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In this half episode of Startups For The Rest Of Us, Rob makes the biggest announcement in MicroConf history and talks about the future of the conference.
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Episode 474 | Overcoming a 40% Decline in MRR with Brian Casel
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In this episode of Startups For The Rest Of Us, Rob talks with Brian Casel of Audience Ops, about recovering from a 40% decline in MRR. They start the story back in 2016 and work through the decline, audience ops rebound, the start of Ops Calendar, and Brian’s decision to learn how to code.
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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 sane and sustainable startups. We realize that starting a company is hard. More than half of being a startup founder is managing your own psychology and much of being a founder is making decisions with incomplete information where the right answer is impossible to find through math or data.
This week’s episode, I talk with Brian Castle about overcoming a 40% decline in MRR and rising from those ashes. This is Startups for the Rest of Us episode 474.
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 Brian Castle, we’re here to share experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. Thank you for joining me again this week on Startups for the Rest of Us. We have many different show formats. This week is a conversation with someone you’ve likely heard of, Brian Castle. He hosts the Bootstrapped Web podcast with Jordan Gal. And I’ve been listening to that podcast for many years. Hope you enjoy our conversation today.
But before we dive into that, I want to let you know about a MicroConf announcement we’re making this Friday, December 13th. It is by far the biggest we’ve made since launching the conference a decade ago. I really encourage you to go to microconf.com, make sure you’re on the email list. If you’ve attended a MicroConf in the past or you have tickets now, you’re already on the list and you’ll hear about it. But it really is big news and I’m not just saying that to try to sensationalize it or encourage you to go over there. But there’s a lot that’s been going on in terms of the planning of MicroConf for 2020 and we have a lot of new things coming and would love for you to be in the loop on all that’s going on. There’s a lot that’s going to be announced. microconf.com, make sure you’re on the email list.
I enjoyed the conversation I had today with Brian Castle. To set a little bit of the stage, Brian is a frontend designer and UX guy by trade, and then he learned to do some frontend development work. He had been doing a lot of consulting and eventually started dabbling and building products as many of us do. He started at a SaaS app called Restaurant Engine which was originally designed. His vision was for it to be Squarespace for restaurants, but really it evolved almost into a productized service where he had to do a lot of hand holding with the restaurant managers. I think that probably got his gears turning on its software plus service. That offered more value than just straight up building another website builder.
In early 2015, he sold Restaurant Engine for a tidy sum. He talks about that. He said it wasn’t life changing money, but it was enough to go towards a new home. We joined his story at that point where he sold Restaurant Engine and he’s about to start a new productized service. I hope you enjoy this conversation with Brian Castle.
Brian, thank you so much for joining me on the podcast.
Brian: Hey Rob, thanks for having me on.
Rob: Absolutely, man. We joined your story in the middle as I like to say where things are going up into the right. You’ve launched Audience Ops, productized service, and you launched it 2015 and over the course of about the next 18 months, it is all up into the right and you grow from zero dollars in MRR from April of 2015 to 50K of MRR by September of 2016. What was that feeling? Have you ever launched a product that grew that quickly. It’s productized service so it’s not all software, we get it. Have you ever launched anything that had had that much success for that long?
Brian: No, definitely not. I definitely didn’t expect to grow that fast. Looking back on it, it sort of makes sense. Obviously what I’ve learned with productized services is that you can charge a lot more per customer and that helps accelerate the growth rate. If you really nail a market and you’re solving a problem, specific value proposition all that, then I found that growing a recurring productize service like that can really happen. You can grow that revenue pretty fast.
But when I launched it in April 2015, I did not set out to even hit that. The goal was what’s the fastest thing that I can do to get 10K MRR and hit that within two months.
Rob: Right. Like you said, it’s the average revenue per user, a lot of people don’t realize it when that’s $500 a month or $1000, does not take many customers to get you to that 10K, 20K, 30K price point. I’ve seen it with MicroConf companies, with TinySeed companies trying to launch at $20 average revenue per customer app and get to any scale is a very long road even if you have a big audience or have a lot of traffic. Whereas the folks who are plug and away adding two customers a month at $500 average revenue per customer, that’s a grand a month of MRR that you’re growing. It’s a nice base to have.
Brian: Yeah. Audience Ops has, for the most part, been between $1000 and $2000 a month in terms of average per customer. I think it’s great to be able to grow a service like that so quickly. It has some downsides to it too when you’re charging that much because you just see crazy swings in MRR. You can add just a couple of customers, lose just a couple in a week and you’re seeing swings in 5K or 10K MRR. That can really screw with you.
Rob: Right. Stuff we won’t dig into here is you’ve talked a lot about productized services, there are pros and cons to them, you can grow quickly as you’re saying the price points are high and that’s great. Obviously the cons are hey, it’s not as easily scalable as pure software. You do have to hire staff. 50K MRR SaaS company might have 3, 4 people working on it. And a 50K productized service probably has a team of 15 or more. There’s pros and cons to this.
But the thing that’s cool is you launched it and 18 months later, obviously there was a lot of work that you had to do but you have this 50K MRR business now that’s supporting you because after you exited your prior app restaurant engine, I imagine you didn’t want to sit and burn through that cash. You mentioned to me offline that in 2016, you actually spent most of your restaurant engine money on a new house.
Brian: Yeah, that’s right. It wasn’t a life changing exit or anything, but it was a chunk of cash. I looked at that and I really thought about what is going to be in my next business to replace that income. I wanted to get into SaaS software right then in 2015. I looked at a few ideas, but the thought back then of basically burning all of that cash within a year and then maybe getting somewhere close to 10K MRR, which was a big maybe. That kind of scared me.
That’s what lead me to start looking at I kind of know productized services fairly well at this point. That seems to be the fastest way to get to a viable recurring revenue source to then free up my time. Obviously, a lot of work goes into building the team and the systems to remove myself, but that’s always been the goal with the service companies is to grow the cash flow to fund my time to work on stuff.
Rob: You’re a 50K MRR with Audience Ops, it’s fall, September 2016. Since everything is going up into the right, you’re feeling great, you already had two full time W-2 people, you turned 2 more people, they were contractors, you put them on salary and then you started looking at launching the SaaS app. You’re starting to build OPS Calendar. You did some validation there and started upping your expenses. What was the thought process there?
Brian: Right around that time, I guess it was around September into October, I had the idea for this software called OPS Calendar at the time, it was like an editorial software calendar with some process stuff built into it. You can automate content processes and things. Essentially, that was the precursor to my product today—ProcessKit. But back then, that’s what I was doing. At that point, I didn’t personally have the ability to just build an app myself. I‘ve always been a frontend developer and a designer, not a backend. It would definitely require outsourcing and hiring developers to build the functional app.
I did some presale, I got 10, 13, 14 people to prepay based on the idea and a promise that they will someday use this idea. That, combined with the growth rate on Audience Ops, and I had some profit saved up at this point. Okay, I’m good with spending around 5K a month on an outsourced developer and that turned into two or three guys overseas that I was working with.
Rob: Since we didn’t cover it before, could you give people just a two sentence explanation of what OPS Calendar, what it is and the purpose it would serve if it had made it to market, so to speak.
Brian: The idea with OPS Calendar, it was essentially an editorial calendar software with some production process stuff built into it. You and your team can build a process for how you produce blog articles, and podcasts, and social media, and map all that stuff to a calendar to see who needs to do what by when and also to schedule blog posts and social post to the calendar.
Back then I was running Audience Ops which is a content service, we do blog content as a service so obviously it was born out of that. That was essentially the idea with OPS Calendar at the time.
Rob: Yeah, cool. There’s a six months chunk where really from November of 2016, right after you ratchet up these expenses, things hit the skids with Audience Ops. I think this is one of the tough parts of your journey, it seems like. You want to walk us through the timeline there, what happened?
Brian: We’re three years later now and this is still one of those periods of time that I still look back on. Like, “Man, that was painful.” What happened was basically that growth from Audience Ops, 0-50K, that started to plateau right around October, November into the holidays and then started to decline through the holidays, in the January, February into about March or April is when it started to finally turn back around. It was painful on a number of fronts because it coincides right at the time that I decided to start spending a lot of extra cash on developers and employees all at the same time. There was that part of it.
And then it was also just like, “Why is this happening?” Everything was growing just fine up until that point. What is causing the reduction in leads or the increase to churn, it was probably a combination of both. I was looking at it in a thousand different angles to try to uncover what was actually causing it. It’s still unclear to me to this day. I have a few ideas, some hunches of what it could have been. But when you’re in it and you’re trying to fix it, you just don’t know what exactly is broken. It’s really frustrating.
Rob: Absolutely. That’s devastating. 40%? That’s a huge drop. 50K down to 30K. That’s a lot of salaries, that’s probably all your net profit on this thing. I’ve seen SaaS apps plateau, I’ve seen them right over the top, so to speak, when they start to decline. But I’ve never heard of a drop that fast that wasn’t due to some big platform risk. Like, “Hey, I’m integrated with Shopify and they just completely cut off our access.” Or, “I’m a Twitter client and they cut the API.” Or a Google change. Something that was just decimating.
But just to have that happen seemingly out of the blue, it sounds like, and three years later not have been able to pinpoint what happened, must have been terrible. It sounds like it went on for five months and you were just trying to fix it this whole time. Is that what it was?
Brian: Yeah. There are a few things. It was probably a combination of things that I look back on. One was in summer 2016, it was the first time that I hired a sales person for Audience Ops. There was somebody on the team, actually still on the team today, and I put that person into a sales role to remove myself from the sales. That was one remaining jobs that I was still doing in Audience Ops, the team was handling other stuff. It’s not any fault of his, he actually did a really great job of closing a lot of accounts that summer. Bringing out a lot of clients, but a lot of those clients that he sold and closed churned a lot faster than other clients have come on.
I take that as my fault for the training, maybe some of the compensation structure that I really didn’t structure and situate to have a sales person really set the right expectations for customers. Basically the way that I do when I do sales calls for Audience Ops is for me, when I do it, it’s really about let me tell you exactly what’s happening in Audience Ops and almost talk you out of signing up for Audience Ops to make sure that you’re really on board for this. There’s that, we just saw a string of cancellations.
Then the holiday season hit and that slowed down. It was weird because the previous holiday season was actually a pretty big spike in growth for us, but it didn’t happen in 2016. In January, now we’re in the thick of this six month period where sales are stalling, we’re seeing this churn. I go away to the Philippines, my wife has some family there. We were there for a whole month. My plan was to work a little bit while we’re there, but it’s a completely different timezone and that means I literally could not do any sales calls. Even the leads that we had, I couldn’t really even talk to them. Combine that with terrible WiFi while I was there. That was stressful as well.
Rob: How did that manifest itself? What was the peak moment or a moment you can remember where you lost your **** or you were feeling extremely mad about it?
Brian: Anyone who knows me, I am really pretty level headed, I think. I tend to compartmentalize pretty well. Poor sleep, bad eating habits and exercise and all that definitely starts to pile up. Because it’s like I could go exercise today, or I could keep working and try to fix this thing. That was a choice every single day.
Rob: Right. You just dug in and just grinded it out, I shall say. Probably took a toll on your body and mental well being, too.
Brian: Yeah. Into March, April 2017 is when things started to turn around. It’s almost like I don’t really know because it wasn’t a sudden turn around either. It took all of 2017 to dig back out and back up to where it was. But, we definitely improved a lot of things. That was when we really improved the new customer on boarding process heavily. Again, to reinforce those expectations. That I think had a really big impact on customer retention. If they have a really fantastic first month with Audience Ops, they’re really likely to stay on for a year or more at that point.
I worked on some new marketing stuff during that time and some new content, some webinar stuff. I think that seemed to help as well.
Rob: It’s something I talk a lot to entrepreneurs, especially new entrepreneurs don’t understand that they’ll see someone who’s built a business up to 10K a month. You may be able to sell that for $250,000 or something, there’s all these factors. But whatever, you can sell it for quite a million dollars. But people will say, “Why wouldn’t you just keep that? Just keep it and keep running on the side. It’s only three hours a week or five hours a week. Just keep running it.” Usually, there’s a couple of reasons, one because distraction is distraction and there’s opportunity cost to that. But the bigger one is that none of the businesses we have run on autopilot for years. They always get smacked around by something. Sometimes it’s Google, and sometimes it’s a competitor, and sometimes it’s platform risk, and sometimes it’s something you never would’ve guessed, it’s a key employee quitting, it’s something that you have a tough time identifying like what happened with you.
Then you have to shut everything down, stop doing what you’re focused on, and you have to turn your focus back to this thing that you’re tired of working on anyways. At a certain point, eventually, you give in. I’ve done this with multiple businesses and I’ve seen people do it as well, where you’re just like, “Forget it. I just got to sell this thing. I got to get it off my plate.”
Brian: Yeah. It hasn’t really come to that point in Audience Ops, but I can definitely say that there have been times. This period in 2016 was definitely one of those where it was like my mindset is trying to get this brand new idea for a SaaS off the ground. It wasn’t even in existence yet. It was just like get this thing to market. That was my number one goal. Working with developers, I’m paying for developers. I want that to happen as soon as possible. And then I have to stop and work on this churn problem in Audience Ops. Yeah, that was pretty painful.
Rob: We’ll talk in a second about how essentially you did turn that around through 2017. But I’m curious, that low point, this five, six months where things from November to March, April, when they are just in the thrawf and you can’t dig it out. You said that’s still a point that you remember very vividly. I have moments like that in three, four, five months period as well. I learned a lot from them and they impact the way that I do things today. They impact the way that I think about business and the way I ran my apps after that. I’m curious, what lesson or lessons did you take away from that? That impact the way that you make decisions.
Brian: I found that there are one or two of those points in my career so far that I can look back on, that I feel like really influenced the way that I work today. I think in some ways that’s a good thing and in some ways, I do things to a fault today to try to prevent that from happening again. On the positive side, I’ve been through enough of those ups and downs in the MRR graph to know that no matter how well something might be going today, I still have to play it extremely conservative.
We’re like three years out from that, Audience Ops is actually doing really well and I have a profit savings saved up that I’m able to deploy on new products and ProcessKit and things like that. But I’m actually hesitant to spend anything. Because it’s like just keep the reserves in check just in case, you really never know. You look at the news, the economy and stuff. I look at things almost afraid of what could happen.
Tactically, on the sales side of it, I talked about how that period I had a salesperson and then there was a string of churn that came in the months after that. That has caused me to really delay and delay on trying to put a salesperson in place again on Audience Ops.
I’m actually now doing that finally in the end of 2019 with a new strategy behind it and some new structure, but it took me three more years. I have removed myself from every other aspect of Audience Ops. I really spend less than two hours a week on this business, but those two hours are doing the sales calls. Because I just want to make sure that that message is being sent to new customers as they get on. I’m finally coming around to being okay in letting that role go.
Rob: That makes sense. I was going to ask, obviously, if you brought a salesperson and it didn’t work out, you had to turn the app around but after that, I would think that if you do want to get that sales, you would just try and try again. Most sales people don’t work out. The first one you find, frankly, more of the first VAs that I find, the first one almost never works out. So I just hire one, two, three, four and it’s frustrating and it takes time, but eventually, you find someone and then you’re able to let it go. Is that where you’re at now? Is that something you’re looking at doing, trying again and stepping away?
Brian: Yeah. I’m trying again because I think it will actually help impact the business, growth, and the overall health of the business to get me out of that role. Speaking about it now in 2019, I just have a lot more space to breathe. Financially and time wise and so many more things inside the business are more optimized now than they were back then. The on boarding stuff is really locked in, things like that. I just think it’s probably a better time to try to get that off my plate now than it was.
Again, things did start to turn around in 2017, but it took all of ‘17 into the beginning of ‘18. ‘18 was really when I finally got my bearings back in terms of having some space to play with.
Rob: Right. It sounds like it, and that April 2017 point could have been celebratory because you’re bringing your first paying customers in for your SaaS up OPS Calendar, but your financial runway was basically gone. You had to turn around over the next six, seven, eight months. What were a couple steps that you took, it was all hands on deck at that point, right? We’ve lost 40% revenue, we’re still declining at this point. What were some steps you took to turn this around and get out of the tailspin?
Brian: Just to be clear, there’s two parallel products in play here. One is Audience Ops which is in the site crisis mode, and then OPS Calendar which is trying to get off the ground but then I would have to pause, paying for the developers, right at these critical moments as we’re bringing these new customers on to the software. I just didn’t have the cash to fund for the development and couldn’t move fast and all that stuff. That was really frustrating.
But with Audience Ops to start to turn it around, I did a number of different things to try to attack the problem from different angles. One was that new customer on boarding again. I worked with my team a bit to see how can we just make sure that customers are really happy after their first month and that clearly has had an impact on improving churn over time. Just focusing on retention. I think that also helped with customers like referring other leads to us, that has that side effect too.
I did work on some new marketing materials. A whole round of new content, I think I did a recorded webinar that I put into the marketing system at that point, worked on the email automations that helped to nurture. I just went through the whole funnel. Everything that leads and customers see as they find out about Audience Ops, as they go through the sales process, as they get educated and nurtured and on boarded. I tried to improve every step of the funnel over that in early 2017.
Those are the kinds of improvements that you just don’t see moving the needle overnight, you just do that work then maybe a few months later things start to improve.
Rob: Right, and it worked because you turned it around over the next six or eight months.
Brian: I think it has definitely returned to where it was and has grown beyond that but it doesn’t really see the growth rate that it saw in that very first year. But I think that’s sort of a natural slowing down that a business sees. At least I’ll see it that way.
Rob: Yeah. It’s hard to say without going out and really beating the bushes and trying to generate a bunch of leads and doing cold outbound, focusing on SEO or running ads, there’s a natural threshold that always sets in. It seems to me like you’ve always been cool with that plateau because that plateau provides you with a full time income budget to build other apps which is really what you want to do. That’s your lifestyle choice.
Brian: Yeah, exactly.
Rob: They were working on OPS Calendar, your developers were, and you got your first paying customers in April and then you had to pull them off because you didn’t have the money, and then in July in 2017 you’re able to get them back to work on OPS Calendar, and then you get a little bit of traction right that latter half of 2017 but you never found product market fit with OPS Calendar. By February of 2018, you were still trying to push it forward, but some calamities happened. It sounds like there was a code base thing you want to talk us through what it was like dealing with that.
Brian: Throughout that year of 2017, it was trying to bring those first customers on and got a few handful of paying customers, but over the summer there whatever savings I had was gone from that period of Audience Ops. I’m not one of these people who just goes crazy on the credit card. Once I see a little bit of balance on there, I’m just too risk averse and debt averse to really go too heavy on that. I just pause and I don’t really spend until I have the cash in the bank account. I had to pause those developers over the summer which really, really hurt because I felt like it was at a critical time.
As we get into 2018, I went on a trip and we had been pushing off this upgrade from Vue one to Vue JS. At the time, I wasn’t a developer, I didn’t even really understand what Vue was. The developers chose that framework. That upgrade broke everything. I came home from that trip looking at a situation where I could pay those developers to go fix every single feature that I had just paid them for the last 18 months to build. Essentially, spend all that money and all that time again to rebuild the app, which was not going to happen.
It was also we’re having a hard time converting these customers, even a lot of the early prepaid customers didn’t end up continuing on as full customers. That said to me you know what, this thing isn’t really right. Because we have a process feature in OPS Calendar, and people were using that side of it and they were not touching the social media calendar stuff. That was also a signal to me that really the product that I deep down wanted to build was more of a process oriented tool.
Here I am in early 2018, probably going to “pivot” the product, if you will, to something else. Probably a new name and everything. I’m having a problem with these developers, but at that point I just decided to just stop everything. Just pause all work on OPS Calendar, take a month and figure out what I’m going to do. My conclusion was that I’m done with being limited by not being able to build apps myself. As a designer and front-end developer and product person, I’ve always felt, and this really brought it to a head was this experience with OPS Calendar, I’ve always felt this frustration that I can’t move fast enough because I’m always waiting for the developers to finish a feature. Sometimes I can’t move at all because I don’t have the cash to pay developers.
Let me bypass that by investing my time in learning back in development. I learned Ruby on Rails. I basically decided all of 2018, I’m going to use all my full time hours to make myself a full stack developer. I know I won’t be a very good one, but at least I’ll be able to take any idea and build it into a product and bring it to market, and that’s essentially what I do.
Rob: You were just about 18 months into OPS Calendar and I’m going to guess tens of thousands of dollars paying developers. You put on maintenance mode. You effectively shut it down. What was that decision like? How hard was it for you?
Brian: I think it was somewhere around $30,000 or $40,000 that I put into over that period of time. It sort of sucked, but it was also I don’t really have any other option here. I’m not going to just keep spending on something that’s clearly not working. I knew that the tech underneath the app, they technically built the features that I designed and speckled, but there were underlying architectural issues that I could just feel as a user.
That was another reason moving to let me just try to build it myself because at least I could design the thing from the inside out the way that I feel like it should be built. It was hard, but it was also I’m moving on. At that point I was also really excited about this idea for what the next version is which became ProcessKit, which is what I’m working on today.
Rob: I’m curious, deciding to learn to code from scratch, you’ll often hear folks send questions in to this podcast and say, “Should I learn to code if I’m going to watch a SaaS app?” The answer’s always it depends. Do you think that’s something you’re interested in? I would at the minimum learn to code well enough to know if the developers are trying to pull one over on you so you have a concept, you can talk to them. I don’t write production code anymore myself, but I wrote code professionally for 10 years.
I can still have architectural conversations. When Derrick and I were building Drip, I could go pretty deep on the tech stuff. It’s an asset to have for sure. But I’m curious, instead of learning to code, why not launch another productized service? Because you seem to be good at them, they seem to work out for you. Audience Ops is obviously successful and profitable. Why continue to seek after something that is showing you so much resistance in essence, which is a true software base SaaS app?
Brian: Number one, I’ve always been interested in software. I’m not new to software today. I’ve been working on it in different forms for many years. That has always been my number one interest in terms of what I want to create on the web. I’ve been building on the web for over a decade. That’s really always been where I’ve been heading with this. Even since I started Audience Ops, yeah I worked very hard on building it and building the team and the processes, the systems and everything. It’s always been with the end goal in mind of removing myself so that I can fund my time to work on software.
Like you said, the scalability aspect. Yes, I believe a service company can run without you and be profitable without you in the day to day like it is for me, but it’s clearly not as scalable as a SaaS that has hit product market fit and has that growth. Just in terms of the value of an asset and all that.
Also, I just wanted to go back to what you’re saying about the decision to learn to code or not, I agree with you. In many cases, it may not be the smartest choice, or maybe you should just learn a very light understanding of it so that you can communicate with developers. I think there are few caveats that made my situation a little bit unique from where most people are that I come across at least.
Number one, I’m not starting from scratch. I had been a frontend HTML, CSS, little PHP, little JavaScript work. But professional level frontend stuff for years. Building websites, doing a lot of work with advanced WordPress stuff, working on major websites for agencies and things like that. I was not completely new to basic coding and programming. I just never really learned a back end stack like Ruby on Rails, and working with databases and things like that.
There was that. That gave me a head start. And then the other thing is that I had the time. I really have full time hours to throw at this. If I didn’t have that, if I was doing this nights and weekends, I don’t think it would be possible to make as much progress as I did over the last now almost two years. I don’t think I would have been able to really make a lot of progress with it if I couldn’t work on it full time every day.
Rob: Right. You had a lot of time to focus and it was something that as you said, you already had a basis for.
Brian: And I had a lot of help too. A lot of my close friends are software developers, Rails developers, I had of people that I could turn to for support and they’ve been super helpful.
Rob: Totally. That’s the thing. You’re in the developer community already even if you’re more of a frontend developer/designer. It’s like you live in that world and it’s not such a far stretch to be like, okay, I want to go one layer deeper and see how it interacts with the service side code. Cool.
That takes us to spring of 2018. Audience Ops is back, profitable, and you were able to free up your time and spent most of 2018, as you said, learning Rails. What was the most surprising part of that experience of taking that six or eight months and digging into service side code and learning to build your own software top to bottom for the first time?
Brian: In the early months, I knew that it would be a very big effort and that it would take me a long time to get decent at it. It was a little bit frustrating going through tutorials and courses and then still not quite being able to build anything real yet, but then just hacking away at it a little bit more for another month or two and then I can build something very simple.
Over the course of 2018, I went through a bunch of courses, I worked with a coach which was very helpful, and then I did some throwaway practice project apps. By the end of that, I was able to put together a simple app called Sunrise KPI. That was the first real app that I’d built.
I should mention that the idea for ProcessKit I had throughout 2018. I bought the domain. I spent some money on that domain. I was putting sketch ideas for what ProcessKit would be, but I also knew that I wasn’t capable of building it yet. I had to get those skills up and it wasn’t until the end of 2018 I had felt confident in actually starting to build what is now ProcessKit.
Rob: Yeah. If someone’s listening to this and they are thinking about themselves learning to code, what would be a piece of advice, either a warning or just a hey, do this, this is what really worked for me, this is what fast tracked me.
Brian: Early on, I definitely wanted to stay away from the newest, trendiest, most complex frameworks, especially like the JavaScript frameworks and stuff. I’m sure there’s plenty of technical benefits to those, but I wanted boring, tried and true, non trendy stuff. It came down to a decision between Ruby on Rails or PHP in Laravel.
I went through a couple of weeks with PHP Laravel, some tutorials. I could follow along with those, but then I found I couldn’t take what I’d learned and go build something simple. I went through a one on one course on Rails. I did a month on PHP in Laravel and then a month on Rails. I found that at the end of the month on Rails, I was able to take that and build something simple. I continued to double down on Rails from there.
I went through a number of courses on that. Tip number one is to stick with something like Ruby on Rails, or PHP with Laravel. Something that has a huge developer community with tons of resources and educational stuff. That’s a big number one. Number two is to try and find mentors. I go to friends like I talked about. I paid a couple of people for paid mentorship for a while and I’ve learned to code in Rails developer communities, I go to that for some help as well. I frequently talked with friends about code questions. I hit up codementor.io quite a bit when I really get stuck.
Rob: Sounds cool. You mentioned ProcessKit which we haven’t really covered in this conversation. You want to tell folks what that is? Is it the next generation of OPS Calendar done in the way based on your learning from the first time?
Brian: At this point, the way that it’s positioned is that it’s really a projects tool. It kind of like a project management software, but it’s process driven. If your projects really follow the same script every time, they’re very repeatable and you’re doing a lot of the same stuff, whether you’re onboarding customers to a service or to a SaaS or something like that and you need your team to follow a certain process, that’s really where ProcessKit comes in. It’s different from the project management tools where you might run your tasks and projects in one of those tools, but you have your documentation, your SOPs over in a silo somewhere else. That’s where those kinds of operations tend to fall apart, the team just never really follows the SOPs.
ProcessKit sort of brings those together, and then also builds in automation steps. You can say if this then that, if it is is this type of project then assign these tasks to these people, calculate these due dates, and link up with Zapier and all that kind of fun stuff.
Rob: Cool. Where is that project in terms of launching? This is the part of the interview where I ask you questions I already know the answer to. What status is ProcessKit at right now?
Brian: It launched, it has customers. I’ve been doing the slow launch things over the past really throughout ‘19. I think I started on boarding the first customers around June, the very first ones. Today, we’re in November. I’ve been sending early access, invites pretty regularly since then. It was up on Product Hunt about two weeks ago and now it’s out there.
Rob: Is it everything you wanted and more to own a SaaS app? Is it just growing up into the right by itself? You make money while you sleep? I was going to say is it back to the same slug as OPS Calendar, but I don’t think it is. This time really is different. I get the feeling that there is more potential here. Is that pretty accurate?
Brian: First I heard your interview with Jane Portman this morning and I completely relate to that, probably so many other early SaaS founders with the long slow SaaS ramp of death. It’s real.
It’s very slow and the revenue is nowhere new replacing the income that I get from Audience Ops. But yeah, it’s less than a year in, and it does have more customers now than OPS Calendar did. It resonates with people a lot more, the problem and the solution, and the positioning. At least with my audience, the people that I’m connected to. But it’s early on. It really just launched a couple of weeks ago. Now that the new website is up, I’m starting to kick into gear. That shift away from just going to the early access list to actually marketing this thing and getting new traffic and new leads and that sort of stuff.
Rob: Now the real work begins is what I like to say. Getting to launch is like 30% of the journey. That’s where folks who are listening, we could do Startups for the Rest of Us drinking game where like if you get to launch and you don’t have some type of launch list that you’ve been building, then you have a problem. That’s the first base or the first quarter of the journey. And then now you’re launched and now the real work begins. That’s where it’s like you probably don’t have product market fit yet.
Now, I’m going to spend the next six months figuring that out as I grow very slowly. Then, you do get to product market fit, now I need to find a sustainable source of leads when it’s relatively scalable. Then you spend the next 6-12 months figuring that out. That’s why it’s the long slow SaaS ramp. These things are in stages and it’s truly the Cinderella stories that don’t have these steps in this order. It’s always a grind.
Even the Cinderella stories, like I said, there are no Cinderella stories, but even the ones that we look at and say, “Oh my gosh, that grew so fast.” It was a complete grind behind the scenes. This is never easy.
I wish you the best of luck with ProcessKit, because it’s essentially a second iteration of a SaaS app. You’ve obviously fought very hard for multiple years to get this out. This is something you really believe in. You can tell that it’s not an opportunistic product. It’s like I’m going to ship dog food to people on the internet because I could make money. You’re building this because this is something you need and you believe in. I hope that you’re able to make it work.
I think longer term, if for some reason it doesn’t work out, would you build another SaaS app again or would you consider doing a productized service?
Brian: At this point, I am pretty committed personally to doing software whether that’s ProcessKit or another idea or several other ideas, I’m pretty focused primarily on ProcessKit right now. I would use the productized service model if it came to that. No, I should say that I’m actually still using the service model in many ways. Obviously there’s Audience Ops that continues to grow, but even in ProcessKit, now we’re launching a Done with You process service to help you and your team improve and audit your processes, get you set up on ProcessKit as a paid service. That’s sort of like a productized service built on the software, which I really love that model.
You asked about how is it. For me right now, in that slow grind on ProcessKit, I’ll be honest, I’m really loving it. I’m really loving doing everything from the design to the code and talking to customers every day because being able to talk to customers and then literally iterate on the feedback that I got on the feature that I could ship by the end of the week, that just feels so empowering. I know that it won’t be forever, but at this point, Audience Ops is back to growth and profitable in steady state and a really amazing, fantastic team that I have that space to breathe now. I’m not worried about having to cut off the development cycles because of cash flow or things being built in the wrong way or things like that.
Rob: Yeah. There’s definitely a luxury to being able to control that whole pipeline, the manufacturing pipeline. Like I said, I don’t write code anymore, but when I was getting started all the way through Drip, everything before that, I wrote at least some code. Even if it was just maintenance, even if it’s just tinkering here, it was just tweaking. Because finding developer to make a three line code change in PHP or Cold Fusion or classic ASP or .NET or any of those things, it’s a huge amount of work to find someone just to do that. If you know the basics of code, to then just learn, I didn’t know some of those languages but I picked up a book or I went on Stack Overflow, whatever and you Google it, and you’re like, “I’m going to make this change and see if it doesn’t break anything.” If it doesn’t, it’s like wow, I just saved myself like a week of recruiting someone just because you know how to do the basics.
It cuts both ways. I think then you can also get mired in it and then you’re not working on the things you should be and that’s where as we started Drip originally, Derrick said, “Hey, I want to build it on Rails.” I said, “Cool.” Originally I was going to learn Ruby but eventually I said, “You know what, I actually think I shouldn’t because I will get into the repo and start tweaking things. And I should be talking to customers, I should be building processes for this business, I should be doing all the other things that don’t involve the coding.” There’s a point where that makes sense. And if obviously for building a venture backed startup and you’re raising money, you probably shouldn’t be the one digging into the code. Maybe someone on your team is. But there’s a balance there.
But that’s not what you’re doing. You’re building something that you want to build, that you want to exist in the world, and you’re willing and able to take it slow and that gives you a luxury.
Brian: Taking it slow, I’m as impatient as they come with things. I constantly want to move fast and execute and ship something new every single week. But bigger picture, that what’s this podcast and MicroConf and everything is all about. It’s about embracing that slow model of taking your time and making sure that things are done right. I’m all about it.
Rob: That’s right. Ambitious founders who want to build interesting things, build sizable business but are not willing to sacrifice their lives, their health, their relationships, whatever it is, even in your case, it’s a lifestyle that you don’t want to sacrifice to do it and that’s what it’s about. It’s about retaining that control.
Brian: 100%.
Rob: Thanks so much for coming on the show, man. If folks want to keep up with you, and they like the podcast, they should search for Bootstrapped Web, podcast you release every week or two with Jordan Gall. I’m a listener, have been for years. If they want to keep up with you on Twitter, you are @casjam and of course processkit.com is where your SaaS app lives. Any other places folks might want to look out for you?
Brian: Audience Ops is still kicking. Great team over there. Yeah, you hit it. That’s it.
Rob: Sounds great. Thanks again, man.
Brian: Thanks. Thanks, Rob.
Rob: If you have any questions for Brian or myself after hearing this interview, I’d love it if you would tweet me @robwalling or send a question into questions.startupsfortherestofus.com and I would be glad to have Brian back on the show to answer questions you have about any of his experiences, or productized services, or anything else that you feel like he could lend some insight into. If you have an unrelated question for the show, you can leave me a voicemail at 888-801-9690. Or you can always email us questions.startupsfortherestofus.com. You can find us in all the podcasting marketplaces and directories, just search for Startups.
If you’re interested in the full transcript or to make a comment on an episode, just hit up startupsfortherestofus.com. This was episode 474. Our theme music is an excerpt from We’re Outta Control by MoOt, it’s used under Creative Commons. Thank you for listening, and I’ll see you next time.
This week’s episode, I talk with Brian Castle about overcoming a 40% decline in MRR and rising from those ashes. This is Startups for the Rest of Us episode 474.
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 Brian Castle, we’re here to share experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. Thank you for joining me again this week on Startups for the Rest of Us. We have many different show formats. This week is a conversation with someone you’ve likely heard of, Brian Castle. He hosts the Bootstrapped Web podcast with Jordan Gal. And I’ve been listening to that podcast for many years. Hope you enjoy our conversation today.
But before we dive into that, I want to let you know about a MicroConf announcement we’re making this Friday, December 13th. It is by far the biggest we’ve made since launching the conference a decade ago. I really encourage you to go to microconf.com, make sure you’re on the email list. If you’ve attended a MicroConf in the past or you have tickets now, you’re already on the list and you’ll hear about it. But it really is big news and I’m not just saying that to try to sensationalize it or encourage you to go over there. But there’s a lot that’s been going on in terms of the planning of MicroConf for 2020 and we have a lot of new things coming and would love for you to be in the loop on all that’s going on. There’s a lot that’s going to be announced. microconf.com, make sure you’re on the email list.
I enjoyed the conversation I had today with Brian Castle. To set a little bit of the stage, Brian is a frontend designer and UX guy by trade, and then he learned to do some frontend development work. He had been doing a lot of consulting and eventually started dabbling and building products as many of us do. He started at a SaaS app called Restaurant Engine which was originally designed. His vision was for it to be Squarespace for restaurants, but really it evolved almost into a productized service where he had to do a lot of hand holding with the restaurant managers. I think that probably got his gears turning on its software plus service. That offered more value than just straight up building another website builder.
In early 2015, he sold Restaurant Engine for a tidy sum. He talks about that. He said it wasn’t life changing money, but it was enough to go towards a new home. We joined his story at that point where he sold Restaurant Engine and he’s about to start a new productized service. I hope you enjoy this conversation with Brian Castle.
Brian, thank you so much for joining me on the podcast.
Brian: Hey Rob, thanks for having me on.
Rob: Absolutely, man. We joined your story in the middle as I like to say where things are going up into the right. You’ve launched Audience Ops, productized service, and you launched it 2015 and over the course of about the next 18 months, it is all up into the right and you grow from zero dollars in MRR from April of 2015 to 50K of MRR by September of 2016. What was that feeling? Have you ever launched a product that grew that quickly. It’s productized service so it’s not all software, we get it. Have you ever launched anything that had had that much success for that long?
Brian: No, definitely not. I definitely didn’t expect to grow that fast. Looking back on it, it sort of makes sense. Obviously what I’ve learned with productized services is that you can charge a lot more per customer and that helps accelerate the growth rate. If you really nail a market and you’re solving a problem, specific value proposition all that, then I found that growing a recurring productize service like that can really happen. You can grow that revenue pretty fast.
But when I launched it in April 2015, I did not set out to even hit that. The goal was what’s the fastest thing that I can do to get 10K MRR and hit that within two months.
Rob: Right. Like you said, it’s the average revenue per user, a lot of people don’t realize it when that’s $500 a month or $1000, does not take many customers to get you to that 10K, 20K, 30K price point. I’ve seen it with MicroConf companies, with TinySeed companies trying to launch at $20 average revenue per customer app and get to any scale is a very long road even if you have a big audience or have a lot of traffic. Whereas the folks who are plug and away adding two customers a month at $500 average revenue per customer, that’s a grand a month of MRR that you’re growing. It’s a nice base to have.
Brian: Yeah. Audience Ops has, for the most part, been between $1000 and $2000 a month in terms of average per customer. I think it’s great to be able to grow a service like that so quickly. It has some downsides to it too when you’re charging that much because you just see crazy swings in MRR. You can add just a couple of customers, lose just a couple in a week and you’re seeing swings in 5K or 10K MRR. That can really screw with you.
Rob: Right. Stuff we won’t dig into here is you’ve talked a lot about productized services, there are pros and cons to them, you can grow quickly as you’re saying the price points are high and that’s great. Obviously the cons are hey, it’s not as easily scalable as pure software. You do have to hire staff. 50K MRR SaaS company might have 3, 4 people working on it. And a 50K productized service probably has a team of 15 or more. There’s pros and cons to this.
But the thing that’s cool is you launched it and 18 months later, obviously there was a lot of work that you had to do but you have this 50K MRR business now that’s supporting you because after you exited your prior app restaurant engine, I imagine you didn’t want to sit and burn through that cash. You mentioned to me offline that in 2016, you actually spent most of your restaurant engine money on a new house.
Brian: Yeah, that’s right. It wasn’t a life changing exit or anything, but it was a chunk of cash. I looked at that and I really thought about what is going to be in my next business to replace that income. I wanted to get into SaaS software right then in 2015. I looked at a few ideas, but the thought back then of basically burning all of that cash within a year and then maybe getting somewhere close to 10K MRR, which was a big maybe. That kind of scared me.
That’s what lead me to start looking at I kind of know productized services fairly well at this point. That seems to be the fastest way to get to a viable recurring revenue source to then free up my time. Obviously, a lot of work goes into building the team and the systems to remove myself, but that’s always been the goal with the service companies is to grow the cash flow to fund my time to work on stuff.
Rob: You’re a 50K MRR with Audience Ops, it’s fall, September 2016. Since everything is going up into the right, you’re feeling great, you already had two full time W-2 people, you turned 2 more people, they were contractors, you put them on salary and then you started looking at launching the SaaS app. You’re starting to build OPS Calendar. You did some validation there and started upping your expenses. What was the thought process there?
Brian: Right around that time, I guess it was around September into October, I had the idea for this software called OPS Calendar at the time, it was like an editorial software calendar with some process stuff built into it. You can automate content processes and things. Essentially, that was the precursor to my product today—ProcessKit. But back then, that’s what I was doing. At that point, I didn’t personally have the ability to just build an app myself. I‘ve always been a frontend developer and a designer, not a backend. It would definitely require outsourcing and hiring developers to build the functional app.
I did some presale, I got 10, 13, 14 people to prepay based on the idea and a promise that they will someday use this idea. That, combined with the growth rate on Audience Ops, and I had some profit saved up at this point. Okay, I’m good with spending around 5K a month on an outsourced developer and that turned into two or three guys overseas that I was working with.
Rob: Since we didn’t cover it before, could you give people just a two sentence explanation of what OPS Calendar, what it is and the purpose it would serve if it had made it to market, so to speak.
Brian: The idea with OPS Calendar, it was essentially an editorial calendar software with some production process stuff built into it. You and your team can build a process for how you produce blog articles, and podcasts, and social media, and map all that stuff to a calendar to see who needs to do what by when and also to schedule blog posts and social post to the calendar.
Back then I was running Audience Ops which is a content service, we do blog content as a service so obviously it was born out of that. That was essentially the idea with OPS Calendar at the time.
Rob: Yeah, cool. There’s a six months chunk where really from November of 2016, right after you ratchet up these expenses, things hit the skids with Audience Ops. I think this is one of the tough parts of your journey, it seems like. You want to walk us through the timeline there, what happened?
Brian: We’re three years later now and this is still one of those periods of time that I still look back on. Like, “Man, that was painful.” What happened was basically that growth from Audience Ops, 0-50K, that started to plateau right around October, November into the holidays and then started to decline through the holidays, in the January, February into about March or April is when it started to finally turn back around. It was painful on a number of fronts because it coincides right at the time that I decided to start spending a lot of extra cash on developers and employees all at the same time. There was that part of it.
And then it was also just like, “Why is this happening?” Everything was growing just fine up until that point. What is causing the reduction in leads or the increase to churn, it was probably a combination of both. I was looking at it in a thousand different angles to try to uncover what was actually causing it. It’s still unclear to me to this day. I have a few ideas, some hunches of what it could have been. But when you’re in it and you’re trying to fix it, you just don’t know what exactly is broken. It’s really frustrating.
Rob: Absolutely. That’s devastating. 40%? That’s a huge drop. 50K down to 30K. That’s a lot of salaries, that’s probably all your net profit on this thing. I’ve seen SaaS apps plateau, I’ve seen them right over the top, so to speak, when they start to decline. But I’ve never heard of a drop that fast that wasn’t due to some big platform risk. Like, “Hey, I’m integrated with Shopify and they just completely cut off our access.” Or, “I’m a Twitter client and they cut the API.” Or a Google change. Something that was just decimating.
But just to have that happen seemingly out of the blue, it sounds like, and three years later not have been able to pinpoint what happened, must have been terrible. It sounds like it went on for five months and you were just trying to fix it this whole time. Is that what it was?
Brian: Yeah. There are a few things. It was probably a combination of things that I look back on. One was in summer 2016, it was the first time that I hired a sales person for Audience Ops. There was somebody on the team, actually still on the team today, and I put that person into a sales role to remove myself from the sales. That was one remaining jobs that I was still doing in Audience Ops, the team was handling other stuff. It’s not any fault of his, he actually did a really great job of closing a lot of accounts that summer. Bringing out a lot of clients, but a lot of those clients that he sold and closed churned a lot faster than other clients have come on.
I take that as my fault for the training, maybe some of the compensation structure that I really didn’t structure and situate to have a sales person really set the right expectations for customers. Basically the way that I do when I do sales calls for Audience Ops is for me, when I do it, it’s really about let me tell you exactly what’s happening in Audience Ops and almost talk you out of signing up for Audience Ops to make sure that you’re really on board for this. There’s that, we just saw a string of cancellations.
Then the holiday season hit and that slowed down. It was weird because the previous holiday season was actually a pretty big spike in growth for us, but it didn’t happen in 2016. In January, now we’re in the thick of this six month period where sales are stalling, we’re seeing this churn. I go away to the Philippines, my wife has some family there. We were there for a whole month. My plan was to work a little bit while we’re there, but it’s a completely different timezone and that means I literally could not do any sales calls. Even the leads that we had, I couldn’t really even talk to them. Combine that with terrible WiFi while I was there. That was stressful as well.
Rob: How did that manifest itself? What was the peak moment or a moment you can remember where you lost your **** or you were feeling extremely mad about it?
Brian: Anyone who knows me, I am really pretty level headed, I think. I tend to compartmentalize pretty well. Poor sleep, bad eating habits and exercise and all that definitely starts to pile up. Because it’s like I could go exercise today, or I could keep working and try to fix this thing. That was a choice every single day.
Rob: Right. You just dug in and just grinded it out, I shall say. Probably took a toll on your body and mental well being, too.
Brian: Yeah. Into March, April 2017 is when things started to turn around. It’s almost like I don’t really know because it wasn’t a sudden turn around either. It took all of 2017 to dig back out and back up to where it was. But, we definitely improved a lot of things. That was when we really improved the new customer on boarding process heavily. Again, to reinforce those expectations. That I think had a really big impact on customer retention. If they have a really fantastic first month with Audience Ops, they’re really likely to stay on for a year or more at that point.
I worked on some new marketing stuff during that time and some new content, some webinar stuff. I think that seemed to help as well.
Rob: It’s something I talk a lot to entrepreneurs, especially new entrepreneurs don’t understand that they’ll see someone who’s built a business up to 10K a month. You may be able to sell that for $250,000 or something, there’s all these factors. But whatever, you can sell it for quite a million dollars. But people will say, “Why wouldn’t you just keep that? Just keep it and keep running on the side. It’s only three hours a week or five hours a week. Just keep running it.” Usually, there’s a couple of reasons, one because distraction is distraction and there’s opportunity cost to that. But the bigger one is that none of the businesses we have run on autopilot for years. They always get smacked around by something. Sometimes it’s Google, and sometimes it’s a competitor, and sometimes it’s platform risk, and sometimes it’s something you never would’ve guessed, it’s a key employee quitting, it’s something that you have a tough time identifying like what happened with you.
Then you have to shut everything down, stop doing what you’re focused on, and you have to turn your focus back to this thing that you’re tired of working on anyways. At a certain point, eventually, you give in. I’ve done this with multiple businesses and I’ve seen people do it as well, where you’re just like, “Forget it. I just got to sell this thing. I got to get it off my plate.”
Brian: Yeah. It hasn’t really come to that point in Audience Ops, but I can definitely say that there have been times. This period in 2016 was definitely one of those where it was like my mindset is trying to get this brand new idea for a SaaS off the ground. It wasn’t even in existence yet. It was just like get this thing to market. That was my number one goal. Working with developers, I’m paying for developers. I want that to happen as soon as possible. And then I have to stop and work on this churn problem in Audience Ops. Yeah, that was pretty painful.
Rob: We’ll talk in a second about how essentially you did turn that around through 2017. But I’m curious, that low point, this five, six months where things from November to March, April, when they are just in the thrawf and you can’t dig it out. You said that’s still a point that you remember very vividly. I have moments like that in three, four, five months period as well. I learned a lot from them and they impact the way that I do things today. They impact the way that I think about business and the way I ran my apps after that. I’m curious, what lesson or lessons did you take away from that? That impact the way that you make decisions.
Brian: I found that there are one or two of those points in my career so far that I can look back on, that I feel like really influenced the way that I work today. I think in some ways that’s a good thing and in some ways, I do things to a fault today to try to prevent that from happening again. On the positive side, I’ve been through enough of those ups and downs in the MRR graph to know that no matter how well something might be going today, I still have to play it extremely conservative.
We’re like three years out from that, Audience Ops is actually doing really well and I have a profit savings saved up that I’m able to deploy on new products and ProcessKit and things like that. But I’m actually hesitant to spend anything. Because it’s like just keep the reserves in check just in case, you really never know. You look at the news, the economy and stuff. I look at things almost afraid of what could happen.
Tactically, on the sales side of it, I talked about how that period I had a salesperson and then there was a string of churn that came in the months after that. That has caused me to really delay and delay on trying to put a salesperson in place again on Audience Ops.
I’m actually now doing that finally in the end of 2019 with a new strategy behind it and some new structure, but it took me three more years. I have removed myself from every other aspect of Audience Ops. I really spend less than two hours a week on this business, but those two hours are doing the sales calls. Because I just want to make sure that that message is being sent to new customers as they get on. I’m finally coming around to being okay in letting that role go.
Rob: That makes sense. I was going to ask, obviously, if you brought a salesperson and it didn’t work out, you had to turn the app around but after that, I would think that if you do want to get that sales, you would just try and try again. Most sales people don’t work out. The first one you find, frankly, more of the first VAs that I find, the first one almost never works out. So I just hire one, two, three, four and it’s frustrating and it takes time, but eventually, you find someone and then you’re able to let it go. Is that where you’re at now? Is that something you’re looking at doing, trying again and stepping away?
Brian: Yeah. I’m trying again because I think it will actually help impact the business, growth, and the overall health of the business to get me out of that role. Speaking about it now in 2019, I just have a lot more space to breathe. Financially and time wise and so many more things inside the business are more optimized now than they were back then. The on boarding stuff is really locked in, things like that. I just think it’s probably a better time to try to get that off my plate now than it was.
Again, things did start to turn around in 2017, but it took all of ‘17 into the beginning of ‘18. ‘18 was really when I finally got my bearings back in terms of having some space to play with.
Rob: Right. It sounds like it, and that April 2017 point could have been celebratory because you’re bringing your first paying customers in for your SaaS up OPS Calendar, but your financial runway was basically gone. You had to turn around over the next six, seven, eight months. What were a couple steps that you took, it was all hands on deck at that point, right? We’ve lost 40% revenue, we’re still declining at this point. What were some steps you took to turn this around and get out of the tailspin?
Brian: Just to be clear, there’s two parallel products in play here. One is Audience Ops which is in the site crisis mode, and then OPS Calendar which is trying to get off the ground but then I would have to pause, paying for the developers, right at these critical moments as we’re bringing these new customers on to the software. I just didn’t have the cash to fund for the development and couldn’t move fast and all that stuff. That was really frustrating.
But with Audience Ops to start to turn it around, I did a number of different things to try to attack the problem from different angles. One was that new customer on boarding again. I worked with my team a bit to see how can we just make sure that customers are really happy after their first month and that clearly has had an impact on improving churn over time. Just focusing on retention. I think that also helped with customers like referring other leads to us, that has that side effect too.
I did work on some new marketing materials. A whole round of new content, I think I did a recorded webinar that I put into the marketing system at that point, worked on the email automations that helped to nurture. I just went through the whole funnel. Everything that leads and customers see as they find out about Audience Ops, as they go through the sales process, as they get educated and nurtured and on boarded. I tried to improve every step of the funnel over that in early 2017.
Those are the kinds of improvements that you just don’t see moving the needle overnight, you just do that work then maybe a few months later things start to improve.
Rob: Right, and it worked because you turned it around over the next six or eight months.
Brian: I think it has definitely returned to where it was and has grown beyond that but it doesn’t really see the growth rate that it saw in that very first year. But I think that’s sort of a natural slowing down that a business sees. At least I’ll see it that way.
Rob: Yeah. It’s hard to say without going out and really beating the bushes and trying to generate a bunch of leads and doing cold outbound, focusing on SEO or running ads, there’s a natural threshold that always sets in. It seems to me like you’ve always been cool with that plateau because that plateau provides you with a full time income budget to build other apps which is really what you want to do. That’s your lifestyle choice.
Brian: Yeah, exactly.
Rob: They were working on OPS Calendar, your developers were, and you got your first paying customers in April and then you had to pull them off because you didn’t have the money, and then in July in 2017 you’re able to get them back to work on OPS Calendar, and then you get a little bit of traction right that latter half of 2017 but you never found product market fit with OPS Calendar. By February of 2018, you were still trying to push it forward, but some calamities happened. It sounds like there was a code base thing you want to talk us through what it was like dealing with that.
Brian: Throughout that year of 2017, it was trying to bring those first customers on and got a few handful of paying customers, but over the summer there whatever savings I had was gone from that period of Audience Ops. I’m not one of these people who just goes crazy on the credit card. Once I see a little bit of balance on there, I’m just too risk averse and debt averse to really go too heavy on that. I just pause and I don’t really spend until I have the cash in the bank account. I had to pause those developers over the summer which really, really hurt because I felt like it was at a critical time.
As we get into 2018, I went on a trip and we had been pushing off this upgrade from Vue one to Vue JS. At the time, I wasn’t a developer, I didn’t even really understand what Vue was. The developers chose that framework. That upgrade broke everything. I came home from that trip looking at a situation where I could pay those developers to go fix every single feature that I had just paid them for the last 18 months to build. Essentially, spend all that money and all that time again to rebuild the app, which was not going to happen.
It was also we’re having a hard time converting these customers, even a lot of the early prepaid customers didn’t end up continuing on as full customers. That said to me you know what, this thing isn’t really right. Because we have a process feature in OPS Calendar, and people were using that side of it and they were not touching the social media calendar stuff. That was also a signal to me that really the product that I deep down wanted to build was more of a process oriented tool.
Here I am in early 2018, probably going to “pivot” the product, if you will, to something else. Probably a new name and everything. I’m having a problem with these developers, but at that point I just decided to just stop everything. Just pause all work on OPS Calendar, take a month and figure out what I’m going to do. My conclusion was that I’m done with being limited by not being able to build apps myself. As a designer and front-end developer and product person, I’ve always felt, and this really brought it to a head was this experience with OPS Calendar, I’ve always felt this frustration that I can’t move fast enough because I’m always waiting for the developers to finish a feature. Sometimes I can’t move at all because I don’t have the cash to pay developers.
Let me bypass that by investing my time in learning back in development. I learned Ruby on Rails. I basically decided all of 2018, I’m going to use all my full time hours to make myself a full stack developer. I know I won’t be a very good one, but at least I’ll be able to take any idea and build it into a product and bring it to market, and that’s essentially what I do.
Rob: You were just about 18 months into OPS Calendar and I’m going to guess tens of thousands of dollars paying developers. You put on maintenance mode. You effectively shut it down. What was that decision like? How hard was it for you?
Brian: I think it was somewhere around $30,000 or $40,000 that I put into over that period of time. It sort of sucked, but it was also I don’t really have any other option here. I’m not going to just keep spending on something that’s clearly not working. I knew that the tech underneath the app, they technically built the features that I designed and speckled, but there were underlying architectural issues that I could just feel as a user.
That was another reason moving to let me just try to build it myself because at least I could design the thing from the inside out the way that I feel like it should be built. It was hard, but it was also I’m moving on. At that point I was also really excited about this idea for what the next version is which became ProcessKit, which is what I’m working on today.
Rob: I’m curious, deciding to learn to code from scratch, you’ll often hear folks send questions in to this podcast and say, “Should I learn to code if I’m going to watch a SaaS app?” The answer’s always it depends. Do you think that’s something you’re interested in? I would at the minimum learn to code well enough to know if the developers are trying to pull one over on you so you have a concept, you can talk to them. I don’t write production code anymore myself, but I wrote code professionally for 10 years.
I can still have architectural conversations. When Derrick and I were building Drip, I could go pretty deep on the tech stuff. It’s an asset to have for sure. But I’m curious, instead of learning to code, why not launch another productized service? Because you seem to be good at them, they seem to work out for you. Audience Ops is obviously successful and profitable. Why continue to seek after something that is showing you so much resistance in essence, which is a true software base SaaS app?
Brian: Number one, I’ve always been interested in software. I’m not new to software today. I’ve been working on it in different forms for many years. That has always been my number one interest in terms of what I want to create on the web. I’ve been building on the web for over a decade. That’s really always been where I’ve been heading with this. Even since I started Audience Ops, yeah I worked very hard on building it and building the team and the processes, the systems and everything. It’s always been with the end goal in mind of removing myself so that I can fund my time to work on software.
Like you said, the scalability aspect. Yes, I believe a service company can run without you and be profitable without you in the day to day like it is for me, but it’s clearly not as scalable as a SaaS that has hit product market fit and has that growth. Just in terms of the value of an asset and all that.
Also, I just wanted to go back to what you’re saying about the decision to learn to code or not, I agree with you. In many cases, it may not be the smartest choice, or maybe you should just learn a very light understanding of it so that you can communicate with developers. I think there are few caveats that made my situation a little bit unique from where most people are that I come across at least.
Number one, I’m not starting from scratch. I had been a frontend HTML, CSS, little PHP, little JavaScript work. But professional level frontend stuff for years. Building websites, doing a lot of work with advanced WordPress stuff, working on major websites for agencies and things like that. I was not completely new to basic coding and programming. I just never really learned a back end stack like Ruby on Rails, and working with databases and things like that.
There was that. That gave me a head start. And then the other thing is that I had the time. I really have full time hours to throw at this. If I didn’t have that, if I was doing this nights and weekends, I don’t think it would be possible to make as much progress as I did over the last now almost two years. I don’t think I would have been able to really make a lot of progress with it if I couldn’t work on it full time every day.
Rob: Right. You had a lot of time to focus and it was something that as you said, you already had a basis for.
Brian: And I had a lot of help too. A lot of my close friends are software developers, Rails developers, I had of people that I could turn to for support and they’ve been super helpful.
Rob: Totally. That’s the thing. You’re in the developer community already even if you’re more of a frontend developer/designer. It’s like you live in that world and it’s not such a far stretch to be like, okay, I want to go one layer deeper and see how it interacts with the service side code. Cool.
That takes us to spring of 2018. Audience Ops is back, profitable, and you were able to free up your time and spent most of 2018, as you said, learning Rails. What was the most surprising part of that experience of taking that six or eight months and digging into service side code and learning to build your own software top to bottom for the first time?
Brian: In the early months, I knew that it would be a very big effort and that it would take me a long time to get decent at it. It was a little bit frustrating going through tutorials and courses and then still not quite being able to build anything real yet, but then just hacking away at it a little bit more for another month or two and then I can build something very simple.
Over the course of 2018, I went through a bunch of courses, I worked with a coach which was very helpful, and then I did some throwaway practice project apps. By the end of that, I was able to put together a simple app called Sunrise KPI. That was the first real app that I’d built.
I should mention that the idea for ProcessKit I had throughout 2018. I bought the domain. I spent some money on that domain. I was putting sketch ideas for what ProcessKit would be, but I also knew that I wasn’t capable of building it yet. I had to get those skills up and it wasn’t until the end of 2018 I had felt confident in actually starting to build what is now ProcessKit.
Rob: Yeah. If someone’s listening to this and they are thinking about themselves learning to code, what would be a piece of advice, either a warning or just a hey, do this, this is what really worked for me, this is what fast tracked me.
Brian: Early on, I definitely wanted to stay away from the newest, trendiest, most complex frameworks, especially like the JavaScript frameworks and stuff. I’m sure there’s plenty of technical benefits to those, but I wanted boring, tried and true, non trendy stuff. It came down to a decision between Ruby on Rails or PHP in Laravel.
I went through a couple of weeks with PHP Laravel, some tutorials. I could follow along with those, but then I found I couldn’t take what I’d learned and go build something simple. I went through a one on one course on Rails. I did a month on PHP in Laravel and then a month on Rails. I found that at the end of the month on Rails, I was able to take that and build something simple. I continued to double down on Rails from there.
I went through a number of courses on that. Tip number one is to stick with something like Ruby on Rails, or PHP with Laravel. Something that has a huge developer community with tons of resources and educational stuff. That’s a big number one. Number two is to try and find mentors. I go to friends like I talked about. I paid a couple of people for paid mentorship for a while and I’ve learned to code in Rails developer communities, I go to that for some help as well. I frequently talked with friends about code questions. I hit up codementor.io quite a bit when I really get stuck.
Rob: Sounds cool. You mentioned ProcessKit which we haven’t really covered in this conversation. You want to tell folks what that is? Is it the next generation of OPS Calendar done in the way based on your learning from the first time?
Brian: At this point, the way that it’s positioned is that it’s really a projects tool. It kind of like a project management software, but it’s process driven. If your projects really follow the same script every time, they’re very repeatable and you’re doing a lot of the same stuff, whether you’re onboarding customers to a service or to a SaaS or something like that and you need your team to follow a certain process, that’s really where ProcessKit comes in. It’s different from the project management tools where you might run your tasks and projects in one of those tools, but you have your documentation, your SOPs over in a silo somewhere else. That’s where those kinds of operations tend to fall apart, the team just never really follows the SOPs.
ProcessKit sort of brings those together, and then also builds in automation steps. You can say if this then that, if it is is this type of project then assign these tasks to these people, calculate these due dates, and link up with Zapier and all that kind of fun stuff.
Rob: Cool. Where is that project in terms of launching? This is the part of the interview where I ask you questions I already know the answer to. What status is ProcessKit at right now?
Brian: It launched, it has customers. I’ve been doing the slow launch things over the past really throughout ‘19. I think I started on boarding the first customers around June, the very first ones. Today, we’re in November. I’ve been sending early access, invites pretty regularly since then. It was up on Product Hunt about two weeks ago and now it’s out there.
Rob: Is it everything you wanted and more to own a SaaS app? Is it just growing up into the right by itself? You make money while you sleep? I was going to say is it back to the same slug as OPS Calendar, but I don’t think it is. This time really is different. I get the feeling that there is more potential here. Is that pretty accurate?
Brian: First I heard your interview with Jane Portman this morning and I completely relate to that, probably so many other early SaaS founders with the long slow SaaS ramp of death. It’s real.
It’s very slow and the revenue is nowhere new replacing the income that I get from Audience Ops. But yeah, it’s less than a year in, and it does have more customers now than OPS Calendar did. It resonates with people a lot more, the problem and the solution, and the positioning. At least with my audience, the people that I’m connected to. But it’s early on. It really just launched a couple of weeks ago. Now that the new website is up, I’m starting to kick into gear. That shift away from just going to the early access list to actually marketing this thing and getting new traffic and new leads and that sort of stuff.
