
Jordan: There are a lot of different aspects to it. What’s happened over the past years as I have gone further away from the frontlines and from the customer interactions, is I have become shielded from the kinetic activity, actually talking and rubbing up against customers on a daily basis. I don’t feel that nearly as much as when I started to.
The anecdote I give was I had a conversation with our support team. I asked them, “What percentage of your work is for people who are in trial that won’t convert or people that have converted but are only going to stick around for a month or two?” They looked at me and said, “Probably 80%.” To me that sounded horrible. I’m setting up my employees to run on a treadmill at a very high rate of speed and looking at them saying, “How do we increase the speed?” That’s not a recipe for a happy employee.
What I mean by taking control over our business, it wasn’t just like this external-facing, “We only want to work with big merchants.” It was also, “This feels like a mess internally.” We’re doing an enormous amount of work for people that don’t fit. The reason we’re doing it is because they just walked in the door on their own and create a free trial. All of a sudden, we are forced to engage with them. It’s definitely unexpected that one of the biggest problems in our business is how to limit the number of people using the product. That’s not what I expected. I expected, how do I beg people to use our product and make them successful with it? That was a reality.
Rob: Yeah. You’re in a unique position, for sure, to be able to do this. There is no model for this. I’ve heard of apps going up market or changing. Drip went from generally as […] to focus on ecommerce. Obviously, that drove some people away in terms of that pivot or that focusing. There’s a model for that.
While you are going up market, you did it in a different way. You didn’t just raised prices. As you said, pricing is one piece of it. That’s where Ifind this whole decision and process super gutsy. It feels risky to me hearing about it. Did it feel that risky to you upfront? Were you just like, “No, I know this is going to work”? Or were you like, “Oh my gosh, this could completely tank a lot of things”?
Jordan: There was definitely a lot of fear. We’ll get into a bit of the math around what helped me overcome the fear was just being very objective in the math and saying, “No. This isn’t going to work out. Even if it’s not very successful, it’s still going to work out on the math and finances.” All of this comes back to the finances. If we had raised $8 million in a Series A, we would be trying to gather as much of the market as possible. That’s not what we’re doing. We raised a little bit of money. We want a healthy, profitable company.
If you want healthy and profitable, then you need to live within your means. The reality of our situation, just taking on as many customers as possible, was not leading to that outcome. It had churn way too high. The amount of work that was happening internally was too high for customers that didn’t make sense. That’s what helped us come to the conclusion of, “Okay, I’m going to take a risk, and we’re going to gather the forces. Let’s get into what we did.”
Rob: Jordan, I want to interrupt you real quickly. When you say it wasn’t working for you, I know that CartHook is doing several million in ARR. It was working to a certain extent, but was it really the churn? That double digit churn that wasn’t working for you?
Jordan: Yes. It’s all relative. Yes, I really shouldn’t be complaining. It is working to a degree because the revenue is where it is and all these. That’s from the outside perspective. From the inside perspective, sitting in my shoes, I have to acknowledge what’s good and what’s bad. Just because I can say we’re at several million in ARR does not mean everything is good. I was fine with that. A lot of this role is holding two things in your head at the same time that are completely in conflict with one another. That’s just the way it is.
The truth is, it wasn’t working for us in a sense that I didn’t like the way the future looked. There’s a straightforward formula that everyone can Google. I don’t remember exactly what it is. It basically tells you what your maximum revenue is. Given your growth and your churn, this is the maximum that you will reach. It will not go beyond that because that’s how math works. You will get to a point where a 12% of your revenue equals the amount of growth your getting, and then you’ll stay there forever, mathematically.
I looked at that and that wasn’t that far off on the horizon based on where we were currently. We still had room. We still had another 100+ MRR to get to that point but I felt that we need to move on this now before we hit that and then all of a sudden everything hits a wall. That’s what led into it.
Now, let’s get to the first big part of the decision. The first big part of the decision was on July 1st, 2019. We are doing two big things. We are shutting down the ability to create a self-serve free trial and we are changing pricing. Two massive things at the same time. A lot of complexity came out of that because when you do that, you don’t want to just do it quietly and not say anything. You do have to acknowledge it with your existing customers because they’re going to ask, “Hey. I noticed you changed your pricing. Does that mean that my price is going to change?” There’s a lot of communication with the existing customer base that went along with the changes that were intended for the non-existing customer base.
Rob: Yeah. I find that’s a good moment where, certainly, if you are going to raise prices on your existing customers, whether you grandfather them 6 months or 12 months or whether you don’t—there’s a whole conversation; we’ll probably going to get into around that—or if you’re not going to raise on them at all, it’s still a good time to get in touch. If you’re not going to raise on them right now or in the future, then you’ll let them know that. “Hey folks, we just raised the prices. We’re not going to do that for you. We’re going to grandfather you for now.” It’s a nice way.
If you aren’t going to grandfather them, it’s a perfect time to get in touch and say, “Hey, by the way, we’re going to grandfather you for a certain amount of time, but then change it up later and here’s why,” and give the whole defense or the reasoning behind it.
Jordan: That’s right. Now, for our situation, we did want to raise prices on existing customers. That’s a complicated thing because people are not used to that.
Rob: Yeah. I was going to ask. There is obviously a debate in the SaaS space. Every founder has their own opinions about it. It’s like, “I heard people say…” You know I’m not a fan of absolutes, right? So I hate it when you say, “You should always grandfather. You should never grandfather. You should blah-blah-blah.” I don’t think that’s the correct way to think about pretty much any of this.
I think there’s something in between and there’s a spectrum. I’ve often thought, “Hey. There are reasons to not grandfather, especially if you can communicate those reasons well in a letter, a blog post, or an email to your audience. If it makes sense to them and if it’s the right thing for your business, then these are the times when I would think about doing it.
I know that had been a hard decision. Grandfather for a period of time is what you ended up doing. Talk me through that.
Jordan: Yes, it was a hard decision and an easy decision at the same time. The math of it was very straightforward, that we would be foolish not to change pricing on existing customers. Here’s why. When we started the business, we didn’t have a full understanding of exactly how our business work from a financial metrics point of view. We thought we were on the software business, where we license our software to people to pay a monthly subscription fee to have access to the software. It’s a traditional SaaS.
The reason we thought that was because that’s what we had in our hands at that time. “Here’s the software. You can use it.” What we didn’t realize was the significance of the payment processing that we would be doing. We do significant payment processing. Hundreds of millions of dollars annually. We did not factor that into the business model. That resulted in our very heavily underutilizing our GMV (Gross Merchandise Value), the total amount of money being processed into our system. We were not monetizing our GMV.
If you look at, for example, Shopify, at scale, they make 50% of their money, $400 million annually around monetizing their GMV. That’s somewhere around $28 billion worth of GMV in total. They’re out over a basis a point. Over 1% of their GMV turns into revenue for them. $400 milion on $20 billion is 1.2 or so basis points.
We were well below that. Our pricing was 0.1%, a tenth of a percent. Shopify was making 10X what we were making on a monetizing GMV perspective. We didn’t realize that when we first started the business. Where we ended up was grandfathering pricing for existing customers on the subscription fee. If you pay $100 a month, $300 a month, $400 a month, or whatever that is, that will stay that way forever. On the GMV that you’re processing through our system, we move it up from 0.1% to our new pricing of 0.5%. It is a 5X but still very much in line with our competition, with Shopify, and with the market overall.
What we had to back it up was our software had just gotten so much better. It’s tough to describe how much better—how bad it was to begin with and how much better it is now. What we did is we put ourselves in their shoes and we said, “If I were a merchant and I had been with CartHook for a year, I had been around when it sucked, now it’s better and I’m happier, but I stuck with you guys this way, how would we want to be treated in that situation?”
What we decided to do was write that blog post that you alluded to earlier, that we should link up, because that was a very complicated blog post to write, and then make a promise that we thought was fair. That promise was, this is the new pricing for everybody, for new merchants. You will be grandfathered into your subscription price forever but your transaction fees will go up. However, we will let you go through the entire holiday, Black Friday season of 2019, and the price increase will only go into effect in January of 2020.
Basically saying, we’re not going to be bastards and raise the prices right before the holidays to maximize the amount of money we can make off you and you have no choice because you’re already using the system. We said, “No. We’re going to forego that revenue because that’s the right thing to do. But we will be raising it after the holiday’s over in January.” That makes sense?
Rob: Absolutely does. The thing I’m fascinated to hear is how did it go over? How many positive, negative comments? What was your sense of what your customer base responded with?
Jordan: The truth is we’re in the middle of it now. We’re halfway through. We sent out an initial email in July. Two weeks ago, we sent out another email. What we sent in July along with the blog post was, “Between now and January 2020, we have six months to earn that price increase in your eyes. Here’s what we’re planning on adding to the product and this is part of the justification of the price going up.”
What we’ve been very conscious of internally and from a product and prioritization point of view is that’s coming due. We will need to send an email to all those existing customers telling them that the price is going up next month and, “This is what we promised you and this is what we’ve accomplished.” We have an internal list of, “These are the things that are worth noting in that email that we can say these are significant improvements and significant additions that helped to justify the price increase.”
When we first sent it out in July, we heard nothing. Just no negative reactions. A few emails about clarification, a few questions, and then all good. That tells me that it went over pretty well and that a lot of people didn’t read it. That’s the reality of it.
Now, things are ramping up. We communicated again two weeks ago saying, “Hey, just as a reminder. In January 2020, your pricing is going to change. We will get back in touch in December before that happens to make sure that you are fully aware.” That communication started to cause a little bit more of a pushback. A lot of it was our fault because we communicated what the pricing change was. What we really should have done is personalize it.
“Last month, you did X and paid Y. In January, if you do the same X, then your pricing will be Z.” We should have laid that out more specifically and we didn’t. Because we didn’t, people started doing math themselves. If you do the math emotionally, you’ll get the wrong answer. We had a lot of emails back and forth just clarifying, “Look, it’s not going up 10X. Here’s the change for you.”
On the positive side, what it has also done is it has armed us with a bargaining chip with larger merchants. If you’re a large merchant and you’re processing $2 million a month in our system, and you don’t want to go from 0.1% to 0.5%, then let’s have a conversation to make sure you don’t go all the way up to 0.5%. Let’s set something up that makes sense, maybe get you in a 12 month contract. Let’s partner on this and do it the right way.
It has helped us get a lot of our larger merchants talking about pricing and moving toward annual contracts in order to lock down a predictable cost for them as opposed to something that’s variable.
Rob: There’s a number of things that I won’t even pull out of that because it’s the right way to think about it. It’s very smart, but one of the things you said was, “Let’s think about it from their perspective.” I imagined that that sentence, that phrase was uttered many, many times in your office when you were trying to make this decision. You thought it through. You and your team thought it through to the extent of some people could say if they were your customer, it would be a little outrageous. I could come out and say, “You 5X-ed my pricing. Even though technically I know I’m still grandfathered in the monthly, but 0.1 to 0.5 is a 5X. I’m going to come on and be outraged.” The fact that people didn’t do that indicates that you had (a) a case. You had justification. And (b) you communicated that in a way that made people feel comfortable. You weren’t screwing them.
Jordan: Yeah. It was not abstract. It was very real. It was, “How is […] from Native Deodorant going to react to this exact email that we’re about to send?” We’ve gotten to know these people over time. We worked for them in a long time. How is this specific person at this company going to take this? Are they going to go write to the Facebook page? Are they going to email us? Are they going to ask us for clarification? Are they going to want to get on the call?
Everything in that communication was based around real reactions. It was a lot of, “We’re here to talk about this. Here’s a Calend.ly link to set up a call with somebody if you want to talk about it.” It was thought through that way.
Rob: That’s the power of being a founder or a CEO who’s in touch with your customer base. Even at several million ARR and at 25-30 employees, you still know a bunch of customers by name. Not only do you know them by name, you know how they’re probably going to react to an email. You think it through deep. The best founders, best CEO that I see doing this, doing hard things and not pissing their customer base off, are the ones who are in touch with them. That’s a big key to this.
Jordan: Yeah and that’s gotten harder. I would say that it shifted away from my responsibility being super aware with these specific merchants, their personalities and relationships, and more just understanding that that’s important. And then, looking at my success team and saying, “Okay. Let’s think about these people. What’s your opinion on how’s this person is going to react?” Just knowing that that is a key thing to keep in mind is now more important than actually knowing and understanding the relationships themselves.
The conversations we’re having internally here is I’m asking my leadership, the people who are in these communications, in these difficult email threads of, “Does this make sense?” “Should I leave?” “You guys are being greedy.” These really difficult email conversations. What I have to do is I have to ask them to put two hats on. “Here’s your empathy hat for when you’re talking to people and we wanted the right thing by them.”
Then, I’m also going to ask you to switch hats, come to the conference room with me, and look at the spreadsheet that says, “When we make these changes, if 30% of our customers leave, and that still results to adding $100,000 to MRR, can you acknowledge that? Do you think 30% of our customers are really going to leave?” The answer is no. Can you carry both those things at the same time? Can you be very empathetic to people and make sure we’re doing right by them?
At the same time, acknowledging if someone leaves, we have to be able to accept that because the math will work out for us. That sets us up to be a healthier company, hire the people we need, and then get a bigger office that we need. We have to have that as part of the goal. It’s not just about what the customers want. It’s also about our business. It’s both together.
Rob: And that makes a lot of sense. That’s a big reason that you did have success with this. What’s next?
Jordan: That’s really the pricing change. Our existing customers, we had to communicate with them. That’s not done, but it’s going in the right direction. Now, the bigger change is the process. Making the switch from self-serve free trials to an application process with demos was the harder call. That was the scarier thing because we started getting good, we started getting to the hundreds of free trials every month. Then, you’re taking that flow of potential revenue and you literally just shut it down 100%. We took a faucet that was all the way opened and we closed it all the way. Now, people could not create a free trial unless we sent them a link to create a free trial. We shut the faucet all the way down.
We went from hundreds of free trials a month to a few dozen. That’s where it got scary because if you think about the nature of churn, it carries on for a few months. If we have this messy washing machine of merchants that don’t fit and only pay for one or two or three months, then they leave, when you shut down free trials, you are now going to hurt yourself both ways. You’re not going to be getting new customers and the customers from the past 90 days are still going to be churning.
It was like, “Alright guys, our revenue is about to go down. Everyone be okay with it. We’re going to keep calm. We’ve had this amazing run of growth. Everything’s going up. Now, we are purposely just going to chop off 10%-50% of our revenue over a 90 day span and we’re just going to be okay with that.” That expectation setting was super important so nobody freak out because I saw what was going to happen. We’re going to go from a few hundred to a few dozen and then the churn is going to continue on.
Rob: That’s really important to point out that, (a) you called that out to your team in advance, but (b) most people who have never run an app, where you have big waves of customers coming in and a lot of trials, if you shut that off, it’s exactly what you said. It’s like this huge wave. The churn is going to crash but it never crashes because your trials bolster it. It just keeps going up, and up, and up. But the moment I’ve had a couple apps where we had hiccups, whether it was suddenly Google downgraded us, the ads stopped working, whatever it is, our trials plummeted.
It wasn’t just, “Oh. We didn’t grow that month because we didn’t have as many trials.” It is devastating because oftentimes, your first 60 or first 90 day churn is way, way higher than your 90 day to infinity day churn. That’s the part that just crashes. If you don’t keep that constant influx top of funnel, it can be devastating. Like you said, 10%-15%, 20%-30%, I’ve seen with smaller apps. It’s painful if you’re not aware, if you don’t look at the math in advance.
Jordan: Yes. This […] back to what you’ve mentioned a few minutes ago, where I should be happy because things are going well. I knew internally that this is what was happening, that the trials were just keeping it afloat. The trial’s just kept overwhelming the churn. If anything happened at all to the trials coming in, then we’ll be exposed. Making this move was like, “Let’s do that on our terms instead of someone else’s terms.”
It’s also why we did it in the middle of the year, July 1st, literally right in the middle of the year, well in advance of the holidays so that we would have our act together now. That’s what happened. We completely stopped free trials and the churn kept going for 90 days. That hurt, but the benefits were amazing and immediate.
July 1st comes in and we just shut it down. You can’t see a free trial on our site. It’s apply for a demo. That terminology was super important to me. It was not “request” a demo, it was “apply.” It was a position of power. This is really good. You’ve heard about it. You’ve heard about the success people have with it. If you want it, you need to apply. We soft pedaled it on the site.
