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In this episode of Startups For The Rest Of Us, Rob and Mike revisit their 2019 goals. The guys check in to see if they are on pace with their 2019 goals as well as discuss some other topics including why remote companies grow slower.
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Rob: In this episode of Startups for the Rest of Us, Mike and I revisit our 2019 goals. We pontificate on why remote companies might grow slower than collocated ones and we answer a couple of listener questions. This is Startups for the Rest of Us Episode 441.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
Mike: I know that we’re only a couple of weeks out from MicroConf in Vegas. We are just in the process of selling MicroConf Europe tickets. That will be in the 20th to 22nd of October and it will be in Dubrovnik, Croatia again. Looking forward to that. It’ll be awesome and it’ll be back in the same location and one that has a fantastic view of the ocean.
Rob: Yup. I loved that hotel last year. I’m very much looking forward to that, October 22nd, 23rd, and 24th, is that right?
Mike: I believe so, yes. I have to look at the calendar.
Rob: Yeah.
Mike: That’s hard.
Rob: Go to Eventbrite and they’ll be on sale soon. That’s good. I’ve got to start looking for speakers for that here, soon.
One thing I wanted to throw out that I’ve been thinking about, there’s this book called Mindset. I believe it’s by Carol Dweck. Is that right? I wish there was some device that I could type a name of a book into and figure out who wrote it. But anyway, it’s about having a growth mindset versus a fixed mindset. It’s about expanding your thinking and not being caught up with the same beliefs you had your whole life, as well as just believing that you can get better, and that you can change and do more.
I loved this book when I read it. When trying to instill growth mindsets into our children so they don’t go through life thinking, “Well, this is what I have. I’m like this the whole time and I can’t learn new things. Whatever I believed when I was 10 or whatever was instilled in me can’t change.” I really think that this runs true and there’s a parallel here with successful founders. Successful founders I know have growth mindset. They’re always trying to learn, they’re always trying to get better, and they’re always questioning their beliefs.
There are certain moral beliefs implicit that you probably never shared. There are beliefs that you shouldn’t. There are these other ones like, I remember talking about Split Testing in 2008. People were telling me like, “Oh, that’s tricking people. You’re tricking people.” That’s what internet marketers do and we don’t do that in Startups.
Let’s try and talk about email marketing in 2009–2010. It’s like, “Oh, you’re a spammer.” I’m talking about SEO to market a business. It’s like, “Yeah, it’s just gaming and Google. You should just write great content and you’ll rank.” I feel like those are fixed mindsets. Things like, “Well, this is bad and what I believe is going to hold true forever.” But the folks who are able to embrace those new things, if you’re able to do it quickly, and if you’re able to implement these things and take advantage of them, these are the founders that I see succeeding.
The reason I bring this up is there’s a constant ongoing flux of new ideas coming in and trends that come in and out of the whole startup scene. Part of my talk at MicroConf was about trends that I have observed over the past 14 years of being involved in the scene. One of which, of course, is the changing nature of funding, that being bootstrapped and venture-funded used to be this binary thing and then self-funding is introduced where [00:03:33] bank. That’s a little different than being bootstrapped. There’s taking a $100,000 from friends and family. You don’t have an institutional investor. How different is that?
Then, there’s obviously TinySeed, there’s a [00:03:45], and there’s other players. Technically, yes you took a dollar, so you have now taken funding but it’s not the same as the VC funding of 10, 15, and 20 years ago. It doesn’t come with the same negative things.
Some thoughts I’ve been doing and really going back to first principles of what is bootstrapping about? Is it bootstrapping? The reason that I bootstrap—I would assume for most of us—is we want the freedom to run our own company and we want to have purpose working on something interesting. We want to have healthy relationships with our families, not get a divorce, not never be around our kids. If we could do that, whether we take a little bit of money, don’t take any money, which is totally a viable thing, or take a lot of money or whatever, I guess I’ve always had those three goals, that freedom, purpose, and relationship. I think that funding has traditionally been at odds with those—10–15 years ago it would have been—but in my head, there are more shades of gray than perhaps has been the case in the past.
Mike: Part of those things that you just talked about are the change in definitions or understanding of specific pieces. For example, bootstrapping. What does bootstrapping mean? I think that question has come up a lot more recently because of things like TinySeed and [00:04:57]. What does it mean to be a bootstrapper? If you have a very specific or fixed view of that in your head, then it’s going to impact how you view taking money for your company or somebody else taking money for their company. I don’t think that a lot of those definitions are necessarily static because bootstrapping itself is relatively new. It’s really only become a household word in our circles in the last 10 or 15 years. Our circles didn’t even really exist 10 or 15 years ago.
The landscape itself is changing and those definitions are changing at the same time. It makes it difficult to not adjust with it. You’re going to be left behind if you can’t adjust your definitions or mindset along the way.
Rob: Yeah and that’s the thing. This is something that I’ve struggled with. I’m an engineer. I wrote code for decades. I do think in very binary and I used to think in very black and white terms. I used to be more opinionated, more fixed in my thoughts. The older I get and the more experienced I get, the more I realized that that has been a detriment to me in my career and the things that held me back early on were holding on to these ideals that I truly believed and later found out were not as black and white and not as “true” as I thought they were.
Anyway, that’s it. I’ve been thinking a lot about that and how to continue. It’s all up for me to continue to grow. I ask myself the question, “What things do I believe today that I will look back on five years and think that wasn’t correct or that was holding me back then?”
On a lighter note, did you know you can get a refund for audible books that you don’t like?
Mike: I did not know that.
Rob: This is crazy. Remember how I talked about how I’ve backed 185 kickstarters? The only thing worse than Kickstarter for me is Audible. I believe—I would have to look at the library—we have close to 500 audio books.
Mike: Wow.
Rob: I’ve been a member for nine years. It’s nuts. Granted my kids listen to audio books. Sherry listens to them. We all share the same account. Hundreds and hundreds. That’s how I read. I don’t buy physical books. I really don’t buy books on Kindle. I have a lot of them. But I also will go and just try a book and if I don’t like it—I get two, three, or four chapters in—if it’s not doing for me what I thought it was doing, or if it’s too way academic, or just a crappy book, I bail on it. I’ve always, at least for the past 10 years, valued my time more than the cost of an audio book which runs around, let’s say, $10 with a membership.
I have a bunch of audio books that I haven’t listen to. If they’re good, I listen all the way through, I take notes, and I do all that stuff, but if they’re not, I bail on them. I’ve always hate that cost and I realized the other day, you can go back and just say, “Hey, I didn’t like the book.” I’m sure if you abuse this, they have some repercussions or something if you listen on every book and then return it or whatever, but it’s interesting. It’s buried to find it but I definitely went back. I looked to about a year. I went back and refund maybe seven or eight books that I only got a little bit into. I remember specifically why they were crappy. I got some extra credits and you know what I do with those credits?
Mike: You got more books?
Rob: I even [00:08:10] bought more books. Of course I did, Mike. It’s got a voice, I love the information, and learning new things. I’m listening to books everywhere, on topics anywhere from growing your business to negotiation. I have a book on Leonardo Da Vinci, one on World War II, one about dungeons and dragons, two about dungeons and dragons, I listen to Profit First based on a recommendation from Patrick Folly, and I have something about dealing with challenges mentally and blah-blah-blah. All of those won’t stand up to the scrutiny but I do like having a very plethora of books to be able to listen to based on the mood and goals I have at that time.
Mike: The only thing that shocks me about any of that is that you waited until you got the credit before going and buying more books.
Rob: No. It’s true. I didn’t actually spend all the credit.
Mike: You lied. You lied to thousands of people.
Rob: I did spend several of credits but yeah, I’m kind of backed up. I don’t have a big wish list, but I don’t tend to buy a lot of books until I’m ready. Right when I’m ready to listen to it then I’ll buy one or two more and then go into it. Right now, I’m a little overbought because of this credit glut that I experienced after the refund.
All that said, let’s talk about some 2019 goals. You and I make goals each year. I know they’re varied opinions on goals. I’ve always been a goal-driven person. I find that goals help me focus for the year. Not get shiny object syndrome, not wander off and do other crap because there are always more opportunities that are super interesting than I can ever do. The goals help keep me focused.
I sometimes do re-evaluate goals and say, “You know what? I screwed up when I made that goal in the last year. I shouldn’t do that this year. I should pivot the goal.” These are things that I spend a lot of time thinking about. I’ll try to do it on a retreat to make sure that I spend a day or two thinking about it and I really want to accomplish that in the next year. That’s a high-level thing that I then try to focus on the next 12 months.
With that said, we set some goals back in December. It is now second week of April. We kind of just passed the first quarter of our goals. You had two goals with a bunch of subpoints under that. It might be five or six. I had four goals. Why don’t you talk through your first one and let us know how you’re doing? This is either going to be the walk of shame or a celebratory episode where we can high five each other.
Mike: I think it’s going to be a walk between them because I didn’t exactly have a lot of heads-up on the particular piece of this podcast episode. I did not go back and take a look to see what exactly all these numbers looked like. I can give you a ballpark idea but probably not exact.
In terms of exercise, I know that at least halfway through the first quarter I was ahead, and then it really dropped off the end of the quarter as MicroConf got closer. I think that I’m close to what it should’ve been but I’m not absolutely sure.
Rob: You’re saying that you’re not sure if you’re on track for two times a week?
Mike: I think that it’s close. I mean they’re still a little ahead or a little behind but I’m not too far off. Twice a week would’ve been 25 times by the end of the quarter. I know that I was at least 15 or 20 at one point. There is one point where I was six or eight weeks ahead or something like that. I was doing very well but then as MicroConf got closer, I got busy and I stopped going to the gym. Now that MicroConf is over, I can start going back. I haven’t gone back and actually looked at the numbers. I think I’m on track, but I could be a little ahead or a little behind it. I’m not sure.
Rob: Yeah, give or take. You’re on track, it sounds like. I’m way behind. The winter decimated me. I’ve talked about this in the past. It started getting warm here a couple weeks ago. I actually started exercising. My first goal is three days of exercise a week. We’ve got six or seven inches of snow yesterday. It’s like halfway through April. It’s a train wreck for me so far. This is a good reminder. If I didn’t have this goal, I would just not care. I care because I have this goal. It is something that I need to change and is something that I want to be doing. I don’t enjoy exercises. It’s not something I’ve ever really want to on purpose, but they did something that I need to get motivated for. This is a friendly reminder that I’m walk of shaming with the exercise one and I need to figure out a way to do better with this.
Mike: The second one for my getting my health back on track was having a normal sleep schedule. Part of that involved using my CPAP machine at least five times a week and average usage of at least 6½ hours at night. I can say with absolute certainty that I am actually beating that if not exceeding it in a number of different ways. The app that I use for this only goes back, I think, about 30 days or so. I can get more data then, that if I needed to. But even over the last 30 days, the lowest I have on here is 5½ hours and that’s actually a lower one. Most of the rest of them are six plus. Some of them were highest. One of them on here is 9½. We got 10 hours and 40 minutes on here for one of them. I’m doing well on that one.
Rob: Very nice. My second one is about TinySeed. It’s to build it into the de facto brand when bootstrappers look for early-stage funding. The subpoint for that was first batch of founders chosen and they have a good chance of success, good progress, growth, and all that stuff. That’s by the end of the year.
Yes, I would say I’m on track for these. I think the de facto brand thing comes over time. Maybe it’s not a year but it’s kind of a long-term goal. The first batch of founders are on track. We wanted to have everybody chosen by MicroConf. We didn’t get that done but we are most of the way there. To be honest, the biggest hang up as per usual is legal rather than any actual conversations or phone calls or any of that. It’s just getting everything in, bullet points and the legal docs. I’m feeling good about this. This is my main thing that I’m working on. I would say on track for that.
Mike: My next one was to lose 15 pounds. Do we cue the audience’s laughter here now?
Rob: Not there.
Mike: No. I think after MicroConf, I actually gained eight pounds but then the day after or two days after, I was back down to a normal weight or whatever. I hadn’t really lost. I think this is all water weight. I really haven’t lost any measurable amount of weight at this point. I’ve got to work on that. I think that’ll go back to the exercise thing.
Rob: My third goal is to not panic when the stock market crashes. I don’t really think that’s happened. I mean it’s been a little up and down but there hasn’t been a crash. I don’t know yet, we’ll see. This one’s a little bit out of my hands but it’s just something nice to be in the back of my mind.
Mike: You can go out and buy a bottle of whiskey so that when it does crash then you can drink the whiskey and hopefully forget about the stock market.
Rob: Yup, indeed.
Mike: My next one was to have more regular and in-person social contact. I would say that I’m actually succeeding there. Still meeting up with a bunch of people once a week. Obviously, there is a massive injection of social contact at MicroConf, but yeah, I’m still meeting up with people. I wouldn’t say that this is in-person social contact, but I’m also meeting up with a group of people online, usually on Saturday evenings. But we’re going to take a break for a couple of weeks, then startup back again in May. It should be good.
Rob: Very nice. My fourth and final goal is to write or rewrite a book. I have not started on this nor I thought about it. It’s been because of MicroConf and TinySeed all happening here at the first of the year. I’m not on track to do this because I haven’t started it and it hasn’t been on my radar. I want to see once we get the batch chosen, we get things rolling, I want to see how my time works out and if I’m able to do this. As I said when we set this for the first time, writing another book aligns with the main thing I’m doing because writing another book about startups didn’t align with growing Drip. It didn’t align with growing HitTail but it does align with TinySeed. I have more of a reason or an excuse because I really want to do it. There’s more of an excuse to do it. I just got to figure out if I can carve out the time.
One thing that’ll hopefully help with that is, we actually just announced that we hired a program manager with TinySeed who’s going to help in the accelerator because there’s so much work to do. We hired Tracy Osborne formerly of Wedding Lovely. She’s spoke at MicroConf in 2016, did really good talk there. I’ve been a longtime fan and we’ve kept in touch. It just worked out really well for her to come and join us. She’s a developer, a designer, she’s written several books on design, and I believe in some development as well. She’s a public speaker. She’s got a lot of chops. I’m stoked to be working with her on this. That should help achieve, hopefully, a few of the goals on this list in terms of freeing up time, hopefully, for me to do something with the book as well as helping us grow TinySeed into that brand I was talking about.
Mike: Congratulations. It’ll be great to have her around.
Rob: Indeed.
Mike: My last one on here was for Bluetick. It was to establish attraction and move on to something else. The comments I had on here was that it’s fuzzy, not exactly what it should been, whether it should be revenue-target or customer-based. For this, I would say it has meandered the past couple of months. It’s probably largely for the same reasons that you have not gotten around to writing a book was because of MicroConf.
It was about a week or two before MicroConf. I was sitting down and working on stuff. I realized that basically the first three months of this year were basically taken up by MicroConf. I did very little else. It got me thinking about how much of my time is actually spent working Bluetick. My current estimate is between 30% and 40% of my time throughout the course of the year is spent working on Bluetick, whereas I previously thought it was closer to 100%. That’s totally not the case. It changes things in my mind more than anything else, but it’s just a perception or a recognition, I’ll say that I’m not really working on it full time. I’m working on it about a third of the time. That would probably explain how it meanders a little bit and how I’m not getting as much done on it sometimes than I feel like I should be.
Rob: That makes it tough. It’s hard to not have that focus. It’s almost like you’re basically working almost nights and weekends on it. You’re kind of doing it as a side project.
Mike: Yeah. That’s really what it is which in part explains why it can meander along if I’m not paying attention to it. It grows when I am. But if I’m only paying attention to it 30% of the time, it’s really not enough to offset turn out of it, to be perfectly honest. I don’t know. I have to give some more thought to that at exactly how to address that particular problem, but I’ll figure something out.
Rob: Indeed. We’ll there were a couple of other things that I want to talk about. We do have a couple of listener questions but something I thought was interesting from Patrick Campbell from ProfitWell spoke at MicroConf a few weeks ago. A couple of the things or slides that he put up that, I believe challenged people’s thinking, were from some research they have done. They have a lot recurring [00:19:44] SaaS companies using ProfitWell and he posted up two different slides. He posted several that agreed with our mindset of, like this one agrees with your internal monologue of how you believe the world to be.