Rob: Now the real work begins is what I like to say. Getting to launch is like 30% of the journey. That’s where folks who are listening, we could do Startups for the Rest of Us drinking game where like if you get to launch and you don’t have some type of launch list that you’ve been building, then you have a problem. That’s the first base or the first quarter of the journey. And then now you’re launched and now the real work begins. That’s where it’s like you probably don’t have product market fit yet.
Now, I’m going to spend the next six months figuring that out as I grow very slowly. Then, you do get to product market fit, now I need to find a sustainable source of leads when it’s relatively scalable. Then you spend the next 6-12 months figuring that out. That’s why it’s the long slow SaaS ramp. These things are in stages and it’s truly the Cinderella stories that don’t have these steps in this order. It’s always a grind.
Even the Cinderella stories, like I said, there are no Cinderella stories, but even the ones that we look at and say, “Oh my gosh, that grew so fast.” It was a complete grind behind the scenes. This is never easy.
I wish you the best of luck with ProcessKit, because it’s essentially a second iteration of a SaaS app. You’ve obviously fought very hard for multiple years to get this out. This is something you really believe in. You can tell that it’s not an opportunistic product. It’s like I’m going to ship dog food to people on the internet because I could make money. You’re building this because this is something you need and you believe in. I hope that you’re able to make it work.
I think longer term, if for some reason it doesn’t work out, would you build another SaaS app again or would you consider doing a productized service?
Brian: At this point, I am pretty committed personally to doing software whether that’s ProcessKit or another idea or several other ideas, I’m pretty focused primarily on ProcessKit right now. I would use the productized service model if it came to that. No, I should say that I’m actually still using the service model in many ways. Obviously there’s Audience Ops that continues to grow, but even in ProcessKit, now we’re launching a Done with You process service to help you and your team improve and audit your processes, get you set up on ProcessKit as a paid service. That’s sort of like a productized service built on the software, which I really love that model.
You asked about how is it. For me right now, in that slow grind on ProcessKit, I’ll be honest, I’m really loving it. I’m really loving doing everything from the design to the code and talking to customers every day because being able to talk to customers and then literally iterate on the feedback that I got on the feature that I could ship by the end of the week, that just feels so empowering. I know that it won’t be forever, but at this point, Audience Ops is back to growth and profitable in steady state and a really amazing, fantastic team that I have that space to breathe now. I’m not worried about having to cut off the development cycles because of cash flow or things being built in the wrong way or things like that.
Rob: Yeah. There’s definitely a luxury to being able to control that whole pipeline, the manufacturing pipeline. Like I said, I don’t write code anymore, but when I was getting started all the way through Drip, everything before that, I wrote at least some code. Even if it was just maintenance, even if it’s just tinkering here, it was just tweaking. Because finding developer to make a three line code change in PHP or Cold Fusion or classic ASP or .NET or any of those things, it’s a huge amount of work to find someone just to do that. If you know the basics of code, to then just learn, I didn’t know some of those languages but I picked up a book or I went on Stack Overflow, whatever and you Google it, and you’re like, “I’m going to make this change and see if it doesn’t break anything.” If it doesn’t, it’s like wow, I just saved myself like a week of recruiting someone just because you know how to do the basics.
It cuts both ways. I think then you can also get mired in it and then you’re not working on the things you should be and that’s where as we started Drip originally, Derrick said, “Hey, I want to build it on Rails.” I said, “Cool.” Originally I was going to learn Ruby but eventually I said, “You know what, I actually think I shouldn’t because I will get into the repo and start tweaking things. And I should be talking to customers, I should be building processes for this business, I should be doing all the other things that don’t involve the coding.” There’s a point where that makes sense. And if obviously for building a venture backed startup and you’re raising money, you probably shouldn’t be the one digging into the code. Maybe someone on your team is. But there’s a balance there.
But that’s not what you’re doing. You’re building something that you want to build, that you want to exist in the world, and you’re willing and able to take it slow and that gives you a luxury.
Brian: Taking it slow, I’m as impatient as they come with things. I constantly want to move fast and execute and ship something new every single week. But bigger picture, that what’s this podcast and MicroConf and everything is all about. It’s about embracing that slow model of taking your time and making sure that things are done right. I’m all about it.
Rob: That’s right. Ambitious founders who want to build interesting things, build sizable business but are not willing to sacrifice their lives, their health, their relationships, whatever it is, even in your case, it’s a lifestyle that you don’t want to sacrifice to do it and that’s what it’s about. It’s about retaining that control.
Brian: 100%.
Rob: Thanks so much for coming on the show, man. If folks want to keep up with you, and they like the podcast, they should search for Bootstrapped Web, podcast you release every week or two with Jordan Gall. I’m a listener, have been for years. If they want to keep up with you on Twitter, you are @casjam and of course processkit.com is where your SaaS app lives. Any other places folks might want to look out for you?
Brian: Audience Ops is still kicking. Great team over there. Yeah, you hit it. That’s it.
Rob: Sounds great. Thanks again, man.
Brian: Thanks. Thanks, Rob.
Rob: If you have any questions for Brian or myself after hearing this interview, I’d love it if you would tweet me @robwalling or send a question into questions.startupsfortherestofus.com and I would be glad to have Brian back on the show to answer questions you have about any of his experiences, or productized services, or anything else that you feel like he could lend some insight into. If you have an unrelated question for the show, you can leave me a voicemail at 888-801-9690. Or you can always email us questions.startupsfortherestofus.com. You can find us in all the podcasting marketplaces and directories, just search for Startups.
If you’re interested in the full transcript or to make a comment on an episode, just hit up startupsfortherestofus.com. This was episode 474. Our theme music is an excerpt from We’re Outta Control by MoOt, it’s used under Creative Commons. Thank you for listening, and I’ll see you next time.
Episode 473 | Managing Annual Subscriptions, Low-price vs. High, Being a Non-Developer Founder, and More Listener Questions with Laura Roeder
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In this episode of Startups For The Rest Of Us, Laura Roeder joins the podcast to answer a number of listener questions on topics including managing annual subscriptions, being a non-developer founder, 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 is a show where we talk about building ambitious, yet sane startups. This week, I had a great time answering listener questions with Laura Roeder from MeetEdgar. We talked through questions about managing annual subscriptions, going low price versus high, being a non-developer founder, and we talked through more listener questions. This is Startups for the Rest of Us episode 473.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome in building, launching, and growing software products. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Laura Roeder, we’re going to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. This is the show where we focus on indie-funded and self-funded startups, folks who want to do interesting things, are ambitious, and want to build themselves a better life, but also want to build companies that grow. Starting a company is hard. Having this community of people who are going through the same thing that you are, having that sense of belonging, knowing (a) that it’s possible but (b) that there’s a place where we can all hang out and just get each other, and where you don’t go in and explain what you do and everyone looks at you funny, there’s a tremendous amount of value to that. That was a big reason why we started this podcast almost 10 years ago, back in 2010.
Startups for the Rest of Us has many episode formats. Sometimes, I just have conversations with folks, do interviews. Now and again, we do founder hot seats. But one of my favorite episode formats is listener questions. We’ve answered a tremendous number of listener questions over the years. We’ve had a lot of episodes on this. It’s just the gift that keeps on giving, because it’s a time for listeners to participate, and to hear what other folks are going through, and to hear the thought process of a couple of founders typically who’ve been there and have done some things, and it’s not that we’ve been through everything that they asked about, but you can at least hear that thought process of how we would approach it. And over the years, we’ve always receive positive feedback about this episode format.
Before we dive in, I want to let you know that at MicroConf, we are making an announcement next week. It is by far the biggest announcement that we will have made since we launched the event nine years ago. It is coincidental that the 20th MicroConf is going to be on April 20th of 2020, so the 20th during the 20s or whatever, but that’s not the announcement. I’ve obviously already mentioned that MicroConf Growth and Starter are in Minneapolis in late April of 2020, but if you’re not on the MicroConf list, I encourage you to go to microconf.com, enter your email, and we’ll loop you in as soon as we have the info. It really is pretty spectacular and you probably know me well enough by now to know that I’m not trying to inflate the importance of it.
Today I answer questions with founder Laura Roeder. If you don’t remember Laura, I interviewed her in episode 451. She runs MeetEdgar which is a social media management SaaS app and in 451, we talked about stellar growth, platform risk, layoffs, and powering through roadblocks. It was a really, really good interview and Laura knows her stuff. I have a ton of respect for her. Honestly, I always love getting on the mic and just chatting with her. Super fun. I had a fun interview at 451 and I had a great time talking to her today and hearing her insights and her take on some of your questions. Without further ado, let’s dive in.
Laura Roeder, thank you so much for coming back on the show.
Laura: I love the Startups for the Rest of Us. I cannot stay away.
Rob: Awesome. I am so stoked to have you on to answer some questions. You’ve actually submitted questions in the past, so it’s cool to have you on the other side of the ear bud, so to speak. We have some good questions today. As always, voicemails go to the top of the stack. I curated some questions that I think you should have some unique insight on. Let’s just roll right into the first voicemail which is about being a nontechnical founder and how to make good technical decisions.
Mack: Hi Rob, this is Mack from the UK. I’ve got a question, I’m looking for advice for a nontechnical founder. How can I avoid getting called out by poor decisions from the technical team or just not knowing about the consequences of some of the technical revisions that gets made to create their software? Any advice would be great. Thanks.
Rob: This is an interesting question, Laura. As a nontechnical SaaS founder yourself, I’m curious what your initial take is on it.
Laura: I would first like to take umbrage with the phrase non technical founder. I mean obviously, I know what he’s referring to. Nontechnical founder means that you are not a developer and I’m not a developer. But I always think it’s a little funny because I’m like, “I run a software company.” It doesn’t seem quite right to call me nontechnical, but this is a very real problem for all of us who are running software companies and are not developers because obviously, you are not intimately familiar with a really core part of what your company does.
I guess the first blanket advice for this is that, you really need to have a person in that CTO role who you trust 100%. I think this goes for any leadership role in your business, but it’s especially important in this case, because you’re not going to be able to provide so much oversight. Anyone can look at a customer service email and say, “Okay, that was not how we want to answer,” but you really can’t read code if you’re not a coder. I think that’s just step one is, make sure that you’re willing to put 100% faith in the person in that dev leadership role.
Rob: That’s what I was going to say as well. Even if you aren’t at the place where you can have a CTO. The fact that he used the phrase, “How do I not get called out,” does your team not trust you or do you feel like you have to make decisions that are out of your league? That’s an interesting turn of phrase. It implies that the team calls him out for making technical decisions, but are you making decisions you shouldn’t be since you’re not a developer? I would dig into that. I think having a CTO, or the senior dev, or somebody that really is making decisions in the best interest of the company, is a huge deal.
Laura: I think it also brings up that you shouldn’t try to pretend to be anything you’re not. If people are calling you out, does it mean that you’re pretending you know things that you don’t know or maybe making decisions that would be better for other people in the company to make? I think it’s just important to be unafraid to ask really stupid, really basic questions until you understand some of these core concepts related to writing code.
You can decide how much you feel you need to know. For me, I feel like I’ve been through this process recently big time with our finance team, understanding all the financials of the business. I just asked our finance person over and over and over again. Sometimes I’ll literally read a book. I read a finance book recently. I just wrote down questions for her in the margins and then I’m like, “I want you to read this book too and we’re going to have a call together. I’m going to ask you all of my questions about the book.”
I think that’s a great thing to do for technical questions as well. You need to be open with your team about what you know and don’t know and I think it’s important for you to work with the type of person that is very patient and very understanding in explaining things to you. Within reason, you don’t need to understand every detail. There are a lot of concepts that are probably unfamiliar to you that you do need to understand at least the basics of how “the sausage gets made.”
Rob: I like your example because as a founder, you don’t need to know every single thing about bookkeeping, accounting, and finance, but you should probably know enough to be able to ask the right questions. I feel the same way running a software company. I don’t think you should be able to code everything in a SaaS app, but maybe it’s worth going through a code where the code camps or maybe it’s worth on the side taking you to make classes.
It’s easier than ever to learn and have just a really basic level of coding knowledge such that, yes, you’ll never be able to make architectural decisions, you won’t make the senior level things, but you can at least relate to, “Oh, this is what code is. This is how it works. This is what it’s like to write a bug,” and spend four hours and not realizing that it’s the semicolon. That’s a lot of what it is. I think having that cursory knowledge and being able to then ask the right questions is what you’re touching on and that’s what I like about it.
Laura: Yes.
Rob: You don’t like the term non technical founder. If you’re a developer and you’re writing the code, then you’re like a developer founder, is it a non-developer founder, is there a term that you prefer rather than nontechnical?
Laura: I guess maybe just say founder and then when you’re explaining later your side of the business, because you also don’t call like you just a developer founder, but I’ve never heard anyone actually say that.
Rob: I was just making up a new term to try not to say technical and non, because typically it’s technical and nontechnical are the two terms people use. I was just trying to think of a different way to say that because you’re right, running a SaaS app, yes, you may not write code but you are more technical than most people we know just because by nature of being in it. It is a misnomer.
But if someone wanted to differentiate between Derek and I when we started Drip, he was literally in a code every day and I was literally not in the code every day. I don’t know how else you differentiate that or what phrase we could come up. I don’t feel nontechnical founder as pejorative. I don’t feel like it’s a negative. Does it have a stigma? Do you feel like it does?
Laura: I actually think it does have a little bit of a stigma because I’ve heard developers use it in that way before. We’re not as cool of a founder if you’re not technical.
Rob: No, I think that’s lame.
Laura: That is lame.
Rob: That sucks. I don’t use it that way but if it gets that connotation then yeah, we need to figure out another phrase for it. Cool. Thanks for the question. I hope that was helpful.
We’re going to bounce into our second question which is also a voicemail. It’s about a founder who’s launching a second SaaS app. They’re nearing launch and he’s concerned about potential lawsuits.
Thomas: Hello, this is Thomas from Austria. I listened to the show for a long time and wanted to tell you that it’s really great content. I love following along your journeys and also hear stories of other people in similar situations.
To my question, I founded a SaaS company three years ago. It provides an invoicing solution for small independent car repair shops. It’s doing pretty okay. I can live off it and it’s slowly growing, so I’m happy with that. Half a year ago, I founded another company with a partner and we are building a software to compare prices for car parts.
Now that we want to go to market with the software to the suppliers, the […] of us are trying to fight us pretty hard. I think we have to go to court several times. There is not really a legal problem with fetching the prices because we do it locally on the customer’s computer and they’re not going through our systems, but still they can make our lives very miserable if they pulled us to court all the time.
Now, I’m not really sure how to go along. My partner really wants to push through that and he’s sure that it will work out. I’m also pretty sure that it will work out in the end, but I’m not sure if I am the right person to spend my next one, two, three years fighting big companies. I wanted to hear your thoughts on that and maybe what you would do in this situation. Thank you.
Rob: Thomas also wrote in and he said that he wanted to clarify that he hasn’t spent any money on the price comparison project, and have a small private investor, but in essence, he has only invested his time so far. I should preface this with we’re not legal experts, we don’t give legal advice, obviously, but it’s more of, “Hey, if I were in your shoes, how would I think through this?” This is an interesting situation. I’m not sure it’s one I’ve heard before. What do you think about this Laura?
Laura: The way I think of it is just, there are pros and cons with every business, every business model, and it’s really smart to go into a business with your eyes wide open about those pros and cons. From what I understood from his message, this is a likely threat, not a certain threat. He suspects that there is going to be lawsuits. He has a good reason to believe that’s going to happen or it could not happen at all. It makes me think of with my business MeetEdgar, we are entirely dependent on the social networks. You can listen to my interview on this podcast on Startups for the Rest of Us. I talked about a big problem we had because of that, but all businesses have upsides and downsides.
For me, I know that I’m in a space where I’m totally dependent on these partners that I have no relationship with and that can do whatever they want. That’s a big downside to my business. The big upside is that I’m building on Facebook, Twitter, and Instagram. Obviously, very popular tools, so lots of users. I think that he just needs to know this going in and maybe it’s something that you budget for.
It’s good not to be scared of it. It’s good to go in and say, “Okay, I know that this will likely happen. Maybe we have some money set aside for it. Maybe we’ve already figured out who our lawyer is so they can jump right in and we won’t be surprised,” spending a few months just trying to find a good counsel.
To me it doesn’t sound like a deal breaker, because it might not even happen at all. Like you said, you have to know that that is a battle that you could be fighting and you have to know that that’s something that you want to sign up for.
Rob: I like the way you’re thinking about it. I think these unknowns, like if you’ve never received a cease and desist, or you’ve never been sued, it’s super scary. You don’t you don’t know what that entails. I got sued by a patent troll about probably five years ago, but it was literally a blanket. It was about a troll. Someone who sued 100 people at once for having online invoicing software is what it was. It was just this crazy, he sued everybody that does online invoicing because it was a ridiculous patent. I got to be honest, I was super scared the day I got the email.
Then I quickly realized I could talk to a lawyer and someone was just like, “Yeah, this just isn’t that big of a deal,” and we have these stigmas against things. Lawsuits can be a big deal. They can be expensive, but your point of it’s almost like try to demystify, or de-risk, or just get more familiar with what this might look like. Typically, if you were to launch something like this, you’re not going to get five lawsuits the next day from five suppliers. It’s probably going to be weeks, months, and then they’re going to grumble and they’re going to have to call you or send you an email, and then you might get a cease and desist.
It would be a long process and maybe like you said, you set aside money to either have a lawyer, whether it’s to go to court or whether it’s to try to negotiate settlements. There’s a lot of options here and I think this comes back to expertise. As a nonlawyer, you should know how to ask the right questions, but you’re not the expert in how they should all go down. There’s folks who can give you advice if you find a good counsel.
I think the biggest question for me is, is this a big idea? Is this a seven-figure idea or an eight-figure idea that’s worth going through all of this for it or is it something that’s going to generate $5000 a month? In which case personally, it doesn’t sound like it would really be worth it. I mean maybe I would launch it and if it’s doing a couple thousand dollars a month or $5000 a month and you start getting cease and desist, well maybe that’s the point where you’re like, “Okay, I guess I’m going to pull the plug on this,” maybe that’s the best decision because it just doesn’t make enough money or maybe that is your defense of, it doesn’t make enough money. Go ahead and sue it. It’s not worth anything.
I think that’s really the question I’d be asking, not is it worth it, but is the idea big enough? Do you think the company can be big enough to make it worth fighting for?
Laura: I think it’s also worth a quick Google. I think he said he’s in Austria. He didn’t say if the business would also be dealing with Austrian suppliers. America is very litigious, most of Europe is not, you can’t just file random lawsuits about anything the way you can in America. If this were my business, you can figure out a pretty good amount just from educating yourself on the internet. Would the suppliers have any case? If they wouldn’t, that’s also just going to make the whole thing much more unlikely.
Rob: Yeah. Thanks for the question Thomas. I hope that was helpful. Depending on what happens, I’d love to hear an update on how you move forward.
Our next question is about pricing and whether to try to go for more customers with lower pricing or vice-versa. It’s from Winslow Moore and he says, “I’m a huge fan of your podcast and all you guys do. I found you guys at the end of last year when I was going through a bit of what I’m doing in my life and I’ve learned so much. I’ve wanted to reach out for a while, but haven’t because my current product under development isn’t SaaS, it’s just an app. A recipe book app to be precise.” I’m assuming it’s a mobile app.
“Development is nearing completion and I’m wanting to make a landing page to gain some interest. Before I do, I’d like to figure out some pricing scheme options and I’m hoping you can give some advice. Here are my main ideas. Number one, make the app free with ads,” he listed pros and cons, “Number two, make the app freemium with paying to unlock X recipe storage. The third is to make it cheap like $1, and the fourth is to make it a subscription like $1 a month or $5 a quarter. Again, I know this isn’t something you normally answer questions on, but if you feel adventurous, it would be appreciated.” What do you think?
Laura: I feel like I have some news that he’s not going to like to hear. I’m trying to let him down gently. This is one of the most crowded spaces you could possibly enter. There’s so much recipe content on the internet. So much of it is excellent and so much of it is free. None of the models that you outlined gave a compelling reason for someone to pay. You just said like a recipe app, maybe they’ll pay $1, maybe they’ll pay a subscription. I think you just need to rethink your starting assumptions or maybe there’s something you didn’t tell us, because there are reasons that people could pay for some recipe or cooking service.
I know a SaaS business that does meal plans for people. You put in all of your detailed dietary requirements and they spit out really specific meal plans, shopping lists, and there’s a whole app and a subscription around it. They have a business doing that because they’re meeting a specific need in the market that is related to recipes. There are businesses related to recipes and food, but just recipe app, I don’t think is really one of them.
Rob: I like the way you’re thinking about it because if you were to niche way down and, like you said, build custom meal plans, that’s something you can’t get for free, or it’s really hard to do at a good quality or vegan meal plans or Paleo meal plans. There are ways to think about it. I’m guessing everything I just named is already done to death. Even if he has, let’s say, he builds not just content and he builds an app that actually has functionality that people are interested in. A $1 a month, you need a thousand customers to make, and doesn’t Apple 30%, I think, so you’re really making $0.70 on that. You need a thousand customers to make $700 a month. That is a tough business.
Even with apps store distribution, you would really need to know apps store SEO. I mean you to rank in the top whatever, top five, four or whatever term that has enough volume to do it. This would be a pure search play in my opinion, because at $1 a month, even for lifetime value is $10, $20, $30, $40, you can’t run ads, you can’t hire sales, none of the standard models work. It’s purely a spray-and-pray and it’s, “I need to have enough free traffic,” so you need virality, or you need organic discovery through a search engine. Really, none of these pricing models are easy.
Laura: I’m going to go out and say they’re not viable. I think it’s polite to say that they’re not easy, but they’re really only viable if you have some way of getting that mass, which is possible. Maybe you’re like, “I’m going to raise a ton of funding and I’m going to be the number one recipe destination on the internet.” Someone has to be that. That’s not an impossible thing, but it’s going to take a ton of money to get there or you’re like. “I am the number one SEO ninja on the app store. No one can do apps store SEO better than me and I also probably have a bunch of money or some money to put behind it, so that’s how I’m going to get there.”
I just think you need to really look at how does mass work out to make this a viable business and what’s my strategy beyond just like, “Well, I hope a lot of people find my recipe app in the app store.”
Rob: And even if you’re building a SaaS app, let’s say, just in general, what’s the general rule? The lower your price point, the higher your churn, the harder it is to grow. This is not in every case, but it’s in 95% of cases. That’s why so many SaaS apps, the playbook is, you go out, you underprice yourself because you just don’t know any better or you don’t value what your built and over time everybody goes up market. It’s a very common playbook.
The reason is if those customers as you go up market tend to churn less, they tend to be more sophisticated, less support, there’s just a bunch of plusses with it, but you often can’t start out at those high price points because your product is not worth it at that point. It doesn’t provide the value and it takes you time to get product market fit with that audience. Then move it up market.
Laura: That’s all B2B stuff, also, everything you’re saying. We’re talking B2C, so I don’t think there’s really even a big market to go to for an app. There’s more expensive consumer services but, I’ve never heard of an expensive app. Maybe it’s a thing, people have done everything. Now I’m curious. Is there an app for consumers that cost $800 a month and is a lot more high-end looking than the other app? I don’t know.
Rob: I’ve never heard of one. I bought a $25 app the other day. It wasn’t a subscription, but it’s a teleprompter, that goes on my iPhone, that listens to my voice. It’s the only one that turns the microphone on and as I speak, it teleprompts automatically. To me that was worth $25, but really, am I a consumer? Because I bought it for business purposes. I bought it for these videos I’m recording. I’ve also bought $20 app a couple of years ago. It was before where you can pair an iPad as a second monitor to your Mac. It was software that did that. Again, there was only one or two of them and I did the best one. It wasn’t a subscription and I would’ve been less likely to pay a subscription for either those to be honest.
Laura: Yeah, those are really tough models, too, where they’re only making $20 one time.
Rob: Right. Thanks for your question, Winston. Sorry for the bad news, but I hope that was helpful. I’m curious, if you love recipes or somehow love that space, then dig in and figure out that maybe it’s not a $1 app, maybe it is a website that you acquire from someone to get a traffic source and you build just a web app into there. I mean, there are other options in the food and recipe space, that I’m sure there’s opportunity and I would say don’t get locked into trying to pick up pennies really is what $1 a month it’s like.
Laura: I didn’t actually say the name of the one I was talking about. It’s realplans.com if you want to check that out.
Rob: Awesome. Our next question is about recurring payments and it’s from Gavin Esplan. He says, “I’m in the planning stage of a small daycare management app. One of the main features will be setting up recurring payments between the daycare providers and their customers, who are parents or guardians of the kids. I also need recurring payments for the providers to pay me. I’m a professional web developer, but I’m not sure which system, like Stripe, would be best to accomplish this. I’m leaning toward Stripe, but it’s probably because it’s the one I’ve heard of most. I’m not sure what other good options would be out there. Do you guys have any recommendations?” What do you think, Laura?
Laura: Well, there’s an easy part and a hard part to his question. As far as him taking payments from customer, I say yeah, Stripe is great. We use it. We like it. Go for it. The other part where your customers take payments gets a lot trickier because your customers need to have something like Stripe or PayPal, but they need their own individual accounts and then are you helping then set that up? Then there’s your customer stuff that has to be complied with or do they already have their accounts? I just want to point out there’s a trickier question within the question.
Rob: Stripe Connect is for marketplaces. I think it’s for this instance. I’ve never used it, but I know folks who’ve set up market places and use it. This isn’t technically a market place, so that’s where I’m not sure if the terms of service would apply to him having 20 or 30 day cares using it and taking payments or if the Know Your Customer stuff would pass through to him. Do you have any interaction with Stripe Connect?
Laura: No, I’ve researched it a little bit for a different project and the hurdle that we came up with is that this similar model, they still have to have their own Stripe account which Stripe helps facilitate. We thought that might be confusing and challenging for this customer to set that up which I imagine daycare centers might have the same or they might have their own payment system already that they’re using.
Rob: Yes I would head to Stripe Connect and at least research it because that’s the one that I’ve heard the most about when you’re in this type of situation. Again, not saying it’s going to work but I think that’s where it starts. In my opinion, Stripe is number one in this game. They kill it. They make it easy and if you can make it work with them, great. To me, by my rules, if for some reason I couldn’t you Stripe, I would look at Braintree. I think they’re the number two in our space for doing this stuff.
Obviously, it doesn’t sound like he’s funded. I’m guessing he’s bootstrapped listening to this podcast. If you look at Gumroad, as an example, became a processor themselves. That is a possibility. There’s a lot of red tape and regulation. I’m guessing, one of the reasons I heard Gumroad raised their money was that they had to go to banks basically and have a bank say, “Okay, we’re cool with you being a processor.” If you’re some bootstrap person working at your garage, that’s unlikely to happen. It’s probably not an option for you now, but in the longer term hopefully, you don’t have to do that, but that would be a parachute option, I think. Thanks for the question, Gavin, hope that was helpful.
Our next question is from Ash Yadav, and he’s looking for thoughts on joining an early stage startup just after graduation. He said, “I just cover the podcast, I’m going through one episode at a time. They really informative and enjoyable. I recently graduated with a degree in EECS,” Electrical Engineering and Computer Science, I think, “then joined an early stage Internet of Things startup. I want to ask what are some tools, courses, workshops, et cetera, I can look into to get more comfortable with the industry lingo.
As I recently graduated, working in a two person team right now, there are times when I have to talk to clients or talk to people who are much more experienced than me and sometimes I feel left out. I don’t have industry project management experience, an MBA, or the entrepreneurial experience to be fluent in business lingo. For example, this might sound silly, but someone recently talked to me about beta sites and I had no clue what beta sites were. Luckily, I was able to figure it out while we chatted in made it out alive, but I fear I’ll be in a similar situation again.”
You almost certainly will. I remember my first job out of college and I didn’t understand anything. Thanks that’s a great question, Ash. Interested in your thoughts, Laura.
Laura: I think the first thing, Ash, is that someone asking questions is a huge sign of intelligence, not the opposite. Everyone knows that you’re young, everyone knows that you just graduated from college. When you ask those questions like, “What’s a beta site?” instead of pretending that you know and then maybe being way off base, it’s actually going to make you look much smarter, eager to learn, and capable than just pretending that you know stuff. Hopefully, most of the people around you feel the same way that I do. I don’t think you should be shy about asking questions. Even if it’s something that you feel is really basic, that you feel a bit embarrassed about.
We all we’re born knowing nothing. No one knew the term Internet of Things until the first time they heard it and then someone explain it to them. No one is born knowing any of those stuff. I think people should do this anytime in their career. We were talking about this earlier in the podcast about learning and asking questions, asking more questions. For me, the answer is less about courses and more of just having the attitude and the mindset that asking questions is a wonderful thing and that’s how you learn.
Rob: Yeah, when I graduate from college and had my first job, I thought I needed to know everything. I felt weird about asking questions and I thought it was a sign of weakness. I pretty quickly learned what fixed it for me is I worked with this one guy who is really smart and he was senior and he knew bunch stuff. In meetings, someone would say a concept and I remember being like, “Oh, I know what that is,” and he would say, “I don’t know what that is. Can you define out for the group?” and I was like, “Whoa.” Everybody respected him.
That showed me that it was okay to ask a question like that. It was such a good model for me and I think the thing to keep in mind is you’re going to ask a lot of questions up front, but it’s not going to be like that forever, because you’re just going to learn enough. First, you’re going to learn 20% and then 60% and then you’re going to get to the point where you’re 80 or 90% fluent in all the lingo. That may take three months, it may take six months, but at a certain point, you’re not going to ask as many questions.
You still want to ask questions, but you’re going to be seen as more of this mid-level or senior and you’ll get to the point where you don’t have to do it all the time. For me, if I was trying to learn about a new space, I don’t know much about IoT (Internet of Things), just what I’ve heard on Tech podcast, so if I got a job at one, I would probably be in a similar boat. I would dive deep in the IoT podcasts and some IoT audio books. For me, I do a lot of audio just because that’s my thing. For you, maybe it’s Kindle or maybe it’s paper or whatever I would use Google a lot. I will try to get the lingo from the podcast or the books in advance and then every time I heard something I didn’t understand I would Google it. You’ll be shocked, there’s only so many terms in any space.
In SaaS, it’s an app and there’s MRR and there’s LTV and it sounds like there is infinite, but if you listen to the show for probably 10 or 20 episodes, you’re going to hear 90% of the terms that we all use. If you’ve defined of those and committed them to memory, that’s great training for trying to get up to speed faster.
Laura: Yeah, I love that advice. I was thinking just the other day I actually Googled the term “test case.” It came up in my company flat, they’re talking about test cases and I was like, “You know, I’m assuming I know what that means, based on some context, but I’m actually not sure that I know what a test case is. I just Googled it and I read about it and I figured it out, right in front of a nontechnical founder thing.” This is a skill that you want to have throughout your career and like Rob said, luckily, it will get certainly easier and you’ll have to do less Googling as time goes on.
It’s something to embrace to make sure that you’re not making assumptions, make sure that you are on the same page which is why it can be good to ask things like, “Okay, this is this is what I mean when I say test case, is that what you mean,” because those types of miscommunications come up all the time.
Rob: That’s a really good point. Probably once a week, I Google an acronym. Oftentimes, it’s something someone posts on Twitter and it’s like a colloquialism that I just don’t know. I mean maybe a year ago it was TBH and I used TBH the other day. I was talking to my 13-year-old and in conversation out loud, I was like, “So TBH, blah, blah, blah.” He’s like, “What does that mean?” and I was like, “To be honest.” He’s like, “Oh my, you’re such a nerd.” But I find myself Googling this on what does this mean and then there’s like seven different definitions and you have to take it from context. Don’t feel like you’re in over your head, Ash. I think we all are. Just because someone has been doing this for a few years doesn’t mean that they know everything about it. Thanks for the question. I think it’s a good one.
Wrapping this up for the day, our final question is from Zee and it’s about managing subscriptions. He says, “Hello. Big fan. What recommendations do you have to manage subscriptions that come both via credit card and check? As the business is growing, I want to make sure I’m not missing out on things as people renew their subscriptions. For example, we make a credit card payments through Braintree.” I think it means they accept credit card payments through Braintree, but they also have people that pay via check annually and they handle stuff through PayPal.
To set the context, when I first read this, I thought he was saying, “We have a bunch of SaaS subscriptions, how do we keep track of those?” But he’s actually saying they accept payments in a bunch of different ways, some of which are annual. He says, “We then use QuickBooks for all the accounting. We want to be sure we don’t miss out on annual fees.” Laura, have you had to deal with this?
Laura: No, I haven’t.
Rob: Is it all credit card with EDGAR?
Laura: Yeah. I mean, we would just say, “No, thank you.” if someone wanted to buy with a check, but I know that in some industries, you can’t do that.
Rob: Yeah we did this with Drip. Let me think. After we get acquired by Leadpages, we were using Stripe, they were using Braintree. At a certain point, we started accepting PayPal and they were doing these larger annual contract values. You get you get a 12-month subscription that is $20,000 and really that’s an invoice check situation. Frankly, you don’t want to pay the $600 processing fee, the 3%, but also the companies, bigger companies as you said that’s the way it works
The way we did it, like the very first one, is it literally went into an Excel spreadsheet or maybe it was a Google Docs that we all had access to and we’re like, Okay, note to self, calendar reminder,” and it goes into a Google Doc. In the next month, we need to build some type of system. Then we just went into our existing billing code, and we tweak some things to say, “Oh, this is a check and so and so needs to be reminded.” It sends off an email to this AR (accounts receivable) at this certain thing. We hacked it together. That took one day or two days of development work, but in the moment we were able to accept the check.
We knew there was a calendar reminder in case everything went haywire. We went back and it was like this just in time MVP implementation of something. I’ve been gone from Drip for two years now. I’m guessing by now, hopefully they built even a better system. I think there are a bunch of ways to do this and that they’re trying to build a gold-plated version from V1 is not necessarily the best way to do it. If you only have one or two customers paying you that way, you just don’t need that much infrastructure.
Laura: Yeah, I don’t have anything on this one.
Rob: All right. Well Laura, thanks again for coming back on the show. It’s so good to chat with you. Folks who want to keep up with you, you are @lkr on Twitter, that’s a great three-letter Twitter handle, I’m so jealous. If folks want to know what you’re up to with Edgar, they can head to meetedgar.com. Anything else you’d like folks to check out?
Laura: I would just like to say that people used to be a lot more impressed by my Twitter handle, I feel like you can tell that Twitter’s on its way out because I used to get a much bigger reaction. You threw in a little comment which was very polite of you, but I missed out on having a cool Instagram handle. My Instagram is @laurakroeder, I can’t even get @lauraroeder, I had to throw my middle initial in there. I’m just like feeling a little old that I missed the Instagram thing and no one cares about my Twitter handle anymore. That’s my closing comment for the show.
Rob: That’s amazing. Thank you so much. I guess I should go register an Instagram handle, is what you’re saying. That’s how old I am.
Laura: Yeah. Get on that.
Rob: Thanks again, Laura. I hope you enjoyed today’s episode. Next week on the show, Mr. Brian Castle from Bootstrapped Web and Process Kit is coming on to talk about just the brutal year he had in 2016 and 2017, overcoming a 40% decline in MRR, and we walk through his trials and tribulations, dig into frankly some struggles, some victories and failures, and it’s a good interview. Also I hope you’ve been checking out TinySeed Tales on Thursday mornings. That season wraps up here in the next week or so.
I would love to hear your feedback or input on that. You can email me directly questions@startupsfortherestofus.com, you can Twitter DM me, or if you have great things to say, obviously, just go into Twitter and let me know. I appreciate it. Should we do it again? I’ve started working on season two doing some interviews, but if you like it, if you will listen, if it’s a good fit for you, please let me know. If it’s not, that’s cool, too.
It was definitely an experiment. As I’ve said when we announced that this is by far the most time and money I’ve ever invested into an audio project. It’s TinySeed tales, because TinySeed was able to make that happen. If it’s worth it and it’s providing value, then we’ll keep doing it. If not, we always have more good ideas we can implement, so I can obviously but my focus elsewhere.
You heard a bunch of questions answered today. If you have a question for the show, you can leave us a voicemail at 888-801-9690 or you can record an MP3 and WAV, an Ogg Vorbis, an AIFF, send us a Dropbox or a GDrive link to questions@startupsfortherestofus.com.
I tweeted something out a couple weeks ago and I said if I were starting a company today, these are the tools that I would use. I just listed it, it was a five-minute tweet tops. I just listed a bunch of things and look through them, made comments and spit it out. It’s like one of the most popular tweets I’ve ever done. These things are both fine and infuriating, where you spend 20 minutes trying to craft something and like six people care about it and then you do something like this that is just off-the-cuff-flippant and it gets all these traction. I think it has 150 retweets or something at this point.
The funny thing is just the opinions about Dropbox versus GDrive versus Box. It was like, “Why not that? “ It’s personal preference. There’s feature parity. These things are not so different from one another, it’s really a personal preference, unless there’s some individual, sneaky feature somewhere that somebody has that you really need. For the most part, these things are all equivalent, but I think a lot of preference comes into it as well as pricing and stuff.
Anyway, I digress. Our theme music on the show is an excerpt from a song called We’re Outta Control by a band named MoOt, it’s used under Creative Commons. You can subscribe to this podcast, and you should, by searching for startups in any pod catcher you have. To be honest, new subscribers is a big ranking factor in iTunes. If you’re listening to this and you’re not subscribed, even if you just listen to it on the web or you somehow download it through an FTP script that you coded up years ago, it would be super cool if you would open iTunes and just hit the subscribe button because it does help us rank higher. It helps us get more reach and it helps us reach more people.
If you haven’t been to startupsfortherestofus.com in a while, we have full transcripts of all of our episodes within a week or two after they air, we […] the audio live is that, number one thing in transcripts just take time to get done. We get a decent number of helpful comments on the site too, so if you have a comment on an episode, you can obviously tweet to me @robwalling or you can come to the website itself startupsfortherestofus.com. Check out the fancy new design we put in place a couple of months ago. Leave a comment, drop us an email through the contact form. Thank you so much for listening today. 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 software products. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Laura Roeder, we’re going to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. This is the show where we focus on indie-funded and self-funded startups, folks who want to do interesting things, are ambitious, and want to build themselves a better life, but also want to build companies that grow. Starting a company is hard. Having this community of people who are going through the same thing that you are, having that sense of belonging, knowing (a) that it’s possible but (b) that there’s a place where we can all hang out and just get each other, and where you don’t go in and explain what you do and everyone looks at you funny, there’s a tremendous amount of value to that. That was a big reason why we started this podcast almost 10 years ago, back in 2010.
Startups for the Rest of Us has many episode formats. Sometimes, I just have conversations with folks, do interviews. Now and again, we do founder hot seats. But one of my favorite episode formats is listener questions. We’ve answered a tremendous number of listener questions over the years. We’ve had a lot of episodes on this. It’s just the gift that keeps on giving, because it’s a time for listeners to participate, and to hear what other folks are going through, and to hear the thought process of a couple of founders typically who’ve been there and have done some things, and it’s not that we’ve been through everything that they asked about, but you can at least hear that thought process of how we would approach it. And over the years, we’ve always receive positive feedback about this episode format.
Before we dive in, I want to let you know that at MicroConf, we are making an announcement next week. It is by far the biggest announcement that we will have made since we launched the event nine years ago. It is coincidental that the 20th MicroConf is going to be on April 20th of 2020, so the 20th during the 20s or whatever, but that’s not the announcement. I’ve obviously already mentioned that MicroConf Growth and Starter are in Minneapolis in late April of 2020, but if you’re not on the MicroConf list, I encourage you to go to microconf.com, enter your email, and we’ll loop you in as soon as we have the info. It really is pretty spectacular and you probably know me well enough by now to know that I’m not trying to inflate the importance of it.
Today I answer questions with founder Laura Roeder. If you don’t remember Laura, I interviewed her in episode 451. She runs MeetEdgar which is a social media management SaaS app and in 451, we talked about stellar growth, platform risk, layoffs, and powering through roadblocks. It was a really, really good interview and Laura knows her stuff. I have a ton of respect for her. Honestly, I always love getting on the mic and just chatting with her. Super fun. I had a fun interview at 451 and I had a great time talking to her today and hearing her insights and her take on some of your questions. Without further ado, let’s dive in.
Laura Roeder, thank you so much for coming back on the show.
Laura: I love the Startups for the Rest of Us. I cannot stay away.
Rob: Awesome. I am so stoked to have you on to answer some questions. You’ve actually submitted questions in the past, so it’s cool to have you on the other side of the ear bud, so to speak. We have some good questions today. As always, voicemails go to the top of the stack. I curated some questions that I think you should have some unique insight on. Let’s just roll right into the first voicemail which is about being a nontechnical founder and how to make good technical decisions.
Mack: Hi Rob, this is Mack from the UK. I’ve got a question, I’m looking for advice for a nontechnical founder. How can I avoid getting called out by poor decisions from the technical team or just not knowing about the consequences of some of the technical revisions that gets made to create their software? Any advice would be great. Thanks.
Rob: This is an interesting question, Laura. As a nontechnical SaaS founder yourself, I’m curious what your initial take is on it.
Laura: I would first like to take umbrage with the phrase non technical founder. I mean obviously, I know what he’s referring to. Nontechnical founder means that you are not a developer and I’m not a developer. But I always think it’s a little funny because I’m like, “I run a software company.” It doesn’t seem quite right to call me nontechnical, but this is a very real problem for all of us who are running software companies and are not developers because obviously, you are not intimately familiar with a really core part of what your company does.
I guess the first blanket advice for this is that, you really need to have a person in that CTO role who you trust 100%. I think this goes for any leadership role in your business, but it’s especially important in this case, because you’re not going to be able to provide so much oversight. Anyone can look at a customer service email and say, “Okay, that was not how we want to answer,” but you really can’t read code if you’re not a coder. I think that’s just step one is, make sure that you’re willing to put 100% faith in the person in that dev leadership role.
Rob: That’s what I was going to say as well. Even if you aren’t at the place where you can have a CTO. The fact that he used the phrase, “How do I not get called out,” does your team not trust you or do you feel like you have to make decisions that are out of your league? That’s an interesting turn of phrase. It implies that the team calls him out for making technical decisions, but are you making decisions you shouldn’t be since you’re not a developer? I would dig into that. I think having a CTO, or the senior dev, or somebody that really is making decisions in the best interest of the company, is a huge deal.
Laura: I think it also brings up that you shouldn’t try to pretend to be anything you’re not. If people are calling you out, does it mean that you’re pretending you know things that you don’t know or maybe making decisions that would be better for other people in the company to make? I think it’s just important to be unafraid to ask really stupid, really basic questions until you understand some of these core concepts related to writing code.
You can decide how much you feel you need to know. For me, I feel like I’ve been through this process recently big time with our finance team, understanding all the financials of the business. I just asked our finance person over and over and over again. Sometimes I’ll literally read a book. I read a finance book recently. I just wrote down questions for her in the margins and then I’m like, “I want you to read this book too and we’re going to have a call together. I’m going to ask you all of my questions about the book.”
I think that’s a great thing to do for technical questions as well. You need to be open with your team about what you know and don’t know and I think it’s important for you to work with the type of person that is very patient and very understanding in explaining things to you. Within reason, you don’t need to understand every detail. There are a lot of concepts that are probably unfamiliar to you that you do need to understand at least the basics of how “the sausage gets made.”
Rob: I like your example because as a founder, you don’t need to know every single thing about bookkeeping, accounting, and finance, but you should probably know enough to be able to ask the right questions. I feel the same way running a software company. I don’t think you should be able to code everything in a SaaS app, but maybe it’s worth going through a code where the code camps or maybe it’s worth on the side taking you to make classes.
It’s easier than ever to learn and have just a really basic level of coding knowledge such that, yes, you’ll never be able to make architectural decisions, you won’t make the senior level things, but you can at least relate to, “Oh, this is what code is. This is how it works. This is what it’s like to write a bug,” and spend four hours and not realizing that it’s the semicolon. That’s a lot of what it is. I think having that cursory knowledge and being able to then ask the right questions is what you’re touching on and that’s what I like about it.
Laura: Yes.
Rob: You don’t like the term non technical founder. If you’re a developer and you’re writing the code, then you’re like a developer founder, is it a non-developer founder, is there a term that you prefer rather than nontechnical?
Laura: I guess maybe just say founder and then when you’re explaining later your side of the business, because you also don’t call like you just a developer founder, but I’ve never heard anyone actually say that.
Rob: I was just making up a new term to try not to say technical and non, because typically it’s technical and nontechnical are the two terms people use. I was just trying to think of a different way to say that because you’re right, running a SaaS app, yes, you may not write code but you are more technical than most people we know just because by nature of being in it. It is a misnomer.
But if someone wanted to differentiate between Derek and I when we started Drip, he was literally in a code every day and I was literally not in the code every day. I don’t know how else you differentiate that or what phrase we could come up. I don’t feel nontechnical founder as pejorative. I don’t feel like it’s a negative. Does it have a stigma? Do you feel like it does?
Laura: I actually think it does have a little bit of a stigma because I’ve heard developers use it in that way before. We’re not as cool of a founder if you’re not technical.
Rob: No, I think that’s lame.
Laura: That is lame.
Rob: That sucks. I don’t use it that way but if it gets that connotation then yeah, we need to figure out another phrase for it. Cool. Thanks for the question. I hope that was helpful.
We’re going to bounce into our second question which is also a voicemail. It’s about a founder who’s launching a second SaaS app. They’re nearing launch and he’s concerned about potential lawsuits.
Thomas: Hello, this is Thomas from Austria. I listened to the show for a long time and wanted to tell you that it’s really great content. I love following along your journeys and also hear stories of other people in similar situations.
To my question, I founded a SaaS company three years ago. It provides an invoicing solution for small independent car repair shops. It’s doing pretty okay. I can live off it and it’s slowly growing, so I’m happy with that. Half a year ago, I founded another company with a partner and we are building a software to compare prices for car parts.
Now that we want to go to market with the software to the suppliers, the […] of us are trying to fight us pretty hard. I think we have to go to court several times. There is not really a legal problem with fetching the prices because we do it locally on the customer’s computer and they’re not going through our systems, but still they can make our lives very miserable if they pulled us to court all the time.
Now, I’m not really sure how to go along. My partner really wants to push through that and he’s sure that it will work out. I’m also pretty sure that it will work out in the end, but I’m not sure if I am the right person to spend my next one, two, three years fighting big companies. I wanted to hear your thoughts on that and maybe what you would do in this situation. Thank you.
Rob: Thomas also wrote in and he said that he wanted to clarify that he hasn’t spent any money on the price comparison project, and have a small private investor, but in essence, he has only invested his time so far. I should preface this with we’re not legal experts, we don’t give legal advice, obviously, but it’s more of, “Hey, if I were in your shoes, how would I think through this?” This is an interesting situation. I’m not sure it’s one I’ve heard before. What do you think about this Laura?
Laura: The way I think of it is just, there are pros and cons with every business, every business model, and it’s really smart to go into a business with your eyes wide open about those pros and cons. From what I understood from his message, this is a likely threat, not a certain threat. He suspects that there is going to be lawsuits. He has a good reason to believe that’s going to happen or it could not happen at all. It makes me think of with my business MeetEdgar, we are entirely dependent on the social networks. You can listen to my interview on this podcast on Startups for the Rest of Us. I talked about a big problem we had because of that, but all businesses have upsides and downsides.
For me, I know that I’m in a space where I’m totally dependent on these partners that I have no relationship with and that can do whatever they want. That’s a big downside to my business. The big upside is that I’m building on Facebook, Twitter, and Instagram. Obviously, very popular tools, so lots of users. I think that he just needs to know this going in and maybe it’s something that you budget for.
It’s good not to be scared of it. It’s good to go in and say, “Okay, I know that this will likely happen. Maybe we have some money set aside for it. Maybe we’ve already figured out who our lawyer is so they can jump right in and we won’t be surprised,” spending a few months just trying to find a good counsel.
To me it doesn’t sound like a deal breaker, because it might not even happen at all. Like you said, you have to know that that is a battle that you could be fighting and you have to know that that’s something that you want to sign up for.
Rob: I like the way you’re thinking about it. I think these unknowns, like if you’ve never received a cease and desist, or you’ve never been sued, it’s super scary. You don’t you don’t know what that entails. I got sued by a patent troll about probably five years ago, but it was literally a blanket. It was about a troll. Someone who sued 100 people at once for having online invoicing software is what it was. It was just this crazy, he sued everybody that does online invoicing because it was a ridiculous patent. I got to be honest, I was super scared the day I got the email.
Then I quickly realized I could talk to a lawyer and someone was just like, “Yeah, this just isn’t that big of a deal,” and we have these stigmas against things. Lawsuits can be a big deal. They can be expensive, but your point of it’s almost like try to demystify, or de-risk, or just get more familiar with what this might look like. Typically, if you were to launch something like this, you’re not going to get five lawsuits the next day from five suppliers. It’s probably going to be weeks, months, and then they’re going to grumble and they’re going to have to call you or send you an email, and then you might get a cease and desist.
It would be a long process and maybe like you said, you set aside money to either have a lawyer, whether it’s to go to court or whether it’s to try to negotiate settlements. There’s a lot of options here and I think this comes back to expertise. As a nonlawyer, you should know how to ask the right questions, but you’re not the expert in how they should all go down. There’s folks who can give you advice if you find a good counsel.
I think the biggest question for me is, is this a big idea? Is this a seven-figure idea or an eight-figure idea that’s worth going through all of this for it or is it something that’s going to generate $5000 a month? In which case personally, it doesn’t sound like it would really be worth it. I mean maybe I would launch it and if it’s doing a couple thousand dollars a month or $5000 a month and you start getting cease and desist, well maybe that’s the point where you’re like, “Okay, I guess I’m going to pull the plug on this,” maybe that’s the best decision because it just doesn’t make enough money or maybe that is your defense of, it doesn’t make enough money. Go ahead and sue it. It’s not worth anything.
I think that’s really the question I’d be asking, not is it worth it, but is the idea big enough? Do you think the company can be big enough to make it worth fighting for?
Laura: I think it’s also worth a quick Google. I think he said he’s in Austria. He didn’t say if the business would also be dealing with Austrian suppliers. America is very litigious, most of Europe is not, you can’t just file random lawsuits about anything the way you can in America. If this were my business, you can figure out a pretty good amount just from educating yourself on the internet. Would the suppliers have any case? If they wouldn’t, that’s also just going to make the whole thing much more unlikely.
Rob: Yeah. Thanks for the question Thomas. I hope that was helpful. Depending on what happens, I’d love to hear an update on how you move forward.
Our next question is about pricing and whether to try to go for more customers with lower pricing or vice-versa. It’s from Winslow Moore and he says, “I’m a huge fan of your podcast and all you guys do. I found you guys at the end of last year when I was going through a bit of what I’m doing in my life and I’ve learned so much. I’ve wanted to reach out for a while, but haven’t because my current product under development isn’t SaaS, it’s just an app. A recipe book app to be precise.” I’m assuming it’s a mobile app.
“Development is nearing completion and I’m wanting to make a landing page to gain some interest. Before I do, I’d like to figure out some pricing scheme options and I’m hoping you can give some advice. Here are my main ideas. Number one, make the app free with ads,” he listed pros and cons, “Number two, make the app freemium with paying to unlock X recipe storage. The third is to make it cheap like $1, and the fourth is to make it a subscription like $1 a month or $5 a quarter. Again, I know this isn’t something you normally answer questions on, but if you feel adventurous, it would be appreciated.” What do you think?
Laura: I feel like I have some news that he’s not going to like to hear. I’m trying to let him down gently. This is one of the most crowded spaces you could possibly enter. There’s so much recipe content on the internet. So much of it is excellent and so much of it is free. None of the models that you outlined gave a compelling reason for someone to pay. You just said like a recipe app, maybe they’ll pay $1, maybe they’ll pay a subscription. I think you just need to rethink your starting assumptions or maybe there’s something you didn’t tell us, because there are reasons that people could pay for some recipe or cooking service.
I know a SaaS business that does meal plans for people. You put in all of your detailed dietary requirements and they spit out really specific meal plans, shopping lists, and there’s a whole app and a subscription around it. They have a business doing that because they’re meeting a specific need in the market that is related to recipes. There are businesses related to recipes and food, but just recipe app, I don’t think is really one of them.
Rob: I like the way you’re thinking about it because if you were to niche way down and, like you said, build custom meal plans, that’s something you can’t get for free, or it’s really hard to do at a good quality or vegan meal plans or Paleo meal plans. There are ways to think about it. I’m guessing everything I just named is already done to death. Even if he has, let’s say, he builds not just content and he builds an app that actually has functionality that people are interested in. A $1 a month, you need a thousand customers to make, and doesn’t Apple 30%, I think, so you’re really making $0.70 on that. You need a thousand customers to make $700 a month. That is a tough business.
Even with apps store distribution, you would really need to know apps store SEO. I mean you to rank in the top whatever, top five, four or whatever term that has enough volume to do it. This would be a pure search play in my opinion, because at $1 a month, even for lifetime value is $10, $20, $30, $40, you can’t run ads, you can’t hire sales, none of the standard models work. It’s purely a spray-and-pray and it’s, “I need to have enough free traffic,” so you need virality, or you need organic discovery through a search engine. Really, none of these pricing models are easy.
Laura: I’m going to go out and say they’re not viable. I think it’s polite to say that they’re not easy, but they’re really only viable if you have some way of getting that mass, which is possible. Maybe you’re like, “I’m going to raise a ton of funding and I’m going to be the number one recipe destination on the internet.” Someone has to be that. That’s not an impossible thing, but it’s going to take a ton of money to get there or you’re like. “I am the number one SEO ninja on the app store. No one can do apps store SEO better than me and I also probably have a bunch of money or some money to put behind it, so that’s how I’m going to get there.”
I just think you need to really look at how does mass work out to make this a viable business and what’s my strategy beyond just like, “Well, I hope a lot of people find my recipe app in the app store.”
Rob: And even if you’re building a SaaS app, let’s say, just in general, what’s the general rule? The lower your price point, the higher your churn, the harder it is to grow. This is not in every case, but it’s in 95% of cases. That’s why so many SaaS apps, the playbook is, you go out, you underprice yourself because you just don’t know any better or you don’t value what your built and over time everybody goes up market. It’s a very common playbook.
The reason is if those customers as you go up market tend to churn less, they tend to be more sophisticated, less support, there’s just a bunch of plusses with it, but you often can’t start out at those high price points because your product is not worth it at that point. It doesn’t provide the value and it takes you time to get product market fit with that audience. Then move it up market.
Laura: That’s all B2B stuff, also, everything you’re saying. We’re talking B2C, so I don’t think there’s really even a big market to go to for an app. There’s more expensive consumer services but, I’ve never heard of an expensive app. Maybe it’s a thing, people have done everything. Now I’m curious. Is there an app for consumers that cost $800 a month and is a lot more high-end looking than the other app? I don’t know.
Rob: I’ve never heard of one. I bought a $25 app the other day. It wasn’t a subscription, but it’s a teleprompter, that goes on my iPhone, that listens to my voice. It’s the only one that turns the microphone on and as I speak, it teleprompts automatically. To me that was worth $25, but really, am I a consumer? Because I bought it for business purposes. I bought it for these videos I’m recording. I’ve also bought $20 app a couple of years ago. It was before where you can pair an iPad as a second monitor to your Mac. It was software that did that. Again, there was only one or two of them and I did the best one. It wasn’t a subscription and I would’ve been less likely to pay a subscription for either those to be honest.
Laura: Yeah, those are really tough models, too, where they’re only making $20 one time.
Rob: Right. Thanks for your question, Winston. Sorry for the bad news, but I hope that was helpful. I’m curious, if you love recipes or somehow love that space, then dig in and figure out that maybe it’s not a $1 app, maybe it is a website that you acquire from someone to get a traffic source and you build just a web app into there. I mean, there are other options in the food and recipe space, that I’m sure there’s opportunity and I would say don’t get locked into trying to pick up pennies really is what $1 a month it’s like.
Laura: I didn’t actually say the name of the one I was talking about. It’s realplans.com if you want to check that out.
Rob: Awesome. Our next question is about recurring payments and it’s from Gavin Esplan. He says, “I’m in the planning stage of a small daycare management app. One of the main features will be setting up recurring payments between the daycare providers and their customers, who are parents or guardians of the kids. I also need recurring payments for the providers to pay me. I’m a professional web developer, but I’m not sure which system, like Stripe, would be best to accomplish this. I’m leaning toward Stripe, but it’s probably because it’s the one I’ve heard of most. I’m not sure what other good options would be out there. Do you guys have any recommendations?” What do you think, Laura?
Laura: Well, there’s an easy part and a hard part to his question. As far as him taking payments from customer, I say yeah, Stripe is great. We use it. We like it. Go for it. The other part where your customers take payments gets a lot trickier because your customers need to have something like Stripe or PayPal, but they need their own individual accounts and then are you helping then set that up? Then there’s your customer stuff that has to be complied with or do they already have their accounts? I just want to point out there’s a trickier question within the question.
Rob: Stripe Connect is for marketplaces. I think it’s for this instance. I’ve never used it, but I know folks who’ve set up market places and use it. This isn’t technically a market place, so that’s where I’m not sure if the terms of service would apply to him having 20 or 30 day cares using it and taking payments or if the Know Your Customer stuff would pass through to him. Do you have any interaction with Stripe Connect?
Laura: No, I’ve researched it a little bit for a different project and the hurdle that we came up with is that this similar model, they still have to have their own Stripe account which Stripe helps facilitate. We thought that might be confusing and challenging for this customer to set that up which I imagine daycare centers might have the same or they might have their own payment system already that they’re using.
Rob: Yes I would head to Stripe Connect and at least research it because that’s the one that I’ve heard the most about when you’re in this type of situation. Again, not saying it’s going to work but I think that’s where it starts. In my opinion, Stripe is number one in this game. They kill it. They make it easy and if you can make it work with them, great. To me, by my rules, if for some reason I couldn’t you Stripe, I would look at Braintree. I think they’re the number two in our space for doing this stuff.
Obviously, it doesn’t sound like he’s funded. I’m guessing he’s bootstrapped listening to this podcast. If you look at Gumroad, as an example, became a processor themselves. That is a possibility. There’s a lot of red tape and regulation. I’m guessing, one of the reasons I heard Gumroad raised their money was that they had to go to banks basically and have a bank say, “Okay, we’re cool with you being a processor.” If you’re some bootstrap person working at your garage, that’s unlikely to happen. It’s probably not an option for you now, but in the longer term hopefully, you don’t have to do that, but that would be a parachute option, I think. Thanks for the question, Gavin, hope that was helpful.
Our next question is from Ash Yadav, and he’s looking for thoughts on joining an early stage startup just after graduation. He said, “I just cover the podcast, I’m going through one episode at a time. They really informative and enjoyable. I recently graduated with a degree in EECS,” Electrical Engineering and Computer Science, I think, “then joined an early stage Internet of Things startup. I want to ask what are some tools, courses, workshops, et cetera, I can look into to get more comfortable with the industry lingo.
As I recently graduated, working in a two person team right now, there are times when I have to talk to clients or talk to people who are much more experienced than me and sometimes I feel left out. I don’t have industry project management experience, an MBA, or the entrepreneurial experience to be fluent in business lingo. For example, this might sound silly, but someone recently talked to me about beta sites and I had no clue what beta sites were. Luckily, I was able to figure it out while we chatted in made it out alive, but I fear I’ll be in a similar situation again.”
You almost certainly will. I remember my first job out of college and I didn’t understand anything. Thanks that’s a great question, Ash. Interested in your thoughts, Laura.
Laura: I think the first thing, Ash, is that someone asking questions is a huge sign of intelligence, not the opposite. Everyone knows that you’re young, everyone knows that you just graduated from college. When you ask those questions like, “What’s a beta site?” instead of pretending that you know and then maybe being way off base, it’s actually going to make you look much smarter, eager to learn, and capable than just pretending that you know stuff. Hopefully, most of the people around you feel the same way that I do. I don’t think you should be shy about asking questions. Even if it’s something that you feel is really basic, that you feel a bit embarrassed about.
We all we’re born knowing nothing. No one knew the term Internet of Things until the first time they heard it and then someone explain it to them. No one is born knowing any of those stuff. I think people should do this anytime in their career. We were talking about this earlier in the podcast about learning and asking questions, asking more questions. For me, the answer is less about courses and more of just having the attitude and the mindset that asking questions is a wonderful thing and that’s how you learn.
Rob: Yeah, when I graduate from college and had my first job, I thought I needed to know everything. I felt weird about asking questions and I thought it was a sign of weakness. I pretty quickly learned what fixed it for me is I worked with this one guy who is really smart and he was senior and he knew bunch stuff. In meetings, someone would say a concept and I remember being like, “Oh, I know what that is,” and he would say, “I don’t know what that is. Can you define out for the group?” and I was like, “Whoa.” Everybody respected him.
That showed me that it was okay to ask a question like that. It was such a good model for me and I think the thing to keep in mind is you’re going to ask a lot of questions up front, but it’s not going to be like that forever, because you’re just going to learn enough. First, you’re going to learn 20% and then 60% and then you’re going to get to the point where you’re 80 or 90% fluent in all the lingo. That may take three months, it may take six months, but at a certain point, you’re not going to ask as many questions.