We’re not like, “Apply here to see if you’re good enough for us.” That sucks. That’s not good positioning. It was really, “Apply to see if we’re a fit.” People are like, “That’s […]. You’re basically just saying that we’re not good enough if you only want to work with successful merchants. We’re up and coming. You don’t want to work with us because we’re not big enough. That’s not cool.” In reality, it was much closer to, “Let’s make sure we’re a fit.” Think about all the things we’ve been talking about. It’s not just, “Do you make enough money?”
I read Lincoln Murphy’s blog post about qualification. He had a great write-up about the different types of qualification, where it’s strategic, cultural, financial, all these different things that are in line. We have some merchants that makes $1,000,000 a month, but we absolutely cannot stand working with them. That has now become a factor in the qualification.
Now, we have an actual pipeline. That sales process that was happening inside the product and a few interactions with support is now happening with people, with an application that people fill out, then every morning the success team comes in and either denies or accepts the application. Right now, we’re denying roughly 50% of the applications. We’re just saying, “It does not make sense for you to work with us. Here’s a link to our competitor that might make more sense for you.” We literally linked to the competitor in that rejection email.
Rob: That’s crazy. It’s such an unorthodox approach. It’s the Velvet Rope Policy. It’s just letting in exactly who you want. As we’ve said, it’s a luxury. Most apps needs all the trials they can get. You hit a certain point where that made sense, but I do think that more companies should think about doing this once they hit that point.
Jordan: When I spoke to other founders about this, I got the sense that people were like, “Can you do that? Is that okay?” To me it felt like, “That’s what I think we should do. It felt very strange to be like a slave to the fact that people want to use it, therefore we have no choice but to let them. What? That doesn’t make sense.”
Rob: I’ll tell you what, it’s way better to do it upfront than to let people in. Whether it’s just people aren’t qualified or they’re the toxic types of customers that you can identify pretty early on that you’re like, “Oh boy. This person’s never going to be happy with anything. They’re just going to rag on my staff the whole time. They’re going to Twitter the moment we don’t answer their email in four minutes.” If you can get them upfront, identify them that way, and not have to fire customers who’ve been with you for two or three months who are a pain in the ass (which all of us have to do, it sucks), for that alone, this is pretty valuable.
Jordan: Yes. We call them category four. We have category one, the best of the best direct-to-consumer brands that we recognize. We’d love to work with them, absolutely get them in, let’s give them the white-glove treatment. We have a category two that are a good fit. We have category three that are not quite there yet, it’s on the bubble. It’s the success team’s call whether or not they should come in or not. And we have category four that are jerks. It doesn’t matter how much revenue they make. If they’re just going to make us miserable, they just don’t get in.
Rob: Yeah. Isn’t that a hurricane category one?
Jordan: Yes. Think about what this has done internally. A few things that it has done. First is establish an actual sales pipeline that we can optimize. What we did there is first, we took a stab at what we think the pipeline actually looks like. Think about the different stages. We get a demo whether they get approved. They get the link to set-up a time to talk. Then, they get the link to sign up after that. Then, they create a free trial. Then, they’re launched and have a processed revenue. And then, they’re into the conversion piece of it.
Before, we didn’t have those steps. It was just a free trial and then hope the product does its job. Now, what we did is we set up the pipeline and those steps. We have in HubSpot, but I got a good recommendation from someone (I can’t remember exactly who) to put it up on the wall. I’ve got a bunch of index cards, we’ve got a bunch of markers, and we’ve got these tacky stuff that sticks to the wall. We created the categories as columns on our wall. Each prospect got an index card with their name on it and we would physically move the index card from stage to stage. It was just mimicking HubSpot. You would move in the HubSpot, you’d go to the wall, and you’d move it from one column to the next.
What that did is it showed the entire company in visual, physical format, what was happening with our sales pipeline, instead of just, “I don’t know. We have a few hundred trials.” The second thing it did is it was a dead obvious way to see where the friction was. The friction is the columns that have the most people, pretty simple. What it tells us is that stage in the pipeline is where we have a lot of friction, and that’s where we need to get the communications and marketing teams to create content.
Now, what does the success team need in order to help merchants get from that column to the next column and then start creating content, videos, support docs, to help people through that, so that the success team could provide those and the merchants can also get on their own?
We did it for three months or so. We’ve since taken it down. It’s no longer useful as it was in the beginning. At first, we made the switch. It just had this amazing impact. I have a bell on my desk. When someone became a paying customer, I would hit the bell. It was like this visceral experience for people. We’re not a company that just answers emails. We’re doing something specific. We’re finding people, identifying who the right people are, moving through this pipeline, and getting them to success.
Rob: I love that idea, the visual nature of it. Just seeing cards, it must be obvious visually and just be an amazing queue for you guys. That’s really cool.
Jordan: Yeah. They were just a very large vertical stack of prospects that didn’t go from, let’s say, approved but didn’t schedule the actual appointment to do the demo. Okay, we need to be better at that. An obvious one was also like they’ve created a trial, but they’re not processing revenue yet. They need to get over the hump of actually using the product.
One thing I did mentioned earlier on the pricing is that not only did we remove self-served free trials but we removed free trials entirely. We asked for the first $500 upfront at the time of sign-up that we have a 30-day money back guarantee instead of the free trial. It’s all toward the same type of positioning of, “Let’s make sure that you’re a good fit. Once we know that you’re a good fit, then you commit to us. We’re committing to you. You commit to us. Let’s do this together.”
Rob: Yeah. When you look at large, enterprise companies, let’s say HubSpot or Salesforce or something, they get a bad rap for being enterprises. They’re a pain in the ass to deal with, they’re too expensive, and their sales process sucks. You’re moving somewhere between self-serve and what they do. It sounds like there is less friction. Is your pricing public on your website?
Jordan: Yes, it is.
Rob: So the pricing’s public, that’s a difference. They tend to hide it behind a thing, then it’s a negotiation, blah-blah-blah. The difference is there. You put up the velvet rope. You’ve gone upmarket. They’re typically not free trials with these really expensive enterprise plans. It typically all annual. I don’t think you’re there yet, but my guess is you’ll be moving there because there’s a lot of reasons to do that. Both predictability with the merchant but also predictability for you. You are taking that step towards the upmarket playbook, right?
Jordan: Yeah. The results, if you think about internally, going from hundreds of free trials to a few dozen, what we’ve been able to do is give love to the right merchants. We’ve told our support team, “Guys, we’re no longer doing things. It’s not about crushing tickets. You could take your time. You can spend 45 minutes on an email as long as on the other end the person goes, ‘Wow. That was everything I needed and you took your time. I feel great about it.’”
The fewer, more qualified merchants is the theme. We’re much common internally. Our support staff finish things up by 11, then they’re doing support docs, they’re helping testing on the product team, and everyone’s happier. People who are jerks, no one feels the need to like, “Hey, I guess I can’t turn down money because it’s not my business.” Now, they’re empowered. If this person sucks, tell them to get lost. People are more empowered. They’re happier. Our monthly churn went from 12%. It continued on for those few months. Five or so months later, we’re at 5% monthly churn.
Rob: Oh, man. Wow. That’s crazy. That’s such a testament. On the podcast and in the whole MicroConf community, what’s funny is before we started talking about this, let’s say in 2010, there wasn’t just this common knowledge on a lot of things that we talked about. Lower price products have higher churn. The customers are more of a pain in the ass. We all know that now. You know that if you’re selling a $10 product, everybody’s price sensitive. Your churn is through the roof. They want all the features. It’s just known now.
Then, there’s the next step up of $50 price point average revenue per customer or $100 average revenue per customer. You guys were at such a high volume that even those numbers didn’t make sense anymore. It just didn’t make sense to service them because they were such a small portion. They were huge portion in your customer base, in your trial base, very small portion of your actual revenue. Now, we can only bother or we should only focus on $500 to $2000 a month average revenue per user.
That’s the step. It’s obviously very deliberate and I’m just struck by the impact. It’s not one thing. It rippled through the entire business in mostly positive ways, it sounds like. The fact that you support people now have the ticket, the ticket volume is whatever it is, a tenth of what it used to be, is just phenomenal.
Jordan: Yeah. The way we look at it is that we really made a healthier company. The growth in 2019 was nothing nearly 3X of the previous year. But now, we’re in a position to grow in a much healthier way.
Going back to the faucet analogy, now that we’ve tightened it up all the way, fully controlled everything, now that we have our systems in place, we understand who the right matches are, the systems are better, the people are happier, now we can start to open up a little bit on our terms, and grow faster but in our way. An example is when someone’s a category three, they’re qualified but they’re not one or two, we send them a recorded version of the demo. Now, we can open that growth back up, but on our terms and under control. If we don’t like the way that’s going, we’re just going to shut that back down.
Rob: We talked a lot about the positives. Was there a major negative repercussions to this?
Jordan: Just finances.
Rob: That’s short-term.
Jordan: Yeah. The short-term financial hit that hurt is just a stressful thing. We did that with what I felt was enough money in the bank, that we wouldn’t get to the point where I felt like I have to go raise more money. I wanted to get through this in a way that we come out to the other side.
Really, if you think about all the way back, the decision to increase prices on existing customers and that kicking in January, what we really needed to do was just get through this six month period. The increased pricing on that GMV that is coming on the door already is going to overwhelm all of the negative impact of it. Then, we’ll be in a position where we are much more profitable and much happier at the same time. Just six months of pain but all towards putting ourselves to a good spot in 2020.
Rob: Yeah, and that’s playing long ball. You have a long-term mindset. You’re not churning and burning, “Oh, how can I maximize revenue now to raise the next round? Or have an exit?” or whatever it is. You’re thinking, “If I’m going to run this company for years, what is the healthiest company? What company do we all want to work for? What’s best really for the customers that are the best fit? What’s best?” The six months of pain, I’m sure, has sucked but you’re basically coming out on the other side of that. I hope January is truly an amazing month for you.
Jordan: Yeah. Thank you, man. I appreciate the ability to talk through the whole thing. I’m actually writing a blog post about this. I’ll let you know when that’s out.
Rob: Sounds cool.
Jordan: I know it’s all unique to each individual business, but the big lesson I hope people get from it is that you don’t have to play by what you think are established rules. You should do what you think is best for your business.
Rob: Love it. We will link up the price increase blog post that you talked about. I have that link right here. I googled Lincoln Murphy’s blog post about qualification and hopefully it’s the same one. We will also link that up. If you get your post published before this goes live, we can throw that in there as well.
If folks want to keep up with what you’re up to, they can go to @jordangal on Twitter and carthook.com is your app. Any other places they should keep their eye on?
Jordan: Yeah. I also do a podcast with my good friend, Brian Castle, called BootstrappedWeb. Those are the three places: Twitter, CartHook, and BootstrappedWeb.
Rob: Sounds great. Thanks again for coming on.
Jordan: My pleasure. Thank you.
Rob: Thanks again to Jordan for coming on the show. Also, I should call out episode 452 of this podcast. Just a few months ago, Jordan came on and answered listener questions with me. If you’re interested to hear more of his thought process, go back and listen to 452. You can hear his take on several listeners questions.
If you have a question for me or a future guest, leave me a voicemail at (888) 801-9690 or email questions@startupsfortherestofus.com. As you know, our theme music is an excerpt from a song by MoOt. It’s called We’re Outta Control. It’s used under Creative Commons. You can subscribe to us in any pod catcher. Just search for “startups” and visit startupsfortherestofus.com if you want to see a transcript of each episode as well, to see show notes, and comments by other loyal Startups for the Rest of Us listeners. Leave a comment of your own if you want to give a thumbs up, your thoughts, constructive criticism, whatever it might be on any of the shows. Thank you for listening. I’ll see you next time.
This week’s guest is Jordan Gal. You may know him from BootstrappedWeb. Also, the founder of CartHook. In this episode of Startups for the Rest of Us, I talk with Jordan about what I’ve seen as one of the gutsiest price increases and sales process changes by going up market that I’ve ever seen. The quote that I’m using in the title is, “We went from hundreds of free trials to a few dozen on purpose.” This is Startups for the Rest of Us episode 476.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome in building, launching, and growing startups, whether you’ve built your fifth startup or you’re thinking about your first. I’m Rob and today with Jordan Gal, we’re here to share experiences to help you avoid the mistakes we’ve made.
It’s a great conversation today. In fact, often times I say we have many different episode formats. This one is less of an interview and it’s more of me and just letting Jordan go on this topic. He thought about it so deeply with his team. It was their realization of, “Our churn is way too high and we’re just running on this treadmill that is getting faster and faster, and the business doesn’t feel healthy. How do we fix that? It’s not one tactic. It’s not changing, making people email to cancel you. It’s not moving to annual plans. It’s not the little tactics. How do we revamp our entire sales, onboarding, pricing process, and go up market to change the nature of our business?” That’s what we’ll talk about today.
You can tell during the interview that I’m obviously impacted by it. I was impacted from the outside. I’m an angel investor in CartHook. CartHook has raised a small amount of money. It’s still very much in that bootstrap indie-funded mindset. Jordan is super capital efficient. He’s not on the constant churn to raise that Series A to Series B and go there. He hasn’t raised that institutional money that forces him to go after that. He’s very much like a Brennan Dunn […] with the RightMessage.
A lot of the other companies we hear about that are in our MicroConf community, they’re in the Startups for the Rest of Us community, they’ve raised a small amount of money to hit that escape velocity. They’re not looking to unicorn or bust. They’re not looking to be that one billion dollar company, necessarily. Jordan’s in that camp. I love the way he’s meticulous. He really thinks these decisions through. I really enjoyed the conversation today.
To set the stage, if you haven’t heard of Jordan, years ago he ran an ecommerce company, ecommerce business. If I recall, it was with his brother. Maybe his dad. It was like a family member. They sold that. He had a small exit there. Then, he wanted to start a SaaS or a software tools for ecommerce. He wound up starting CartHook. Originally, it was just cart abandonment emails and they’ve since stopped doing that.
They eventually got to the point where CartHook essentially replaces the checkout on Shopify. The headline of CartHook is “Maximize Conversion Rate and Grow Average Order Value Today.” They have a real competitive advantage that’s very much differentiated from a lot of the other products in the ecom space, and he’s got a lot of traction.
As we talked about during the interview, they’re doing several million dollars in ARR, which is a big deal. They’re in the 25-30 employee range. He’s really just been grinding it out for years to get there.
What I like about this conversation is I was getting investor updates and then I saw a blog post where Jordan was talking about increasing prices. That’s always such a dicey proposition. I then started chatting about it. I asked him what the thought process was and how they’ve gotten blowback. They basically led to the conversation that we have here on the podcast today.
Without further ado, let’s dive into the interview with Jordan Gal. Jordan, thank you so much for coming on the show.
Jordan: Rob, thanks very much for having me on.
Rob: It’s great to chat again. There’s a lot that we’re going to dig into today. It’s been a fascinating journey. From the outside, I have an inside seat as an investor in CartHook. I’ve watched this transformation that you’ve taken over the past year or so. I’m really fascinated to begin with that.
The nugget for this episode actually came when I saw you raised prices. You did it so well, you did it so elegantly with (I believe) almost no pushback. I read a blog post, it was a blog post that you put on the CartHook blog, and I was like, “Man, I really want to get you on the show to just talk about what the thought process was there.” There was so much more to it. It wasn’t just a price increase. There’s this whole story that were going to dig into today. You want to kick people off with letting us know where we’re headed today?
Jordan: This is a topic I’m excited to talk about, something that I’m proud of. The best way to get started is to give some context around what these decisions are, what they entail, and why we got to a point of wanting to take these bigger actions.
What I need to do is to ask everyone to go back with me for about a year. The history of our checkout product, 2017, is when we came out with it. It was very difficult, technically. It was just one challenge after another. Then, we released a version two where we made a lot of big fixes. That’s when we start to hit traction.
2018 was our big year of growth, where we 3X revenue and got to multiple millions in ARR. That was this wild ride. It was fun. I look back on that year very fondly. That’s how I always want to feel.