But how about this one? This is from data. This is from 1800 respondents. The slide said, “Remote companies have considerably worst growth and retention than collocated companies.” The room went silent. He’s like, “I know. None of us want to hear this because we’re building remote companies. We want to build remote companies.” How does that make you feel? You instantly question the data. Whereas, seven of these different slides that had statements like this, some were totally in the MicroConf wheelhouse and totally agreed with bootstrapping and all that stuff, others were like this and they’ve challenged our thinking. This one in particular, he had 1800 respondents. The growth was between 21% and 29% slower for remote companies than it was for companies located in the same location.
The other one was companies with founders with a hobby grow slower. This is when the hobby takes 10 hours a week and the study was done four years in a row. It was 2014, 2015, 2016, and 2017. Each year, the growth was 10% or 12% slower with founders with a hobby.
It’s interesting. I want to back these around really quick. I don’t want to dispute the number because he asked these questions. They’re pretty rigorous company, I believe, in terms of data and research. What do you make of them? What are your thoughts on this?
Mike: I thought that the way he positioned these was to let people think about them and understand their default position on what their beliefs were about the data, whether it conflicted with their worldview. I found that more interesting than the actual data itself because I don’t have access to this data directly. It’s not stuff that I look at or actively thinking about. The data itself makes sense to me, but I don’t have anything to dispute it either way.
Remote companies have a worst growth of retention or founders with a hobby grow slower. That intuitively makes sense. The first one, remote companies having a worst growth rate and worst retention rate, I don’t know what he meant by collocated. Does that mean they have an office?
Rob: Just local companies having an office that are not remote.
Mike: I could see that because I think a lot of people have issues working remotely. Some people are just not wired that way. They can’t do it.
Rob: Yeah. I can see that the retention part of it makes a little bit of sense to me. When you’re working remotely, you don’t have as much of a connection to the people whereas if you cut to lunch with folks every day, there is more of that team or family depending on how you couch it. There’s that feel that really is different. I could see that one being causation because obviously, correlation is not causation. That’s where I look at. The fact that remote companies have considerably worst growth, it doesn’t mean that being remote causes worst growth.
Again, I’m not trying to challenge these numbers but I always thinking, most venture-funded companies, the VCs, do not want them to be remote. They frown on remote. I would hypothesize that most remote companies, the majority, are actually bootstrap companies—bootstrap, self-funded, whatever—not venture-backed, anything but venture-backed.
As a guess, I would also say that venture-backed companies tend to grow faster overall than bootstrap or self-funded companies. One, because that’s the mandate. For better or worse, it’s growth at all cost a lot of times. That’s the number one KPI, it’s growth, and that’s not necessarily with folks in our community. Number two, venture-funded companies tend to have just more money at their disposal. They can goose the growth almost; they can force the growth.
That was something that has gone through my head. Perhaps growth is not caused by them being remote but it’s one factor in that.
Mike: It seems to me like you’re trying to justify what those numbers are and kind of fit them into your mental model. I think that was one of the things that I took away from the talk is if there’s data, there’s two ways to approach it. One is this is factual and how do I relate to it? Or you trying to either pick it apart or trying to make sure that it doesn’t conflict with your worldview. I can see both ways on both of them. I think you can as well. But you’re trying to map these things to your mental model of why these things could be true even though you don’t necessarily want to go out and get funding, for example.
Rob: Totally. That’s the thing. Companies with founders with a hobby grow slower. Remote companies grow slower. It’s like, “So what?” When I come back to my values of freedom, purpose, and relationship, the growth is not one of those three core values. I did like having companies that grew in revenue because it led to a certain amount of success. It lends a bunch of things. I can impact more people; I can make more money. It led to more purpose and I can have more impact. There was just a bunch of stuff with it.
But frankly, if I’m going to have a hobby and I’m going to play my guitar, or I’m going to play tabletop games, or my hobby is hanging out with my kids, but I grow slower by 10%, 12%, or 15% a year, I’m actually okay with that. That’s a personal thing of mine.
While these things might say, “Oh my gosh,” it might make you rethink everything. It’s like we’re not in the venture-funded space, so, can we just have profitable businesses? Isn’t it that what Startups for The Rest Of Us and MicroConf our movement, or community, or whatever you want to call it, it’s kind of about it? Is it growth at all cost? It’s nothing we’ve ever espouse.
Frankly, just growth in general is good, it feels good, and it’s a goal. It should be a goal somewhere in your radar but it’s not the number one, end-all-be-all for me or for a lot of people, I think.
Mike: Yeah. Just growing headcount is not the major goal for most people that I know. Whereas you said, if for a VC or a funded company, it kind of is, to be honest. It would make sense that those types of companies would do that. Again, I think that even in just saying that or kind of going that part of the conversation, we’re really drawing attention to the fact that now we’re starting to try to pick apart the data and question, “Is this data accurate?” or, “How good is the data?” That’s exactly what I took away from Patrick’s talk, which was when you see data that conflicts with what you think, consider why that is.
Rob: Yeah. I don’t think it’s what we’re doing here. I wasn’t saying that data’s not correct. I was saying, let’s say this is correct. Am I okay with that? Am I okay with growing a business? Am I okay having a hobby? Yeah. That’s the beauty of being in control of my business is that I can make these decisions.
Mike: Yup. Totally.
Rob: Cool. Listener questions. Let’s dive-in. We have a voicemail from Josh Doody. It’s about metrics rules of thumb for B2C products.
Josh: Hey, Rob and Mike. It’s Josh Doody here, MicroConf attendee frequently. Also, I run my business at fearlesssalarynegotiation.com. I have a question that might be a little bit outside your wheelhouse, but I’d really love to get your perspective on some metrics and things for my business, as people who think about SaaS a lot.
I run a B2C business that has two sides. One side is coaching. That side’s great, I’ve done marketing, it works really well, that’s where I make most of my living. But then, I have a product side of my business that, again, is B2C mostly driven by organic search traffic on Google.
Really, what I’m struggling with is trying to figure out what are good metrics for my business? How do I know if I’m doing well in terms of converting email subscribers to customers, primarily, but even top-of-funnel, converting visitors to email subscribers? I use a sort of typical nurture campaign sales sequence-type funnel in my business.
I’m just curious if you could point me to some resources or other examples of folks who do B2C organic search-driven businesses online? I’m in the career space, salary negotiation, getting rated, and that sort of thing. We’re just really curious if you have any ideas from a SaaS perspective of what a good funnel from search visitors to converted customer at an info product would be? My products range from about $47 for some email templates going up to about $240 for the complete bundle, is what I call it.
Thanks so much for all you do for the Startups for the Rest of Us. Love the podcast, been listening since the beginning, and looking forward to what you guys think. Thanks for your time. Bye.
Rob: Mike, for a question like this, I’d like to take us out to our remote correspondent. He’s a growth expert. He does some B2B, but he does even more B2C. MicroConf speaker, TinySeed mentor, Taylor Hendricksen. Taylor, what are your thoughts for Josh?
Taylor: Hey, Rob and Mike. Thanks for having me on. Josh, thanks for submitting your question.
Before we jump in to the rule of the metrics on B2C products, I’d like to note that it really does differ greatly from business to business and product to product, depending on the few things. The two of the biggest ones being the purchase price, that you’re obviously selling the products for, and what kind of hunger towards the offer there is. Some things that are solved here [00:29:05] would generate much better returns in these metrics than other ones that really don’t have that.
Jumping in, there’s three of the rules of thumbs I’d like to go for in general B2C offers. For onsite opt-in rate for a website visitor using organic to an email opt-in, we like to see conversion rate of about 2%-3%. We see this as low; you could have nothing. Or as high is anywhere from 6%-7% if you have a really great offer dialed-in into that content.
After they are on your email list, a list-to-sale rate, we’ll purchase any of your products, let’s assume you have a 60-90 day sale cycle that you could go to. But a list-to-sale rate we would generally see about 1%-2% rate in there.
Lastly, the value per email subscriber. How much each email subscriber’s worth is around $3-$5 in the first 60-90 day period. That’s the one that differs the most. Depending on this, the financial niches can go up even higher and some of the more hobby niches can go lower.
A way to improve some of those metrics for your current setup, first off, for the opt-in rate, looking through some of your content, some of the content upgrades can definitely be improved, brought to attention more, maybe some more standout design around it. Specifically, it feels like the sour negotiation guide. I thought it was one of the best phrases you ranked for. It could be a tremendous opportunity to send people into that opt-in funnel. The current opt-ins you have were kind of just gray and not really that eye-catching.
How to improve the list of sale? This is something where it sounds like you already got a lot of the core pieces in place with the nurture sequence, the sales sequences, and stuff like that. I haven’t gone through your funnel yet but I’m sure those are pretty good. A way to boost that is to flash sales. It’s something I like to do and hopefully you can generate custom coupons with your setup. I’m not sure SendOwl can, which is the platform you’re using. Other platforms like Ontraport, ActiveCampaign, WooCommerce can do hacks to basically allow you to generate custom coupons for that user that expire in, let’s say, 24 hours. We like to push those. We’ve seen people have engaged maybe the business sales page, but they haven’t purchase yet. That’s one way to cheaply get them over the hump to make a purchase.
Last way to improve your value per email subscriber is after you gone to your main sales sequences, really link that out as long as you can. A good long-term content and an affiliate marketing sequence. After you pitch your products, go through all the good, relevant ones that you’d actually recommend to your audience just to increase that visitor value over time.
Another easy thing to add on that I didn’t see you have, is a push notification list. That’s a really easy thing to plug in. We’re seeing great opt-in rates that are really low friction ways to get that audience out and then you can actually set those automated campaigns to go out over time. Drip out the same content you normally would. Mix it with sales stuff.
In terms of resources to look for, these metrics as well as learning more how to improve those, the biggest one that comes to mind is just DigitalMarketer. Their Customer Value Ascension Journey is a good way to map that. Some of their tactics are a little bit more aggressive in terms of the rule of thumbs. They’ll say $1 per email subscriber per month, especially if you plan financial world, they can achieve this. They’re mailing pretty often and have very aggressive sales tactics within those emails.
I hope this was helpful. Back to you, Rob and Mike.
Rob: Thanks, Taylor, for your onsite commentary. Mike, anything to add?
Mike: No. That was fantastic. That was a great addition.
Rob: I know. This comes back to the whole thing of you and I have certain wheelhouses and experiences, but it’s so cool when we’re able to call on other people in the community.
Mike: Because this isn’t one of them.
Rob: Exactly. I would have had to go and research this. I had some B2C stuff way back in the day, but it was over a decade ago. It’s just not something that we would have. That was awesome for someone who, day-to-day, is doing a lot of B2C stuff. He also does some B2B but he’s one of the folks I know who’s really knee-deep in these stuff. Thanks for the question, Josh. I hope that was helpful. Thanks, Taylor, for chiming in on that.
Other question for the day comes to us from Justin Wolfe from positionhealth.co. He says, “Hey, guys. First off, thanks for the show. Very informative. I have a question about some case studies that we’ve produced for my company, Position Health, which provide real-time notifications whenever people enter or exit medical facilities. Right now, I’ve got a webpage where interested people can fill out a form to request to download the case study by entering their contact info. When people make this request, we sent it to them and add that person as a sales prospect.”
“My question is around indexing for the content in the case study. Right now, the case study isn’t published on our website, but it has lots of good content, and would probably help with making our website more findable in search engines. How would we go about making the case study’s content count towards our website in the SEO sense while still making it available by request only via our email opt-in? Thanks, and keep up the good work.”
What do you think, Mike?
Mike: There’s two things I can think of off the top of my head. The first one would be more related to SEO. I’ll say the second one first which is you could do paid ads for the content. That way, you’re essentially driving people to a landing page and you’re getting their email address. That’s not quite what you’re looking for. I think what you’re looking for is something along the lines of publishing some of the contents or a partial excerpt of it and then providing it as a download if you enter in your email address. Maybe give the title or maybe a brief synopsis of it, and then first couple of paragraphs of it or something like that, or maybe some images from it. They’re a little bit blurred out, so to speak. You can entice people using something like that. You can use excerpts from that content or from that case study around on your website in various places even in other content, use it as a content upgrade, and help capture email addresses using that.
Otherwise, if you are looking to expanding the amount of information that’s on your website, you could post it there as well. I get what you’re trying to do in terms of forcing people to download it. I didn’t mention it on our last podcast except where we talked specifically about case studies. But it’s possible you could get away with posting it for free and publicly to your website, and then also make it available in different places as something that people can just download. You put the content on the site and if you want the downloadable version of it you could say, “Okay, enter in your email address over here.” I don’t know. I have mixed feelings on how that’ll actually even work.
Rob: The last one that you said was the last one I was thinking about was basically if you have a blog or an article section or an essay section, then you put this in there as a text case study. When people land on that, then you say, “Hey, opt-in and get this epically formatted, amazing downloadable PDF thing of this. Plus, an audio version.” Frankly, that’s recording an audio version or something like that is super-fast and easy to do.
If you have just a landing page, whether it’s your homepage, or it’s a squeeze page, or it’s something you’re sending your ads to, and you’re saying, “Hey, I have this great case study and it has great content. Enter your email and download it here,” the odds of someone wandering over and digging through archives of your essays to find this one post that is the same content, is not that likely. That was my initial thought about it. Just offer it in two places as long as it’s not linked to from your header by the same name or linked to in your footer by the same name. It’s more of a section someone has to go to and search from. That’s what Google’s going to want to crawl. If you have these collections of things, then you have this group of content.
If your website is literally a homepage with an opt-in to get the case study, then just this one article off of it, that’s a little weird then. I don’t really know an easy way around that. Frankly, two pages is a thin side anyway. Google is probably not going to rank you for anything. You have to have more built out of that.
Once you get more built out, when you’re at 20, 30, 40 different pages on the site, that becomes easier to put it in the section, then Google index it—assuming they’re indexing your site—and then you rank accordingly.
I wouldn’t be too hung-up since it’s behind an email gate through this route that I can never publish it on my site to this other route because people will find it and then they won’t opt-in their email. It’s such a 5% use case that it wouldn’t be something I’d be particularly concerned about.
Mike: Well, Rob. I think that about wraps this up for today. If you have a question for us, you can call into our voicemail number at 888-801-9690. Or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for full transcript to each episode. Thanks 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 software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
Mike: I know that we’re only a couple of weeks out from MicroConf in Vegas. We are just in the process of selling MicroConf Europe tickets. That will be in the 20th to 22nd of October and it will be in Dubrovnik, Croatia again. Looking forward to that. It’ll be awesome and it’ll be back in the same location and one that has a fantastic view of the ocean.
Rob: Yup. I loved that hotel last year. I’m very much looking forward to that, October 22nd, 23rd, and 24th, is that right?
Mike: I believe so, yes. I have to look at the calendar.
Rob: Yeah.
Mike: That’s hard.
Rob: Go to Eventbrite and they’ll be on sale soon. That’s good. I’ve got to start looking for speakers for that here, soon.
One thing I wanted to throw out that I’ve been thinking about, there’s this book called Mindset. I believe it’s by Carol Dweck. Is that right? I wish there was some device that I could type a name of a book into and figure out who wrote it. But anyway, it’s about having a growth mindset versus a fixed mindset. It’s about expanding your thinking and not being caught up with the same beliefs you had your whole life, as well as just believing that you can get better, and that you can change and do more.
I loved this book when I read it. When trying to instill growth mindsets into our children so they don’t go through life thinking, “Well, this is what I have. I’m like this the whole time and I can’t learn new things. Whatever I believed when I was 10 or whatever was instilled in me can’t change.” I really think that this runs true and there’s a parallel here with successful founders. Successful founders I know have growth mindset. They’re always trying to learn, they’re always trying to get better, and they’re always questioning their beliefs.
There are certain moral beliefs implicit that you probably never shared. There are beliefs that you shouldn’t. There are these other ones like, I remember talking about Split Testing in 2008. People were telling me like, “Oh, that’s tricking people. You’re tricking people.” That’s what internet marketers do and we don’t do that in Startups.