You still want to ask questions, but you’re going to be seen as more of this mid-level or senior and you’ll get to the point where you don’t have to do it all the time. For me, if I was trying to learn about a new space, I don’t know much about IoT (Internet of Things), just what I’ve heard on Tech podcast, so if I got a job at one, I would probably be in a similar boat. I would dive deep in the IoT podcasts and some IoT audio books. For me, I do a lot of audio just because that’s my thing. For you, maybe it’s Kindle or maybe it’s paper or whatever I would use Google a lot. I will try to get the lingo from the podcast or the books in advance and then every time I heard something I didn’t understand I would Google it. You’ll be shocked, there’s only so many terms in any space.
In SaaS, it’s an app and there’s MRR and there’s LTV and it sounds like there is infinite, but if you listen to the show for probably 10 or 20 episodes, you’re going to hear 90% of the terms that we all use. If you’ve defined of those and committed them to memory, that’s great training for trying to get up to speed faster.
Laura: Yeah, I love that advice. I was thinking just the other day I actually Googled the term “test case.” It came up in my company flat, they’re talking about test cases and I was like, “You know, I’m assuming I know what that means, based on some context, but I’m actually not sure that I know what a test case is. I just Googled it and I read about it and I figured it out, right in front of a nontechnical founder thing.” This is a skill that you want to have throughout your career and like Rob said, luckily, it will get certainly easier and you’ll have to do less Googling as time goes on.
It’s something to embrace to make sure that you’re not making assumptions, make sure that you are on the same page which is why it can be good to ask things like, “Okay, this is this is what I mean when I say test case, is that what you mean,” because those types of miscommunications come up all the time.
Rob: That’s a really good point. Probably once a week, I Google an acronym. Oftentimes, it’s something someone posts on Twitter and it’s like a colloquialism that I just don’t know. I mean maybe a year ago it was TBH and I used TBH the other day. I was talking to my 13-year-old and in conversation out loud, I was like, “So TBH, blah, blah, blah.” He’s like, “What does that mean?” and I was like, “To be honest.” He’s like, “Oh my, you’re such a nerd.” But I find myself Googling this on what does this mean and then there’s like seven different definitions and you have to take it from context. Don’t feel like you’re in over your head, Ash. I think we all are. Just because someone has been doing this for a few years doesn’t mean that they know everything about it. Thanks for the question. I think it’s a good one.
Wrapping this up for the day, our final question is from Zee and it’s about managing subscriptions. He says, “Hello. Big fan. What recommendations do you have to manage subscriptions that come both via credit card and check? As the business is growing, I want to make sure I’m not missing out on things as people renew their subscriptions. For example, we make a credit card payments through Braintree.” I think it means they accept credit card payments through Braintree, but they also have people that pay via check annually and they handle stuff through PayPal.
To set the context, when I first read this, I thought he was saying, “We have a bunch of SaaS subscriptions, how do we keep track of those?” But he’s actually saying they accept payments in a bunch of different ways, some of which are annual. He says, “We then use QuickBooks for all the accounting. We want to be sure we don’t miss out on annual fees.” Laura, have you had to deal with this?
Laura: No, I haven’t.
Rob: Is it all credit card with EDGAR?
Laura: Yeah. I mean, we would just say, “No, thank you.” if someone wanted to buy with a check, but I know that in some industries, you can’t do that.
Rob: Yeah we did this with Drip. Let me think. After we get acquired by Leadpages, we were using Stripe, they were using Braintree. At a certain point, we started accepting PayPal and they were doing these larger annual contract values. You get you get a 12-month subscription that is $20,000 and really that’s an invoice check situation. Frankly, you don’t want to pay the $600 processing fee, the 3%, but also the companies, bigger companies as you said that’s the way it works
The way we did it, like the very first one, is it literally went into an Excel spreadsheet or maybe it was a Google Docs that we all had access to and we’re like, Okay, note to self, calendar reminder,” and it goes into a Google Doc. In the next month, we need to build some type of system. Then we just went into our existing billing code, and we tweak some things to say, “Oh, this is a check and so and so needs to be reminded.” It sends off an email to this AR (accounts receivable) at this certain thing. We hacked it together. That took one day or two days of development work, but in the moment we were able to accept the check.
We knew there was a calendar reminder in case everything went haywire. We went back and it was like this just in time MVP implementation of something. I’ve been gone from Drip for two years now. I’m guessing by now, hopefully they built even a better system. I think there are a bunch of ways to do this and that they’re trying to build a gold-plated version from V1 is not necessarily the best way to do it. If you only have one or two customers paying you that way, you just don’t need that much infrastructure.
Laura: Yeah, I don’t have anything on this one.
Rob: All right. Well Laura, thanks again for coming back on the show. It’s so good to chat with you. Folks who want to keep up with you, you are @lkr on Twitter, that’s a great three-letter Twitter handle, I’m so jealous. If folks want to know what you’re up to with Edgar, they can head to meetedgar.com. Anything else you’d like folks to check out?
Laura: I would just like to say that people used to be a lot more impressed by my Twitter handle, I feel like you can tell that Twitter’s on its way out because I used to get a much bigger reaction. You threw in a little comment which was very polite of you, but I missed out on having a cool Instagram handle. My Instagram is @laurakroeder, I can’t even get @lauraroeder, I had to throw my middle initial in there. I’m just like feeling a little old that I missed the Instagram thing and no one cares about my Twitter handle anymore. That’s my closing comment for the show.
Rob: That’s amazing. Thank you so much. I guess I should go register an Instagram handle, is what you’re saying. That’s how old I am.
Laura: Yeah. Get on that.
Rob: Thanks again, Laura. I hope you enjoyed today’s episode. Next week on the show, Mr. Brian Castle from Bootstrapped Web and Process Kit is coming on to talk about just the brutal year he had in 2016 and 2017, overcoming a 40% decline in MRR, and we walk through his trials and tribulations, dig into frankly some struggles, some victories and failures, and it’s a good interview. Also I hope you’ve been checking out TinySeed Tales on Thursday mornings. That season wraps up here in the next week or so.
I would love to hear your feedback or input on that. You can email me directly questions@startupsfortherestofus.com, you can Twitter DM me, or if you have great things to say, obviously, just go into Twitter and let me know. I appreciate it. Should we do it again? I’ve started working on season two doing some interviews, but if you like it, if you will listen, if it’s a good fit for you, please let me know. If it’s not, that’s cool, too.
It was definitely an experiment. As I’ve said when we announced that this is by far the most time and money I’ve ever invested into an audio project. It’s TinySeed tales, because TinySeed was able to make that happen. If it’s worth it and it’s providing value, then we’ll keep doing it. If not, we always have more good ideas we can implement, so I can obviously but my focus elsewhere.
You heard a bunch of questions answered today. If you have a question for the show, you can leave us a voicemail at 888-801-9690 or you can record an MP3 and WAV, an Ogg Vorbis, an AIFF, send us a Dropbox or a GDrive link to questions@startupsfortherestofus.com.
I tweeted something out a couple weeks ago and I said if I were starting a company today, these are the tools that I would use. I just listed it, it was a five-minute tweet tops. I just listed a bunch of things and look through them, made comments and spit it out. It’s like one of the most popular tweets I’ve ever done. These things are both fine and infuriating, where you spend 20 minutes trying to craft something and like six people care about it and then you do something like this that is just off-the-cuff-flippant and it gets all these traction. I think it has 150 retweets or something at this point.
The funny thing is just the opinions about Dropbox versus GDrive versus Box. It was like, “Why not that? “ It’s personal preference. There’s feature parity. These things are not so different from one another, it’s really a personal preference, unless there’s some individual, sneaky feature somewhere that somebody has that you really need. For the most part, these things are all equivalent, but I think a lot of preference comes into it as well as pricing and stuff.
Anyway, I digress. Our theme music on the show is an excerpt from a song called We’re Outta Control by a band named MoOt, it’s used under Creative Commons. You can subscribe to this podcast, and you should, by searching for startups in any pod catcher you have. To be honest, new subscribers is a big ranking factor in iTunes. If you’re listening to this and you’re not subscribed, even if you just listen to it on the web or you somehow download it through an FTP script that you coded up years ago, it would be super cool if you would open iTunes and just hit the subscribe button because it does help us rank higher. It helps us get more reach and it helps us reach more people.
If you haven’t been to startupsfortherestofus.com in a while, we have full transcripts of all of our episodes within a week or two after they air, we […] the audio live is that, number one thing in transcripts just take time to get done. We get a decent number of helpful comments on the site too, so if you have a comment on an episode, you can obviously tweet to me @robwalling or you can come to the website itself startupsfortherestofus.com. Check out the fancy new design we put in place a couple of months ago. Leave a comment, drop us an email through the contact form. Thank you so much for listening today. I’ll see you next time.
Episode 472 | From Amazing Launch to Near Bankruptcy to Profitability with Shai Schechter
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In this episode of Startups For The Rest Of Us, Rob talks with Shai Schechter of RightMessage, about his amazing launch and then finding himself near bankruptcy and how he was able to right the ship.
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Episode 471 | Fighting to Gain Traction in a Crowded Space with Jane Portman of Userlist
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In this episode of Startups For The Rest Of Us, Rob talks with Jane Portman of Userlist. They discuss the struggles of growing slowly, gaining traction in the crowded space, and some of the lessons learned from her first SaaS app.
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Rob: In this week’s episode of Startups For The Rest of Us, I talk with Jane Portman of Userlist, about their fight to gain traction in a crowded space. This is Startups For The Rest of Us episode 471.
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 start up or you’re thinking about your first. I’m Rob and today with Jane Portman, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to this week’s episode. I’m your host, Rob Walling. Each week on the show. We cover topics relating to building and growing ambitious startups that we grow, because we want to improve our lives. We want to improve the lives of those around us, but we’re not willing to sacrifice ourselves, our lives, our relationships, our health to grow these companies. We believe in relentless execution with a long-term mindset. We think in terms of years, not months. As such, we don’t burn ourselves out by working crazy hours, sacrificing our health, or relationships.
Over the past 470 episodes, we’ve espoused things like freedom, purpose, and relationships. Freedom is the freedom to work on what you want, when you want, without a boss breathing down your neck. The freedom to go on your kids baseball game on a Thursday afternoon without asking anyone’s permission. Purpose, the ability to work on something that fascinates you and drives you everyday to make it better. The purpose of building something that tens and thousands of people are getting value out of and it makes you feel great. Relationships, deep and meaningful relationships with your family, your significant other, your kids, your friends.That’s what Startups for the Rest of Us is all about. That’s the lens through which we view startups.
Today, I’ve invited Jane Portman on the show. Have known Jane for several years. She spoke at MicroConf Europe back in 2014. We’re going to talk about the app userlist.com that she co-founded with her co-founder Benedikt Deicke. They started working on Userlist about two years ago. They did a bunch of customer interviews. Then, almost a year later, they sold pre-orders. That was about one year ago. Really, it was a little bit less than a year ago when they started onboarding people and turned on billing towards the end of 2018.
Userlist, which used to be userlist.io, but they just recently got the .com, so now it’s userlist.com is customer life cycle email, perfect for your SaaS business. It’s event-based email, behavior tracking, lifecycle automation, segmentation, they have broadcast, and that kind of stuff. You can imagine competitors of Userlist might be something like an Intercom, customer.io and maybe even a tool like, Vero. To be honest, I’m so much less clear on the whole email marketing space. Know that I’m not in it day-to-day. But, at one point Vero was in this stuff as well.
Both Benedikt and Jane have been to many MicroConfs. I’ve had dinner with them multiple times. They are just fixtures of the community and good people who are working hard, essentially Bootstrap SaaS app. It’s always fun to have conversations with folks who are doing it. Benedikt is a developer and Jane is a really solid UX/UI designer. They make a good team, as you can tell by the design and from what I’ve heard the reviews of Userlist.
In today’s episode, we talk about the struggles of growing slowly and trying to find traction in a crowded space, because there is a lot of competition. We even walk through some lessons learned, that Jane learned from her first SaaS app that she founded. That one came as a surprise to me. I remembered the app, but I just hadn’t realized what had happened to it. In the middle of the interview she said, “Hey, I have a bunch of interesting takeaways from that,” and we run through those towards the end. Hope you enjoy this conversation with Jane Portman.
Jane Portaman, thank you so much for coming on the show today.
Jane: Thank you Rob. I’m super, super thrilled to share a story here.
Rob: It’s good to have you on. You and I have known each other for many years actually. You spoke at MicroConf Europe back in 2014. I believe? We’ve met at many a MicroConf.
Jane: Absolutely. Thanks for putting that amazing community together.
Rob: For sure. Congratulations on userlist.com. Still on the back of my mind, I think of you as userlist.io because you just have them for two years. I think just recently, you dropped a couple thousand bucks on the .com.
Jane: Quite a few, yeah. We’re absolutely excited about this. We had doubts until the very last moment. But when we did buy it, and when we got out to the community with the news, then it was an instant hit. We’re like, “Yes. This is so great.”
Rob: That’s what I was going to ask. As a bootstrapper, I think Benedikt said you spent $2000 or $3000 on the domain name. He mentioned it on his podcast. Obviously, that’s an investment. You said you have doubts right up until the end. Where you’re just questioning whether or not it would be worth it, whether or not you should do it?
Jane: We actually spent, $4000. It’s definitely a lot for a bootstrapper budget. We have been on the negotiation curve for a year-and-a-half. Basically, ever since our business started. It felt the right moment that it was available enough for us. We understood that Userlist really has good traction now. It was also a good enough point for them not to understand that we’re super, super successful because otherwise, we would probably go back up.
We started at negotiating at $20,000 and then met at $4000. We’ve been having doubts, but we have never looked back ever since. That’s been such an emotional uplift for the whole company.
Rob: Yeah, that’s good. That’s nice to have those hard decisions. That once you make them, you know you’re either going to feel terrible and be dragging them along and second guess them, or you’re going to feel amazing, move on, and know that it was the right call. It’s so hard to know until you send that wire or until you do the 301 redirect and how your domain is all up. I’m super stoked to hear that it was the right call for you guys.
Jane: Thank you.
Rob: You’ve been working on Userlist with your co-founder Benedikt and your co-founder Claire for two years now. As you and I talked a bit offline, it’s been a long journey to get to the point where you are today. You started doing customer interviews about two years ago. Then another year later, you did some presales. Then it was just about a year ago that you started onboarding people.
I know that there’s a lot of talk in the MicroConf community about Userlist. I believe they were even cemented from the stage of MicroConf Europe for folks who are using Userlist. I’ve heard from you and Benedikt that it’s been slow growth. It has been perhaps a little discouraging that it’s taking this long. Can you talk me through how that felt?
Jane: Absolutely. There are a lot of facets to that. First hand is, our naivety in the beginning. Our initial plan was to get to market and $5000 MRR in six months. Primary reason for that was that we did the software product together with Benedikt before. We got it out in a few weeks because it was smaller. This time, we figured, we’ll have a more complex product, but let’s go full throttle in this. It took way longer than that.
We’ve done a lot of administrative stuff in the first year. We didn’t even do much product development because of that, because email […] so sensitive. We wanted to get properly set up with a lot of things like incorporation, all kinds of legal documents, agreements, everything like that, we had in place before even onboarding the first customer.
That feels great because we don’t have to deal with that now. But whilst we were done building the actual MVP, the second part of the hurdle happened. It’s an intentional model that we decided to be a critical business tool for people as opposed to a Vitamin type of product. That implies lower churn and much better retention, but that also implies problematic onboarding. It’s much harder to help people onboard into critical business tool, as supposed to some productivity stuff.
Therefore our users, our customers, they do strongly depend not only on the state of our product, and the complexity. But also, because our product is super easy inside. The integration might seem intimidating, but it’s not really, and inside is super simple. What mostly depends on is this stage in their business. We have plenty of early-stage founders who are planning their launch in a few months and it’s never the perfect day to tackle customer messaging. That’s what we have to deal with. I think we still yet to solve that inflection point moment and how to stimulate that in our customer’s mind. We’ve been trying our best to inspire them with learning materials, with podcast channels, and everything else. It’s still very much learning in progress.
Rob: Yeah. You mentioned that it’s hard to get people to switch, or to come onboard because it’s such an aspirin. You’ve talked about the Vitamin aspirin. That caught me a little bit there. That’s what I found, too. When I’ve had apps that we’re Vitamins, it was easier to get people to try them out, but the churn was higher. Frankly, it can cut both ways.
It’s nice when people will just try it on a whim. It sucks when they cancel, but it is nice to be able to get casual users. Building the aspirin type product is exactly what you’re talking about, where it is a lot harder to get folks to sign up, commit, and move over. And there’s switching cost, even if there isn’t true switching cost. There’s switching cost in their head and there’s set up cost. There’s all of that almost mental baggage that I think people have resistance to moving over. How have you been attacking that?
Jane: Like I’ve said, we’ve been trying to inspire folks. We do our best to follow-up with the potential leads in the most polite but persistent way. We don’t have our secret sauce yet. It really helps that our brand has grown over the last years, especially. We have gotten some nice publicity. I think that a nice public image also makes us more attractive of a purchase, and that contributes to that excitement, that founders generally need to get started with this. It’s just a matter of technically helping them onboard when they need technical assistant, but that’s not a huge burden at all.
Rob: It’s an issue that probably any email tool, that’s worth its weight is facing. Is that, most people who are going to use their tool are already using something else in place of it. They are either using a tool like Mailchimp, or Drip, or customer.io, or they have built it themselves in-house. They already have Rails code with a Liquid template that they pull at the database and then they send these life cycle emails. I introed it at the top of the show, but just to remind folks, it’s customer life cycle email designed for SaaS businesses. It’s behavior-based, event-based life cycle automation, segmentation and that kind of stuff.
The switching cost for that is, there’s a challenge there because it’s hard. If I was running a SaaS app, I don’t want all my marketing emails in Mailchimp and my lifecycle emails in Userlist. I want them all together so that when someone unsubscribes, it unsubscribes across everything. So that I have the data, the tags, and all the stuff across everything. The decision to switch over to Userlist is not as simple, easy, “I make the decision today, I move tomorrow” decision. It’s the one that really covers a lot of aspects of my business, all the way from marketing, into the sales process, into the onboarding, the customer retention process. It really does touch a lot of key points in a business.
Jane: You’re just hitting a nail on its head. We have very, very heated discussions in house. They’re not heated, because we initially agreed to give this only post sign-up, customer communications. There is a bunch of trade-offs and perks related to that. The perks are that it allows us to make the products super simple inside. Literally, very very intuitive, as opposed to more complex enterprise tools that do both. On the other hand, there have been an increasing support requests and I know there are opinions out there (yours included), that we should probably allow for classic email marketing automation inside this list as well. So, it’s in debate and we’ll see if this direction is worth pursuing down the road. It’s not an easy decision for sure.
Rob: No. I went through the same thing. I wouldn’t say that I think you guys should do marketing. I just know that when we started Drip, it was overwhelming. By the time we’re just doing the customer interactions, people kept asking us for the marketing. It was for the reason I said they wanted it all to be in one place. That is a decision for you guys to make yourselves.
If you look at Intercom and Customer.io (https://customer.io/) , they’re not designed for marketing emails. It’s really customer communication. It’s obvious that you can build a business without doing those things. I don’t know if Vero was still that way, but getvero.com (https://www.getvero.com/) was also just used to be customer messaging. I think there’s a path to do it and do it successfully. It’s just a matter of how you attack it and which customers you go after.
Jane: And making these tools speak to each other. It’s not just a matter of technical set up. There is no convention in the whole SaaS industry to date. Please correct me if I’m wrong. What is the best practice if somebody becomes your customer? Do you keep sending them newsletters or not? What kind of communication they receive? Is there a single unsubscribe button or not? Every founder makes those decisions for themselves. It’s a technical set up and it’s plenty of logical decisions they have to take.
Rob: Yeah, that’s right. You find yourself all in the mix. Every founder, as you said, makes the decision differently, but they all think that their decision is right. That’s where it gets complicated. That’s interesting.
Over the last couple of years, you’ve been grinding it out, getting Userlist on, getting it built, getting presales, getting folks to use it. You do have paying customers at this point and MRR. I’m curious. In your mind, has there been a lot of uncertainty? Or is there uncertainty now in terms of, “Are we going to be able to pull this off? Is this going to work? We’re two years in and I wish we were growing faster. I wish we were bigger.” Does it ever feel like, “I am just not sure that this is going to work at the scale that we wanted to”?
Jane: It sure sometimes feels like a marketing drudge for any founder. From day one, we have never had any doubt that this is a product that’s needed for people. We’ve done some inventive products before, but we were absolutely positive that there is a need. It was just a matter of making it happen, step by step, slowly, very slowly, very very slowly towards the right direction.
We’ve actually been getting more optimistic with time. The last few months have been super cool. We know there’s a lot of work ahead, but it’s been so nice to see how the traction picks up and there is word of mouth in the community, et cetera. We have actually made decisions, we have been part-time on this, myself and Benedikt. We have made the decision to take the scary plunge and actually go full-time on that in the beginning of 2020, starting January.
Rob: Wow. That’s just a couple of months out. Good for you guys.
Jane: Yeah. There is a lot of work, like prep up we have to do in terms of client work. Having client work, it pulls your attention away, but on the same side, it lets you do that organic slow thing in the more secure manner. You don’t have to worry about bread and butter on the table, because that desperate type of marketing is no good for any brand.
Rob: Yeah. It’s hard to be stressed about money and watch runway shrinking away. Yet, it’s also hard to have split focus. I’ve done both of them and neither is that fun. That’s the conundrum of being a founder. It’s making hard decisions with incomplete information where none of the decisions is 100% clear. I feel your pain on that. Congrats on deciding to go full-time. I do think that will probably be game changing for you guys in terms of the focus.
Jane: Thank you so much. We’re absolutely looking forward to this.
Rob: I bet. I asked you before the interview, if we were cool to talk about your third co-founder, Claire Suellentrop. Folks may have seen her on the MicroConf stage a couple of years ago. You, Claire, and Benedikt actually started Userlist together a couple of years ago. I know that she’s a lot less involved than she was early on. Do you want to talk us through maybe, what the situation is and how that went down?
Jane: Yeah, absolutely. We started this together, the three of us. It was me who pulled the folks together. In my previous SaaS, I was a solo founder, so I had to pay Benedikt cash to build stuff. There was no way I could do this with such a complex project, so I invited Benedikt on board. I was super lucky that he said, “Yes.” There was one more piece of the puzzle missing, the marketing person. Claire was number one on my rolodex of nice people and also amazing marketers, so I reached out to her. At that point of time, she was particularly looking for something of her own to start after quitting Calendly. There was ofcourse time between that. She was previously director of marketing at Calendly. See how large of talent we’re talking about?
I was absolutely thrilled when she said, “Yes.” We had a lot of discussions in the beginning. I’m super happy that we formalized our relationship in the most transparent way. Splitting the shares in the correct manner, doing the vesting schedule, then doing the proper contract. Even though in the beginning, that contract was sort of informal, but we still signed. Then we incorporate it.
Everything was really really well-organized. It’s not just about being legally protected, but also about having clear system in your mind. What’s going to happen when something changes? The assumption of that was everyone was going to be friends forever. It’s definitely very naive and childish, because things change for everyone. That is exactly what happened after a year that we’ve been working together.
The traction has been slow. We just started onboarding our fist pre-order customer. There was no sign of MRR whatsoever. Claire had to decide what’s going to be the number one priority. She had to take things off her plate to make it happen. She had two large projects at that time. It was Userlist and Forget The Funnel, which you’ve probably heard online, which is a huge training website and platform for marketers. She made a conscious choice towards working with marketers because these are her peers, target audience, and that was just overall more fulfilling.
Therefore, we’ve rearranged our agreement. We slowed down her vesting in half and she became our advisor instead of doing work hands one. In that type of mode, we spend another year until just recently when all of the above happened, that we decided to go full in. It didn’t feel quite fair that we’d go full in, start working our backs off, and Claire would just be advising. We decided maybe we could put together a more fair agreement and we reconsidered it again.
Right now, we have not documented it yet. She will formally stop vesting at the end of the year. She will just retain the number of shares she has while myself and Benedikt will go full spin. It sounds pretty stressful, but we really didn’t get into any human arguments about it. It was more like a constructive discussion about figuring out ways how it can work for all of us and the work that’s fairly rewarding. Going into business with adequate people really, really pays off. After all, she is a good fit.
Rob: That’s what I’m going to say. From what I’ve heard from you and Benedikt just in passing, in talking about stuff, it sounds like it’s been a surprisingly easy process for something that could’ve been really hard. It often turns into a big emotional fight with co-founders if there’s someone that has a perfectly good reason to come, walk away, and do something else that they decided to go do. It can hurt people’s feelings and it can have all types of ramifications. It really sounds like you all were just reasonable people trying to figure out what was best. Is that a good summary of it?
Jane: Yeah, very much so. Interesting fact: we never got to use it, but in our original agreement we also had a field for a mediator. That was a person we all knew and trusted who would mediate our arguments should we arrive at a deadlock somewhere. We never resorted to that measure, but it was another cautionary thing that we took. It sounds like marriage. You need to find adequate people to really resonate with each other and you need to document everything. That’s how it works.
Rob: That’s good. I’m glad. I like Claire and I know that you guys are friends. It’s nice to be able to go away with everyone feeling good about the resolution.
Jane: We’re so very much a team. She remains as the co-founder. For sure we’re going to have a monthly marketing sessions together. She’s still participating largely in the strategic side of the business. It feels great. She’s a wonderful human being.
Rob: Jane, you’ve worked on many SaaS apps. You’ve built a couple yourself, as you said. You hired Benedikt prior as a contractor, and now working as a co-founder. You have a bit of an experience under your belly here. What has been the most surprising thing to you in building Userlist?
Jane: Building Userlist? I was thinking you’re going to ask about the takeaways from the first app because I had plenty.
Rob: Oh. Let’s go back on that after you answer this. I’d love to hear it.
Jane: Probably the slowness of it was the biggest surprise.
Rob: Yeah. You thought it would gain traction quicker?
Jane: Yes. The product idea is quite unbeatable. It’s really, really a useful tool. You will think that just getting the word out in the community would get fellow founders signing up like that but no.
Rob: Yeah. Is that an issue with switching cost? Or do you think it’s the differentiation thing of not having the same features? If I were to compare you to your competitors, I don’t know who has the most features or whatever, so I’m curious what your take is on that.
Jane: We’re all wise enough to know—our team and you—that features that are not exactly the key thing in purchasing decisions. I think feature parity is not an issue. A lack of some features is clearly a benefit in our case. It makes the product much more transparent and straightforward to use.
I don’t want to be comparing it to Apple but because it’s run-of-the-mill, we try to make some opinionated product decisions insight so that it’s simpler, easier to use, and more efficient. In that regard, that’s definitely not a problem.
As for the switching cost, yes. I think that’s a primary reason as we talked about. I’m hoping there’s a secret sauce inside. Overall, that and explaining what it does all together really makes a puzzle. I’m glad that I have been putting it together gradually but it’s clearly not there yet.
Rob: To wrap us up today, you hinted takeaways from your prior SaaS. For folks who don’t know, it’s called Tiny Reminder. It was a form builder with notifications. Does that correctly sum it up?
Jane: That’s right. It was a Vitamin. Very much Vitamin type of product.
Rob: Cool. What were your handful of takeaways from building and I presume, shutting that down?
Jane: Quite a few. I sold it Nusii, so it still exists and functions. They’re planning to grow it as a satellite, a promotional tool for Nusii. I had a bunch of takeaways. I’m so glad I had this lab SaaS, lab rat sort of project that I’ve made all possible mistakes. I didn’t market it to a clear audience. It was really so useful that anyone could use it and after that, just focus on a niche instead.
It was super Vitamin. That’s why we set out to do an Aspirin product this time. Also, I did a freemium and that was quite a battle. Freemium is not a great way for bootstrap founders to start their business. Not just because of the lack of revenue but also the lack of MRR as a validation. You never know whether those people are just like tire kickers or real users—do they really need it?
And a couple of more discoveries. I had a lot of experience with info products before. I’ve been observing how sales work, that sales are hard to get, how downloads work, how emails, sign-ups, and numbers work. Not everything is cool. I was not prepared for that in SaaS businesses. It’s so much harder.
Just selling a book and an impulse purchase is way easier than selling a tool. That’s clearly not something you can just buy. You need to use it and get value out of it.
Rob: I had that conversation with so many info marketers who are making $50,000 a month or $100,000 a month. They’ll say, “How am I going to get into SaaS?” I’m like, “I know you can write a copy. I know you can get people to impulse buy a book.” If they don’t read the book, they don’t cancel on you because they’ve already paid you. It’s like in a completely different world. You’re right, it’s not twice as hard. It’s like 10 times as hard to make it work with SaaS.
Jane: We had a spectacular product launch for Tiny Reminder. The number of free trials, I think, was the cold traction to the website. We’ve got like 10 or something. I don’t exactly remember the number but it was super miserable. For a typical marketing freebie, it would have been, like you’ve said, 10 times bad.
Another lesson was that I had no audience of my own related to design. I’m sure there are plenty of founders in that audience. I’ve learned to understand that personal audiences don’t translate into SaaS sales, period. We’ve had a few users coming from my site but this is clearly not a primary channel. It’s not something you can leverage very well. You really need to count on product market fit first and some scalable, reliable, marketing channels instead of trying to milk your list, which I’ve never done in a bad way, but I tried with the first product and it just clearly didn’t work.
Rob: Yeah. That’s a lesson I’ve learned a long time ago as well. You can sell a little bit to your list but really, they’re interested in hearing from you, hearing about your process, and they’ll buy books from you all day because that’s hearing about you and your process. Books, video courses, and conference tickets are things that you can sell their personal audience, but SaaS apps, you can get that first. You will get a first handful of customers and then that’s it. Now, the real work begins.
That’s why I’ve heard folks say, “Hey. You should build an audience before you build a product.” That’s the way to do it. I’ve heard that said about infoproducts and I’ve heard it said about SaaS. I think it’s the wrong advice with SaaS. It’s never bad to have an audience but I do not think it’s worth the years and all the effort of building an audience.
Building an audience is very, very hard in order to launch a SaaS app. I think I have many more examples of people who have not built an audience and launched a successful SaaS app than I had people who have done it. Versus, if we’re going to talk about the knowledge product side where you’re going to write books, courses, and that kind of stuff, I would say people need to know, like, and trust you. Therefore, if they need that relationship with you, therefore, I would recommend and err on the side of actually building an audience before doing that.
Jane: You need to find scalable ways of reaching out to new people anyways. Even if you have a nice waiting list like we had something close to between 500 and 1000 people, I have an impression that they never really fully converted, even though we’re doing our best and talking to them very, very often, very diligently, with exciting updates. It’s still not a scalable way to grow our customer base for sure.
Rob: Yeah. That’s right. When we launched Drip, I had a launch list—not my robwalling.com list—but an actual Drip interest list. It was about 3400 people. The first 500 on the list were from me talking about in the podcast. I think I emailed my email list and just talk about it in another podcast. Then, there were segments that were from other shows. There were some from Facebook ads to a landing page. I watch how they converted. It was definitely my personal brand that converted almost the worst.
There were some cold traffic that converts worse than that, but people were more interested in the story. That’s okay, but you have to know that going in that an audience is not a golden ticket to launching a successful SaaS app.
Jane: Moreover, it can be deceptive. We’ve heard those stories like Brennan building RightMessage. They almost have that hangover from Brennan’s authority in the automation space when they were building a different kind of product. I’ve just had Derrick on my show and we’ve talked about Level and how we validated it. That was basically off his authority based on Drip and everything that got him into a little bit deceptive situation, too.
Rob: Yup. As you said, it can be deceiving.
Jane, thank you so much for coming on the show today to talk about Userlist and your experience with it. If folks want to keep up with you on Twitter, you are @uibreakfast. You have the UI Breakfast Podcast that you have mentioned a couple of times. Any other things folks should check out?
Jane: Of course, userlist.com. We just migrated yesterday. That’s a great resource. You can find all kinds of materials if you’re interested in life cycle email. We grabbed the Twitter handle, too. We are now at @userlist. That’s just pure luck. We didn’t even buy it.
Rob: That’s great. Cool. Thanks again, Jane.
Jane: Thank you so much, Rob.
Rob: Thanks again to Jane for coming on the show. If you have a question you’d like to hear answered on the show, leave me a voicemail at (888) 801-9690. Or email questions@startupsfortherestofus.com.
Our theme music is an excerpt from We’re Outta Control used under Creative Commons. Subscribe to us by searching for startups and 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 start up or you’re thinking about your first. I’m Rob and today with Jane Portman, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to this week’s episode. I’m your host, Rob Walling. Each week on the show. We cover topics relating to building and growing ambitious startups that we grow, because we want to improve our lives. We want to improve the lives of those around us, but we’re not willing to sacrifice ourselves, our lives, our relationships, our health to grow these companies. We believe in relentless execution with a long-term mindset. We think in terms of years, not months. As such, we don’t burn ourselves out by working crazy hours, sacrificing our health, or relationships.
Over the past 470 episodes, we’ve espoused things like freedom, purpose, and relationships. Freedom is the freedom to work on what you want, when you want, without a boss breathing down your neck. The freedom to go on your kids baseball game on a Thursday afternoon without asking anyone’s permission. Purpose, the ability to work on something that fascinates you and drives you everyday to make it better. The purpose of building something that tens and thousands of people are getting value out of and it makes you feel great. Relationships, deep and meaningful relationships with your family, your significant other, your kids, your friends.That’s what Startups for the Rest of Us is all about. That’s the lens through which we view startups.
Today, I’ve invited Jane Portman on the show. Have known Jane for several years. She spoke at MicroConf Europe back in 2014. We’re going to talk about the app userlist.com that she co-founded with her co-founder Benedikt Deicke. They started working on Userlist about two years ago. They did a bunch of customer interviews. Then, almost a year later, they sold pre-orders. That was about one year ago. Really, it was a little bit less than a year ago when they started onboarding people and turned on billing towards the end of 2018.
Userlist, which used to be userlist.io, but they just recently got the .com, so now it’s userlist.com is customer life cycle email, perfect for your SaaS business. It’s event-based email, behavior tracking, lifecycle automation, segmentation, they have broadcast, and that kind of stuff. You can imagine competitors of Userlist might be something like an Intercom, customer.io and maybe even a tool like, Vero. To be honest, I’m so much less clear on the whole email marketing space. Know that I’m not in it day-to-day. But, at one point Vero was in this stuff as well.
Both Benedikt and Jane have been to many MicroConfs. I’ve had dinner with them multiple times. They are just fixtures of the community and good people who are working hard, essentially Bootstrap SaaS app. It’s always fun to have conversations with folks who are doing it. Benedikt is a developer and Jane is a really solid UX/UI designer. They make a good team, as you can tell by the design and from what I’ve heard the reviews of Userlist.
In today’s episode, we talk about the struggles of growing slowly and trying to find traction in a crowded space, because there is a lot of competition. We even walk through some lessons learned, that Jane learned from her first SaaS app that she founded. That one came as a surprise to me. I remembered the app, but I just hadn’t realized what had happened to it. In the middle of the interview she said, “Hey, I have a bunch of interesting takeaways from that,” and we run through those towards the end. Hope you enjoy this conversation with Jane Portman.
Jane Portaman, thank you so much for coming on the show today.
Jane: Thank you Rob. I’m super, super thrilled to share a story here.
Rob: It’s good to have you on. You and I have known each other for many years actually. You spoke at MicroConf Europe back in 2014. I believe? We’ve met at many a MicroConf.
Jane: Absolutely. Thanks for putting that amazing community together.
Rob: For sure. Congratulations on userlist.com. Still on the back of my mind, I think of you as userlist.io because you just have them for two years. I think just recently, you dropped a couple thousand bucks on the .com.
Jane: Quite a few, yeah. We’re absolutely excited about this. We had doubts until the very last moment. But when we did buy it, and when we got out to the community with the news, then it was an instant hit. We’re like, “Yes. This is so great.”
Rob: That’s what I was going to ask. As a bootstrapper, I think Benedikt said you spent $2000 or $3000 on the domain name. He mentioned it on his podcast. Obviously, that’s an investment. You said you have doubts right up until the end. Where you’re just questioning whether or not it would be worth it, whether or not you should do it?
Jane: We actually spent, $4000. It’s definitely a lot for a bootstrapper budget. We have been on the negotiation curve for a year-and-a-half. Basically, ever since our business started. It felt the right moment that it was available enough for us. We understood that Userlist really has good traction now. It was also a good enough point for them not to understand that we’re super, super successful because otherwise, we would probably go back up.
We started at negotiating at $20,000 and then met at $4000. We’ve been having doubts, but we have never looked back ever since. That’s been such an emotional uplift for the whole company.
Rob: Yeah, that’s good. That’s nice to have those hard decisions. That once you make them, you know you’re either going to feel terrible and be dragging them along and second guess them, or you’re going to feel amazing, move on, and know that it was the right call. It’s so hard to know until you send that wire or until you do the 301 redirect and how your domain is all up. I’m super stoked to hear that it was the right call for you guys.
Jane: Thank you.
Rob: You’ve been working on Userlist with your co-founder Benedikt and your co-founder Claire for two years now. As you and I talked a bit offline, it’s been a long journey to get to the point where you are today. You started doing customer interviews about two years ago. Then another year later, you did some presales. Then it was just about a year ago that you started onboarding people.
I know that there’s a lot of talk in the MicroConf community about Userlist. I believe they were even cemented from the stage of MicroConf Europe for folks who are using Userlist. I’ve heard from you and Benedikt that it’s been slow growth. It has been perhaps a little discouraging that it’s taking this long. Can you talk me through how that felt?
Jane: Absolutely. There are a lot of facets to that. First hand is, our naivety in the beginning. Our initial plan was to get to market and $5000 MRR in six months. Primary reason for that was that we did the software product together with Benedikt before. We got it out in a few weeks because it was smaller. This time, we figured, we’ll have a more complex product, but let’s go full throttle in this. It took way longer than that.
We’ve done a lot of administrative stuff in the first year. We didn’t even do much product development because of that, because email […] so sensitive. We wanted to get properly set up with a lot of things like incorporation, all kinds of legal documents, agreements, everything like that, we had in place before even onboarding the first customer.
That feels great because we don’t have to deal with that now. But whilst we were done building the actual MVP, the second part of the hurdle happened. It’s an intentional model that we decided to be a critical business tool for people as opposed to a Vitamin type of product. That implies lower churn and much better retention, but that also implies problematic onboarding. It’s much harder to help people onboard into critical business tool, as supposed to some productivity stuff.
Therefore our users, our customers, they do strongly depend not only on the state of our product, and the complexity. But also, because our product is super easy inside. The integration might seem intimidating, but it’s not really, and inside is super simple. What mostly depends on is this stage in their business. We have plenty of early-stage founders who are planning their launch in a few months and it’s never the perfect day to tackle customer messaging. That’s what we have to deal with. I think we still yet to solve that inflection point moment and how to stimulate that in our customer’s mind. We’ve been trying our best to inspire them with learning materials, with podcast channels, and everything else. It’s still very much learning in progress.
Rob: Yeah. You mentioned that it’s hard to get people to switch, or to come onboard because it’s such an aspirin. You’ve talked about the Vitamin aspirin. That caught me a little bit there. That’s what I found, too. When I’ve had apps that we’re Vitamins, it was easier to get people to try them out, but the churn was higher. Frankly, it can cut both ways.
It’s nice when people will just try it on a whim. It sucks when they cancel, but it is nice to be able to get casual users. Building the aspirin type product is exactly what you’re talking about, where it is a lot harder to get folks to sign up, commit, and move over. And there’s switching cost, even if there isn’t true switching cost. There’s switching cost in their head and there’s set up cost. There’s all of that almost mental baggage that I think people have resistance to moving over. How have you been attacking that?
Jane: Like I’ve said, we’ve been trying to inspire folks. We do our best to follow-up with the potential leads in the most polite but persistent way. We don’t have our secret sauce yet. It really helps that our brand has grown over the last years, especially. We have gotten some nice publicity. I think that a nice public image also makes us more attractive of a purchase, and that contributes to that excitement, that founders generally need to get started with this. It’s just a matter of technically helping them onboard when they need technical assistant, but that’s not a huge burden at all.
Rob: It’s an issue that probably any email tool, that’s worth its weight is facing. Is that, most people who are going to use their tool are already using something else in place of it. They are either using a tool like Mailchimp, or Drip, or customer.io, or they have built it themselves in-house. They already have Rails code with a Liquid template that they pull at the database and then they send these life cycle emails. I introed it at the top of the show, but just to remind folks, it’s customer life cycle email designed for SaaS businesses. It’s behavior-based, event-based life cycle automation, segmentation and that kind of stuff.
The switching cost for that is, there’s a challenge there because it’s hard. If I was running a SaaS app, I don’t want all my marketing emails in Mailchimp and my lifecycle emails in Userlist. I want them all together so that when someone unsubscribes, it unsubscribes across everything. So that I have the data, the tags, and all the stuff across everything. The decision to switch over to Userlist is not as simple, easy, “I make the decision today, I move tomorrow” decision. It’s the one that really covers a lot of aspects of my business, all the way from marketing, into the sales process, into the onboarding, the customer retention process. It really does touch a lot of key points in a business.
Jane: You’re just hitting a nail on its head. We have very, very heated discussions in house. They’re not heated, because we initially agreed to give this only post sign-up, customer communications. There is a bunch of trade-offs and perks related to that. The perks are that it allows us to make the products super simple inside. Literally, very very intuitive, as opposed to more complex enterprise tools that do both. On the other hand, there have been an increasing support requests and I know there are opinions out there (yours included), that we should probably allow for classic email marketing automation inside this list as well. So, it’s in debate and we’ll see if this direction is worth pursuing down the road. It’s not an easy decision for sure.
Rob: No. I went through the same thing. I wouldn’t say that I think you guys should do marketing. I just know that when we started Drip, it was overwhelming. By the time we’re just doing the customer interactions, people kept asking us for the marketing. It was for the reason I said they wanted it all to be in one place. That is a decision for you guys to make yourselves.
If you look at Intercom and Customer.io (https://customer.io/) , they’re not designed for marketing emails. It’s really customer communication. It’s obvious that you can build a business without doing those things. I don’t know if Vero was still that way, but getvero.com (https://www.getvero.com/) was also just used to be customer messaging. I think there’s a path to do it and do it successfully. It’s just a matter of how you attack it and which customers you go after.
Jane: And making these tools speak to each other. It’s not just a matter of technical set up. There is no convention in the whole SaaS industry to date. Please correct me if I’m wrong. What is the best practice if somebody becomes your customer? Do you keep sending them newsletters or not? What kind of communication they receive? Is there a single unsubscribe button or not? Every founder makes those decisions for themselves. It’s a technical set up and it’s plenty of logical decisions they have to take.
Rob: Yeah, that’s right. You find yourself all in the mix. Every founder, as you said, makes the decision differently, but they all think that their decision is right. That’s where it gets complicated. That’s interesting.
Over the last couple of years, you’ve been grinding it out, getting Userlist on, getting it built, getting presales, getting folks to use it. You do have paying customers at this point and MRR. I’m curious. In your mind, has there been a lot of uncertainty? Or is there uncertainty now in terms of, “Are we going to be able to pull this off? Is this going to work? We’re two years in and I wish we were growing faster. I wish we were bigger.” Does it ever feel like, “I am just not sure that this is going to work at the scale that we wanted to”?
Jane: It sure sometimes feels like a marketing drudge for any founder. From day one, we have never had any doubt that this is a product that’s needed for people. We’ve done some inventive products before, but we were absolutely positive that there is a need. It was just a matter of making it happen, step by step, slowly, very slowly, very very slowly towards the right direction.
We’ve actually been getting more optimistic with time. The last few months have been super cool. We know there’s a lot of work ahead, but it’s been so nice to see how the traction picks up and there is word of mouth in the community, et cetera. We have actually made decisions, we have been part-time on this, myself and Benedikt. We have made the decision to take the scary plunge and actually go full-time on that in the beginning of 2020, starting January.
Rob: Wow. That’s just a couple of months out. Good for you guys.
Jane: Yeah. There is a lot of work, like prep up we have to do in terms of client work. Having client work, it pulls your attention away, but on the same side, it lets you do that organic slow thing in the more secure manner. You don’t have to worry about bread and butter on the table, because that desperate type of marketing is no good for any brand.
Rob: Yeah. It’s hard to be stressed about money and watch runway shrinking away. Yet, it’s also hard to have split focus. I’ve done both of them and neither is that fun. That’s the conundrum of being a founder. It’s making hard decisions with incomplete information where none of the decisions is 100% clear. I feel your pain on that. Congrats on deciding to go full-time. I do think that will probably be game changing for you guys in terms of the focus.
Jane: Thank you so much. We’re absolutely looking forward to this.
Rob: I bet. I asked you before the interview, if we were cool to talk about your third co-founder, Claire Suellentrop. Folks may have seen her on the MicroConf stage a couple of years ago. You, Claire, and Benedikt actually started Userlist together a couple of years ago. I know that she’s a lot less involved than she was early on. Do you want to talk us through maybe, what the situation is and how that went down?
Jane: Yeah, absolutely. We started this together, the three of us. It was me who pulled the folks together. In my previous SaaS, I was a solo founder, so I had to pay Benedikt cash to build stuff. There was no way I could do this with such a complex project, so I invited Benedikt on board. I was super lucky that he said, “Yes.” There was one more piece of the puzzle missing, the marketing person. Claire was number one on my rolodex of nice people and also amazing marketers, so I reached out to her. At that point of time, she was particularly looking for something of her own to start after quitting Calendly. There was ofcourse time between that. She was previously director of marketing at Calendly. See how large of talent we’re talking about?
I was absolutely thrilled when she said, “Yes.” We had a lot of discussions in the beginning. I’m super happy that we formalized our relationship in the most transparent way. Splitting the shares in the correct manner, doing the vesting schedule, then doing the proper contract. Even though in the beginning, that contract was sort of informal, but we still signed. Then we incorporate it.
Everything was really really well-organized. It’s not just about being legally protected, but also about having clear system in your mind. What’s going to happen when something changes? The assumption of that was everyone was going to be friends forever. It’s definitely very naive and childish, because things change for everyone. That is exactly what happened after a year that we’ve been working together.
The traction has been slow. We just started onboarding our fist pre-order customer. There was no sign of MRR whatsoever. Claire had to decide what’s going to be the number one priority. She had to take things off her plate to make it happen. She had two large projects at that time. It was Userlist and Forget The Funnel, which you’ve probably heard online, which is a huge training website and platform for marketers. She made a conscious choice towards working with marketers because these are her peers, target audience, and that was just overall more fulfilling.
Therefore, we’ve rearranged our agreement. We slowed down her vesting in half and she became our advisor instead of doing work hands one. In that type of mode, we spend another year until just recently when all of the above happened, that we decided to go full in. It didn’t feel quite fair that we’d go full in, start working our backs off, and Claire would just be advising. We decided maybe we could put together a more fair agreement and we reconsidered it again.
Right now, we have not documented it yet. She will formally stop vesting at the end of the year. She will just retain the number of shares she has while myself and Benedikt will go full spin. It sounds pretty stressful, but we really didn’t get into any human arguments about it. It was more like a constructive discussion about figuring out ways how it can work for all of us and the work that’s fairly rewarding. Going into business with adequate people really, really pays off. After all, she is a good fit.
Rob: That’s what I’m going to say. From what I’ve heard from you and Benedikt just in passing, in talking about stuff, it sounds like it’s been a surprisingly easy process for something that could’ve been really hard. It often turns into a big emotional fight with co-founders if there’s someone that has a perfectly good reason to come, walk away, and do something else that they decided to go do. It can hurt people’s feelings and it can have all types of ramifications. It really sounds like you all were just reasonable people trying to figure out what was best. Is that a good summary of it?
Jane: Yeah, very much so. Interesting fact: we never got to use it, but in our original agreement we also had a field for a mediator. That was a person we all knew and trusted who would mediate our arguments should we arrive at a deadlock somewhere. We never resorted to that measure, but it was another cautionary thing that we took. It sounds like marriage. You need to find adequate people to really resonate with each other and you need to document everything. That’s how it works.
Rob: That’s good. I’m glad. I like Claire and I know that you guys are friends. It’s nice to be able to go away with everyone feeling good about the resolution.
Jane: We’re so very much a team. She remains as the co-founder. For sure we’re going to have a monthly marketing sessions together. She’s still participating largely in the strategic side of the business. It feels great. She’s a wonderful human being.
Rob: Jane, you’ve worked on many SaaS apps. You’ve built a couple yourself, as you said. You hired Benedikt prior as a contractor, and now working as a co-founder. You have a bit of an experience under your belly here. What has been the most surprising thing to you in building Userlist?
Jane: Building Userlist? I was thinking you’re going to ask about the takeaways from the first app because I had plenty.
Rob: Oh. Let’s go back on that after you answer this. I’d love to hear it.
Jane: Probably the slowness of it was the biggest surprise.
Rob: Yeah. You thought it would gain traction quicker?
Jane: Yes. The product idea is quite unbeatable. It’s really, really a useful tool. You will think that just getting the word out in the community would get fellow founders signing up like that but no.
Rob: Yeah. Is that an issue with switching cost? Or do you think it’s the differentiation thing of not having the same features? If I were to compare you to your competitors, I don’t know who has the most features or whatever, so I’m curious what your take is on that.
Jane: We’re all wise enough to know—our team and you—that features that are not exactly the key thing in purchasing decisions. I think feature parity is not an issue. A lack of some features is clearly a benefit in our case. It makes the product much more transparent and straightforward to use.
I don’t want to be comparing it to Apple but because it’s run-of-the-mill, we try to make some opinionated product decisions insight so that it’s simpler, easier to use, and more efficient. In that regard, that’s definitely not a problem.
As for the switching cost, yes. I think that’s a primary reason as we talked about. I’m hoping there’s a secret sauce inside. Overall, that and explaining what it does all together really makes a puzzle. I’m glad that I have been putting it together gradually but it’s clearly not there yet.
Rob: To wrap us up today, you hinted takeaways from your prior SaaS. For folks who don’t know, it’s called Tiny Reminder. It was a form builder with notifications. Does that correctly sum it up?
Jane: That’s right. It was a Vitamin. Very much Vitamin type of product.
Rob: Cool. What were your handful of takeaways from building and I presume, shutting that down?
Jane: Quite a few. I sold it Nusii, so it still exists and functions. They’re planning to grow it as a satellite, a promotional tool for Nusii. I had a bunch of takeaways. I’m so glad I had this lab SaaS, lab rat sort of project that I’ve made all possible mistakes. I didn’t market it to a clear audience. It was really so useful that anyone could use it and after that, just focus on a niche instead.
It was super Vitamin. That’s why we set out to do an Aspirin product this time. Also, I did a freemium and that was quite a battle. Freemium is not a great way for bootstrap founders to start their business. Not just because of the lack of revenue but also the lack of MRR as a validation. You never know whether those people are just like tire kickers or real users—do they really need it?
And a couple of more discoveries. I had a lot of experience with info products before. I’ve been observing how sales work, that sales are hard to get, how downloads work, how emails, sign-ups, and numbers work. Not everything is cool. I was not prepared for that in SaaS businesses. It’s so much harder.
Just selling a book and an impulse purchase is way easier than selling a tool. That’s clearly not something you can just buy. You need to use it and get value out of it.
Rob: I had that conversation with so many info marketers who are making $50,000 a month or $100,000 a month. They’ll say, “How am I going to get into SaaS?” I’m like, “I know you can write a copy. I know you can get people to impulse buy a book.” If they don’t read the book, they don’t cancel on you because they’ve already paid you. It’s like in a completely different world. You’re right, it’s not twice as hard. It’s like 10 times as hard to make it work with SaaS.
Jane: We had a spectacular product launch for Tiny Reminder. The number of free trials, I think, was the cold traction to the website. We’ve got like 10 or something. I don’t exactly remember the number but it was super miserable. For a typical marketing freebie, it would have been, like you’ve said, 10 times bad.
Another lesson was that I had no audience of my own related to design. I’m sure there are plenty of founders in that audience. I’ve learned to understand that personal audiences don’t translate into SaaS sales, period. We’ve had a few users coming from my site but this is clearly not a primary channel. It’s not something you can leverage very well. You really need to count on product market fit first and some scalable, reliable, marketing channels instead of trying to milk your list, which I’ve never done in a bad way, but I tried with the first product and it just clearly didn’t work.
Rob: Yeah. That’s a lesson I’ve learned a long time ago as well. You can sell a little bit to your list but really, they’re interested in hearing from you, hearing about your process, and they’ll buy books from you all day because that’s hearing about you and your process. Books, video courses, and conference tickets are things that you can sell their personal audience, but SaaS apps, you can get that first. You will get a first handful of customers and then that’s it. Now, the real work begins.
That’s why I’ve heard folks say, “Hey. You should build an audience before you build a product.” That’s the way to do it. I’ve heard that said about infoproducts and I’ve heard it said about SaaS. I think it’s the wrong advice with SaaS. It’s never bad to have an audience but I do not think it’s worth the years and all the effort of building an audience.
Building an audience is very, very hard in order to launch a SaaS app. I think I have many more examples of people who have not built an audience and launched a successful SaaS app than I had people who have done it. Versus, if we’re going to talk about the knowledge product side where you’re going to write books, courses, and that kind of stuff, I would say people need to know, like, and trust you. Therefore, if they need that relationship with you, therefore, I would recommend and err on the side of actually building an audience before doing that.
Jane: You need to find scalable ways of reaching out to new people anyways. Even if you have a nice waiting list like we had something close to between 500 and 1000 people, I have an impression that they never really fully converted, even though we’re doing our best and talking to them very, very often, very diligently, with exciting updates. It’s still not a scalable way to grow our customer base for sure.
Rob: Yeah. That’s right. When we launched Drip, I had a launch list—not my robwalling.com list—but an actual Drip interest list. It was about 3400 people. The first 500 on the list were from me talking about in the podcast. I think I emailed my email list and just talk about it in another podcast. Then, there were segments that were from other shows. There were some from Facebook ads to a landing page. I watch how they converted. It was definitely my personal brand that converted almost the worst.
There were some cold traffic that converts worse than that, but people were more interested in the story. That’s okay, but you have to know that going in that an audience is not a golden ticket to launching a successful SaaS app.
Jane: Moreover, it can be deceptive. We’ve heard those stories like Brennan building RightMessage. They almost have that hangover from Brennan’s authority in the automation space when they were building a different kind of product. I’ve just had Derrick on my show and we’ve talked about Level and how we validated it. That was basically off his authority based on Drip and everything that got him into a little bit deceptive situation, too.
Rob: Yup. As you said, it can be deceiving.
Jane, thank you so much for coming on the show today to talk about Userlist and your experience with it. If folks want to keep up with you on Twitter, you are @uibreakfast. You have the UI Breakfast Podcast that you have mentioned a couple of times. Any other things folks should check out?
Jane: Of course, userlist.com. We just migrated yesterday. That’s a great resource. You can find all kinds of materials if you’re interested in life cycle email. We grabbed the Twitter handle, too. We are now at @userlist. That’s just pure luck. We didn’t even buy it.
Rob: That’s great. Cool. Thanks again, Jane.
Jane: Thank you so much, Rob.
Rob: Thanks again to Jane for coming on the show. If you have a question you’d like to hear answered on the show, leave me a voicemail at (888) 801-9690. Or email questions@startupsfortherestofus.com.
Our theme music is an excerpt from We’re Outta Control used under Creative Commons. Subscribe to us by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. I’ll see you next time
Episode 470 | 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 progress with Bluetick. They talk about the finale of the Google audit, a new integration. and trying to find differentiation in the market.
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Rob: In this week’s episode of Startups for the Rest of Us, I catch up with Mike Taber and get an update on his progress with Bluetick. This is Startups for the Rest of Us Episode 470.
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 start up or you’re thinking about your first. I’m Rob and today with Mike Taber, we’re going to share our experiences to help you avoid the mistakes we’ve made.
Welcome to the show. I’m your host, Rob Walling. Each week on the show, I cover topics related to building, growing startups in order to build yourself a better life and improve the world in some small way. We strive to be ambitious, but we’re not willing to sacrifice our life or health to grow our companies. We have many different show formats. We have some tactics and teaching. We have interviews, listener questions. Sometimes, we do founder hot seats and breaking news episodes. All kinds of things that just mix it up and the feedback I’ve gotten since the mix up 20, 25 episodes ago is that the people really like that and they almost like the unpredictability of it. I’ve been overwhelmingly told to keep going and keep doing what we’re doing.
Each month or so, about every four to six weeks, I catch up with Mike Taber. He’s still a regular guest on the show, but he only comes on every month or two to update us on what he’s been doing with his product, Bluetick, that he’s been struggling to get to the point of supporting him full-time. If you haven’t already heard episodes 448 and 458, I’d encourage you to go listen to those episodes because they do give you a background on really what we’re talking about, how I’m trying to help push Mike forward, and challenge some of his assumptions. Also, to get updates, just to hear what’s going on because I like to know what’s up with Mike and I’ve heard overwhelmingly that people want to as well. They want to know what’s going on with him.
Today’s episode is a fun one. I do push back on a few things that Mike has said and call him on why he hasn’t made more progress. Overall, it’s a positive episode and it’s fun to hear Mike rant about the Google audit and I think our editor even has to bleep him once or twice, which is unusual for Mike.
Before we dive in, I want to let you know that tiny TinySeed applications for batch two are now open. You can go to tinyseed.com, click the apply button. If you’re a bootstrap, SaaS app, or subscription software and you’re looking for mentorship and community in a small batch of motivated founders as well as $120,000 investment or more frankly, if you have a couple of founders, you should head over to TinySeed and see what we’re up to. We’re super bootstrapper-friendly and the idea is to raise the tide and to raise all the boats in this segment that is really an underserved group.
The venture capitalist has an agenda and it’s to go bigger or go home, it’s to be a unicorn or bust, and that’s not what we’re doing. Our thesis is that we can get a lot of folks who are wanting to build this $1–$20 million ARR, these life-changing SaaS apps, ambitious but not 90-hour weeks. We’re about halfway through our first batch of ten. This application process runs for the next couple of weeks and we’ll be doing another batch early next year. We’re getting that together. Good things have been happening there. tinyseed.com, if you’re interested. With that, let’s talk to Mike.
Mike, thanks for coming back on the show.
Mike: Hey, how is it going?
Rob: It’s pretty good, man. I was just counting the days. I think it’s been about five weeks, about right around 34–35 days since we last spoke. I know during that time you were out of town for five days with MicroConf Europe, but I’ve been getting feedback both at MicroConf Europe and then at a little founder retreat I went to earlier this week that folks do like following the story of what you’ve been up to, so I’m curious.
As usual, I have my list of stuff from last time that some stuff was up in the air and the threads that we’re following, so I look forward to hearing about it. I think the thread of the hour and the one that you’re basically spending 15 hours a week last time we spoke is this Google audit. You were a month into it and you thought it would be six more weeks’ worth of stuff. We’re essentially five weeks into that period so I’m fascinated to hear what that’s looked like over the past five weeks, where it’s at, are you wrapping up, that kind of stuff.
Mike: I guess for context of dates and timeline here, three weeks ago was MicroConf Europe. There was a Wednesday that I was basically either on a plane or over in Dubrovnik for MicroConf Europe. That spans a couple of weeks where, I don’t know about you, but a day or two before you travel, you really don’t get a whole lot done and then the day or two after is kind of the same thing so that basically makes it almost two full weeks right there.
My audit started last Monday and it was supposed to go from Monday to Monday, I believe. That process is finished. I’ve got a draft of the report and I’m going to go over it with them next week. I’ve got the letter of attestation or whatever it is, more like a letter of assessment. That’s already in my hands and I’ve sent that off to Google. Now, it’s a waiting game to see if Google just looks at it and says, “Yup, this is good. You’re all set for the next 12 months.” That’s the good news. The bad news is I’m super pissed about the whole thing.
Rob: Well, you have been the whole time. Are you more pissed now than you were the last two episodes? Has something more happened?
Mike: I’m way more pissed about it because basically they came back and said, “Yeah, everything looks fine. It’s pretty much it.” There was one thing they complained about and they’re like, “Yeah, you’re cryptography keys, the keys that you’re using to encrypt information, shouldn’t be on the same machine as all source code,” or not even a source code, but the actual application because before, I was compiling it directly into the application knowing that nobody else has access to that machine. You can’t get to it unless you break the machine open and hack into it, and then you’ve got access to the source code and everything else.
At that point, encrypting things really doesn’t do a whole heck of a lot and yeah, the data is on a different machine, but I’m well aware of all the security implications there. In the grand scheme of things, that’s a very, very small thing. They’re like, “Yeah, that’s an absolute no, no. You can’t do that.” I was like, “All right. Fine.” I spend a couple of days using Azure’s Key Vault, I think it’s called. Basically, now I’m storing the keys someplace else, but the client’s secret and stuff are still on that machine, so it’s like, “Okay, now I have to go to this other machine, pull back that information, and then encrypt it.” I have to do that every single time that I have to encrypt or decrypt information. I’m like, “This is just stupid.” It’s just like, “All right, whatever. I’ll do it,” because I have to. I have no other choice.