The holidays in ecommerce are always big, obviously. Black Friday, Cyber Monday, and then the holidays. The end of 2018 for us was gangbusters. Then, January–February 2019 comes around. We start to be able to catch our breath, really look at the company, and analyze how things are going. There was one number that stood out that was a problem. It was an obvious problem and something that could not be ignored. That was churn.
In January–February 2019, we’re cruising at 12%-14% monthly churn. Ecommerce itself has high churn. There’s a reason Shopify does not disclose their churn rate because it’s much higher than other software companies. It’s partly the nature of ecommerce, the nature of the market, whatever else. Still, 12%-14% monthly is unsustainable.
On first glance, it looks like the company’s a washing machine. It’s just bringing people in, spitting them out, and that’s not going to work out for the long-term. When we started to really analyze it more deeply, what we realized is that the situation was not nearly as bad as 12%-14% looked. What was happening was that we were attracting a top tier of merchants that really fit with our product. What they were selling, the way the company was set up in terms of the number of people, how technically savvy they were, all these characteristics from revenue point of view, cultural point of view, product point of view, and so on. We really lined up with this nicely. Those customers were sticking around for the longer-term.
The issue was that we were also attracting this lower-end merchant that did not fit with our business. It didn’t fit with the software, sophistication level required, pricing, all that. That large chunk was not staying. Those customers were coming in, doing a free trial, either leaving before the free trial ended, or paying once or twice, then leaving after that. There was a real bifurcation in these two populations.
The challenge was, how do we improve the health of our business, overall? We had a few goals. Why don’t I list out a few of the goals that we came up with when we start to tackle this? We wanted to do things like take more control of our business. A lot of it felt like we were not in control. We just had a ton of word of mouth. It was just a bunch of incoming demand. That did not feel like we were really controlling who was walking into the system. We obviously needed to reduce churn significantly.
At the same time, we also wanted to increase our pricing to align with the value we provide. We hadn’t changed our pricing since we launched and we were significantly better than we had launched. Overall, the saying that we came up with was “fewer, more qualified merchants.” That was our goal. To work with fewer merchants that were much better fit and much bigger overall. Those were the goals.
The way we did it was changing two big things. We changed our pricing and we changed our process. You started off this conversation talking about a pricing change. From the outside, it really looks like a pricing change. In reality, it’s more of a process change like a sales process, like how we bring people onboard. The pricing change served that larger process change.
Rob: Yeah, that makes a lot of sense. I have a couple of questions for you. You used this phrase, “To take control of our business.” You touched on that a little bit, but is it that you’re controlling who comes through the gate such that you only deal with customers that you deemed are nice or that are qualified? Or is it taking control? Are there any other aspects to that?
Jordan: There are a lot of different aspects to it. What’s happened over the past years as I have gone further away from the frontlines and from the customer interactions, is I have become shielded from the kinetic activity, actually talking and rubbing up against customers on a daily basis. I don’t feel that nearly as much as when I started to.
The anecdote I give was I had a conversation with our support team. I asked them, “What percentage of your work is for people who are in trial that won’t convert or people that have converted but are only going to stick around for a month or two?” They looked at me and said, “Probably 80%.” To me that sounded horrible. I’m setting up my employees to run on a treadmill at a very high rate of speed and looking at them saying, “How do we increase the speed?” That’s not a recipe for a happy employee.
What I mean by taking control over our business, it wasn’t just like this external-facing, “We only want to work with big merchants.” It was also, “This feels like a mess internally.” We’re doing an enormous amount of work for people that don’t fit. The reason we’re doing it is because they just walked in the door on their own and create a free trial. All of a sudden, we are forced to engage with them. It’s definitely unexpected that one of the biggest problems in our business is how to limit the number of people using the product. That’s not what I expected. I expected, how do I beg people to use our product and make them successful with it? That was a reality.
Rob: Yeah. You’re in a unique position, for sure, to be able to do this. There is no model for this. I’ve heard of apps going up market or changing. Drip went from generally as […] to focus on ecommerce. Obviously, that drove some people away in terms of that pivot or that focusing. There’s a model for that.
While you are going up market, you did it in a different way. You didn’t just raised prices. As you said, pricing is one piece of it. That’s where Ifind this whole decision and process super gutsy. It feels risky to me hearing about it. Did it feel that risky to you upfront? Were you just like, “No, I know this is going to work”? Or were you like, “Oh my gosh, this could completely tank a lot of things”?
Jordan: There was definitely a lot of fear. We’ll get into a bit of the math around what helped me overcome the fear was just being very objective in the math and saying, “No. This isn’t going to work out. Even if it’s not very successful, it’s still going to work out on the math and finances.” All of this comes back to the finances. If we had raised $8 million in a Series A, we would be trying to gather as much of the market as possible. That’s not what we’re doing. We raised a little bit of money. We want a healthy, profitable company.
If you want healthy and profitable, then you need to live within your means. The reality of our situation, just taking on as many customers as possible, was not leading to that outcome. It had churn way too high. The amount of work that was happening internally was too high for customers that didn’t make sense. That’s what helped us come to the conclusion of, “Okay, I’m going to take a risk, and we’re going to gather the forces. Let’s get into what we did.”
Rob: Jordan, I want to interrupt you real quickly. When you say it wasn’t working for you, I know that CartHook is doing several million in ARR. It was working to a certain extent, but was it really the churn? That double digit churn that wasn’t working for you?
Jordan: Yes. It’s all relative. Yes, I really shouldn’t be complaining. It is working to a degree because the revenue is where it is and all these. That’s from the outside perspective. From the inside perspective, sitting in my shoes, I have to acknowledge what’s good and what’s bad. Just because I can say we’re at several million in ARR does not mean everything is good. I was fine with that. A lot of this role is holding two things in your head at the same time that are completely in conflict with one another. That’s just the way it is.
The truth is, it wasn’t working for us in a sense that I didn’t like the way the future looked. There’s a straightforward formula that everyone can Google. I don’t remember exactly what it is. It basically tells you what your maximum revenue is. Given your growth and your churn, this is the maximum that you will reach. It will not go beyond that because that’s how math works. You will get to a point where a 12% of your revenue equals the amount of growth your getting, and then you’ll stay there forever, mathematically.
I looked at that and that wasn’t that far off on the horizon based on where we were currently. We still had room. We still had another 100+ MRR to get to that point but I felt that we need to move on this now before we hit that and then all of a sudden everything hits a wall. That’s what led into it.
Now, let’s get to the first big part of the decision. The first big part of the decision was on July 1st, 2019. We are doing two big things. We are shutting down the ability to create a self-serve free trial and we are changing pricing. Two massive things at the same time. A lot of complexity came out of that because when you do that, you don’t want to just do it quietly and not say anything. You do have to acknowledge it with your existing customers because they’re going to ask, “Hey. I noticed you changed your pricing. Does that mean that my price is going to change?” There’s a lot of communication with the existing customer base that went along with the changes that were intended for the non-existing customer base.
Rob: Yeah. I find that’s a good moment where, certainly, if you are going to raise prices on your existing customers, whether you grandfather them 6 months or 12 months or whether you don’t—there’s a whole conversation; we’ll probably going to get into around that—or if you’re not going to raise on them at all, it’s still a good time to get in touch. If you’re not going to raise on them right now or in the future, then you’ll let them know that. “Hey folks, we just raised the prices. We’re not going to do that for you. We’re going to grandfather you for now.” It’s a nice way.
If you aren’t going to grandfather them, it’s a perfect time to get in touch and say, “Hey, by the way, we’re going to grandfather you for a certain amount of time, but then change it up later and here’s why,” and give the whole defense or the reasoning behind it.
Jordan: That’s right. Now, for our situation, we did want to raise prices on existing customers. That’s a complicated thing because people are not used to that.
Rob: Yeah. I was going to ask. There is obviously a debate in the SaaS space. Every founder has their own opinions about it. It’s like, “I heard people say…” You know I’m not a fan of absolutes, right? So I hate it when you say, “You should always grandfather. You should never grandfather. You should blah-blah-blah.” I don’t think that’s the correct way to think about pretty much any of this.
I think there’s something in between and there’s a spectrum. I’ve often thought, “Hey. There are reasons to not grandfather, especially if you can communicate those reasons well in a letter, a blog post, or an email to your audience. If it makes sense to them and if it’s the right thing for your business, then these are the times when I would think about doing it.
I know that had been a hard decision. Grandfather for a period of time is what you ended up doing. Talk me through that.
Jordan: Yes, it was a hard decision and an easy decision at the same time. The math of it was very straightforward, that we would be foolish not to change pricing on existing customers. Here’s why. When we started the business, we didn’t have a full understanding of exactly how our business work from a financial metrics point of view. We thought we were on the software business, where we license our software to people to pay a monthly subscription fee to have access to the software. It’s a traditional SaaS.
The reason we thought that was because that’s what we had in our hands at that time. “Here’s the software. You can use it.” What we didn’t realize was the significance of the payment processing that we would be doing. We do significant payment processing. Hundreds of millions of dollars annually. We did not factor that into the business model. That resulted in our very heavily underutilizing our GMV (Gross Merchandise Value), the total amount of money being processed into our system. We were not monetizing our GMV.
If you look at, for example, Shopify, at scale, they make 50% of their money, $400 million annually around monetizing their GMV. That’s somewhere around $28 billion worth of GMV in total. They’re out over a basis a point. Over 1% of their GMV turns into revenue for them. $400 milion on $20 billion is 1.2 or so basis points.
We were well below that. Our pricing was 0.1%, a tenth of a percent. Shopify was making 10X what we were making on a monetizing GMV perspective. We didn’t realize that when we first started the business. Where we ended up was grandfathering pricing for existing customers on the subscription fee. If you pay $100 a month, $300 a month, $400 a month, or whatever that is, that will stay that way forever. On the GMV that you’re processing through our system, we move it up from 0.1% to our new pricing of 0.5%. It is a 5X but still very much in line with our competition, with Shopify, and with the market overall.
What we had to back it up was our software had just gotten so much better. It’s tough to describe how much better—how bad it was to begin with and how much better it is now. What we did is we put ourselves in their shoes and we said, “If I were a merchant and I had been with CartHook for a year, I had been around when it sucked, now it’s better and I’m happier, but I stuck with you guys this way, how would we want to be treated in that situation?”
What we decided to do was write that blog post that you alluded to earlier, that we should link up, because that was a very complicated blog post to write, and then make a promise that we thought was fair. That promise was, this is the new pricing for everybody, for new merchants. You will be grandfathered into your subscription price forever but your transaction fees will go up. However, we will let you go through the entire holiday, Black Friday season of 2019, and the price increase will only go into effect in January of 2020.
Basically saying, we’re not going to be bastards and raise the prices right before the holidays to maximize the amount of money we can make off you and you have no choice because you’re already using the system. We said, “No. We’re going to forego that revenue because that’s the right thing to do. But we will be raising it after the holiday’s over in January.” That makes sense?
Rob: Absolutely does. The thing I’m fascinated to hear is how did it go over? How many positive, negative comments? What was your sense of what your customer base responded with?
Jordan: The truth is we’re in the middle of it now. We’re halfway through. We sent out an initial email in July. Two weeks ago, we sent out another email. What we sent in July along with the blog post was, “Between now and January 2020, we have six months to earn that price increase in your eyes. Here’s what we’re planning on adding to the product and this is part of the justification of the price going up.”
What we’ve been very conscious of internally and from a product and prioritization point of view is that’s coming due. We will need to send an email to all those existing customers telling them that the price is going up next month and, “This is what we promised you and this is what we’ve accomplished.” We have an internal list of, “These are the things that are worth noting in that email that we can say these are significant improvements and significant additions that helped to justify the price increase.”
When we first sent it out in July, we heard nothing. Just no negative reactions. A few emails about clarification, a few questions, and then all good. That tells me that it went over pretty well and that a lot of people didn’t read it. That’s the reality of it.
Now, things are ramping up. We communicated again two weeks ago saying, “Hey, just as a reminder. In January 2020, your pricing is going to change. We will get back in touch in December before that happens to make sure that you are fully aware.” That communication started to cause a little bit more of a pushback. A lot of it was our fault because we communicated what the pricing change was. What we really should have done is personalize it.
“Last month, you did X and paid Y. In January, if you do the same X, then your pricing will be Z.” We should have laid that out more specifically and we didn’t. Because we didn’t, people started doing math themselves. If you do the math emotionally, you’ll get the wrong answer. We had a lot of emails back and forth just clarifying, “Look, it’s not going up 10X. Here’s the change for you.”
On the positive side, what it has also done is it has armed us with a bargaining chip with larger merchants. If you’re a large merchant and you’re processing $2 million a month in our system, and you don’t want to go from 0.1% to 0.5%, then let’s have a conversation to make sure you don’t go all the way up to 0.5%. Let’s set something up that makes sense, maybe get you in a 12 month contract. Let’s partner on this and do it the right way.
It has helped us get a lot of our larger merchants talking about pricing and moving toward annual contracts in order to lock down a predictable cost for them as opposed to something that’s variable.
Rob: There’s a number of things that I won’t even pull out of that because it’s the right way to think about it. It’s very smart, but one of the things you said was, “Let’s think about it from their perspective.” I imagined that that sentence, that phrase was uttered many, many times in your office when you were trying to make this decision. You thought it through. You and your team thought it through to the extent of some people could say if they were your customer, it would be a little outrageous. I could come out and say, “You 5X-ed my pricing. Even though technically I know I’m still grandfathered in the monthly, but 0.1 to 0.5 is a 5X. I’m going to come on and be outraged.” The fact that people didn’t do that indicates that you had (a) a case. You had justification. And (b) you communicated that in a way that made people feel comfortable. You weren’t screwing them.
Jordan: Yeah. It was not abstract. It was very real. It was, “How is […] from Native Deodorant going to react to this exact email that we’re about to send?” We’ve gotten to know these people over time. We worked for them in a long time. How is this specific person at this company going to take this? Are they going to go write to the Facebook page? Are they going to email us? Are they going to ask us for clarification? Are they going to want to get on the call?
Everything in that communication was based around real reactions. It was a lot of, “We’re here to talk about this. Here’s a Calend.ly link to set up a call with somebody if you want to talk about it.” It was thought through that way.
Rob: That’s the power of being a founder or a CEO who’s in touch with your customer base. Even at several million ARR and at 25-30 employees, you still know a bunch of customers by name. Not only do you know them by name, you know how they’re probably going to react to an email. You think it through deep. The best founders, best CEO that I see doing this, doing hard things and not pissing their customer base off, are the ones who are in touch with them. That’s a big key to this.
Jordan: Yeah and that’s gotten harder. I would say that it shifted away from my responsibility being super aware with these specific merchants, their personalities and relationships, and more just understanding that that’s important. And then, looking at my success team and saying, “Okay. Let’s think about these people. What’s your opinion on how’s this person is going to react?” Just knowing that that is a key thing to keep in mind is now more important than actually knowing and understanding the relationships themselves.
The conversations we’re having internally here is I’m asking my leadership, the people who are in these communications, in these difficult email threads of, “Does this make sense?” “Should I leave?” “You guys are being greedy.” These really difficult email conversations. What I have to do is I have to ask them to put two hats on. “Here’s your empathy hat for when you’re talking to people and we wanted the right thing by them.”
Then, I’m also going to ask you to switch hats, come to the conference room with me, and look at the spreadsheet that says, “When we make these changes, if 30% of our customers leave, and that still results to adding $100,000 to MRR, can you acknowledge that? Do you think 30% of our customers are really going to leave?” The answer is no. Can you carry both those things at the same time? Can you be very empathetic to people and make sure we’re doing right by them?
At the same time, acknowledging if someone leaves, we have to be able to accept that because the math will work out for us. That sets us up to be a healthier company, hire the people we need, and then get a bigger office that we need. We have to have that as part of the goal. It’s not just about what the customers want. It’s also about our business. It’s both together.
Rob: And that makes a lot of sense. That’s a big reason that you did have success with this. What’s next?
Jordan: That’s really the pricing change. Our existing customers, we had to communicate with them. That’s not done, but it’s going in the right direction. Now, the bigger change is the process. Making the switch from self-serve free trials to an application process with demos was the harder call. That was the scarier thing because we started getting good, we started getting to the hundreds of free trials every month. Then, you’re taking that flow of potential revenue and you literally just shut it down 100%. We took a faucet that was all the way opened and we closed it all the way. Now, people could not create a free trial unless we sent them a link to create a free trial. We shut the faucet all the way down.