Let’s try and talk about email marketing in 2009–2010. It’s like, “Oh, you’re a spammer.” I’m talking about SEO to market a business. It’s like, “Yeah, it’s just gaming and Google. You should just write great content and you’ll rank.” I feel like those are fixed mindsets. Things like, “Well, this is bad and what I believe is going to hold true forever.” But the folks who are able to embrace those new things, if you’re able to do it quickly, and if you’re able to implement these things and take advantage of them, these are the founders that I see succeeding.
The reason I bring this up is there’s a constant ongoing flux of new ideas coming in and trends that come in and out of the whole startup scene. Part of my talk at MicroConf was about trends that I have observed over the past 14 years of being involved in the scene. One of which, of course, is the changing nature of funding, that being bootstrapped and venture-funded used to be this binary thing and then self-funding is introduced where [00:03:33] bank. That’s a little different than being bootstrapped. There’s taking a $100,000 from friends and family. You don’t have an institutional investor. How different is that?
Then, there’s obviously TinySeed, there’s a [00:03:45], and there’s other players. Technically, yes you took a dollar, so you have now taken funding but it’s not the same as the VC funding of 10, 15, and 20 years ago. It doesn’t come with the same negative things.
Some thoughts I’ve been doing and really going back to first principles of what is bootstrapping about? Is it bootstrapping? The reason that I bootstrap—I would assume for most of us—is we want the freedom to run our own company and we want to have purpose working on something interesting. We want to have healthy relationships with our families, not get a divorce, not never be around our kids. If we could do that, whether we take a little bit of money, don’t take any money, which is totally a viable thing, or take a lot of money or whatever, I guess I’ve always had those three goals, that freedom, purpose, and relationship. I think that funding has traditionally been at odds with those—10–15 years ago it would have been—but in my head, there are more shades of gray than perhaps has been the case in the past.
Mike: Part of those things that you just talked about are the change in definitions or understanding of specific pieces. For example, bootstrapping. What does bootstrapping mean? I think that question has come up a lot more recently because of things like TinySeed and [00:04:57]. What does it mean to be a bootstrapper? If you have a very specific or fixed view of that in your head, then it’s going to impact how you view taking money for your company or somebody else taking money for their company. I don’t think that a lot of those definitions are necessarily static because bootstrapping itself is relatively new. It’s really only become a household word in our circles in the last 10 or 15 years. Our circles didn’t even really exist 10 or 15 years ago.
The landscape itself is changing and those definitions are changing at the same time. It makes it difficult to not adjust with it. You’re going to be left behind if you can’t adjust your definitions or mindset along the way.
Rob: Yeah and that’s the thing. This is something that I’ve struggled with. I’m an engineer. I wrote code for decades. I do think in very binary and I used to think in very black and white terms. I used to be more opinionated, more fixed in my thoughts. The older I get and the more experienced I get, the more I realized that that has been a detriment to me in my career and the things that held me back early on were holding on to these ideals that I truly believed and later found out were not as black and white and not as “true” as I thought they were.
Anyway, that’s it. I’ve been thinking a lot about that and how to continue. It’s all up for me to continue to grow. I ask myself the question, “What things do I believe today that I will look back on five years and think that wasn’t correct or that was holding me back then?”
On a lighter note, did you know you can get a refund for audible books that you don’t like?
Mike: I did not know that.
Rob: This is crazy. Remember how I talked about how I’ve backed 185 kickstarters? The only thing worse than Kickstarter for me is Audible. I believe—I would have to look at the library—we have close to 500 audio books.
Mike: Wow.
Rob: I’ve been a member for nine years. It’s nuts. Granted my kids listen to audio books. Sherry listens to them. We all share the same account. Hundreds and hundreds. That’s how I read. I don’t buy physical books. I really don’t buy books on Kindle. I have a lot of them. But I also will go and just try a book and if I don’t like it—I get two, three, or four chapters in—if it’s not doing for me what I thought it was doing, or if it’s too way academic, or just a crappy book, I bail on it. I’ve always, at least for the past 10 years, valued my time more than the cost of an audio book which runs around, let’s say, $10 with a membership.
I have a bunch of audio books that I haven’t listen to. If they’re good, I listen all the way through, I take notes, and I do all that stuff, but if they’re not, I bail on them. I’ve always hate that cost and I realized the other day, you can go back and just say, “Hey, I didn’t like the book.” I’m sure if you abuse this, they have some repercussions or something if you listen on every book and then return it or whatever, but it’s interesting. It’s buried to find it but I definitely went back. I looked to about a year. I went back and refund maybe seven or eight books that I only got a little bit into. I remember specifically why they were crappy. I got some extra credits and you know what I do with those credits?
Mike: You got more books?
Rob: I even [00:08:10] bought more books. Of course I did, Mike. It’s got a voice, I love the information, and learning new things. I’m listening to books everywhere, on topics anywhere from growing your business to negotiation. I have a book on Leonardo Da Vinci, one on World War II, one about dungeons and dragons, two about dungeons and dragons, I listen to Profit First based on a recommendation from Patrick Folly, and I have something about dealing with challenges mentally and blah-blah-blah. All of those won’t stand up to the scrutiny but I do like having a very plethora of books to be able to listen to based on the mood and goals I have at that time.
Mike: The only thing that shocks me about any of that is that you waited until you got the credit before going and buying more books.
Rob: No. It’s true. I didn’t actually spend all the credit.
Mike: You lied. You lied to thousands of people.
Rob: I did spend several of credits but yeah, I’m kind of backed up. I don’t have a big wish list, but I don’t tend to buy a lot of books until I’m ready. Right when I’m ready to listen to it then I’ll buy one or two more and then go into it. Right now, I’m a little overbought because of this credit glut that I experienced after the refund.
All that said, let’s talk about some 2019 goals. You and I make goals each year. I know they’re varied opinions on goals. I’ve always been a goal-driven person. I find that goals help me focus for the year. Not get shiny object syndrome, not wander off and do other crap because there are always more opportunities that are super interesting than I can ever do. The goals help keep me focused.
I sometimes do re-evaluate goals and say, “You know what? I screwed up when I made that goal in the last year. I shouldn’t do that this year. I should pivot the goal.” These are things that I spend a lot of time thinking about. I’ll try to do it on a retreat to make sure that I spend a day or two thinking about it and I really want to accomplish that in the next year. That’s a high-level thing that I then try to focus on the next 12 months.
With that said, we set some goals back in December. It is now second week of April. We kind of just passed the first quarter of our goals. You had two goals with a bunch of subpoints under that. It might be five or six. I had four goals. Why don’t you talk through your first one and let us know how you’re doing? This is either going to be the walk of shame or a celebratory episode where we can high five each other.
Mike: I think it’s going to be a walk between them because I didn’t exactly have a lot of heads-up on the particular piece of this podcast episode. I did not go back and take a look to see what exactly all these numbers looked like. I can give you a ballpark idea but probably not exact.
In terms of exercise, I know that at least halfway through the first quarter I was ahead, and then it really dropped off the end of the quarter as MicroConf got closer. I think that I’m close to what it should’ve been but I’m not absolutely sure.
Rob: You’re saying that you’re not sure if you’re on track for two times a week?
Mike: I think that it’s close. I mean they’re still a little ahead or a little behind but I’m not too far off. Twice a week would’ve been 25 times by the end of the quarter. I know that I was at least 15 or 20 at one point. There is one point where I was six or eight weeks ahead or something like that. I was doing very well but then as MicroConf got closer, I got busy and I stopped going to the gym. Now that MicroConf is over, I can start going back. I haven’t gone back and actually looked at the numbers. I think I’m on track, but I could be a little ahead or a little behind it. I’m not sure.
Rob: Yeah, give or take. You’re on track, it sounds like. I’m way behind. The winter decimated me. I’ve talked about this in the past. It started getting warm here a couple weeks ago. I actually started exercising. My first goal is three days of exercise a week. We’ve got six or seven inches of snow yesterday. It’s like halfway through April. It’s a train wreck for me so far. This is a good reminder. If I didn’t have this goal, I would just not care. I care because I have this goal. It is something that I need to change and is something that I want to be doing. I don’t enjoy exercises. It’s not something I’ve ever really want to on purpose, but they did something that I need to get motivated for. This is a friendly reminder that I’m walk of shaming with the exercise one and I need to figure out a way to do better with this.
Mike: The second one for my getting my health back on track was having a normal sleep schedule. Part of that involved using my CPAP machine at least five times a week and average usage of at least 6½ hours at night. I can say with absolute certainty that I am actually beating that if not exceeding it in a number of different ways. The app that I use for this only goes back, I think, about 30 days or so. I can get more data then, that if I needed to. But even over the last 30 days, the lowest I have on here is 5½ hours and that’s actually a lower one. Most of the rest of them are six plus. Some of them were highest. One of them on here is 9½. We got 10 hours and 40 minutes on here for one of them. I’m doing well on that one.
Rob: Very nice. My second one is about TinySeed. It’s to build it into the de facto brand when bootstrappers look for early-stage funding. The subpoint for that was first batch of founders chosen and they have a good chance of success, good progress, growth, and all that stuff. That’s by the end of the year.
Yes, I would say I’m on track for these. I think the de facto brand thing comes over time. Maybe it’s not a year but it’s kind of a long-term goal. The first batch of founders are on track. We wanted to have everybody chosen by MicroConf. We didn’t get that done but we are most of the way there. To be honest, the biggest hang up as per usual is legal rather than any actual conversations or phone calls or any of that. It’s just getting everything in, bullet points and the legal docs. I’m feeling good about this. This is my main thing that I’m working on. I would say on track for that.
Mike: My next one was to lose 15 pounds. Do we cue the audience’s laughter here now?
Rob: Not there.
Mike: No. I think after MicroConf, I actually gained eight pounds but then the day after or two days after, I was back down to a normal weight or whatever. I hadn’t really lost. I think this is all water weight. I really haven’t lost any measurable amount of weight at this point. I’ve got to work on that. I think that’ll go back to the exercise thing.
Rob: My third goal is to not panic when the stock market crashes. I don’t really think that’s happened. I mean it’s been a little up and down but there hasn’t been a crash. I don’t know yet, we’ll see. This one’s a little bit out of my hands but it’s just something nice to be in the back of my mind.
Mike: You can go out and buy a bottle of whiskey so that when it does crash then you can drink the whiskey and hopefully forget about the stock market.
Rob: Yup, indeed.
Mike: My next one was to have more regular and in-person social contact. I would say that I’m actually succeeding there. Still meeting up with a bunch of people once a week. Obviously, there is a massive injection of social contact at MicroConf, but yeah, I’m still meeting up with people. I wouldn’t say that this is in-person social contact, but I’m also meeting up with a group of people online, usually on Saturday evenings. But we’re going to take a break for a couple of weeks, then startup back again in May. It should be good.
Rob: Very nice. My fourth and final goal is to write or rewrite a book. I have not started on this nor I thought about it. It’s been because of MicroConf and TinySeed all happening here at the first of the year. I’m not on track to do this because I haven’t started it and it hasn’t been on my radar. I want to see once we get the batch chosen, we get things rolling, I want to see how my time works out and if I’m able to do this. As I said when we set this for the first time, writing another book aligns with the main thing I’m doing because writing another book about startups didn’t align with growing Drip. It didn’t align with growing HitTail but it does align with TinySeed. I have more of a reason or an excuse because I really want to do it. There’s more of an excuse to do it. I just got to figure out if I can carve out the time.
One thing that’ll hopefully help with that is, we actually just announced that we hired a program manager with TinySeed who’s going to help in the accelerator because there’s so much work to do. We hired Tracy Osborne formerly of Wedding Lovely. She’s spoke at MicroConf in 2016, did really good talk there. I’ve been a longtime fan and we’ve kept in touch. It just worked out really well for her to come and join us. She’s a developer, a designer, she’s written several books on design, and I believe in some development as well. She’s a public speaker. She’s got a lot of chops. I’m stoked to be working with her on this. That should help achieve, hopefully, a few of the goals on this list in terms of freeing up time, hopefully, for me to do something with the book as well as helping us grow TinySeed into that brand I was talking about.
Mike: Congratulations. It’ll be great to have her around.
Rob: Indeed.
Mike: My last one on here was for Bluetick. It was to establish attraction and move on to something else. The comments I had on here was that it’s fuzzy, not exactly what it should been, whether it should be revenue-target or customer-based. For this, I would say it has meandered the past couple of months. It’s probably largely for the same reasons that you have not gotten around to writing a book was because of MicroConf.
It was about a week or two before MicroConf. I was sitting down and working on stuff. I realized that basically the first three months of this year were basically taken up by MicroConf. I did very little else. It got me thinking about how much of my time is actually spent working Bluetick. My current estimate is between 30% and 40% of my time throughout the course of the year is spent working on Bluetick, whereas I previously thought it was closer to 100%. That’s totally not the case. It changes things in my mind more than anything else, but it’s just a perception or a recognition, I’ll say that I’m not really working on it full time. I’m working on it about a third of the time. That would probably explain how it meanders a little bit and how I’m not getting as much done on it sometimes than I feel like I should be.
Rob: That makes it tough. It’s hard to not have that focus. It’s almost like you’re basically working almost nights and weekends on it. You’re kind of doing it as a side project.
Mike: Yeah. That’s really what it is which in part explains why it can meander along if I’m not paying attention to it. It grows when I am. But if I’m only paying attention to it 30% of the time, it’s really not enough to offset turn out of it, to be perfectly honest. I don’t know. I have to give some more thought to that at exactly how to address that particular problem, but I’ll figure something out.
Rob: Indeed. We’ll there were a couple of other things that I want to talk about. We do have a couple of listener questions but something I thought was interesting from Patrick Campbell from ProfitWell spoke at MicroConf a few weeks ago. A couple of the things or slides that he put up that, I believe challenged people’s thinking, were from some research they have done. They have a lot recurring [00:19:44] SaaS companies using ProfitWell and he posted up two different slides. He posted several that agreed with our mindset of, like this one agrees with your internal monologue of how you believe the world to be.
But how about this one? This is from data. This is from 1800 respondents. The slide said, “Remote companies have considerably worst growth and retention than collocated companies.” The room went silent. He’s like, “I know. None of us want to hear this because we’re building remote companies. We want to build remote companies.” How does that make you feel? You instantly question the data. Whereas, seven of these different slides that had statements like this, some were totally in the MicroConf wheelhouse and totally agreed with bootstrapping and all that stuff, others were like this and they’ve challenged our thinking. This one in particular, he had 1800 respondents. The growth was between 21% and 29% slower for remote companies than it was for companies located in the same location.
The other one was companies with founders with a hobby grow slower. This is when the hobby takes 10 hours a week and the study was done four years in a row. It was 2014, 2015, 2016, and 2017. Each year, the growth was 10% or 12% slower with founders with a hobby.
It’s interesting. I want to back these around really quick. I don’t want to dispute the number because he asked these questions. They’re pretty rigorous company, I believe, in terms of data and research. What do you make of them? What are your thoughts on this?
Mike: I thought that the way he positioned these was to let people think about them and understand their default position on what their beliefs were about the data, whether it conflicted with their worldview. I found that more interesting than the actual data itself because I don’t have access to this data directly. It’s not stuff that I look at or actively thinking about. The data itself makes sense to me, but I don’t have anything to dispute it either way.
Remote companies have a worst growth of retention or founders with a hobby grow slower. That intuitively makes sense. The first one, remote companies having a worst growth rate and worst retention rate, I don’t know what he meant by collocated. Does that mean they have an office?
Rob: Just local companies having an office that are not remote.
Mike: I could see that because I think a lot of people have issues working remotely. Some people are just not wired that way. They can’t do it.
Rob: Yeah. I can see that the retention part of it makes a little bit of sense to me. When you’re working remotely, you don’t have as much of a connection to the people whereas if you cut to lunch with folks every day, there is more of that team or family depending on how you couch it. There’s that feel that really is different. I could see that one being causation because obviously, correlation is not causation. That’s where I look at. The fact that remote companies have considerably worst growth, it doesn’t mean that being remote causes worst growth.