Rob: Yeah, that’s the thing. You can get hung up on it and be pissed about it, but then you got to move past it especially if Google approves this certificate of attestation, I think is what you said. I mean assuming that that goes through, you have 12 months and it’s time to get on your horse and get things moving.
I’m curious. Over the past five weeks, how much of your time was that was it? You expected it to maybe ramp up to like 20 hours a week, like half your time, and I’m curious if that amounted to that or what it looked like.
Mike: It wasn’t that much. I had to give them a whole ton of documentation. It wasn’t quite a dozen different documents of policies and procedures and stuff like that, but some of it was just I’ll say personally frustrating because they’re like, “Document what your secure coding procedures look like and how you educate other people who come onboard.” I’m like, “Well, there really isn’t anybody else that I have to educate about it because it’s just me.”
I distinctly remember looking at one of the questions and it was something along the lines of, “Please describe how you do pair programming for code reviews.” I wanted to laugh at it and I had to hold myself back from saying, “I wait 12 hours, sober up, and then look at the codes sober to figure out what it was that I was doing.” It’s just so frustrating to have to go through that stuff and answer completely stupid questions and provide documentation for things that I’m not going to look at and nobody else will.
Rob: I wish you would have put that drunk answer on there and just to see what they said.
Mike: Well, it ended up in the report, too. Not that, but some of the other things that I wrote, they asked me a couple of clarifying questions and literally word-for-word, the stuff that I put in there, it was word-for-word what I said was in the executive report.
Rob: Yeah, that makes sense. I was joking, by the way, about the drunk comment. I’m glad you didn’t do that because that wouldn’t have gotten well. This feels like a win to me. I’m going to flip it on its head because I can tell you’re pissed and you have been for three months or more because the whole thing threatened your business itself.
When you got initial quotes or estimates, they were really high. Then you got lower quotes, then you negotiated, and then you got something that was reasonable enough for you to pay. Now, it sounds like your done and while it has killed some time, it didn’t kill as much time as you were projecting over the next six weeks. Right now, are you done? Do you have to make any more code changes to satisfy their recommendations?
Mike: As far as I know, no. I have the letter. I have to hand it off to Google. I believe, at that point, Google just takes it and says, “Okay. Yes, you’re approved.” And they toggle some switches on their side and they stop bugging me about all this stuff. My belief is that I’m done, but what pisses me off is how little they found and how big a deal Google made it out to be. They’re like, “We’re going to kill your business if you don’t do these things or you don’t go through this process and pay this large sum of money to this third party company to do a security audit.”
There’s no recourse there whatsoever. So, I go through the process and then when I get through it, I come back and I look at their end result of it and they’re like, “Oh yeah, you have to change this one minor thing here that’ll take you like a day or two.” Then, all the other documentation that I put together, which is a total waste of time because nobody else is ever going to look at any of it, it’s totally useless. It was a huge time sink for absolutely nothing. It didn’t benefit my customers. It doesn’t make the product any better. It doesn’t get more people using it. It literally does nothing other than allow me to stay in business. That’s the piece that’s so frustrating. That’s the part that really pisses me off and makes me angry at Google, for putting me through this when at the end of the day, you look at the report and they’re like, “Oh yeah, these one or two things.” It was almost completely unnecessary.
Rob: If you’re at home playing the Startups For the Rest of Us drinking game, you can know take your shot for Mike saying it was unnecessary and he’s angry at Google. Mike, I know. I totally get it. I think I want to say it again. I consider this a win because you’ve passed this. Six months ago, maybe more, you started talking about this and it was a big, big deal and you’re done. You made it through and it didn’t wreck the business. To me, it’s like the Bill Wolf quote, “Control what you can control and let the score take care of itself.” That’s where you are. You can be pissed. I get pissed all the time at stuff. You know me pretty well. I get mad pretty easily, but I try to let stuff go quickly and move on. You know what I mean?
I mean this could’ve been a complete and utter roadblock that decimated your business whether because you failed the audit, whether it’s because you couldn’t afford the audit, whether it’s because you refused to do the audit on principle. Any one of those would’ve wrecked the business and you turned it into a speed bump. You said, “What are my options here? I can pay for this thing. I can negotiate this thing. With my teeth clenched, I can just force my way through,” and that’s what you did. I think I know it’s a pain in the ass. I totally get it and I’m really surprised that we have not had to use the beep noise over any of your words so far this episode, but cheers to you, man. I am happy. I look ahead at Bluetick and now, it’s all about execution. It’s differentiation. It’s writing some code. It’s marketing. It’s getting more people in. That’s how I feel about it. I have the outside perspective. You’ve been mired in this for months. Does that resonate with you? Do you feel that way or do you feel like I’m being too optimistic silver lining?
Mike: You’re absolutely right. Everything that you just said is 100% correct, but Google still pisses me off right now. I’m not the type of person who gets upset easily. I’m not the person who you can just poke with a stick and suddenly, I just rear my claws and just go after you. I just don’t do that, but this has been dragging on for so long and I really feel like I’ve been put through the ringer for this for no good reason. I just can’t point anything justifiable. The problem is I know I have to go through it again next year.
Next year, it will be better because I’ve got all the documentation in place and yeah, the product will change, certain things are going to have to be updated here and there and that’s fine, but the fact that they went through this whole thing and they made it such a big deal, and they get to the end of it and there’s this report that shows, “Oh, we found three things.” One of which is not even on my servers. I’m like, “Okay, this is total […]. Complete and utter […]. You’re complaining about an SSL certificate that I put on a server that’s not even my server. Come on. That’d ridiculous.” I even told them that. I’m like, “I have no control over this.”
Rob: Yeah. I hear you about having to do it again in 12 months. My hope is that the fact that you already have an existing relationship with an auditor and that you have the same docs or depending on where you are in 12 months, maybe you’ll have hired a developer or a senior developer that could do parts of this for you so you don’t have to mire through it.
I realized that’s a tall order. You’d have to make a lot of progress between now and then, but I think in the back of my mind, in your shoes, you’ve seen how frustrating this is and how much it emotionally derails you. With me, with Drip, it was blacklists, there were support requests, it was cues being slow. There were these things that I had to find people to do because they slowly tore away at me and they made me hate my job.
As entrepreneurs, we can’t hate our job because we control them. If we’re not enjoying it, it’s to a certain extent, our fault. Now, in this case, it’s not. It’s not your fault that Google made you do that but you did then have the chance to say, “Well, I’m just going to shut the business down,” or, “I’m going to pivot away from Google,” or whatever, but you gritted it and made it through, which is in my opinion, what you should have done. But looking ahead 12 months, I’d be thinking how can I not let this be six weeks, eight weeks of me being mad next time? What types of things can I put in place to help with that?
Mike: The fact of the matter is, I think that in a year when this comes up again, it will be a lot less stressful because I will have had full visibility of all the things that are going on, and all the things that they’re looking out, and I will have already had one report to look at that says, “These are all the things that we looked at and be able to at least keep them in mind moving forward.” Up until I got a final report, even during the week of the audit, it was just super stressful because I wasn’t getting anything back from them and I was expecting a daily report or something along those lines that says, “Hey, we looked at this and this is a problem. You need to fix it. Here’s a high priority. Here’s a critical thing that you have to do.” Because that all those critical and high items had to be taken care of before they could issue this letter of assessment and I was getting nothing.
I asked them. I was like, “What’s going on here? I’m expecting something here and I haven’t heard anything.” They’re like, “Oh, we haven’t found anything so far.” But of course, there’s a lag time between the time that I sent them an email and then they get back to me. I think some of their penetration testing staff are in completely different time zones like halfway around the world, so it just makes that back-and-forth a lot harder to do because, (1) they don’t report directly to me, and (2) they’re in a completely different time zones. It just makes it a lot harder and a lot more stressful, but I don’t think that it’ll be nearly as bad next time.
Rob: Yeah, I would agree. Looking ahead, let’s talk about some other things that you had in the works, some of which were on hold or I think one of which was on hold due to a code freeze and then there were some other stuff that step through. Just to keep going on the thread.
You have an untestable sealed .NET component. Startups For the Rest of Us drinking game just gets so good when we go over this topic again. I want to go back and I think it had to have been six or eight months ago when you first mentioned of this thing. You said, “I’m going to replace this thing,” and you put it on hold due to the Google audit. Have you replaced it yet? Is this top priority? Where do we stand with this?
Mike: I just got the letter of assessment this morning. I was expecting it on Monday because they said that they were working on it, and then Tuesday came and nothing, Wednesday came and still nothing, and finally, I got it this morning. It was like one o’clock in the morning. Until then, it’s basically been on code freeze. So no, I haven’t touched that yet. Is it on deck? Yes, at some point. When exactly? I don’t really know.
I have to go through and look at where that really falls in the priority list because I feel like it’s a lower priority than a lot of the sales and marketing stuff that I have to do. I hate to say that this is or isn’t holding me back because I’m not really sure. I want to get it out of there. I don’t know how hard it is to be able to pull it out because it is pretty integrated into the core of my code and I’m going to have to change the storage mechanism.
I think I’m just going to have to make a judgment call at some point about do I just suck it up and leave it there even though I know that it’s the wrong decision? There are certain part of I think everybody’s application where it’s got words on it and you’re like, “This really needs to be rewritten or it needs to be refactored.” And you don’t do it because you know that you’re just kicking a hornet’s nest and it’s going to be terrible.
Rob: How long do you think it’s going to take you to get the new component in? I know you have to redo data and you have to remap stuff and namespaces. I get it. How long though? That’s the thing.
Mike: Just for me to migrate the data would probably take a week. That’s just the computers churning.
Rob: Yeah, so it’s a sizable thing, but you have decided that this is the right choice, right?
Mike: Yeah. That’s the thing. Assuming nothing goes wrong, it would take a week.
Rob: Sure. All right. It happened this morning and you’re not done with it yet, Mike? What have you been doing? No, I’m just kidding. Do you plan to start it? What is it? Thursday today so do you plan to start that tomorrow or Monday? Is that the next priority or you’re just saying I’m going to do this in a few months?
It’s tough. This one’s not so clear up to me. To me, in my head, it’s a bite the bullet type of thing where it’s overhead and I know it creates legacy, or cruft, or just hard code to work around. To me, I would bite the bullet and I would cover up two weeks and I would hammer this through. But I can also see an argument on the other side of this provides no value to your customers. On the flip side, it’s like, “I should be marketing, selling, and getting more people in before that.” I could see an argument either way. Again, I would probably make the product such that I feel more comfortable marketing and selling it, because I hate having crappy code. What’s your plan there?
Mike: The best thing that I can come up with is to plan to do it in about a month because that would put it in mid- to late-December, which I know there’s not going to be many people using Bluetick at the time and I’m probably not going to be fielding very many support requests. I’m probably not going to be launching very many new marketing or sales campaigns at the time. It’s a slow time where it would be a good time to sit down and bite the bullet and do that as opposed to now where people are still ramping up for the holiday season, doing email follow-ups, and trying to get deals and stuff. By the end of the year, it seems like my time is probably better spent doing that now and then plan for that slow period of biting the bullet.
Rob: Cool. That sounds good. We will connect with you again on that next time you come back. For our next topic, let’s talk about marketing. You obviously had the majority of your work weeks to be doing other things. You didn’t want to write code and the Google audit was taking some time. We talked about a marketing hire you were making. It was a contractor to do podcaster research and we had talked that through a little bit last time. Where does that stand?
Mike: Most of the stuff is already done and been sorted and prioritized. I got the information I need for all those things, so we’re basically waiting until the end of this audit to start queuing those up. Between today and tomorrow, the plan is to start queuing those up, start sending those emails out, and see if I can get onto a handful of other podcasts. I’ve already done one podcast interview. I actually did that last week. I’ve got another one that I was told by the podcast host that she’d love to have me on so it’s just a matter of reaching out to them and getting that set up as well. There’s no more roadblocks in the way of doing that so that’s get started ASAP at the moment.
Rob: It’s been five weeks. Why did it take that long? Why hasn’t that started two weeks ago?
Mike: Well, two weeks ago, I was in Europe. That’s why. Of the last five weeks, a good solid week-and-a-half to two weeks was spent in the middle of the audit and then there was another solid week or two that was basically over in Europe. I basically had maybe two weeks or so before MicroConf Europe get started on that. That was mostly the data aggregation and the actual work that was done behind the scenes.
Rob: Got it. Are you sending those emails through Bluetick?
Mike: Yes.
Rob: That’s cool.
Mike: Well, that’s the plan. I haven’t actually sent them out yet.
Rob: How did you get on the podcast then?
Mike: Oh, there’s a personal invitation. Somebody raised that to me.
Rob: Got it. Cool. That would be an ASAP thing then. You could get that going tomorrow literally or Monday. You just got to write some copy and get her in.
Mike: Yup.
Rob: Cool.
Mike: That’s the plan for that.
Rob: Good. Looking forward to that. We already talked about that. I won’t go into it. Again, it drives a little bit of traffic. It’s more of a slow burn. It’s a one-time thing type of thing, but I think that it’s easy enough to do as long as it doesn’t take a bunch of time. I would probably be doing the same thing right now.
The other thing you were looking at was code emailing. It was really warm emailing. You said 900 email addresses from your LinkedIn connections. You had prior Bluetick cancellations, sales leads that never converted, that were in pipe drive, other stuff. You were going to bucket them and start warm emailing cold batches in the next week or two last time we talked. Talk to me the status on that.
Mike: I’ve got those all bucketed out and that’s another situation where I was holding off on actually doing it and pulling the trigger after this audit was done. That again is something else that got the green light at this point that I can start today or tomorrow.
Rob: That’s interesting. Why were you holding off on that? Because you knew you were going to pass the audit. That wasn’t a big question. I knew you were.
Mike: It was never a question of whether I would it pass it or not, it was a question of timing. There are two pieces of the audit itself. There was the technical piece where they say, “Hey, we’re going to beat on you servers for six days.” And then aside from that, there is all this policy documentation that I had to create. Anything that they saw that raised a red flag, I had to either change the policy itself, it’s not just text that I have to change, but it’s also I have to change how I do things.
For example, one of the things that they said was, “Oh, you have to enable multi factor authentication on everything including source control.” So I have to basically generate SSH keys and lock down all of my source controls, which means that I also have to generate API keys, then go into my build environment, and I have to change all that stuff, too. It’s not just a simple thing like changing some texts on a piece of paper that I hand to them. I actually have to go do those things as well. All of that stuff needed to be changed.
There was a bunch of other things that came up during the policy side of things where they said, “Hey, you need to change how you’re going about these things just in order to comply with the requirements.” Between that, I knew that I only had a week or two before I had to leave for Europe, and then immediately after that, I had to dive right into the technical side of the policy stuff.
What I didn’t want to do is start going out and start and try to schedule meetings, calls, and stuff with people. They were not going to be for a month-and-a-half because I didn’t necessarily know that earlier this week things were going to be done. For all I knew, they could come back and say, “Well, you’ve got these 25 vulnerabilities, and 17 of them are high or critical. You need to make code changes to do those.” I didn’t know that I was going to be done this week. For all I knew, it could’ve been another three to four weeks.
Rob: Yeah, but I think we talked last time and I had said cold email doesn’t just start converting overnight typically. Typically, you start it at trickle, you test some things, you tweak, you tweak, you tweak. It takes weeks to really start ramping it up. I had suggested, “Hey, you have this month or whatever,” I guess it was six weeks during the audit that was projected to be six weeks, “I would propose that you just start emailing 5 a day or 10 a week.” Just a very small trickle to start seeing something such that the volume of things wouldn’t have been like, “Oh my gosh, I have 50 calls.”
It wouldn’t have been so much, but just to start ironing those out because I bet if you start this on Monday, it’ll be a couple of weeks until it really starts getting going and now, you’re at a standing stop five weeks later. You know what I mean? Five weeks after our last call, you are at standing stop trying to get it going rather than having a little bit of momentum. That’s what I was more getting at. Why did you wait during the audit to get it going?
Mike: I think I agreed at the time and then realized that I just was not going to have time. Even if that started to turn into something, I wasn’t sure what the future would hold in terms of my timeline leading up to the week after MicroConf or two weeks afterwards. Like I said, for all I knew, it could’ve been another three or four of hard, heavy lifting in terms of code or code changes. I just didn’t know. That big blind spot is really what held me back there.
Rob: Okay. Next time, you should be good. You should be rolling on these things. Right now, cold email and the podcast tour, do you have any other marketing stuff that you’re going to be rolling out or are you going to be focusing on those two? I’m just talking over the next month. Let’s say we talk again in four or five weeks.
Mike: I do have one other thing that has finished up, which we haven’t really talked about. I just finished up an integration that I got approval for I think on Monday of this week. Now, if you go over to zapier.com and you search for bluetick.io, you’ll find it underneath the early access section. bluetick.io now officially has a Zapier integration that is no longer just buy and bite only.
Rob: Nice. Congrats man. That’s cool. Now, what’s funny is I have a note because I was going to cover that. The note says, “Mike is working on an integration that should be live at the end of this week.” I read that five weeks ago. Why did it take that extra month?
Mike: Because I had to email them and then there was a little bit of back and forth. They basically had to run it through their own testing and stuff like that. There was a bunch of things that needed to be changed both on my side and inside the Zap itself in order to get it live. It took a little bit longer to get finished than I thought it would or I hoped it would. And then I emailed them and said, “Hey, can you guys take another look at this.” When I got back from MicroConf, I emailed them again because I haven’t heard back. Maybe the email got lost or buried under all the other stuff that I’ve got going on, but I ended up having to ask them again to take a look at it. It only took them two or three days after that to take a look at it to say, “Yup, this thing looks good. Go for it.”
Rob: Cool. So people can go and search for that right now. Do you get any promotion out of that? Are they going to list you anywhere?
Mike: No. They don’t do any code promotion until you get to a certain number of users, which I think I was told it was like 50 users before that happens so I have to look and see if there’s any way for me to actually see how many active users I have. But I don’t know what it currently stands at so I don’t know how far I have to go between now and doing any sort of code promotion with them.
Rob: Got it. In order to get to 50 users, obviously, you need to get more customers yourself and then have something in a sequence somewhere that is asking people to hook it up, right?
Mike: Exactly.
Rob: Cool.
Mike: But I will say having the audit and the Zapier integration behind me, I would call both of those huge wins for me.
Rob: Yeah, that’s good. Would you say over the past, since our last call, those are probably the two high points?
Mike: I would say so, yeah.
Rob: And then the low point was the audit? Just in the midst, that’s what it sounds like.
Mike: Well, the midst of it and then the end results been everything’s fine. It’s like if I wanted to pay somebody five plus figures to go not find something, I’m sure my kids would volunteer. Again, it’s just irksome. I mean you don’t know until after you’ve done it because you do have to poke at everything and I get that part of it, but it’s still frustrating especially being early on.
Rob: Wait, are you saying you were frustrated with Google and the audit? Oh Mike, every time, I’m going to keep bringing it up.
Mike: My anger is interesting.
Rob: Oh, next call, I’m going to bring it up again just to see, just to troll you. Cool. A couple of other things before we wrap. One thing I had asked you about was differentiation. I’ve mentioned, Bluetick is very similar and undifferentiated from most of your competitors and you had said, “I need to talk to some of my customers more and ask them why did they decide to use Bluetick.” Think about it as a job to be done thing. You had talked to a few customers. You got a couple of ideas. One was to have customers in multiple sequences at the same time. In other words, to be able to re-add customers to the same sequence.
It’s a two part question. One is have you gotten more confirmation that those two feature ideas or differentiators are enough? Are you going to build those? And I guess the third part is, maybe we’ll start with this, have you had more conversations with customers since we last spoke? Talk about those other things.
Mike: I’ve had a few here and there, yeah. I still don’t necessarily know if what I have in mind is the deciding factor of like, “Hey, this is going to make Bluetick leaps and bounds better than the other things that are out there.” I believe that it is, but I don’t necessarily know that for a fact. I don’t have any real basis for that. It’s a gut feeling more than anything else.
Rob: How can you turn it from a gut feeling into something? I would say a gut feeling is like, “Yeah, I’m like 30%, 40%, 50%.” How can you get this to 70% or 80%? Whether it’s with one of these things or whether it is something entirely different that you start hearing from other customers.
Mike: I think the first step one, obviously talk to some more of my customers, but two is to start running the idea past. I almost want to say go back to basics when I was first flushing out the idea of Bluetick with a bunch of different people and ask them questions about, “Would you be […] this?” or a product that solves this particular problem. I think it’s a matter of going to some of my list and finding out, “Is this the type of problem that you would be interested in solving inside of your own business?” I feel like it’s more of a reframing of what Bluetick does versus selling what Bluetick is, if that makes sense.
Rob: It does. Now, is it reframing what it does just like, “Hey, it does this one extra feature or two extra features,” or is it in a whole position? Like it’s a more broad branding/positioning shift?
Mike: A little of both, I think. In order to do it, I would have to write some more code. Obviously, I don’t want to go in that direction unless I hear more from people about, “Hey, yeah, this would actually be very compelling for us to use that.” But the other thing is when you hear about an email follow-up tool, your inclination is cold email. There has to be some sort of a brand positioning of, “Hey, this isn’t just for cold email. This is how it is positioned differently in order to make it work for people who aren’t just doing cold email.”
Right now, Bluetick serves a very, very specific piece of functionality for people in their business and if they don’t have that particular problem, then they won’t use it, but that also makes it hard to identify the types of customers because two businesses who are largely identical, one of them may be doing that activity and the other one may not be. It’s hard for me to say, “Oh, go after SaaS companies that fits this profile or in this particular business,” because unless they’re doing that particular thing, it doesn’t solve their problem.
Rob: Got it. So between now and the next time we chat, is this high on your priority list, to speak with this additional customers to try to suss this out?
Mike: It is. I wouldn’t call it my number one priority, but I really need to find what that one differentiating feature or factor is that would make it easy for people to understand what I originally had in mind with Bluetick as a vision as opposed to what it currently is and does today and what people see it as.
Rob: Yeah. I wouldn’t disagree with that. It’s kind of what I’ve been saying the whole time back to episode 448 when we first really dug into all of this. My point was Bluetick is not differentiated and you’re not moving fast enough. That was the thing, whatever that was five months ago. Now, you’re through the Google audit and you’re through a lot of this speed bumps and does feel like, (a) step one, figure out how to differentiate it, and then (b) differentiate it and move fast enough such that folks you’re trying differentiate away from aren’t keeping up with you or aren’t going in the same direction or whatever. That’s what I’d be doing, too, in your shoes, would be a lot of conversations.
I think that cold emails probably can play into that. Again, they’re not cold emails, but it’s your LinkedIn connects and the Bluetick cancellations and such. In addition, I’d probably talk to every customer you have right and just try to figure out why they’re using it, how else you can make it to be sticky. You have those two ideas of those features I mentioned earlier. Those seem like nice to have as interesting tweaks but I’m not convinced. My gut is that they aren’t enough. They aren’t enough to be really, really differentiated and make people switch. Just like what can you have that will make people switch from other tools or choose your tool when they’re comparing yours to the three or four other tools that are top of mind for me.
Mike: I mean I have an idea of exactly what it is that I would want to talk to people about because it’s something that we can talk about it here if you want. The basic idea using Bluetick as a mechanism for identifying things that you need from other people and this is something that you can do with Bluetick right now, but let’s say that I need a W-9 from you or something like that, the question is, how do I get that from you and how do I make sure that I follow-up with you until I get it?
That was one of the things that Bluetick was born out of, was when basically before Xander started helping out with this stuff, I was doing all of the data gathering for all the sponsors for MicroConf. I would say, “Hey, I need logo. I need title text. I need an image. I need all these different things,” and asking them for it and then going back and forth like, “Hey, I’ve got these two things but not this other one or this third one over here or fourth one over here,” and using Bluetick instead as a mechanism for gathering that stuff.
That’s basically a way to build a process into Bluetick such that solve a very tightly-defined problem to gather digital materials from other people and they may fit a specific format, or they may be documents, or Excel spreadsheets or something, and then Bluetick can manage that back and forth process to say, “Hey, I’ve got these three things but not this other thing over here.” Does that make sense? There are like 30 different use cases for it but just very simplistically, that’s the idea.
Rob: Yeah, that makes sense. That’s a clear path or a clear job to be done. The job to be done, you’re saying, is not cold email, it’s not increasing sales, it really is to get something in a workflow from other folks and to do that with email. My first thought when I hear that is right now, the tool I use for that is Gmail and Boomerang. If I email someone for an image, and a this, and an invoice, I Boomerang it in a week if there’s no reply or two weeks if there’s no reply and then I just respond to it again. I know that’s different. Probably in Bluetick, you could put a whole sequence together and if they don’t reply, it automatically does it. I don’t have to type the next one.
I think that Boomerang does a really good job on a small scale and if I only had five sponsors to deal with, that’s what I would do. Bluetick is going to be limited only to those that needed that scale. Cold outbound email or sales emails, you’re a 1000 a month or 2000 a month. There’s no way you would do that via a Boomerang, so everyone in that boat needs or should be using a tool like Bluetick or one of your competitors’.
Whereas, the niche you’re talking about, I think, not only is that a lot smaller and it’s further away from the dollars that the people are trying to generate for their business, because more of a back office thing, but it has to be people doing that at scale. Again, if you’re onboarding five clients a month, you’re probably just going to do via email. If you’re onboarding 100 clients a month, 100 sponsors a month, now it makes a lot more sense to use a tool like you’re talking about.
Mike: A lot of what you’re saying makes sense but I had a conversation with somebody who does onboarding at a small scale and they already know let’s say 30 or 50 different things that they need from the customer. Rather than saying, “Here’s the list of all the stuff that I need,” they only ask for two or three. The reason they only ask for 2 or 3 is because if they ask for 50, it’s going to be overwhelming to the customers. Instead, they only ask them for a couple of things and then they modify that list over time.
So the idea would be you’ll have this, I’ll say a workflow, where you’re asking for something from somebody and you need Bluetick to follow-up or you need a follow-up mechanism in place to basically manage the process of gathering that stuff and you don’t want to overwhelm them with everything all at once. That’s just one instance.
But also, I’ll tell you from experience of managing the sponsors. Once you get up to more than about five conversations in parallel like that where you have different things that you need from people, it gets really hard to manage. It’s not 1000, it’s not even 25, it’s like 5 or 6, and it’s just a nightmare to manage, even 5 or 6.
Rob: It’s interesting. I think, in the interest of time because we’re wrapping up, I want to make a note of this and circle back once you’ve had more conversations, I don’t think it’s a terrible idea. It’s an interesting position. I think there’s a hole we could dive way into how I would think about this because if you’re going to build a generic tool to do that and there are three different use cases, you have a problem. If you can pick one, what’s the biggest one of those used cases, the biggest pain point? Back to conversations we’ve had in the past, is it conference organizers trying to get sponsors and speakers to give them stuff? Is it, whatever, we could pick any vertical and is that where you start? Or is it lawyers trying to get stuff?
Mike: Is it CPAs trying to get tax information from their customers?
Rob: Exactly. Right. All that stuff.
Mike: I’ve had those conversations, too, and it’s a nightmare. I hate to go down the road of going after real estate brokers where you’re trying to get a loan and you need all these different things to apply for. I don’t want to deal in that particular business, but that’s another particular use case where there’s a lot of back and forth and a lot of information that’s needed.
Rob: That’s the thing, is all those verticals we just named or several of them are a pain in the ass to sell into. They are inundated with cold outreach. They don’t adopt new technology quickly. I tweeted this out a few months ago where I said you’re either dealing with competitor pain or customer pain these days if you’re building a SaaS. It’s a general comment but 10 years ago, you could go into a greenfield market with somewhat sophisticated customers, and you could build a SaaS app, and they would come and adopt it, and that was it. It was cool. But things changed over time and today, there’s not much greenfield left and a lot of the greenfield is like, “Well, there’s not a really good this and that for lawyers, or this and that for CPAs, or this and that for dentists.” And so, there’s not some specific thing for them. It’s like, “Cool. I’m going to build for that because I don’t want competitor pain. I don’t want a bunch of completion that chomping at my heels all the time.”
On the flip side, you’re now going to have customer pain. What I mean by that are high maintenance customers, they could be long sales cycles, they could be high price sensitivity, they are high support because they’re not technical, that’s kind of stuff. I’m not trying to make an unequivocal 100% of the time this is the thing, but these are the patterns that I’m seeing. When I look at the TinySeed batch, or when I look at people who apply to become in TinySeed, or when I look at my experience, you got to pick one of those. Trying to get away from both of those is very, very hard, I would say dang near impossible these days unless you get pretty lucky and be early to a certain market for early adopters where the market is just emerging.
I can name a few. Baremetrics is one. Early on, he didn’t have either. Now, he has competitor pain because he has a bunch of competitors, but he got in so early with the Stripe Metrics. I think another one is Tuple, Ben Orenstein’s. They filled a big gap that was left by a startup that have been acquired and shut down and right now, they don’t have competitor pain and they don’t really have customer pain either because it’s a lot of developers.
In the long run, Tuple will have competitor pain because people are watching that and there are going to be competitors that are developed there. They have a bit of a technical mode but in the long term they should just expect to experience that eventually, but since they have a head start, that’s good.
That was my long diatribe about that’s where as you decide if you want to do one vertical or five verticals to start with or wherever you want to position this. I certainly think making it a generic horizontal tool where the headline says get anything from anyone in an automated way, I think that’s a really tough way to go because in a lot of examples, people are trying to fit it into like, “What it is actually then? Is this like Mailchimp?” “No.” “Is it a cold email outreach tool?” “No. It’s not that.” So they’re trying to fit it into a bucket. That’s what people do when we go to these sites. If it’s something that’s just completely new, it’s always you’re just explaining the same thing over and over.
This is interesting. I’m making a note here because I think this is the key to unlocking something with a small group of people. This is how you find early signs of product market fit with a small group, and they love it, and they rave about it, and they say, “No other tool does it this way.” And they have different feature request for you than they would if you’re a cold email tool. If you can make it work and it’s a big if, that the direction you head. That’s how you find that you start growing.
Mike: Yeah. It’s just interesting how many conversations I’ve had have led me in that particular direction. There are a lot of things that remind me of, back when I first started working on Bluetick. It was some of the problems I ran into in trying to onboard sponsors for MicroConf or to sales for AutoShark. A lot of them are overlapping in a very similar way. Some of those features, they just never really got built.
Rob: So wrapping us up today, each time we’ve tended to talk about motivation, sleep, exercise, and stuff—I don’t want to run so far over what we dive into all of that today—I’m curious, over the last five weeks, what has your motivation been like?
Mike: I would say it’s fluctuated. It’s gone up and down. There are definitely days where I don’t have a whole lot of motivation and I feel like the world is pressing down around me. It’s not that I don’t have any options, it’s just that it’s hard to figure out what to do. And then there are days where I don’t even think twice about it and I just sit down and start working and banging things out, but it fluctuates from day-to-day. I can’t say that there’s a great pattern to it or not a great pattern but like an identifiable cause for anything that’s going on. It’s not really sleep-related. It’s not really exercise-related because I’m sleeping fairly well and exercising pretty well. So I don’t know. It’s hard to say.
Rob: I was going to wrap up the interview anyways, but the recording software crashed right at that moment and then Mike and I were basically just text chatting. But I feel like we’ve got a pretty good feeling of where Mike’s at and I’ll probably dig more into motivation, sleep, and exercise in the next episodes. It’s kind of got short shrift here. But I, for one, am feeling good for Mike about his Google audit effect that it’s done and I feel like he can get past it and move on. I’m super interested to hear what progress he can make on trying to get on this podcast as well as really the cold email as the one that I’m banking on as well as the differentiation. Those are the things that I’m going to be continuing to press him on.
These are the points of accountability that I think helped us all to move forward, is to have someone bring up what we said last time and say, “Where are you with that? If you’re not as far as you should be, why not? Okay. Let’s talk about that again in a few weeks.” Is starts to get in your head that this is a real thing that you need to move on and make progress on. Otherwise, the business doesn’t move forward.
I always enjoy talking to Mike. I feel like these are enjoyable conversations for me when I listen back to them. I feel like there are a lot of value for folks to follow his story, to hear what he’s going through as well as to take away how to keep pushing a business forward and have accountability. In a way, it’s a one way mastermind. It’s a little bit how I think about it. It’s kind of he’s reporting on things and I’m helping move it forward. I appreciate that Mike takes the time to keep us posted and we’ll keep doing this as long as it’s interesting.
If you have a question for the show, because we do a lot of Q&A episodes, email us questions@startupsfortherestofus.com and you can even attach a voicemail or link to a Dropbox, Google Drive, MP3, or whatever, or you can leave us a voicemail at (888) 801-9690. Per usual, voicemails go to the top of the stack and we will have another Q&A episode coming up here pretty soon.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. In any podcaster, search for “startups.” We’re typically in the top five. You can visit startupsfortherestofus.com to get a full transcript of each episode. Thank you for listening and we’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 start up or you’re thinking about your first. I’m Rob and today with Mike Taber, we’re going to share our experiences to help you avoid the mistakes we’ve made.
Welcome to the show. I’m your host, Rob Walling. Each week on the show, I cover topics related to building, growing startups in order to build yourself a better life and improve the world in some small way. We strive to be ambitious, but we’re not willing to sacrifice our life or health to grow our companies. We have many different show formats. We have some tactics and teaching. We have interviews, listener questions. Sometimes, we do founder hot seats and breaking news episodes. All kinds of things that just mix it up and the feedback I’ve gotten since the mix up 20, 25 episodes ago is that the people really like that and they almost like the unpredictability of it. I’ve been overwhelmingly told to keep going and keep doing what we’re doing.
Each month or so, about every four to six weeks, I catch up with Mike Taber. He’s still a regular guest on the show, but he only comes on every month or two to update us on what he’s been doing with his product, Bluetick, that he’s been struggling to get to the point of supporting him full-time. If you haven’t already heard episodes 448 and 458, I’d encourage you to go listen to those episodes because they do give you a background on really what we’re talking about, how I’m trying to help push Mike forward, and challenge some of his assumptions. Also, to get updates, just to hear what’s going on because I like to know what’s up with Mike and I’ve heard overwhelmingly that people want to as well. They want to know what’s going on with him.
Today’s episode is a fun one. I do push back on a few things that Mike has said and call him on why he hasn’t made more progress. Overall, it’s a positive episode and it’s fun to hear Mike rant about the Google audit and I think our editor even has to bleep him once or twice, which is unusual for Mike.
Before we dive in, I want to let you know that tiny TinySeed applications for batch two are now open. You can go to tinyseed.com, click the apply button. If you’re a bootstrap, SaaS app, or subscription software and you’re looking for mentorship and community in a small batch of motivated founders as well as $120,000 investment or more frankly, if you have a couple of founders, you should head over to TinySeed and see what we’re up to. We’re super bootstrapper-friendly and the idea is to raise the tide and to raise all the boats in this segment that is really an underserved group.
The venture capitalist has an agenda and it’s to go bigger or go home, it’s to be a unicorn or bust, and that’s not what we’re doing. Our thesis is that we can get a lot of folks who are wanting to build this $1–$20 million ARR, these life-changing SaaS apps, ambitious but not 90-hour weeks. We’re about halfway through our first batch of ten. This application process runs for the next couple of weeks and we’ll be doing another batch early next year. We’re getting that together. Good things have been happening there. tinyseed.com, if you’re interested. With that, let’s talk to Mike.
Mike, thanks for coming back on the show.
Mike: Hey, how is it going?
Rob: It’s pretty good, man. I was just counting the days. I think it’s been about five weeks, about right around 34–35 days since we last spoke. I know during that time you were out of town for five days with MicroConf Europe, but I’ve been getting feedback both at MicroConf Europe and then at a little founder retreat I went to earlier this week that folks do like following the story of what you’ve been up to, so I’m curious.
As usual, I have my list of stuff from last time that some stuff was up in the air and the threads that we’re following, so I look forward to hearing about it. I think the thread of the hour and the one that you’re basically spending 15 hours a week last time we spoke is this Google audit. You were a month into it and you thought it would be six more weeks’ worth of stuff. We’re essentially five weeks into that period so I’m fascinated to hear what that’s looked like over the past five weeks, where it’s at, are you wrapping up, that kind of stuff.
Mike: I guess for context of dates and timeline here, three weeks ago was MicroConf Europe. There was a Wednesday that I was basically either on a plane or over in Dubrovnik for MicroConf Europe. That spans a couple of weeks where, I don’t know about you, but a day or two before you travel, you really don’t get a whole lot done and then the day or two after is kind of the same thing so that basically makes it almost two full weeks right there.
My audit started last Monday and it was supposed to go from Monday to Monday, I believe. That process is finished. I’ve got a draft of the report and I’m going to go over it with them next week. I’ve got the letter of attestation or whatever it is, more like a letter of assessment. That’s already in my hands and I’ve sent that off to Google. Now, it’s a waiting game to see if Google just looks at it and says, “Yup, this is good. You’re all set for the next 12 months.” That’s the good news. The bad news is I’m super pissed about the whole thing.
Rob: Well, you have been the whole time. Are you more pissed now than you were the last two episodes? Has something more happened?
Mike: I’m way more pissed about it because basically they came back and said, “Yeah, everything looks fine. It’s pretty much it.” There was one thing they complained about and they’re like, “Yeah, you’re cryptography keys, the keys that you’re using to encrypt information, shouldn’t be on the same machine as all source code,” or not even a source code, but the actual application because before, I was compiling it directly into the application knowing that nobody else has access to that machine. You can’t get to it unless you break the machine open and hack into it, and then you’ve got access to the source code and everything else.
At that point, encrypting things really doesn’t do a whole heck of a lot and yeah, the data is on a different machine, but I’m well aware of all the security implications there. In the grand scheme of things, that’s a very, very small thing. They’re like, “Yeah, that’s an absolute no, no. You can’t do that.” I was like, “All right. Fine.” I spend a couple of days using Azure’s Key Vault, I think it’s called. Basically, now I’m storing the keys someplace else, but the client’s secret and stuff are still on that machine, so it’s like, “Okay, now I have to go to this other machine, pull back that information, and then encrypt it.” I have to do that every single time that I have to encrypt or decrypt information. I’m like, “This is just stupid.” It’s just like, “All right, whatever. I’ll do it,” because I have to. I have no other choice.
Rob: Yeah, that’s the thing. You can get hung up on it and be pissed about it, but then you got to move past it especially if Google approves this certificate of attestation, I think is what you said. I mean assuming that that goes through, you have 12 months and it’s time to get on your horse and get things moving.
I’m curious. Over the past five weeks, how much of your time was that was it? You expected it to maybe ramp up to like 20 hours a week, like half your time, and I’m curious if that amounted to that or what it looked like.
Mike: It wasn’t that much. I had to give them a whole ton of documentation. It wasn’t quite a dozen different documents of policies and procedures and stuff like that, but some of it was just I’ll say personally frustrating because they’re like, “Document what your secure coding procedures look like and how you educate other people who come onboard.” I’m like, “Well, there really isn’t anybody else that I have to educate about it because it’s just me.”
I distinctly remember looking at one of the questions and it was something along the lines of, “Please describe how you do pair programming for code reviews.” I wanted to laugh at it and I had to hold myself back from saying, “I wait 12 hours, sober up, and then look at the codes sober to figure out what it was that I was doing.” It’s just so frustrating to have to go through that stuff and answer completely stupid questions and provide documentation for things that I’m not going to look at and nobody else will.
Rob: I wish you would have put that drunk answer on there and just to see what they said.
Mike: Well, it ended up in the report, too. Not that, but some of the other things that I wrote, they asked me a couple of clarifying questions and literally word-for-word, the stuff that I put in there, it was word-for-word what I said was in the executive report.
Rob: Yeah, that makes sense. I was joking, by the way, about the drunk comment. I’m glad you didn’t do that because that wouldn’t have gotten well. This feels like a win to me. I’m going to flip it on its head because I can tell you’re pissed and you have been for three months or more because the whole thing threatened your business itself.
When you got initial quotes or estimates, they were really high. Then you got lower quotes, then you negotiated, and then you got something that was reasonable enough for you to pay. Now, it sounds like your done and while it has killed some time, it didn’t kill as much time as you were projecting over the next six weeks. Right now, are you done? Do you have to make any more code changes to satisfy their recommendations?
Mike: As far as I know, no. I have the letter. I have to hand it off to Google. I believe, at that point, Google just takes it and says, “Okay. Yes, you’re approved.” And they toggle some switches on their side and they stop bugging me about all this stuff. My belief is that I’m done, but what pisses me off is how little they found and how big a deal Google made it out to be. They’re like, “We’re going to kill your business if you don’t do these things or you don’t go through this process and pay this large sum of money to this third party company to do a security audit.”
There’s no recourse there whatsoever. So, I go through the process and then when I get through it, I come back and I look at their end result of it and they’re like, “Oh yeah, you have to change this one minor thing here that’ll take you like a day or two.” Then, all the other documentation that I put together, which is a total waste of time because nobody else is ever going to look at any of it, it’s totally useless. It was a huge time sink for absolutely nothing. It didn’t benefit my customers. It doesn’t make the product any better. It doesn’t get more people using it. It literally does nothing other than allow me to stay in business. That’s the piece that’s so frustrating. That’s the part that really pisses me off and makes me angry at Google, for putting me through this when at the end of the day, you look at the report and they’re like, “Oh yeah, these one or two things.” It was almost completely unnecessary.
Rob: If you’re at home playing the Startups For the Rest of Us drinking game, you can know take your shot for Mike saying it was unnecessary and he’s angry at Google. Mike, I know. I totally get it. I think I want to say it again. I consider this a win because you’ve passed this. Six months ago, maybe more, you started talking about this and it was a big, big deal and you’re done. You made it through and it didn’t wreck the business. To me, it’s like the Bill Wolf quote, “Control what you can control and let the score take care of itself.” That’s where you are. You can be pissed. I get pissed all the time at stuff. You know me pretty well. I get mad pretty easily, but I try to let stuff go quickly and move on. You know what I mean?
I mean this could’ve been a complete and utter roadblock that decimated your business whether because you failed the audit, whether it’s because you couldn’t afford the audit, whether it’s because you refused to do the audit on principle. Any one of those would’ve wrecked the business and you turned it into a speed bump. You said, “What are my options here? I can pay for this thing. I can negotiate this thing. With my teeth clenched, I can just force my way through,” and that’s what you did. I think I know it’s a pain in the ass. I totally get it and I’m really surprised that we have not had to use the beep noise over any of your words so far this episode, but cheers to you, man. I am happy. I look ahead at Bluetick and now, it’s all about execution. It’s differentiation. It’s writing some code. It’s marketing. It’s getting more people in. That’s how I feel about it. I have the outside perspective. You’ve been mired in this for months. Does that resonate with you? Do you feel that way or do you feel like I’m being too optimistic silver lining?
Mike: You’re absolutely right. Everything that you just said is 100% correct, but Google still pisses me off right now. I’m not the type of person who gets upset easily. I’m not the person who you can just poke with a stick and suddenly, I just rear my claws and just go after you. I just don’t do that, but this has been dragging on for so long and I really feel like I’ve been put through the ringer for this for no good reason. I just can’t point anything justifiable. The problem is I know I have to go through it again next year.
Next year, it will be better because I’ve got all the documentation in place and yeah, the product will change, certain things are going to have to be updated here and there and that’s fine, but the fact that they went through this whole thing and they made it such a big deal, and they get to the end of it and there’s this report that shows, “Oh, we found three things.” One of which is not even on my servers. I’m like, “Okay, this is total […]. Complete and utter […]. You’re complaining about an SSL certificate that I put on a server that’s not even my server. Come on. That’d ridiculous.” I even told them that. I’m like, “I have no control over this.”
Rob: Yeah. I hear you about having to do it again in 12 months. My hope is that the fact that you already have an existing relationship with an auditor and that you have the same docs or depending on where you are in 12 months, maybe you’ll have hired a developer or a senior developer that could do parts of this for you so you don’t have to mire through it.
I realized that’s a tall order. You’d have to make a lot of progress between now and then, but I think in the back of my mind, in your shoes, you’ve seen how frustrating this is and how much it emotionally derails you. With me, with Drip, it was blacklists, there were support requests, it was cues being slow. There were these things that I had to find people to do because they slowly tore away at me and they made me hate my job.
As entrepreneurs, we can’t hate our job because we control them. If we’re not enjoying it, it’s to a certain extent, our fault. Now, in this case, it’s not. It’s not your fault that Google made you do that but you did then have the chance to say, “Well, I’m just going to shut the business down,” or, “I’m going to pivot away from Google,” or whatever, but you gritted it and made it through, which is in my opinion, what you should have done. But looking ahead 12 months, I’d be thinking how can I not let this be six weeks, eight weeks of me being mad next time? What types of things can I put in place to help with that?
Mike: The fact of the matter is, I think that in a year when this comes up again, it will be a lot less stressful because I will have had full visibility of all the things that are going on, and all the things that they’re looking out, and I will have already had one report to look at that says, “These are all the things that we looked at and be able to at least keep them in mind moving forward.” Up until I got a final report, even during the week of the audit, it was just super stressful because I wasn’t getting anything back from them and I was expecting a daily report or something along those lines that says, “Hey, we looked at this and this is a problem. You need to fix it. Here’s a high priority. Here’s a critical thing that you have to do.” Because that all those critical and high items had to be taken care of before they could issue this letter of assessment and I was getting nothing.
I asked them. I was like, “What’s going on here? I’m expecting something here and I haven’t heard anything.” They’re like, “Oh, we haven’t found anything so far.” But of course, there’s a lag time between the time that I sent them an email and then they get back to me. I think some of their penetration testing staff are in completely different time zones like halfway around the world, so it just makes that back-and-forth a lot harder to do because, (1) they don’t report directly to me, and (2) they’re in a completely different time zones. It just makes it a lot harder and a lot more stressful, but I don’t think that it’ll be nearly as bad next time.
Rob: Yeah, I would agree. Looking ahead, let’s talk about some other things that you had in the works, some of which were on hold or I think one of which was on hold due to a code freeze and then there were some other stuff that step through. Just to keep going on the thread.
You have an untestable sealed .NET component. Startups For the Rest of Us drinking game just gets so good when we go over this topic again. I want to go back and I think it had to have been six or eight months ago when you first mentioned of this thing. You said, “I’m going to replace this thing,” and you put it on hold due to the Google audit. Have you replaced it yet? Is this top priority? Where do we stand with this?
Mike: I just got the letter of assessment this morning. I was expecting it on Monday because they said that they were working on it, and then Tuesday came and nothing, Wednesday came and still nothing, and finally, I got it this morning. It was like one o’clock in the morning. Until then, it’s basically been on code freeze. So no, I haven’t touched that yet. Is it on deck? Yes, at some point. When exactly? I don’t really know.
I have to go through and look at where that really falls in the priority list because I feel like it’s a lower priority than a lot of the sales and marketing stuff that I have to do. I hate to say that this is or isn’t holding me back because I’m not really sure. I want to get it out of there. I don’t know how hard it is to be able to pull it out because it is pretty integrated into the core of my code and I’m going to have to change the storage mechanism.
I think I’m just going to have to make a judgment call at some point about do I just suck it up and leave it there even though I know that it’s the wrong decision? There are certain part of I think everybody’s application where it’s got words on it and you’re like, “This really needs to be rewritten or it needs to be refactored.” And you don’t do it because you know that you’re just kicking a hornet’s nest and it’s going to be terrible.
Rob: How long do you think it’s going to take you to get the new component in? I know you have to redo data and you have to remap stuff and namespaces. I get it. How long though? That’s the thing.
Mike: Just for me to migrate the data would probably take a week. That’s just the computers churning.
Rob: Yeah, so it’s a sizable thing, but you have decided that this is the right choice, right?
Mike: Yeah. That’s the thing. Assuming nothing goes wrong, it would take a week.
Rob: Sure. All right. It happened this morning and you’re not done with it yet, Mike? What have you been doing? No, I’m just kidding. Do you plan to start it? What is it? Thursday today so do you plan to start that tomorrow or Monday? Is that the next priority or you’re just saying I’m going to do this in a few months?
It’s tough. This one’s not so clear up to me. To me, in my head, it’s a bite the bullet type of thing where it’s overhead and I know it creates legacy, or cruft, or just hard code to work around. To me, I would bite the bullet and I would cover up two weeks and I would hammer this through. But I can also see an argument on the other side of this provides no value to your customers. On the flip side, it’s like, “I should be marketing, selling, and getting more people in before that.” I could see an argument either way. Again, I would probably make the product such that I feel more comfortable marketing and selling it, because I hate having crappy code. What’s your plan there?
Mike: The best thing that I can come up with is to plan to do it in about a month because that would put it in mid- to late-December, which I know there’s not going to be many people using Bluetick at the time and I’m probably not going to be fielding very many support requests. I’m probably not going to be launching very many new marketing or sales campaigns at the time. It’s a slow time where it would be a good time to sit down and bite the bullet and do that as opposed to now where people are still ramping up for the holiday season, doing email follow-ups, and trying to get deals and stuff. By the end of the year, it seems like my time is probably better spent doing that now and then plan for that slow period of biting the bullet.
Rob: Cool. That sounds good. We will connect with you again on that next time you come back. For our next topic, let’s talk about marketing. You obviously had the majority of your work weeks to be doing other things. You didn’t want to write code and the Google audit was taking some time. We talked about a marketing hire you were making. It was a contractor to do podcaster research and we had talked that through a little bit last time. Where does that stand?
Mike: Most of the stuff is already done and been sorted and prioritized. I got the information I need for all those things, so we’re basically waiting until the end of this audit to start queuing those up. Between today and tomorrow, the plan is to start queuing those up, start sending those emails out, and see if I can get onto a handful of other podcasts. I’ve already done one podcast interview. I actually did that last week. I’ve got another one that I was told by the podcast host that she’d love to have me on so it’s just a matter of reaching out to them and getting that set up as well. There’s no more roadblocks in the way of doing that so that’s get started ASAP at the moment.
Rob: It’s been five weeks. Why did it take that long? Why hasn’t that started two weeks ago?
Mike: Well, two weeks ago, I was in Europe. That’s why. Of the last five weeks, a good solid week-and-a-half to two weeks was spent in the middle of the audit and then there was another solid week or two that was basically over in Europe. I basically had maybe two weeks or so before MicroConf Europe get started on that. That was mostly the data aggregation and the actual work that was done behind the scenes.
Rob: Got it. Are you sending those emails through Bluetick?
Mike: Yes.
Rob: That’s cool.
Mike: Well, that’s the plan. I haven’t actually sent them out yet.
Rob: How did you get on the podcast then?
Mike: Oh, there’s a personal invitation. Somebody raised that to me.
Rob: Got it. Cool. That would be an ASAP thing then. You could get that going tomorrow literally or Monday. You just got to write some copy and get her in.
Mike: Yup.
Rob: Cool.
Mike: That’s the plan for that.
Rob: Good. Looking forward to that. We already talked about that. I won’t go into it. Again, it drives a little bit of traffic. It’s more of a slow burn. It’s a one-time thing type of thing, but I think that it’s easy enough to do as long as it doesn’t take a bunch of time. I would probably be doing the same thing right now.
The other thing you were looking at was code emailing. It was really warm emailing. You said 900 email addresses from your LinkedIn connections. You had prior Bluetick cancellations, sales leads that never converted, that were in pipe drive, other stuff. You were going to bucket them and start warm emailing cold batches in the next week or two last time we talked. Talk to me the status on that.
Mike: I’ve got those all bucketed out and that’s another situation where I was holding off on actually doing it and pulling the trigger after this audit was done. That again is something else that got the green light at this point that I can start today or tomorrow.
Rob: That’s interesting. Why were you holding off on that? Because you knew you were going to pass the audit. That wasn’t a big question. I knew you were.
Mike: It was never a question of whether I would it pass it or not, it was a question of timing. There are two pieces of the audit itself. There was the technical piece where they say, “Hey, we’re going to beat on you servers for six days.” And then aside from that, there is all this policy documentation that I had to create. Anything that they saw that raised a red flag, I had to either change the policy itself, it’s not just text that I have to change, but it’s also I have to change how I do things.
For example, one of the things that they said was, “Oh, you have to enable multi factor authentication on everything including source control.” So I have to basically generate SSH keys and lock down all of my source controls, which means that I also have to generate API keys, then go into my build environment, and I have to change all that stuff, too. It’s not just a simple thing like changing some texts on a piece of paper that I hand to them. I actually have to go do those things as well. All of that stuff needed to be changed.
There was a bunch of other things that came up during the policy side of things where they said, “Hey, you need to change how you’re going about these things just in order to comply with the requirements.” Between that, I knew that I only had a week or two before I had to leave for Europe, and then immediately after that, I had to dive right into the technical side of the policy stuff.
What I didn’t want to do is start going out and start and try to schedule meetings, calls, and stuff with people. They were not going to be for a month-and-a-half because I didn’t necessarily know that earlier this week things were going to be done. For all I knew, they could come back and say, “Well, you’ve got these 25 vulnerabilities, and 17 of them are high or critical. You need to make code changes to do those.” I didn’t know that I was going to be done this week. For all I knew, it could’ve been another three to four weeks.
Rob: Yeah, but I think we talked last time and I had said cold email doesn’t just start converting overnight typically. Typically, you start it at trickle, you test some things, you tweak, you tweak, you tweak. It takes weeks to really start ramping it up. I had suggested, “Hey, you have this month or whatever,” I guess it was six weeks during the audit that was projected to be six weeks, “I would propose that you just start emailing 5 a day or 10 a week.” Just a very small trickle to start seeing something such that the volume of things wouldn’t have been like, “Oh my gosh, I have 50 calls.”
It wouldn’t have been so much, but just to start ironing those out because I bet if you start this on Monday, it’ll be a couple of weeks until it really starts getting going and now, you’re at a standing stop five weeks later. You know what I mean? Five weeks after our last call, you are at standing stop trying to get it going rather than having a little bit of momentum. That’s what I was more getting at. Why did you wait during the audit to get it going?
Mike: I think I agreed at the time and then realized that I just was not going to have time. Even if that started to turn into something, I wasn’t sure what the future would hold in terms of my timeline leading up to the week after MicroConf or two weeks afterwards. Like I said, for all I knew, it could’ve been another three or four of hard, heavy lifting in terms of code or code changes. I just didn’t know. That big blind spot is really what held me back there.
Rob: Okay. Next time, you should be good. You should be rolling on these things. Right now, cold email and the podcast tour, do you have any other marketing stuff that you’re going to be rolling out or are you going to be focusing on those two? I’m just talking over the next month. Let’s say we talk again in four or five weeks.
Mike: I do have one other thing that has finished up, which we haven’t really talked about. I just finished up an integration that I got approval for I think on Monday of this week. Now, if you go over to zapier.com and you search for bluetick.io, you’ll find it underneath the early access section. bluetick.io now officially has a Zapier integration that is no longer just buy and bite only.
Rob: Nice. Congrats man. That’s cool. Now, what’s funny is I have a note because I was going to cover that. The note says, “Mike is working on an integration that should be live at the end of this week.” I read that five weeks ago. Why did it take that extra month?
Mike: Because I had to email them and then there was a little bit of back and forth. They basically had to run it through their own testing and stuff like that. There was a bunch of things that needed to be changed both on my side and inside the Zap itself in order to get it live. It took a little bit longer to get finished than I thought it would or I hoped it would. And then I emailed them and said, “Hey, can you guys take another look at this.” When I got back from MicroConf, I emailed them again because I haven’t heard back. Maybe the email got lost or buried under all the other stuff that I’ve got going on, but I ended up having to ask them again to take a look at it. It only took them two or three days after that to take a look at it to say, “Yup, this thing looks good. Go for it.”
Rob: Cool. So people can go and search for that right now. Do you get any promotion out of that? Are they going to list you anywhere?
Mike: No. They don’t do any code promotion until you get to a certain number of users, which I think I was told it was like 50 users before that happens so I have to look and see if there’s any way for me to actually see how many active users I have. But I don’t know what it currently stands at so I don’t know how far I have to go between now and doing any sort of code promotion with them.
Rob: Got it. In order to get to 50 users, obviously, you need to get more customers yourself and then have something in a sequence somewhere that is asking people to hook it up, right?
Mike: Exactly.
Rob: Cool.
Mike: But I will say having the audit and the Zapier integration behind me, I would call both of those huge wins for me.
Rob: Yeah, that’s good. Would you say over the past, since our last call, those are probably the two high points?
Mike: I would say so, yeah.
Rob: And then the low point was the audit? Just in the midst, that’s what it sounds like.
Mike: Well, the midst of it and then the end results been everything’s fine. It’s like if I wanted to pay somebody five plus figures to go not find something, I’m sure my kids would volunteer. Again, it’s just irksome. I mean you don’t know until after you’ve done it because you do have to poke at everything and I get that part of it, but it’s still frustrating especially being early on.
Rob: Wait, are you saying you were frustrated with Google and the audit? Oh Mike, every time, I’m going to keep bringing it up.
Mike: My anger is interesting.
Rob: Oh, next call, I’m going to bring it up again just to see, just to troll you. Cool. A couple of other things before we wrap. One thing I had asked you about was differentiation. I’ve mentioned, Bluetick is very similar and undifferentiated from most of your competitors and you had said, “I need to talk to some of my customers more and ask them why did they decide to use Bluetick.” Think about it as a job to be done thing. You had talked to a few customers. You got a couple of ideas. One was to have customers in multiple sequences at the same time. In other words, to be able to re-add customers to the same sequence.
It’s a two part question. One is have you gotten more confirmation that those two feature ideas or differentiators are enough? Are you going to build those? And I guess the third part is, maybe we’ll start with this, have you had more conversations with customers since we last spoke? Talk about those other things.
Mike: I’ve had a few here and there, yeah. I still don’t necessarily know if what I have in mind is the deciding factor of like, “Hey, this is going to make Bluetick leaps and bounds better than the other things that are out there.” I believe that it is, but I don’t necessarily know that for a fact. I don’t have any real basis for that. It’s a gut feeling more than anything else.
Rob: How can you turn it from a gut feeling into something? I would say a gut feeling is like, “Yeah, I’m like 30%, 40%, 50%.” How can you get this to 70% or 80%? Whether it’s with one of these things or whether it is something entirely different that you start hearing from other customers.
Mike: I think the first step one, obviously talk to some more of my customers, but two is to start running the idea past. I almost want to say go back to basics when I was first flushing out the idea of Bluetick with a bunch of different people and ask them questions about, “Would you be […] this?” or a product that solves this particular problem. I think it’s a matter of going to some of my list and finding out, “Is this the type of problem that you would be interested in solving inside of your own business?” I feel like it’s more of a reframing of what Bluetick does versus selling what Bluetick is, if that makes sense.
Rob: It does. Now, is it reframing what it does just like, “Hey, it does this one extra feature or two extra features,” or is it in a whole position? Like it’s a more broad branding/positioning shift?
Mike: A little of both, I think. In order to do it, I would have to write some more code. Obviously, I don’t want to go in that direction unless I hear more from people about, “Hey, yeah, this would actually be very compelling for us to use that.” But the other thing is when you hear about an email follow-up tool, your inclination is cold email. There has to be some sort of a brand positioning of, “Hey, this isn’t just for cold email. This is how it is positioned differently in order to make it work for people who aren’t just doing cold email.”
Right now, Bluetick serves a very, very specific piece of functionality for people in their business and if they don’t have that particular problem, then they won’t use it, but that also makes it hard to identify the types of customers because two businesses who are largely identical, one of them may be doing that activity and the other one may not be. It’s hard for me to say, “Oh, go after SaaS companies that fits this profile or in this particular business,” because unless they’re doing that particular thing, it doesn’t solve their problem.
Rob: Got it. So between now and the next time we chat, is this high on your priority list, to speak with this additional customers to try to suss this out?
Mike: It is. I wouldn’t call it my number one priority, but I really need to find what that one differentiating feature or factor is that would make it easy for people to understand what I originally had in mind with Bluetick as a vision as opposed to what it currently is and does today and what people see it as.
Rob: Yeah. I wouldn’t disagree with that. It’s kind of what I’ve been saying the whole time back to episode 448 when we first really dug into all of this. My point was Bluetick is not differentiated and you’re not moving fast enough. That was the thing, whatever that was five months ago. Now, you’re through the Google audit and you’re through a lot of this speed bumps and does feel like, (a) step one, figure out how to differentiate it, and then (b) differentiate it and move fast enough such that folks you’re trying differentiate away from aren’t keeping up with you or aren’t going in the same direction or whatever. That’s what I’d be doing, too, in your shoes, would be a lot of conversations.
I think that cold emails probably can play into that. Again, they’re not cold emails, but it’s your LinkedIn connects and the Bluetick cancellations and such. In addition, I’d probably talk to every customer you have right and just try to figure out why they’re using it, how else you can make it to be sticky. You have those two ideas of those features I mentioned earlier. Those seem like nice to have as interesting tweaks but I’m not convinced. My gut is that they aren’t enough. They aren’t enough to be really, really differentiated and make people switch. Just like what can you have that will make people switch from other tools or choose your tool when they’re comparing yours to the three or four other tools that are top of mind for me.
Mike: I mean I have an idea of exactly what it is that I would want to talk to people about because it’s something that we can talk about it here if you want. The basic idea using Bluetick as a mechanism for identifying things that you need from other people and this is something that you can do with Bluetick right now, but let’s say that I need a W-9 from you or something like that, the question is, how do I get that from you and how do I make sure that I follow-up with you until I get it?