We went from hundreds of free trials a month to a few dozen. That’s where it got scary because if you think about the nature of churn, it carries on for a few months. If we have this messy washing machine of merchants that don’t fit and only pay for one or two or three months, then they leave, when you shut down free trials, you are now going to hurt yourself both ways. You’re not going to be getting new customers and the customers from the past 90 days are still going to be churning.
It was like, “Alright guys, our revenue is about to go down. Everyone be okay with it. We’re going to keep calm. We’ve had this amazing run of growth. Everything’s going up. Now, we are purposely just going to chop off 10%-50% of our revenue over a 90 day span and we’re just going to be okay with that.” That expectation setting was super important so nobody freak out because I saw what was going to happen. We’re going to go from a few hundred to a few dozen and then the churn is going to continue on.
Rob: That’s really important to point out that, (a) you called that out to your team in advance, but (b) most people who have never run an app, where you have big waves of customers coming in and a lot of trials, if you shut that off, it’s exactly what you said. It’s like this huge wave. The churn is going to crash but it never crashes because your trials bolster it. It just keeps going up, and up, and up. But the moment I’ve had a couple apps where we had hiccups, whether it was suddenly Google downgraded us, the ads stopped working, whatever it is, our trials plummeted.
It wasn’t just, “Oh. We didn’t grow that month because we didn’t have as many trials.” It is devastating because oftentimes, your first 60 or first 90 day churn is way, way higher than your 90 day to infinity day churn. That’s the part that just crashes. If you don’t keep that constant influx top of funnel, it can be devastating. Like you said, 10%-15%, 20%-30%, I’ve seen with smaller apps. It’s painful if you’re not aware, if you don’t look at the math in advance.
Jordan: Yes. This […] back to what you’ve mentioned a few minutes ago, where I should be happy because things are going well. I knew internally that this is what was happening, that the trials were just keeping it afloat. The trial’s just kept overwhelming the churn. If anything happened at all to the trials coming in, then we’ll be exposed. Making this move was like, “Let’s do that on our terms instead of someone else’s terms.”
It’s also why we did it in the middle of the year, July 1st, literally right in the middle of the year, well in advance of the holidays so that we would have our act together now. That’s what happened. We completely stopped free trials and the churn kept going for 90 days. That hurt, but the benefits were amazing and immediate.
July 1st comes in and we just shut it down. You can’t see a free trial on our site. It’s apply for a demo. That terminology was super important to me. It was not “request” a demo, it was “apply.” It was a position of power. This is really good. You’ve heard about it. You’ve heard about the success people have with it. If you want it, you need to apply. We soft pedaled it on the site.
We’re not like, “Apply here to see if you’re good enough for us.” That sucks. That’s not good positioning. It was really, “Apply to see if we’re a fit.” People are like, “That’s […]. You’re basically just saying that we’re not good enough if you only want to work with successful merchants. We’re up and coming. You don’t want to work with us because we’re not big enough. That’s not cool.” In reality, it was much closer to, “Let’s make sure we’re a fit.” Think about all the things we’ve been talking about. It’s not just, “Do you make enough money?”
I read Lincoln Murphy’s blog post about qualification. He had a great write-up about the different types of qualification, where it’s strategic, cultural, financial, all these different things that are in line. We have some merchants that makes $1,000,000 a month, but we absolutely cannot stand working with them. That has now become a factor in the qualification.
Now, we have an actual pipeline. That sales process that was happening inside the product and a few interactions with support is now happening with people, with an application that people fill out, then every morning the success team comes in and either denies or accepts the application. Right now, we’re denying roughly 50% of the applications. We’re just saying, “It does not make sense for you to work with us. Here’s a link to our competitor that might make more sense for you.” We literally linked to the competitor in that rejection email.
Rob: That’s crazy. It’s such an unorthodox approach. It’s the Velvet Rope Policy. It’s just letting in exactly who you want. As we’ve said, it’s a luxury. Most apps needs all the trials they can get. You hit a certain point where that made sense, but I do think that more companies should think about doing this once they hit that point.
Jordan: When I spoke to other founders about this, I got the sense that people were like, “Can you do that? Is that okay?” To me it felt like, “That’s what I think we should do. It felt very strange to be like a slave to the fact that people want to use it, therefore we have no choice but to let them. What? That doesn’t make sense.”
Rob: I’ll tell you what, it’s way better to do it upfront than to let people in. Whether it’s just people aren’t qualified or they’re the toxic types of customers that you can identify pretty early on that you’re like, “Oh boy. This person’s never going to be happy with anything. They’re just going to rag on my staff the whole time. They’re going to Twitter the moment we don’t answer their email in four minutes.” If you can get them upfront, identify them that way, and not have to fire customers who’ve been with you for two or three months who are a pain in the ass (which all of us have to do, it sucks), for that alone, this is pretty valuable.
Jordan: Yes. We call them category four. We have category one, the best of the best direct-to-consumer brands that we recognize. We’d love to work with them, absolutely get them in, let’s give them the white-glove treatment. We have a category two that are a good fit. We have category three that are not quite there yet, it’s on the bubble. It’s the success team’s call whether or not they should come in or not. And we have category four that are jerks. It doesn’t matter how much revenue they make. If they’re just going to make us miserable, they just don’t get in.
Rob: Yeah. Isn’t that a hurricane category one?
Jordan: Yes. Think about what this has done internally. A few things that it has done. First is establish an actual sales pipeline that we can optimize. What we did there is first, we took a stab at what we think the pipeline actually looks like. Think about the different stages. We get a demo whether they get approved. They get the link to set-up a time to talk. Then, they get the link to sign up after that. Then, they create a free trial. Then, they’re launched and have a processed revenue. And then, they’re into the conversion piece of it.
Before, we didn’t have those steps. It was just a free trial and then hope the product does its job. Now, what we did is we set up the pipeline and those steps. We have in HubSpot, but I got a good recommendation from someone (I can’t remember exactly who) to put it up on the wall. I’ve got a bunch of index cards, we’ve got a bunch of markers, and we’ve got these tacky stuff that sticks to the wall. We created the categories as columns on our wall. Each prospect got an index card with their name on it and we would physically move the index card from stage to stage. It was just mimicking HubSpot. You would move in the HubSpot, you’d go to the wall, and you’d move it from one column to the next.
What that did is it showed the entire company in visual, physical format, what was happening with our sales pipeline, instead of just, “I don’t know. We have a few hundred trials.” The second thing it did is it was a dead obvious way to see where the friction was. The friction is the columns that have the most people, pretty simple. What it tells us is that stage in the pipeline is where we have a lot of friction, and that’s where we need to get the communications and marketing teams to create content.
Now, what does the success team need in order to help merchants get from that column to the next column and then start creating content, videos, support docs, to help people through that, so that the success team could provide those and the merchants can also get on their own?
We did it for three months or so. We’ve since taken it down. It’s no longer useful as it was in the beginning. At first, we made the switch. It just had this amazing impact. I have a bell on my desk. When someone became a paying customer, I would hit the bell. It was like this visceral experience for people. We’re not a company that just answers emails. We’re doing something specific. We’re finding people, identifying who the right people are, moving through this pipeline, and getting them to success.
Rob: I love that idea, the visual nature of it. Just seeing cards, it must be obvious visually and just be an amazing queue for you guys. That’s really cool.
Jordan: Yeah. They were just a very large vertical stack of prospects that didn’t go from, let’s say, approved but didn’t schedule the actual appointment to do the demo. Okay, we need to be better at that. An obvious one was also like they’ve created a trial, but they’re not processing revenue yet. They need to get over the hump of actually using the product.
One thing I did mentioned earlier on the pricing is that not only did we remove self-served free trials but we removed free trials entirely. We asked for the first $500 upfront at the time of sign-up that we have a 30-day money back guarantee instead of the free trial. It’s all toward the same type of positioning of, “Let’s make sure that you’re a good fit. Once we know that you’re a good fit, then you commit to us. We’re committing to you. You commit to us. Let’s do this together.”
Rob: Yeah. When you look at large, enterprise companies, let’s say HubSpot or Salesforce or something, they get a bad rap for being enterprises. They’re a pain in the ass to deal with, they’re too expensive, and their sales process sucks. You’re moving somewhere between self-serve and what they do. It sounds like there is less friction. Is your pricing public on your website?
Jordan: Yes, it is.
Rob: So the pricing’s public, that’s a difference. They tend to hide it behind a thing, then it’s a negotiation, blah-blah-blah. The difference is there. You put up the velvet rope. You’ve gone upmarket. They’re typically not free trials with these really expensive enterprise plans. It typically all annual. I don’t think you’re there yet, but my guess is you’ll be moving there because there’s a lot of reasons to do that. Both predictability with the merchant but also predictability for you. You are taking that step towards the upmarket playbook, right?
Jordan: Yeah. The results, if you think about internally, going from hundreds of free trials to a few dozen, what we’ve been able to do is give love to the right merchants. We’ve told our support team, “Guys, we’re no longer doing things. It’s not about crushing tickets. You could take your time. You can spend 45 minutes on an email as long as on the other end the person goes, ‘Wow. That was everything I needed and you took your time. I feel great about it.’”
The fewer, more qualified merchants is the theme. We’re much common internally. Our support staff finish things up by 11, then they’re doing support docs, they’re helping testing on the product team, and everyone’s happier. People who are jerks, no one feels the need to like, “Hey, I guess I can’t turn down money because it’s not my business.” Now, they’re empowered. If this person sucks, tell them to get lost. People are more empowered. They’re happier. Our monthly churn went from 12%. It continued on for those few months. Five or so months later, we’re at 5% monthly churn.
Rob: Oh, man. Wow. That’s crazy. That’s such a testament. On the podcast and in the whole MicroConf community, what’s funny is before we started talking about this, let’s say in 2010, there wasn’t just this common knowledge on a lot of things that we talked about. Lower price products have higher churn. The customers are more of a pain in the ass. We all know that now. You know that if you’re selling a $10 product, everybody’s price sensitive. Your churn is through the roof. They want all the features. It’s just known now.
Then, there’s the next step up of $50 price point average revenue per customer or $100 average revenue per customer. You guys were at such a high volume that even those numbers didn’t make sense anymore. It just didn’t make sense to service them because they were such a small portion. They were huge portion in your customer base, in your trial base, very small portion of your actual revenue. Now, we can only bother or we should only focus on $500 to $2000 a month average revenue per user.
That’s the step. It’s obviously very deliberate and I’m just struck by the impact. It’s not one thing. It rippled through the entire business in mostly positive ways, it sounds like. The fact that you support people now have the ticket, the ticket volume is whatever it is, a tenth of what it used to be, is just phenomenal.
Jordan: Yeah. The way we look at it is that we really made a healthier company. The growth in 2019 was nothing nearly 3X of the previous year. But now, we’re in a position to grow in a much healthier way.
Going back to the faucet analogy, now that we’ve tightened it up all the way, fully controlled everything, now that we have our systems in place, we understand who the right matches are, the systems are better, the people are happier, now we can start to open up a little bit on our terms, and grow faster but in our way. An example is when someone’s a category three, they’re qualified but they’re not one or two, we send them a recorded version of the demo. Now, we can open that growth back up, but on our terms and under control. If we don’t like the way that’s going, we’re just going to shut that back down.
Rob: We talked a lot about the positives. Was there a major negative repercussions to this?
Jordan: Just finances.
Rob: That’s short-term.
Jordan: Yeah. The short-term financial hit that hurt is just a stressful thing. We did that with what I felt was enough money in the bank, that we wouldn’t get to the point where I felt like I have to go raise more money. I wanted to get through this in a way that we come out to the other side.
Really, if you think about all the way back, the decision to increase prices on existing customers and that kicking in January, what we really needed to do was just get through this six month period. The increased pricing on that GMV that is coming on the door already is going to overwhelm all of the negative impact of it. Then, we’ll be in a position where we are much more profitable and much happier at the same time. Just six months of pain but all towards putting ourselves to a good spot in 2020.
Rob: Yeah, and that’s playing long ball. You have a long-term mindset. You’re not churning and burning, “Oh, how can I maximize revenue now to raise the next round? Or have an exit?” or whatever it is. You’re thinking, “If I’m going to run this company for years, what is the healthiest company? What company do we all want to work for? What’s best really for the customers that are the best fit? What’s best?” The six months of pain, I’m sure, has sucked but you’re basically coming out on the other side of that. I hope January is truly an amazing month for you.
Jordan: Yeah. Thank you, man. I appreciate the ability to talk through the whole thing. I’m actually writing a blog post about this. I’ll let you know when that’s out.
Rob: Sounds cool.
Jordan: I know it’s all unique to each individual business, but the big lesson I hope people get from it is that you don’t have to play by what you think are established rules. You should do what you think is best for your business.
Rob: Love it. We will link up the price increase blog post that you talked about. I have that link right here. I googled Lincoln Murphy’s blog post about qualification and hopefully it’s the same one. We will also link that up. If you get your post published before this goes live, we can throw that in there as well.
If folks want to keep up with what you’re up to, they can go to @jordangal on Twitter and carthook.com is your app. Any other places they should keep their eye on?
Jordan: Yeah. I also do a podcast with my good friend, Brian Castle, called BootstrappedWeb. Those are the three places: Twitter, CartHook, and BootstrappedWeb.
Rob: Sounds great. Thanks again for coming on.
Jordan: My pleasure. Thank you.
Rob: Thanks again to Jordan for coming on the show. Also, I should call out episode 452 of this podcast. Just a few months ago, Jordan came on and answered listener questions with me. If you’re interested to hear more of his thought process, go back and listen to 452. You can hear his take on several listeners questions.
If you have a question for me or a future guest, leave me a voicemail at (888) 801-9690 or email questions@startupsfortherestofus.com. As you know, our theme music is an excerpt from a song by MoOt. It’s called We’re Outta Control. It’s used under Creative Commons. You can subscribe to us in any pod catcher. Just search for “startups” and visit startupsfortherestofus.com if you want to see a transcript of each episode as well, to see show notes, and comments by other loyal Startups for the Rest of Us listeners. Leave a comment of your own if you want to give a thumbs up, your thoughts, constructive criticism, whatever it might be on any of the shows. Thank you for listening. I’ll see you next time.
Episode 475 | A Bluetick Update from #Mike Taber
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Show Notes
In this episode of Startups For The Rest Of Us, Rob checks in with Mike Taber on his continued progress with Bluetick. The final conclusion to the Google audit is revealed, and they check in with the .Net component problem, the podcast tour, and more.
Items mentioned in this episode:
Rob: In this week’s episode of Startups for the Rest of Us, I catch up with Mike Taber. He’ll give us an update on what he’s been up to with Bluetick for the past five weeks. Welcome to this week’s episode. I’m your host, Rob Walling.
This week on the show, we cover topics and tactics related to building and growing startups in order to better your life and improve the world in a small way. This is a show made by and for ambitious startup founders who want to build ambitious startups but want to stay sane at the same time. And our willingness, our sacrifice, our life, or our health in order to grow our company.
We want to make interesting things. We want to be constantly learning, growing, and evolving. We want to be in control of our time. I think that’s a big motivation while a lot of us start these companies so that we can work on stuff that is super interesting to us. We’re able to create and push things out into the world, do things in public, create opportunities for ourselves, and own our own destiny.
We have many show formats, interviews, hotseats, and listener questions. But every five weeks or so, Mike Taber, comes on the show. He and I co-hosted the show for the first 448 episodes. Now, he is spending a lot of time focusing on his startup, Bluetick at bluetick.io. He updates us on his journey. He’s taking a social media hiatus, podcast hiatus, and he’s really focusing on trying to grow the startup.
If you haven’t listened to episode 470 and maybe even 465, you can get a little more background on what’s been going on. This has been an ongoing conversation and you hear me refer back to things that Mike has been dealing with, fighting trough, and struggling with for quite some time. It was a good conversation this week. I think Mike’s making some progress on some friends, not as much progress on the marketing side. You’ll hear me bust this chops about that a little bit in this episode. Overall, I think you’ll enjoy it.