Again, I’m not trying to challenge these numbers but I always thinking, most venture-funded companies, the VCs, do not want them to be remote. They frown on remote. I would hypothesize that most remote companies, the majority, are actually bootstrap companies—bootstrap, self-funded, whatever—not venture-backed, anything but venture-backed.
As a guess, I would also say that venture-backed companies tend to grow faster overall than bootstrap or self-funded companies. One, because that’s the mandate. For better or worse, it’s growth at all cost a lot of times. That’s the number one KPI, it’s growth, and that’s not necessarily with folks in our community. Number two, venture-funded companies tend to have just more money at their disposal. They can goose the growth almost; they can force the growth.
That was something that has gone through my head. Perhaps growth is not caused by them being remote but it’s one factor in that.
Mike: It seems to me like you’re trying to justify what those numbers are and kind of fit them into your mental model. I think that was one of the things that I took away from the talk is if there’s data, there’s two ways to approach it. One is this is factual and how do I relate to it? Or you trying to either pick it apart or trying to make sure that it doesn’t conflict with your worldview. I can see both ways on both of them. I think you can as well. But you’re trying to map these things to your mental model of why these things could be true even though you don’t necessarily want to go out and get funding, for example.
Rob: Totally. That’s the thing. Companies with founders with a hobby grow slower. Remote companies grow slower. It’s like, “So what?” When I come back to my values of freedom, purpose, and relationship, the growth is not one of those three core values. I did like having companies that grew in revenue because it led to a certain amount of success. It lends a bunch of things. I can impact more people; I can make more money. It led to more purpose and I can have more impact. There was just a bunch of stuff with it.
But frankly, if I’m going to have a hobby and I’m going to play my guitar, or I’m going to play tabletop games, or my hobby is hanging out with my kids, but I grow slower by 10%, 12%, or 15% a year, I’m actually okay with that. That’s a personal thing of mine.
While these things might say, “Oh my gosh,” it might make you rethink everything. It’s like we’re not in the venture-funded space, so, can we just have profitable businesses? Isn’t it that what Startups for The Rest Of Us and MicroConf our movement, or community, or whatever you want to call it, it’s kind of about it? Is it growth at all cost? It’s nothing we’ve ever espouse.
Frankly, just growth in general is good, it feels good, and it’s a goal. It should be a goal somewhere in your radar but it’s not the number one, end-all-be-all for me or for a lot of people, I think.
Mike: Yeah. Just growing headcount is not the major goal for most people that I know. Whereas you said, if for a VC or a funded company, it kind of is, to be honest. It would make sense that those types of companies would do that. Again, I think that even in just saying that or kind of going that part of the conversation, we’re really drawing attention to the fact that now we’re starting to try to pick apart the data and question, “Is this data accurate?” or, “How good is the data?” That’s exactly what I took away from Patrick’s talk, which was when you see data that conflicts with what you think, consider why that is.
Rob: Yeah. I don’t think it’s what we’re doing here. I wasn’t saying that data’s not correct. I was saying, let’s say this is correct. Am I okay with that? Am I okay with growing a business? Am I okay having a hobby? Yeah. That’s the beauty of being in control of my business is that I can make these decisions.
Mike: Yup. Totally.
Rob: Cool. Listener questions. Let’s dive-in. We have a voicemail from Josh Doody. It’s about metrics rules of thumb for B2C products.
Josh: Hey, Rob and Mike. It’s Josh Doody here, MicroConf attendee frequently. Also, I run my business at fearlesssalarynegotiation.com. I have a question that might be a little bit outside your wheelhouse, but I’d really love to get your perspective on some metrics and things for my business, as people who think about SaaS a lot.
I run a B2C business that has two sides. One side is coaching. That side’s great, I’ve done marketing, it works really well, that’s where I make most of my living. But then, I have a product side of my business that, again, is B2C mostly driven by organic search traffic on Google.
Really, what I’m struggling with is trying to figure out what are good metrics for my business? How do I know if I’m doing well in terms of converting email subscribers to customers, primarily, but even top-of-funnel, converting visitors to email subscribers? I use a sort of typical nurture campaign sales sequence-type funnel in my business.
I’m just curious if you could point me to some resources or other examples of folks who do B2C organic search-driven businesses online? I’m in the career space, salary negotiation, getting rated, and that sort of thing. We’re just really curious if you have any ideas from a SaaS perspective of what a good funnel from search visitors to converted customer at an info product would be? My products range from about $47 for some email templates going up to about $240 for the complete bundle, is what I call it.
Thanks so much for all you do for the Startups for the Rest of Us. Love the podcast, been listening since the beginning, and looking forward to what you guys think. Thanks for your time. Bye.
Rob: Mike, for a question like this, I’d like to take us out to our remote correspondent. He’s a growth expert. He does some B2B, but he does even more B2C. MicroConf speaker, TinySeed mentor, Taylor Hendricksen. Taylor, what are your thoughts for Josh?
Taylor: Hey, Rob and Mike. Thanks for having me on. Josh, thanks for submitting your question.
Before we jump in to the rule of the metrics on B2C products, I’d like to note that it really does differ greatly from business to business and product to product, depending on the few things. The two of the biggest ones being the purchase price, that you’re obviously selling the products for, and what kind of hunger towards the offer there is. Some things that are solved here [00:29:05] would generate much better returns in these metrics than other ones that really don’t have that.
Jumping in, there’s three of the rules of thumbs I’d like to go for in general B2C offers. For onsite opt-in rate for a website visitor using organic to an email opt-in, we like to see conversion rate of about 2%-3%. We see this as low; you could have nothing. Or as high is anywhere from 6%-7% if you have a really great offer dialed-in into that content.
After they are on your email list, a list-to-sale rate, we’ll purchase any of your products, let’s assume you have a 60-90 day sale cycle that you could go to. But a list-to-sale rate we would generally see about 1%-2% rate in there.
Lastly, the value per email subscriber. How much each email subscriber’s worth is around $3-$5 in the first 60-90 day period. That’s the one that differs the most. Depending on this, the financial niches can go up even higher and some of the more hobby niches can go lower.
A way to improve some of those metrics for your current setup, first off, for the opt-in rate, looking through some of your content, some of the content upgrades can definitely be improved, brought to attention more, maybe some more standout design around it. Specifically, it feels like the sour negotiation guide. I thought it was one of the best phrases you ranked for. It could be a tremendous opportunity to send people into that opt-in funnel. The current opt-ins you have were kind of just gray and not really that eye-catching.
How to improve the list of sale? This is something where it sounds like you already got a lot of the core pieces in place with the nurture sequence, the sales sequences, and stuff like that. I haven’t gone through your funnel yet but I’m sure those are pretty good. A way to boost that is to flash sales. It’s something I like to do and hopefully you can generate custom coupons with your setup. I’m not sure SendOwl can, which is the platform you’re using. Other platforms like Ontraport, ActiveCampaign, WooCommerce can do hacks to basically allow you to generate custom coupons for that user that expire in, let’s say, 24 hours. We like to push those. We’ve seen people have engaged maybe the business sales page, but they haven’t purchase yet. That’s one way to cheaply get them over the hump to make a purchase.
Last way to improve your value per email subscriber is after you gone to your main sales sequences, really link that out as long as you can. A good long-term content and an affiliate marketing sequence. After you pitch your products, go through all the good, relevant ones that you’d actually recommend to your audience just to increase that visitor value over time.
Another easy thing to add on that I didn’t see you have, is a push notification list. That’s a really easy thing to plug in. We’re seeing great opt-in rates that are really low friction ways to get that audience out and then you can actually set those automated campaigns to go out over time. Drip out the same content you normally would. Mix it with sales stuff.
In terms of resources to look for, these metrics as well as learning more how to improve those, the biggest one that comes to mind is just DigitalMarketer. Their Customer Value Ascension Journey is a good way to map that. Some of their tactics are a little bit more aggressive in terms of the rule of thumbs. They’ll say $1 per email subscriber per month, especially if you plan financial world, they can achieve this. They’re mailing pretty often and have very aggressive sales tactics within those emails.
I hope this was helpful. Back to you, Rob and Mike.
Rob: Thanks, Taylor, for your onsite commentary. Mike, anything to add?
Mike: No. That was fantastic. That was a great addition.
Rob: I know. This comes back to the whole thing of you and I have certain wheelhouses and experiences, but it’s so cool when we’re able to call on other people in the community.
Mike: Because this isn’t one of them.
Rob: Exactly. I would have had to go and research this. I had some B2C stuff way back in the day, but it was over a decade ago. It’s just not something that we would have. That was awesome for someone who, day-to-day, is doing a lot of B2C stuff. He also does some B2B but he’s one of the folks I know who’s really knee-deep in these stuff. Thanks for the question, Josh. I hope that was helpful. Thanks, Taylor, for chiming in on that.
Other question for the day comes to us from Justin Wolfe from positionhealth.co. He says, “Hey, guys. First off, thanks for the show. Very informative. I have a question about some case studies that we’ve produced for my company, Position Health, which provide real-time notifications whenever people enter or exit medical facilities. Right now, I’ve got a webpage where interested people can fill out a form to request to download the case study by entering their contact info. When people make this request, we sent it to them and add that person as a sales prospect.”
“My question is around indexing for the content in the case study. Right now, the case study isn’t published on our website, but it has lots of good content, and would probably help with making our website more findable in search engines. How would we go about making the case study’s content count towards our website in the SEO sense while still making it available by request only via our email opt-in? Thanks, and keep up the good work.”
What do you think, Mike?
Mike: There’s two things I can think of off the top of my head. The first one would be more related to SEO. I’ll say the second one first which is you could do paid ads for the content. That way, you’re essentially driving people to a landing page and you’re getting their email address. That’s not quite what you’re looking for. I think what you’re looking for is something along the lines of publishing some of the contents or a partial excerpt of it and then providing it as a download if you enter in your email address. Maybe give the title or maybe a brief synopsis of it, and then first couple of paragraphs of it or something like that, or maybe some images from it. They’re a little bit blurred out, so to speak. You can entice people using something like that. You can use excerpts from that content or from that case study around on your website in various places even in other content, use it as a content upgrade, and help capture email addresses using that.
Otherwise, if you are looking to expanding the amount of information that’s on your website, you could post it there as well. I get what you’re trying to do in terms of forcing people to download it. I didn’t mention it on our last podcast except where we talked specifically about case studies. But it’s possible you could get away with posting it for free and publicly to your website, and then also make it available in different places as something that people can just download. You put the content on the site and if you want the downloadable version of it you could say, “Okay, enter in your email address over here.” I don’t know. I have mixed feelings on how that’ll actually even work.
Rob: The last one that you said was the last one I was thinking about was basically if you have a blog or an article section or an essay section, then you put this in there as a text case study. When people land on that, then you say, “Hey, opt-in and get this epically formatted, amazing downloadable PDF thing of this. Plus, an audio version.” Frankly, that’s recording an audio version or something like that is super-fast and easy to do.
If you have just a landing page, whether it’s your homepage, or it’s a squeeze page, or it’s something you’re sending your ads to, and you’re saying, “Hey, I have this great case study and it has great content. Enter your email and download it here,” the odds of someone wandering over and digging through archives of your essays to find this one post that is the same content, is not that likely. That was my initial thought about it. Just offer it in two places as long as it’s not linked to from your header by the same name or linked to in your footer by the same name. It’s more of a section someone has to go to and search from. That’s what Google’s going to want to crawl. If you have these collections of things, then you have this group of content.
If your website is literally a homepage with an opt-in to get the case study, then just this one article off of it, that’s a little weird then. I don’t really know an easy way around that. Frankly, two pages is a thin side anyway. Google is probably not going to rank you for anything. You have to have more built out of that.
Once you get more built out, when you’re at 20, 30, 40 different pages on the site, that becomes easier to put it in the section, then Google index it—assuming they’re indexing your site—and then you rank accordingly.
I wouldn’t be too hung-up since it’s behind an email gate through this route that I can never publish it on my site to this other route because people will find it and then they won’t opt-in their email. It’s such a 5% use case that it wouldn’t be something I’d be particularly concerned about.
Mike: Well, Rob. I think that about wraps this up for today. If you have a question for us, you can call into our voicemail number at 888-801-9690. Or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for full transcript to each episode. Thanks for listening and we’ll see you next time.
Episode 440 | How to Build Case Studies That Don’t Suck
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about the process of putting together a case study and reasons why you would do it. They also share some additional thoughts on this years MicroConf and its future.
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Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about how to build case studies that don’t suck. This is Startups for the Rest of Us episode 440.
Welcome to Startups for the Rest of Us, the podcast helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products whether you’re built your first products or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: I’m back from London, sir. MicroConf for a week and then I flew home and the next day flew out to London with my wife and the kids for 9 days, 10 days–it was a long time. It was a long time to be away from home. As much as I’d like being in new places, I find that I’m more productive at home and just being gone for that long with the kids and just being gone for basically two-and-a-half weeks including MicroConf was stressful. It kind of takes the toll on you plus the time change, plus all the stuff.
London was fun. Sheri and I had been there before. The kids have not so we took them around all the fun sites. We watched five-hour play called Harry Potter and the Cursed Child. It had a two-and-a-half-hour intermission, so you get dinner in between the two parts. That was really good though, very well done.
Mike: Wait, was the two-and-a-half-hours inclusive of the play itself?
Rob: No.
Mike: Okay. It was two-and-a-half-hours of play, a two-and-a-half-hour dinner, and then two-and-a-half-hours of play?
Rob: Yep.
Mike: Wow.
Rob: It started at 1:00 in the afternoon and ended at 9:00 PM.
Mike: Wow.
Rob: With a two-and-a-half, three-hour gap in the middle so we went out to dinner. It was quite expensive as well. It was a big expense being there. She’s like, “Do we want to do this?” This is one of those things, it’s getting rave reviews and it’s got Broadway quality play. It’s really pretty cool. J.K Rowling was heavily involved in this. She’s not writing books anymore but she’s now doing movies and this play.
I know when it started that it came out as a book format or in book format—I didn’t read it—but it was basically a play in book format. There was no description, it was all just dialogue, and people didn’t really like it but play itself got rave reviews. My kids loved it. I enjoyed it as well. I was surprised that we all made it through because it’s like 5 ½ hours-ish of sitting in a play is a long time, but I think it’s kind of one of those lifelong experiences of crazy thing to say, “Yeah, we saw it in the first year or two and it was good.” I imagine they’ll make it into a movie at some point and we’ll say, “We like the play better,” because isn’t that what you do? You always like the book or the play better, the pretentiousness of, “I saw it first, […].
Mike: I know. I think that that’s always whichever one you saw first; it happens to be the one that you like.
Rob: Totally.
Mike: It’s nothing else. I saw you were going to London. I was like, “Oh, god.” Because I got back and then I saw some things on Facebook I think, it was like, “Oh, yeah. We’re headed to London,” or something about the play. I’m just like, I cannot imagine getting on the plane after having gone to MicroConf for a full week and then taking the eight-hour flight back and then have to get on another plane.
Rob: It was exhausting. I don’t travel well as it is. I’d tire a lot. Sheri travels really well, I don’t, so it took a toll on me but all in all, I had a good time. It’s good to be back.
In addition, Sheri and I hosted a founder meetup. I had mentioned that on the podcast here and then tweeted it. We got about 30 people who showed up. I had to rent a space. This was kind of a misstep. I was imagining like, “Yeah, we’re getting 10 or 15 people together and we’ll just show-up at a restaurant or I’ll call them in advance and get a back room.” When we did that, I got 57 people who entered their email and contact information. I was like, “This is like an event now. I can’t just show up somewhere.”
It was a mistake because I didn’t want to plan anything. You know what I mean? I then had to get in touch with venues and do all this stuff. Actually, thanks to Stephanie who works for FE International. She actually stepped in. I was talking to Thomas at MicroConf and he recommended connecting me with someone there and she ended up researching venues and handling a lot of that for me but still with a lot of back and forth. Even just trying to get the venue paid, I’m in London and I’m trying to wire them money and bank transfer and of course, it has to text me in order to add a recipient and I don’t have my sim card because I’m in a London sim card. It’s just all that friction and you don’t want to be doing that when you’re sitting there on a bus going to Stonehenge.