That was one of the things that Bluetick was born out of, was when basically before Xander started helping out with this stuff, I was doing all of the data gathering for all the sponsors for MicroConf. I would say, “Hey, I need logo. I need title text. I need an image. I need all these different things,” and asking them for it and then going back and forth like, “Hey, I’ve got these two things but not this other one or this third one over here or fourth one over here,” and using Bluetick instead as a mechanism for gathering that stuff.
That’s basically a way to build a process into Bluetick such that solve a very tightly-defined problem to gather digital materials from other people and they may fit a specific format, or they may be documents, or Excel spreadsheets or something, and then Bluetick can manage that back and forth process to say, “Hey, I’ve got these three things but not this other thing over here.” Does that make sense? There are like 30 different use cases for it but just very simplistically, that’s the idea.
Rob: Yeah, that makes sense. That’s a clear path or a clear job to be done. The job to be done, you’re saying, is not cold email, it’s not increasing sales, it really is to get something in a workflow from other folks and to do that with email. My first thought when I hear that is right now, the tool I use for that is Gmail and Boomerang. If I email someone for an image, and a this, and an invoice, I Boomerang it in a week if there’s no reply or two weeks if there’s no reply and then I just respond to it again. I know that’s different. Probably in Bluetick, you could put a whole sequence together and if they don’t reply, it automatically does it. I don’t have to type the next one.
I think that Boomerang does a really good job on a small scale and if I only had five sponsors to deal with, that’s what I would do. Bluetick is going to be limited only to those that needed that scale. Cold outbound email or sales emails, you’re a 1000 a month or 2000 a month. There’s no way you would do that via a Boomerang, so everyone in that boat needs or should be using a tool like Bluetick or one of your competitors’.
Whereas, the niche you’re talking about, I think, not only is that a lot smaller and it’s further away from the dollars that the people are trying to generate for their business, because more of a back office thing, but it has to be people doing that at scale. Again, if you’re onboarding five clients a month, you’re probably just going to do via email. If you’re onboarding 100 clients a month, 100 sponsors a month, now it makes a lot more sense to use a tool like you’re talking about.
Mike: A lot of what you’re saying makes sense but I had a conversation with somebody who does onboarding at a small scale and they already know let’s say 30 or 50 different things that they need from the customer. Rather than saying, “Here’s the list of all the stuff that I need,” they only ask for two or three. The reason they only ask for 2 or 3 is because if they ask for 50, it’s going to be overwhelming to the customers. Instead, they only ask them for a couple of things and then they modify that list over time.
So the idea would be you’ll have this, I’ll say a workflow, where you’re asking for something from somebody and you need Bluetick to follow-up or you need a follow-up mechanism in place to basically manage the process of gathering that stuff and you don’t want to overwhelm them with everything all at once. That’s just one instance.
But also, I’ll tell you from experience of managing the sponsors. Once you get up to more than about five conversations in parallel like that where you have different things that you need from people, it gets really hard to manage. It’s not 1000, it’s not even 25, it’s like 5 or 6, and it’s just a nightmare to manage, even 5 or 6.
Rob: It’s interesting. I think, in the interest of time because we’re wrapping up, I want to make a note of this and circle back once you’ve had more conversations, I don’t think it’s a terrible idea. It’s an interesting position. I think there’s a hole we could dive way into how I would think about this because if you’re going to build a generic tool to do that and there are three different use cases, you have a problem. If you can pick one, what’s the biggest one of those used cases, the biggest pain point? Back to conversations we’ve had in the past, is it conference organizers trying to get sponsors and speakers to give them stuff? Is it, whatever, we could pick any vertical and is that where you start? Or is it lawyers trying to get stuff?
Mike: Is it CPAs trying to get tax information from their customers?
Rob: Exactly. Right. All that stuff.
Mike: I’ve had those conversations, too, and it’s a nightmare. I hate to go down the road of going after real estate brokers where you’re trying to get a loan and you need all these different things to apply for. I don’t want to deal in that particular business, but that’s another particular use case where there’s a lot of back and forth and a lot of information that’s needed.
Rob: That’s the thing, is all those verticals we just named or several of them are a pain in the ass to sell into. They are inundated with cold outreach. They don’t adopt new technology quickly. I tweeted this out a few months ago where I said you’re either dealing with competitor pain or customer pain these days if you’re building a SaaS. It’s a general comment but 10 years ago, you could go into a greenfield market with somewhat sophisticated customers, and you could build a SaaS app, and they would come and adopt it, and that was it. It was cool. But things changed over time and today, there’s not much greenfield left and a lot of the greenfield is like, “Well, there’s not a really good this and that for lawyers, or this and that for CPAs, or this and that for dentists.” And so, there’s not some specific thing for them. It’s like, “Cool. I’m going to build for that because I don’t want competitor pain. I don’t want a bunch of completion that chomping at my heels all the time.”
On the flip side, you’re now going to have customer pain. What I mean by that are high maintenance customers, they could be long sales cycles, they could be high price sensitivity, they are high support because they’re not technical, that’s kind of stuff. I’m not trying to make an unequivocal 100% of the time this is the thing, but these are the patterns that I’m seeing. When I look at the TinySeed batch, or when I look at people who apply to become in TinySeed, or when I look at my experience, you got to pick one of those. Trying to get away from both of those is very, very hard, I would say dang near impossible these days unless you get pretty lucky and be early to a certain market for early adopters where the market is just emerging.
I can name a few. Baremetrics is one. Early on, he didn’t have either. Now, he has competitor pain because he has a bunch of competitors, but he got in so early with the Stripe Metrics. I think another one is Tuple, Ben Orenstein’s. They filled a big gap that was left by a startup that have been acquired and shut down and right now, they don’t have competitor pain and they don’t really have customer pain either because it’s a lot of developers.
In the long run, Tuple will have competitor pain because people are watching that and there are going to be competitors that are developed there. They have a bit of a technical mode but in the long term they should just expect to experience that eventually, but since they have a head start, that’s good.
That was my long diatribe about that’s where as you decide if you want to do one vertical or five verticals to start with or wherever you want to position this. I certainly think making it a generic horizontal tool where the headline says get anything from anyone in an automated way, I think that’s a really tough way to go because in a lot of examples, people are trying to fit it into like, “What it is actually then? Is this like Mailchimp?” “No.” “Is it a cold email outreach tool?” “No. It’s not that.” So they’re trying to fit it into a bucket. That’s what people do when we go to these sites. If it’s something that’s just completely new, it’s always you’re just explaining the same thing over and over.
This is interesting. I’m making a note here because I think this is the key to unlocking something with a small group of people. This is how you find early signs of product market fit with a small group, and they love it, and they rave about it, and they say, “No other tool does it this way.” And they have different feature request for you than they would if you’re a cold email tool. If you can make it work and it’s a big if, that the direction you head. That’s how you find that you start growing.
Mike: Yeah. It’s just interesting how many conversations I’ve had have led me in that particular direction. There are a lot of things that remind me of, back when I first started working on Bluetick. It was some of the problems I ran into in trying to onboard sponsors for MicroConf or to sales for AutoShark. A lot of them are overlapping in a very similar way. Some of those features, they just never really got built.
Rob: So wrapping us up today, each time we’ve tended to talk about motivation, sleep, exercise, and stuff—I don’t want to run so far over what we dive into all of that today—I’m curious, over the last five weeks, what has your motivation been like?
Mike: I would say it’s fluctuated. It’s gone up and down. There are definitely days where I don’t have a whole lot of motivation and I feel like the world is pressing down around me. It’s not that I don’t have any options, it’s just that it’s hard to figure out what to do. And then there are days where I don’t even think twice about it and I just sit down and start working and banging things out, but it fluctuates from day-to-day. I can’t say that there’s a great pattern to it or not a great pattern but like an identifiable cause for anything that’s going on. It’s not really sleep-related. It’s not really exercise-related because I’m sleeping fairly well and exercising pretty well. So I don’t know. It’s hard to say.
Rob: I was going to wrap up the interview anyways, but the recording software crashed right at that moment and then Mike and I were basically just text chatting. But I feel like we’ve got a pretty good feeling of where Mike’s at and I’ll probably dig more into motivation, sleep, and exercise in the next episodes. It’s kind of got short shrift here. But I, for one, am feeling good for Mike about his Google audit effect that it’s done and I feel like he can get past it and move on. I’m super interested to hear what progress he can make on trying to get on this podcast as well as really the cold email as the one that I’m banking on as well as the differentiation. Those are the things that I’m going to be continuing to press him on.
These are the points of accountability that I think helped us all to move forward, is to have someone bring up what we said last time and say, “Where are you with that? If you’re not as far as you should be, why not? Okay. Let’s talk about that again in a few weeks.” Is starts to get in your head that this is a real thing that you need to move on and make progress on. Otherwise, the business doesn’t move forward.
I always enjoy talking to Mike. I feel like these are enjoyable conversations for me when I listen back to them. I feel like there are a lot of value for folks to follow his story, to hear what he’s going through as well as to take away how to keep pushing a business forward and have accountability. In a way, it’s a one way mastermind. It’s a little bit how I think about it. It’s kind of he’s reporting on things and I’m helping move it forward. I appreciate that Mike takes the time to keep us posted and we’ll keep doing this as long as it’s interesting.
If you have a question for the show, because we do a lot of Q&A episodes, email us questions@startupsfortherestofus.com and you can even attach a voicemail or link to a Dropbox, Google Drive, MP3, or whatever, or you can leave us a voicemail at (888) 801-9690. Per usual, voicemails go to the top of the stack and we will have another Q&A episode coming up here pretty soon.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. In any podcaster, search for “startups.” We’re typically in the top five. You can visit startupsfortherestofus.com to get a full transcript of each episode. Thank you for listening and we’ll see you next time.
Episode 469 | Key Takeaways from MicroConf Europe 2019
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike walk you through some of the talks and key takeways from MicroConf Europe 2019.
Items mentioned in this episode:
picture of an evening reception at MicroConf Europe 2019 at Vala Beach
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about our key takeaways from MicroConf Europe 2019. This is Startups for the Rest of Us episode 469.
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.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the mistakes we made. So, where this week, sir?
Mike: Not much. Just working on my security audit for Google.
Rob: I was going to ask about that. That’s the running thread. I think in the next couple of weeks, we should get back a full updates episode, but talk me through it briefly.
Mike: It started earlier this week, so I scheduled it for the week after MicroConf Europe because obviously I wasn’t going to be here at last week. I didn’t want to start it the week that I wasn’t here because it’s expensive. We went through, how to kick-off call, they said, “Which environments do you want?” and then they asked, “How much can your server handle in terms of requests per second?” and I hesitated a little bit because I wasn’t really sure what to tell them.
On one hand, I want them to do a good job, but on the other hand I don’t want it to fall over and die on itself. I said, “Try to be a little careful, but I should be alright generally if anything happens. Just email me right away and be done with it.” I just turned them loose.
Rob: Do you think it was a good call to do it immediately after MicroConf Europe? I guess you flew back on Wednesday, I flew back on Thursday. It wasn’t just jet lag. It’s just that extravert hangover being around so many people. It’s so amazing and you want to stay up late and have a bazillion conversations but then, I find that on the flight back I am completely worthless. Basically, I can’t do any work and frankly, several days after MicroConf, I just don’t book anything. Even doing phone calls is a real stretch for me. The fact that the audit started the week after, were you geared back up again by then?
Mike: I was, but I didn’t have all the stuff ready to go right away. We ended up starting about a day late, but that was partially my fault because any email come through that I didn’t fully read absolutely everything in it, it said, “Reply to this email just to confirm that we’re good to go on this date.” I confirmed it on the call but then they followed it up with an email afterwards just to verify and I hadn’t replied to that.
So we ended up starting a day late, but there’s a bunch of paperwork that I was still working on to get over to them. So, documentation, policies, procedures, that sort of stuff. Anyway, we really didn’t start any too much later. I could be a lot worse. It could’ve been them saying, “Oh. Well, our schedule is booked for the next three weeks, so you’re going to have to wait three weeks.” I’m glad that it didn’t come to that.
Rob: That makes sense. From my end, really spent a week-and-a-half in Dubrovnik. I guess it was eight days and the first part of that for several days was second in-person TinySeed retreat and then rolled into MicroConf Europe and then I stayed one extra day just purely because I couldn’t get a flight out at a good time, but that was nice to have that extra day. Most people were gone and that view from that hotel is just amazing.
If you’re on Twitter and you saw any pictures—we’ll even try to grab a picture and put it in the show notes here. Tt really is the nicest venue we’ve ever had in MicroConf fat ever in either continent. There’s something about being that close to water. It’s the Adriatic sea and there are boats out there and there are people’s scuba diving.
With TinySeed, we did as a kayak trip although I couldn’t go out there because I was busy writing my talk, but it really is just amazing to be in the venue, you want to talk, then the break starts, the curtains open, and you’re just looking out on the sea. It’s this feeling of we’re not trapped in this conference room for six or seven hours today.
We are in the conference room intermittently between walking out on the deck, hanging out in the sunlight, listening to seagulls and that kind of stuff. It really is this very unique venue that we found.
Mike: Did you get to go swimming at all or no?
Rob: I had time to swim. I don’t particularly love swimming in cold water. It wasn’t that cold but it was cold to me. I’m from California. I like hot tubs and I like warm swimming pools, so no. I sat there and waved at people and took pictures at folks while they swam and they did it because they were like, “Yeah, I want to prove that I was in the Adriatic sea and stuff,” but I did not get up in the actual water past my knees.
I did get it last year. For listeners, this is the second year we’ve done it at the same venue and I’ve don’t it last year. How about you?
Mike: I went twice. I was planning on going to the third time just before I left, but then I realized that if I went swimming just beforehand, then it was probably going to be an issue because all my stuff would be all wet. I just didn’t want to make it all wet with the sea water and then get on a plane because I would have to put them in a plastic bag or something. I’m like, “No.” I just don’t want to do that.
Rob: Twenty hours of flying? Yeah. We definitely got a lot of positive feedback about the venue. It was interesting. There were more first timers there than usual this year and I’m not sure what to make of that. There were also just more attendees than we had at most MicroConf Europes. It was between 130 and 140 and folks were basically saying, “You should do it here again next year.” That was the overall consensus that I heard.
Normally, we move it every 2 years. I moved in Prague for two years, Barcelona two years. We only did Lisbon for one due to issues with the hotel and then we’ve done it two years in Croatia. So, next year we would think about moving it, but folks are saying, “No. Do it here another year.” Is that what you heard as well?
Mike: For the most part, I did hear one or two people say that we should have it in very specific places. I asked if they lived there and they said yes.
Rob: Yeah, it doesn’t count. If you recommend a city, I’m always like, “Great. Do you live there?” because then I completely discount it. If you don’t live there and the event recommend it, it’s going to be one vote for every city everybody lives in, and then we’re just going to go to the place with the most attendees from that.
The only real drawback for me about doing it in Dubrovnik again is it’s hard to get to. Even for Minneapolis, which is a delta hub, I have to do three flights. I have two stops and it takes me 17 hours each way. It’s not that far. I can get to Heathrow in London. It’s an eight-hour flight tops, direct. It’s not that Europe is that far. It’s that it’s these three hops with the gaps between and customs in all this and that.
It’s not the end of the world. If you’re in Europe, I’ve heard it’s actually pretty easy to get to, so I’m willing to discount that, but the other thing that has me concerned is we do it in shoulder season because the hotel is a five-star hotel. It’s €250–€300 a night during the main part of the year, during high season, but when we do it, it’s €120 a night. It’s way, way less expensive, but as a result, the risk of having a bunch of rain is higher.
In both years, we’ve dodged it and within two or three days after we left, it just started pouring rain most of the days and stormy. That’s my one concern with doing it next year is do we roll the dice again a third time?
Mike: Well, we have had in Vegas for a long time. I feel like rolling the dice is a real par for the course. We do run businesses, too. I guess you could say that, but with running your own business, you actually have some measure of control. Maybe a fall solution, but you do feel like you have control with the weather totally out of the window, literally and figuratively.
Rob: Someone pointed out I said that to someone the other day and they said, “How bad would it be if it was raining outside? Would that ruin the event?” and I was like, “No, I guess it wouldn’t. It would just be different. The evening events would have to be indoors, but we’d still have the view of the ocean and frankly stormy ocean is pretty cool.” I actually think even if it rained, it wouldn’t be the end of the world.
Mike: Yup, I totally agree.
Rob: Sounds good, so no verdict yet. We’re actually still getting survey responses from the attendees about all the myriad of things, the talks, the venue, and all that stuff. So, news to come on that in the future once we figure ourselves out.
Today, we wanted to walk through a handful of the talks. Talk through some key takeaways that you and I took away from these talks. We never have time to go through all the talks. We had nine speakers and eight attendee talks. With 17 different talks there’s just no chance we could fit into an episode like this. But we do hand-pick a few of the talks that we feel like had the most comments, or the most positive feedback, or just that had really interesting takeaways.
The first one talk we’re going to talk about is from Peldi Guilizzoni of Balsamiq. He is a multi-time MicroConf speaker and he kicked off the conference with his talk, Victories in Tragedies: The Three Year Journey Building Balsamic Cloud.
Balsamiq has traditionally been a desktop app, one Peldi built, but they basically wanted to move it into the cloud. Part of his description of the talk was, “Build a SaaS app, they said. It’ll be great, they said. It turns out, running an online service is a big pain in the SaaS.” What did you take away from his talk?
Mike: The biggest takeaway I had was when he was talking about the data loss. I guess somebody had run something and it started deleting a bunch of customer data. They didn’t realize right away, but it started deleting very, very rapidly. I forget how long he said it has been running for. It’s six or eight hours or something like that before they noticed it. It already deleted a ton of data.
His advice for that was don’t have anything in production that’s going to delete a lot of data all at once. Have it parsed out over a long period of time like 30 days, or 60 days, or something like that. That way it will get deleted eventually, but you have more time to interject yourself into the process.
I think he said they’ve gotten about 20% done before they had noticed it and were able to do anything. If that time period were longer, then they would have more time to notice and do something about it.
Although I would question whether or not over that time period, are you going to notice it? What sorts of controls or things you have in place, especially for a new app that you’re building, and trying to figure out things as you go? You’re probably not putting every single safety precaution in place that you probably should and would it be something that you would notice over a longer period of time or not?
Rob: Yeah. That was the most memorable part of talk for me as well. It was partly just because how devastating I know that would feel. He said in the talk where they deleted, I believe it was 1200 or 1600, I forget which number of mock-ups. If you don’t know Balsamiq, you can mock up a web page or you can mock up a user interface or whatever, so across hundreds, if not more than 1000 customers, they deleted 1200–1600 of these work spaces, in essence.
My favorite part about it was when he said, “I turned to my co-founder, my wife, and I said, ‘Well this is it. We sure had a good run.’” He was basically implying like, “We’re done. This will kill Balsamiq.” That was how bad it felt. It turns out that wasn’t the case at all. There were a few pissed-off people. Most people didn’t care. I think a bunch of them had wind up being the example mock-up or whatever.
Bust just when you hear a story like that, I’ve never had a mistake as that big where you lose data, but I have had mistakes where we accidentally send double the emails to this whole list, or via a bug, or we accidentally didn’t send these emails and they were delayed by two hours and this person is doing the launch.
That’s how it feels at the 3time. It feels like this is unbelievable, this is catastrophic. and it’s not going to fix itself. In retrospect, it was three years ago, I think he said, two or three years ago. They obviously recovered from it and frankly I didn’t even know it wasn’t that big of a deal in the sense that I hadn’t even heard about that. It wasn’t like it got widely publicized and people on Twitter just railing on or anything.
Mike: I feel like you and I could probably to an episode at some point on the worst engineering mistakes that we made to that nobody noticed, like sending double emails to people and things like that. You and I probably both have a couple of pretty good stories about it if we could both share.
Rob: I know. We definitely have stories and some of them were back when I was an engineer than others were just the Drip team, just bugs sinking through because you’re shipping software fast.
That was a good piece of Peldi’s talk, but overall, the talk was that the three years that it took them to build and deploy this, the starts and stops, the highs and lows. I always love a good founder story, and they did a good job of having takeaways. It wasn’t just a story but this is what we learned from that and if you’re in the same place, this is what you can do as well.
Mike: Something else I noticed that was in his talk that caught my eye, which was something I wish I had found out a lot earlier than I did, was have a small dashboard that allows you to do different things for your early access customers.
For example, having a button there that just simply allows you to click on it and allows you to, say, reset the trial for this particular customer or delete this customer outright just because they’re gone and they’re not going to use it, or they just need to reset everything up because everything got completely screwed up and it needs to be blown away and restarted.
Those are the things that are simple enough to overlook but also important enough that you’re probably going to run into them time and time again. By the time you need it, it’s a pain in the neck to just say, “Okay. Let me whip this up for you,” and it takes 8 or 12 hours of work to do all that stuff. Then, the next customer comes along and you have to do it again. You may or may not have sat down and taken the time to think through all the different things that need to be done for that.
I think there were four different buttons he got on there and one of them was restart trial, one was delete the account, and there were a couple of other ones I forget what they were, but it was a very simple sounding piece of advice which have gone through the process a number of times before. It seems obvious, but in retrospect, it may not have been at the time.
Rob: It’s every admin console I’ve ever built had built for a SaaS app, but I like what Peldi went through. I wish I had a screen shot of the Drip admin dashboard which we called faucet because faucet drip, pun, water. That is what we called it. It’s a MicroConf joke. It literally was called that. We had all these buttons.
I remember early on I would say, “Derek, we need to restart someone’s trial.” He would go into the rails console and he would do it. It was a state machine, so he would say, “Set it back to the state.” But after asking him to do that two or three times, he’s like, “There’s now just a button on every user record. Just click that and all it does is change the state machine.”
There were a bunch of things, so actually I wished I had a screenshot of it. I’m sure I can go back and get one but…
Mike: My joke would be actually that he just didn’t want to talk to you, so he made a button so you could do it yourself.
Rob: Oh yeah. That’s not a joke. That’s an actual reality. It became more efficient and we had a bunch of buttons like that. It’s just something you run into as you’re running an app.
The next talk we’ll talk about is from Irina Nica. She works for HubSpot and her talk was a little bit about SEO, but the title was, How to Build Buzz and Backlinks on a Bootstrapper’s Budget, and it was more about getting inbound links. It was off-page optimization. We also had a talk that was more about on-page stuff.
This is cool because every day this is what she is thinking about. This is what she does full-time, she has a team that does it, and HubSpot is really good at this. We hear her run through the key things to think about if you’re going to take this approach. Coming from someone who is an expert in the space, I appreciate that.
Mike: She’s had some really great advice on doing podcast tours and guest posts and really talk about the process of getting backlinks in a way that looks organic, even though you have to work at it.
There’s a couple of different strategies. One is just throw your website out there and hope that people link to it. I think it’s what Google expects people to do, but it just doesn’t work. You really have to be proactive about it and find ways that are going to be useful to other people to get them to link to your site, whether it’s tools or you do a podcast tour. As part of that, you get links back to your site because people are linking to your profile, or your website, or what have you.
Even just doing guest post where you are literally writing and then you have in your byline you can have something there that says, “Hey, click here for more information about what I do or what we do,” or even if there’s just resources that you provide to them, that they can look back on your website. All those different things add up and over time, what you’re really looking for is for things to go up into the right in terms of the number of backlinks.
I also like how she had this internal dashboard that they use to figure out what the terms were that people were thinking back to the website she was working on. I thought that was pretty ingenious because there was basically a Google spreadsheet that she had up there and it would basically parse the HTML. I think it was a parse XML function or something like that, but it would look for certain key terms on the websites that they were linking back to them. I thought that was a really cool hack which I don’t think I’ve seen before.
Rob: They’ve taken what is often done is a haphazard effort of trying to build backlinks. They’ve really systematize, they’ve turned it into a repeatable system, and at their scale, with the team working on it, that’s what you have to do. It was an interesting insight into how that’s done.
From 10 years ago, SEO has gotten a lot harder, but in certain elements or in certain ways, it’s almost like there’s less competition because there’s less people doing it because it did get so hard, so if you’re able to execute on getting backlinks and getting high quality backlinks, you can really move the needle today.
Ten years ago, it was easier to move the needle if you’re willing to just buy links and do greyhat stuff or blackhat stuff, but the tide has shifted and I think we’ll continue to move around under our feet all the time because it’s Google and they just do what they want to. You have no exposure to that, do you, Mike? No experience with that.
Mike: None whatsoever.
Rob: The other thing we did is at every MicroConf, we tend to have this 30–35 minute slot where we do something experimental. Sometimes, it was a Q&A with Jason Fried at MicroConf Growth last year and that was an experiment as much as it was just a sloppy kind of comes together at the very last minute. Or we did a panel a few years ago in MicroConf Europe.
This year, you did an AMA and I kind of couched. The interesting thing is I don’t know if it was 40% of the people were new, maybe 50% new in the room and I didn’t want to assume that everyone knew your story or anything, so I started the first five minutes and basically talked about the years of MicroConf and your history with the podcast, then Bluetick and where you’re at, how you’re not happy with it’s not supporting you full-time, then we kicked in and people ask do anything. I was pleased with the range of questions that you received.
Mike: I love how you position it as this 30–40 minute slot where we try something experimental, and usually as we have it blocked off or something, we decide at the last minute that it’s not a good idea, and somehow I end up in that slot.
Rob: It has happened before, yeah. “We don’t want to do this. Mike, quick. Fill in.”
Mike: Yeah, I was cool. I was a little worried about whether the context of the questions that were going to be asked was going to be relevant to some of the newcomers, especially if they haven’t listened to the podcast or been following along with the story, so I think you gave us a great summary of that. There are some really interesting and challenging questions that came up. You were in the audience, so you would have a better handle on how it came across because I haven’t seen the video.
That’s actually something else we can talk about before at the beginning of the episode is we recorded this series of talks this year at MicroConf Europe, which is not something that we’ve done in the past.
Rob: That’s right. This is the first time I believe we’ve had a professional photographer at a MicroConf, so we got some good stills and then this is the first time we have a video recording of that Europe one. That will be interesting to watch your AMA.
I was in the audience, but I was running around with a microphone. I was definitely paying attention. but I was also distracted looking for the next hand to come up. There were fascinating questions about Bluetick. There was like, “How can we in the audience help you?” and at one point, someone asked you how it is that you managed to keep going, and they’re at it for themselves. We all get discouraged, we know you’re going through a tough time, I believe the guy said, “So am I,” or, “So have I been,” at different times, and, “How is it that you stay motivated to keep going?”
Honestly, AMAs, especially live, can be hard if you get hard questions, and I felt you did get a couple of hard questions. It wasn’t people trying to be mean at all, but it was just honest questions of, “How do you keep going, Mike? You’ve been through all this,” and I thought your your answers were clever. You’re at your best in this thing, so once these videos come out, you should watch this AMA because you were making jokes and your answers were just really honest. I didn’t feel you sugar-coated or BS’d your way through them.
Mike: Thanks, I appreciate that. I did feel the vast majority of the questions were, I don’t want to see easy answer, but they felt relatively straightforward and I felt comfortable answering them, as opposed to previous situations where I’ve been up on stage and either been asked questions I haven’t really thought about, and being put on the spot in terms of what I’m going to give as an answer or how I want to portray. I was just like, “You know? I’m just up here, I’m comfortable being up here, so I’ll just answer them in the best way that I can, with the knowledge that I have. If I hadn’t thought about it, then I’ll just say that I don’t really know yet.”
Rob: And I rounded out the first day with my talk, Lessons from the Field: Five Proven Strategies for Faster SaaS Growth. It was interesting coming up with this talk because in the past I have typically look back at the prior year, I’ve said what have I done that was hard, what did I done that I learned, and try to write a talk around it.
Basically, I tell a story, I try to pull the takeaways that people could apply their business, and that’s a formula that has worked for me. At this point, I’m not doing that anymore. For me to talk about building TinySeed just doesn’t make sense to apply that to SaaS apps.
What I do instead is I talked to most of the companies in the first TinySeed batch, got their permission to basically share high-level info about what they’ve been up to. We’re approaching halfway done with the first year and there’s a bunch of interesting information advantage, in essence, that I have and that I’m no longer working in one start up. I am seeing the inner workings, including the financials, the day-to-day, and see what they’re doing across 10 startups plus my investments.
I have another 10 angel investments and I’m not working with those as day-to-day, but I really do start to have a view that is differentiated from someone working on a single company. I’m seeing trends, I’m seeing things that three, four, five people in the batch are all doing, and seeing how it’s working for them. That’s however at the talk.
I literally took five things—with permission—that people in the batch are doing successfully and unsuccessfully. I didn’t just say they’re doing cold email or there are more people moving credit card or going freemium. I then dug into why I think that’s working and when I think that’s working. I talked about, “If you’re in this type of vertical versus that, I don’t think you should do cold email.” That was the gist of the talk.
Generally, I felt it came off well. When I get up on stage, I’m always like the first time I’ve done a talk. I don’t know how is this going to go. Even though I’ve rehearsed it 5–6 times in a row in real time, it’s not until I get up there that I really know how it feels.
Mike: Yeah. I think it was a really good talk. If I were to rephrase or reframe what you said about your standpoint on it, it’s almost like when you’re building your own start up you’ve got this silo of information you’re only privy to what’s there. The position you’re in now within TinySeed, you’ve got access to 5 or 10 of the silos simultaneously, versus previously you were looking at one silo, then you move on to a different start up, you look at a different one. But because the time frames are different, it’s not always easy to correlate lessons from one to the next.
Right now, you’re seeing them across all of them at the same time and you can use that to extrapolate what is and isn’t working, whereas there’s very few other people who’d really have that insight, or knowledge, or ability to be able to analyze that information. Other people have to be limited by it, not just their own information, but by the virtual working in their startup. You’re a little bit removed from it, not completely removed, but a little bit. So you can see what’s going on and then think about the implications versus those startup founders have to look at their own stuff and what they’re doing.
Rob: The other thing I did that I enjoyed is I had just gotten back maybe 20 or 30 of them at the time, but it was the initial rough graphs from the state of independent SaaS survey that we did through MicroConf last month. I had these bar graphs embedded in Excel. They’re accurate, they just don’t look great. They’re very plain, but I had pieces of those that I could share. I believe I should maybe four or five throughout the talk. That felt good too, to have some type of data.
I wasn’t trying to use them to say, “Oh, this is working. Look at these graphs.” It was more like, “This is added context of I’m super surprised at how many companies are not asking for credit card before their trial.” We have numbers on that now for more than 1000 nonventure-backed SaaS companies. So, I included that in the part where I talked about specific examples of TinySeed companies doing this. Then, I brought in the higher level of like, “Hey, there’s more the 1000 who responded and they’re doing it, too. This is an interesting trend. Let’s keep our eye on it.”
Another talk that went over well was Craig Hewitt’s talk and it was, Staying on Top of Your SaaS Metrics, Knowing What to Measure and What Not To, to Help Maintain Sustainable Growth. What’s your takeaway from Craig’s talk?
Mike: One of the things I liked that he drew attention to is the fact that he looks at his own metrics every day. There are a lot of different schools of thought on whether you should look at them on a daily basis or not. If you look at him every single day, then it’s probably going to be distracting and you’re possibly spending too much time on it. But he obsesses about his revenue on a day-to-day basis. Some people only look at it once a week or once a month.
He said that it almost doesn’t matter how often you look at it as long as you’re actually on the right track. If you’re going off-track, then obviously something’s wrong. There is a certain amount of personal value that he places on looking at it every single day, whereas somebody else is looking it at every week. It’s not right or wrong either way. It’s what you are most comfortable with. I think the correlation he drew between certain KPIs and saying these things don’t matter nearly as much on a day-to-day basis or week-to-week basis as these other ones. I think that was an important point to make.
The other thing I liked about what he did was he talked about the different phases of the customer journey and how you really need to concentrate some of your marketing on where people are in those. For example, for Castos, he talked about new podcasters and how people who want to start a podcast but don’t really know where to begin their problem or where, but then there’s other people who don’t even really understand that they have a problem. It makes a difference as to what it is that you’re building for, marketing materials, or the types of people that you’re targeting for the pieces of marketing collateral that you’re putting together.
Rob: Yup. I like his talk quite a bit and I the way he looks at metrics. He had his rules of thumb and, of course, I’m comparing my mental rules of thumb to his as he was doing it. He has a very metrics-driven approach and it reminds me of my approach of how I’ve built and grown SaaS apps. It resonated with me and in his thought process of, “Hey, here’s how to get in, here’s a look at the numbers, and here’s how to grow.”
[…] grow an app that if you’re charging $500 a month, $1000 a month, and knows your bottom-end prices, you don’t tend to do a bunch of split testing. You don’t tend to do these big, “Oh, I need to look at my churn number,” because when you only have 20 or 30 customers, one of them churning is this huge number, but it’s an anomaly because you just don’t have the law of large numbers going.
Whereas, when you’re building a service that is $20–$200 lowest price point and you’re in the $10,000–$100,000 month or up, you just have a lot of customers. That’s where looking at these things in aggregate and having these rules of thumb is really helpful for optimizing your funnel. That’s what he’s talking through.
And the last talk of MicroConf Europe 2019 was Shai Schechter. He’s the co-founder of RightMessage with Brennan Dunne and his talk was called, RightMessage Year One: From a $75,000 Launch Week, to Virtually Bankrupt, to Product Market Fit. I enjoyed his talk as that is a tale of going through it and he was pulling out these actionable things, the mistakes they made, things he felt other people could apply. What did you think about it?
Mike: I think that it was not obvious from somebody being on the outside of that company, what a dire situation they were in. I’m not sure exactly the time frame. It was probably about a year ago it seemed, where they were burning through money a lot faster than it was coming in, their churn was really high, and they essentially had to put the brakes on and say, “Okay, look. This is a problem. Our churn is so high that we’re bleeding customers faster than we’re getting them. We don’t have enough money coming in to cover all of our expenses.”
If you’ve got some level of funding that’s fine, but you still need to bridge that gap at some point. They were actually deviating from bridging that gap. They’re going away from it rather than closing it. It was interesting to see that they had a bunch of different options to try and they had to use all of them. It doesn’t sound like it was a pleasant experience in any way, shape, or form, but they were able to do it and they were able to essentially save the company and continue forward.
That’s not really something that I’ve ever gotten or seen from their company. I think it’s just interesting to see it laid out on the table like that, which is what you’d expect to see to MicroConf talk. There’s not too many other conferences I’ve been to where somebody will lay out the company troubles and say, “Yeah, we almost completely went under and if it weren’t for these things that we did, we would have.”
Rob: What I appreciated is, again, he didn’t sugarcoat it. He talked about how hard it was, he talked about where they made mistakes, and he talked about what he would do differently in the future. It wasn’t this, “Hey, look. We survived,” and, “Isn’t this an amazing success story?” He was still like, “Yeah and we’re not done. We’re doing better now, but it’s not a 100% complete Cinderella story now and we ride off into the sunset. There’s still a lot of hard work and a lot of stuff going on.”
I enjoy that talk and we headed off to watch the sunset from Vala beach, which is attached to the hotel. Overall, I really enjoyed this year’s event, not just because the weather is amazing. I got to meet a lot of new people, which is cool, but I also got to see the returning folks, the Kristoffs, the Benedicts, and all the other people I’m not going to name because I don’t forget somebody but just folks that I haven’t seen. Some folks are on every other year schedule and we haven’t seen each other for a couple years. It’s cool to settle back in and just see old friends and make some new ones. I appreciate everybody who came.
Mike: I agree. It’s always great just to catch up with those people in person that you catch them online, or through Twitter, or something like that, but it’s very different being in the same room and talking to them. We really appreciate everybody coming out to MicroConf regardless whether it’s in Dubrovnik, or Minneapolis or Vegas. It’s always great to just come together with other people in the community, talk business, and catch up on personal […]. I really feel there’s a lot of that too, not just the business aspect. It’s meeting other people, learning about them, their journey, their struggles, their family, and what’s going throughout their whole lives. It’s just nice to have those connections make those friends and revisit them every year.
Rob: We’re also up to our Twitter game this year. I know you didn’t see it because you’re not on Twitter, but Tracy Osborn was there helping out and she was taking a picture of every speaker I got on stage and tweeting that out. I was actually doing video interviews on my phone. I got this cool little attachment that just plugs right into the iPhone’s lightning port and this directional mic it’s really high quality sound even though you’re just filming with an iPhone. With the iPhone 11, the video quality was really high.
It was nice. I was just doing behind the scenes interviews and just throwing that up on Twitter as well. It’s something we haven’t done in the past, really haven’t had the time or the bandwidth, to be honest, because it’s pretty intense to run the event and then also try to do that, but that was pretty fun and I enjoyed it. I feel we got more.
There was more of a groundswell around this event. There were more pictures posted by us and there were also by the attendees. It leads to this social media momentum mostly on Twitter, but that’s a good thing. It’s something I hope we can continue to do, such that even if you aren’t able to make it, you still do get some concept of what the experience is like and you do know what’s going on at different times of the day. It’s just nice to be able to do that and include more than just 150 or 250 or how many people can show up in the room.
If this sounds interesting and you’ve never attended a MicroConf or you’re not on the mailing list, you should head to microconf.com and enter your email. We don’t email that much. We just email to let people know there’s an event coming up or a state of independence has survey. It’s not an overwhelming volume of it, but we’re going to continue to double down on MicroConf as we head into the new year. If this all sounds like fun, you should be in the know.
And that wraps us up for today. If you have a question for the show leave us a voicemail at (888) 801-9690 or email us questions@startupsfortherestofus.com. 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. Just search for “startups.” If you want a full transcript of this episode, wait a week or two after it’s posted and head to startupsfortherestofus.com for that transcript. Thank you for listening and we will 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.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the mistakes we made. So, where this week, sir?
Mike: Not much. Just working on my security audit for Google.
Rob: I was going to ask about that. That’s the running thread. I think in the next couple of weeks, we should get back a full updates episode, but talk me through it briefly.
Mike: It started earlier this week, so I scheduled it for the week after MicroConf Europe because obviously I wasn’t going to be here at last week. I didn’t want to start it the week that I wasn’t here because it’s expensive. We went through, how to kick-off call, they said, “Which environments do you want?” and then they asked, “How much can your server handle in terms of requests per second?” and I hesitated a little bit because I wasn’t really sure what to tell them.
On one hand, I want them to do a good job, but on the other hand I don’t want it to fall over and die on itself. I said, “Try to be a little careful, but I should be alright generally if anything happens. Just email me right away and be done with it.” I just turned them loose.
Rob: Do you think it was a good call to do it immediately after MicroConf Europe? I guess you flew back on Wednesday, I flew back on Thursday. It wasn’t just jet lag. It’s just that extravert hangover being around so many people. It’s so amazing and you want to stay up late and have a bazillion conversations but then, I find that on the flight back I am completely worthless. Basically, I can’t do any work and frankly, several days after MicroConf, I just don’t book anything. Even doing phone calls is a real stretch for me. The fact that the audit started the week after, were you geared back up again by then?
Mike: I was, but I didn’t have all the stuff ready to go right away. We ended up starting about a day late, but that was partially my fault because any email come through that I didn’t fully read absolutely everything in it, it said, “Reply to this email just to confirm that we’re good to go on this date.” I confirmed it on the call but then they followed it up with an email afterwards just to verify and I hadn’t replied to that.
So we ended up starting a day late, but there’s a bunch of paperwork that I was still working on to get over to them. So, documentation, policies, procedures, that sort of stuff. Anyway, we really didn’t start any too much later. I could be a lot worse. It could’ve been them saying, “Oh. Well, our schedule is booked for the next three weeks, so you’re going to have to wait three weeks.” I’m glad that it didn’t come to that.
Rob: That makes sense. From my end, really spent a week-and-a-half in Dubrovnik. I guess it was eight days and the first part of that for several days was second in-person TinySeed retreat and then rolled into MicroConf Europe and then I stayed one extra day just purely because I couldn’t get a flight out at a good time, but that was nice to have that extra day. Most people were gone and that view from that hotel is just amazing.
If you’re on Twitter and you saw any pictures—we’ll even try to grab a picture and put it in the show notes here. Tt really is the nicest venue we’ve ever had in MicroConf fat ever in either continent. There’s something about being that close to water. It’s the Adriatic sea and there are boats out there and there are people’s scuba diving.
With TinySeed, we did as a kayak trip although I couldn’t go out there because I was busy writing my talk, but it really is just amazing to be in the venue, you want to talk, then the break starts, the curtains open, and you’re just looking out on the sea. It’s this feeling of we’re not trapped in this conference room for six or seven hours today.
We are in the conference room intermittently between walking out on the deck, hanging out in the sunlight, listening to seagulls and that kind of stuff. It really is this very unique venue that we found.
Mike: Did you get to go swimming at all or no?
Rob: I had time to swim. I don’t particularly love swimming in cold water. It wasn’t that cold but it was cold to me. I’m from California. I like hot tubs and I like warm swimming pools, so no. I sat there and waved at people and took pictures at folks while they swam and they did it because they were like, “Yeah, I want to prove that I was in the Adriatic sea and stuff,” but I did not get up in the actual water past my knees.
I did get it last year. For listeners, this is the second year we’ve done it at the same venue and I’ve don’t it last year. How about you?
Mike: I went twice. I was planning on going to the third time just before I left, but then I realized that if I went swimming just beforehand, then it was probably going to be an issue because all my stuff would be all wet. I just didn’t want to make it all wet with the sea water and then get on a plane because I would have to put them in a plastic bag or something. I’m like, “No.” I just don’t want to do that.
Rob: Twenty hours of flying? Yeah. We definitely got a lot of positive feedback about the venue. It was interesting. There were more first timers there than usual this year and I’m not sure what to make of that. There were also just more attendees than we had at most MicroConf Europes. It was between 130 and 140 and folks were basically saying, “You should do it here again next year.” That was the overall consensus that I heard.
Normally, we move it every 2 years. I moved in Prague for two years, Barcelona two years. We only did Lisbon for one due to issues with the hotel and then we’ve done it two years in Croatia. So, next year we would think about moving it, but folks are saying, “No. Do it here another year.” Is that what you heard as well?
Mike: For the most part, I did hear one or two people say that we should have it in very specific places. I asked if they lived there and they said yes.
Rob: Yeah, it doesn’t count. If you recommend a city, I’m always like, “Great. Do you live there?” because then I completely discount it. If you don’t live there and the event recommend it, it’s going to be one vote for every city everybody lives in, and then we’re just going to go to the place with the most attendees from that.
The only real drawback for me about doing it in Dubrovnik again is it’s hard to get to. Even for Minneapolis, which is a delta hub, I have to do three flights. I have two stops and it takes me 17 hours each way. It’s not that far. I can get to Heathrow in London. It’s an eight-hour flight tops, direct. It’s not that Europe is that far. It’s that it’s these three hops with the gaps between and customs in all this and that.
It’s not the end of the world. If you’re in Europe, I’ve heard it’s actually pretty easy to get to, so I’m willing to discount that, but the other thing that has me concerned is we do it in shoulder season because the hotel is a five-star hotel. It’s €250–€300 a night during the main part of the year, during high season, but when we do it, it’s €120 a night. It’s way, way less expensive, but as a result, the risk of having a bunch of rain is higher.
In both years, we’ve dodged it and within two or three days after we left, it just started pouring rain most of the days and stormy. That’s my one concern with doing it next year is do we roll the dice again a third time?
Mike: Well, we have had in Vegas for a long time. I feel like rolling the dice is a real par for the course. We do run businesses, too. I guess you could say that, but with running your own business, you actually have some measure of control. Maybe a fall solution, but you do feel like you have control with the weather totally out of the window, literally and figuratively.
Rob: Someone pointed out I said that to someone the other day and they said, “How bad would it be if it was raining outside? Would that ruin the event?” and I was like, “No, I guess it wouldn’t. It would just be different. The evening events would have to be indoors, but we’d still have the view of the ocean and frankly stormy ocean is pretty cool.” I actually think even if it rained, it wouldn’t be the end of the world.
Mike: Yup, I totally agree.
Rob: Sounds good, so no verdict yet. We’re actually still getting survey responses from the attendees about all the myriad of things, the talks, the venue, and all that stuff. So, news to come on that in the future once we figure ourselves out.
Today, we wanted to walk through a handful of the talks. Talk through some key takeaways that you and I took away from these talks. We never have time to go through all the talks. We had nine speakers and eight attendee talks. With 17 different talks there’s just no chance we could fit into an episode like this. But we do hand-pick a few of the talks that we feel like had the most comments, or the most positive feedback, or just that had really interesting takeaways.
The first one talk we’re going to talk about is from Peldi Guilizzoni of Balsamiq. He is a multi-time MicroConf speaker and he kicked off the conference with his talk, Victories in Tragedies: The Three Year Journey Building Balsamic Cloud.
Balsamiq has traditionally been a desktop app, one Peldi built, but they basically wanted to move it into the cloud. Part of his description of the talk was, “Build a SaaS app, they said. It’ll be great, they said. It turns out, running an online service is a big pain in the SaaS.” What did you take away from his talk?
Mike: The biggest takeaway I had was when he was talking about the data loss. I guess somebody had run something and it started deleting a bunch of customer data. They didn’t realize right away, but it started deleting very, very rapidly. I forget how long he said it has been running for. It’s six or eight hours or something like that before they noticed it. It already deleted a ton of data.
His advice for that was don’t have anything in production that’s going to delete a lot of data all at once. Have it parsed out over a long period of time like 30 days, or 60 days, or something like that. That way it will get deleted eventually, but you have more time to interject yourself into the process.
I think he said they’ve gotten about 20% done before they had noticed it and were able to do anything. If that time period were longer, then they would have more time to notice and do something about it.
Although I would question whether or not over that time period, are you going to notice it? What sorts of controls or things you have in place, especially for a new app that you’re building, and trying to figure out things as you go? You’re probably not putting every single safety precaution in place that you probably should and would it be something that you would notice over a longer period of time or not?
Rob: Yeah. That was the most memorable part of talk for me as well. It was partly just because how devastating I know that would feel. He said in the talk where they deleted, I believe it was 1200 or 1600, I forget which number of mock-ups. If you don’t know Balsamiq, you can mock up a web page or you can mock up a user interface or whatever, so across hundreds, if not more than 1000 customers, they deleted 1200–1600 of these work spaces, in essence.
My favorite part about it was when he said, “I turned to my co-founder, my wife, and I said, ‘Well this is it. We sure had a good run.’” He was basically implying like, “We’re done. This will kill Balsamiq.” That was how bad it felt. It turns out that wasn’t the case at all. There were a few pissed-off people. Most people didn’t care. I think a bunch of them had wind up being the example mock-up or whatever.
Bust just when you hear a story like that, I’ve never had a mistake as that big where you lose data, but I have had mistakes where we accidentally send double the emails to this whole list, or via a bug, or we accidentally didn’t send these emails and they were delayed by two hours and this person is doing the launch.
That’s how it feels at the 3time. It feels like this is unbelievable, this is catastrophic. and it’s not going to fix itself. In retrospect, it was three years ago, I think he said, two or three years ago. They obviously recovered from it and frankly I didn’t even know it wasn’t that big of a deal in the sense that I hadn’t even heard about that. It wasn’t like it got widely publicized and people on Twitter just railing on or anything.
Mike: I feel like you and I could probably to an episode at some point on the worst engineering mistakes that we made to that nobody noticed, like sending double emails to people and things like that. You and I probably both have a couple of pretty good stories about it if we could both share.
Rob: I know. We definitely have stories and some of them were back when I was an engineer than others were just the Drip team, just bugs sinking through because you’re shipping software fast.
That was a good piece of Peldi’s talk, but overall, the talk was that the three years that it took them to build and deploy this, the starts and stops, the highs and lows. I always love a good founder story, and they did a good job of having takeaways. It wasn’t just a story but this is what we learned from that and if you’re in the same place, this is what you can do as well.
Mike: Something else I noticed that was in his talk that caught my eye, which was something I wish I had found out a lot earlier than I did, was have a small dashboard that allows you to do different things for your early access customers.
For example, having a button there that just simply allows you to click on it and allows you to, say, reset the trial for this particular customer or delete this customer outright just because they’re gone and they’re not going to use it, or they just need to reset everything up because everything got completely screwed up and it needs to be blown away and restarted.
Those are the things that are simple enough to overlook but also important enough that you’re probably going to run into them time and time again. By the time you need it, it’s a pain in the neck to just say, “Okay. Let me whip this up for you,” and it takes 8 or 12 hours of work to do all that stuff. Then, the next customer comes along and you have to do it again. You may or may not have sat down and taken the time to think through all the different things that need to be done for that.
I think there were four different buttons he got on there and one of them was restart trial, one was delete the account, and there were a couple of other ones I forget what they were, but it was a very simple sounding piece of advice which have gone through the process a number of times before. It seems obvious, but in retrospect, it may not have been at the time.
Rob: It’s every admin console I’ve ever built had built for a SaaS app, but I like what Peldi went through. I wish I had a screen shot of the Drip admin dashboard which we called faucet because faucet drip, pun, water. That is what we called it. It’s a MicroConf joke. It literally was called that. We had all these buttons.
I remember early on I would say, “Derek, we need to restart someone’s trial.” He would go into the rails console and he would do it. It was a state machine, so he would say, “Set it back to the state.” But after asking him to do that two or three times, he’s like, “There’s now just a button on every user record. Just click that and all it does is change the state machine.”
There were a bunch of things, so actually I wished I had a screenshot of it. I’m sure I can go back and get one but…
Mike: My joke would be actually that he just didn’t want to talk to you, so he made a button so you could do it yourself.
Rob: Oh yeah. That’s not a joke. That’s an actual reality. It became more efficient and we had a bunch of buttons like that. It’s just something you run into as you’re running an app.
The next talk we’ll talk about is from Irina Nica. She works for HubSpot and her talk was a little bit about SEO, but the title was, How to Build Buzz and Backlinks on a Bootstrapper’s Budget, and it was more about getting inbound links. It was off-page optimization. We also had a talk that was more about on-page stuff.
This is cool because every day this is what she is thinking about. This is what she does full-time, she has a team that does it, and HubSpot is really good at this. We hear her run through the key things to think about if you’re going to take this approach. Coming from someone who is an expert in the space, I appreciate that.
Mike: She’s had some really great advice on doing podcast tours and guest posts and really talk about the process of getting backlinks in a way that looks organic, even though you have to work at it.
There’s a couple of different strategies. One is just throw your website out there and hope that people link to it. I think it’s what Google expects people to do, but it just doesn’t work. You really have to be proactive about it and find ways that are going to be useful to other people to get them to link to your site, whether it’s tools or you do a podcast tour. As part of that, you get links back to your site because people are linking to your profile, or your website, or what have you.
Even just doing guest post where you are literally writing and then you have in your byline you can have something there that says, “Hey, click here for more information about what I do or what we do,” or even if there’s just resources that you provide to them, that they can look back on your website. All those different things add up and over time, what you’re really looking for is for things to go up into the right in terms of the number of backlinks.
I also like how she had this internal dashboard that they use to figure out what the terms were that people were thinking back to the website she was working on. I thought that was pretty ingenious because there was basically a Google spreadsheet that she had up there and it would basically parse the HTML. I think it was a parse XML function or something like that, but it would look for certain key terms on the websites that they were linking back to them. I thought that was a really cool hack which I don’t think I’ve seen before.
Rob: They’ve taken what is often done is a haphazard effort of trying to build backlinks. They’ve really systematize, they’ve turned it into a repeatable system, and at their scale, with the team working on it, that’s what you have to do. It was an interesting insight into how that’s done.
From 10 years ago, SEO has gotten a lot harder, but in certain elements or in certain ways, it’s almost like there’s less competition because there’s less people doing it because it did get so hard, so if you’re able to execute on getting backlinks and getting high quality backlinks, you can really move the needle today.
Ten years ago, it was easier to move the needle if you’re willing to just buy links and do greyhat stuff or blackhat stuff, but the tide has shifted and I think we’ll continue to move around under our feet all the time because it’s Google and they just do what they want to. You have no exposure to that, do you, Mike? No experience with that.
Mike: None whatsoever.
Rob: The other thing we did is at every MicroConf, we tend to have this 30–35 minute slot where we do something experimental. Sometimes, it was a Q&A with Jason Fried at MicroConf Growth last year and that was an experiment as much as it was just a sloppy kind of comes together at the very last minute. Or we did a panel a few years ago in MicroConf Europe.
This year, you did an AMA and I kind of couched. The interesting thing is I don’t know if it was 40% of the people were new, maybe 50% new in the room and I didn’t want to assume that everyone knew your story or anything, so I started the first five minutes and basically talked about the years of MicroConf and your history with the podcast, then Bluetick and where you’re at, how you’re not happy with it’s not supporting you full-time, then we kicked in and people ask do anything. I was pleased with the range of questions that you received.
Mike: I love how you position it as this 30–40 minute slot where we try something experimental, and usually as we have it blocked off or something, we decide at the last minute that it’s not a good idea, and somehow I end up in that slot.
Rob: It has happened before, yeah. “We don’t want to do this. Mike, quick. Fill in.”
Mike: Yeah, I was cool. I was a little worried about whether the context of the questions that were going to be asked was going to be relevant to some of the newcomers, especially if they haven’t listened to the podcast or been following along with the story, so I think you gave us a great summary of that. There are some really interesting and challenging questions that came up. You were in the audience, so you would have a better handle on how it came across because I haven’t seen the video.
That’s actually something else we can talk about before at the beginning of the episode is we recorded this series of talks this year at MicroConf Europe, which is not something that we’ve done in the past.
Rob: That’s right. This is the first time I believe we’ve had a professional photographer at a MicroConf, so we got some good stills and then this is the first time we have a video recording of that Europe one. That will be interesting to watch your AMA.
I was in the audience, but I was running around with a microphone. I was definitely paying attention. but I was also distracted looking for the next hand to come up. There were fascinating questions about Bluetick. There was like, “How can we in the audience help you?” and at one point, someone asked you how it is that you managed to keep going, and they’re at it for themselves. We all get discouraged, we know you’re going through a tough time, I believe the guy said, “So am I,” or, “So have I been,” at different times, and, “How is it that you stay motivated to keep going?”
Honestly, AMAs, especially live, can be hard if you get hard questions, and I felt you did get a couple of hard questions. It wasn’t people trying to be mean at all, but it was just honest questions of, “How do you keep going, Mike? You’ve been through all this,” and I thought your your answers were clever. You’re at your best in this thing, so once these videos come out, you should watch this AMA because you were making jokes and your answers were just really honest. I didn’t feel you sugar-coated or BS’d your way through them.
Mike: Thanks, I appreciate that. I did feel the vast majority of the questions were, I don’t want to see easy answer, but they felt relatively straightforward and I felt comfortable answering them, as opposed to previous situations where I’ve been up on stage and either been asked questions I haven’t really thought about, and being put on the spot in terms of what I’m going to give as an answer or how I want to portray. I was just like, “You know? I’m just up here, I’m comfortable being up here, so I’ll just answer them in the best way that I can, with the knowledge that I have. If I hadn’t thought about it, then I’ll just say that I don’t really know yet.”
Rob: And I rounded out the first day with my talk, Lessons from the Field: Five Proven Strategies for Faster SaaS Growth. It was interesting coming up with this talk because in the past I have typically look back at the prior year, I’ve said what have I done that was hard, what did I done that I learned, and try to write a talk around it.
Basically, I tell a story, I try to pull the takeaways that people could apply their business, and that’s a formula that has worked for me. At this point, I’m not doing that anymore. For me to talk about building TinySeed just doesn’t make sense to apply that to SaaS apps.
What I do instead is I talked to most of the companies in the first TinySeed batch, got their permission to basically share high-level info about what they’ve been up to. We’re approaching halfway done with the first year and there’s a bunch of interesting information advantage, in essence, that I have and that I’m no longer working in one start up. I am seeing the inner workings, including the financials, the day-to-day, and see what they’re doing across 10 startups plus my investments.
I have another 10 angel investments and I’m not working with those as day-to-day, but I really do start to have a view that is differentiated from someone working on a single company. I’m seeing trends, I’m seeing things that three, four, five people in the batch are all doing, and seeing how it’s working for them. That’s however at the talk.
I literally took five things—with permission—that people in the batch are doing successfully and unsuccessfully. I didn’t just say they’re doing cold email or there are more people moving credit card or going freemium. I then dug into why I think that’s working and when I think that’s working. I talked about, “If you’re in this type of vertical versus that, I don’t think you should do cold email.” That was the gist of the talk.
Generally, I felt it came off well. When I get up on stage, I’m always like the first time I’ve done a talk. I don’t know how is this going to go. Even though I’ve rehearsed it 5–6 times in a row in real time, it’s not until I get up there that I really know how it feels.
Mike: Yeah. I think it was a really good talk. If I were to rephrase or reframe what you said about your standpoint on it, it’s almost like when you’re building your own start up you’ve got this silo of information you’re only privy to what’s there. The position you’re in now within TinySeed, you’ve got access to 5 or 10 of the silos simultaneously, versus previously you were looking at one silo, then you move on to a different start up, you look at a different one. But because the time frames are different, it’s not always easy to correlate lessons from one to the next.
Right now, you’re seeing them across all of them at the same time and you can use that to extrapolate what is and isn’t working, whereas there’s very few other people who’d really have that insight, or knowledge, or ability to be able to analyze that information. Other people have to be limited by it, not just their own information, but by the virtual working in their startup. You’re a little bit removed from it, not completely removed, but a little bit. So you can see what’s going on and then think about the implications versus those startup founders have to look at their own stuff and what they’re doing.
Rob: The other thing I did that I enjoyed is I had just gotten back maybe 20 or 30 of them at the time, but it was the initial rough graphs from the state of independent SaaS survey that we did through MicroConf last month. I had these bar graphs embedded in Excel. They’re accurate, they just don’t look great. They’re very plain, but I had pieces of those that I could share. I believe I should maybe four or five throughout the talk. That felt good too, to have some type of data.
I wasn’t trying to use them to say, “Oh, this is working. Look at these graphs.” It was more like, “This is added context of I’m super surprised at how many companies are not asking for credit card before their trial.” We have numbers on that now for more than 1000 nonventure-backed SaaS companies. So, I included that in the part where I talked about specific examples of TinySeed companies doing this. Then, I brought in the higher level of like, “Hey, there’s more the 1000 who responded and they’re doing it, too. This is an interesting trend. Let’s keep our eye on it.”
Another talk that went over well was Craig Hewitt’s talk and it was, Staying on Top of Your SaaS Metrics, Knowing What to Measure and What Not To, to Help Maintain Sustainable Growth. What’s your takeaway from Craig’s talk?
Mike: One of the things I liked that he drew attention to is the fact that he looks at his own metrics every day. There are a lot of different schools of thought on whether you should look at them on a daily basis or not. If you look at him every single day, then it’s probably going to be distracting and you’re possibly spending too much time on it. But he obsesses about his revenue on a day-to-day basis. Some people only look at it once a week or once a month.
He said that it almost doesn’t matter how often you look at it as long as you’re actually on the right track. If you’re going off-track, then obviously something’s wrong. There is a certain amount of personal value that he places on looking at it every single day, whereas somebody else is looking it at every week. It’s not right or wrong either way. It’s what you are most comfortable with. I think the correlation he drew between certain KPIs and saying these things don’t matter nearly as much on a day-to-day basis or week-to-week basis as these other ones. I think that was an important point to make.
The other thing I liked about what he did was he talked about the different phases of the customer journey and how you really need to concentrate some of your marketing on where people are in those. For example, for Castos, he talked about new podcasters and how people who want to start a podcast but don’t really know where to begin their problem or where, but then there’s other people who don’t even really understand that they have a problem. It makes a difference as to what it is that you’re building for, marketing materials, or the types of people that you’re targeting for the pieces of marketing collateral that you’re putting together.
Rob: Yup. I like his talk quite a bit and I the way he looks at metrics. He had his rules of thumb and, of course, I’m comparing my mental rules of thumb to his as he was doing it. He has a very metrics-driven approach and it reminds me of my approach of how I’ve built and grown SaaS apps. It resonated with me and in his thought process of, “Hey, here’s how to get in, here’s a look at the numbers, and here’s how to grow.”
[…] grow an app that if you’re charging $500 a month, $1000 a month, and knows your bottom-end prices, you don’t tend to do a bunch of split testing. You don’t tend to do these big, “Oh, I need to look at my churn number,” because when you only have 20 or 30 customers, one of them churning is this huge number, but it’s an anomaly because you just don’t have the law of large numbers going.
Whereas, when you’re building a service that is $20–$200 lowest price point and you’re in the $10,000–$100,000 month or up, you just have a lot of customers. That’s where looking at these things in aggregate and having these rules of thumb is really helpful for optimizing your funnel. That’s what he’s talking through.
And the last talk of MicroConf Europe 2019 was Shai Schechter. He’s the co-founder of RightMessage with Brennan Dunne and his talk was called, RightMessage Year One: From a $75,000 Launch Week, to Virtually Bankrupt, to Product Market Fit. I enjoyed his talk as that is a tale of going through it and he was pulling out these actionable things, the mistakes they made, things he felt other people could apply. What did you think about it?