Our big future of MicroConf announcement went live last Friday. I imagined you heard episode 474.5 that I put into the feed that had the audio content of that announcement. It was super fun to put together. It was one of those things that’s super stressful. It is when you’re launching something. It’s one of these things that I couldn’t talk about on the MicroConf team. We’ve been talking about and thinking things through about expansion plans for years, literally, but pretty intently for 5–6 months trying to plan everything out. Even just having a video, recording a video like that, having it produced, and having a moment where everyone watch at the same time was definitely exhilarating and it was an experiment for us.
We wanted to part toes into the water, but it came out really great. As always, thank you for all your support. We really are just looking to get more people to connect with one another. I hope to connect with you, but I can’t meet everyone. The idea behind this whole community has always been connecting more of us to one another, which is exactly why we plan this expansion, and exactly why we’re diving in headfirst in 2020 and beyond.
It’s getting close to the holidays. I hope you’re taking some time to think about what the new year brings and to spend some time with your family. I’m going to continue to push the episodes out every Tuesday. For now, let’s dive into the conversation with Mike.
Mike, thanks so much for coming back on the show.
Mike: Hey, how’s it going?
Rob: It’s going pretty well. I always enjoy our conversations. I love circling back up with you and hearing what’s going on with Bluetick.
Mike: Yeah, cool as well. Where do you want to start today?
Rob: You told me offline that you had a pretty big win this month. You want to tell folks about that?
Mike: Yeah. I was working through a trial with a customer. They were looking at everything because they wanted to use Bluetick for their team. They signed up for the $500 a month plan. It’s a pretty big win. It’s one of the largest plans that I have at the moment. I see that somebody signed up for that, went through some onboarding things with them, got all of their user accounts setup, and got their mailboxes added. I know that they were working on some integrations to do direct work with the public API for Bluetick. So far, everything seems to be going well. I answered a few support emails but no major issues to speak of, so that’s nice.
Rob: Congrats. That’s super cool to hear. I know that has an impact on your overall MRR. It’s cool to hear. We really haven’t had a big win like that in a long time since we started talking about this, so I applaud that and I hope to hear more about it next time we circle up.
Mike: Definitely. One of the things that it made me realize was that in terms of the team accounts, obviously, getting a $500 a month customer versus a $50 customer, that’s a huge win. Not just a win. It’s also a large revenue boost.
In the past, I’ve been looking at smaller companies where they’ve got anywhere between one and three mailboxes or something like that. But the level of effort for those larger customers is not really that much bigger. For this particular customer, they sell software which I hadn’t have a whole lot of success trying to sell Bluetick to customers who were running a SaaS businesses. Even if they have a lifetime value of several thousand dollars. Even though those numbers tend to fit well with services company where they’re selling something that’s $5000, $10,000, or $15,000.
I think that the reason for that was more because I was looking at the types of customers who are selling. They’re lifetime value was spread out over a much greater period of time versus the ones like this one, where somebody buys our software and it’s a couple of thousand dollars right upfront. It just made me realize that there’s probably a lot of other customers that fit that type of profile where their price point for their software is, even just the starting point is probably relatively high, and it will be worth talking to these people and say, “Hey, would you like to put an automation process in place such that you’re reaching everybody who starts a trial?” I think it’s just a matter of segmenting the types of software companies and what their price point is.
Rob: If you’re listening to this and you fit that bill, reach out to us questions@startupsfortherestofus.com or you can hit up Mike. I was going to say DM you on Twitter, but you’re not on Twitter anymore. I don’t want to call out your personal email address on the show, but we’ll absolutely get this over to Mike if you send it there.
Mike: It’s pretty easy to find.
Rob: Yeah, you’re email. You can contact Mike, singlefounder.com. I’m guessing you have a contact link.
Mike: I think it’s on the website.
Rob: I guess they can just go to bluetick.io. That’s what I’m going to ask. Cool, this is a great win. How can you get more of these? I don’t want to dig into all the details of the customer, obviously, but what industry, why did they sign up, and how do you find more of them? Sometimes these things are anomalies, obviously. If you think it is, could be a repeatable customer or type that works for you? I think that would be a big win.
Mike: Yeah. I’m definitely going to look into that a little bit more once December is over. I’ve got a bunch of other things going on that I’m working on that are just taking time and effort to do. I just don’t really have the bandwidth to expand the energy and focus to go after those other things. It’s definitely something that I want to proceed and go after starting in January.
Rob: Cool. That was our big win. Tell me that this is not our big loss or our big agony of defeat moment, Mike. The Google audit, is it done. Is it done?
Mike: Yes, it is.
Rob: Yay!
Mike: Yeah, I know. No kidding. I’ve got the letter of assessment. I don’t remember whether I had that the last time we talked or not. I think I was still waiting for it, but I got it back. As soon as I got it, I turned around and send it to Google. It was about a month later, I sent it to them, and they replied to the email that I sent with the letter of assessment saying they’re still waiting for my letter of assessment. I was probably less than polite in my response because it was literally right below where they had written, “Where’s your letter of assessment?” but the next day, they emailed me and said, “Hey. Everything is good. You’re all set.”
Rob: That’s really good news. What sound effect should we trigger it? Is it people clapping? Is it glasses clinking?
Mike: I don’t know. Maybe a car crash?
Rob: Yeah. It’s been such a trainwreck. I’m happy for you. This is a second win. We’re off to a good start. It can only go downhill from here as well.
Mike: Do you want me to wrap up right now and be done with it?
Rob: Yeah, that’s right. No. I’m glad to hear it. It’s been about five weeks since we talked. Did it take much of your time during that five weeks? Was it just a small blip?
Mike: No. It was just a small blip. I didn’t have anything to do. Once I’ve got all the paperwork back, I sent it to Google, and basically just was waiting for them to come back and say, “Hey. This is all set.” I think that I have heard that if you email them again, it basically puts you back to the bottom of the queue, so you’re better off not saying anything which is just the most bizarre way to handle it, but it is what it is.
They probably work backwards from whatever’s been sitting in their queue the longest. I get that but it still sucks to have to wait and not be able to ask, “Hey. There’s this deadline coming up. Are you going to do anything with this paperwork I sent you?”
Rob: Cool. Let’s move on from that. That means you have five weeks of undistracted work. Life never gets in the way like getting sick, or thanksgiving, or kids. Being home from snow days, I’m sure, happens or whatever. I haven’t had that yet this winter but I know it’s coming.
Talk to me then. There’s been a recurring theme around this untestable sealed .NET component. I brought it up multiple times about, “Hey, are you going to get rid of it?” and you said, “Yes.” Last time we went back and forth of, “Should I be doing sales and marketing or should I be getting this done?” we actually had a comment from a listener, Ralph Corderoy, on episode 470 which was the last time we talked.
He said, “Regarding ditching the .NET package that makes testing hard, it hasn’t been made clear why the application code needs to change. A re-implementation could take the subset of the API that the application uses and provide just that; none of the application code would know or care, and then whatever’s needed to ‘peek through’ for testing would be added. This seems much simpler than altering the application code, to use a new API that would need designing in parallel, thus take less time and be easier to justify.”
Mike: Yeah. It’s not an actual. It’s not an API. It’s an actual library that’s compiled into Bluetick that’s the problem.
Rob: Got it.
Mike: I’m not sure I completely follow what he means by some of that.
Rob: I think if you have coded it to an interface or something that you have created. He’s saying that it’s an internal API. But it is interesting. The bottom line is you said, the way it’s done, it’s a tremendous amount of work because you have to read a bunch of stuff in the database. Do you really need to redo this stuff in the database, by the way? Would it be possible to not do that?
Once you switch the component, it has to be. When I say possible, sometimes you have a naming convention that you used the vendor’s name in the components name in it. If you switch it over and it’s a new component, it’s confusing why do we have that legacy name. The code would still work, right? That’s the thing I’m thinking.
Mike: Yeah. There’s a decision that I made early on to save some time, which was to take the component that they have and dump it to a JSON file, read it back, then put it back into the object. That’s part of the problem. It’s not even just an interface. It’s the entire component. It’s being sort basically as a binary blob. It’s not nearly as easy as it could be to rip that out.
I have written a bit of an interface around it to abstract it a little bit more, to make it easier to use a different component. I’m still going to have to convert all of those things in order to completely rip it out. I need to go through every single one of those blobs and convert it into whatever the new storage format happens to be. It’s not just a simple rip and replace.
Rob: Totally. I have two questions on that one. It’s Ralph’s final question on his comment from that episode. He said, “What’s the minimum that can be done to provide regression test to allow development to continue […]?” Is there a scope of less than what you described or is it all or nothing?
Mike: It’s probably all or nothing because of the naming convention rely on that component. Since I don’t have access to the source code for it, I can’t just copy things out. I can probably decompiled it and use them as it is, but it’ll still be really, really hard. It’s just not easy. A lot of that stuff is integrated into my unit test, so I have to rebuild a bunch of that unit test as well.
Rob: Right. I’m not sure that I want to rehash this decision, but the more we talk about it, the more I’m thinking, “Do you really need to remove this?” You said that it was that you couldn’t test it because it was sealed and you can’t write unit tests around it or something. I’m just thinking, is that big of a deal? Maybe you just live with it. Last time we talked, you said it would be a week. At a best case, it would be a week of data, of rewriting, and the blobs of data manipulation.
Mike: No. It’ll be a week of just a data migration. Once work is done, just to migrate the data is going to be a week.
Rob: Right. It’s like two weeks or three weeks of full time work to get this done. When I hear that, I think, “Ouch. How important is this?”
Mike: There’s other things I want to do including have a separate database for each customer for their mailboxes to be able to do more, to allow people to mind their mailbox for other information that they can’t get any other way. There’s literally no way to do certain types of queries in a mailbox. Even if you go into Gmail and start typing certain things, there’s literally zero way to get certain queries to work.
I would like to be able to surface some of those things for Bluetick but some of those features are so far off that it’s not worth it for me to go all the way down that road right now. I’m kicking at it a little bit to get certain pieces of it out, but I don’t want to go down the rabbit hole of implementing software the next three or four months in order to get everything working in the way I want it to work and an effort to implement features that are probably a year off anyway.
I’m trying to rip out this particular component so I don’t have to deal with it in the future. Then I can test things that I need to. Right now, I have a hard time testing email headers in certain ways, and going back to previous emails. It’s just harder for me to do that right now because I don’t have some of the infrastructure in place right now. I can’t put the infrastructure in place until I rip this thing out.
Rob: Got it. It’s a tough one. It’s tough to have a code that you have to redo that doesn’t provide value.
Mike: Without walking you through the specifics of it, it’s really hard to describe.
Rob: Yeah. You have decided to rip it out. The last time I was pushing you to, “If I were you, you could ignore this.” Obviously, you need to do sales and marketing because you need more customers to make all of it worthwhile, frankly. Having that legacy hanging over you head, the tech debt, it’s going to slow development. It makes you not want to build certain features that you may want to build, and I was now more on the side of, I would eat it during this holiday season. I would eat it. Personally, I would eat the time. But I’m 55/45 on that or 60/40. I’m not 95/5. I think an argument can be made both ways. Where do you land right now? Have you started working on that? Or are you going to replace it soon? Or are you just going to punt it?
Mike: I started working on it a while ago, but it’s just kicking out here and there, trying to abstract things a little bit more to get further along without breaking anything that’s already in place. There is a second interface in there to replace it but I’ve got to write some of the code that’s going to pull all the objects.
Right now, what I’m doing is I’m in a holding pattern probably for another week or so. Right now, I’m also still working on some of the additional multi-user functionality for that larger customer that I had, which I prioritize above pretty much everything else, to be perfectly honest, for obvious reasons.
Rob: Yeah. If it’s revenue, that should rise to the top. That’s the thing with .NET. My concern, Mike, is I think you have a history of letting things hang around for too long. Letting them linger, not just diving in doing the work, and getting it done so that it can be behind you. I felt like the Google audit was one thing. I know you could’ve done that fast. We’ve been talking about Google audit for how long? Seven months? Eight months? This .NET component, too. It’s like six, seven, or eight months.
To me, if it’s that, if we have been talking about it, if it’s been that important that we have, then it’s time to resolve that thing. To get it off. To get it off the to-do list. It feels like a shadow or a cloud that’s hanging over your head. I just don’t want to still be talking about that. I don’t want you to still be talking about that in this spring or next summer.
Mike: I totally agree. This piece of it has to be resolved. For the Google Audit, I was holding off because I didn’t feel like I had enough information to be able to make a good decision either way. I know that you’re always working in a realm of uncertainty where you don’t necessarily have all the information. Waiting to get more information isn’t always going to give you the information you need to make a better decision.
I also recognize that Google was throwing this out there to everybody and saying, “Hey, you have to do this.” Everybody was kicking and complaining about it. Nobody really knew what to do or what it involved.
I had a few conversations with other people. Before I went through the process and before I made the decision to go forward with it, I got at least some clarity. But none of that clarity I got was from Google, which sucks. There’s not a whole lot that I can do about it. And even since then, I had conversations with other entrepreneurs who’ve gotten in touch with me, and say, “Hey. I know you went through this. Can you help us out? What it is that you had to do?” I’ve been able to help them, which is nice to be able to do. At the same time, I feel like Google could’ve been a lot more forthcoming with a lot of the information. They just weren’t.
Rob: Oh, we know, Mike. We’ve been through it with you. You know what? I’m happy. I think a win for all of us is that I’m not going to ask about Google audit next time. That’s checked. It’s done. I want to get there with the .NET component. I know we can’t just wave a magic wand and make it go away. It’s something that I want to see we move past when you can. Obviously, I would prioritize the customer features, too. Anything’s that driving revenue would be number one.
Mike: Totally agree.
Rob: Someone circled back, they wrote in an asked if you ever took the Enneagram.
Mike: No, I didn’t. I took the wrong one.
Rob: You took a wrong one, yeah. It was a personally test that tells you what motivates you. I was saying for me, it was creating things. I have worked with folks who are about achievement and they were more of the Jeff Bezos role, where they didn’t really need to build or make things. They just wanted power. I’m not just, but they wanted power and achievement and that’s what made them happy.
Obviously, it’s not a cure-all or whatever, but it’s an interesting thing to learn about. The test is in our show notes, the link for the last episode, but I think a couple of people called in and said, “Yeah. I really like to know what motivates Mike and all that.”
Mike: So, you’re telling me I got to go in the show notes and look for that?
Rob: You got it. I can send you the link. I’ll send you the link and I’ll reimburse you for the $10 or whatever it takes, guys.
Mike: No, you won’t.
Rob: I’m teasing, I know. Send me you’re Venmo, Mike. There were some marketing stuff you were talking about. There was a podcast tour. You had someone sending emails to try to get you on some podcast. As I said, I didn’t think it would be a long term impact but certainly getting out there, it’s easy for you to jump in a podcast, and wondering if you’ve had any traction with that approach.
Mike: Yeah, I have. I’ve been in a couple of podcasts over the last month or so. Still working on other ones. I was on Sales Tools, and also on Jane Portman’s UI Breakfast. That one’s not going to be out until next month, I believed. I’ve been on those two so far. There’s a bunch of others that I started reaching out to, and we’ll see how that works out.
Rob: Okay. Two sounds okay. How many emails have been sent? That doesn’t sound like a ton of traction.
Mike: No, maybe five or ten tops.
Rob: How did that happened? You hired a contractor to do it, right? Two months ago.
Mike: Yeah. Most of the stuff’s set up. I’m just holding off on hitting the button. Actually, my mastermind group tomorrow, we’re meeting up. One of the things that we have is, “Hey. That button’s going to be click tomorrow to just blasting these things out.”
Rob: Stop holding off on hitting the button. Why are you holding off on hitting the button? We talked about it last time. I was like, “Cool. You’re getting ready?” You were like, “Yeah. I’m going to do it.” Five weeks later, why hold off on that?
Mike: I don’t know. Honestly, I almost feel like it was one of the reasons I built Bluetick to begin with. People don’t want to hit that button. It’s just need to be hit, to be perfectly honest. Honestly, my mastermind group member, he’s just like, “Yeah. We’ll just share control, just go in and click the button for you.”
Rob: Yeah. Consider your chops busted here on the show that you did not hit that button in the past five weeks. I really thought that that was an easy thing. It mostly set up. That’s something that you’ve got to be doing with these other stuff. It’s easy for you to do. I just feel like it’s one more step, it’s one more action to get you going.