Mike: Really? You don’t?
Rob: You don’t. But overall, it was a super good experience. The cool part is when we do that, there’s so many folks who listen to the podcast, or read your book, or follow us on Twitter or whatever, but then they don’t come to MicroConf so you’ve never met them in person. The original goal obviously with MicroConf, as we said, was to get everybody together back in 2011. Just people we knew that we felt like should be talking to one another. But there’s 10, 20, 30x that many people that are out there that have never been to a MicroConf but still are bootstrappers. They still are a part of this community. They still follow the movement and all of that stuff.
That’s where this meetup was cool was that being able to show up. If I’d planned it better, easily today, if I’ve actually emailed the list and promoted it and figured out the dates in advance, I could’ve had 50-75 people there. I have no doubt about it. I think that’s something that could be an interesting thing moving forward although it takes time and effort and such to do, I did enjoy meeting folks that normally we wouldn’t get to meet in the course of the year.
Mike: That’s always cool, to just drop into some place. I mean, I certainly am not the one who don’t want to go around and call the venues and stuff like that because that’s a total pain in the neck. But you’re right, there’s people all over the place that you know through various social media outlets, or through email list, or they bought your book as you said, and you know of them or they know of you. It’d be nice to get together but not everybody has got the flexibility to be able to do that. When you do travel, it’s nice to be able to just get together with people.
Rob: I agree. How about you? What’s been going on in the past week or two?
Mike: Well, I’ve been cleaning up after MicroConf. I’ve also been looking at 4K monitors. Bringing my computer into the 21st century I guess because my monitor is, I think it’s like eight years old at this point. But I’ve got a 30-inch monitor, so I haven’t needed to upgrade it because it’s been fine, but I’ve also got a pair of 20-inch monitors on the side. I’ve kind of been eyeing 4K monitors for a while now.
I was talking to Andrew Culver, who apparently—if people are not familiar or follow him on Twitter—he runs Bullet Train and he’s got a pair of 55-inch LED TVs that he uses. They’re both 4K. He’s got one in front of him and one he uses actually as the top of his desk and he just sits there and works between the two of them which is crazy, like that’s massive amounts of screen real estate but it works for him. I’ve seen pictures of it but I don’t think I would want to go to that level.
Rob: Oh, yeah. That sounds crazy. I’m still using, what do I have, two 24-inch Dell IPS and stuff. It’s probably time for me to revisit that because it definitely has been, I’m thinking it’s probably been about four years, I think since I upgraded my monitors. I actually have a ton of desk space here and so; I don’t know that I could do something that’s that large or that it would benefit me. It’s nice to rethink that every once in a while.
Mike: Most of the ones that I’ve been looking at, they tend to be 27-inch monitors that are 4K. The one I have right now is the 30-inch monitor and it’s 2560×1600 screen resolution. I basically get 50% more screen real estate by going to a 4K and it would be in a smaller area. I just question whether my eyes are good enough to keep on it.
Rob: Yeah, that makes sense. I’ve had some time to reflect on MicroConf this year. We recorded our recap episode when we were there still and you’re in the midst of it and everything. But after talking to more folks and reading their feedback and even just thinking about it over the past week, I realized that this was a less tactical MicroConf than in previous years. I guess I’m speaking specifically about Growth. I think Starter we’re still quite tactical.
It definitely gets hard to find qualified speakers who can speak at the level of Growth who everyone hasn’t heard from a dozen times. It included a diverse line-up of speakers and it’s about tactical things. That’s the challenge and it’s a needle we try thread every year. But yeah, I looked through the list and we had five of the nine Growth talks that should have been fairly tactical. Hanne from Thrive Themes talking about how to handle feature requests. It was Maron talking about hiring, and the Joanna Wiebe talking about copywriting. Taylor Hendricksen talking about SEO and Alli Blum talking about reducing churn through customer feedback.
Typically, I have more marketing talks. I think this year, I struggled. I asked a few other people who would’ve done talks more in line with prior years, but they weren’t available. Unfortunately, Marron had to cancel last minute due to a personal thing that came up. Really, we only had four of our nine talks were tactical and that doesn’t line up with prior years. We’ve tended to do 70%-80% tactical which is the couple of inspirational.
What’s interesting is that we’ve done 18 of these now. Some years, that’s just what happens. It happens because there’d be last minute pivots in a talk or the speaker’s like, “Hey, I just decided to do this other thing.” It’s like, “Cool, let’s do that.” And it changes the line-up. Or one year, we can’t get a bunch of people. Or one year, we’ll get good speakers who have delivered great talks in the past and they just have a bad year; they have a bad talk that doesn’t come across.
What I’ve learned, I think I’ve learned with the first three, four, five MicroConfs we did, I was always ranking them in my head. “Oh, this next one has to be the best one ever.” At certain point, you just can’t all be doing the best one ever. You just have to do the best that you can and hope it turns up. But there’s a bunch of stuff that’s not within our control, frankly. Whether it’s the speaker canceling or just someone showing up and not doing the best talk they’ve ever done, whether it’s someone who you’ve vetted, and they pivot the talk at the last minute.
I think that in my head, I’m pretty careful not to draw trendlines based on one event and say, “Alright, that’s it. Now, MicroConf is different than it always has been. It’s not tactical anymore.” And it’s like, “No, that’s not actually true because the next time, we’re going to double down on the same vision.” We’ve had pretty good consistency through the 18 events but it’s just an observation I made. Again, I heard a couple of people mention it to me and I was kind of like, “Yeah, that’s a good point.” I think that it’ll be different next time. No two MicroConfs are the same.”
Mike: Yeah. You and I have had this conversation before. I think that we had the conversation especially early on after the first two to three years where things were getting progressively better, we’re like, “Okay. How do we top the previous year? How do we make it better? How do we improve?” At a certain point, I think that’s actually detrimental especially when it comes to a conference where there’s so many things that are outside of your control.
What you really need to do is be concentrating on how can I maintain a consistently high-level of quality doing the same thing? Because you’re never going to consistently beat what you did before. You’re not always going to grow your numbers. You’re not always going to have better and better speakers. As you said, some people are going to have an off year here or there or a talk you think is going to go over well just falls flat or something like that. Those things happen and just aiming for consistently high quality I think is the better way to approach it because you’ll maintain your sanity a lot better as well.
Rob: Totally. I mean other examples I realized, again, I was reflecting. I was going through all the talks and thinking, “How are they different than I thought they would be? How is this MicroConf different?” There were more talks that had perhaps a hint of negativity in them. It wasn’t that the whole talk was negativity but during my talk I said, “Look, bootstrapping is getting harder. There’s more money coming into SaaS. It is harder.” Some people are like, “Oh my gosh, it’s just doom and gloom everywhere.” It’s like, “No, it’s not. It’s just a trend that I’m seeing.”
Patrick Campbell mentioned something that were part of his talk was, remote companies don’t grow as fast and have higher churn than co-located companies. We can talk about that probably in a future episode but there were just little tangents of it. Even Gumroad, Sahil’s talk, I’ve never met him, but his talk was more of a downer than I thought it would be and you just don’t know that going in. His story of starting Gumroad and raising the money and failing to become a billion-dollar company, it can come off inspirational, there could be tactics, or it can have undertones of thoughtful introspection.
Or even talking about bootstrapping versus not. This happened to be a year where there were with Chris Savage and Sahil talking about that weren’t necessarily super related to or in the wheelhouse of bootstrapping. Even patio11 having to step in. Maron wasn’t able to do it, patio11 stepped in and talked about what Silicon Valley does and this and that.
Again, one could paint it with a brush and look at it and be like, “Oh well, MicroConf now is about depressing talks that are less tactical and not focused on bootstrapping.” You could say that and it’s not true. No one is saying that, I am definitely just reflecting on this and looking at it, painting it in my head, but I think it’s one experience, one year, does not make a trend. It’s just the way things kind of fall in a given year. Again, it’s because a lot of the things that can be outside of your control that have changed last minute or just the way things fall certain years.
Mike: Your comment about Patrick Campbell’s data points about the companies that are remote growing slower than ones that aren’t, that maybe a general trend or a general conclusion that you could draw but it doesn’t mean that that happens every single time. Because there’s obviously individual situations that fall on one side or the other. Some of them are going to skew the data and some of them are going to stick pretty close to it. It’s more about what your path is as opposed to, “Oh, this trend line over here says this,” or, “This data point I have says X.” Well, a data point in and of itself doesn’t mean a whole lot. There’s a bigger picture that you’re not always looking at.
Rob: Totally. It’s been good. I think when you’re building anything—you’re building software, you’re building a personal brand, or you’re building a conference—you should reflect on it, figure out what went well, what went not so well, and figure out how to build an event or a thing that you’re proud and that brings value to people. That’s how we’ve done that. We’ve done that over and over for the past 18 conferences, so I think it was a good exercise. It was like a mini retreat. I had a lot of time on airplanes over the past two weeks, so I was able to think about this kind of stuff.
With that, what are we talking about today?
Mike: Well, today we’re going to be talking about case studies that don’t suck. I have a bunch of sources that I’ve drawn from and will put those into the show notes. But I want to talk about the process of putting together a case study and why would we even do it.
To start out, what’s the purpose of a case study? You can use case studies in a lot of different ways. But you can use them to drive traffic to your website, you can use them help convert leads, increase sales and the biggest thing that I’ve looked at for case studies is that when you have case study that is fully written out, it’s treated by people as different than if you have a conversation with them and you start relaying facts to them. Because there’s this, I don’t want to say a wall of, “I don’t believe you,” in front of them. But if you have something in a case study and it’s spelled out in black and white, they could look at it, and they can download it and see the data and pick it apart in their head. As opposed to trying to process it on the fly when you’re having the conversations. It feels a little bit more tangible to them.
You can use it as a reference point not just to hand to them but also you can relate back to those data points in conversations that you have during sales calls or demos or just everyday conversation where you point back to it and then say, “Oh well, we have a case study on exactly this. I will send it to you.”
Rob: Yeah. The cool part about case studies is they can function at the top of the funnel like you said to drive traffic, they can function in the middle of the funnel to convert leads, and they can function more towards the bottom of the funnel to convert leads and increase sales. They are very versatile piece of content depending on how they’re written. You can even do different variations of the exact same case study to make it more general and have a broader headline that could go towards top of the funnel or be super specific and just use the same content and tweak it to make it applicable to someone who’s deep in your sales funnel.
I’ve always liked them because they make your customer the hero which, in essence, tries to make your prospect the hero of the story. The prospect is thinking about it can look at it and say, “Well, I want that to be me.” In addition, the versatility to be able to be at all stages of the funnel is a unique aspect of case studies.
Mike: I think that one of the things you just mentioned is you’re positioning those prospects as the hero and that’s one of the reasons why this thing is so effective. It allows you to directly position your product as the best solution for that particular case study and you’ve got claims that are backed by results because you’re documenting them as part of the case study.
All these things combined make it helpful to have those because you can put them in front of somebody and it’s not something that everybody else has. Not every company puts together case studies that they can hand out to their prospects or their soon-to-be customers. And that makes them extremely effective in helping to convert those people into paying customers.
Rob: I think one of the critical things to think about when you’re building a case study is to identify who its targeting, or to be very specific. Oftentimes you’ll see a case study done for each of several market verticals. If your app serves other SaaS apps and WordPress plugins and info marketers, then you could do one case study for each of those three verticals. That could be a start.
If you serve different company sizes, whether they’re horizontal over the verticals, you can do Fortune 500 case study, and then a solopreneur case study, and then an SMB case study. Job titles, job responsibilities, is another one that you can look at. They have to go a bunch of course from the CEO of a small company or the CFO or even the marketing director or whatever. I think that doubling down, figuring out the 80/20 of this, and starting with kind of the one and focusing it on the place you have the most traction with. Like, what’s the job title or responsibility, is it founder, is it CEO, is it CFO, whatever; the company size whether SMB enterprise etc., and the market vertical, and then doing your first one based on that and seeing how it goes I think is how I would start.
Mike: I think the other thing that you mentioned earlier which was the fact that a case study can apply at the top, middle, or the bottom of the funnel, that’s another important thing to keep in mind when you are trying to identify who it is that you’re targeting because you want to know which of those types of people that you are targeting in your sales funnel. Is it somebody who you want to be able to run Facebook ads and promote this case study to? Or is it somebody who’s much closer to being a paying customer and they just need that last little bit of a push, and you can hand them a case study that maps them into the shoes of a current customer that you have who’s being successful with your product.
Once you have that information, you have to find customers who fit that profile and interview them. The very first thing you’re going to want to do is get their permission to use their name, photo, company, logo, things like that as part of a case study. Obviously, they’re going to want to be interested in being the subject of that case study. You want to look specifically who are being successful with your products. You don’t necessarily have to have had them for a long time, but they have to be excited about your product and using it a lot.
A lot of times this can happen when they just signed-on, if you’ve had a sales conversation and you maybe manually onboarded them because it was complicated. They were moving from another product to yours, and you had to do some upgraded or new feature improvements, or something like that, in order to get them over on to using your product. Those people are typically good candidates because they were experiencing pain enough from an existing solution that they were using. It also allows you to position your product against that other product as saying, “Hey, this was a better fit for this type of person and here are the reasons why.”
Rob: From there, you can use an introductory questionnaire in essence whether it’s a Google form or whether it’s just an email with four, five bullets on it. Get someone to give you their initial thoughts, initial feedback and you use that to then construct a deeper set of questions that you would typically ask during a phone interview that you then record. You can either then listen back, turn it out into the case study or you can transcribe it and try to manipulate that. But basically, what we’re talking about here is a do level of interviews. This first one is this short introductory questionnaire that’s typically done via email. What that allows you to do is to make the best use of this person’s time when you jump on the phone and interview for 30-45 minutes.
Mike: And that introductory questionnaire is something that you can inject as part of your marketing automation. When they have paid for the third or fourth time, they made three credit card payments, you can then send them a question that says, “Hey, would you be interested in doing a case study?” And then maybe highlight some of the other ones that you’ve done or if you’re early on, you don’t have a pool of case studies that you’ve done, what you could send them over is an individual email.
Rob: What you’re trying to dig into with all of this is you’re trying to find the through line for their story and then tell that story from start to finish. To be honest, I would look at The Hero’s Journey by Joseph Campbell, and you can just read a summary of that, you don’t have to read the whole book but just figure out what that is. You’ll see a lot of interviews. I actually base a lot of my talk outlines on The Hero’s Journey as much as I can. But it’s basically showing this person where they ended up and then tracing back and walking through the steps that they got to get there.
You want to identify who they are, what they do, what their goals were, what their needs were, what challenges they ran into along the way, how did your product meet these goals and help them get to that next level, helped them go from Mario to Super Mario, in essence, and what were the benefits that they received from your team or from your product or whatever to be able to level-up.
Mike: The most important thing that you want to keep in mind when you’re going through that story and identifying what that through line is to folks almost exclusively on the story. Because it has to resonate with whoever your target prospect is. The brand recognition for the hero of the story matters a lot less than the story itself. If you have a person or a company that you’re highlighting and nobody knows who they are, it doesn’t matter. But what really matters is making sure that the story is going to be relatable to the person who’s reading it because if it isn’t, then case study itself is not going to be nearly as powerful or as effective.
I’ve seen case studies where they’re written for a completely different type of company like an enterprise company. I read the case study and it means absolutely mean nothing to me because my problems are wildly different than that of an enterprise company. But if you have a different case study that is targeted at one or two-person companies then that’s something that resonates a lot better with me. It doesn’t matter to me if I know who the subject of that particular case study is or not.
Rob: Yeah. Story, story, story—those are the first three rules of anything, right? First three rules of starting a podcast, of writing a book—even if it’s a non-fiction book about marketing—having a story in there will […], writing a talk, there’s so many things, a blog post, that story can do and case studies are no different.
Something to think about once you’ve nailed this down, thinking about your formats. There’s a lot of formats you can put a case study into. You could obviously do a video, one. I hesitate when I say that because a, it’s expensive to do high-quality. I think fewer people watch videos than they listen to audio or read written version but if you can do a high-end one—if you could pay a videographer to actually put it together, if you can afford that—they can be pretty cool and they can have a lot of […]. There’s video, there’s PDF, there’s audio, there’s infographics.