Mike: I think that it was not obvious from somebody being on the outside of that company, what a dire situation they were in. I’m not sure exactly the time frame. It was probably about a year ago it seemed, where they were burning through money a lot faster than it was coming in, their churn was really high, and they essentially had to put the brakes on and say, “Okay, look. This is a problem. Our churn is so high that we’re bleeding customers faster than we’re getting them. We don’t have enough money coming in to cover all of our expenses.”
If you’ve got some level of funding that’s fine, but you still need to bridge that gap at some point. They were actually deviating from bridging that gap. They’re going away from it rather than closing it. It was interesting to see that they had a bunch of different options to try and they had to use all of them. It doesn’t sound like it was a pleasant experience in any way, shape, or form, but they were able to do it and they were able to essentially save the company and continue forward.
That’s not really something that I’ve ever gotten or seen from their company. I think it’s just interesting to see it laid out on the table like that, which is what you’d expect to see to MicroConf talk. There’s not too many other conferences I’ve been to where somebody will lay out the company troubles and say, “Yeah, we almost completely went under and if it weren’t for these things that we did, we would have.”
Rob: What I appreciated is, again, he didn’t sugarcoat it. He talked about how hard it was, he talked about where they made mistakes, and he talked about what he would do differently in the future. It wasn’t this, “Hey, look. We survived,” and, “Isn’t this an amazing success story?” He was still like, “Yeah and we’re not done. We’re doing better now, but it’s not a 100% complete Cinderella story now and we ride off into the sunset. There’s still a lot of hard work and a lot of stuff going on.”
I enjoy that talk and we headed off to watch the sunset from Vala beach, which is attached to the hotel. Overall, I really enjoyed this year’s event, not just because the weather is amazing. I got to meet a lot of new people, which is cool, but I also got to see the returning folks, the Kristoffs, the Benedicts, and all the other people I’m not going to name because I don’t forget somebody but just folks that I haven’t seen. Some folks are on every other year schedule and we haven’t seen each other for a couple years. It’s cool to settle back in and just see old friends and make some new ones. I appreciate everybody who came.
Mike: I agree. It’s always great just to catch up with those people in person that you catch them online, or through Twitter, or something like that, but it’s very different being in the same room and talking to them. We really appreciate everybody coming out to MicroConf regardless whether it’s in Dubrovnik, or Minneapolis or Vegas. It’s always great to just come together with other people in the community, talk business, and catch up on personal […]. I really feel there’s a lot of that too, not just the business aspect. It’s meeting other people, learning about them, their journey, their struggles, their family, and what’s going throughout their whole lives. It’s just nice to have those connections make those friends and revisit them every year.
Rob: We’re also up to our Twitter game this year. I know you didn’t see it because you’re not on Twitter, but Tracy Osborn was there helping out and she was taking a picture of every speaker I got on stage and tweeting that out. I was actually doing video interviews on my phone. I got this cool little attachment that just plugs right into the iPhone’s lightning port and this directional mic it’s really high quality sound even though you’re just filming with an iPhone. With the iPhone 11, the video quality was really high.
It was nice. I was just doing behind the scenes interviews and just throwing that up on Twitter as well. It’s something we haven’t done in the past, really haven’t had the time or the bandwidth, to be honest, because it’s pretty intense to run the event and then also try to do that, but that was pretty fun and I enjoyed it. I feel we got more.
There was more of a groundswell around this event. There were more pictures posted by us and there were also by the attendees. It leads to this social media momentum mostly on Twitter, but that’s a good thing. It’s something I hope we can continue to do, such that even if you aren’t able to make it, you still do get some concept of what the experience is like and you do know what’s going on at different times of the day. It’s just nice to be able to do that and include more than just 150 or 250 or how many people can show up in the room.
If this sounds interesting and you’ve never attended a MicroConf or you’re not on the mailing list, you should head to microconf.com and enter your email. We don’t email that much. We just email to let people know there’s an event coming up or a state of independence has survey. It’s not an overwhelming volume of it, but we’re going to continue to double down on MicroConf as we head into the new year. If this all sounds like fun, you should be in the know.
And that wraps us up for today. If you have a question for the show leave us a voicemail at (888) 801-9690 or email us questions@startupsfortherestofus.com. 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. Just search for “startups.” If you want a full transcript of this episode, wait a week or two after it’s posted and head to startupsfortherestofus.com for that transcript. Thank you for listening and we will see you next time.
Episode 468 | Tables Are Turned As Tracy Osborn Interviews Rob About the Past Year
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Show Notes
In this episode of Startups For The Rest Of Us, the tables have turned as Tracy Osborn interviews Rob about his past year. They talk life after Drip, focusing on the backstory of TinySeed and the ups and downs that have come along since its launch.
Items mentioned in this episode:
Rob: In today’s episode of Startups for the Rest of Us, Tracy Osborn turns the tables and interviews me about what I’ve been up to for the past year. This is Startups for the Rest of Us, episode 468.
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. Today with Tracy Osborn, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to this week’s episode, I’m your host, Rob Walling. Each week on the show, we cover topics relating to building and growing startups, but startups that are real businesses, not the Silicon Valley myth of building a company, having billions of people adopt it organically, virally overnight and not paying you, and suddenly you come up with that monetization strategy. We talk about building real businesses where real people pay us real money. We talk about building businesses that provide us with a purpose that we’re fascinated with, but we don’t sacrifice our lives at the expense of building these companies.
We also talk about building companies that provide us with the freedom, and it’s a freedom from a day job, it’s the freedom of working on crappy projects, and it’s the freedom to own our own destiny. With many different show topics, often times, we talk about tactics or teaching. We answer a lot of listener questions, sometimes with guests. We do founder hot seats and we also have interviews, as well as breaking news, episodes like we did last week with Adii Pienaar. This week, we turn the tables on me as Tracy Osborn takes the interview seat and she asked me really about what’s been going on for me post-Drip and it focuses around TinySeed. That’s really the main day-to-day thing that I’ve been doing since then.
During the course of the conversation, we look at some highs, some lows, things that have been surprises. It’s really the background story that I would tell, if I was talking about building a SaaS app. It’s all the customer development, challenges that we faced and just kind of the story that I haven’t particularly talked about on the show or really for the most part anywhere else. I enjoyed the conversation and I hope you enjoyed this inside look at what’s been going on with me for about the last 12 to 18 months. Let’s dive in.
Tracy: Hey Rob. Thanks for coming on the show. I am excited to be the interviewer for once.
Rob: Absolutely. Yeah, my pleasure.
Tracy: I was looking forward to it, actually, after you answered the questions on WeddingLovely, I was like, “Cool, I can turn the tables on you.” Put you in the hot seat.
Rob: Yup, dig into my successes and failures. Really, really put the thumb down on me. “How did you feel when you were at the bottom of the bottomless pit?” This will be fun. I’ve actually had multiple people tell me that I should do this. They said, “You know? You still have a story going on and you are growing a startup yourself,” and there’s obviously a lot of uncertainty any time you start something new and folks told me it’ll be interesting to hear what’s been going on.
Tracy: Yeah and honestly, you don’t talk a lot about TinySeed. I went through a lot of the episodes of Startups for the Rest of Us, and there were a few dedicated episodes, but in general, it’s been really cool listening to you and Mike talk about Bluetick. I feel like there is a lot of opportunity for you to talk about TinySeed, not just to promote it, but it’s just like a really interesting process and something that’s completely new. We’re not technically working on a startup, like what’s involved in running and funding and all that.
Rob: Yeah, I would agree. I think I’ve probably been overly sensitive to that and not wanting it to feel like I’m promoting it, but I don’t know that anyone’s ever accused me of promoting stuff on the podcast. We’ve been really careful about it, so I do think I want to start sharing more of the inside track. It’s like you started SaaS app. You start a productized service. You start an accelerator, like TinySeed. There’s an 80% overlap. You still have to get all the systems in place. You still have to find customers. You might need to raise funding if you’re going to do it.
You still need to figure out and do customer development. We’ll talk a little bit about that, but our terms are essentially like our pricing. That’s the thing that someone could look at our terms and say, “Oh, you’re pricing’s too high.” Just like in a SaaS or productized service, they would say that. I’m finding a lot of commonalities and I feel like my experience running startups in the past is absolutely translated here.
Tracy: Right. The funny thing is I was looking at the previous podcast episode. As of this recording, it’s almost one year to the day of when you announced TinySeed. It’s been a pretty epic year, I think.
Rob: Yeah, it really has. It doesn’t feel like it’s been that long. So much is going on, though. It’s one of those things were the days are long but the years are short. It’s kind of like that.
Tracy: Maybe we should backtrack a bit, just in case someone comes on this podcast and doesn’t have a lot of background. Do you want to go over TinySeed and what we’re doing?
Rob: Yeah sure. I mean the basics, TinySeed is the first startup accelerator designed for people who’d traditionally bootstrap and unlike most accelerators, like Y Combinator or Techstars, we’re fully remote and we’re a year long. Most accelerators, you have to move to a city, they’re typically three months, usually the goal is to learn how to pitch, and you’re going to raise money at the end of it. That’s going to be a big demo today.
We are not doing that because my money and fundraising is not the end goal of all of our startups. I think there are a few that will raise follow-on rounds, but it’s going to be totally up to the founders. We’re remote, we’re one year, we focus on subscription software, so mostly SaaS, although we almost funded to set a marketplace that was software-enabled, that had a subscription tied to it. It wasn’t just processing fee. We have a really top notch group of mentors, to be honest. tinyseed.com/people, if you go there, it’s kind of a who’s who of folks who know about SaaS.
That’s one of the beauties of, I think, being able to focus like we did. We didn’t say, “Hey, we’re remote accelerator for consumer packaged goods,” and any startup that has software that enables it. We may get there eventually, but right now being so focused on this, we can have mentors like the Jason Frieds, the DHHs, the Rand Fishskins, Chris Savage from Wistia, Ruben Gomez from Bidsketch, and Laura Roeder from MeetEdgar. It’s folks who are really in it and can provide really detailed info.
I like to say, with TinySeed there’s five elements that we provide the founders. One is the money, two is the mentorship, three is the community of being in the batch—we meet four times during the year in-person, our second one ‘s coming up here in a week—and then the fifth is really the network.
You can come to me. My network is now at the disposal of the batch of any of the founders we backed, as well as the networks of most of our mentors. I’ve heard Craig Hewitt talk about a couple episodes ago, a lot of second order intro, where he’ll talk to whoever, Asia Matos or Reuben Gomez, who are both mentors and they will intro him to someone they know to help solve a particular problem.
That’s been the goal. I got to be honest, it was a year ago we announced and there was a lot of uncertainty as to whether this model would work, whether we could pull it off, and in all honesty, it’s gone very smoothly.
Tracy: That was my next question, overall how has last year gone? How are you feeling today about everything?
Rob: Today, we’re about 4½ months into the first batch for the year long batch and there have been very few days in the past year that I have felt down. There have been a few and we’ll talk about some of those today, but compared to probably every other startup I’ve ever done, this has been more fun, less stress. I feel like I’m having as much or more of an impact or at least a deeper impact than a lot of other things that I’ve done. I feel really positive about it.
One of the reasons Sherry and I talk through this on Zen Founder episode, and she said, “Is it less stressed because it truly is less complicated? Because I hear you guys…” we were making deals with startups, we were fundraising, we were trying to figure out terms, there was a lot of complexity and a lot of moving pieces all at once and it was way more complicated, this time.
Yet, I felt less stressed and we kind of started boiling it down to, (a) I’m probably a little more mature, (b) it helps to work with a really strong cofounder like Einar, who took a bunch of the complexity. He’s really good at making deals and working with people in finding things that work, so I didn’t have to bear all the burden of that. It’s interesting. With prior startups for me, my chips were always all on the table, where if the startup failed, it was years of my life that was down the drain and it was potentially most of my net worth that was down the drain. I always took that really as a big burden.
Now, I was able to take chips off the table, in all honesty with Drip. There’s a certain level of comfort where I’m still confident that it’s going to work every day when I get up. I’m like, “Yeah, this is helping people,” it’s providing real value and I’m not worried all the time of, “Oh, it’s going to…” I don’t know why I woke up three days a week when I was running Drip and thought this could all come crashing down tomorrow. It wasn’t a healthy attitude and I kind of regret it, and I think I’ve made it a point not to do that here. It’s made it easier mentally, but it’s also made me a better as a founder, that I’m not so worried about that.
Tracy: That’s really fun, I say as a team member, it’s really fun to work on something that I feel so positive and exciting, just working with these founders and riding their success. It’s been a really fulfilling thing to work on,
Rob: Yeah, I think being able to live through them vicariously is super helpful. I’ve told the founders that, “Hey, when you succeed I get the dopamine rush and when you’re going through the struggles, let’s get on the phone and I will work with you through that.” It’s nice to have that ability without really having to do it day-to-day at this point. I kept telling Sherry towards the end of Drip when we were selling it like, “I just don’t want to do this again. I’ve done this enough.” I’m looking for something different, but also challenging and also that has a lot of impact and I’m really glad that this is what we settled on.
Tracy: A year ago, the TinySeed was kind of just an idea, just like a plan, like you said, we’re about 4½ months into the first batch. What has changed in terms of how you thought the process, how the management of TinySeed, and how things would go? What has changed between that idea versus reality what’s going on today?
Rob: It’s surprisingly little actually. Einar and I had started talking about TinySeed around April of 2018 and then we announced about six months later and Einar have heard my MicroConf talk and said, “That’s something that should exist and I know limited partners who would fund that.” We were at the black jack tables at MicroConf and I kind of waved off like, “I don’t know, man. It seems like a lot of work, a lot of headache,” all that stuff.
Within a week or two, I got to thinking because I had this idea YC for bootstrappers, like 2011, I had written down and started sketching it out and I thought, “That sounds like a lot of headache dealing with it. I’ve never raised money.” It’s like, “I don’t really want to deal with limited partners.” It’s a lot of work. But the idea became more and more intriguing the more I thought about the need from the founder side.
Since I started investing, writing the little angel checks in, the more bootstrapper companies, the capital efficient independent startups like the CartHook, the RightMessages, and the SparkToros, I just didn’t have the money or the time to really go all in on that. But the need was obvious and the need was there and a lot of it was at MicroConf, frankly, people I would meet.
All that said, we started just kind of collaborating and working on the deck and stuff and I really was like—we haven’t worked together before, but he’s come to a bunch of MicroConfs, I checked references and asked around. Some people I’ve been in a master mind with them. People are like, “He’s legit. He’s super smart. He gets stuff done and he’d be a good partner.” It took us I think a couple months of back and forth to configure out really what we wanted to do, but even in the early incarnation, I think I’d said a three or a six-month remote accelerator is what we’re thinking.
At some point one of us said, “Why not make a year since SaaS takes so long.” That was one thing that changed. The other thing that changed were the terms. We just didn’t know what terms could possibly work, because the only model for this was indie.vc. Everyone else who funds things really does it either way, it’s like safes, convertible notes and those aren’t going to work here, because if you don’t raise another round, then you never get your equity. Then there’s venture terms and we don’t want any of those. That is where we just started. That was the biggest iteration of probably what changed the most, was I think we went through six different versions of the terms and customer developed the hell out of those.
We talked to founders. We talked to investors and looked at myself and said, “Which of these makes sense and is the most fair?” and obviously we eventually landed on them. Our current terms, which are modeled after SparkToro’s terms, Rand Fishkin came up with to raise money for himself. Other than that, I think with Fred from the start we said, “We’re going to do weekly calls. There will be office hours. We’ll get together two to four times per year.” The basic structure was in place really early. Frankly, I’m surprised more hasn’t changed, because we are very willing. As founders, if it doesn’t work and I’m willing to change it.
I’ve been surprised at how little we’ve had to change. I would’ve expected more things to go wrong. Typically, when you’re starting something with a lot of uncertainty, things go wrong and you just have to pivot, or change, or whatever. I guess it helps that the accelerator model is proven and there is a lot of accelerators and models to look at that already work. All we did was make it remote and we can essentially model ourselves after an in-person one and just make the adjustments necessary to translate it to a remote situation.
Tracy: Let’s go back to that term process because I know that there is a lot of hullabaloo that went into nailing down the terms, getting investors on board, and some ups and downs there. If you want to expand on that process?
Rob: In all honesty, I think my two low points came while we were trying to figure out the terms. I don’t like uncertainty, I’m an engineer, I’m left brain, I like things to be ones and zeros and the process of trying to figure out what terms were fair to founders but that also provide some type of return, such that you can be super founder friendly and if you provide a crappy return, then no one will invest in your fund. They will put their money to REIT instead, if you can’t provide more venture-like returns.
There were a couple of conversations in there. One was with a potential TinySeed founder and one was with a potential TinySeed investor. The terms were changing literally weekly at this point. Each of those conversations—we had a few dozen—there were two in particular where after I basically got the feedback, I told Sherry like, “I just don’t think this is going to work.” I don’t think we’re ever going to find terms that both satisfy both investors and founders because it’s a lot harder than it looks. I was super down during that point and it was for about a day or two. Frankly, I was catastrophizing. It was not that big of a deal. It was one data point and it’s so easy to do that in the early days. Your ideas are just so fragile.
When you launch your SaaS app and someone tells you, “This isn’t going to work,” or, “The pricing is too high,” or whatever, the first time you hear that, you’re like, “Oh, no. My pricing is too high.” But when you have 500 customers paying you and someone comes and tells your pricing is too high or you’ve funded an entire batch of really talented ambitious founders who are growing fast and the terms work for them, you just gain that level of confidence where batch two opens in just probably less than a week after this. If someone comes and says, “I don’t like your terms,” I’m going to say, “Okay.” It doesn’t matter.
The first few times you hear that when you just have three data points and one of them is that they’re not going to work, it’s really hard for me. I think that’s actually something I’d like to get better at and I think it’s a weakness of mine, is I take those things really hard. I get myself tied up in the success of my startup. Einar was basically like, “Nah. One data point. We’ll make this work.” He helped pull me out of those two moments. That’s where I’m thankful. It’s been a year plus but those were the two moments where I was like, “Man, this sucks.” Aside from that it’s definitely been more fun, except for due diligence in dealing with the lawyers.
Tracy: That would be the next question actually, because trying to create the terms was made even harder because of working with lawyers and people who don’t understand what we’re trying to do, or at least they work off a rubric that works for traditional venture firms, but we’re not that.
Rob: Yeah, we figured out our terms. We talked to one law firm, of course we’re talking to Silicon Valley lawyers and we worked with them for about three weeks, and we bailed. We switched lawyers because they just didn’t get it. They couldn’t get their heads around we’re funding LLCs and C Corps in all 50 states. They gave us docs and it was all Delaware C Corp language. We’re like, “No, we’ve told you like four times on calls, this is not that,” and they just didn’t understand it. We bailed, went to another firm and they did that although they figured themselves out a little sooner.
We were making offers to companies and going to sign the docs, and our lawyers were like, “We might have six or eight weeks of due diligence to do on these companies,” I’m like, “What?” I don’t know, it’s frustrating for me. I often get frustrated dealing with lawyers and my goal every year to not to have to talk to lawyers. At a certain point, I worked through the due diligence, took a couple of months, most of the companies and eventually I got so burned out on it. Einar was like, “Do you want me to step in on this?” He actually had to take over. He didn’t have to, I could’ve got it done but it really pulled a big burden off me.
I think we’re probably 7 or 8 into our 10 that we funded and he took over. It’s a thing where I can do that stuff, but it’s not fulfilling and it’s frustrating and that’s when you know, if you do that for a long time you’re going to burn out. Just because you’re capable of something as a founder, doesn’t mean you should do it. I think that is a lesson I learned over the past year is if I’m able to hand that off completely this time, just the mechanical due diligence of it and not be involved, that will that will probably be my goal.
Tracy: TinySeed was a little bit delayed starting the first batch, right? How long was that?
Rob: Yeah. We wanted to announce at MicroConf 2019 which was March 23rd, I believe, 24th, and I think of first docs that were signed were maybe five weeks after that. It was the first company and everyone else came within the next four to six weeks. It was like May, early June that everybody got signed. It was a couple months later than we had intended. I would say it’s frustrating, but it also was a little bit disappointing. I didn’t take it super hard, but like in the past, if I set a deadline and we missed it, I would have been devastated, like we failed. I didn’t necessarily feel that way this time.
Tracy: And we could take it to round two which is going to be happening pretty soon. I think all these things we’ve learned about the application process and the due diligence stuff should be easier this time around now that we’ve worked things out have lawyers and all that.
Rob: Yeah, absolutely. We have a checklist Einar put together and I would expect it to be shorter. The other thing we learned is we’re opening applications November 1st. They’ll be open for a month. We’re giving ourselves a month or a little more to evaluate and interview, and then we give ourselves another couple months just to make sure the due diligence is dialed in, everything gets signed, and we can plan for folks to frankly come to MicroConf which is our first retreat for the second batch will be a couple of days prior to MicroConf here in Minneapolis next April. We’ve given ourselves ample time this time. Last time was definitely an aggressive schedule and I feel like you get experience under your belt and you’re just a little more cautious with it.
Tracy: On the founder side of things, what has changed in the application?
Rob: Our first cut of the application was good. It wasn’t great. Some of the wordings was off. You can tell when someone puts a monthly number and another person puts an annual number, and you can tell, “Oops. Should have specified monthly,” because that’s what you wanted. There were some things like that.
Tracy: So is on Google. It was kind of very MVP before. They were using Google form or is it type form I think and then pushed into Google sheets.
Rob: It was a square space form that’s pushed into Google sheets and I had Zapier monitoring the Google sheet to send a confirmation email because I didn’t have that at first and I probably got 50 emails on the first day or two saying, “Was my application received? I got the message, but I never got an email,” I got a message on the screen but never had an email. I like, okay, I guess people wanted an email confirmation.
It was very taped together. Google sheet was almost 900 rows. You saw it as you came in right at the end of the process. It was a kind of a mess to deal with. It was very MVP as you said. It was in retrospect, I don’t know that I would do anything different. I didn’t want to vet and find applicant tracking software. I didn’t want to drop the money. We didn’t know if we had the money to invest in that at that time.
We knew we had money to invest in the founders, I just didn’t know how much budget we would have for things like that. We were doing it almost like a bootstrapped fund and just doing it super scrappy, but this time around, you have gone through a bunch of potential pieces of software. That was a fun journey, huh?
Tracy: Yeah. The founder side of the application is going to change. I’m raising a new system and that should be really great. There’s everything administrative-wise I think will be improved on our side. Our founder facing side, the questions aren’t really changing. They’re just updating a few of the questions there. We’re kind of working through that process, continue working at that process at the moment, but a lot of lessons learned.
I think it’s really fascinating to see. This was places where we’re not launching our own product per se, but it’s still a lot of those lessons from doing something really small, scrappy, and MVP, and then taking those lessons, then be, “Okay, cool. Now we actually know what we need, what we want to build, and implement that into our process.”
Rob: Yeah. I think that’s a bigger thing that we’ll change is the internal process that we have. We just have a better software this time. The application itself is I think 95% the same as the first time because we found that we had really good information, that we needed to evaluate folks.
Tracy: The terms for the founders who get accepted at TinySeed aren’t changing or at least aren’t changing significantly, because there’s some other funds out there that will do version one, version two, and whatnot, but we’re largely saying it’s pretty much the same.
Rob: Yeah. There’s just one minor adjustment to multiple founders. The single founder rate of $120,000 that we invest is staying the same, but we did get some feedback that only we were only adding $20,000 per additional founder. It did start to feel after many conversations like, “Yeah, that’s not enough,” so we’re increasing that amount for subsequent founders this time. Multiple founder teams will get a bit more.
Tracy: We have 10 companies in our initial batch. Any fun surprises about working with our initial batch of startups?
Rob: I think the biggest surprise is like I said earlier, how smooth it has actually been given that we were making it up as we were going along. I expected to have to change more things to be honest. I expected things to go wrong just because when you’re writing it out on a piece of paper, you figure, “Cool. This is our V0.5 and I’m ready to change a lot of things.” I’ve also been pleasantly surprised with how well the batch came together in terms of the personalities and in terms of people helping really going out of their way to help one another.
We have a couple of folks who are really good with UX. We have some folks that are really good at sales, dealing with big contracts, all these skill sets. There’s a myriad of skill sets in there and the people in that batch are just willing to jump in and help one another. I had hoped that would be the case. That’s the point of funding people in batches. You get a group of 10 super talented, we have 2-person teams so it’s 12 super talented founders.
If they were off on their own, we just wrote a check. and then we’re like, “Okay, yeah. You could deal with us and the mentors,” you lose something there. That was why from the start, Einar had gone through YCombinator, I was always a believer in community. I’ve been a part of building MicroConf and building online communities and such, I’ve seen folks help one another. That was a hope, not an expectation, and that has come together in a way that I’m very, very pleased with.
Tracy: One of the things I found really fascinating when I joined—I do a lot of the day-to-day administration of the batch—there are some founders who are very active and involved, and there’s other founders that are a little bit more quiet. It was funny […] building of the systems we use in TinySeed. We have some of the traditional things. We’re using Notion, we’re using Slack, and we looked at some other project management solutions. They’re kind of geared towards people running companies where you have to have the people who are involved be involved and responding, like check-ins and all that.
The funny thing is, with us, with our community, we want people to be involved, but these are founders who are heads down working on their own companies, and we have to also have these things in place so that they can focus on their companies. There are times where they’re not going to be as involved at TinySeed, and people float in and float out as they need us. I thought that was really interesting to me, really interesting to build up an accelerator and build up these systems, but then how they’re different than how you run a company with employees.
Rob: That makes a lot of sense. That’s a good differentiation. Einar had said, when he went through YCombinator, that some of the companies used office hours all the time, or super engage with the batch, and there were a few that were just less engaged they were off doing their own thing. It wasn’t a sign of success either way. It wasn’t predictive who was more involved, then they grew faster, whatever. It was just personality, they just wanted different things out of the batch. That’s something that we’ve tried to do, build the systems in a way that doesn’t force anyone.
I was kind of a loner. I’ve had a lot of co-founders, but I’ve always been just kind of like to go and work off on my own. I get it. I get that some folks don’t want to be on calls. If we were doing two calls a week or something, I feel like you’d start to detract from founder productivity and then it just gets to be too much.
Tracy: Yeah, totally. The same thing with me. When I went to 500 Startups, I didn’t involve myself a lot in office hours. Personally for me, that was one of my regrets, but it’s been fascinating to be on the other side of the table, see how different people work, and what people prefer. On the TinySeed side, trying to make sure that we’re successful for all these different kinds of founders. Will you remind me, was Drip remote or did you have a team in place?
Rob: We were half remote. We are five Fresno and then five remote.
Tracy: We’re entirely remote. I met you at MicroConf, but really the first time we really worked together in-person was at the Minneapolis retreat, the TinySeed retreat. How has been that process of (a) TinySeed itself is remote, and then (b) working with the founders as all entirely remote and we get to meet each other on these retreats, but we’re all in on the remote culture. How’s that been as a founder, as the person who’s managing everything?
Rob: I think personally, I’m fine with it. I work really well remote. I don’t need a lot of in-person communication and all that. Some folks want more interaction. We had a founder or two mention, “Hey, can we do more calls? I wish the Slack group had more action going on,” and then other folks are fine with the way it is or frankly probably wished there was less conversation going on. That’s what I’ve been thinking about is how do we make this work for a broad range of people.
The remote aspect, I’m curious to hear your thoughts. I haven’t felt like that’s been a detriment. I think that’s a testament to this day and age. The tools like Slack and Zoom, and the fact that we are meeting together four times during the year. We’re so well-enabled that if you have a high speed internet to connect with one another. Even Voxer, I know most of us have a love/hate relationship with Voxer, but the push to talk and just to get audio to someone quickly, I just think we have more tools now than we ever have. I don’t feel like that’s been a big hindrance, but I’m curious to hear your thoughts if there’s something that’s come up about us being remote that has been a challenge.
Tracy: Well, it’s funny, again, looking back on my experience with 500 and also YC because those are in-person. They attribute a lot of their success to being like, “Okay, we’re all working together in-person for these three months heads down,” a lot of that has to do with that whole Series A process or the whole fundraising process when you’re getting on the full roller coaster. It’s been really interesting also. This works for us for the founders, because we’re working a little slower, a little bit more reasonable, a little bit better work-life balance for the founders for this year long process.
It’s nice to have that trickle down to the TinySeed team, because another thing I was going to ask you actually is you’re juggling a lot of things. You’re running MicroConf, you’re running TinySeed, we just did a big survey for MicroConf. I helped you out on that. You’re running this podcast, you’re running a new podcast project which you’ve been mentioning a few times on this podcast, you’re an angel investor in other companies, you do a lot of speaking engagements, you have a family. That’s why I think the nicest things about having this remote first company is that I think it allowed you to work through all these different projects that you’re working on which is kind of overwhelming when I listed it out like that. I’m just going to roll right into it. How has that been? Just juggling all these different things?
Rob: What’s interesting is it feels less stressful now than it did when I was running software companies, because at least more of the things overlap. Now the podcast overlaps, it’s always overlapped with MicroConf, but much like the conversation today, and my ability to bring some of the TinySeed founders on as I have, David Heller, Craig Hewitt, Matt Wensing, it almost feels like things are more in sync than they have been in the past with me.
The other advantage I have that I didn’t back in the day is, given our funding, we were able to bring you on full time to do a lot of the day-to-day, the grind, the operations, that I would have had to do. What I did with my prior companies. This is probably the first time I’m talking about on the podcast, but we brought Xander on full time to essentially head up MicroConf and continue to produce it. I’m not as in the trenches as I have been in the past and everything’s aligned and going in the same direction.
I’m not doing all of this. Everything you just mentioned, I was doing except for TinySeed, but insert Drip in there. I’m running a software company with a team of developers and there are 10 of us and in essence. That split my focus because MicroConf podcast mode was different than Drip mode. It’s just two different problem sets. TinySeed and MicroConf are not the same, but at least it’s the same headspace of community, and helping folks, and pushing this forward. At least for me, there’s a lot that I can stay in the same headspace with each of those things, and then frankly working with really good people has helped tremendously.
Tracy: In terms of all these projects, do you have any processes in place that help you keep track of everything you have to do?
Rob: Yes. I get a lot of email, quite a lot of email. I’m in email constantly and my process is to triage things and use the Trello board. Literally, if someone texts me something that is like a task or if you Slack me something, I will often copy-paste or screenshot that and throw it into Trello, because otherwise, I’ll read it, forget about it, and it’ll never get done. I’ll remember it three days later and be like, “I’m sorry I didn’t get back to you about that one thing you asked me about,” if it’s a quick yes or no of course I just answer, but if it’s more than two minutes, I need to be prioritized.
I’m in Trello and email a lot. I boomerang a ton of stuff. I have a “this week” folder. If it doesn’t need to get done, if it’s not urgent and I know I can handle it in a week or in the next week, I’ll throw it into this week and I have 30 minutes like on Thursday morning where I go through that whole folder and I respond to things. Often it’s speaking invitations, it’s asking for advice from random people I don’t know, or people outside of the batch. Other stuff that’s not time-sensitive.
I think really the core of why all that works is Trello. If you’re ever in a conversation with me and I get on my phone, I will say, “I’m emailing myself that right now.” If you were to mention a really good book right now, I would email that to the Trello board and I would later add it to my audible wishlist if I wanted to listen to it. Or if you are to recommend a tool for applicant processing, I would email it there first, then later I would go and I would mention it to you that I put it in Notion or something. That’s kind of my inbox triage. Just getting fast with keyboard shortcuts.
Tracy: There was that one time that you emailed me rather than Trello with your to-do. That was funny, because Tracy starts with TR.
Rob: Yup. I know of a good TR and it’s the Trello board and for some reason, you were there, and it was only a subject line, it was like, “Remember to X, Y, Z,” and you’re like, “Was this for me?”
Tracy: I was like, “Okay, this is clearly not for me but I’m not sure what it was for.”
Rob: Totally.
Tracy: Batch number two, the application is going to start on November 1st. It will probably last about a month. For people who are applying for batch two, do you have any big pieces of advice?
Rob: That’s an interesting question. We do look at every application, we will read all of your answers, do think them through. We’re serious about the questions we ask there. We feel like it provides a lot of insight. We actually got a feedback last time from multiple people saying, the questions, especially the latter half where we ask about, “What would be three ideal customers for you? Why is now the time for this idea?” these are just some high-level questions.
We got multiple people that told us, “Those helped me think through my business. I learned something by having to think those through.” I would say I look at the people, I look at product market fit, and I look at price sensitivity. Those are the 3Ps, the high level P’s. We have this whole list of 40 something things that we evaluate folks on. If it’s a solid team, you’re shipping, you’re getting stuff done, and have some kind of traction, we really want to have a conversation.
I don’t know if there are any hacks or quick ways to get attention, but I do feel that in this day and age, I don’t know any angel, or VC, or accelerator, that will fund ideas. If you’re at the idea stage, get out of that. Get validation, get someone using it. Even if it’s a productized service that will ultimately be beaten by software, or you’re just hacking stuff together with Zapier and Duct Tape. Get to revenue, get to where you’ve proven that there is a need and people are willing to pay for this, because that’s so much of it.
The cone of uncertainty is widest in those early days and it’s so hard to break through from $0-$50 MRR. It might be the hardest point, or $50-$500. There’s just these little hurdles that are so hard to get through. It’s what I tell any founder, whether they’re applying for funding or not. This is the hard part. Get past that to prove to yourself as much as anyone else that that is a viable idea, and it gives you the confidence to keep pouring your time into your business.
Tracy: The nice part thinking about their new application process is that people can save their work compared to last time which is just a form.
Rob: Yup, big one-page form. That is nice. There will be improvements this whole time, little iterations and such.
Tracy: When I was working my startup before TinySeed, I never got into YCombinator. Like what you said, the application process helped me so much in terms of making me think through what are the issues that I wasn’t thinking about beforehand, what are the things that I could be anticipating, that I can put into place in the next three months? Who are the competitors out there? What does the competitor last week look at that moment? Because oftentimes. I’d forget to look at that as things popup over time.
We’ve gotten quite a few emails from people saying, “Hey, should I apply? I don’t know if I should apply,” and I said, “Yeah, definitely apply if only for that process of going through those questions and forcing yourself to think about these things, you might’ve forgotten to think about for awhile.” I think it’s a really useful process and I hope to see a lot of applications. This is my first time being 100% involved, so I’m really looking forward to it.
Rob: Yeah. It’ll be fun.
Tracy: Cool. I think that’s a good place to end this.
Rob: Sounds good. If folks want to keep up with you, they can go to @tracymakes on Twitter or tracymakes.com.
Tracy: And if they want to keep up with you, they can go to @robwalling or robwalling.com.
Rob: Nice. Well done.
Thanks again to Tracy for coming on the show and interviewing me and maybe I’ll do that again in another month or two to continue my story. If you have a question for the show, leave us a voicemail at (888) 801-9690 or email questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt it’s used under Creative Commons. Visit startupsfortherestofus.com for a full transcript of each episode. Thank you for listening and we’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. Today with Tracy Osborn, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to this week’s episode, I’m your host, Rob Walling. Each week on the show, we cover topics relating to building and growing startups, but startups that are real businesses, not the Silicon Valley myth of building a company, having billions of people adopt it organically, virally overnight and not paying you, and suddenly you come up with that monetization strategy. We talk about building real businesses where real people pay us real money. We talk about building businesses that provide us with a purpose that we’re fascinated with, but we don’t sacrifice our lives at the expense of building these companies.
We also talk about building companies that provide us with the freedom, and it’s a freedom from a day job, it’s the freedom of working on crappy projects, and it’s the freedom to own our own destiny. With many different show topics, often times, we talk about tactics or teaching. We answer a lot of listener questions, sometimes with guests. We do founder hot seats and we also have interviews, as well as breaking news, episodes like we did last week with Adii Pienaar. This week, we turn the tables on me as Tracy Osborn takes the interview seat and she asked me really about what’s been going on for me post-Drip and it focuses around TinySeed. That’s really the main day-to-day thing that I’ve been doing since then.
During the course of the conversation, we look at some highs, some lows, things that have been surprises. It’s really the background story that I would tell, if I was talking about building a SaaS app. It’s all the customer development, challenges that we faced and just kind of the story that I haven’t particularly talked about on the show or really for the most part anywhere else. I enjoyed the conversation and I hope you enjoyed this inside look at what’s been going on with me for about the last 12 to 18 months. Let’s dive in.
Tracy: Hey Rob. Thanks for coming on the show. I am excited to be the interviewer for once.
Rob: Absolutely. Yeah, my pleasure.
Tracy: I was looking forward to it, actually, after you answered the questions on WeddingLovely, I was like, “Cool, I can turn the tables on you.” Put you in the hot seat.
Rob: Yup, dig into my successes and failures. Really, really put the thumb down on me. “How did you feel when you were at the bottom of the bottomless pit?” This will be fun. I’ve actually had multiple people tell me that I should do this. They said, “You know? You still have a story going on and you are growing a startup yourself,” and there’s obviously a lot of uncertainty any time you start something new and folks told me it’ll be interesting to hear what’s been going on.
Tracy: Yeah and honestly, you don’t talk a lot about TinySeed. I went through a lot of the episodes of Startups for the Rest of Us, and there were a few dedicated episodes, but in general, it’s been really cool listening to you and Mike talk about Bluetick. I feel like there is a lot of opportunity for you to talk about TinySeed, not just to promote it, but it’s just like a really interesting process and something that’s completely new. We’re not technically working on a startup, like what’s involved in running and funding and all that.
Rob: Yeah, I would agree. I think I’ve probably been overly sensitive to that and not wanting it to feel like I’m promoting it, but I don’t know that anyone’s ever accused me of promoting stuff on the podcast. We’ve been really careful about it, so I do think I want to start sharing more of the inside track. It’s like you started SaaS app. You start a productized service. You start an accelerator, like TinySeed. There’s an 80% overlap. You still have to get all the systems in place. You still have to find customers. You might need to raise funding if you’re going to do it.
You still need to figure out and do customer development. We’ll talk a little bit about that, but our terms are essentially like our pricing. That’s the thing that someone could look at our terms and say, “Oh, you’re pricing’s too high.” Just like in a SaaS or productized service, they would say that. I’m finding a lot of commonalities and I feel like my experience running startups in the past is absolutely translated here.
Tracy: Right. The funny thing is I was looking at the previous podcast episode. As of this recording, it’s almost one year to the day of when you announced TinySeed. It’s been a pretty epic year, I think.
Rob: Yeah, it really has. It doesn’t feel like it’s been that long. So much is going on, though. It’s one of those things were the days are long but the years are short. It’s kind of like that.
Tracy: Maybe we should backtrack a bit, just in case someone comes on this podcast and doesn’t have a lot of background. Do you want to go over TinySeed and what we’re doing?
Rob: Yeah sure. I mean the basics, TinySeed is the first startup accelerator designed for people who’d traditionally bootstrap and unlike most accelerators, like Y Combinator or Techstars, we’re fully remote and we’re a year long. Most accelerators, you have to move to a city, they’re typically three months, usually the goal is to learn how to pitch, and you’re going to raise money at the end of it. That’s going to be a big demo today.
We are not doing that because my money and fundraising is not the end goal of all of our startups. I think there are a few that will raise follow-on rounds, but it’s going to be totally up to the founders. We’re remote, we’re one year, we focus on subscription software, so mostly SaaS, although we almost funded to set a marketplace that was software-enabled, that had a subscription tied to it. It wasn’t just processing fee. We have a really top notch group of mentors, to be honest. tinyseed.com/people, if you go there, it’s kind of a who’s who of folks who know about SaaS.
That’s one of the beauties of, I think, being able to focus like we did. We didn’t say, “Hey, we’re remote accelerator for consumer packaged goods,” and any startup that has software that enables it. We may get there eventually, but right now being so focused on this, we can have mentors like the Jason Frieds, the DHHs, the Rand Fishskins, Chris Savage from Wistia, Ruben Gomez from Bidsketch, and Laura Roeder from MeetEdgar. It’s folks who are really in it and can provide really detailed info.
I like to say, with TinySeed there’s five elements that we provide the founders. One is the money, two is the mentorship, three is the community of being in the batch—we meet four times during the year in-person, our second one ‘s coming up here in a week—and then the fifth is really the network.
You can come to me. My network is now at the disposal of the batch of any of the founders we backed, as well as the networks of most of our mentors. I’ve heard Craig Hewitt talk about a couple episodes ago, a lot of second order intro, where he’ll talk to whoever, Asia Matos or Reuben Gomez, who are both mentors and they will intro him to someone they know to help solve a particular problem.
That’s been the goal. I got to be honest, it was a year ago we announced and there was a lot of uncertainty as to whether this model would work, whether we could pull it off, and in all honesty, it’s gone very smoothly.
Tracy: That was my next question, overall how has last year gone? How are you feeling today about everything?
Rob: Today, we’re about 4½ months into the first batch for the year long batch and there have been very few days in the past year that I have felt down. There have been a few and we’ll talk about some of those today, but compared to probably every other startup I’ve ever done, this has been more fun, less stress. I feel like I’m having as much or more of an impact or at least a deeper impact than a lot of other things that I’ve done. I feel really positive about it.
One of the reasons Sherry and I talk through this on Zen Founder episode, and she said, “Is it less stressed because it truly is less complicated? Because I hear you guys…” we were making deals with startups, we were fundraising, we were trying to figure out terms, there was a lot of complexity and a lot of moving pieces all at once and it was way more complicated, this time.
Yet, I felt less stressed and we kind of started boiling it down to, (a) I’m probably a little more mature, (b) it helps to work with a really strong cofounder like Einar, who took a bunch of the complexity. He’s really good at making deals and working with people in finding things that work, so I didn’t have to bear all the burden of that. It’s interesting. With prior startups for me, my chips were always all on the table, where if the startup failed, it was years of my life that was down the drain and it was potentially most of my net worth that was down the drain. I always took that really as a big burden.
Now, I was able to take chips off the table, in all honesty with Drip. There’s a certain level of comfort where I’m still confident that it’s going to work every day when I get up. I’m like, “Yeah, this is helping people,” it’s providing real value and I’m not worried all the time of, “Oh, it’s going to…” I don’t know why I woke up three days a week when I was running Drip and thought this could all come crashing down tomorrow. It wasn’t a healthy attitude and I kind of regret it, and I think I’ve made it a point not to do that here. It’s made it easier mentally, but it’s also made me a better as a founder, that I’m not so worried about that.
Tracy: That’s really fun, I say as a team member, it’s really fun to work on something that I feel so positive and exciting, just working with these founders and riding their success. It’s been a really fulfilling thing to work on,
Rob: Yeah, I think being able to live through them vicariously is super helpful. I’ve told the founders that, “Hey, when you succeed I get the dopamine rush and when you’re going through the struggles, let’s get on the phone and I will work with you through that.” It’s nice to have that ability without really having to do it day-to-day at this point. I kept telling Sherry towards the end of Drip when we were selling it like, “I just don’t want to do this again. I’ve done this enough.” I’m looking for something different, but also challenging and also that has a lot of impact and I’m really glad that this is what we settled on.
Tracy: A year ago, the TinySeed was kind of just an idea, just like a plan, like you said, we’re about 4½ months into the first batch. What has changed in terms of how you thought the process, how the management of TinySeed, and how things would go? What has changed between that idea versus reality what’s going on today?
Rob: It’s surprisingly little actually. Einar and I had started talking about TinySeed around April of 2018 and then we announced about six months later and Einar have heard my MicroConf talk and said, “That’s something that should exist and I know limited partners who would fund that.” We were at the black jack tables at MicroConf and I kind of waved off like, “I don’t know, man. It seems like a lot of work, a lot of headache,” all that stuff.
Within a week or two, I got to thinking because I had this idea YC for bootstrappers, like 2011, I had written down and started sketching it out and I thought, “That sounds like a lot of headache dealing with it. I’ve never raised money.” It’s like, “I don’t really want to deal with limited partners.” It’s a lot of work. But the idea became more and more intriguing the more I thought about the need from the founder side.
Since I started investing, writing the little angel checks in, the more bootstrapper companies, the capital efficient independent startups like the CartHook, the RightMessages, and the SparkToros, I just didn’t have the money or the time to really go all in on that. But the need was obvious and the need was there and a lot of it was at MicroConf, frankly, people I would meet.
All that said, we started just kind of collaborating and working on the deck and stuff and I really was like—we haven’t worked together before, but he’s come to a bunch of MicroConfs, I checked references and asked around. Some people I’ve been in a master mind with them. People are like, “He’s legit. He’s super smart. He gets stuff done and he’d be a good partner.” It took us I think a couple months of back and forth to configure out really what we wanted to do, but even in the early incarnation, I think I’d said a three or a six-month remote accelerator is what we’re thinking.
At some point one of us said, “Why not make a year since SaaS takes so long.” That was one thing that changed. The other thing that changed were the terms. We just didn’t know what terms could possibly work, because the only model for this was indie.vc. Everyone else who funds things really does it either way, it’s like safes, convertible notes and those aren’t going to work here, because if you don’t raise another round, then you never get your equity. Then there’s venture terms and we don’t want any of those. That is where we just started. That was the biggest iteration of probably what changed the most, was I think we went through six different versions of the terms and customer developed the hell out of those.
We talked to founders. We talked to investors and looked at myself and said, “Which of these makes sense and is the most fair?” and obviously we eventually landed on them. Our current terms, which are modeled after SparkToro’s terms, Rand Fishkin came up with to raise money for himself. Other than that, I think with Fred from the start we said, “We’re going to do weekly calls. There will be office hours. We’ll get together two to four times per year.” The basic structure was in place really early. Frankly, I’m surprised more hasn’t changed, because we are very willing. As founders, if it doesn’t work and I’m willing to change it.
I’ve been surprised at how little we’ve had to change. I would’ve expected more things to go wrong. Typically, when you’re starting something with a lot of uncertainty, things go wrong and you just have to pivot, or change, or whatever. I guess it helps that the accelerator model is proven and there is a lot of accelerators and models to look at that already work. All we did was make it remote and we can essentially model ourselves after an in-person one and just make the adjustments necessary to translate it to a remote situation.
Tracy: Let’s go back to that term process because I know that there is a lot of hullabaloo that went into nailing down the terms, getting investors on board, and some ups and downs there. If you want to expand on that process?
Rob: In all honesty, I think my two low points came while we were trying to figure out the terms. I don’t like uncertainty, I’m an engineer, I’m left brain, I like things to be ones and zeros and the process of trying to figure out what terms were fair to founders but that also provide some type of return, such that you can be super founder friendly and if you provide a crappy return, then no one will invest in your fund. They will put their money to REIT instead, if you can’t provide more venture-like returns.
There were a couple of conversations in there. One was with a potential TinySeed founder and one was with a potential TinySeed investor. The terms were changing literally weekly at this point. Each of those conversations—we had a few dozen—there were two in particular where after I basically got the feedback, I told Sherry like, “I just don’t think this is going to work.” I don’t think we’re ever going to find terms that both satisfy both investors and founders because it’s a lot harder than it looks. I was super down during that point and it was for about a day or two. Frankly, I was catastrophizing. It was not that big of a deal. It was one data point and it’s so easy to do that in the early days. Your ideas are just so fragile.
When you launch your SaaS app and someone tells you, “This isn’t going to work,” or, “The pricing is too high,” or whatever, the first time you hear that, you’re like, “Oh, no. My pricing is too high.” But when you have 500 customers paying you and someone comes and tells your pricing is too high or you’ve funded an entire batch of really talented ambitious founders who are growing fast and the terms work for them, you just gain that level of confidence where batch two opens in just probably less than a week after this. If someone comes and says, “I don’t like your terms,” I’m going to say, “Okay.” It doesn’t matter.
The first few times you hear that when you just have three data points and one of them is that they’re not going to work, it’s really hard for me. I think that’s actually something I’d like to get better at and I think it’s a weakness of mine, is I take those things really hard. I get myself tied up in the success of my startup. Einar was basically like, “Nah. One data point. We’ll make this work.” He helped pull me out of those two moments. That’s where I’m thankful. It’s been a year plus but those were the two moments where I was like, “Man, this sucks.” Aside from that it’s definitely been more fun, except for due diligence in dealing with the lawyers.
Tracy: That would be the next question actually, because trying to create the terms was made even harder because of working with lawyers and people who don’t understand what we’re trying to do, or at least they work off a rubric that works for traditional venture firms, but we’re not that.
Rob: Yeah, we figured out our terms. We talked to one law firm, of course we’re talking to Silicon Valley lawyers and we worked with them for about three weeks, and we bailed. We switched lawyers because they just didn’t get it. They couldn’t get their heads around we’re funding LLCs and C Corps in all 50 states. They gave us docs and it was all Delaware C Corp language. We’re like, “No, we’ve told you like four times on calls, this is not that,” and they just didn’t understand it. We bailed, went to another firm and they did that although they figured themselves out a little sooner.
We were making offers to companies and going to sign the docs, and our lawyers were like, “We might have six or eight weeks of due diligence to do on these companies,” I’m like, “What?” I don’t know, it’s frustrating for me. I often get frustrated dealing with lawyers and my goal every year to not to have to talk to lawyers. At a certain point, I worked through the due diligence, took a couple of months, most of the companies and eventually I got so burned out on it. Einar was like, “Do you want me to step in on this?” He actually had to take over. He didn’t have to, I could’ve got it done but it really pulled a big burden off me.
I think we’re probably 7 or 8 into our 10 that we funded and he took over. It’s a thing where I can do that stuff, but it’s not fulfilling and it’s frustrating and that’s when you know, if you do that for a long time you’re going to burn out. Just because you’re capable of something as a founder, doesn’t mean you should do it. I think that is a lesson I learned over the past year is if I’m able to hand that off completely this time, just the mechanical due diligence of it and not be involved, that will that will probably be my goal.
Tracy: TinySeed was a little bit delayed starting the first batch, right? How long was that?
Rob: Yeah. We wanted to announce at MicroConf 2019 which was March 23rd, I believe, 24th, and I think of first docs that were signed were maybe five weeks after that. It was the first company and everyone else came within the next four to six weeks. It was like May, early June that everybody got signed. It was a couple months later than we had intended. I would say it’s frustrating, but it also was a little bit disappointing. I didn’t take it super hard, but like in the past, if I set a deadline and we missed it, I would have been devastated, like we failed. I didn’t necessarily feel that way this time.
Tracy: And we could take it to round two which is going to be happening pretty soon. I think all these things we’ve learned about the application process and the due diligence stuff should be easier this time around now that we’ve worked things out have lawyers and all that.
Rob: Yeah, absolutely. We have a checklist Einar put together and I would expect it to be shorter. The other thing we learned is we’re opening applications November 1st. They’ll be open for a month. We’re giving ourselves a month or a little more to evaluate and interview, and then we give ourselves another couple months just to make sure the due diligence is dialed in, everything gets signed, and we can plan for folks to frankly come to MicroConf which is our first retreat for the second batch will be a couple of days prior to MicroConf here in Minneapolis next April. We’ve given ourselves ample time this time. Last time was definitely an aggressive schedule and I feel like you get experience under your belt and you’re just a little more cautious with it.
Tracy: On the founder side of things, what has changed in the application?
Rob: Our first cut of the application was good. It wasn’t great. Some of the wordings was off. You can tell when someone puts a monthly number and another person puts an annual number, and you can tell, “Oops. Should have specified monthly,” because that’s what you wanted. There were some things like that.
Tracy: So is on Google. It was kind of very MVP before. They were using Google form or is it type form I think and then pushed into Google sheets.
Rob: It was a square space form that’s pushed into Google sheets and I had Zapier monitoring the Google sheet to send a confirmation email because I didn’t have that at first and I probably got 50 emails on the first day or two saying, “Was my application received? I got the message, but I never got an email,” I got a message on the screen but never had an email. I like, okay, I guess people wanted an email confirmation.
It was very taped together. Google sheet was almost 900 rows. You saw it as you came in right at the end of the process. It was a kind of a mess to deal with. It was very MVP as you said. It was in retrospect, I don’t know that I would do anything different. I didn’t want to vet and find applicant tracking software. I didn’t want to drop the money. We didn’t know if we had the money to invest in that at that time.
We knew we had money to invest in the founders, I just didn’t know how much budget we would have for things like that. We were doing it almost like a bootstrapped fund and just doing it super scrappy, but this time around, you have gone through a bunch of potential pieces of software. That was a fun journey, huh?
Tracy: Yeah. The founder side of the application is going to change. I’m raising a new system and that should be really great. There’s everything administrative-wise I think will be improved on our side. Our founder facing side, the questions aren’t really changing. They’re just updating a few of the questions there. We’re kind of working through that process, continue working at that process at the moment, but a lot of lessons learned.
I think it’s really fascinating to see. This was places where we’re not launching our own product per se, but it’s still a lot of those lessons from doing something really small, scrappy, and MVP, and then taking those lessons, then be, “Okay, cool. Now we actually know what we need, what we want to build, and implement that into our process.”
Rob: Yeah. I think that’s a bigger thing that we’ll change is the internal process that we have. We just have a better software this time. The application itself is I think 95% the same as the first time because we found that we had really good information, that we needed to evaluate folks.
Tracy: The terms for the founders who get accepted at TinySeed aren’t changing or at least aren’t changing significantly, because there’s some other funds out there that will do version one, version two, and whatnot, but we’re largely saying it’s pretty much the same.
Rob: Yeah. There’s just one minor adjustment to multiple founders. The single founder rate of $120,000 that we invest is staying the same, but we did get some feedback that only we were only adding $20,000 per additional founder. It did start to feel after many conversations like, “Yeah, that’s not enough,” so we’re increasing that amount for subsequent founders this time. Multiple founder teams will get a bit more.
Tracy: We have 10 companies in our initial batch. Any fun surprises about working with our initial batch of startups?
Rob: I think the biggest surprise is like I said earlier, how smooth it has actually been given that we were making it up as we were going along. I expected to have to change more things to be honest. I expected things to go wrong just because when you’re writing it out on a piece of paper, you figure, “Cool. This is our V0.5 and I’m ready to change a lot of things.” I’ve also been pleasantly surprised with how well the batch came together in terms of the personalities and in terms of people helping really going out of their way to help one another.
We have a couple of folks who are really good with UX. We have some folks that are really good at sales, dealing with big contracts, all these skill sets. There’s a myriad of skill sets in there and the people in that batch are just willing to jump in and help one another. I had hoped that would be the case. That’s the point of funding people in batches. You get a group of 10 super talented, we have 2-person teams so it’s 12 super talented founders.
If they were off on their own, we just wrote a check. and then we’re like, “Okay, yeah. You could deal with us and the mentors,” you lose something there. That was why from the start, Einar had gone through YCombinator, I was always a believer in community. I’ve been a part of building MicroConf and building online communities and such, I’ve seen folks help one another. That was a hope, not an expectation, and that has come together in a way that I’m very, very pleased with.
Tracy: One of the things I found really fascinating when I joined—I do a lot of the day-to-day administration of the batch—there are some founders who are very active and involved, and there’s other founders that are a little bit more quiet. It was funny […] building of the systems we use in TinySeed. We have some of the traditional things. We’re using Notion, we’re using Slack, and we looked at some other project management solutions. They’re kind of geared towards people running companies where you have to have the people who are involved be involved and responding, like check-ins and all that.
The funny thing is, with us, with our community, we want people to be involved, but these are founders who are heads down working on their own companies, and we have to also have these things in place so that they can focus on their companies. There are times where they’re not going to be as involved at TinySeed, and people float in and float out as they need us. I thought that was really interesting to me, really interesting to build up an accelerator and build up these systems, but then how they’re different than how you run a company with employees.
Rob: That makes a lot of sense. That’s a good differentiation. Einar had said, when he went through YCombinator, that some of the companies used office hours all the time, or super engage with the batch, and there were a few that were just less engaged they were off doing their own thing. It wasn’t a sign of success either way. It wasn’t predictive who was more involved, then they grew faster, whatever. It was just personality, they just wanted different things out of the batch. That’s something that we’ve tried to do, build the systems in a way that doesn’t force anyone.
I was kind of a loner. I’ve had a lot of co-founders, but I’ve always been just kind of like to go and work off on my own. I get it. I get that some folks don’t want to be on calls. If we were doing two calls a week or something, I feel like you’d start to detract from founder productivity and then it just gets to be too much.
Tracy: Yeah, totally. The same thing with me. When I went to 500 Startups, I didn’t involve myself a lot in office hours. Personally for me, that was one of my regrets, but it’s been fascinating to be on the other side of the table, see how different people work, and what people prefer. On the TinySeed side, trying to make sure that we’re successful for all these different kinds of founders. Will you remind me, was Drip remote or did you have a team in place?
Rob: We were half remote. We are five Fresno and then five remote.
Tracy: We’re entirely remote. I met you at MicroConf, but really the first time we really worked together in-person was at the Minneapolis retreat, the TinySeed retreat. How has been that process of (a) TinySeed itself is remote, and then (b) working with the founders as all entirely remote and we get to meet each other on these retreats, but we’re all in on the remote culture. How’s that been as a founder, as the person who’s managing everything?
Rob: I think personally, I’m fine with it. I work really well remote. I don’t need a lot of in-person communication and all that. Some folks want more interaction. We had a founder or two mention, “Hey, can we do more calls? I wish the Slack group had more action going on,” and then other folks are fine with the way it is or frankly probably wished there was less conversation going on. That’s what I’ve been thinking about is how do we make this work for a broad range of people.
The remote aspect, I’m curious to hear your thoughts. I haven’t felt like that’s been a detriment. I think that’s a testament to this day and age. The tools like Slack and Zoom, and the fact that we are meeting together four times during the year. We’re so well-enabled that if you have a high speed internet to connect with one another. Even Voxer, I know most of us have a love/hate relationship with Voxer, but the push to talk and just to get audio to someone quickly, I just think we have more tools now than we ever have. I don’t feel like that’s been a big hindrance, but I’m curious to hear your thoughts if there’s something that’s come up about us being remote that has been a challenge.
Tracy: Well, it’s funny, again, looking back on my experience with 500 and also YC because those are in-person. They attribute a lot of their success to being like, “Okay, we’re all working together in-person for these three months heads down,” a lot of that has to do with that whole Series A process or the whole fundraising process when you’re getting on the full roller coaster. It’s been really interesting also. This works for us for the founders, because we’re working a little slower, a little bit more reasonable, a little bit better work-life balance for the founders for this year long process.
It’s nice to have that trickle down to the TinySeed team, because another thing I was going to ask you actually is you’re juggling a lot of things. You’re running MicroConf, you’re running TinySeed, we just did a big survey for MicroConf. I helped you out on that. You’re running this podcast, you’re running a new podcast project which you’ve been mentioning a few times on this podcast, you’re an angel investor in other companies, you do a lot of speaking engagements, you have a family. That’s why I think the nicest things about having this remote first company is that I think it allowed you to work through all these different projects that you’re working on which is kind of overwhelming when I listed it out like that. I’m just going to roll right into it. How has that been? Just juggling all these different things?
Rob: What’s interesting is it feels less stressful now than it did when I was running software companies, because at least more of the things overlap. Now the podcast overlaps, it’s always overlapped with MicroConf, but much like the conversation today, and my ability to bring some of the TinySeed founders on as I have, David Heller, Craig Hewitt, Matt Wensing, it almost feels like things are more in sync than they have been in the past with me.
The other advantage I have that I didn’t back in the day is, given our funding, we were able to bring you on full time to do a lot of the day-to-day, the grind, the operations, that I would have had to do. What I did with my prior companies. This is probably the first time I’m talking about on the podcast, but we brought Xander on full time to essentially head up MicroConf and continue to produce it. I’m not as in the trenches as I have been in the past and everything’s aligned and going in the same direction.
I’m not doing all of this. Everything you just mentioned, I was doing except for TinySeed, but insert Drip in there. I’m running a software company with a team of developers and there are 10 of us and in essence. That split my focus because MicroConf podcast mode was different than Drip mode. It’s just two different problem sets. TinySeed and MicroConf are not the same, but at least it’s the same headspace of community, and helping folks, and pushing this forward. At least for me, there’s a lot that I can stay in the same headspace with each of those things, and then frankly working with really good people has helped tremendously.
Tracy: In terms of all these projects, do you have any processes in place that help you keep track of everything you have to do?
Rob: Yes. I get a lot of email, quite a lot of email. I’m in email constantly and my process is to triage things and use the Trello board. Literally, if someone texts me something that is like a task or if you Slack me something, I will often copy-paste or screenshot that and throw it into Trello, because otherwise, I’ll read it, forget about it, and it’ll never get done. I’ll remember it three days later and be like, “I’m sorry I didn’t get back to you about that one thing you asked me about,” if it’s a quick yes or no of course I just answer, but if it’s more than two minutes, I need to be prioritized.
I’m in Trello and email a lot. I boomerang a ton of stuff. I have a “this week” folder. If it doesn’t need to get done, if it’s not urgent and I know I can handle it in a week or in the next week, I’ll throw it into this week and I have 30 minutes like on Thursday morning where I go through that whole folder and I respond to things. Often it’s speaking invitations, it’s asking for advice from random people I don’t know, or people outside of the batch. Other stuff that’s not time-sensitive.
I think really the core of why all that works is Trello. If you’re ever in a conversation with me and I get on my phone, I will say, “I’m emailing myself that right now.” If you were to mention a really good book right now, I would email that to the Trello board and I would later add it to my audible wishlist if I wanted to listen to it. Or if you are to recommend a tool for applicant processing, I would email it there first, then later I would go and I would mention it to you that I put it in Notion or something. That’s kind of my inbox triage. Just getting fast with keyboard shortcuts.