The other thing, please tell me you hit the button on this one, Mike. Cold email. You said you had 900 addresses from some LinkedIn connections. You have prior Bluetick cancellations. You have some sales leads that never converted. You just had a whole list. It wasn’t even cold, it was warm, and you’re going to bucket them in and start getting back in touch with them.
Last we chatted, that was going to start. You hadn’t done it because MicroConf Europe. I said, “Cool. You’re going to get that going.” You generally agreed that, “Yup. This is the next thing to try to get more prospects.” Tell us where you are with it.
Mike: Yeah. That’s a total fail.
Rob: Oh no. You’re killing me.
Mike: I know, For whatever reason, I feel like I don’t want to start stuff in December when it comes to that stuff. I don’t know why.
Rob: It’s December 12. I think we last spoke, November 5th, maybe. Give or take. The three weeks before Thanksgiving, I think, are still good. I think starting stuff now it’s December—
Mike: Really?
Rob: Yeah, I do. November was always typically a decent work month. It was never the best, but we always had decent growth. Whereas in December, things tended to level off with my apps. Now that we’re mid-December, there’s no reason to start doing it now. I don’t think you want to book a call the week of December 15th. This is what we originally talked about. I was like, “I don’t want you to start this Mid-January,” which is now where you’re going to wind up.
Mike: Yeah.
Rob: It’s a bummer. It sounds like you don’t feel good about it.
Mike: No, I don’t. I don’t really have anything to offer up for either than it just didn’t get done. I should have. I can point out all sorts of things as to why I did or didn’t, but at the end of the day, it just didn’t get done. That’s where things are at.
Rob: Do you think it’ll get done before we talk next time? We’ll talk mid-January.
Mike: It’ll definitely get kicked off. Yeah, it’ll definitely get kicked off by then.
Rob: “It’ll definitely get kicked off by then.” I love that. I am so quoting that back to you. I’m actually going to go ahead and make a note of it, that sentence, here are the notes.
Mike: Awesome.
Rob: Last episode, you had launched the Zapier integration, I believe. You want to update us on that? Is that yielding anything? Didn’t you need a certain amount of beta users in other for it to be public or something like that?
Mike: Yeah. Right now it’s in early access, but I need to get to 50 users in order to do any cold marketing campaign with Zapier. Until I get to 50 customers, I’m probably not going to get to 50 users for it, it would just be difficult to do that. There’s probably ways I can hack it to some extent but I got to get to the 50 customers first.
Rob: I wouldn’t do that. I would just try to do it organically. Okay, so we’ll table that one. That one will be tabled for a while, actually. Something we ran at that time that we talked about last time was personal stuff like motivation, sleep, exercise. How was your motivation then over the past five weeks?
Mike: It’s been generally good, but I’ll be honest. I wish I didn’t have to struggle so much when it came to front-end code for Bluetick. Part of it is just lack of familiarity with some of the CSS that’s in there because I’m using libraries and templates that I got from WrapBootstrap. Some of it is just harder for me to do simple things than I would like.
I’ve started throwing things directly into the CSS, the style that I’m supposed to use in classes and stuff like that. I’m like, “You know what? I just don’t care. This just needs to get done. It just needs to work.”
Rob: That’s a bummer. Do you have any budget to hire a front-end dev so you don’t have to be mired in it?
Mike: I was actually thinking exactly that. Earlier today I spent two hours fighting and trying to get an image to display in the right place. What I’m thinking of doing is when I run into certain things like this, just go to my bug tracker and add them in there, so that it says, “Hey, this needs to show up in this particular place. I can’t get it to work,” then hire somebody to go through and get a lot of those things done for me so I don’t have to do it. I don’t have to spend my time and effort trying to figure out how to get it done.
Rob: Yeah. Any sticking point. We know you’re bootstrapping. We know that there’s not a ton. You don’t have so much revenue that you can hire anyone full-time or anything like that. If this is a point of friction, think about the questions I just asked, “What’s your motivation like?” You’re like, “It’s been good except for front-end code.”
Front-end code is not just a technical challenge. It sounds like it’s something you are not enjoying. It sounds like it’s something affecting motivation. It could really solve a lot if you were able to pull it off and bring someone in part time. Even if it is 20-40 hours a month. It could feasibly reduce the burden on your mental state as well as allow you to move faster.
Mike: Definitely. I have no doubt that somebody can get it done probably five or ten times faster than I am. Just to say, “This is exactly how to do it.” That would be perfect.
Rob: You’re thinking about that. It sounds like a good idea. Is it something you’re going to do? We can bat ideas around, but if it’s not a good idea then don’t. If it is a good idea, should that become a priority? For me, it sounds like it might be. Then, you have to take the step. You have to go on Upwork or work your network, you have to find that person, vet him and all that stuff.
Mike: I think that’s the challenge I have. How much time is that going to take versus trying to do it myself. I don’t know. I feel like I’ll be better served having somebody else to do it knowing that it’s going to take some upfront time and effort. It’s just going to push off some of the time frame of the implementation for certain things. I get images completely in the wrong place. I really don’t want to push a live, but at the same time, maybe it’s not the end of the world.
Rob: Sure. Again, if I were in your shoes, which is how I like to think about and couch when I do offer advice, the concept in my head of what you’re working on, how hard things are, and which you do and don’t like, I would look to hire someone. I know you’re focused now on getting features done so that the customer you just landed sticks around. That would be my number one priority. I would not let hiring derail that.
You’re not going to be doing any marketing over the next three weeks, four weeks, because hold email is not going to work with the holidays. There’s all these stuff. You have this time to crank through some things. To me, the big customer support is number one. Hiring, probably number two. And that unsealed .NET component in my head would be number three.
The hiring, an interesting thing you can do, whether you go to Upwork or Authentic Jobs or WeWork remotely, I have to think of which of those allow part time. Writing up a job description for front-end dev doesn’t take that long. Maybe it takes you an hour to do it. You can use an old job description or whatever, old posting you’ve used. Post that.
If you post on a higher-end job board, you tend to get higher quality but a lot fewer candidates. It shouldn’t take you a ton of time to vet. Again, that would be my second or third priority. Probably second priority that I was doing after supporting that big customer. I will say that and leave it at that.
I’m not trying to badger you to hire someone or anything like that. Or forcing you to make a decision. But, I don’t want your motivation. I know what it’s like to have crap on your to-do list that you don’t want to do and don’t like to do. I still have that. We have it on our whole entrepreneur career. It’s trying to minimize that. It’s trying to get less and less of that as you move forward.
I literally do look at my Trello board once a week and say, “What of these things I am procrastinating on because I don’t want to do them? Can I just archive these things?” We have a VA executive assistant. “Can I hand it to anybody on the team such that I enjoy my life more?” I think that’s important.
Mike: Yeah. For me, mentally managing the trade-off in runway versus how much am I going to be paying for this, is difficult as well. I only got so much runway to work with. At the same time, I’ve got to grow the business and anything that I spent is going to take away from that. It’s like, “All right. How do I manage this?” If the complete business was cash flow positive then it wouldn’t matter so much, but including my time is definitely not. That’s where I struggle a little bit, like how much should I budget with this stuff? And how much money should I be spending on certain things?
Rob: Sure. That’s without seeing your finances. Obviously, we can even begin to conjecture that. So, let’s leave that one at that. I’m curious to hear where you wind up with it on the next episode.
How about sleep? Overall, your sleep had gotten much better over the last several episodes. Going back nine months, it was terrible, and it has gotten better. How has it been over the last month or so?
Mike: It’s been touch and go. I’ve been sick for at least the past week or so. My kids were sick the week before that. Then, it was Thanksgiving and lots of other stuff in between. It comes and goes. Sometimes it’s great and sometimes it’s just not so much. I would definitely say it’s generally better than it was six months or nine months ago, but I think I could always be better.
Rob: Yeah. As we know, sleep impacts everything. That impacts your ability to focus. It impacts your motivation during the day. It impacts a lot of stuff. That’s something I know you’re keeping an eye on it, but it’s super, super, important.
Mike: Yeah. My doctors have me up to five medications again, I think.
Rob: Are you? Oh no. That’s not good.
Mike: Yeah. The past couple of weeks have not been helpful. I get off with a bunch of stuff. I go back and the doctor’s like, “You need to be on this and this.” I was like, “All right. Fine.” I’ll come off with the two of them in about a week. We’ll see how things will go.
Rob: Yeah. I’m just going to let that one go. I’m not going to dive into that. Exercise? How about that? You’re exercising twice a day at some point.
Mike: No, no, no. Not that much. It was three or four times a week.
Rob: Okay. I think one day we recorded, you said, “I’ve exercised twice today.” I think that was the statement. You didn’t say you were doing it twice a day.
Mike: There might have been that.
Rob: How has it been though?
Mike: The past two weeks have been off. I think that’s mainly because of Thanksgiving lumped in there but I’ve got to get back to the gym probably this coming week because I’ve been sick for the past week or so. I think I got there once or twice last week. I think it’s just once at the very beginning of the week. Then, I haven’t gone at all this week. I gotta get back there again next week.
I have the motivation to do it. It’s just lately, I haven’t had the energy because I felt terrible. Even right now, my sinuses are all congested. I’m a little loosey from the meds that I’m on. They affect your blood pressure, so the doctor warned me. She’s just like, “Yeah. Be careful walking up and down the stairs.” My god, this will be fun.
Rob: And you realized the reason I asked you about this stuff. I asked you about motivation because: (a) you’re interested and I want to hear what’s going on, but (b) I think it’s a good touch point for you to think about every week or four weeks or five weeks when we discuss to really think, “How is my motivation?”
Exercise’s probably more of an accountability thing that you think yourself the “next time Rob and I chat on the podcast.” I hope you feel a little bit of friendly pressure to keep doing it. I think it’s super helpful for all of us to have some type of exercise in our routine.
Mike: Generally, I’m still keeping track of everything that I eat. That’s been going really well. I’m down at least 10 or 12 pounds or so over the past three months. That’s been going well. I’m at least losing weight like I have planned on doing. Maybe not nearly as much because I haven’t gotten to the gym nearly as much.
Rob: Right. Lastly, we’ll wrap us up with differentiation. “I need to talk to some of my customers more.” We had talked about, should you change your positioning? You brought up like, get things you need from other people like a W9, for example. You’re going to have more conversations with customers to figure out if you need to add features to be unique, and then write the code to implement that.
Last time you were still noodling on stuff. Before that, you’re still noodling on stuff like, “I’m not sure yet how to make this unique. I’m not sure what my angle is.” I had said for not doing that, you need to have a unique traffic channel, would be the best marketer just to get people on top of the funnel or you need to have that unique selling proposition that differentiates you, the positioning that means, “Oh, at least a subset of people really need what I have and pretty much no one else has that.” I’m curious where you are with that.
Mike: This leads into something you and I have briefly talked about before the episode. We’re probably leave this off a bit. I was talking to somebody about possibly doing an integration that will provide a fair amount of that file collection capability. We only have one conversation so far, but their product is completely API-based. It would probably not be too difficult to get it to work with Bluetick. I still have to go and talk to a couple of customers to specifically know have that particular pain point of being able to collect files from people on an ongoing basis.
I just had that conversation with him earlier this week. Now that I’ve had that conversation—it’s actually been yesterday that when we talk—I have to go through, go back to those customers, and say, “We’re just thinking through this. Is this something that would be of interest to you? Will it make your life easier inside of Bluetick? If so, do you also know anybody else who has a similar type of problem, where right now they’ve got things hacked together in Bluetick, but with an integration like this, it might be possible to make it a much smoother experience? If so, I want to know if there are other people who would benefit from it and what those people like like? How to get in touch with them?” Once I know that stuff, then I can decide whether or not to actually build it and do that integration.
Rob: Interesting. It sounds like a one-off thing. It’s not like you’re actively reaching out to customers and having conversations. Or is this an outreach thing from you? Or was it an outreach from them?
Mike: For the integration?
Rob: Yeah. For this. I think you said that there’s a customer who probably needs that or a potential customer.
Mike: Yes. They’re making it work right now. They’re just basically asking people in an email. My idea was to basically bake the functionality directly into Bluetick, so when they send the email, they can say, “Go to this page and upload the five things that we need from you.” This other tool can do those things. If I can integrate with that other tool, then I can provide that to my customers like a white label thing, but it would get me further without having to write all that code.
I would have to write integration code, but I wouldn’t necessarily have to write this whole other tool to collect all the files and everything else that goes with it. I’m still noodling on that but I want to talk to the customers, and say, “Does Bluetick serve your needs right now? Or will something like this be better?” Does that make sense?
Rob: It does. This is it. When you have these small numbers in their early days, it’s trying to take one instance, extrapolate, and ask, “Are there any people like this?”
Mike: Extrapolate it from a single data point is not helpful.
Rob: Yeah, but it’s what you have to do right now.
Mike: I’ve got one kid. Thirty would be great.
Rob: Yeah, exactly. That’s all I have today. I think we covered pretty much everything. We have some wins. We have some not so wins. Overall, how do you feel about the past five weeks? Does it feel okay? Feel good? Great?
Mike: Okay. There’s been some high points with the Google audit getting done and adding a large customer, those were fantastic. Low points with things like having a deal with a front-end CSS code and a few other things that just haven’t been done, some of the marketing stuff I wanted to get done.
There was one customer. I wouldn’t want to call him customer because he signed up. It was the day before Thanksgiving or something like that. He signed up for an onboarding call. I was like, “Yes!” Then I looked at the time of it. It was 4:30 on a Wednesday afternoon. It’s literally the day before thanksgiving. I was like, “All right, fine.” Then they ghosted me, didn’t showed up, didn’t respond to any of my emails. I reached out to him several other times. Then, the billing went through. 12 minutes later, they asked for a refund. I’m so upset.
Rob: Yeah. That’s a bummer. That’s the hard thing about being solo. You run into stuff like that and you don’t have anybody else to handle it. I’m sorry to hear that.
Mike: That’s an obvious low point. That’s like a kick right into the teeth. I really tried to help out and tried to do something. Of course, the cancellation email was like, “I DIDN’T WANT THE SUBSCRIPTION.” It was all in caps. I was like, “Come on. All right, fine. Just refund. Bye.” That’s it, walk away. Get something else done.
Rob: You’ve got to move on, wipe your hands off, and be done. That will certainly happen.
Mike: I have to make a conscious effort of dust my hands off and just walk away. I’ll be like, “All right, whatever. I can’t make everybody happy.”
Rob: You can’t get hung up on it. You can let it ruin your day but you shouldn’t. These are the ones where you really have to shake it off. It happens every so often. Sometimes more often than not, everything on your customer base. You’ve got to move past it. Sounds like you’ve got a good head about it.
Anyway, let’s wrap up. We will catch up with you again after the New Year and hope things go well over the holidays.
Mike: All right. Talk to you soon.
Rob: Take it easy.
We’ll talk to Mike again in four or five episodes. Hope you enjoyed the conversation. I will talk to you next Tuesday.
If you have a question, we have a Q&A episode coming up with Brian Castle. If you have a question specifically for him, he knows productized services. He’s launched a couple of SaaS apps. He was essentially a non developer that taught himself how to code in order to have more control over his ability to launch SaaS apps, or any other questions. I’m just going to pull out ones that I think he knows about. You can email them too at questions@startupsfortherestofus.com or you can always leave us a voicemail at 888-801-9690. We have a theme song and it’s actually an excerpt from a song called We’re Outta Control by MoOt. We use it under Creative Commons.
In any pod catcher, you can search startups, and we’re typically on the top 3–5. Go on in the internet and search for Startups for the Rest of Us and you’ll find our website that we recently redesigned maybe three or four months since then. You can check that out. We have full transcripts of each episodes within a week or two. Those going live, thanks for listening. We’ll see you next time.
This week on the show, we cover topics and tactics related to building and growing startups in order to better your life and improve the world in a small way. This is a show made by and for ambitious startup founders who want to build ambitious startups but want to stay sane at the same time. And our willingness, our sacrifice, our life, or our health in order to grow our company.
We want to make interesting things. We want to be constantly learning, growing, and evolving. We want to be in control of our time. I think that’s a big motivation while a lot of us start these companies so that we can work on stuff that is super interesting to us. We’re able to create and push things out into the world, do things in public, create opportunities for ourselves, and own our own destiny.