The idea is if you can provide it in multiple formats, it’s kind of cool, because you can then take that same content and the content often takes the bulk of the time to produce but then you can rework it and reposition it and send it out in these many ways so that it feels like you have a bunch of case studies but it’s actually just one thing reworked into multiple formats.
Mike: Part of the reason you’d want to do that is just because people like to consume content in different ways. Some people like videos, some people like audios, some people like to read a PDF, other people will glance at an infographic and they’ll sign-up for a mailing list in order to find out more information. But all those things can be used in different capacities and in different channel. You want to make the most use of that content that you generated as you possibly can. The way to do it is using multiple formats.
One thing that we kind of skipped though or we didn’t talk about earlier was the fact that when you’re writing these case stories, try and drill in to find real numbers that you can reference. If you say, “Grew by 100% or 200%,” that’s a lot less meaningful than saying, “Grew by 97%.” That’s kind of a classic marketing technique but the fact is that having real numbers that prospects can reference and can relate to is a huge difference.
If somebody’s getting, let’s say, 10,000 visitors a month to their website and you have a case study where somebody is talking about growing from 9,000 to 17,000 visitors a month, that’s going to be powerful to them. Whereas if that same person reads a case study and it references 180,000 visitors going to 360,000, it’s not as meaningful to them because they can’t relate to it; it doesn’t mean as much. That’s why having those numbers in there helps you to position your case study directly towards the type of person you’re targeting.
And then the last thing is to make sure that you have a place where people can go to get these case studies. It’s not enough to just promote them through various channels or to send them into people when they’re asking for them or to put them into your marketing automation. What you really want to do is make sure that these case studies are available so that if somebody is just browsing through your website and they want to see some of the different case studies, they’re right there. That serves a lot of different purposes, but the bottom line is you want people to be able to see these out if they’re interested in them and then download them whenever they feel like it.
Rob: Of course, the thing that most people forget about and that is should probably be at least half of the work is the promotion. Maybe it should be 80/20 but it’s promotion. You’re going to build this thing; it’s not going to promote itself.
Mike: It’s not?
Rob: It’s not going to promote… Mike, if you have learned nothing in 440 episodes of this, “Build it and they will come,” is not going to work. This is where you have to inject this case study into your sales or your marketing funnel. It can be published on the website at a place where it gets a lot of traffic. You can put it in email welcome sequence. You can put it in an email marketing sequence. But just some way to get this in front of people’s eyeballs. Promote it on social media periodically, if it holds up, if it’s evergreen. If it’s a one-time thing obviously, promote it on social media for a week or two and then let it go.
Getting it out to folks via email really is probably the best way. We know that email engagement is so much higher than other things, but the idea here is to get out in front of people. I’ve heard folks doing the case study running ads to get people to go download or read the case study, is certainly a viable option. That’s a marketing tactic that you’re going to have to spend quite a bit of time honing the funnel and all that stuff but there are lots of ways to get people in front of it. If the case study is well-written, it impacts people, it can lead to people converting. It can have that positive ROI pretty quickly.
Mike: You could even go so far as to put these as a content upgrade on your website in various places throughout your content marketing. If there’s an article that you have about some particular topic and you have a case study that is discussing that topic or challenge that people were having and explicitly walks through how one of your customers was able to overcome it with your product, then that’s a fantastic content upgrade that you can promote inside of that particular blog post.
Rob: We have four sourced articles that you compiled this outline from as well as some of your own magic. We will include those links in our show notes, startupsfortherestofus.com, look for episode 440 if you want to learn more about this topic. With that, we’re wrapped up for the day.
If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes, Stitcher, Overcast, Downcast, Spotify or wherever podcasts are sold, just search for Startups For The Rest Of Us. If you want a full transcript of each episode, you can hit our website startupsfortherestofus.com. thanks for listening, we’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products whether you’re built your first products or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: I’m back from London, sir. MicroConf for a week and then I flew home and the next day flew out to London with my wife and the kids for 9 days, 10 days–it was a long time. It was a long time to be away from home. As much as I’d like being in new places, I find that I’m more productive at home and just being gone for that long with the kids and just being gone for basically two-and-a-half weeks including MicroConf was stressful. It kind of takes the toll on you plus the time change, plus all the stuff.
London was fun. Sheri and I had been there before. The kids have not so we took them around all the fun sites. We watched five-hour play called Harry Potter and the Cursed Child. It had a two-and-a-half-hour intermission, so you get dinner in between the two parts. That was really good though, very well done.
Mike: Wait, was the two-and-a-half-hours inclusive of the play itself?
Rob: No.
Mike: Okay. It was two-and-a-half-hours of play, a two-and-a-half-hour dinner, and then two-and-a-half-hours of play?
Rob: Yep.
Mike: Wow.
Rob: It started at 1:00 in the afternoon and ended at 9:00 PM.
Mike: Wow.
Rob: With a two-and-a-half, three-hour gap in the middle so we went out to dinner. It was quite expensive as well. It was a big expense being there. She’s like, “Do we want to do this?” This is one of those things, it’s getting rave reviews and it’s got Broadway quality play. It’s really pretty cool. J.K Rowling was heavily involved in this. She’s not writing books anymore but she’s now doing movies and this play.
I know when it started that it came out as a book format or in book format—I didn’t read it—but it was basically a play in book format. There was no description, it was all just dialogue, and people didn’t really like it but play itself got rave reviews. My kids loved it. I enjoyed it as well. I was surprised that we all made it through because it’s like 5 ½ hours-ish of sitting in a play is a long time, but I think it’s kind of one of those lifelong experiences of crazy thing to say, “Yeah, we saw it in the first year or two and it was good.” I imagine they’ll make it into a movie at some point and we’ll say, “We like the play better,” because isn’t that what you do? You always like the book or the play better, the pretentiousness of, “I saw it first, […].
Mike: I know. I think that that’s always whichever one you saw first; it happens to be the one that you like.
Rob: Totally.
Mike: It’s nothing else. I saw you were going to London. I was like, “Oh, god.” Because I got back and then I saw some things on Facebook I think, it was like, “Oh, yeah. We’re headed to London,” or something about the play. I’m just like, I cannot imagine getting on the plane after having gone to MicroConf for a full week and then taking the eight-hour flight back and then have to get on another plane.
Rob: It was exhausting. I don’t travel well as it is. I’d tire a lot. Sheri travels really well, I don’t, so it took a toll on me but all in all, I had a good time. It’s good to be back.
In addition, Sheri and I hosted a founder meetup. I had mentioned that on the podcast here and then tweeted it. We got about 30 people who showed up. I had to rent a space. This was kind of a misstep. I was imagining like, “Yeah, we’re getting 10 or 15 people together and we’ll just show-up at a restaurant or I’ll call them in advance and get a back room.” When we did that, I got 57 people who entered their email and contact information. I was like, “This is like an event now. I can’t just show up somewhere.”
It was a mistake because I didn’t want to plan anything. You know what I mean? I then had to get in touch with venues and do all this stuff. Actually, thanks to Stephanie who works for FE International. She actually stepped in. I was talking to Thomas at MicroConf and he recommended connecting me with someone there and she ended up researching venues and handling a lot of that for me but still with a lot of back and forth. Even just trying to get the venue paid, I’m in London and I’m trying to wire them money and bank transfer and of course, it has to text me in order to add a recipient and I don’t have my sim card because I’m in a London sim card. It’s just all that friction and you don’t want to be doing that when you’re sitting there on a bus going to Stonehenge.
Mike: Really? You don’t?
Rob: You don’t. But overall, it was a super good experience. The cool part is when we do that, there’s so many folks who listen to the podcast, or read your book, or follow us on Twitter or whatever, but then they don’t come to MicroConf so you’ve never met them in person. The original goal obviously with MicroConf, as we said, was to get everybody together back in 2011. Just people we knew that we felt like should be talking to one another. But there’s 10, 20, 30x that many people that are out there that have never been to a MicroConf but still are bootstrappers. They still are a part of this community. They still follow the movement and all of that stuff.
That’s where this meetup was cool was that being able to show up. If I’d planned it better, easily today, if I’ve actually emailed the list and promoted it and figured out the dates in advance, I could’ve had 50-75 people there. I have no doubt about it. I think that’s something that could be an interesting thing moving forward although it takes time and effort and such to do, I did enjoy meeting folks that normally we wouldn’t get to meet in the course of the year.
Mike: That’s always cool, to just drop into some place. I mean, I certainly am not the one who don’t want to go around and call the venues and stuff like that because that’s a total pain in the neck. But you’re right, there’s people all over the place that you know through various social media outlets, or through email list, or they bought your book as you said, and you know of them or they know of you. It’d be nice to get together but not everybody has got the flexibility to be able to do that. When you do travel, it’s nice to be able to just get together with people.
Rob: I agree. How about you? What’s been going on in the past week or two?
Mike: Well, I’ve been cleaning up after MicroConf. I’ve also been looking at 4K monitors. Bringing my computer into the 21st century I guess because my monitor is, I think it’s like eight years old at this point. But I’ve got a 30-inch monitor, so I haven’t needed to upgrade it because it’s been fine, but I’ve also got a pair of 20-inch monitors on the side. I’ve kind of been eyeing 4K monitors for a while now.
I was talking to Andrew Culver, who apparently—if people are not familiar or follow him on Twitter—he runs Bullet Train and he’s got a pair of 55-inch LED TVs that he uses. They’re both 4K. He’s got one in front of him and one he uses actually as the top of his desk and he just sits there and works between the two of them which is crazy, like that’s massive amounts of screen real estate but it works for him. I’ve seen pictures of it but I don’t think I would want to go to that level.
Rob: Oh, yeah. That sounds crazy. I’m still using, what do I have, two 24-inch Dell IPS and stuff. It’s probably time for me to revisit that because it definitely has been, I’m thinking it’s probably been about four years, I think since I upgraded my monitors. I actually have a ton of desk space here and so; I don’t know that I could do something that’s that large or that it would benefit me. It’s nice to rethink that every once in a while.
Mike: Most of the ones that I’ve been looking at, they tend to be 27-inch monitors that are 4K. The one I have right now is the 30-inch monitor and it’s 2560×1600 screen resolution. I basically get 50% more screen real estate by going to a 4K and it would be in a smaller area. I just question whether my eyes are good enough to keep on it.
Rob: Yeah, that makes sense. I’ve had some time to reflect on MicroConf this year. We recorded our recap episode when we were there still and you’re in the midst of it and everything. But after talking to more folks and reading their feedback and even just thinking about it over the past week, I realized that this was a less tactical MicroConf than in previous years. I guess I’m speaking specifically about Growth. I think Starter we’re still quite tactical.
It definitely gets hard to find qualified speakers who can speak at the level of Growth who everyone hasn’t heard from a dozen times. It included a diverse line-up of speakers and it’s about tactical things. That’s the challenge and it’s a needle we try thread every year. But yeah, I looked through the list and we had five of the nine Growth talks that should have been fairly tactical. Hanne from Thrive Themes talking about how to handle feature requests. It was Maron talking about hiring, and the Joanna Wiebe talking about copywriting. Taylor Hendricksen talking about SEO and Alli Blum talking about reducing churn through customer feedback.
Typically, I have more marketing talks. I think this year, I struggled. I asked a few other people who would’ve done talks more in line with prior years, but they weren’t available. Unfortunately, Marron had to cancel last minute due to a personal thing that came up. Really, we only had four of our nine talks were tactical and that doesn’t line up with prior years. We’ve tended to do 70%-80% tactical which is the couple of inspirational.
What’s interesting is that we’ve done 18 of these now. Some years, that’s just what happens. It happens because there’d be last minute pivots in a talk or the speaker’s like, “Hey, I just decided to do this other thing.” It’s like, “Cool, let’s do that.” And it changes the line-up. Or one year, we can’t get a bunch of people. Or one year, we’ll get good speakers who have delivered great talks in the past and they just have a bad year; they have a bad talk that doesn’t come across.
What I’ve learned, I think I’ve learned with the first three, four, five MicroConfs we did, I was always ranking them in my head. “Oh, this next one has to be the best one ever.” At certain point, you just can’t all be doing the best one ever. You just have to do the best that you can and hope it turns up. But there’s a bunch of stuff that’s not within our control, frankly. Whether it’s the speaker canceling or just someone showing up and not doing the best talk they’ve ever done, whether it’s someone who you’ve vetted, and they pivot the talk at the last minute.
I think that in my head, I’m pretty careful not to draw trendlines based on one event and say, “Alright, that’s it. Now, MicroConf is different than it always has been. It’s not tactical anymore.” And it’s like, “No, that’s not actually true because the next time, we’re going to double down on the same vision.” We’ve had pretty good consistency through the 18 events but it’s just an observation I made. Again, I heard a couple of people mention it to me and I was kind of like, “Yeah, that’s a good point.” I think that it’ll be different next time. No two MicroConfs are the same.”
Mike: Yeah. You and I have had this conversation before. I think that we had the conversation especially early on after the first two to three years where things were getting progressively better, we’re like, “Okay. How do we top the previous year? How do we make it better? How do we improve?” At a certain point, I think that’s actually detrimental especially when it comes to a conference where there’s so many things that are outside of your control.
What you really need to do is be concentrating on how can I maintain a consistently high-level of quality doing the same thing? Because you’re never going to consistently beat what you did before. You’re not always going to grow your numbers. You’re not always going to have better and better speakers. As you said, some people are going to have an off year here or there or a talk you think is going to go over well just falls flat or something like that. Those things happen and just aiming for consistently high quality I think is the better way to approach it because you’ll maintain your sanity a lot better as well.
Rob: Totally. I mean other examples I realized, again, I was reflecting. I was going through all the talks and thinking, “How are they different than I thought they would be? How is this MicroConf different?” There were more talks that had perhaps a hint of negativity in them. It wasn’t that the whole talk was negativity but during my talk I said, “Look, bootstrapping is getting harder. There’s more money coming into SaaS. It is harder.” Some people are like, “Oh my gosh, it’s just doom and gloom everywhere.” It’s like, “No, it’s not. It’s just a trend that I’m seeing.”
Patrick Campbell mentioned something that were part of his talk was, remote companies don’t grow as fast and have higher churn than co-located companies. We can talk about that probably in a future episode but there were just little tangents of it. Even Gumroad, Sahil’s talk, I’ve never met him, but his talk was more of a downer than I thought it would be and you just don’t know that going in. His story of starting Gumroad and raising the money and failing to become a billion-dollar company, it can come off inspirational, there could be tactics, or it can have undertones of thoughtful introspection.
Or even talking about bootstrapping versus not. This happened to be a year where there were with Chris Savage and Sahil talking about that weren’t necessarily super related to or in the wheelhouse of bootstrapping. Even patio11 having to step in. Maron wasn’t able to do it, patio11 stepped in and talked about what Silicon Valley does and this and that.
Again, one could paint it with a brush and look at it and be like, “Oh well, MicroConf now is about depressing talks that are less tactical and not focused on bootstrapping.” You could say that and it’s not true. No one is saying that, I am definitely just reflecting on this and looking at it, painting it in my head, but I think it’s one experience, one year, does not make a trend. It’s just the way things kind of fall in a given year. Again, it’s because a lot of the things that can be outside of your control that have changed last minute or just the way things fall certain years.
Mike: Your comment about Patrick Campbell’s data points about the companies that are remote growing slower than ones that aren’t, that maybe a general trend or a general conclusion that you could draw but it doesn’t mean that that happens every single time. Because there’s obviously individual situations that fall on one side or the other. Some of them are going to skew the data and some of them are going to stick pretty close to it. It’s more about what your path is as opposed to, “Oh, this trend line over here says this,” or, “This data point I have says X.” Well, a data point in and of itself doesn’t mean a whole lot. There’s a bigger picture that you’re not always looking at.