Tracy: There was that one time that you emailed me rather than Trello with your to-do. That was funny, because Tracy starts with TR.
Rob: Yup. I know of a good TR and it’s the Trello board and for some reason, you were there, and it was only a subject line, it was like, “Remember to X, Y, Z,” and you’re like, “Was this for me?”
Tracy: I was like, “Okay, this is clearly not for me but I’m not sure what it was for.”
Rob: Totally.
Tracy: Batch number two, the application is going to start on November 1st. It will probably last about a month. For people who are applying for batch two, do you have any big pieces of advice?
Rob: That’s an interesting question. We do look at every application, we will read all of your answers, do think them through. We’re serious about the questions we ask there. We feel like it provides a lot of insight. We actually got a feedback last time from multiple people saying, the questions, especially the latter half where we ask about, “What would be three ideal customers for you? Why is now the time for this idea?” these are just some high-level questions.
We got multiple people that told us, “Those helped me think through my business. I learned something by having to think those through.” I would say I look at the people, I look at product market fit, and I look at price sensitivity. Those are the 3Ps, the high level P’s. We have this whole list of 40 something things that we evaluate folks on. If it’s a solid team, you’re shipping, you’re getting stuff done, and have some kind of traction, we really want to have a conversation.
I don’t know if there are any hacks or quick ways to get attention, but I do feel that in this day and age, I don’t know any angel, or VC, or accelerator, that will fund ideas. If you’re at the idea stage, get out of that. Get validation, get someone using it. Even if it’s a productized service that will ultimately be beaten by software, or you’re just hacking stuff together with Zapier and Duct Tape. Get to revenue, get to where you’ve proven that there is a need and people are willing to pay for this, because that’s so much of it.
The cone of uncertainty is widest in those early days and it’s so hard to break through from $0-$50 MRR. It might be the hardest point, or $50-$500. There’s just these little hurdles that are so hard to get through. It’s what I tell any founder, whether they’re applying for funding or not. This is the hard part. Get past that to prove to yourself as much as anyone else that that is a viable idea, and it gives you the confidence to keep pouring your time into your business.
Tracy: The nice part thinking about their new application process is that people can save their work compared to last time which is just a form.
Rob: Yup, big one-page form. That is nice. There will be improvements this whole time, little iterations and such.
Tracy: When I was working my startup before TinySeed, I never got into YCombinator. Like what you said, the application process helped me so much in terms of making me think through what are the issues that I wasn’t thinking about beforehand, what are the things that I could be anticipating, that I can put into place in the next three months? Who are the competitors out there? What does the competitor last week look at that moment? Because oftentimes. I’d forget to look at that as things popup over time.
We’ve gotten quite a few emails from people saying, “Hey, should I apply? I don’t know if I should apply,” and I said, “Yeah, definitely apply if only for that process of going through those questions and forcing yourself to think about these things, you might’ve forgotten to think about for awhile.” I think it’s a really useful process and I hope to see a lot of applications. This is my first time being 100% involved, so I’m really looking forward to it.
Rob: Yeah. It’ll be fun.
Tracy: Cool. I think that’s a good place to end this.
Rob: Sounds good. If folks want to keep up with you, they can go to @tracymakes on Twitter or tracymakes.com.
Tracy: And if they want to keep up with you, they can go to @robwalling or robwalling.com.
Rob: Nice. Well done.
Thanks again to Tracy for coming on the show and interviewing me and maybe I’ll do that again in another month or two to continue my story. If you have a question for the show, leave us a voicemail at (888) 801-9690 or email questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt it’s used under Creative Commons. Visit startupsfortherestofus.com for a full transcript of each episode. Thank you for listening and we’ll see you next time.
Episode 467 | “A Life-Changing Exit” with Adii Pienaar of Conversio
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In this episode of Startups For The Rest Of Us, Rob talks with Adii Pienaar of Conversio, about his life changing exit, when and why he decided to sell, and what the whole process was like.
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Rob: In this breaking news edition of Startups for the Rest of Us, we have the first interview with Adii Pienaar of Conversio after he sold his company to Campaign Monitor for a life-changing amount of money. This is Startups for the Rest of Us Episode 467.
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 Adii Pienaar, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to this week’s episode of Startups for the Rest of Us. I’m Rob Walling. Each week on this show, we cover topics relating to building and growing startups in order to provide a better life for ourselves and our family but also to improve the world in a small way.
This podcast aims to highlight folks that are winning, highlight folks that are struggling, highlight folks that have one but let them talk about the struggles along the way because frankly, a lot of the media seems to whitewash it and the TechCrunch articles we read and Inked magazine and such, I don’t know, they paint the picture that maybe this is easy or that we should have millions in revenue in the first couple of years and that if you sell for less than a billion dollars, that’s somehow a failure, but it’s not.
We talk on this show about building businesses, building real companies instead of building slide decks. We don’t ask for permission to start companies. We go and start them and we build real businesses with real customers who pay us real money.
Starting a company is hard. More than half of building a successful startup is managing your own psychology. We’re going to dive into that today with Adii Pienaar as we do a breaking news interview with him after he exited from his company Conversio. Now, Adii Pienaar was a co-founder of WooThemes many years ago which later sold to WordPress (parent company Automattic). After leaving WooThemes, he started Conversio, which in the beginning was called Receiptful to SaaS app and it was essentially an email service provider that catered to eCommerce companies. They integrate with Shopify, BigCommerce, a few others, and he built it up into a multiple seven-figure SaaS app.
Adii and I have known each other for years. He’s a three-time MicroConf speaker. I was super happy for Adii that this exit went through and that he was able to have this moment especially with Campaign Monitor which is a company a lot of us know and respect. Now, he and his team are working for Campaign Monitor and they’ve rebranded Conversio to CM Commerce.
Before we dive in, I wanted to remind you that the TinySeed batch two applications open on November 1st. Head over to tinyseed.com and you can get an email when the applications open.
In this interview, Adii and I walk through it all. We talk a little bit about growing Conversio but we dive in mid-story, as I like to do, to cover when did Adii decide to sell, why did he decide to sell, what that process was like, how painful or not it was, how it took, how the transition’s been, and a couple of things that he bought shortly after the exit closed. I hope you enjoy this conversion with Adii Pienaar.
Adii Pienaar, thank you so much for joining me on the show.
Adii: Thanks for having me, Rob.
Rob: I’m so surprised. This is the first time that you’ve been on Startups for the Rest of Us. I just thought somewhere in the back of my mind, I had invited you on before but apparently, as you just told me, this is it, this is your premier.
Adii: Yeah. I’m just going to say, The most politically correct thing to say is absence makes the hardcore founder. I know I’m here just because of all these years of absence.
Rob: That’s right. What an episode to be on, man. We could have had you on years ago to talk about WooThemes, we could have talked about when you started Receiptful, renamed it to Conversio. The agony, the victories, and everything that it takes to build a seven-figure SaaS app, but here we are, we’re able to talk about essentially what I’m calling a life-changing exit. Does that sound reasonably correct.
Adii: Yeah, it does. That’s the way I describe it as well in more ways than one, but yeah, definitely life-changing. Even on the ground, saying that and thinking about, that you hear me say that […] into that new normal. That’s all I know that is life-changing because I don’t get settled into that new normal, I just know that it’s on the horizon.
Rob: Yeah, exactly. Can you take me back to the moment that the docs were signed and were you like me refreshing your bank account just to see when the wire came through? What did that feel like when you saw that many zeros in your bank account?
Adii: I think the […] Rob is that I saw the first cash from deal. I got paid last. Everyone else is all about I get paid first. I don’t know why some British legal thing. Then the money also went to our family office and they didn’t really have got to me in South Africa. By the time it got here, I’ve already just dipped into bit in South Africa just to buy a few things to reward myself. The money itself was odd. You think about that now, actually just receiving the money, it ended up not being the predominant experience that I seem to remember from recent weeks.
Rob: Yeah, that’s interesting. It never ceases to amaze me how something that you can chase your whole life, you can achieve it, and then within days or weeks, it suddenly becomes a new normal, as you said.
Adii: The way I think about it, money itself has never been a good motivator for me. I know that to many people that sounds weird because I have […] adult life, at least I’ve been an entrepreneur and I’ve been working my own things. There is that pursuit of money, but money itself is never a motivator. To me, it’s the kind of things that I attach the money, the kind of life I can build in a way.
To that extent, the thing that both Joan (my wife) and I said to each other beforehand was that we already had a really good life before and we didn’t need a single event, especially not one of this magnitude to change the fundamentals of our lives. We aren’t going to change our family values just because we had more money. That’s part of why I’ve probably just not enjoyed or indulged on the financial aspect of the exit just get.
Rob: I find that very common with makers. You’re a developer yourself and a lot of the makers I know, most of them start the companies not for the money but for the freedom that money can potentially bring them. In the same way, I just wanted to be able to go build interesting things. I found that working for other people, I couldn’t do that. I built really boring things that I didn’t like and I didn’t have any equity. Then at the end, finally starting your own thing, it’s like, “Wow, I just won enough time to build fun things and cool things that I’m interested in.” How do you get there? I think starting a company is one way to do that.
Adii: Exactly. We’re a little beyond two months now since the transaction closed. In those two months, my team and I had been hustling in terms of evolving the product, rebranding the product, trying to focus our attention on doing more good work because I just gravitate towards that. Everything else is a distraction to what I actually want to do. I just like to create value, do cool stuff, whether it’s my own or otherwise. I only have experience on working my own things, so I think going into a new parent company, that’s […] and it’s something I will evolve into, but that’s at least has been the focus for those two months. As I said, just getting back to doing good, focused work.
Rob: Folks who are listening know that you started Conversio, which essentially is an email service provider and you mentioned to me that you started it in 2014. Now, selling it here five years later, you grew it into a seven-figure SaaS app and then you had an exit, that’s “only” five years. When I say only, I either literally mean that or I mean it in quotes because sometimes, five years of running a software company and growing it can be very painful. How do you feel about that? Do you feel like, “Wow, this was a quick victory for me, a Cinderella story,” or do you feel like it was a grind and five years was really tough, “I feel good to have made this next step into this next stage of my life”?
Adii: I think on average, Rob, we started the […] this is life-changing and I do think positive at the whole exit like in that […], It is life-changing and the fact that I’m really happy about the new home that we found for both product and the team. The cool thing there is there’s some personal affinity with Campaign Monitor, our new parent company, in the sense that I […] user forever, like firstly a customer. We were still customers of theirs at the point of acquisition and that’s always been by choice, but also when I started working on WooThemes back in the day like 2007, those are the wild, wild west of software, online software, SaaS, et cetera. From afar, we always looked at Campaign Monitor and we would ship or […].
I can remember, for example, when they put up their fancy Sydney office. Magnus, Mark, and I were looking at that and drooling. Not that we needed a fancy office because we had a mostly-distributed team, but there’s always been that personal affinity and when you get almost your heroes, a hero company where you come in and express interest to buy this thing that you’ve built, that’s a great feeling as well.
That’s predominantly the lens that I look at the exit and depending on how deep you would get. Ultimately the flipside to that is we were operating in a pretty competitive space and I also knew that to compete, we had to either accelerate our growth organically or sustainably with our own means or we had to raise more money because we had well-funded competitors that were definitely making moves within the industry.
You look at that five years and say, “Could we have done more to grow it further and exited at a year or two, three, four down the line for some exponential model?” and yes, I think that is possible. But you sometimes just get an opportunity to get a really good exit which is what we got and you can actually see that. I want to see that moment because you never know what changes beyond your control the next 2–3 years.
Rob: Yeah, I’ve seen folks ride their business over the top, so to speak. Once that growth stops, suddenly your multiple is not 4X instead of 5X multiple. It becomes 1½X instead of 5X. It’s a huge change once your stop growing. Given the potential for recession that folks are talking about, it’s easy. If you’re in it for another 5–10 years, go for it, but if you’re at the point—like my mental model—where you’re burned out, or you’re thinking about doing something else, or “Hey, having enough money where I can ride off into the sunset,” is starting to sound appealing and you can get that, what’s the difference between having that and two times that? You know what I mean? I talk about this in a MicroConf talk after we sold Drip and it was the same model. It’s like, “Yeah, I can keep riding this stuff,” but I don’t want to be that person that winds up having a major regret about it.
Last year, you spoke at MicroConf Europe in Croatia and if I recall, your talk was pretty raw. You talked about running Conversio and some of the challenges that you’re facing, both emotionally and just with the business, that there were competitors. There are all kinds of stuff, as you said, in this space that make it difficult. When did you decide to sell and why? Was that part of it?
Adii: Yeah, definitely. I think many people look at—I hate the term, by the way—serial founders and they figure, “Oh, the second, third, or fourth time is just so much easier.” I actually found it was completely the opposite for me. The second time was much harder possibly because the first part was partly […] way than the extent of our success was you […] lack in timing et cetera. Coming into Conversio, it was just harder than that. We also started off growing wildly. Then the growth plateaued and it was harder.
The other thing that made Conversio really much harder for me over the years was the fact that Adii Jr. was born, I believe, two years. He was two years old by the time that I left WooThemes and sold out WooThemes. By the time I had started working on Conversio, I had a six-month-old baby in the house. Having dependent and two dependents, as well as Joan, that always seem to aggravate my fears, my awareness of risk, those kind of things, so the second time was just much, much harder.
By the time we had gotten to MicroConf, my talk was mostly sense of being tired. The short story there was about a year before, we thought we had revenue which we didn’t have and it contradicts with the message. We literally lost due to reporting. We lost about $25,000 MRR. We’ve been pretty frugal and keeping revenue and expenses close to break even, some months just over, some months just under, not a big cash reserve. Then, this revenue just disappears. The revenue we thought was there and there was a lag from our payment process […]. I had to lay off two team members. That’s November 2017.
For the next year, all we had to do was really be brutal in terms of turning the business around and making sure it was profitable. We did that on almost, not zero, but minimal. We probably did around about 10% revenue growth in that whole year, start to finish in that process, but we turned profitability around drastically. It was just a hard year. For me, just given an overall overarching experience of the second time being harder and then going through a tough year like that, I was just tired. At least for me, when I feel like that I don’t feel as energized and ambitious, then I start looking at options, which meant that throughout that year, for that lost year, I at least started putting feelers out there to see should we raise more money—that was one option—or should we actually look for some kind of strategic partnership or acquisition.
Rob: Those layoffs must have been really tough. Was that the first time you had to lay people off?
Adii: Yeah. I’ve had to let people go before due to performance or something, but this is the first time that a big reason for them leaving the team was just we couldn’t afford to keep them, and that was on me and that sucked.
Rob: Yeah, it’s really hard to be doing your best and trying to take care of everybody and to make a mistake like that. I know how that feels myself. A lot of people don’t realize how close to the margins so many of these successful SaaS apps actually run. You have an app doing $1 million–$3 million dollars a year and that sounds like this amazing windfall.
Of course, when an app stops growing, it will plateau and you can have this amazing profit margins. 50% is the net margin I hear thrown around for SaaS, if you need a team to do it and if there’s this special Cinderella SaaS where HitTail had 85% net margin or something.
You can get a lot out of it, but when an app is growing, you’re driving, you have a bunch of competitors, you’re building features, and you’re basically trying to keep your head above water as you’re growing, most of these apps will run at breakeven for a very long time. I don’t think that a lot of people realize that.
What that means is that one small misstep with cash or as you’re saying with an accounting snafu can really mean some pretty drastic stuff. I bet at that time, now we say like, “Oh, you have to lay two people off.” That was tough. At that time, did that feel catastrophic? Was that a huge weight on you?
Adii: Yeah. I can’t remember, Rob, at least in terms from day one of starting Conversio, going through a darker period of my life because part of that is I’m also a solo founder, nobody was as invested in this business as I was. Even if I consider Joan from a family perspective, she has that financial exposure but it wasn’t her decision that influenced what happened in the business.
It wasn’t on the shareholders either. They were passive ever since. They obviously had their capital exposed in that risk, but it’s not the same thing. It very quickly became a very, very lonely thing both in terms of taking responsibility for what happened but also, literally, the next steps in terms of telling two people, “Listen. You’re unfortunately redundant. Here’s the situation…” You’re doing that, handling the you’re being there for the rest of the team. Often, they lose friends to friends, for example. That’s hard.
Thinking about it now, the hardest part is going through such a tough experience also at the end of the calendar year, when one tends to be a little bit more tired probably than in January, having to rally the troops because the business needed to be turned around. It wasn’t just about letting two people go. We needed to shift momentum drastically. I probably walked through 2018 just feeling this immense, immense weight on my shoulders like I’ve never felt before, not with WooThemes, not with Conversio before, and probably not with anything else that I’ve done in my life.
Rob: How large was your team at the time?
Adii: Fourteen, I believe, we went down from 14 to 12.
Rob: To 12, yeah, that’s a big hit. Obviously, we can hear it in your voice and just in the events you’re talking about that why you would start thinking about other options? You mentioned raising funding and you actually dropped me a line, I believe. You sent me an email and asked about the Drip exit. Did you and I jump on a call? Remind me of what happened because I remember introducing you to Einar and this is before TinySeed, I believe, and then the two of you got in a conversation about what it would look like to exit. Remind me the process because I’m guessing you’ll remember better than I do.
Adii: Yeah. I don’t think we spoke enough after that, by the way. The last time before this split was a couple of weeks ago just after the exit.
Rob: Got it. Was it in MicroConf Europe?
Adii: Yeah.
Rob: Okay, so that was it. That would have been almost a year ago now.
Adii: Yeah.
Rob: You must have asked me about what it would look like to exit and I think I said, “Hey, I know this guy.” We’ve probably just announced TinySeed, literally, a week before that and I knew that Einar had hopes. Part of what he’s done over the past several years is helping seven-figure and eight-figure SaaS founders exit and then run a process and sell their companies to really strategic buyers is what they do. I intrude you there. Now, did you follow other leads as well or once you talked to Einar, were you like, “This is something”?
Adii: Yeah, I actually stuck to Einar. I’m a big believer, at least, both in life and business but in business, too. You need to tie and consolidate relationships as much as possible. If I find someone that resonated with me and there’s a fit for my personality, then I’m all in.
Rob: Einar is the founder of Discretion Capital and you worked with him to essentially run a process, is what it’s called. Folks who’ve done it know what that means but for folks who don’t know what that phrase means, can you talk about what that looks like? I guess from a high level what it looks like, but also I’m curious to hear your individual story as you went through that process.
Adii: We ended up having quite a simple process, but it’s also the first one that I ran. What that meant was Einar and I worked together to put together a prospectus of some kind for the business and then identify potential acquirers, both strategic or just financial sponsors, which was a new term that I learned as well. Then, the ultimate goal with any exits is once you have that, try and get multiple parties interested. If you have multiple parties interested, you can probably pay that interest off each other to make sure you get the best possible bid. In saying that, the best possible bid isn’t necessarily the one that has the highest variation. It could be related to payment terms, some restrictions or warranties, or just almost a cultural thing.
I know a friend, for example, that ran through a process. There’s one friend […] that has sold multiple businesses and he told me that in his last business, he didn’t choose the one that had the highest valuation. He chose the company and team that he thought would really make progress with the product because that was more important to him at that stage. I think that’s what that competitive bidding process looks like in terms of getting multiple interested parties and then hopefully multiple bids on the table.
Rob: Yeah, that makes a lot of sense. I’ve never been through a process and I’m not super familiar with it, but my understanding is when you work with a broker or an investment banker like this—they do run a process—they essentially take all your financials, they put them together, they crunch them, they run numbers, they put spreadsheets together, they put a 1–5-page teaser together that is totally anonymous and they circulate that out to folks that they think would be interested strategically and financially, as you said, and then they circulate that confidentially. Folks will respond and say, “Oh, I’m interested,” and then they sign an NDA. Then, they have a deck that they’ve prepared in essence and talks go from there. As you said, the key here is to get multiple offers because it’s a market and it’s the way to get the best price.
I’m curious, when I went through the Drip sale process to Leadpages, it was not that. We didn’t run a process. They approached us. It was still very, very painful. It was agonizing for me. It was a 13-month process total, but it was really hardcore for about 6 months, where it was maybe 10–20 hours a week for 6 months for me of negotiation, getting to the letter of intent, and then all that stuff. How long did it take once things started getting moving? I don’t just mean getting your financials together and doing other stuff, but actually when you started doing calls? Because it becomes real once you get on the phone or get on the Zoom call with a potential acquirer who’s like, “We’re going to write you a big check but we have all these hurdles to go through.” From that point when it started getting real, how long did it take until the deal closed?
Adii: Timeline from the first email indicating interest to transaction closing is less than three months.
Rob: Wow.
Adii: It definitely has its advantages. Objectively, this wasn’t something as necessarily was top of mind for me, but having such a short close is generally beneficial to the seller because if for whatever reason the deal falls through, you can quickly get back on the market. If you had multiple interested parties before, you can pursue them.
That’s the objective benefit of a shorter close. I wasn’t concerned about that at all, and this is what we say in hindsight because my boss and colleagues are listening, that was just never a concern for me. I like the fact that there was momentum because it became a forcing function to get through tedious due diligence things, which was crazy. Ultimately at the same time—as I said, I’ll elaborate on all these benefits of the short close— I now just know what it felt like drinking from a firehose. I just had to learn so many different things like a legal documented compliance standpoint. I was exposed to new things at an incredible rate. That definitely took its toll just for me, personally, and again, because I’m a solo founder.
I was lucky to that extent. I had Einar who we’ve chatted about. I think his experience was really helpful in just guiding me through that process and also just running interference on certain things, so that was helpful. The other thing that I know it did, even though it cost me a lot of money, it shaved a couple of years off of the […] that would have had to, stressful that I would have had to pay, but as soon as we had lifeline, Einar advised me and he said, “If you don’t have your legal counsel that has M&A experience, find the best legal counsel you can find and get them involved.” We’ve got a fantastic firm in the UK that assisted us here with this and that’s I said, “It’s not cheap. It’s almost when you eventually bite the bullet. It feels like the grudge purchase thing, but objectively I know that there was no way for me to navigate this transaction without that experienced and expert help.
Rob: Yeah, it’s a big deal when this much money is thrown around. I went through the same mental process when Leadpages approached us to acquire Drip. It was like, “Do I hire someone to represent me like a broker? Do I hire a lawyer?” I hired both and you’re right, it’s not cheap, but I think it saved years of my life, I think, is what you were saying. It reduced so much stress because I just felt like I was dotting I’s and crossing the T’s, and I’m going to sell a couple of companies in my life probably.
Whereas on the other side, acquirers have often acquired 5, 10 15, 20, and the lawyers know way more about it than you do. Not having an expert on your side is tough. I do know some folks who have done it and they are better people than I in terms of being able to put up with the uncertainty.
Ninety days is short. I said wow when you said that. I hear a lot of acquisitions take a lot longer than that. Did it feel quick to you or did it feel like 90 days of agony, uncertainty, pain, due diligence?
Adii: Due diligence wasn’t that bad. I went into it expecting much, much worse and it wasn’t bad. My gut feel is it wasn’t that bad for two reasons. First is the parent company were trying to do almost—this is obviously not a term—malicious due diligence. They were not just doing due diligence for due diligence’ sake. I think that’s the first part.
The second part that I am actually proud of is that I ran a really clean business. I say that in the way that I’m not a tax advisor, so don’t take any of my words here as a tax advice, but I think most founders know how to find a few tax deficiencies in their businesses by interlacing personal interests, business interests, and whatnot. I just never did that. Even though I was a solo founder, even though I had more than 70% of the equity by the time this transaction closed, there just wasn’t stuff there and our accounts were up to date.
We tried to run, in terms of our […] back to solutions we used with a software or some process within the business. Everything, we tried to simplify things and that greatly assisted us, that due diligence wasn’t that bad. But the uncertainty was still there. For me, it was a tipping point and it was very early on where I know I shouldn’t get attached to things and then your mind pulls a trick on you where it says, “Don’t screw this up now because this is significant and potentially life-changing,” and then that uncertainty kicks in like, “What happens if I get onto one of these calls and they find some kind of skeleton in the closet that I wasn’t even aware of and the deal falls through?” Up until close, that was something that at least pulled a few mental strains for me in the way that wasn’t unnecessary pleasant or helpful.
Rob: As founders, we always find something to worry about, don’t we?
Adii: Yeah, because if we didn’t have that, we will also wouldn’t apply the same kind of mental gymnastics to conjure up creative valuable ideas and bring them to life.
Rob: Indeed. Exiting the Campaign Monitor is awesome. To be honest, Campaign Monitor may have been the first ESPI ever used even before Mailchimp. I’ve always had a lot of respect. It was an ESP for designers is what I thought of it. I was guessing it was started by a couple of designers based on the UX that they’ve had over the years.
You had a huge transition now and you were able to sell the company. Your whole team now works for Campaign Monitor that have actually rebranded Conversio to CM Commerce. What is it like to go from a team of a dozen or so people to working at a company that large? How many employees does Campaign Monitor have?
Adii: Almost 650, I think.
Rob: That’s a big difference. Talk us through that. How is that felt?
Adii: It definitely has its challenges. The way we used to work has to change. That’s the simple reality because the things that we did as a completely distributed team, small team, an intimate team at that, that doesn’t translate well to such a big corporation. I think part of that as well is we are the smallest conservation in terms of people volume. We were 11 people that ultimately went a long acquisition and those 600 people there that are already more settled. Some of them have been there for 10,11,12, or 13 years. That has to change and for us at least, we went through that change very quickly because we wanted to get to the improved rebranded version of the product pretty quickly.
We had to literally make relationships on the fly with our new colleagues which I think is just challenging because relationships take time. What struck me most is the fact that most people on my team—doesn’t matter which role they were hired for—wear multiple hats in terms of doing things that just needed to get done. I know that was true for me as founder and leader of the team as well.
The biggest change that I’ve noticed is that most people are more narrow in their definition of how they add value to the organization. This is my skill set, this is my expertise, these are my responsibilities. At least for me as a founder, that’s a hard natural jump to make. I think that’s the biggest challenge that I have, but it also brings along with it quite a bit of excitement where I can probably do some things that are a little freer, more creative, more suited to a particular strength of mine instead of having to unnecessarily worry about all these things.
I did conversions, bookkeeping, all the way up to […]. I could do it, they were perfect, and as I mentioned they […] flag them. Due diligence, for example, and taxes got paid, et cetera. But that’s probably not my magic. There’s probably better bookkeepers, accountants, and whatnot in the world, but I think that opportunity and that change is bittersweet to some extent because I am someone that can wear multiple hats. But as I said, I’m mostly focused on seeing where being a bit more of a specialist and focus on the specific area of business and seeing where that takes me in the future.
Rob: What was the hardest moment of the acquisition process? Remember a time during those 90 days when you just thought, “This is brutal”?
Adii: I guess the last week or so, the discussion seemed both sides as legal teams. It seems to extend and seem to get into […]. I literally had the sense of, we just have to wrap this up now. We are getting into semantics and I’m also just generally a very trusting person. That part of it felt very unnatural to me, but I can’t remember a single event, like a single email, or a single call, or a single issue that popped up, that I felt would threaten everything. The only thing that comes to my mind is the last week or two where it feels like we got 90% of the deal done, and then we literally have to cram that last 10% into that last week.
What made it worse was, I was actually on a trip in Europe, a pre-planned holiday with Jean and our best friends. I was literally having to jump on calls and answer emails in between those things, which just extenuated that. By the time that we got, literally Friday afternoon 6:00 PM kind of thing, got to a point where both parties had agreed that we put pencils down and we’ll be signing […] as it was in that stage.
The first thing I did was I literally broke down in Jean’s arms. I just cried and I don’t want to call it sadness, but it was just things pure outpouring of all of these pent up emotions and thoughts that culminated over the preceding weeks.
Rob: I have totally been there and shortly thereafter, I cracked open a bottle of whiskey. I literally remember the night that I closed, when we sold […]. It’s funny how many parallels that even though our experiences are different in terms of you running a process and me having a strategic or whatever, so much of what you are talking about is bringing up a little bit of trauma for me.
You’re right. The last week feels like a month’s worth of work. It’s like,”There’s no chance that we are going to close. Are you kidding me?” Then everyone is arguing about this sentence and that word, and what it means, and it’s infuriating. I was so frustrated, angry, and stressed because I’m like, “This has to go through.” That’s what you said. You’re mind is playing tricks on you and it’s like, “I don’t want to get attached to this, but really I’m kind of attached to it. I want this to happen,” and yet you can’t just give in. You can’t just be, ” I want this to happen,” so okay go ahead and do what you want. It’s an incredible mental battle.
Adii: Exactly. That’s the thing, Rob. For me, that part of selling a business is very unnatural, at least for me an entrepreneur. I suspect that it’s probably the case of most entrepreneurs. That most entrepreneurs are bigger picture people and negotiating an acquisition like this is going on to those very, very fine details. Those details where you know there was an email thread about three weeks ago, but for the life of you, you can’t find that exact line in that email anymore because that email thread is now a novel. Gmail has magically decided to split this up into multiple threads.
I just think that’s a very unnatural state for me, at least, you are getting to that level of […] and specially so late in the transaction because you get to the point of attachment where it is point of no return, where I know that I need to push through now because trying to turn this back and for this thing not to go through, that outcome is so much worse.
Rob: Are there one or two things that you bought after the acquisition that you bought to celebrate, that you wouldn’t have bought before? Do you now have a tesla in your driveway, for example?
Adii: No, I do not have a Tesla. Mostly because I figure there’s not, by far, any public charging stations. It’s not a vital purchase. If that wasn’t the case, then I might have. I’ve done two things. One is totally juvenile and the other one is pretty cool.
The juvenile thing is I’ve never bought as much wine as I have in the last two months and I already have too much wine. I’m a bit of a collector. I’m mostly a wine drinker, but we have too much wine. I definitely enjoyed taking out on wine and probably making purchases that I would not have made before.
The more significant thing for me, this is the biggest reward, direct reward at least, that I am also giving myself from the exit. I still wish I could claim that this was my idea, but it was Jean’s idea. We are actually taking my whole family—my parents, my sisters and their spouses, my one sister has two young kids I raised as mine—on a Disney cruise which has been pre-booked and planned for the middle of next year.
We are doing that. The reason I look forward to it is because getting the extended family to get together for any amount of item is already hard and getting to experience something like that with them is just something that I really look forward to. Those are the things I have for myself and […].
Rob: Love it. I often talk about freedom purpose in relationships and it’s like you’ve now achieved a level of freedom. I’m guessing 20 years ago, you would have pinched yourself to have. You did it while diving into a deeper purpose of starting a company doing something to improve your corner of the world.
I love the capstone comes back to relationships because one of the things you start spending a bit of money on is being with family. I guess it’s very poignant and I’m super happy for you in all honesty. I just wanted to say congratulations and thank you so much for taking the time to talk us through.
Folks actually wanted to hear more about it. I guess I got scooped. I thought that this was the first interview you were doing about the acquisition, but it turns out about four days ago on Friday, Zenfounder, my very own wife, scooped me. I know you didn’t go nearly as much detail but you did talk a little bit about that on her show so folks can certainly go check that out if they are interested.
Adii: The other thing that you should know, Rob, because I didn’t know how much I did share with you is that we also scooped a newfound interest in poetry. I’m curious to see how that’s going to play out for you well in the future, whether I’m going to see tweets about what kind of poetry from you.
Rob: Alright. I would love to hear it. Speaking of Twitter, you are @adii on Twitter. That’s an awesome first name. Anywhere else you like folks to follow you online?
Adii: It’s either @adii on Twitter as you said or adii.me which is my blog. Now that this massive live event has passed, I have more time and I’m back to weekly writing discipline. If anyone wants to hear what I’m thinking, then that’s where the place to go.
Rob: You did a really nice write up about this just about a week and a half ago. Folks can go to adii.me if they want to check it out. Frankly, if you have questions for Adii and you like to see him come back in the show and answer questions—I totally did not pitch him on this beforehand—you can email questions at startupsfortherestofus.com or tweet at @robwalling and if we get enough questions, we’ll get Adii back on to answer those assuming he’s up for it and can carve up the time.
Adii: I’m definitely up to it. I’ve been up for these kind of things. Ever since, as a teenager, I read Richard Branson […] where they said, “There’s no such thing as bad publicity.” Whatever kind of spotlight I could get, I will be happy to take. If there’s questions, I’ll be happy to pop back into the show.
Rob: Sounds great. Thanks again, man, for coming into the show.
Adii: Thanks for having me, Rob.
Rob: Thanks again to Adii for coming to the show. As I mentioned, if you have questions for him, tweet them at me, email me. You can email us questions at startupfortherestofus.com or you could call our voice mail number (888) 801-9690 and leave a voicemail. I would bring Adii back on the show if we have enough questions for him to run through those in a future episode. This podcast’s theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. You should subscribe to this podcast. You can do it in iTunes, Stitcher, Spotify so that you don’t miss any episodes. Visit startupsfortherestofus.com to get a full transcript of each episode. Thank you so much 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 Adii Pienaar, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome to this week’s episode of Startups for the Rest of Us. I’m Rob Walling. Each week on this show, we cover topics relating to building and growing startups in order to provide a better life for ourselves and our family but also to improve the world in a small way.
This podcast aims to highlight folks that are winning, highlight folks that are struggling, highlight folks that have one but let them talk about the struggles along the way because frankly, a lot of the media seems to whitewash it and the TechCrunch articles we read and Inked magazine and such, I don’t know, they paint the picture that maybe this is easy or that we should have millions in revenue in the first couple of years and that if you sell for less than a billion dollars, that’s somehow a failure, but it’s not.
We talk on this show about building businesses, building real companies instead of building slide decks. We don’t ask for permission to start companies. We go and start them and we build real businesses with real customers who pay us real money.
Starting a company is hard. More than half of building a successful startup is managing your own psychology. We’re going to dive into that today with Adii Pienaar as we do a breaking news interview with him after he exited from his company Conversio. Now, Adii Pienaar was a co-founder of WooThemes many years ago which later sold to WordPress (parent company Automattic). After leaving WooThemes, he started Conversio, which in the beginning was called Receiptful to SaaS app and it was essentially an email service provider that catered to eCommerce companies. They integrate with Shopify, BigCommerce, a few others, and he built it up into a multiple seven-figure SaaS app.
Adii and I have known each other for years. He’s a three-time MicroConf speaker. I was super happy for Adii that this exit went through and that he was able to have this moment especially with Campaign Monitor which is a company a lot of us know and respect. Now, he and his team are working for Campaign Monitor and they’ve rebranded Conversio to CM Commerce.
Before we dive in, I wanted to remind you that the TinySeed batch two applications open on November 1st. Head over to tinyseed.com and you can get an email when the applications open.
In this interview, Adii and I walk through it all. We talk a little bit about growing Conversio but we dive in mid-story, as I like to do, to cover when did Adii decide to sell, why did he decide to sell, what that process was like, how painful or not it was, how it took, how the transition’s been, and a couple of things that he bought shortly after the exit closed. I hope you enjoy this conversion with Adii Pienaar.
Adii Pienaar, thank you so much for joining me on the show.
Adii: Thanks for having me, Rob.
Rob: I’m so surprised. This is the first time that you’ve been on Startups for the Rest of Us. I just thought somewhere in the back of my mind, I had invited you on before but apparently, as you just told me, this is it, this is your premier.
Adii: Yeah. I’m just going to say, The most politically correct thing to say is absence makes the hardcore founder. I know I’m here just because of all these years of absence.
Rob: That’s right. What an episode to be on, man. We could have had you on years ago to talk about WooThemes, we could have talked about when you started Receiptful, renamed it to Conversio. The agony, the victories, and everything that it takes to build a seven-figure SaaS app, but here we are, we’re able to talk about essentially what I’m calling a life-changing exit. Does that sound reasonably correct.
Adii: Yeah, it does. That’s the way I describe it as well in more ways than one, but yeah, definitely life-changing. Even on the ground, saying that and thinking about, that you hear me say that […] into that new normal. That’s all I know that is life-changing because I don’t get settled into that new normal, I just know that it’s on the horizon.
Rob: Yeah, exactly. Can you take me back to the moment that the docs were signed and were you like me refreshing your bank account just to see when the wire came through? What did that feel like when you saw that many zeros in your bank account?
Adii: I think the […] Rob is that I saw the first cash from deal. I got paid last. Everyone else is all about I get paid first. I don’t know why some British legal thing. Then the money also went to our family office and they didn’t really have got to me in South Africa. By the time it got here, I’ve already just dipped into bit in South Africa just to buy a few things to reward myself. The money itself was odd. You think about that now, actually just receiving the money, it ended up not being the predominant experience that I seem to remember from recent weeks.
Rob: Yeah, that’s interesting. It never ceases to amaze me how something that you can chase your whole life, you can achieve it, and then within days or weeks, it suddenly becomes a new normal, as you said.
Adii: The way I think about it, money itself has never been a good motivator for me. I know that to many people that sounds weird because I have […] adult life, at least I’ve been an entrepreneur and I’ve been working my own things. There is that pursuit of money, but money itself is never a motivator. To me, it’s the kind of things that I attach the money, the kind of life I can build in a way.
To that extent, the thing that both Joan (my wife) and I said to each other beforehand was that we already had a really good life before and we didn’t need a single event, especially not one of this magnitude to change the fundamentals of our lives. We aren’t going to change our family values just because we had more money. That’s part of why I’ve probably just not enjoyed or indulged on the financial aspect of the exit just get.
Rob: I find that very common with makers. You’re a developer yourself and a lot of the makers I know, most of them start the companies not for the money but for the freedom that money can potentially bring them. In the same way, I just wanted to be able to go build interesting things. I found that working for other people, I couldn’t do that. I built really boring things that I didn’t like and I didn’t have any equity. Then at the end, finally starting your own thing, it’s like, “Wow, I just won enough time to build fun things and cool things that I’m interested in.” How do you get there? I think starting a company is one way to do that.
Adii: Exactly. We’re a little beyond two months now since the transaction closed. In those two months, my team and I had been hustling in terms of evolving the product, rebranding the product, trying to focus our attention on doing more good work because I just gravitate towards that. Everything else is a distraction to what I actually want to do. I just like to create value, do cool stuff, whether it’s my own or otherwise. I only have experience on working my own things, so I think going into a new parent company, that’s […] and it’s something I will evolve into, but that’s at least has been the focus for those two months. As I said, just getting back to doing good, focused work.
Rob: Folks who are listening know that you started Conversio, which essentially is an email service provider and you mentioned to me that you started it in 2014. Now, selling it here five years later, you grew it into a seven-figure SaaS app and then you had an exit, that’s “only” five years. When I say only, I either literally mean that or I mean it in quotes because sometimes, five years of running a software company and growing it can be very painful. How do you feel about that? Do you feel like, “Wow, this was a quick victory for me, a Cinderella story,” or do you feel like it was a grind and five years was really tough, “I feel good to have made this next step into this next stage of my life”?
Adii: I think on average, Rob, we started the […] this is life-changing and I do think positive at the whole exit like in that […], It is life-changing and the fact that I’m really happy about the new home that we found for both product and the team. The cool thing there is there’s some personal affinity with Campaign Monitor, our new parent company, in the sense that I […] user forever, like firstly a customer. We were still customers of theirs at the point of acquisition and that’s always been by choice, but also when I started working on WooThemes back in the day like 2007, those are the wild, wild west of software, online software, SaaS, et cetera. From afar, we always looked at Campaign Monitor and we would ship or […].
I can remember, for example, when they put up their fancy Sydney office. Magnus, Mark, and I were looking at that and drooling. Not that we needed a fancy office because we had a mostly-distributed team, but there’s always been that personal affinity and when you get almost your heroes, a hero company where you come in and express interest to buy this thing that you’ve built, that’s a great feeling as well.
That’s predominantly the lens that I look at the exit and depending on how deep you would get. Ultimately the flipside to that is we were operating in a pretty competitive space and I also knew that to compete, we had to either accelerate our growth organically or sustainably with our own means or we had to raise more money because we had well-funded competitors that were definitely making moves within the industry.
You look at that five years and say, “Could we have done more to grow it further and exited at a year or two, three, four down the line for some exponential model?” and yes, I think that is possible. But you sometimes just get an opportunity to get a really good exit which is what we got and you can actually see that. I want to see that moment because you never know what changes beyond your control the next 2–3 years.
Rob: Yeah, I’ve seen folks ride their business over the top, so to speak. Once that growth stops, suddenly your multiple is not 4X instead of 5X multiple. It becomes 1½X instead of 5X. It’s a huge change once your stop growing. Given the potential for recession that folks are talking about, it’s easy. If you’re in it for another 5–10 years, go for it, but if you’re at the point—like my mental model—where you’re burned out, or you’re thinking about doing something else, or “Hey, having enough money where I can ride off into the sunset,” is starting to sound appealing and you can get that, what’s the difference between having that and two times that? You know what I mean? I talk about this in a MicroConf talk after we sold Drip and it was the same model. It’s like, “Yeah, I can keep riding this stuff,” but I don’t want to be that person that winds up having a major regret about it.
Last year, you spoke at MicroConf Europe in Croatia and if I recall, your talk was pretty raw. You talked about running Conversio and some of the challenges that you’re facing, both emotionally and just with the business, that there were competitors. There are all kinds of stuff, as you said, in this space that make it difficult. When did you decide to sell and why? Was that part of it?
Adii: Yeah, definitely. I think many people look at—I hate the term, by the way—serial founders and they figure, “Oh, the second, third, or fourth time is just so much easier.” I actually found it was completely the opposite for me. The second time was much harder possibly because the first part was partly […] way than the extent of our success was you […] lack in timing et cetera. Coming into Conversio, it was just harder than that. We also started off growing wildly. Then the growth plateaued and it was harder.
The other thing that made Conversio really much harder for me over the years was the fact that Adii Jr. was born, I believe, two years. He was two years old by the time that I left WooThemes and sold out WooThemes. By the time I had started working on Conversio, I had a six-month-old baby in the house. Having dependent and two dependents, as well as Joan, that always seem to aggravate my fears, my awareness of risk, those kind of things, so the second time was just much, much harder.
By the time we had gotten to MicroConf, my talk was mostly sense of being tired. The short story there was about a year before, we thought we had revenue which we didn’t have and it contradicts with the message. We literally lost due to reporting. We lost about $25,000 MRR. We’ve been pretty frugal and keeping revenue and expenses close to break even, some months just over, some months just under, not a big cash reserve. Then, this revenue just disappears. The revenue we thought was there and there was a lag from our payment process […]. I had to lay off two team members. That’s November 2017.
For the next year, all we had to do was really be brutal in terms of turning the business around and making sure it was profitable. We did that on almost, not zero, but minimal. We probably did around about 10% revenue growth in that whole year, start to finish in that process, but we turned profitability around drastically. It was just a hard year. For me, just given an overall overarching experience of the second time being harder and then going through a tough year like that, I was just tired. At least for me, when I feel like that I don’t feel as energized and ambitious, then I start looking at options, which meant that throughout that year, for that lost year, I at least started putting feelers out there to see should we raise more money—that was one option—or should we actually look for some kind of strategic partnership or acquisition.
Rob: Those layoffs must have been really tough. Was that the first time you had to lay people off?
Adii: Yeah. I’ve had to let people go before due to performance or something, but this is the first time that a big reason for them leaving the team was just we couldn’t afford to keep them, and that was on me and that sucked.
Rob: Yeah, it’s really hard to be doing your best and trying to take care of everybody and to make a mistake like that. I know how that feels myself. A lot of people don’t realize how close to the margins so many of these successful SaaS apps actually run. You have an app doing $1 million–$3 million dollars a year and that sounds like this amazing windfall.
Of course, when an app stops growing, it will plateau and you can have this amazing profit margins. 50% is the net margin I hear thrown around for SaaS, if you need a team to do it and if there’s this special Cinderella SaaS where HitTail had 85% net margin or something.
You can get a lot out of it, but when an app is growing, you’re driving, you have a bunch of competitors, you’re building features, and you’re basically trying to keep your head above water as you’re growing, most of these apps will run at breakeven for a very long time. I don’t think that a lot of people realize that.
What that means is that one small misstep with cash or as you’re saying with an accounting snafu can really mean some pretty drastic stuff. I bet at that time, now we say like, “Oh, you have to lay two people off.” That was tough. At that time, did that feel catastrophic? Was that a huge weight on you?
Adii: Yeah. I can’t remember, Rob, at least in terms from day one of starting Conversio, going through a darker period of my life because part of that is I’m also a solo founder, nobody was as invested in this business as I was. Even if I consider Joan from a family perspective, she has that financial exposure but it wasn’t her decision that influenced what happened in the business.
It wasn’t on the shareholders either. They were passive ever since. They obviously had their capital exposed in that risk, but it’s not the same thing. It very quickly became a very, very lonely thing both in terms of taking responsibility for what happened but also, literally, the next steps in terms of telling two people, “Listen. You’re unfortunately redundant. Here’s the situation…” You’re doing that, handling the you’re being there for the rest of the team. Often, they lose friends to friends, for example. That’s hard.
Thinking about it now, the hardest part is going through such a tough experience also at the end of the calendar year, when one tends to be a little bit more tired probably than in January, having to rally the troops because the business needed to be turned around. It wasn’t just about letting two people go. We needed to shift momentum drastically. I probably walked through 2018 just feeling this immense, immense weight on my shoulders like I’ve never felt before, not with WooThemes, not with Conversio before, and probably not with anything else that I’ve done in my life.
Rob: How large was your team at the time?
Adii: Fourteen, I believe, we went down from 14 to 12.
Rob: To 12, yeah, that’s a big hit. Obviously, we can hear it in your voice and just in the events you’re talking about that why you would start thinking about other options? You mentioned raising funding and you actually dropped me a line, I believe. You sent me an email and asked about the Drip exit. Did you and I jump on a call? Remind me of what happened because I remember introducing you to Einar and this is before TinySeed, I believe, and then the two of you got in a conversation about what it would look like to exit. Remind me the process because I’m guessing you’ll remember better than I do.
Adii: Yeah. I don’t think we spoke enough after that, by the way. The last time before this split was a couple of weeks ago just after the exit.
Rob: Got it. Was it in MicroConf Europe?
Adii: Yeah.
Rob: Okay, so that was it. That would have been almost a year ago now.
Adii: Yeah.
Rob: You must have asked me about what it would look like to exit and I think I said, “Hey, I know this guy.” We’ve probably just announced TinySeed, literally, a week before that and I knew that Einar had hopes. Part of what he’s done over the past several years is helping seven-figure and eight-figure SaaS founders exit and then run a process and sell their companies to really strategic buyers is what they do. I intrude you there. Now, did you follow other leads as well or once you talked to Einar, were you like, “This is something”?
Adii: Yeah, I actually stuck to Einar. I’m a big believer, at least, both in life and business but in business, too. You need to tie and consolidate relationships as much as possible. If I find someone that resonated with me and there’s a fit for my personality, then I’m all in.
Rob: Einar is the founder of Discretion Capital and you worked with him to essentially run a process, is what it’s called. Folks who’ve done it know what that means but for folks who don’t know what that phrase means, can you talk about what that looks like? I guess from a high level what it looks like, but also I’m curious to hear your individual story as you went through that process.
Adii: We ended up having quite a simple process, but it’s also the first one that I ran. What that meant was Einar and I worked together to put together a prospectus of some kind for the business and then identify potential acquirers, both strategic or just financial sponsors, which was a new term that I learned as well. Then, the ultimate goal with any exits is once you have that, try and get multiple parties interested. If you have multiple parties interested, you can probably pay that interest off each other to make sure you get the best possible bid. In saying that, the best possible bid isn’t necessarily the one that has the highest variation. It could be related to payment terms, some restrictions or warranties, or just almost a cultural thing.
I know a friend, for example, that ran through a process. There’s one friend […] that has sold multiple businesses and he told me that in his last business, he didn’t choose the one that had the highest valuation. He chose the company and team that he thought would really make progress with the product because that was more important to him at that stage. I think that’s what that competitive bidding process looks like in terms of getting multiple interested parties and then hopefully multiple bids on the table.
Rob: Yeah, that makes a lot of sense. I’ve never been through a process and I’m not super familiar with it, but my understanding is when you work with a broker or an investment banker like this—they do run a process—they essentially take all your financials, they put them together, they crunch them, they run numbers, they put spreadsheets together, they put a 1–5-page teaser together that is totally anonymous and they circulate that out to folks that they think would be interested strategically and financially, as you said, and then they circulate that confidentially. Folks will respond and say, “Oh, I’m interested,” and then they sign an NDA. Then, they have a deck that they’ve prepared in essence and talks go from there. As you said, the key here is to get multiple offers because it’s a market and it’s the way to get the best price.
I’m curious, when I went through the Drip sale process to Leadpages, it was not that. We didn’t run a process. They approached us. It was still very, very painful. It was agonizing for me. It was a 13-month process total, but it was really hardcore for about 6 months, where it was maybe 10–20 hours a week for 6 months for me of negotiation, getting to the letter of intent, and then all that stuff. How long did it take once things started getting moving? I don’t just mean getting your financials together and doing other stuff, but actually when you started doing calls? Because it becomes real once you get on the phone or get on the Zoom call with a potential acquirer who’s like, “We’re going to write you a big check but we have all these hurdles to go through.” From that point when it started getting real, how long did it take until the deal closed?
Adii: Timeline from the first email indicating interest to transaction closing is less than three months.
Rob: Wow.
Adii: It definitely has its advantages. Objectively, this wasn’t something as necessarily was top of mind for me, but having such a short close is generally beneficial to the seller because if for whatever reason the deal falls through, you can quickly get back on the market. If you had multiple interested parties before, you can pursue them.
That’s the objective benefit of a shorter close. I wasn’t concerned about that at all, and this is what we say in hindsight because my boss and colleagues are listening, that was just never a concern for me. I like the fact that there was momentum because it became a forcing function to get through tedious due diligence things, which was crazy. Ultimately at the same time—as I said, I’ll elaborate on all these benefits of the short close— I now just know what it felt like drinking from a firehose. I just had to learn so many different things like a legal documented compliance standpoint. I was exposed to new things at an incredible rate. That definitely took its toll just for me, personally, and again, because I’m a solo founder.
I was lucky to that extent. I had Einar who we’ve chatted about. I think his experience was really helpful in just guiding me through that process and also just running interference on certain things, so that was helpful. The other thing that I know it did, even though it cost me a lot of money, it shaved a couple of years off of the […] that would have had to, stressful that I would have had to pay, but as soon as we had lifeline, Einar advised me and he said, “If you don’t have your legal counsel that has M&A experience, find the best legal counsel you can find and get them involved.” We’ve got a fantastic firm in the UK that assisted us here with this and that’s I said, “It’s not cheap. It’s almost when you eventually bite the bullet. It feels like the grudge purchase thing, but objectively I know that there was no way for me to navigate this transaction without that experienced and expert help.
Rob: Yeah, it’s a big deal when this much money is thrown around. I went through the same mental process when Leadpages approached us to acquire Drip. It was like, “Do I hire someone to represent me like a broker? Do I hire a lawyer?” I hired both and you’re right, it’s not cheap, but I think it saved years of my life, I think, is what you were saying. It reduced so much stress because I just felt like I was dotting I’s and crossing the T’s, and I’m going to sell a couple of companies in my life probably.
Whereas on the other side, acquirers have often acquired 5, 10 15, 20, and the lawyers know way more about it than you do. Not having an expert on your side is tough. I do know some folks who have done it and they are better people than I in terms of being able to put up with the uncertainty.
Ninety days is short. I said wow when you said that. I hear a lot of acquisitions take a lot longer than that. Did it feel quick to you or did it feel like 90 days of agony, uncertainty, pain, due diligence?
Adii: Due diligence wasn’t that bad. I went into it expecting much, much worse and it wasn’t bad. My gut feel is it wasn’t that bad for two reasons. First is the parent company were trying to do almost—this is obviously not a term—malicious due diligence. They were not just doing due diligence for due diligence’ sake. I think that’s the first part.
The second part that I am actually proud of is that I ran a really clean business. I say that in the way that I’m not a tax advisor, so don’t take any of my words here as a tax advice, but I think most founders know how to find a few tax deficiencies in their businesses by interlacing personal interests, business interests, and whatnot. I just never did that. Even though I was a solo founder, even though I had more than 70% of the equity by the time this transaction closed, there just wasn’t stuff there and our accounts were up to date.
We tried to run, in terms of our […] back to solutions we used with a software or some process within the business. Everything, we tried to simplify things and that greatly assisted us, that due diligence wasn’t that bad. But the uncertainty was still there. For me, it was a tipping point and it was very early on where I know I shouldn’t get attached to things and then your mind pulls a trick on you where it says, “Don’t screw this up now because this is significant and potentially life-changing,” and then that uncertainty kicks in like, “What happens if I get onto one of these calls and they find some kind of skeleton in the closet that I wasn’t even aware of and the deal falls through?” Up until close, that was something that at least pulled a few mental strains for me in the way that wasn’t unnecessary pleasant or helpful.
Rob: As founders, we always find something to worry about, don’t we?
Adii: Yeah, because if we didn’t have that, we will also wouldn’t apply the same kind of mental gymnastics to conjure up creative valuable ideas and bring them to life.
Rob: Indeed. Exiting the Campaign Monitor is awesome. To be honest, Campaign Monitor may have been the first ESPI ever used even before Mailchimp. I’ve always had a lot of respect. It was an ESP for designers is what I thought of it. I was guessing it was started by a couple of designers based on the UX that they’ve had over the years.
You had a huge transition now and you were able to sell the company. Your whole team now works for Campaign Monitor that have actually rebranded Conversio to CM Commerce. What is it like to go from a team of a dozen or so people to working at a company that large? How many employees does Campaign Monitor have?
Adii: Almost 650, I think.
Rob: That’s a big difference. Talk us through that. How is that felt?
Adii: It definitely has its challenges. The way we used to work has to change. That’s the simple reality because the things that we did as a completely distributed team, small team, an intimate team at that, that doesn’t translate well to such a big corporation. I think part of that as well is we are the smallest conservation in terms of people volume. We were 11 people that ultimately went a long acquisition and those 600 people there that are already more settled. Some of them have been there for 10,11,12, or 13 years. That has to change and for us at least, we went through that change very quickly because we wanted to get to the improved rebranded version of the product pretty quickly.
We had to literally make relationships on the fly with our new colleagues which I think is just challenging because relationships take time. What struck me most is the fact that most people on my team—doesn’t matter which role they were hired for—wear multiple hats in terms of doing things that just needed to get done. I know that was true for me as founder and leader of the team as well.
The biggest change that I’ve noticed is that most people are more narrow in their definition of how they add value to the organization. This is my skill set, this is my expertise, these are my responsibilities. At least for me as a founder, that’s a hard natural jump to make. I think that’s the biggest challenge that I have, but it also brings along with it quite a bit of excitement where I can probably do some things that are a little freer, more creative, more suited to a particular strength of mine instead of having to unnecessarily worry about all these things.
I did conversions, bookkeeping, all the way up to […]. I could do it, they were perfect, and as I mentioned they […] flag them. Due diligence, for example, and taxes got paid, et cetera. But that’s probably not my magic. There’s probably better bookkeepers, accountants, and whatnot in the world, but I think that opportunity and that change is bittersweet to some extent because I am someone that can wear multiple hats. But as I said, I’m mostly focused on seeing where being a bit more of a specialist and focus on the specific area of business and seeing where that takes me in the future.
Rob: What was the hardest moment of the acquisition process? Remember a time during those 90 days when you just thought, “This is brutal”?
Adii: I guess the last week or so, the discussion seemed both sides as legal teams. It seems to extend and seem to get into […]. I literally had the sense of, we just have to wrap this up now. We are getting into semantics and I’m also just generally a very trusting person. That part of it felt very unnatural to me, but I can’t remember a single event, like a single email, or a single call, or a single issue that popped up, that I felt would threaten everything. The only thing that comes to my mind is the last week or two where it feels like we got 90% of the deal done, and then we literally have to cram that last 10% into that last week.
What made it worse was, I was actually on a trip in Europe, a pre-planned holiday with Jean and our best friends. I was literally having to jump on calls and answer emails in between those things, which just extenuated that. By the time that we got, literally Friday afternoon 6:00 PM kind of thing, got to a point where both parties had agreed that we put pencils down and we’ll be signing […] as it was in that stage.
The first thing I did was I literally broke down in Jean’s arms. I just cried and I don’t want to call it sadness, but it was just things pure outpouring of all of these pent up emotions and thoughts that culminated over the preceding weeks.
Rob: I have totally been there and shortly thereafter, I cracked open a bottle of whiskey. I literally remember the night that I closed, when we sold […]. It’s funny how many parallels that even though our experiences are different in terms of you running a process and me having a strategic or whatever, so much of what you are talking about is bringing up a little bit of trauma for me.
You’re right. The last week feels like a month’s worth of work. It’s like,”There’s no chance that we are going to close. Are you kidding me?” Then everyone is arguing about this sentence and that word, and what it means, and it’s infuriating. I was so frustrated, angry, and stressed because I’m like, “This has to go through.” That’s what you said. You’re mind is playing tricks on you and it’s like, “I don’t want to get attached to this, but really I’m kind of attached to it. I want this to happen,” and yet you can’t just give in. You can’t just be, ” I want this to happen,” so okay go ahead and do what you want. It’s an incredible mental battle.
Adii: Exactly. That’s the thing, Rob. For me, that part of selling a business is very unnatural, at least for me an entrepreneur. I suspect that it’s probably the case of most entrepreneurs. That most entrepreneurs are bigger picture people and negotiating an acquisition like this is going on to those very, very fine details. Those details where you know there was an email thread about three weeks ago, but for the life of you, you can’t find that exact line in that email anymore because that email thread is now a novel. Gmail has magically decided to split this up into multiple threads.
I just think that’s a very unnatural state for me, at least, you are getting to that level of […] and specially so late in the transaction because you get to the point of attachment where it is point of no return, where I know that I need to push through now because trying to turn this back and for this thing not to go through, that outcome is so much worse.
Rob: Are there one or two things that you bought after the acquisition that you bought to celebrate, that you wouldn’t have bought before? Do you now have a tesla in your driveway, for example?
Adii: No, I do not have a Tesla. Mostly because I figure there’s not, by far, any public charging stations. It’s not a vital purchase. If that wasn’t the case, then I might have. I’ve done two things. One is totally juvenile and the other one is pretty cool.
The juvenile thing is I’ve never bought as much wine as I have in the last two months and I already have too much wine. I’m a bit of a collector. I’m mostly a wine drinker, but we have too much wine. I definitely enjoyed taking out on wine and probably making purchases that I would not have made before.
The more significant thing for me, this is the biggest reward, direct reward at least, that I am also giving myself from the exit. I still wish I could claim that this was my idea, but it was Jean’s idea. We are actually taking my whole family—my parents, my sisters and their spouses, my one sister has two young kids I raised as mine—on a Disney cruise which has been pre-booked and planned for the middle of next year.
We are doing that. The reason I look forward to it is because getting the extended family to get together for any amount of item is already hard and getting to experience something like that with them is just something that I really look forward to. Those are the things I have for myself and […].
Rob: Love it. I often talk about freedom purpose in relationships and it’s like you’ve now achieved a level of freedom. I’m guessing 20 years ago, you would have pinched yourself to have. You did it while diving into a deeper purpose of starting a company doing something to improve your corner of the world.
I love the capstone comes back to relationships because one of the things you start spending a bit of money on is being with family. I guess it’s very poignant and I’m super happy for you in all honesty. I just wanted to say congratulations and thank you so much for taking the time to talk us through.
Folks actually wanted to hear more about it. I guess I got scooped. I thought that this was the first interview you were doing about the acquisition, but it turns out about four days ago on Friday, Zenfounder, my very own wife, scooped me. I know you didn’t go nearly as much detail but you did talk a little bit about that on her show so folks can certainly go check that out if they are interested.
Adii: The other thing that you should know, Rob, because I didn’t know how much I did share with you is that we also scooped a newfound interest in poetry. I’m curious to see how that’s going to play out for you well in the future, whether I’m going to see tweets about what kind of poetry from you.
Rob: Alright. I would love to hear it. Speaking of Twitter, you are @adii on Twitter. That’s an awesome first name. Anywhere else you like folks to follow you online?
Adii: It’s either @adii on Twitter as you said or adii.me which is my blog. Now that this massive live event has passed, I have more time and I’m back to weekly writing discipline. If anyone wants to hear what I’m thinking, then that’s where the place to go.
Rob: You did a really nice write up about this just about a week and a half ago. Folks can go to adii.me if they want to check it out. Frankly, if you have questions for Adii and you like to see him come back in the show and answer questions—I totally did not pitch him on this beforehand—you can email questions at startupsfortherestofus.com or tweet at @robwalling and if we get enough questions, we’ll get Adii back on to answer those assuming he’s up for it and can carve up the time.
Adii: I’m definitely up to it. I’ve been up for these kind of things. Ever since, as a teenager, I read Richard Branson […] where they said, “There’s no such thing as bad publicity.” Whatever kind of spotlight I could get, I will be happy to take. If there’s questions, I’ll be happy to pop back into the show.
Rob: Sounds great. Thanks again, man, for coming into the show.