We have many show formats, interviews, hotseats, and listener questions. But every five weeks or so, Mike Taber, comes on the show. He and I co-hosted the show for the first 448 episodes. Now, he is spending a lot of time focusing on his startup, Bluetick at bluetick.io. He updates us on his journey. He’s taking a social media hiatus, podcast hiatus, and he’s really focusing on trying to grow the startup.
If you haven’t listened to episode 470 and maybe even 465, you can get a little more background on what’s been going on. This has been an ongoing conversation and you hear me refer back to things that Mike has been dealing with, fighting trough, and struggling with for quite some time. It was a good conversation this week. I think Mike’s making some progress on some friends, not as much progress on the marketing side. You’ll hear me bust this chops about that a little bit in this episode. Overall, I think you’ll enjoy it.
Our big future of MicroConf announcement went live last Friday. I imagined you heard episode 474.5 that I put into the feed that had the audio content of that announcement. It was super fun to put together. It was one of those things that’s super stressful. It is when you’re launching something. It’s one of these things that I couldn’t talk about on the MicroConf team. We’ve been talking about and thinking things through about expansion plans for years, literally, but pretty intently for 5–6 months trying to plan everything out. Even just having a video, recording a video like that, having it produced, and having a moment where everyone watch at the same time was definitely exhilarating and it was an experiment for us.
We wanted to part toes into the water, but it came out really great. As always, thank you for all your support. We really are just looking to get more people to connect with one another. I hope to connect with you, but I can’t meet everyone. The idea behind this whole community has always been connecting more of us to one another, which is exactly why we plan this expansion, and exactly why we’re diving in headfirst in 2020 and beyond.
It’s getting close to the holidays. I hope you’re taking some time to think about what the new year brings and to spend some time with your family. I’m going to continue to push the episodes out every Tuesday. For now, let’s dive into the conversation with Mike.
Mike, thanks so much for coming back on the show.
Mike: Hey, how’s it going?
Rob: It’s going pretty well. I always enjoy our conversations. I love circling back up with you and hearing what’s going on with Bluetick.
Mike: Yeah, cool as well. Where do you want to start today?
Rob: You told me offline that you had a pretty big win this month. You want to tell folks about that?
Mike: Yeah. I was working through a trial with a customer. They were looking at everything because they wanted to use Bluetick for their team. They signed up for the $500 a month plan. It’s a pretty big win. It’s one of the largest plans that I have at the moment. I see that somebody signed up for that, went through some onboarding things with them, got all of their user accounts setup, and got their mailboxes added. I know that they were working on some integrations to do direct work with the public API for Bluetick. So far, everything seems to be going well. I answered a few support emails but no major issues to speak of, so that’s nice.
Rob: Congrats. That’s super cool to hear. I know that has an impact on your overall MRR. It’s cool to hear. We really haven’t had a big win like that in a long time since we started talking about this, so I applaud that and I hope to hear more about it next time we circle up.
Mike: Definitely. One of the things that it made me realize was that in terms of the team accounts, obviously, getting a $500 a month customer versus a $50 customer, that’s a huge win. Not just a win. It’s also a large revenue boost.
In the past, I’ve been looking at smaller companies where they’ve got anywhere between one and three mailboxes or something like that. But the level of effort for those larger customers is not really that much bigger. For this particular customer, they sell software which I hadn’t have a whole lot of success trying to sell Bluetick to customers who were running a SaaS businesses. Even if they have a lifetime value of several thousand dollars. Even though those numbers tend to fit well with services company where they’re selling something that’s $5000, $10,000, or $15,000.
I think that the reason for that was more because I was looking at the types of customers who are selling. They’re lifetime value was spread out over a much greater period of time versus the ones like this one, where somebody buys our software and it’s a couple of thousand dollars right upfront. It just made me realize that there’s probably a lot of other customers that fit that type of profile where their price point for their software is, even just the starting point is probably relatively high, and it will be worth talking to these people and say, “Hey, would you like to put an automation process in place such that you’re reaching everybody who starts a trial?” I think it’s just a matter of segmenting the types of software companies and what their price point is.
Rob: If you’re listening to this and you fit that bill, reach out to us questions@startupsfortherestofus.com or you can hit up Mike. I was going to say DM you on Twitter, but you’re not on Twitter anymore. I don’t want to call out your personal email address on the show, but we’ll absolutely get this over to Mike if you send it there.
Mike: It’s pretty easy to find.
Rob: Yeah, you’re email. You can contact Mike, singlefounder.com. I’m guessing you have a contact link.
Mike: I think it’s on the website.
Rob: I guess they can just go to bluetick.io. That’s what I’m going to ask. Cool, this is a great win. How can you get more of these? I don’t want to dig into all the details of the customer, obviously, but what industry, why did they sign up, and how do you find more of them? Sometimes these things are anomalies, obviously. If you think it is, could be a repeatable customer or type that works for you? I think that would be a big win.
Mike: Yeah. I’m definitely going to look into that a little bit more once December is over. I’ve got a bunch of other things going on that I’m working on that are just taking time and effort to do. I just don’t really have the bandwidth to expand the energy and focus to go after those other things. It’s definitely something that I want to proceed and go after starting in January.
Rob: Cool. That was our big win. Tell me that this is not our big loss or our big agony of defeat moment, Mike. The Google audit, is it done. Is it done?
Mike: Yes, it is.
Rob: Yay!
Mike: Yeah, I know. No kidding. I’ve got the letter of assessment. I don’t remember whether I had that the last time we talked or not. I think I was still waiting for it, but I got it back. As soon as I got it, I turned around and send it to Google. It was about a month later, I sent it to them, and they replied to the email that I sent with the letter of assessment saying they’re still waiting for my letter of assessment. I was probably less than polite in my response because it was literally right below where they had written, “Where’s your letter of assessment?” but the next day, they emailed me and said, “Hey. Everything is good. You’re all set.”
Rob: That’s really good news. What sound effect should we trigger it? Is it people clapping? Is it glasses clinking?
Mike: I don’t know. Maybe a car crash?
Rob: Yeah. It’s been such a trainwreck. I’m happy for you. This is a second win. We’re off to a good start. It can only go downhill from here as well.
Mike: Do you want me to wrap up right now and be done with it?
Rob: Yeah, that’s right. No. I’m glad to hear it. It’s been about five weeks since we talked. Did it take much of your time during that five weeks? Was it just a small blip?
Mike: No. It was just a small blip. I didn’t have anything to do. Once I’ve got all the paperwork back, I sent it to Google, and basically just was waiting for them to come back and say, “Hey. This is all set.” I think that I have heard that if you email them again, it basically puts you back to the bottom of the queue, so you’re better off not saying anything which is just the most bizarre way to handle it, but it is what it is.
They probably work backwards from whatever’s been sitting in their queue the longest. I get that but it still sucks to have to wait and not be able to ask, “Hey. There’s this deadline coming up. Are you going to do anything with this paperwork I sent you?”
Rob: Cool. Let’s move on from that. That means you have five weeks of undistracted work. Life never gets in the way like getting sick, or thanksgiving, or kids. Being home from snow days, I’m sure, happens or whatever. I haven’t had that yet this winter but I know it’s coming.
Talk to me then. There’s been a recurring theme around this untestable sealed .NET component. I brought it up multiple times about, “Hey, are you going to get rid of it?” and you said, “Yes.” Last time we went back and forth of, “Should I be doing sales and marketing or should I be getting this done?” we actually had a comment from a listener, Ralph Corderoy, on episode 470 which was the last time we talked.
He said, “Regarding ditching the .NET package that makes testing hard, it hasn’t been made clear why the application code needs to change. A re-implementation could take the subset of the API that the application uses and provide just that; none of the application code would know or care, and then whatever’s needed to ‘peek through’ for testing would be added. This seems much simpler than altering the application code, to use a new API that would need designing in parallel, thus take less time and be easier to justify.”
Mike: Yeah. It’s not an actual. It’s not an API. It’s an actual library that’s compiled into Bluetick that’s the problem.
Rob: Got it.
Mike: I’m not sure I completely follow what he means by some of that.
Rob: I think if you have coded it to an interface or something that you have created. He’s saying that it’s an internal API. But it is interesting. The bottom line is you said, the way it’s done, it’s a tremendous amount of work because you have to read a bunch of stuff in the database. Do you really need to redo this stuff in the database, by the way? Would it be possible to not do that?
Once you switch the component, it has to be. When I say possible, sometimes you have a naming convention that you used the vendor’s name in the components name in it. If you switch it over and it’s a new component, it’s confusing why do we have that legacy name. The code would still work, right? That’s the thing I’m thinking.
Mike: Yeah. There’s a decision that I made early on to save some time, which was to take the component that they have and dump it to a JSON file, read it back, then put it back into the object. That’s part of the problem. It’s not even just an interface. It’s the entire component. It’s being sort basically as a binary blob. It’s not nearly as easy as it could be to rip that out.
I have written a bit of an interface around it to abstract it a little bit more, to make it easier to use a different component. I’m still going to have to convert all of those things in order to completely rip it out. I need to go through every single one of those blobs and convert it into whatever the new storage format happens to be. It’s not just a simple rip and replace.
Rob: Totally. I have two questions on that one. It’s Ralph’s final question on his comment from that episode. He said, “What’s the minimum that can be done to provide regression test to allow development to continue […]?” Is there a scope of less than what you described or is it all or nothing?
Mike: It’s probably all or nothing because of the naming convention rely on that component. Since I don’t have access to the source code for it, I can’t just copy things out. I can probably decompiled it and use them as it is, but it’ll still be really, really hard. It’s just not easy. A lot of that stuff is integrated into my unit test, so I have to rebuild a bunch of that unit test as well.
Rob: Right. I’m not sure that I want to rehash this decision, but the more we talk about it, the more I’m thinking, “Do you really need to remove this?” You said that it was that you couldn’t test it because it was sealed and you can’t write unit tests around it or something. I’m just thinking, is that big of a deal? Maybe you just live with it. Last time we talked, you said it would be a week. At a best case, it would be a week of data, of rewriting, and the blobs of data manipulation.
Mike: No. It’ll be a week of just a data migration. Once work is done, just to migrate the data is going to be a week.
Rob: Right. It’s like two weeks or three weeks of full time work to get this done. When I hear that, I think, “Ouch. How important is this?”
Mike: There’s other things I want to do including have a separate database for each customer for their mailboxes to be able to do more, to allow people to mind their mailbox for other information that they can’t get any other way. There’s literally no way to do certain types of queries in a mailbox. Even if you go into Gmail and start typing certain things, there’s literally zero way to get certain queries to work.
I would like to be able to surface some of those things for Bluetick but some of those features are so far off that it’s not worth it for me to go all the way down that road right now. I’m kicking at it a little bit to get certain pieces of it out, but I don’t want to go down the rabbit hole of implementing software the next three or four months in order to get everything working in the way I want it to work and an effort to implement features that are probably a year off anyway.
I’m trying to rip out this particular component so I don’t have to deal with it in the future. Then I can test things that I need to. Right now, I have a hard time testing email headers in certain ways, and going back to previous emails. It’s just harder for me to do that right now because I don’t have some of the infrastructure in place right now. I can’t put the infrastructure in place until I rip this thing out.
Rob: Got it. It’s a tough one. It’s tough to have a code that you have to redo that doesn’t provide value.
Mike: Without walking you through the specifics of it, it’s really hard to describe.
Rob: Yeah. You have decided to rip it out. The last time I was pushing you to, “If I were you, you could ignore this.” Obviously, you need to do sales and marketing because you need more customers to make all of it worthwhile, frankly. Having that legacy hanging over you head, the tech debt, it’s going to slow development. It makes you not want to build certain features that you may want to build, and I was now more on the side of, I would eat it during this holiday season. I would eat it. Personally, I would eat the time. But I’m 55/45 on that or 60/40. I’m not 95/5. I think an argument can be made both ways. Where do you land right now? Have you started working on that? Or are you going to replace it soon? Or are you just going to punt it?
Mike: I started working on it a while ago, but it’s just kicking out here and there, trying to abstract things a little bit more to get further along without breaking anything that’s already in place. There is a second interface in there to replace it but I’ve got to write some of the code that’s going to pull all the objects.
Right now, what I’m doing is I’m in a holding pattern probably for another week or so. Right now, I’m also still working on some of the additional multi-user functionality for that larger customer that I had, which I prioritize above pretty much everything else, to be perfectly honest, for obvious reasons.
Rob: Yeah. If it’s revenue, that should rise to the top. That’s the thing with .NET. My concern, Mike, is I think you have a history of letting things hang around for too long. Letting them linger, not just diving in doing the work, and getting it done so that it can be behind you. I felt like the Google audit was one thing. I know you could’ve done that fast. We’ve been talking about Google audit for how long? Seven months? Eight months? This .NET component, too. It’s like six, seven, or eight months.
To me, if it’s that, if we have been talking about it, if it’s been that important that we have, then it’s time to resolve that thing. To get it off. To get it off the to-do list. It feels like a shadow or a cloud that’s hanging over your head. I just don’t want to still be talking about that. I don’t want you to still be talking about that in this spring or next summer.
Mike: I totally agree. This piece of it has to be resolved. For the Google Audit, I was holding off because I didn’t feel like I had enough information to be able to make a good decision either way. I know that you’re always working in a realm of uncertainty where you don’t necessarily have all the information. Waiting to get more information isn’t always going to give you the information you need to make a better decision.
I also recognize that Google was throwing this out there to everybody and saying, “Hey, you have to do this.” Everybody was kicking and complaining about it. Nobody really knew what to do or what it involved.
I had a few conversations with other people. Before I went through the process and before I made the decision to go forward with it, I got at least some clarity. But none of that clarity I got was from Google, which sucks. There’s not a whole lot that I can do about it. And even since then, I had conversations with other entrepreneurs who’ve gotten in touch with me, and say, “Hey. I know you went through this. Can you help us out? What it is that you had to do?” I’ve been able to help them, which is nice to be able to do. At the same time, I feel like Google could’ve been a lot more forthcoming with a lot of the information. They just weren’t.
Rob: Oh, we know, Mike. We’ve been through it with you. You know what? I’m happy. I think a win for all of us is that I’m not going to ask about Google audit next time. That’s checked. It’s done. I want to get there with the .NET component. I know we can’t just wave a magic wand and make it go away. It’s something that I want to see we move past when you can. Obviously, I would prioritize the customer features, too. Anything’s that driving revenue would be number one.
Mike: Totally agree.
Rob: Someone circled back, they wrote in an asked if you ever took the Enneagram.
Mike: No, I didn’t. I took the wrong one.
Rob: You took a wrong one, yeah. It was a personally test that tells you what motivates you. I was saying for me, it was creating things. I have worked with folks who are about achievement and they were more of the Jeff Bezos role, where they didn’t really need to build or make things. They just wanted power. I’m not just, but they wanted power and achievement and that’s what made them happy.
Obviously, it’s not a cure-all or whatever, but it’s an interesting thing to learn about. The test is in our show notes, the link for the last episode, but I think a couple of people called in and said, “Yeah. I really like to know what motivates Mike and all that.”
Mike: So, you’re telling me I got to go in the show notes and look for that?
Rob: You got it. I can send you the link. I’ll send you the link and I’ll reimburse you for the $10 or whatever it takes, guys.
Mike: No, you won’t.
Rob: I’m teasing, I know. Send me you’re Venmo, Mike. There were some marketing stuff you were talking about. There was a podcast tour. You had someone sending emails to try to get you on some podcast. As I said, I didn’t think it would be a long term impact but certainly getting out there, it’s easy for you to jump in a podcast, and wondering if you’ve had any traction with that approach.
Mike: Yeah, I have. I’ve been in a couple of podcasts over the last month or so. Still working on other ones. I was on Sales Tools, and also on Jane Portman’s UI Breakfast. That one’s not going to be out until next month, I believed. I’ve been on those two so far. There’s a bunch of others that I started reaching out to, and we’ll see how that works out.
Rob: Okay. Two sounds okay. How many emails have been sent? That doesn’t sound like a ton of traction.
Mike: No, maybe five or ten tops.
Rob: How did that happened? You hired a contractor to do it, right? Two months ago.
Mike: Yeah. Most of the stuff’s set up. I’m just holding off on hitting the button. Actually, my mastermind group tomorrow, we’re meeting up. One of the things that we have is, “Hey. That button’s going to be click tomorrow to just blasting these things out.”