Rob: Totally. It’s been good. I think when you’re building anything—you’re building software, you’re building a personal brand, or you’re building a conference—you should reflect on it, figure out what went well, what went not so well, and figure out how to build an event or a thing that you’re proud and that brings value to people. That’s how we’ve done that. We’ve done that over and over for the past 18 conferences, so I think it was a good exercise. It was like a mini retreat. I had a lot of time on airplanes over the past two weeks, so I was able to think about this kind of stuff.
With that, what are we talking about today?
Mike: Well, today we’re going to be talking about case studies that don’t suck. I have a bunch of sources that I’ve drawn from and will put those into the show notes. But I want to talk about the process of putting together a case study and why would we even do it.
To start out, what’s the purpose of a case study? You can use case studies in a lot of different ways. But you can use them to drive traffic to your website, you can use them help convert leads, increase sales and the biggest thing that I’ve looked at for case studies is that when you have case study that is fully written out, it’s treated by people as different than if you have a conversation with them and you start relaying facts to them. Because there’s this, I don’t want to say a wall of, “I don’t believe you,” in front of them. But if you have something in a case study and it’s spelled out in black and white, they could look at it, and they can download it and see the data and pick it apart in their head. As opposed to trying to process it on the fly when you’re having the conversations. It feels a little bit more tangible to them.
You can use it as a reference point not just to hand to them but also you can relate back to those data points in conversations that you have during sales calls or demos or just everyday conversation where you point back to it and then say, “Oh well, we have a case study on exactly this. I will send it to you.”
Rob: Yeah. The cool part about case studies is they can function at the top of the funnel like you said to drive traffic, they can function in the middle of the funnel to convert leads, and they can function more towards the bottom of the funnel to convert leads and increase sales. They are very versatile piece of content depending on how they’re written. You can even do different variations of the exact same case study to make it more general and have a broader headline that could go towards top of the funnel or be super specific and just use the same content and tweak it to make it applicable to someone who’s deep in your sales funnel.
I’ve always liked them because they make your customer the hero which, in essence, tries to make your prospect the hero of the story. The prospect is thinking about it can look at it and say, “Well, I want that to be me.” In addition, the versatility to be able to be at all stages of the funnel is a unique aspect of case studies.
Mike: I think that one of the things you just mentioned is you’re positioning those prospects as the hero and that’s one of the reasons why this thing is so effective. It allows you to directly position your product as the best solution for that particular case study and you’ve got claims that are backed by results because you’re documenting them as part of the case study.
All these things combined make it helpful to have those because you can put them in front of somebody and it’s not something that everybody else has. Not every company puts together case studies that they can hand out to their prospects or their soon-to-be customers. And that makes them extremely effective in helping to convert those people into paying customers.
Rob: I think one of the critical things to think about when you’re building a case study is to identify who its targeting, or to be very specific. Oftentimes you’ll see a case study done for each of several market verticals. If your app serves other SaaS apps and WordPress plugins and info marketers, then you could do one case study for each of those three verticals. That could be a start.
If you serve different company sizes, whether they’re horizontal over the verticals, you can do Fortune 500 case study, and then a solopreneur case study, and then an SMB case study. Job titles, job responsibilities, is another one that you can look at. They have to go a bunch of course from the CEO of a small company or the CFO or even the marketing director or whatever. I think that doubling down, figuring out the 80/20 of this, and starting with kind of the one and focusing it on the place you have the most traction with. Like, what’s the job title or responsibility, is it founder, is it CEO, is it CFO, whatever; the company size whether SMB enterprise etc., and the market vertical, and then doing your first one based on that and seeing how it goes I think is how I would start.
Mike: I think the other thing that you mentioned earlier which was the fact that a case study can apply at the top, middle, or the bottom of the funnel, that’s another important thing to keep in mind when you are trying to identify who it is that you’re targeting because you want to know which of those types of people that you are targeting in your sales funnel. Is it somebody who you want to be able to run Facebook ads and promote this case study to? Or is it somebody who’s much closer to being a paying customer and they just need that last little bit of a push, and you can hand them a case study that maps them into the shoes of a current customer that you have who’s being successful with your product.
Once you have that information, you have to find customers who fit that profile and interview them. The very first thing you’re going to want to do is get their permission to use their name, photo, company, logo, things like that as part of a case study. Obviously, they’re going to want to be interested in being the subject of that case study. You want to look specifically who are being successful with your products. You don’t necessarily have to have had them for a long time, but they have to be excited about your product and using it a lot.
A lot of times this can happen when they just signed-on, if you’ve had a sales conversation and you maybe manually onboarded them because it was complicated. They were moving from another product to yours, and you had to do some upgraded or new feature improvements, or something like that, in order to get them over on to using your product. Those people are typically good candidates because they were experiencing pain enough from an existing solution that they were using. It also allows you to position your product against that other product as saying, “Hey, this was a better fit for this type of person and here are the reasons why.”
Rob: From there, you can use an introductory questionnaire in essence whether it’s a Google form or whether it’s just an email with four, five bullets on it. Get someone to give you their initial thoughts, initial feedback and you use that to then construct a deeper set of questions that you would typically ask during a phone interview that you then record. You can either then listen back, turn it out into the case study or you can transcribe it and try to manipulate that. But basically, what we’re talking about here is a do level of interviews. This first one is this short introductory questionnaire that’s typically done via email. What that allows you to do is to make the best use of this person’s time when you jump on the phone and interview for 30-45 minutes.
Mike: And that introductory questionnaire is something that you can inject as part of your marketing automation. When they have paid for the third or fourth time, they made three credit card payments, you can then send them a question that says, “Hey, would you be interested in doing a case study?” And then maybe highlight some of the other ones that you’ve done or if you’re early on, you don’t have a pool of case studies that you’ve done, what you could send them over is an individual email.
Rob: What you’re trying to dig into with all of this is you’re trying to find the through line for their story and then tell that story from start to finish. To be honest, I would look at The Hero’s Journey by Joseph Campbell, and you can just read a summary of that, you don’t have to read the whole book but just figure out what that is. You’ll see a lot of interviews. I actually base a lot of my talk outlines on The Hero’s Journey as much as I can. But it’s basically showing this person where they ended up and then tracing back and walking through the steps that they got to get there.
You want to identify who they are, what they do, what their goals were, what their needs were, what challenges they ran into along the way, how did your product meet these goals and help them get to that next level, helped them go from Mario to Super Mario, in essence, and what were the benefits that they received from your team or from your product or whatever to be able to level-up.
Mike: The most important thing that you want to keep in mind when you’re going through that story and identifying what that through line is to folks almost exclusively on the story. Because it has to resonate with whoever your target prospect is. The brand recognition for the hero of the story matters a lot less than the story itself. If you have a person or a company that you’re highlighting and nobody knows who they are, it doesn’t matter. But what really matters is making sure that the story is going to be relatable to the person who’s reading it because if it isn’t, then case study itself is not going to be nearly as powerful or as effective.
I’ve seen case studies where they’re written for a completely different type of company like an enterprise company. I read the case study and it means absolutely mean nothing to me because my problems are wildly different than that of an enterprise company. But if you have a different case study that is targeted at one or two-person companies then that’s something that resonates a lot better with me. It doesn’t matter to me if I know who the subject of that particular case study is or not.
Rob: Yeah. Story, story, story—those are the first three rules of anything, right? First three rules of starting a podcast, of writing a book—even if it’s a non-fiction book about marketing—having a story in there will […], writing a talk, there’s so many things, a blog post, that story can do and case studies are no different.
Something to think about once you’ve nailed this down, thinking about your formats. There’s a lot of formats you can put a case study into. You could obviously do a video, one. I hesitate when I say that because a, it’s expensive to do high-quality. I think fewer people watch videos than they listen to audio or read written version but if you can do a high-end one—if you could pay a videographer to actually put it together, if you can afford that—they can be pretty cool and they can have a lot of […]. There’s video, there’s PDF, there’s audio, there’s infographics.
The idea is if you can provide it in multiple formats, it’s kind of cool, because you can then take that same content and the content often takes the bulk of the time to produce but then you can rework it and reposition it and send it out in these many ways so that it feels like you have a bunch of case studies but it’s actually just one thing reworked into multiple formats.
Mike: Part of the reason you’d want to do that is just because people like to consume content in different ways. Some people like videos, some people like audios, some people like to read a PDF, other people will glance at an infographic and they’ll sign-up for a mailing list in order to find out more information. But all those things can be used in different capacities and in different channel. You want to make the most use of that content that you generated as you possibly can. The way to do it is using multiple formats.
One thing that we kind of skipped though or we didn’t talk about earlier was the fact that when you’re writing these case stories, try and drill in to find real numbers that you can reference. If you say, “Grew by 100% or 200%,” that’s a lot less meaningful than saying, “Grew by 97%.” That’s kind of a classic marketing technique but the fact is that having real numbers that prospects can reference and can relate to is a huge difference.
If somebody’s getting, let’s say, 10,000 visitors a month to their website and you have a case study where somebody is talking about growing from 9,000 to 17,000 visitors a month, that’s going to be powerful to them. Whereas if that same person reads a case study and it references 180,000 visitors going to 360,000, it’s not as meaningful to them because they can’t relate to it; it doesn’t mean as much. That’s why having those numbers in there helps you to position your case study directly towards the type of person you’re targeting.
And then the last thing is to make sure that you have a place where people can go to get these case studies. It’s not enough to just promote them through various channels or to send them into people when they’re asking for them or to put them into your marketing automation. What you really want to do is make sure that these case studies are available so that if somebody is just browsing through your website and they want to see some of the different case studies, they’re right there. That serves a lot of different purposes, but the bottom line is you want people to be able to see these out if they’re interested in them and then download them whenever they feel like it.
Rob: Of course, the thing that most people forget about and that is should probably be at least half of the work is the promotion. Maybe it should be 80/20 but it’s promotion. You’re going to build this thing; it’s not going to promote itself.
Mike: It’s not?
Rob: It’s not going to promote… Mike, if you have learned nothing in 440 episodes of this, “Build it and they will come,” is not going to work. This is where you have to inject this case study into your sales or your marketing funnel. It can be published on the website at a place where it gets a lot of traffic. You can put it in email welcome sequence. You can put it in an email marketing sequence. But just some way to get this in front of people’s eyeballs. Promote it on social media periodically, if it holds up, if it’s evergreen. If it’s a one-time thing obviously, promote it on social media for a week or two and then let it go.
Getting it out to folks via email really is probably the best way. We know that email engagement is so much higher than other things, but the idea here is to get out in front of people. I’ve heard folks doing the case study running ads to get people to go download or read the case study, is certainly a viable option. That’s a marketing tactic that you’re going to have to spend quite a bit of time honing the funnel and all that stuff but there are lots of ways to get people in front of it. If the case study is well-written, it impacts people, it can lead to people converting. It can have that positive ROI pretty quickly.
Mike: You could even go so far as to put these as a content upgrade on your website in various places throughout your content marketing. If there’s an article that you have about some particular topic and you have a case study that is discussing that topic or challenge that people were having and explicitly walks through how one of your customers was able to overcome it with your product, then that’s a fantastic content upgrade that you can promote inside of that particular blog post.
Rob: We have four sourced articles that you compiled this outline from as well as some of your own magic. We will include those links in our show notes, startupsfortherestofus.com, look for episode 440 if you want to learn more about this topic. With that, we’re wrapped up for the day.
If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes, Stitcher, Overcast, Downcast, Spotify or wherever podcasts are sold, just search for Startups For The Rest Of Us. If you want a full transcript of each episode, you can hit our website startupsfortherestofus.com. thanks for listening, we’ll see you next time.
Episode 439 | 9 Key Takeaways from MicroConf 2019
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Show Note
In this episode of Startups For The Rest Of Us, Rob and Mike talk about their 9 key takeaways from MicroConf 2019. They give a brief synopsis of some of the talks from both starter and growth edition.
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Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about nine key takeaways from MicroConf 2019. This is Startups For The Rest Of Us episode 439.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re going to share our experiences to help you avoid the same mistakes we’ve made. We’re in this week, man? You sound a little tired.
Mike: It’s mostly the voice, it’s just a little scratchy. I am a little tired, but it could be worse. I mean after seven days in Vegas, that will do it to you.
Rob: That’s the thing, right? Normally, we record this MicroConf recap episode the week after or at least a day or two after MicroConf and this year due to my travel schedule, I’m heading to London in a couple of days. We basically have been in Vegas for six and seven days respectively, and voices are shut, and all the things. Hopefully, it will go well. Aren’t we also both drinking rye whiskey right now?
Mike: Yes, it’s a WhistlePig rye, it’s called WhistlePig, but it’s a rye whiskey. It’s quite nice. They make it up in Vermont.
Rob: It’s very nice. This will be a fun episode. We have some takeaways that I pulled away from Starter and Growth, let’s see how many we can get through. What’s new with you in terms of the past week hanging out here at MicroConf?
Mike: One thing I noticed that was sort of a recurring theme was I saw people increasing their prices all over the place which was kind of interesting there. I was sitting outside while Starter edition was happening, and there’s some group of people around the table and one of them had been convinced to double his prices on the spot. They basically made him open up his laptop, change the pricing on his website, and then shut down his laptop. It was pretty cool.
Rob: There was someone else that did that. Someone 12xd their pricing. They were obviously priced quite a bit too low and they said that sales continued to come in after doing that. I heard a rumor, you may confirm or deny, that Bluetick’s pricing might be rising soon.
Mike: Yes, it will be going up in the very near future. Actually, probably by the time this podcast goes live, prices will be tripling.
Rob: That’s the way to do it.
Mike: We’ll see what happens. It’s an experiment like anything else, but that’s what you want to know is that price too high or is it not.
Rob: For me, obviously, I had a great week here. It’s super inspiring to see up and coming entrepreneurs, successful entrepreneurs, and have my laptop charger fail in the middle of the conference. Luis run the conference off our laptops and in this case, we did not, but it was a trip. I have a new MacBook and so I needed the USBC charger and not many people have one. The brick died, the cables all worked. I was like begging, stealing, and borrowing […] at the conference to keep my laptop charged.
Mike: I thought that was funny that of all the things that you had more than one of, the one thing you didn’t was the actual brick itself.
Rob: That’s the thing. I literally have extra this cable, extra that cable. I have two things of ChapStick, I have two or three phone, and iPad chargers. I carry multiples of everything, but I don’t bring an extra brick because it’s the heaviest piece, and I’ve never had one go out on me before just at the time when I needed it, it was kind of funny.
Mike: Actually, I love this, I just saw on Twitter that there is a photo proof of you sitting down on the job while I do all the work.
Rob: That’s fast. I’ll go look for that. You have this whole list of things to do at the end of the conference and I didn’t really know. They’re normally passing back and forth and I just kind of hang out. It was like Tom Sawyer in full effect. MicroConf is a conference you and I started in 2011. It’s for self-funded founders and now, even some not so self-funded founders with the kind of rise of folks like CartHook and LeadFuze who take small rounds of funding, but it’s bootstrappers at heart.
We split the conference three years ago. This week, we ran back-to-back conferences. Monday-Tuesday is MicroConf Growth. We had around, I believe 265 on total attendees including speaker sponsors attendees. At Starter which was the three days following Wednesday, Thursday, 180 people, […] at least this year and last year at the Tropicana in Las Vegas. I think a goal that we made while we were here is to do it somewhere other than Las Vegas next year.
Mike: That would be quite nice, I think.
Rob: We have tried to do that many times and every time, it winds up being so expensive to move out of here. That’s kind of the trap of Vegas, is it’s relatively easy to get to, and the hotel, and that the venue, and the rooms, like just everything is not that expensive, and it’s like less than a 10-minute drive from the airport, it’s all these things that make it, I don’t know, it’s seductive. Because if you look at San Diego, for example, it’s more expensive and it’s a 45-minute drive from the airport to a hotel. I think I’m at the point where I’m just kind of ready to pony up and realize it’s not going have all the pros at Vegas, but we will give up the con, which is it in Las Vegas.
Mike: It’s in Vegas, yes.
Rob: It’s like dry here. I don’t know how you feel. You can tell by our voices, they’re not usual perky Startups For The Rest Of Us, Rob and Mike today.
Mike: Yup.