Adii: Thanks for having me, Rob.
Rob: Thanks again to Adii for coming to the show. As I mentioned, if you have questions for him, tweet them at me, email me. You can email us questions at startupfortherestofus.com or you could call our voice mail number (888) 801-9690 and leave a voicemail. I would bring Adii back on the show if we have enough questions for him to run through those in a future episode. This podcast’s theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. You should subscribe to this podcast. You can do it in iTunes, Stitcher, Spotify so that you don’t miss any episodes. Visit startupsfortherestofus.com to get a full transcript of each episode. Thank you so much for listening. I’ll see you next time.
Episode 466 | Answering Listener Questions With Craig Hewitt
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Show Notes
In this episode of Startups For The Rest Of Us, Craig Hewitt returns to the show to answer a number of listener questions on topics including productized services, podcasting, and more.
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Rob: In this episode of Startups for the Rest of Us, Craig Hewitt returns to the show to answer listener questions about productized services, podcasting, and more. This is Startups for the Rest of Us Episode 466.
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 start up or you’re thinking about your first. I’m Rob and today with Craig Hewitt, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. As you know on this show, we value building real businesses with real customers who pay us real money. We value the freedom to work on projects that are interesting to us. We value the purpose that it brings us to start our own endeavors and to have equity and ownership, and we value relationships, whether that’s relationships with our family or our friends. We don’t decimate our personal life for the gain of our company. We are ambitious founders, but we are not willing to sacrifice our life or our health to get to where we want to go. We know that starting a company is hard. More than half of being a startup founder is managing your own psychology.
Joining me again today is our guest, Craig Hewitt. He’s the founder of Castos. I did an interview with him a few episodes ago, and I did a call out for questions that folks have for him about his experience about his interview. I wanted to bring him back on the show and it’s something I want to start doing, assuming there is enough demand for it. If you didn’t hear that interview, Craig has grown Castos to six team members, including himself. They are a member of the inaugural TinySeed batch and Craig is really crushing it with Castos, his podcast hosting platform.
Before we dive into that, I want to give some special thanks to Kenneth Khaw for his epic enterprise sales tip. He sent an email to me after David Heller’s hot seat episode, where we dug into David’s enterprise sales issues with things taking too long. Kenneth Khaw obviously has tons of credentials around being in enterprise enterprise sales for 12 years and he had some tips for David, including screenshots, a long write up, and talking about summarizing a quote in one page, providing variations of a quote, figuring out what the get over the line number is for negotiating. He really dug into it.
That was super cool, super appreciated, and David just wants to tell us, “Wow, he really spent a lot of time on this,” so it’s much appreciated that the community can give back to someone like David who is pushing forward and trying to solve problems. That was great when we can share our expertise with one another.
Lastly, another reminder that TinySeed applications for our second batch open on November 1st. Those who don’t know, I run TinySeed, the first startup accelerator designed for bootstrappers and we fund companies in batches for a year-long remote accelerator. If you’re interested, head over to tinyseed.com, enter your email there, and we will notify you when the applications’ available.
With that, let’s dig into some questions with Craig Hewitt. Craig, thanks so much for coming back on the show.
Craig: My pleasure. Thanks for having me, Rob.
Rob: I am excited to dig into some questions today. We got a few questions that were asked directly to you and then there’s a few more general mail bag questions. The first question came from Matt Stainer and he said, “Why TinySeed? Going into it, what were you hoping to get out of it? Now that you’ve been in a while, how’s it going? I ask because as I understand it, TinySeed is focused on helping founders and ‘move from nights and weekends to full-time focus.’ Essentially quit their day job and go all in on your startup. And yet, it sounds like you are already full-time on Castos with six employees. So I’m curious what drew you to TinySeed. Thanks, Matt.”
Craig: That’s a really good question. This was a question I asked myself a lot and had a lot of real heart-to-heart with my wife, and even with other people coming in the space that I know, trust, and respect. Really now, what it came down to is the terms for TinySeed are really, really favorable for founders who want to run a business for a long time just as a high-growth lifestyle business. Not on the VC track but want to accelerate the growth of their business, past what they can do by pure bootstrapping.
If it’s like you mentioned, some of the copy on the website might be let you quit your nights and weekends and focus on this full-time, that would obviously accelerate the growth of business. For us, we had a pretty solid beginning of product market fit when we applied and I thought that joining TinySeed, both for the mentorship and for the funding, would allow us to accelerate that. Rob, we’ve for five months into it now. I think it definitely has. We’re growing faster the we were before and the business is absolutely a better business now than it was six months ago.
I think what drew me to it was the people behind it and the opportunities that will allow me professionally and personally to develop but also to put Castos on the map and give us access to resources both financially and mentors and network that I don’t have access to myself, and really at a pretty reasonable cost. I won’t say it’s a cheap cost because it’s not. Giving up a piece of your company is always a big decision and a really super personal one, but I think that the trade-off is really reasonable in this respect.
Rob: I remember you felt a lot about it. You and I had a number of conversations as I did with most of the founders that wound up making into the batch. There were conversations about us feeling people out and there was them feeling us out and saying, “What is this going to be like.” We had an interesting almost conundrum of we were startup, too, and this was our first batch. I think it will be much, much easier. I expected to be much easier with the second batch because it’s just more proven. We have more products market fit now. There are a lot of conversations then.
The other interesting thing is we did start out with a thesis of “I think we’ll fund a lot of founders who will move from nights and weekends to full-time” and if I recall correctly, we funded 10 companies and I think two of them and maybe three went from had a day job to went full-time. Everyone else was already working on it.
Even that hypothesis we had is not entirely accurate. Now, one of them has a small software product that essentially provides him with the full-time income, so he didn’t need to have a day job. Another founding team moved to a cheaper place. They did geo-arbitrage. They moved from the US to a much cheaper and that allowed them to live full-time even though they didn’t have a US full-time income coming in.
There were exception-ish things, but overall, if we haven’t already updated on the website, I think we need to in terms of you figure out really who your best prospects, the people who can use this the most, and message to them.
You said Castos is growing and it’s absolutely in a better position today than it was when it joined TinySeed. Honestly, I haven’t talked a lot about TinySeed on the podcast because I never want the podcast to feel like a sales pitch for anything I’m doing. I would talk about my journey building HitTail, or journey doing MicroConf, or journey of Drip, but I try really hard to keep that balance of I’m not just sitting here pitching what I’m doing.
Actually, I have a couple of people ask me to bring someone on to interview me about what’s going on, not necessarily talk about TinySeed but what’s going on with me, my founder’s journey. I think that can be interesting.
All that said, I haven’t talked to […] about it, but I’m curious. You’ve now been in for almost four months at this point; it’s a third of the accelerator. Without putting you on the spot, is it what you expected in terms of the benefits?
Obviously, there is money, and then there’s the mentorship—our list of mentors is pretty solid—then there’s the office hours themselves of hang-out or kind of the mastermind, the community of it, of being in Slack and being on the weekly calls, then the in-person event, and even the network. Even beyond the mentors if you say, “Hey, I need an intro to somebody.” My network and a lot of the mentor’s network are at your disposal. Has it been what you expected and do you feel like it’s contributed to your success over the past four or five months?
Craig: The money is really nice. I think that a lot of people that take money that have a bootstrapper mindset—Josh from Baremetrics talk about this a lot—they haven’t spent a lot of the money they took, and we haven’t either. We used it as a cushion—it’s a big cushion for me—but we’re not burning hardly any money right now. We’ve hired a lot of full-time person-and-a-half since joining TinySeed. That’s been really nice. It makes me feel good to have a lot of reserves and the business is really sound at this point.
It’s cool that comes through in everything we do because we’re able to take a longer-term approach to building the business, features, marketing approaches and things like that, that we don’t have to worry about making payroll next month or next week because we have money in the bank. Where if things went sideways, we’ll be good for a while. That’s how we are using the money.
The best part really is the network and the community, the difference being the network is with the mentors and the mentor’s networks because we definitely have gone second and third layer with some of the mentors that I’ve talked to and they said, “Hey, if you want to talk to this person, we can intro you over here.” I probably have two or three calls a week with either you and Einar, or a mentor, or a mentor’s friend, or a connection that I’ve made somewhere like that. Then we all, the 10 companies, are in Slack all the time sharing stories. We have a fail whale channel, so sharing our successes and learning opportunities. That’s really great because a lot of us are solo founders.
There’s two founding teams in the cohort, but it gets lonely sometimes out here, especially to have people that are doing exactly the same thing that you’re doing. We’re all building SaaS apps that are less than whatever $50,000 a month. We were all in the same boat pretty much. So, it’s a really homogeneous group. That’s what makes a lot of the discussions really interesting among the founding teams. I think that’s the biggest surprise, though, is that the value of the network of mentors, the support of the other companies, and the founders has been awesome.
I know that we numbered the TinySeed 2019 Slack channel that’s just for us. I know there’ll be a TinySeed 2020 and 2021 stuff that I still will definitely be active in our little part in our channel within the group, just with us and the other 11 people because these are really valuable relationships.
Rob: Awesome. That’s what I would hope to hear from anyone who does become part of the batch. Thanks for the question, Matt. Appreciate that. I hope context was helpful.
Our next question is from Meryl Johnston. She is the founder of Bean Ninjas, which is a pretty well-known productized accounting service. I believe they focus on Xero, but they’re pretty well-known. They’ve sponsored a lot of conferences and Meryl is actually one of the TinySeed mentors. She says, “Hi, Rob. I think it’s a great idea to get Craig back on for another episode to answer questions from the listeners.” Meryl sent a voicemail, so let’s dive into that now.
Meryl: Hi, Rob and Craig. It’s Meryl Johnston here from Bean Ninjas. I’ve got a question for you both. Cool content, by the way. I like the idea of having an interview and then giving listeners the opportunity to ask follow-up questions, which you then answer on a podcast. Going back, understanding is that you started with consulting before you transitioned to products and then software, and that Craig used a productized service business model to then leverage your network and skills, and maybe branding as well, to then going to software.
My transition was also from I went from consulting. I did that for nine months, then created a productized service, and then you see it with been moving into digital products. Based on my own experience, I think there is that when you, in building a skillset, as an entrepreneur while running a service business and in my experience it was a faster way to leave a job and transition to working full-time in their business than if I had created products from day one.
So, my question to you both is, if you were starting from scratch again and is transitioning from a job to running a business, and you didn’t yet have much business, you didn’t have much of the network, and didn’t have a lot of capital behind you, what kind of business would you start? Rob, would it be consulting? And Craig, would it be a productized service?
Rob: That’s a good question. Thanks for that, Meryl. What do you think, Craig? Have you thought about this?
Craig: Yeah, I have pretty strong feelings about this. I think a productized service model or even consulting is a fantastic way to transition out of a day job into running your own business. The reason is, as opposed to software where there’s a ton of time and financial overhead that you need before you can start making any money, you can put up a WordPress site with WooCommerce or Gravity Forms or whatever and start making money literally today.
Justin McGill launched the first version of LeadFuze and this 24-hour challenge to himself. We launched Podcast Motor in maybe a week, and that was because it was my third time ever putting up a WordPress site. We were doing $10,000 a month within a couple of months. You compare that to what a SaaS founder has to do to get that $10,000 a month. It’s like moving planets to get to that kind of MRR for SaaS, especially the first time.
I think that if someone has a skill set or a passion and you can create a productized service around it, you absolutely should do that if you goal is to get out of a day job and into this world. But I think Meryl really nailed it on the head when she said leverage because that’s how I view what we’re doing now.
Rob, you probably see it from consulting to your first software product to what you’re doing now is another form of leverage. I just see that a unit of work I do now in Castos is worth a lot more to the value of the entity than a unit of work that I do into Podcast Motor which is our productized service. I think it’s just because creating a piece of software and a team that supports that is more scalable, probably has better margins, and in some ways is easier to run at a higher level.
I think it’s a fantastic way to start and I think that like Meryl is getting into, getting into a digital or software product is really great because they’re more complicated and if you’ve learned some of the things like marketing, project management, and customer service through a productized service, then you have a really good chance at being successful on software.
Rob: For me, I honestly don’t know. I have an inclination of what I would do, but I think if someone came to me for a blanket advice, I would say, “Look, I had a day job and I want to work for myself. I would say there’s the Robert Kiyosaki levels. I’m not a Poor Dad Rich Dad fan, but I do like this one paradigm he has where it’s like, you’re employed for someone else, then you’re self-employed, which typically is consulting where it’s dollars for hours, then you’re an entrepreneur which is where other people work for you, and as you said, it’s that moment of leverage when you have a whole team, and then it’s investor where you’re no longer running the day-to-day and you’re putting money into other businesses.
So, I would first decide do you just want to recur self in this terms of self-employed or do you want to go as far as to be the entrepreneur and let’s just say to have a product business in this context and then go from there? For me, if I could go back, I wished that I could have kept the day job and had it not just drive me up the wall. I hated my day job. I really, really despised working in a cubicle. I liked some of my co-workers and I didn’t like others. I didn’t like that I couldn’t choose who to work with and I didn’t like that a bunch of the policies seemed just dumb. I didn’t like that we’re forced to write really crappy code a lot of the time.
Our CEO is a sales guy and he would go out and sell something. It would be like, “Hey, we have to ship this in six weeks,” and we’re like, “Yeah, that’s four months of effort.” He’s like, I don’t care. Get it done.” So, then we go get it done and then […] would break because we wrote […] code. Then he’d come down and I was like, “This is dumb. Why isn’t someone smarter here?” That seemed to just be an ongoing thing.
Had I been a little more chill or been able to deal a little better with it or just found jobs that weren’t like that because there are certainly jobs that exist and there are people that are calmer and I would like to say I’m unemployable. I am just not going to be a good employee. But if some is like, “Look. I’m at my day job. I’m making $125,000 or $150,000 as a salesperson or as a developer. I work 40 hours a week, I don’t think about it when I get home, and it doesn’t suck the life out of me,” I would say keep doing that and launch something on the side.
Maybe your first step is consulting. Maybe it is productized consulting like you did, Craig, and like Meryl has done, but maybe it’s a stair step approach. Maybe it’s that WordPress plugin, or you write an ebook, or maybe it’s a Shopify add-on, or any one-time sale product. I definitely went to the consulting route because I wanted to be out of a day job in a hurry and I thought that consulting, to be honest, was the end goal for me originally. I thought that would fix all my woes and as I got out, bill $100–$125 an hour. It’s like, “Oh my gosh, this is great, I’m making more money that I ever had.”
I didn’t dislike it as much as I dislike salaried employment for sure, but it definitely got old after a couple of years. For me, it was about I wasn’t building anything that would last. There is no permanence to it. I didn’t build anything that I owned, I had no equity, and my consulting “firm” was never sellable. I thought to myself, “Am I going to do this for 20 years?” and that didn’t appeal to me.
It’s hard when you’re doing consulting and you’re addicted to the incoming cash. It’s really hard to justify. I could work another hour. I used to be booked 60 hours a week, I would say. I didn’t work that much, but I could have worked that much. So, I would look at it like, “All right. It is Saturday afternoon and I could put in three hours and I could make $375 or I could work on this beach towel website that is doing $200 a month.” It was a very hard transition.
So, for me, going from consulting to products was actually harder than if I had just kept the day job because at the day job, I wouldn’t have had that extra motivation to work more on it. Does that make sense?
Craig: Yeah and I think that’s where consulting and productized services differ. Brian Casel talk about this with Audience Ops. You’re able to take a productized service that has a team that supports it, and systems, and processes, and documentation to—I don’t know—say, run itself, because nothing runs itself. But I spend an hour a day on Podcast Motor right now, maybe two on a bad day or whatever, a good day, and it’s a solid mid six-figure business. You could never do that with consulting because you’re directly trading dollars for hours or hours for dollars. I think that’s the difference.
I agree with all you said, Rob, that most high-leveraged thing you might be able to do is keep your day job because you can just save a bunch of money, maybe, and go buy your way into freedom, you can buy an app. Or you can get experience and something that will then allow you to be successful when you do go out on your own.
I had a sales background before and it’s hugely beneficial to me in the biz world to know how to sell stuff. If you have the opportunity, get into a sales or marketing role where you can learn that side of the business and of the world. I think that might set you up for success. I won’t say more, but it will definitely give you a leg-up versus just going on flailing around and figuring out on your own if you’re able to hold down that day job.
Rob: Yup. I think that if you can learn skill sets either at the day job or as you’re consulting or productized consulting, if you can learn skill sets there that add to your product tool belt—your product marketing, your product sales, your product development, whatever—that’s a big win. That’s something that I found.
Again when I was solo consulting, I had 1–3 clients at any one time, my marketing was my blog, I invoiced using Excel spreadsheets, it was very stripped down, and I didn’t have direct copy, I didn’t learn marketing, I didn’t learn AdWords, I didn’t learn any of that from consulting.
When I look back on my experience, if I had any regrets, is that my salary job. I learned to code for sure, got better at it. So I was already coding before that. That obviously helped me with products. Eventually, you top out and you’re working on different problems than you work if you had a little SaaS website or whatever.
When I transitioned to consulting, I don’t feel like I really learned much that later helped me to translate it into supporting and building a product. Whereas productized services, it sounds like to me from what you’ve said and what I’ve observed that there’s a lot more parallels between that and, say, SaaS. Would you agree with that?
Craig: Everything about it is the same except for the software. It’s marketing, it’s customer service, it’s processes and deliverables, and then SaaS adds on project management of development teams, testing of technology and stuff like that.
Rob: Yup, it really is a nice proxy for that. It’s not just a revenue stream. I already mentioned it in the intro, but if you haven’t already heard Craig’s story, if you go back to episode 459, he tells a story of how he had a day job, launched Podcast Motor which is his productized service, left the day job, and then leveraged that into essentially a WordPress plugin and doing Castos. Not only did it provide revenue, but it provided that whole skill set and the learning curve that you didn’t have to do while you’re communicating with developers and designers, building and supporting a product, and doing all that stuff.
Thanks again for the question, Meryl. I hope that was helpful. Our next question is from Cain about how to run a beta. He references an episode from 2012 where Mike and I talked about running a beta, and he said he’d love to hear a little more on how to select the beta users and figure out beta phases. Any references, similar discussion happen on Matt Wensing’s podcast which is called Out of Beta, not coincidentally I hope, which made me think to look and see what you guys had on this subject.
Craig, I know that you had beta periods with Castos. Talk about that.
Craig: We don’t. No, we don’t have any beta testers or beta functionality in the app.
Rob: Really? Have you never? Were you in beta early on? Or did you just never have a beta?
Craig: No. We just launched.
Rob: I guess to define it so people know, typically I don’t call it beta. I typically call it early access. Beta implies that it is a buggy product and it’s pre-launch. It’s a preview you can use, but beware of the bugs. Typically, we might nuke the data. There’s different agreements and such. Google is famous for having Gmail in beta for five years or something. But betas are, (a) not required, and (b) these days, I would like not to have a buggy product.
When we did Drip, we did early access and we tried to make sure there’s minimal bugs. It wasn’t about testing, it was more about customer development. User experience or fun rather than, “Oh, they clicked on a link and something crashed.”
With that said, I had assumed wrongly, obviously, that you had run a beta with Castos in the early days. So, you just launched straight away.
Craig: Yeah. We just dove head first. I also think there’s two parts to beta. One is before you launch and then the other is beta testing or beta releasing features after you’ve launched. You develop a new feature, you release it to a small cohort of your total user base to let them test it before you go throw it out to the whole world.
We very much would like to do the latter now because we have thousands of users and we don’t want to release something to everybody that could be buggy or whatever. We have extensive unit test and staging environments, and we have testers that run through everything before it goes out the door. But I would still like to take the time to develop feature flags or beta flags for certain users.
I think that if you have an established product, it’s super valuable because you can pick the people that have been around for a long time and you know they really care about you and your product and are going to be there even if you ship something that isn’t the best experience the first time. Those are the perfect beta testers. They’re the people that love what you do no matter what but will give you a lot of latitude if you ship a feature that’s in beta that might be a little rough around the edges.
That’s how I would select those people. You probably know who they are. They’ve been around for a long time, your exchanges with them and support are really positive, they refer other people over to you. Those are the characteristics of what I would consider a good beta user to be and they’re inquisitive, natural, learning people, still go poke around and give you constructive feedback without being overly critical in a non-productive way.
When it comes to beta, that’s the only place I really see a good use for beta. We launched Castos and just launched it. It was not pretty, but it worked. I think we only did it because we tested the hell out of it in staging and had confidence that the product and the market had good alignment because there are other people doing similar things. It’s not like we’re creating a whole new product segment or something like that. That’s why we just launched it.
Rob: And how did that go? How were the results? Because you referenced it was not pretty.
Craig: We had some technical issues with deployment. I think that just happens sometimes. We learn and do things smarter and better now, but that would have happened even if we would have released it as a beta, I think. We would have these issues.
I think people might get hung up on this a little bit and there’s a lot of discussion around this, like when is a launch really a launch, when do you come out of beta, and what does that mean? I think it’s fuzzy, to be honest with you and maybe not super important, like how and where do you draw those lines?
You get the thing out there, have some people use it, make sure it’s not going to break the world, then release it and start getting real, new, fresh customers or trial users so you can see unbiased people using your app. I think that’s the real thing that you want to get to, is how does this person I don’t know and won’t give me that extra leeway, how are they interacting with what I build? Because that’s the real acid test.
How did you guys do both beta period when you were launching Drip and then did you beta release features to certain users?
Rob: Yeah, we did. This is what I would do today. The fact that I’m referring back to Drip doesn’t change […]. This is still […]. The first, let’s say, 10 or 15 customers we let in that weren’t paying yet, they were just on an unlimited free trial and I said, “Look. Once you start really using this and get value out of it, then you pay and I’m just going to monitor it.” So, I would just boomerang emails back to them every 2–3 weeks, checking on their account, touch base with them. It was a very manual process.
Those people knew we were building something new and we said, “Look. We don’t expect it to be buggy and we test the crap out of this stuff. There is a possibility of bugs, but we don’t expect any.” The people were early adopters, obviously, and the way we hand-picked those people was that I looked at people, a lot of them actually either had a dire need for it or they were folks who ran other SaaS apps.
The reason I did that because I knew that they would give helpful, constructive feedback from a product-minded perspective. I had the luxury of folks on the launch list who, when they gave their email, I could tell that they ran another SaaS app. Again, when you have a lay person, they can know a problem that they have, but they’ll often try to propose a solution and that’s not a good solution for you to build into your product.
Having folks like Ruben Gamez from Bidsketch, Jeff Epstein from Ambassador, Brennan Dunn from then Planscope but now with RightMessage, it’s folks who have a pretty good knowledge of that, and then there were some folks that were from ecommerce and there was a couple of bloggers, but they were all folks who I think had good ideas and, as you said, didn’t have a bunch of noise.
That’s the struggle you run into is if you get 15 or 20 people in there and they’re all have diverse goals—you get a blogger, then you get a photographer, then you get someone who runs ecomm, and you SaaS—they’ll have just wildly different request for you and that starts getting complicated. It starts making it hard to figure out what to do next.
And then really, our beta, I say, truly ran—again it’s called early access—from about July to November. It’s five months long. The reason we did that is we have this big launch list and we were still doing customer development. We hadn’t even proven that we build something people were going to pay for. Podcast hosting existed and you knew that if you build a platform, customers will pay you for it. You just needed a channel. That’s how I would see Castos.
With Drip, we were trying to build something new and I didn’t know if we sent an email to the 3500 person launch list, if everyone would just show up and leave. So, we were pretty cautious about who we let in. Then, we just did 300 people at a time every couple of weeks, let them in, build some features.
That was quite stable during that time. I think we only had one bug that missent email, like double send it to a group or something, which is a big deal. That sucks when you are running an ASP to oversend or to miss a schedule. If someone wants it to send at 11:00 AM and it sends three hours later, that’s a problem. More so than some apps, you have the leeway of it not being mission-critical but any ASP can be that.
It could have been more compressed, for sure. I think that also comes back to Derick and I work 40-hour weeks. If we had worked 70-hour weeks, we probably could have gotten it then in two months, but that was a lifestyle choice. That wasn’t the time when I was going to work long hours. That’s not totally on-topic with beta, but that is how we ran it.
To your other point, you said you beta test features. The answer is yes, we have feature flags from the start where we could just ship something and I’m trying to think about split testing or even automation and such, and it was just a checkbox. In the admin panel we would open it up for three four early access folks, send them an email, “Hey, you have this. Check it out. You want to test it.” Get feedback, iterate quickly, and then slowly either release it to a few more people if you are still in doubt or at that point, then we’d actually launch the feature to the whole audience.
Do you guys do that as well? Are you able to feature gate to specific users?
Craig: Yeah. We’re able to do that to really just the admins. It’s myself and our lead developer. Basically, both who have podcasts, so we’re able to run stuff on our podcasts. I guess we definitely have beta versions of the plugin. We manage a WordPress plugin called Seriously Simple Podcasting that integrates with Castos and we absolutely run beta versions of that on our live and test sites all the time. I think that’s more important because not like a SaaS app where you can ship it and then if it’s not exactly right just fix it, push new code, and everyone is happy.
With a WordPress plugin, people’s sites can break or their podcasting go down or whatever, so we are ultraconservative with what we ship there. We test beta versions of the plugin for weeks sometimes, just on our live site to make sure everything is cool. That’s another thing to consider. So, if you have a Shopify app or a WordPress plugin or something like that, running a proper beta program there is very important for different reasons than a SaaS app where you push it, if it’s nice […] right, just fix it and push it again. That’s what we do a lot of times and it works.
Rob: So, thanks for the question, Cain, I hope that was helpful. We will answer one more question and this one is about podcast sponsorships. He asked it for Startups for the Rest of Us but it’s cool that you’re on the show because you have your own podcast. He says, “I’m a long-time listener on your podcast and I’ve followed your startup journey over the years. I, myself have worked for several VC-backed startups until about 10 years ago when I got interested in bootstrapped companies and decided to be a marketing consultant for non VC-backed companies.
I was recently looking at podcast sponsorship opportunities and I read your FAQ that you’re not interested in sponsors. I thought to reach out more out of curiosity. Why did you decide to not have ads? I assume doing a podcast is a time-consuming effort and while not all endeavors need to be money-making, I’m curious what the motivation is for why you do the podcast. I figure you want to help other entrepreneurs, but is that it?” and that’s from […].
So, Craig, you run a podcast and you don’t sponsors. Why is that?
Craig: We coach a lot of our clients, particularly on the Podcast Motor side of things on the why you do a podcast. I think around monetizing a podcast, there are two distinct routes you can take. One is directly monetizing your podcast which is ads or now becoming more popular is selling premium subscription so you can charge $5 or $10 a month for access to limited content or something like that. That’s directly monetizing your podcast.
The other way that I would argue and the vast majority of situations is more lucrative and maybe easier is to indirectly monetize your podcast with products, or services, or conferences, or membership sites, which is what you guys do. Most or all of our customers at Podcast Motor, which are a lot of startups and successful entrepreneurs that everyone that listens to this podcast has heard of, that’s what they do. We have very, very few people who monetize their podcasts just through advertising or through this premium subscription memberships that are becoming popular now.
I think the reason is you have to have enormous download volume to make good money through sponsorships. I know you guys have a really successful podcast, Rob, but you wouldn’t make nearly the money that you might through other things that you can do with having a whole bunch of people that are interested in what you’re doing. Then you have a conference or a membership site that people can become a part of if they like what they hear on the podcast.
That’s a really natural way to use content marketing and podcasting is a form of content marketing. That’s what we really like to see and is more successful and easier for people to do. I think that’s why you don’t see a lot of ads in podcasts, especially in our space.
Rob: I would second that. I think that’s a good way to think about it. Mike and I toyed around with sponsorships. Some listeners might recall us making an announcement nine months or a year ago and saying, “Hey, were thinking about this. If you want to sponsor, email in,” and we just never made it that far.
We got a few emails and, to be honest, managing a sponsorship program is quite a lot of work. It’s enterprise sales in a way and you’re going to many conversations, there’s going to be lead times. Then you’re going to need to follow-up on invoice and get paid. Then you need to work on ad copy because most people do not know how to advertise on podcast. Typically, the first ad copy you get is not very good, so then you’re rewriting that.
It’s not as if you’re cashing a check for free. It is an amount of effort, it is another side job for two software entrepreneurs who also run multiple conferences, also have a podcast, and also write books. It’s just one more thing to tack on and it’s always been like how much value will this actually provide? So that’s it. I would never say never. Might we have sponsorships someday? Maybe. I’m not opposed to them. I just want them to be a fit and I want them to be the right choice both for us and for the audience.
To you point about monetizing indirectly, when we started the podcast, I remember we had the Micropreneur Academy already and I remember I viewed it as a way to not only build more credibility but also have a more personal connection to the audience that I was already building on the blog.
To be honest, I really did want to build a community of folks like us because I knew five people who are doing what we’re doing in 2009 when I started writing my book. I could list them in one hand of like, “These are the solo software entrepreneurs,” Every time I would hear about one of them, it’s like, “What? This is just crazy. There are that many people.”
As the blog started going and after I published my book, more people started coming out of the woodwork. The podcast I really view it as an avenue to just get more of us together. Of course, in 2011 it was finally like, “I think we might actually get together in a room,” and our delusions of grandeur of 200 people in a room quickly turned into, “Uh-oh. How are we going to sell enough tickets to fill 105 seats?”
I think the first MicroConf […] be 105 and I had to discount tickets late there, but all of that became more important than making a couple of grand a month. I don’t know how much we’d make if we monetize the podcast, but I just think that other stuff is more important than the platform. I don’t do it to directly monetize. I just never thought of it that way.
I do it for all of these other things and it’s to continue to be a voice in the community, but also to continue making sure that this community of bootstrappers, independent startups, and indie funded startups that this thing keeps moving forward. I’m playing long ball and I believe we have decades and decades of growth, and this is the new frontier. 99% of companies don’t need venture funding and that’s us. So, let’s band together.
I don’t know. I don’t want to get grandiose and act like that I hate it. That’s what I thought from day one because it wasn’t that deliberate, but that’s where I see it now and that’s why I’m spending my focus, instead of doing enterprise sales, asking for invoices, and rewriting ad copy, I’m focusing on the MicroConfs, the TinySeed, the blogging, and all the other stuff to try to push that forward.
Craig: Yeah, the leverage we talked about from Meryl’s question, right? That the podcast is your probably biggest form of reach and you’re able to do a lot of things now with it that you could never do just by making some ad money.
Rob: Yeah, it’s a good point. That’s a good question. Thanks for sending it in, […]. Craig, thanks again. That was super fun. As your first Q&A episode, how did that feel?
Craig: It was great, a lot of fun, really interesting questions, and thanks for having me on. It was a blast.
Rob: Absolutely. So, if folks want to know what you’re up to, they can head to castos.com for your podcast hosting services and @TheCraigHewitt on Twitter, is that right?
Craig: That’s it, yup.
Rob: Awesome. Talk to you again soon.
Craig: Thanks, Rob.
Rob: And if you have a question for the show, whether it’s myself or a guest, leave us a voice mail at (888) 801-9690 or email us an MP3, or an Ogg-Vorbis, or attach a Dropbox link, or even just write your question out in text, old school style, questions@startupsfortherestofus.com.
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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 start up or you’re thinking about your first. I’m Rob and today with Craig Hewitt, we’re here to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. As you know on this show, we value building real businesses with real customers who pay us real money. We value the freedom to work on projects that are interesting to us. We value the purpose that it brings us to start our own endeavors and to have equity and ownership, and we value relationships, whether that’s relationships with our family or our friends. We don’t decimate our personal life for the gain of our company. We are ambitious founders, but we are not willing to sacrifice our life or our health to get to where we want to go. We know that starting a company is hard. More than half of being a startup founder is managing your own psychology.
Joining me again today is our guest, Craig Hewitt. He’s the founder of Castos. I did an interview with him a few episodes ago, and I did a call out for questions that folks have for him about his experience about his interview. I wanted to bring him back on the show and it’s something I want to start doing, assuming there is enough demand for it. If you didn’t hear that interview, Craig has grown Castos to six team members, including himself. They are a member of the inaugural TinySeed batch and Craig is really crushing it with Castos, his podcast hosting platform.
Before we dive into that, I want to give some special thanks to Kenneth Khaw for his epic enterprise sales tip. He sent an email to me after David Heller’s hot seat episode, where we dug into David’s enterprise sales issues with things taking too long. Kenneth Khaw obviously has tons of credentials around being in enterprise enterprise sales for 12 years and he had some tips for David, including screenshots, a long write up, and talking about summarizing a quote in one page, providing variations of a quote, figuring out what the get over the line number is for negotiating. He really dug into it.
That was super cool, super appreciated, and David just wants to tell us, “Wow, he really spent a lot of time on this,” so it’s much appreciated that the community can give back to someone like David who is pushing forward and trying to solve problems. That was great when we can share our expertise with one another.
Lastly, another reminder that TinySeed applications for our second batch open on November 1st. Those who don’t know, I run TinySeed, the first startup accelerator designed for bootstrappers and we fund companies in batches for a year-long remote accelerator. If you’re interested, head over to tinyseed.com, enter your email there, and we will notify you when the applications’ available.
With that, let’s dig into some questions with Craig Hewitt. Craig, thanks so much for coming back on the show.
Craig: My pleasure. Thanks for having me, Rob.
Rob: I am excited to dig into some questions today. We got a few questions that were asked directly to you and then there’s a few more general mail bag questions. The first question came from Matt Stainer and he said, “Why TinySeed? Going into it, what were you hoping to get out of it? Now that you’ve been in a while, how’s it going? I ask because as I understand it, TinySeed is focused on helping founders and ‘move from nights and weekends to full-time focus.’ Essentially quit their day job and go all in on your startup. And yet, it sounds like you are already full-time on Castos with six employees. So I’m curious what drew you to TinySeed. Thanks, Matt.”
Craig: That’s a really good question. This was a question I asked myself a lot and had a lot of real heart-to-heart with my wife, and even with other people coming in the space that I know, trust, and respect. Really now, what it came down to is the terms for TinySeed are really, really favorable for founders who want to run a business for a long time just as a high-growth lifestyle business. Not on the VC track but want to accelerate the growth of their business, past what they can do by pure bootstrapping.
If it’s like you mentioned, some of the copy on the website might be let you quit your nights and weekends and focus on this full-time, that would obviously accelerate the growth of business. For us, we had a pretty solid beginning of product market fit when we applied and I thought that joining TinySeed, both for the mentorship and for the funding, would allow us to accelerate that. Rob, we’ve for five months into it now. I think it definitely has. We’re growing faster the we were before and the business is absolutely a better business now than it was six months ago.
I think what drew me to it was the people behind it and the opportunities that will allow me professionally and personally to develop but also to put Castos on the map and give us access to resources both financially and mentors and network that I don’t have access to myself, and really at a pretty reasonable cost. I won’t say it’s a cheap cost because it’s not. Giving up a piece of your company is always a big decision and a really super personal one, but I think that the trade-off is really reasonable in this respect.
Rob: I remember you felt a lot about it. You and I had a number of conversations as I did with most of the founders that wound up making into the batch. There were conversations about us feeling people out and there was them feeling us out and saying, “What is this going to be like.” We had an interesting almost conundrum of we were startup, too, and this was our first batch. I think it will be much, much easier. I expected to be much easier with the second batch because it’s just more proven. We have more products market fit now. There are a lot of conversations then.
The other interesting thing is we did start out with a thesis of “I think we’ll fund a lot of founders who will move from nights and weekends to full-time” and if I recall correctly, we funded 10 companies and I think two of them and maybe three went from had a day job to went full-time. Everyone else was already working on it.
Even that hypothesis we had is not entirely accurate. Now, one of them has a small software product that essentially provides him with the full-time income, so he didn’t need to have a day job. Another founding team moved to a cheaper place. They did geo-arbitrage. They moved from the US to a much cheaper and that allowed them to live full-time even though they didn’t have a US full-time income coming in.
There were exception-ish things, but overall, if we haven’t already updated on the website, I think we need to in terms of you figure out really who your best prospects, the people who can use this the most, and message to them.
You said Castos is growing and it’s absolutely in a better position today than it was when it joined TinySeed. Honestly, I haven’t talked a lot about TinySeed on the podcast because I never want the podcast to feel like a sales pitch for anything I’m doing. I would talk about my journey building HitTail, or journey doing MicroConf, or journey of Drip, but I try really hard to keep that balance of I’m not just sitting here pitching what I’m doing.
Actually, I have a couple of people ask me to bring someone on to interview me about what’s going on, not necessarily talk about TinySeed but what’s going on with me, my founder’s journey. I think that can be interesting.
All that said, I haven’t talked to […] about it, but I’m curious. You’ve now been in for almost four months at this point; it’s a third of the accelerator. Without putting you on the spot, is it what you expected in terms of the benefits?
Obviously, there is money, and then there’s the mentorship—our list of mentors is pretty solid—then there’s the office hours themselves of hang-out or kind of the mastermind, the community of it, of being in Slack and being on the weekly calls, then the in-person event, and even the network. Even beyond the mentors if you say, “Hey, I need an intro to somebody.” My network and a lot of the mentor’s network are at your disposal. Has it been what you expected and do you feel like it’s contributed to your success over the past four or five months?
Craig: The money is really nice. I think that a lot of people that take money that have a bootstrapper mindset—Josh from Baremetrics talk about this a lot—they haven’t spent a lot of the money they took, and we haven’t either. We used it as a cushion—it’s a big cushion for me—but we’re not burning hardly any money right now. We’ve hired a lot of full-time person-and-a-half since joining TinySeed. That’s been really nice. It makes me feel good to have a lot of reserves and the business is really sound at this point.
It’s cool that comes through in everything we do because we’re able to take a longer-term approach to building the business, features, marketing approaches and things like that, that we don’t have to worry about making payroll next month or next week because we have money in the bank. Where if things went sideways, we’ll be good for a while. That’s how we are using the money.
The best part really is the network and the community, the difference being the network is with the mentors and the mentor’s networks because we definitely have gone second and third layer with some of the mentors that I’ve talked to and they said, “Hey, if you want to talk to this person, we can intro you over here.” I probably have two or three calls a week with either you and Einar, or a mentor, or a mentor’s friend, or a connection that I’ve made somewhere like that. Then we all, the 10 companies, are in Slack all the time sharing stories. We have a fail whale channel, so sharing our successes and learning opportunities. That’s really great because a lot of us are solo founders.
There’s two founding teams in the cohort, but it gets lonely sometimes out here, especially to have people that are doing exactly the same thing that you’re doing. We’re all building SaaS apps that are less than whatever $50,000 a month. We were all in the same boat pretty much. So, it’s a really homogeneous group. That’s what makes a lot of the discussions really interesting among the founding teams. I think that’s the biggest surprise, though, is that the value of the network of mentors, the support of the other companies, and the founders has been awesome.
I know that we numbered the TinySeed 2019 Slack channel that’s just for us. I know there’ll be a TinySeed 2020 and 2021 stuff that I still will definitely be active in our little part in our channel within the group, just with us and the other 11 people because these are really valuable relationships.
Rob: Awesome. That’s what I would hope to hear from anyone who does become part of the batch. Thanks for the question, Matt. Appreciate that. I hope context was helpful.
Our next question is from Meryl Johnston. She is the founder of Bean Ninjas, which is a pretty well-known productized accounting service. I believe they focus on Xero, but they’re pretty well-known. They’ve sponsored a lot of conferences and Meryl is actually one of the TinySeed mentors. She says, “Hi, Rob. I think it’s a great idea to get Craig back on for another episode to answer questions from the listeners.” Meryl sent a voicemail, so let’s dive into that now.
Meryl: Hi, Rob and Craig. It’s Meryl Johnston here from Bean Ninjas. I’ve got a question for you both. Cool content, by the way. I like the idea of having an interview and then giving listeners the opportunity to ask follow-up questions, which you then answer on a podcast. Going back, understanding is that you started with consulting before you transitioned to products and then software, and that Craig used a productized service business model to then leverage your network and skills, and maybe branding as well, to then going to software.
My transition was also from I went from consulting. I did that for nine months, then created a productized service, and then you see it with been moving into digital products. Based on my own experience, I think there is that when you, in building a skillset, as an entrepreneur while running a service business and in my experience it was a faster way to leave a job and transition to working full-time in their business than if I had created products from day one.
So, my question to you both is, if you were starting from scratch again and is transitioning from a job to running a business, and you didn’t yet have much business, you didn’t have much of the network, and didn’t have a lot of capital behind you, what kind of business would you start? Rob, would it be consulting? And Craig, would it be a productized service?
Rob: That’s a good question. Thanks for that, Meryl. What do you think, Craig? Have you thought about this?
Craig: Yeah, I have pretty strong feelings about this. I think a productized service model or even consulting is a fantastic way to transition out of a day job into running your own business. The reason is, as opposed to software where there’s a ton of time and financial overhead that you need before you can start making any money, you can put up a WordPress site with WooCommerce or Gravity Forms or whatever and start making money literally today.
Justin McGill launched the first version of LeadFuze and this 24-hour challenge to himself. We launched Podcast Motor in maybe a week, and that was because it was my third time ever putting up a WordPress site. We were doing $10,000 a month within a couple of months. You compare that to what a SaaS founder has to do to get that $10,000 a month. It’s like moving planets to get to that kind of MRR for SaaS, especially the first time.
I think that if someone has a skill set or a passion and you can create a productized service around it, you absolutely should do that if you goal is to get out of a day job and into this world. But I think Meryl really nailed it on the head when she said leverage because that’s how I view what we’re doing now.
Rob, you probably see it from consulting to your first software product to what you’re doing now is another form of leverage. I just see that a unit of work I do now in Castos is worth a lot more to the value of the entity than a unit of work that I do into Podcast Motor which is our productized service. I think it’s just because creating a piece of software and a team that supports that is more scalable, probably has better margins, and in some ways is easier to run at a higher level.
I think it’s a fantastic way to start and I think that like Meryl is getting into, getting into a digital or software product is really great because they’re more complicated and if you’ve learned some of the things like marketing, project management, and customer service through a productized service, then you have a really good chance at being successful on software.
Rob: For me, I honestly don’t know. I have an inclination of what I would do, but I think if someone came to me for a blanket advice, I would say, “Look, I had a day job and I want to work for myself. I would say there’s the Robert Kiyosaki levels. I’m not a Poor Dad Rich Dad fan, but I do like this one paradigm he has where it’s like, you’re employed for someone else, then you’re self-employed, which typically is consulting where it’s dollars for hours, then you’re an entrepreneur which is where other people work for you, and as you said, it’s that moment of leverage when you have a whole team, and then it’s investor where you’re no longer running the day-to-day and you’re putting money into other businesses.
So, I would first decide do you just want to recur self in this terms of self-employed or do you want to go as far as to be the entrepreneur and let’s just say to have a product business in this context and then go from there? For me, if I could go back, I wished that I could have kept the day job and had it not just drive me up the wall. I hated my day job. I really, really despised working in a cubicle. I liked some of my co-workers and I didn’t like others. I didn’t like that I couldn’t choose who to work with and I didn’t like that a bunch of the policies seemed just dumb. I didn’t like that we’re forced to write really crappy code a lot of the time.
Our CEO is a sales guy and he would go out and sell something. It would be like, “Hey, we have to ship this in six weeks,” and we’re like, “Yeah, that’s four months of effort.” He’s like, I don’t care. Get it done.” So, then we go get it done and then […] would break because we wrote […] code. Then he’d come down and I was like, “This is dumb. Why isn’t someone smarter here?” That seemed to just be an ongoing thing.
Had I been a little more chill or been able to deal a little better with it or just found jobs that weren’t like that because there are certainly jobs that exist and there are people that are calmer and I would like to say I’m unemployable. I am just not going to be a good employee. But if some is like, “Look. I’m at my day job. I’m making $125,000 or $150,000 as a salesperson or as a developer. I work 40 hours a week, I don’t think about it when I get home, and it doesn’t suck the life out of me,” I would say keep doing that and launch something on the side.
Maybe your first step is consulting. Maybe it is productized consulting like you did, Craig, and like Meryl has done, but maybe it’s a stair step approach. Maybe it’s that WordPress plugin, or you write an ebook, or maybe it’s a Shopify add-on, or any one-time sale product. I definitely went to the consulting route because I wanted to be out of a day job in a hurry and I thought that consulting, to be honest, was the end goal for me originally. I thought that would fix all my woes and as I got out, bill $100–$125 an hour. It’s like, “Oh my gosh, this is great, I’m making more money that I ever had.”
I didn’t dislike it as much as I dislike salaried employment for sure, but it definitely got old after a couple of years. For me, it was about I wasn’t building anything that would last. There is no permanence to it. I didn’t build anything that I owned, I had no equity, and my consulting “firm” was never sellable. I thought to myself, “Am I going to do this for 20 years?” and that didn’t appeal to me.
It’s hard when you’re doing consulting and you’re addicted to the incoming cash. It’s really hard to justify. I could work another hour. I used to be booked 60 hours a week, I would say. I didn’t work that much, but I could have worked that much. So, I would look at it like, “All right. It is Saturday afternoon and I could put in three hours and I could make $375 or I could work on this beach towel website that is doing $200 a month.” It was a very hard transition.
So, for me, going from consulting to products was actually harder than if I had just kept the day job because at the day job, I wouldn’t have had that extra motivation to work more on it. Does that make sense?
Craig: Yeah and I think that’s where consulting and productized services differ. Brian Casel talk about this with Audience Ops. You’re able to take a productized service that has a team that supports it, and systems, and processes, and documentation to—I don’t know—say, run itself, because nothing runs itself. But I spend an hour a day on Podcast Motor right now, maybe two on a bad day or whatever, a good day, and it’s a solid mid six-figure business. You could never do that with consulting because you’re directly trading dollars for hours or hours for dollars. I think that’s the difference.
I agree with all you said, Rob, that most high-leveraged thing you might be able to do is keep your day job because you can just save a bunch of money, maybe, and go buy your way into freedom, you can buy an app. Or you can get experience and something that will then allow you to be successful when you do go out on your own.
I had a sales background before and it’s hugely beneficial to me in the biz world to know how to sell stuff. If you have the opportunity, get into a sales or marketing role where you can learn that side of the business and of the world. I think that might set you up for success. I won’t say more, but it will definitely give you a leg-up versus just going on flailing around and figuring out on your own if you’re able to hold down that day job.
Rob: Yup. I think that if you can learn skill sets either at the day job or as you’re consulting or productized consulting, if you can learn skill sets there that add to your product tool belt—your product marketing, your product sales, your product development, whatever—that’s a big win. That’s something that I found.
Again when I was solo consulting, I had 1–3 clients at any one time, my marketing was my blog, I invoiced using Excel spreadsheets, it was very stripped down, and I didn’t have direct copy, I didn’t learn marketing, I didn’t learn AdWords, I didn’t learn any of that from consulting.
When I look back on my experience, if I had any regrets, is that my salary job. I learned to code for sure, got better at it. So I was already coding before that. That obviously helped me with products. Eventually, you top out and you’re working on different problems than you work if you had a little SaaS website or whatever.
When I transitioned to consulting, I don’t feel like I really learned much that later helped me to translate it into supporting and building a product. Whereas productized services, it sounds like to me from what you’ve said and what I’ve observed that there’s a lot more parallels between that and, say, SaaS. Would you agree with that?
Craig: Everything about it is the same except for the software. It’s marketing, it’s customer service, it’s processes and deliverables, and then SaaS adds on project management of development teams, testing of technology and stuff like that.
Rob: Yup, it really is a nice proxy for that. It’s not just a revenue stream. I already mentioned it in the intro, but if you haven’t already heard Craig’s story, if you go back to episode 459, he tells a story of how he had a day job, launched Podcast Motor which is his productized service, left the day job, and then leveraged that into essentially a WordPress plugin and doing Castos. Not only did it provide revenue, but it provided that whole skill set and the learning curve that you didn’t have to do while you’re communicating with developers and designers, building and supporting a product, and doing all that stuff.
Thanks again for the question, Meryl. I hope that was helpful. Our next question is from Cain about how to run a beta. He references an episode from 2012 where Mike and I talked about running a beta, and he said he’d love to hear a little more on how to select the beta users and figure out beta phases. Any references, similar discussion happen on Matt Wensing’s podcast which is called Out of Beta, not coincidentally I hope, which made me think to look and see what you guys had on this subject.
Craig, I know that you had beta periods with Castos. Talk about that.
Craig: We don’t. No, we don’t have any beta testers or beta functionality in the app.
Rob: Really? Have you never? Were you in beta early on? Or did you just never have a beta?
Craig: No. We just launched.
Rob: I guess to define it so people know, typically I don’t call it beta. I typically call it early access. Beta implies that it is a buggy product and it’s pre-launch. It’s a preview you can use, but beware of the bugs. Typically, we might nuke the data. There’s different agreements and such. Google is famous for having Gmail in beta for five years or something. But betas are, (a) not required, and (b) these days, I would like not to have a buggy product.
When we did Drip, we did early access and we tried to make sure there’s minimal bugs. It wasn’t about testing, it was more about customer development. User experience or fun rather than, “Oh, they clicked on a link and something crashed.”
With that said, I had assumed wrongly, obviously, that you had run a beta with Castos in the early days. So, you just launched straight away.
Craig: Yeah. We just dove head first. I also think there’s two parts to beta. One is before you launch and then the other is beta testing or beta releasing features after you’ve launched. You develop a new feature, you release it to a small cohort of your total user base to let them test it before you go throw it out to the whole world.
We very much would like to do the latter now because we have thousands of users and we don’t want to release something to everybody that could be buggy or whatever. We have extensive unit test and staging environments, and we have testers that run through everything before it goes out the door. But I would still like to take the time to develop feature flags or beta flags for certain users.
I think that if you have an established product, it’s super valuable because you can pick the people that have been around for a long time and you know they really care about you and your product and are going to be there even if you ship something that isn’t the best experience the first time. Those are the perfect beta testers. They’re the people that love what you do no matter what but will give you a lot of latitude if you ship a feature that’s in beta that might be a little rough around the edges.
That’s how I would select those people. You probably know who they are. They’ve been around for a long time, your exchanges with them and support are really positive, they refer other people over to you. Those are the characteristics of what I would consider a good beta user to be and they’re inquisitive, natural, learning people, still go poke around and give you constructive feedback without being overly critical in a non-productive way.
When it comes to beta, that’s the only place I really see a good use for beta. We launched Castos and just launched it. It was not pretty, but it worked. I think we only did it because we tested the hell out of it in staging and had confidence that the product and the market had good alignment because there are other people doing similar things. It’s not like we’re creating a whole new product segment or something like that. That’s why we just launched it.
Rob: And how did that go? How were the results? Because you referenced it was not pretty.
Craig: We had some technical issues with deployment. I think that just happens sometimes. We learn and do things smarter and better now, but that would have happened even if we would have released it as a beta, I think. We would have these issues.
I think people might get hung up on this a little bit and there’s a lot of discussion around this, like when is a launch really a launch, when do you come out of beta, and what does that mean? I think it’s fuzzy, to be honest with you and maybe not super important, like how and where do you draw those lines?
You get the thing out there, have some people use it, make sure it’s not going to break the world, then release it and start getting real, new, fresh customers or trial users so you can see unbiased people using your app. I think that’s the real thing that you want to get to, is how does this person I don’t know and won’t give me that extra leeway, how are they interacting with what I build? Because that’s the real acid test.
How did you guys do both beta period when you were launching Drip and then did you beta release features to certain users?
Rob: Yeah, we did. This is what I would do today. The fact that I’m referring back to Drip doesn’t change […]. This is still […]. The first, let’s say, 10 or 15 customers we let in that weren’t paying yet, they were just on an unlimited free trial and I said, “Look. Once you start really using this and get value out of it, then you pay and I’m just going to monitor it.” So, I would just boomerang emails back to them every 2–3 weeks, checking on their account, touch base with them. It was a very manual process.
Those people knew we were building something new and we said, “Look. We don’t expect it to be buggy and we test the crap out of this stuff. There is a possibility of bugs, but we don’t expect any.” The people were early adopters, obviously, and the way we hand-picked those people was that I looked at people, a lot of them actually either had a dire need for it or they were folks who ran other SaaS apps.
The reason I did that because I knew that they would give helpful, constructive feedback from a product-minded perspective. I had the luxury of folks on the launch list who, when they gave their email, I could tell that they ran another SaaS app. Again, when you have a lay person, they can know a problem that they have, but they’ll often try to propose a solution and that’s not a good solution for you to build into your product.
Having folks like Ruben Gamez from Bidsketch, Jeff Epstein from Ambassador, Brennan Dunn from then Planscope but now with RightMessage, it’s folks who have a pretty good knowledge of that, and then there were some folks that were from ecommerce and there was a couple of bloggers, but they were all folks who I think had good ideas and, as you said, didn’t have a bunch of noise.
That’s the struggle you run into is if you get 15 or 20 people in there and they’re all have diverse goals—you get a blogger, then you get a photographer, then you get someone who runs ecomm, and you SaaS—they’ll have just wildly different request for you and that starts getting complicated. It starts making it hard to figure out what to do next.
And then really, our beta, I say, truly ran—again it’s called early access—from about July to November. It’s five months long. The reason we did that is we have this big launch list and we were still doing customer development. We hadn’t even proven that we build something people were going to pay for. Podcast hosting existed and you knew that if you build a platform, customers will pay you for it. You just needed a channel. That’s how I would see Castos.
With Drip, we were trying to build something new and I didn’t know if we sent an email to the 3500 person launch list, if everyone would just show up and leave. So, we were pretty cautious about who we let in. Then, we just did 300 people at a time every couple of weeks, let them in, build some features.
That was quite stable during that time. I think we only had one bug that missent email, like double send it to a group or something, which is a big deal. That sucks when you are running an ASP to oversend or to miss a schedule. If someone wants it to send at 11:00 AM and it sends three hours later, that’s a problem. More so than some apps, you have the leeway of it not being mission-critical but any ASP can be that.
It could have been more compressed, for sure. I think that also comes back to Derick and I work 40-hour weeks. If we had worked 70-hour weeks, we probably could have gotten it then in two months, but that was a lifestyle choice. That wasn’t the time when I was going to work long hours. That’s not totally on-topic with beta, but that is how we ran it.
To your other point, you said you beta test features. The answer is yes, we have feature flags from the start where we could just ship something and I’m trying to think about split testing or even automation and such, and it was just a checkbox. In the admin panel we would open it up for three four early access folks, send them an email, “Hey, you have this. Check it out. You want to test it.” Get feedback, iterate quickly, and then slowly either release it to a few more people if you are still in doubt or at that point, then we’d actually launch the feature to the whole audience.
Do you guys do that as well? Are you able to feature gate to specific users?
Craig: Yeah. We’re able to do that to really just the admins. It’s myself and our lead developer. Basically, both who have podcasts, so we’re able to run stuff on our podcasts. I guess we definitely have beta versions of the plugin. We manage a WordPress plugin called Seriously Simple Podcasting that integrates with Castos and we absolutely run beta versions of that on our live and test sites all the time. I think that’s more important because not like a SaaS app where you can ship it and then if it’s not exactly right just fix it, push new code, and everyone is happy.
With a WordPress plugin, people’s sites can break or their podcasting go down or whatever, so we are ultraconservative with what we ship there. We test beta versions of the plugin for weeks sometimes, just on our live site to make sure everything is cool. That’s another thing to consider. So, if you have a Shopify app or a WordPress plugin or something like that, running a proper beta program there is very important for different reasons than a SaaS app where you push it, if it’s nice […] right, just fix it and push it again. That’s what we do a lot of times and it works.
Rob: So, thanks for the question, Cain, I hope that was helpful. We will answer one more question and this one is about podcast sponsorships. He asked it for Startups for the Rest of Us but it’s cool that you’re on the show because you have your own podcast. He says, “I’m a long-time listener on your podcast and I’ve followed your startup journey over the years. I, myself have worked for several VC-backed startups until about 10 years ago when I got interested in bootstrapped companies and decided to be a marketing consultant for non VC-backed companies.
I was recently looking at podcast sponsorship opportunities and I read your FAQ that you’re not interested in sponsors. I thought to reach out more out of curiosity. Why did you decide to not have ads? I assume doing a podcast is a time-consuming effort and while not all endeavors need to be money-making, I’m curious what the motivation is for why you do the podcast. I figure you want to help other entrepreneurs, but is that it?” and that’s from […].
So, Craig, you run a podcast and you don’t sponsors. Why is that?
Craig: We coach a lot of our clients, particularly on the Podcast Motor side of things on the why you do a podcast. I think around monetizing a podcast, there are two distinct routes you can take. One is directly monetizing your podcast which is ads or now becoming more popular is selling premium subscription so you can charge $5 or $10 a month for access to limited content or something like that. That’s directly monetizing your podcast.
The other way that I would argue and the vast majority of situations is more lucrative and maybe easier is to indirectly monetize your podcast with products, or services, or conferences, or membership sites, which is what you guys do. Most or all of our customers at Podcast Motor, which are a lot of startups and successful entrepreneurs that everyone that listens to this podcast has heard of, that’s what they do. We have very, very few people who monetize their podcasts just through advertising or through this premium subscription memberships that are becoming popular now.
I think the reason is you have to have enormous download volume to make good money through sponsorships. I know you guys have a really successful podcast, Rob, but you wouldn’t make nearly the money that you might through other things that you can do with having a whole bunch of people that are interested in what you’re doing. Then you have a conference or a membership site that people can become a part of if they like what they hear on the podcast.
That’s a really natural way to use content marketing and podcasting is a form of content marketing. That’s what we really like to see and is more successful and easier for people to do. I think that’s why you don’t see a lot of ads in podcasts, especially in our space.
Rob: I would second that. I think that’s a good way to think about it. Mike and I toyed around with sponsorships. Some listeners might recall us making an announcement nine months or a year ago and saying, “Hey, were thinking about this. If you want to sponsor, email in,” and we just never made it that far.
We got a few emails and, to be honest, managing a sponsorship program is quite a lot of work. It’s enterprise sales in a way and you’re going to many conversations, there’s going to be lead times. Then you’re going to need to follow-up on invoice and get paid. Then you need to work on ad copy because most people do not know how to advertise on podcast. Typically, the first ad copy you get is not very good, so then you’re rewriting that.
It’s not as if you’re cashing a check for free. It is an amount of effort, it is another side job for two software entrepreneurs who also run multiple conferences, also have a podcast, and also write books. It’s just one more thing to tack on and it’s always been like how much value will this actually provide? So that’s it. I would never say never. Might we have sponsorships someday? Maybe. I’m not opposed to them. I just want them to be a fit and I want them to be the right choice both for us and for the audience.
To you point about monetizing indirectly, when we started the podcast, I remember we had the Micropreneur Academy already and I remember I viewed it as a way to not only build more credibility but also have a more personal connection to the audience that I was already building on the blog.
To be honest, I really did want to build a community of folks like us because I knew five people who are doing what we’re doing in 2009 when I started writing my book. I could list them in one hand of like, “These are the solo software entrepreneurs,” Every time I would hear about one of them, it’s like, “What? This is just crazy. There are that many people.”
As the blog started going and after I published my book, more people started coming out of the woodwork. The podcast I really view it as an avenue to just get more of us together. Of course, in 2011 it was finally like, “I think we might actually get together in a room,” and our delusions of grandeur of 200 people in a room quickly turned into, “Uh-oh. How are we going to sell enough tickets to fill 105 seats?”
I think the first MicroConf […] be 105 and I had to discount tickets late there, but all of that became more important than making a couple of grand a month. I don’t know how much we’d make if we monetize the podcast, but I just think that other stuff is more important than the platform. I don’t do it to directly monetize. I just never thought of it that way.
I do it for all of these other things and it’s to continue to be a voice in the community, but also to continue making sure that this community of bootstrappers, independent startups, and indie funded startups that this thing keeps moving forward. I’m playing long ball and I believe we have decades and decades of growth, and this is the new frontier. 99% of companies don’t need venture funding and that’s us. So, let’s band together.
I don’t know. I don’t want to get grandiose and act like that I hate it. That’s what I thought from day one because it wasn’t that deliberate, but that’s where I see it now and that’s why I’m spending my focus, instead of doing enterprise sales, asking for invoices, and rewriting ad copy, I’m focusing on the MicroConfs, the TinySeed, the blogging, and all the other stuff to try to push that forward.
Craig: Yeah, the leverage we talked about from Meryl’s question, right? That the podcast is your probably biggest form of reach and you’re able to do a lot of things now with it that you could never do just by making some ad money.
Rob: Yeah, it’s a good point. That’s a good question. Thanks for sending it in, […]. Craig, thanks again. That was super fun. As your first Q&A episode, how did that feel?
Craig: It was great, a lot of fun, really interesting questions, and thanks for having me on. It was a blast.
Rob: Absolutely. So, if folks want to know what you’re up to, they can head to castos.com for your podcast hosting services and @TheCraigHewitt on Twitter, is that right?
Craig: That’s it, yup.
Rob: Awesome. Talk to you again soon.
Craig: Thanks, Rob.
Rob: And if you have a question for the show, whether it’s myself or a guest, leave us a voice mail at (888) 801-9690 or email us an MP3, or an Ogg-Vorbis, or attach a Dropbox link, or even just write your question out in text, old school style, questions@startupsfortherestofus.com.
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