Rob: Stop holding off on hitting the button. Why are you holding off on hitting the button? We talked about it last time. I was like, “Cool. You’re getting ready?” You were like, “Yeah. I’m going to do it.” Five weeks later, why hold off on that?
Mike: I don’t know. Honestly, I almost feel like it was one of the reasons I built Bluetick to begin with. People don’t want to hit that button. It’s just need to be hit, to be perfectly honest. Honestly, my mastermind group member, he’s just like, “Yeah. We’ll just share control, just go in and click the button for you.”
Rob: Yeah. Consider your chops busted here on the show that you did not hit that button in the past five weeks. I really thought that that was an easy thing. It mostly set up. That’s something that you’ve got to be doing with these other stuff. It’s easy for you to do. I just feel like it’s one more step, it’s one more action to get you going.
The other thing, please tell me you hit the button on this one, Mike. Cold email. You said you had 900 addresses from some LinkedIn connections. You have prior Bluetick cancellations. You have some sales leads that never converted. You just had a whole list. It wasn’t even cold, it was warm, and you’re going to bucket them in and start getting back in touch with them.
Last we chatted, that was going to start. You hadn’t done it because MicroConf Europe. I said, “Cool. You’re going to get that going.” You generally agreed that, “Yup. This is the next thing to try to get more prospects.” Tell us where you are with it.
Mike: Yeah. That’s a total fail.
Rob: Oh no. You’re killing me.
Mike: I know, For whatever reason, I feel like I don’t want to start stuff in December when it comes to that stuff. I don’t know why.
Rob: It’s December 12. I think we last spoke, November 5th, maybe. Give or take. The three weeks before Thanksgiving, I think, are still good. I think starting stuff now it’s December—
Mike: Really?
Rob: Yeah, I do. November was always typically a decent work month. It was never the best, but we always had decent growth. Whereas in December, things tended to level off with my apps. Now that we’re mid-December, there’s no reason to start doing it now. I don’t think you want to book a call the week of December 15th. This is what we originally talked about. I was like, “I don’t want you to start this Mid-January,” which is now where you’re going to wind up.
Mike: Yeah.
Rob: It’s a bummer. It sounds like you don’t feel good about it.
Mike: No, I don’t. I don’t really have anything to offer up for either than it just didn’t get done. I should have. I can point out all sorts of things as to why I did or didn’t, but at the end of the day, it just didn’t get done. That’s where things are at.
Rob: Do you think it’ll get done before we talk next time? We’ll talk mid-January.
Mike: It’ll definitely get kicked off. Yeah, it’ll definitely get kicked off by then.
Rob: “It’ll definitely get kicked off by then.” I love that. I am so quoting that back to you. I’m actually going to go ahead and make a note of it, that sentence, here are the notes.
Mike: Awesome.
Rob: Last episode, you had launched the Zapier integration, I believe. You want to update us on that? Is that yielding anything? Didn’t you need a certain amount of beta users in other for it to be public or something like that?
Mike: Yeah. Right now it’s in early access, but I need to get to 50 users in order to do any cold marketing campaign with Zapier. Until I get to 50 customers, I’m probably not going to get to 50 users for it, it would just be difficult to do that. There’s probably ways I can hack it to some extent but I got to get to the 50 customers first.
Rob: I wouldn’t do that. I would just try to do it organically. Okay, so we’ll table that one. That one will be tabled for a while, actually. Something we ran at that time that we talked about last time was personal stuff like motivation, sleep, exercise. How was your motivation then over the past five weeks?
Mike: It’s been generally good, but I’ll be honest. I wish I didn’t have to struggle so much when it came to front-end code for Bluetick. Part of it is just lack of familiarity with some of the CSS that’s in there because I’m using libraries and templates that I got from WrapBootstrap. Some of it is just harder for me to do simple things than I would like.
I’ve started throwing things directly into the CSS, the style that I’m supposed to use in classes and stuff like that. I’m like, “You know what? I just don’t care. This just needs to get done. It just needs to work.”
Rob: That’s a bummer. Do you have any budget to hire a front-end dev so you don’t have to be mired in it?
Mike: I was actually thinking exactly that. Earlier today I spent two hours fighting and trying to get an image to display in the right place. What I’m thinking of doing is when I run into certain things like this, just go to my bug tracker and add them in there, so that it says, “Hey, this needs to show up in this particular place. I can’t get it to work,” then hire somebody to go through and get a lot of those things done for me so I don’t have to do it. I don’t have to spend my time and effort trying to figure out how to get it done.
Rob: Yeah. Any sticking point. We know you’re bootstrapping. We know that there’s not a ton. You don’t have so much revenue that you can hire anyone full-time or anything like that. If this is a point of friction, think about the questions I just asked, “What’s your motivation like?” You’re like, “It’s been good except for front-end code.”
Front-end code is not just a technical challenge. It sounds like it’s something you are not enjoying. It sounds like it’s something affecting motivation. It could really solve a lot if you were able to pull it off and bring someone in part time. Even if it is 20-40 hours a month. It could feasibly reduce the burden on your mental state as well as allow you to move faster.
Mike: Definitely. I have no doubt that somebody can get it done probably five or ten times faster than I am. Just to say, “This is exactly how to do it.” That would be perfect.
Rob: You’re thinking about that. It sounds like a good idea. Is it something you’re going to do? We can bat ideas around, but if it’s not a good idea then don’t. If it is a good idea, should that become a priority? For me, it sounds like it might be. Then, you have to take the step. You have to go on Upwork or work your network, you have to find that person, vet him and all that stuff.
Mike: I think that’s the challenge I have. How much time is that going to take versus trying to do it myself. I don’t know. I feel like I’ll be better served having somebody else to do it knowing that it’s going to take some upfront time and effort. It’s just going to push off some of the time frame of the implementation for certain things. I get images completely in the wrong place. I really don’t want to push a live, but at the same time, maybe it’s not the end of the world.
Rob: Sure. Again, if I were in your shoes, which is how I like to think about and couch when I do offer advice, the concept in my head of what you’re working on, how hard things are, and which you do and don’t like, I would look to hire someone. I know you’re focused now on getting features done so that the customer you just landed sticks around. That would be my number one priority. I would not let hiring derail that.
You’re not going to be doing any marketing over the next three weeks, four weeks, because hold email is not going to work with the holidays. There’s all these stuff. You have this time to crank through some things. To me, the big customer support is number one. Hiring, probably number two. And that unsealed .NET component in my head would be number three.
The hiring, an interesting thing you can do, whether you go to Upwork or Authentic Jobs or WeWork remotely, I have to think of which of those allow part time. Writing up a job description for front-end dev doesn’t take that long. Maybe it takes you an hour to do it. You can use an old job description or whatever, old posting you’ve used. Post that.
If you post on a higher-end job board, you tend to get higher quality but a lot fewer candidates. It shouldn’t take you a ton of time to vet. Again, that would be my second or third priority. Probably second priority that I was doing after supporting that big customer. I will say that and leave it at that.
I’m not trying to badger you to hire someone or anything like that. Or forcing you to make a decision. But, I don’t want your motivation. I know what it’s like to have crap on your to-do list that you don’t want to do and don’t like to do. I still have that. We have it on our whole entrepreneur career. It’s trying to minimize that. It’s trying to get less and less of that as you move forward.
I literally do look at my Trello board once a week and say, “What of these things I am procrastinating on because I don’t want to do them? Can I just archive these things?” We have a VA executive assistant. “Can I hand it to anybody on the team such that I enjoy my life more?” I think that’s important.
Mike: Yeah. For me, mentally managing the trade-off in runway versus how much am I going to be paying for this, is difficult as well. I only got so much runway to work with. At the same time, I’ve got to grow the business and anything that I spent is going to take away from that. It’s like, “All right. How do I manage this?” If the complete business was cash flow positive then it wouldn’t matter so much, but including my time is definitely not. That’s where I struggle a little bit, like how much should I budget with this stuff? And how much money should I be spending on certain things?
Rob: Sure. That’s without seeing your finances. Obviously, we can even begin to conjecture that. So, let’s leave that one at that. I’m curious to hear where you wind up with it on the next episode.
How about sleep? Overall, your sleep had gotten much better over the last several episodes. Going back nine months, it was terrible, and it has gotten better. How has it been over the last month or so?
Mike: It’s been touch and go. I’ve been sick for at least the past week or so. My kids were sick the week before that. Then, it was Thanksgiving and lots of other stuff in between. It comes and goes. Sometimes it’s great and sometimes it’s just not so much. I would definitely say it’s generally better than it was six months or nine months ago, but I think I could always be better.
Rob: Yeah. As we know, sleep impacts everything. That impacts your ability to focus. It impacts your motivation during the day. It impacts a lot of stuff. That’s something I know you’re keeping an eye on it, but it’s super, super, important.
Mike: Yeah. My doctors have me up to five medications again, I think.
Rob: Are you? Oh no. That’s not good.
Mike: Yeah. The past couple of weeks have not been helpful. I get off with a bunch of stuff. I go back and the doctor’s like, “You need to be on this and this.” I was like, “All right. Fine.” I’ll come off with the two of them in about a week. We’ll see how things will go.
Rob: Yeah. I’m just going to let that one go. I’m not going to dive into that. Exercise? How about that? You’re exercising twice a day at some point.
Mike: No, no, no. Not that much. It was three or four times a week.
Rob: Okay. I think one day we recorded, you said, “I’ve exercised twice today.” I think that was the statement. You didn’t say you were doing it twice a day.
Mike: There might have been that.
Rob: How has it been though?
Mike: The past two weeks have been off. I think that’s mainly because of Thanksgiving lumped in there but I’ve got to get back to the gym probably this coming week because I’ve been sick for the past week or so. I think I got there once or twice last week. I think it’s just once at the very beginning of the week. Then, I haven’t gone at all this week. I gotta get back there again next week.
I have the motivation to do it. It’s just lately, I haven’t had the energy because I felt terrible. Even right now, my sinuses are all congested. I’m a little loosey from the meds that I’m on. They affect your blood pressure, so the doctor warned me. She’s just like, “Yeah. Be careful walking up and down the stairs.” My god, this will be fun.
Rob: And you realized the reason I asked you about this stuff. I asked you about motivation because: (a) you’re interested and I want to hear what’s going on, but (b) I think it’s a good touch point for you to think about every week or four weeks or five weeks when we discuss to really think, “How is my motivation?”
Exercise’s probably more of an accountability thing that you think yourself the “next time Rob and I chat on the podcast.” I hope you feel a little bit of friendly pressure to keep doing it. I think it’s super helpful for all of us to have some type of exercise in our routine.
Mike: Generally, I’m still keeping track of everything that I eat. That’s been going really well. I’m down at least 10 or 12 pounds or so over the past three months. That’s been going well. I’m at least losing weight like I have planned on doing. Maybe not nearly as much because I haven’t gotten to the gym nearly as much.
Rob: Right. Lastly, we’ll wrap us up with differentiation. “I need to talk to some of my customers more.” We had talked about, should you change your positioning? You brought up like, get things you need from other people like a W9, for example. You’re going to have more conversations with customers to figure out if you need to add features to be unique, and then write the code to implement that.
Last time you were still noodling on stuff. Before that, you’re still noodling on stuff like, “I’m not sure yet how to make this unique. I’m not sure what my angle is.” I had said for not doing that, you need to have a unique traffic channel, would be the best marketer just to get people on top of the funnel or you need to have that unique selling proposition that differentiates you, the positioning that means, “Oh, at least a subset of people really need what I have and pretty much no one else has that.” I’m curious where you are with that.
Mike: This leads into something you and I have briefly talked about before the episode. We’re probably leave this off a bit. I was talking to somebody about possibly doing an integration that will provide a fair amount of that file collection capability. We only have one conversation so far, but their product is completely API-based. It would probably not be too difficult to get it to work with Bluetick. I still have to go and talk to a couple of customers to specifically know have that particular pain point of being able to collect files from people on an ongoing basis.
I just had that conversation with him earlier this week. Now that I’ve had that conversation—it’s actually been yesterday that when we talk—I have to go through, go back to those customers, and say, “We’re just thinking through this. Is this something that would be of interest to you? Will it make your life easier inside of Bluetick? If so, do you also know anybody else who has a similar type of problem, where right now they’ve got things hacked together in Bluetick, but with an integration like this, it might be possible to make it a much smoother experience? If so, I want to know if there are other people who would benefit from it and what those people like like? How to get in touch with them?” Once I know that stuff, then I can decide whether or not to actually build it and do that integration.
Rob: Interesting. It sounds like a one-off thing. It’s not like you’re actively reaching out to customers and having conversations. Or is this an outreach thing from you? Or was it an outreach from them?
Mike: For the integration?
Rob: Yeah. For this. I think you said that there’s a customer who probably needs that or a potential customer.
Mike: Yes. They’re making it work right now. They’re just basically asking people in an email. My idea was to basically bake the functionality directly into Bluetick, so when they send the email, they can say, “Go to this page and upload the five things that we need from you.” This other tool can do those things. If I can integrate with that other tool, then I can provide that to my customers like a white label thing, but it would get me further without having to write all that code.
I would have to write integration code, but I wouldn’t necessarily have to write this whole other tool to collect all the files and everything else that goes with it. I’m still noodling on that but I want to talk to the customers, and say, “Does Bluetick serve your needs right now? Or will something like this be better?” Does that make sense?
Rob: It does. This is it. When you have these small numbers in their early days, it’s trying to take one instance, extrapolate, and ask, “Are there any people like this?”
Mike: Extrapolate it from a single data point is not helpful.
Rob: Yeah, but it’s what you have to do right now.
Mike: I’ve got one kid. Thirty would be great.
Rob: Yeah, exactly. That’s all I have today. I think we covered pretty much everything. We have some wins. We have some not so wins. Overall, how do you feel about the past five weeks? Does it feel okay? Feel good? Great?
Mike: Okay. There’s been some high points with the Google audit getting done and adding a large customer, those were fantastic. Low points with things like having a deal with a front-end CSS code and a few other things that just haven’t been done, some of the marketing stuff I wanted to get done.
There was one customer. I wouldn’t want to call him customer because he signed up. It was the day before Thanksgiving or something like that. He signed up for an onboarding call. I was like, “Yes!” Then I looked at the time of it. It was 4:30 on a Wednesday afternoon. It’s literally the day before thanksgiving. I was like, “All right, fine.” Then they ghosted me, didn’t showed up, didn’t respond to any of my emails. I reached out to him several other times. Then, the billing went through. 12 minutes later, they asked for a refund. I’m so upset.
Rob: Yeah. That’s a bummer. That’s the hard thing about being solo. You run into stuff like that and you don’t have anybody else to handle it. I’m sorry to hear that.
Mike: That’s an obvious low point. That’s like a kick right into the teeth. I really tried to help out and tried to do something. Of course, the cancellation email was like, “I DIDN’T WANT THE SUBSCRIPTION.” It was all in caps. I was like, “Come on. All right, fine. Just refund. Bye.” That’s it, walk away. Get something else done.
Rob: You’ve got to move on, wipe your hands off, and be done. That will certainly happen.
Mike: I have to make a conscious effort of dust my hands off and just walk away. I’ll be like, “All right, whatever. I can’t make everybody happy.”
Rob: You can’t get hung up on it. You can let it ruin your day but you shouldn’t. These are the ones where you really have to shake it off. It happens every so often. Sometimes more often than not, everything on your customer base. You’ve got to move past it. Sounds like you’ve got a good head about it.
Anyway, let’s wrap up. We will catch up with you again after the New Year and hope things go well over the holidays.
Mike: All right. Talk to you soon.
Rob: Take it easy.
We’ll talk to Mike again in four or five episodes. Hope you enjoyed the conversation. I will talk to you next Tuesday.
If you have a question, we have a Q&A episode coming up with Brian Castle. If you have a question specifically for him, he knows productized services. He’s launched a couple of SaaS apps. He was essentially a non developer that taught himself how to code in order to have more control over his ability to launch SaaS apps, or any other questions. I’m just going to pull out ones that I think he knows about. You can email them too at questions@startupsfortherestofus.com or you can always leave us a voicemail at 888-801-9690. We have a theme song and it’s actually an excerpt from a song called We’re Outta Control by MoOt. We use it under Creative Commons.
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