Rob: We have nine takeaways, give or take. We might want to put eight or ten, but takeaways from MicroConf, we’re going to look at both. Growth and Starter, we obviously don’t have time to go through every talk. I believe we had 19 sessions, 19 speakers, our Q&A folks, not including the 12 attendee talks, so 31 talks. Of course, we couldn’t possibly cover those in a podcast episode. If you’re interested in seeing an awesome recap in writing, written by Christian Genco, it’s microconfrecap.com. You can go there and see his notes of all the sessions.
For now, let’s dive into our first talk of the entire conference. It was Chris Savage, co-founder of Wistia. The takeaway I took away from Chris was, know what you’re getting into when raising funding. It’s interesting because you could have watched his talk and thought about funding is bad, but I don’t think that’s the message. It was that they didn’t think it through when they raised their funding. The talk title was, How an Offer to Sell Inspired Us to Take On $17 Million In Debt. Wistia, they blogged about it as well, is that they raise funding because it just seemed like the right thing to do. They followed the typical venture path, they actually had pretty high expenses because they are video hosting, obviously, and they weren’t really aware bootstrapping what I understand, so they raise multiple rounds.
At certain point, they got an offer to sell Wistia, but they really thought it over, and agonized, and said, “If we sold it, we would probably start another Wistia. This is really the space we want to be in. We don’t necessarily want to exit this.” But once they realized that, they realized they had a responsibility to their investors of, “Look, if we never sell, how do they get a return?” Now, one thing he never thought about pulling dividends out, but I think they’re probably a C-Corp, and frankly, their investors probably didn’t want that. I guess that’s been a thing lately with alternative funding, the Indie.vc and TinySeed is that from the start or set up that if you wanted to just do dividends, and run it, and not sell it, works; if you decide to sell it works. That’s the optionality I don’t feel like Wistia had.
Mike: Yeah, I think you’re take on this is a little different than mine, where you had said that, you know what you’re getting into, when raising funding. I took it more as a revelation on their part that they realized after a while, after they take in the funding, and obviously, well after that because—I think they funded it in 2008 or 2009, well after that, things changed, and they decided that they wanted something different.
Because of that change, because of the way that they view things was different, the original path no longer suited them. They had to look for ways to change that. That’s how I interpreted it, but I can definitely see how there’s probably three or four different ways that his talk could be interpreted. I don’t think any of them are bad, it’s just that whatever lessons you take away from it, I think you’re going to be great. It was a fantastic talk, it was well put together. I do think that the story of what they went through and how they got there is just interesting in and of itself.
Rob: I would agree. I mean, to be honest Chris Savage was kind of a long time aspiration of mine to get to MicroConf, so it was super cool to have him here this year. Our second session, was, it wasn’t a talk, it was Q&A with Jason Fried. I felt like the takeaway from there was know what you’re good at and make sure to double down on that. What’s interesting is already, we have some ratings and reviews and such coming in because we sent a survey out at the end of the conference. Typically, Q&A sessions are ranked in the middle, they’re not at the top, they’re at the bottom, sometimes they’re at the bottom depending, but Jason Fried is probably the highest rated Q&A session we’ve ever had.
I think that his authenticity, and kind of just his honesty really came out. He answered some pretty fascinating questions about Basecamp, about what it was like to get started about why he grew so fast. I mean at one point, I asked him why did it grow so fast and he said, “We don’t know.” That’s awesome, like, “Thank you for saying that, and not acting like it was that you were super smart, and that you knew what you were doing.” He’s just like, “Yeah.” At a certain point, he said, “We got a little lucky, we had some good timing, and we did some things right as well.” I was like, “That is fantastic assessment.”
Mike: I think that’s the position of a lot of successful people are in. One thing that had come up during the Q&A was that the fact that Basecamp, originally it was 37signals and then they launched Basecamp, and Highrise, and Ta-Da List and several other products, they looked at trying to sell Highrise, which was making obviously millions of dollars at the time. They could not find the buyer because of the fact that they didn’t want to let the team that was working on it and go with it. They just wanted to sell the code base, and the revenue stream, and customers, and all that other stuff to somebody else, and nobody was willing to pay for it. I made sure that I had him kind of clarify this like, “This code base was worth nothing without the team behind it.” He was like, “Yeah, it was.”
Rob: Code base plus revenue stream.
Mike: We get a lot of questions to the podcast about, “How much effort should I put in to protecting my code and making sure that people aren’t stealing it? If I hire a contractor, what do I do?” To have Jason Fried come out and say that the code and the revenue stream behind it were worthless without the team behind it. That’s just a big answer, I think to that question, that continues to come up.
Rob: I wouldn’t say it was worthless. He said they got offers, they were just super low without the team. He said, “We didn’t want to give it away.” If you end up doing $1 million a year and if you bought the team with it, you can get $5 million, and if you didn’t bring the team, you can get $1 million. I get the feeling it was that kind of situation where it’s not that it’s worthless, but it’s worth a lot, lot less.
Mike: He did turn down my offer.
Rob: You offered to buy it from the money in your pocket?
Mike: Yes, I did. I had like $100, maybe $200. I don’t know.
Rob: He graciously declined. That was cool.
Mike: Yes.
Rob: Later in MicroConf, we had a speaker who had to cancel last minute. He actually made it to Las Vegas and then had a personal issue come up and had to leave. Big thanks to Patrick McKenzie, also known as Patio11 on the internet, for filling in and talking about things that Silicon Valley Companies do well. He basically wrote a talk in 24 hours. He said, “We can throw stones at Silicon Valley; yes, it does a lot of things wrong, there’s no doubt but there are certain things that they’re pretty good at.
We won’t dig into all the points of his talk. I think the biggest thing that I took away or the one that impacted the most when he was talking was something that a boss said to him at some point at Stripe. The question was, “After a 45-year career, what do you want to be true?” I would rephrase that almost like, “What do you want to feel or have accomplished looking back on your entire working career?” I think this is a great question to think about, is legacy. This is something I have thought about, not in depth, and extensively.
When I think about legacy—it’s interesting—I think much more about this podcast, and MicroConf, and blogs, and books than I do about the actual companies I’ve started. I bet Jason Fried thinks about his legacy is probably Basecamp. Maybe it’s the books that they’ve written as well, but it’s just interesting to think that different people have different answers for this. I don’t think there’s a right or wrong, but figure it out for yourself and then every day, make a bit of progress towards that.
Mike: I definitely think that this is the type of question that should make it onto the list of questions that you’re going to ask yourself at a personal retreat. But one of the other aspects of that was that, “What does it mean after that 45 years?” I think Patrick had said—and you can correct me if I’m misremembering this—but I think he had looked at and said, “Well, what does that mean to me and how would I quantify it?” I think his basic assessment of how he was going to quantify it was how much impact he’s had on other people over the course that 45 years, and what it means kind of collectively to give himself sort of a numeric score so to speak. I thought that was an interesting way of looking at it as well. Everybody can do it in any way that they want, but I just thought it was an interesting way for him to quantify what that meant to him.
Rob: We had a talk from Hanne Vervaeck, she’s the COO of Thrive Themes. The takeaway I had from her was, “Don’t build what your customers ask for.” Really, it’s don’t only build or just build, you can get a mess. We’ve talked about that a little bit on the podcast in the past. Basically, she talked through handling feature requests; they get hundreds and hundreds of them each month. She talked about instead of implementing every feature customers ask for, do one-on-one customer calls on a call. Shut up and listen, ask questions, and she had a cool process for handling that. In our last couple of years at Drip as it kept ramping up, we were getting probably 100-150 a month when we got acquired, and it was at least double that by the time I left. We had to figure out a way to do this as well. I liked hearing her approach and her thoughts on this.
Mike: The cool thing about when she was discussing that was really, it was a nice way of saying that customers don’t always know what should be built. They have an idea of like, “This is how you should solve the problem.” But the reality is that you should dig into that, and find out what problem they’re actually trying to solve. As opposed to listening to them and implementing things that they say, “You should be doing this. I need a feature that does that.” If you start digging in and trying to figure out more of a jobs-to-be-done type of thing, then you’re going to be much better off if you just blindly implement it, which I think is intuitively obvious to most people, but at the same time, your customers don’t know all the other things that are going on. Quite frankly, you may not even agree with them. You may decide, “Well, yes. That sounds great and all, but it’s just not the right direction for the business, or for the company, or the product,” and you may decide to ignore them because of that. Customers absolutely do not have all the information. Sometimes you have to overrule them.
Rob: I wrapped up the first day with my talk that was titled, The City Bootstrapping in 2019. I looked at some trends that have changed over the past 14 years since I’ve started talking about all this stuff, and then a bunch of things that have stayed the same. I think the takeaway I pulled from there is kind of, there’s more competition these days, but there are also more funding options. I definitely still and whole-heartedly a bootstrapper at heart and believe that the bootstrapping and self-funding are totally viable ways to go. Given that there is more competition, some of the scraps I had with just enormous amounts of VC funding reported SaaS in general.
We, as a community like you and I, with the podcast and the conference were kind of early to SaaS. Now, the big money is coming in over the past eight or nine years. Something I’m talking about is like more funding options are available and that funding is no longer binary. You can look at someone, like a lot of the angel investments I’ve done, where they literally plan to raise a single round, they’re not going to raise institutional funding. They don’t have a board, they never plan to go public or have a unicorn exit. They technically raised money, but they’re still very capital efficient, and they’re using this money to reach escape velocity with their start up faster and maybe a little less painful than that two to three years that we often now see it taking for a truly bootstrapped SaaS to do that.
Mike: I think that there definitely has to be a discussion in our circles around what the terminology actually ends up being, because I think that that’s a source of confusion for a lot of people. If you spend all of your own money on it, or you do it on credit cards, is that self-funding? Well, I guess technically, but at the same time, if you build a product up and then sell it outright to somebody else, and you get a pile of money, and then you put it into your next product, is that self-funding, is that bootstrap? Well, I don’t know. What does that actually mean? I think there’s going to be some discussions over the next coming months or years about some subtle changes to how we view some of the terms like bootstrapping, and self-funding, and maybe bootstrapping becomes more of a state of mind than anything else.
Rob: I would agree. Frankly, I wonder if the terms are—how important they actually are. I think they’re helpful to give context to things when you start to talk and you said, “Look, I’m a bootstrapper. This how I think about things.” That’s helpful versus if I sit up there and said, “Look, I’ve raised VC funding,” then take my advice in that context. That’s why I think it’s helpful, but I do think it’s unhelpful, and that people sometimes get dogmatic about this stuff, and I do not think you should never raise funding. “VC is the worst ever.” Or, “Bootstrapping, it’s just terrible. Why would you even do that?” I’ve heard people say this. I don’t think that’s helpful to do the always never should game. It’s like, let’s keep open minds and realize that this is now a continuum. There is bootstrapping where I literally have $50 to start it, and it has to grow on its own revenue. That’s very hard.
Self-funding is the next thing to the right I will say. It’s the next notch over where it’s like, “Yeah, I have $200,000 to pump into this business,” or, “$100,000 of my own money.” It’s a little different, it’s a different situation in bootstrapping. I’ve done both. I know, it’s very different. And then perhaps the next up step over is taking a small amount of funding from TinySeed or any .vc, or funding source that maybe isn’t expecting you to get huge and you can still build a profitable business selling real product to real customers and then maybe the next notch over is venture capital. Maybe there’s even a notch in between. That’s the thing, it’s not binary anymore.
Mike: I feel like maybe some people get too hung up on the terminology because it feels like their identity is being attacked like, “I’m a bootstrapper and you’re not.” As you said, it’s not binary anymore; it used to be, but now it’s not. I think there’s maybe something about identity crisis going on, but I definitely think that there’s going to be talks and discussions about that behind closed doors. Maybe we’ll come out with something new, or maybe it’ll just kind of be a perpetual issue for the next 20 years, I don’t know.
Rob: Another talk, kind of a last one we’ll cover with Growth, Joanna Wiebe who’s been a many time MicroConf speaker. The takeaway I took from her is that words matter as she talked about copywriting. She ran through seven words that work well in copy. […] here because rattling them off isn’t going to help you. It’s probably somewhere you want to watch the talk when it gets there, or look at Christian Genco’s notes at microconfrecap.com just to see what she talked about and how she presented it.
Mike: Next up, we have Starter. I think that we both want to say a big thank you to Ben Orenstein for being the MC. I think he did a fantastic job. It’s interesting because his talk was actually the last of the conference. Usually, in the past two years when we’ve had an MC, the talks that the MC gave, they were the first talk, and then they were the MC for the rest of it. Whereas Ben, he did the entire conference as the MC and then he got up and spoke which, I mean, that’s just a testament to his ability to get up there in front of everybody.
Rob: Yeah and his talk was great. He always brings it; entertaining, witty, charming. It’s almost like Ben’s here in the room and I’m talking to him. Tall, what did I say? The man with the plan. He’s 6’5 with a tan. You know what I like about his talk is it was, he didn’t even try to pull too many actionable bits out of it, although there was advice and such. It was just a really well told story. I know the story, I’ve listened to every episode of their podcast and yet, I sat there and listened just kind of riveted by how he would talk about the learning from this, and how they did this experiment, and he just set it up so well. Honestly, that’s another one where it’s like, we couldn’t do a justice in five bullet points, that’s one where you need to watch the video when it comes out.
Mike: Definitely. I love the story, and the way that he told it, and how some things came together really well and some things were like, “We discovered this along the way and who knew?” Some of the lessons were, I wouldn’t say they were obvious, but they’re obvious in hindsight. It’s like, “Yeah, that was probably going to be an issue and nobody really thought about it.”
Rob: Just to be clear, we didn’t mention his podcast. It’s called, The Art of Product Podcast and his product is called to Tuple which is a pair of programming SaaS. Another talk we had, it was on the first day of Starter was from Abi Noda. The takeaway I got from him was, “Start quickly by building on someone else’s platform.” Now, he also talked about how there’s a risk in doing that. A platform risk where you’re dependent on them and they could potentially implement a feature and put you out of business. I like that he’s at 21K MRR. He’s only been doing it for—how long is it? Eight months, nine months? It’s not that long.
Mike: Yeah, I think it was a little over a year.
Rob: Okay. It’s pretty quick for a solo founder with no employees. I don’t even the he has contractors to be at 21K MRR. That’s life changing man. The other thing is he talked multiple times about how he’s doing things wrong. He’s like, “I’m not sure about my pricing. I don’t actually think it’s optimal,” but enough things are working that he’s at 21K MRR. Maybe if he optimized to keep—that could be 30 or 40, and that’s great, you can do that. But at this point, he’s bought his own freedom and that’s what I liked about that story. He didn’t get up there and say, “I did everything right and look what all I did.” He’s like, “I did some things wrong and it still worked.”
I think the fact that he built on GitHub, he has a GitHub add-on that notifies you when there’s a pool request that need reviews and notifies you via Slack. He’s in the GitHub marketplace and that was kind of his big marketing approach. It was funny because when I when I talk about stair stepping and how there’s step one, two, and three, he combined step one and three. Step one is that one time downloadable product with a single traffic source, and then step three is recurring revenue. He has recurring revenue, but it’s a single traffic source in essence. I know he has some other traffic but most of it is focused in GitHub marketplace.
Mike: I did find it interesting that the way he opened his talk was the fact that he got fired, that was the day before Christmas or something like that. It was kind of a life-changing event for him and he’s like, “Okay, well now what do I do?” It took him a little while before he figured out, “Well, I kind of wanted to do this and launch my own thing,” and then he did it. There were a bunch of mistakes that he made along the way and things changed for him as he made tweaks to the business and as he basically, just improved things. I think that’s something that a lot of people forget is that, just launching is not the end of the story, that’s not even the destination or the goal, that’s the beginning of it; that’s where you start to learn things and where the rubber hits the road and you’re able to start adjusting what it is that you do. You hear from customers and tweak the business.
Rob: Another good talk was from Lianna Patch, a returning MicroConf speaker. The take away I have from her talk was, “Don’t make stupid copywriting mistakes.” She actually talked and covered a lot of topics, but the stupid copywriting mistake section was cool. She talked about having me-centric copy. Instead of having you and your, it has a lot of I’m, and we, and me. She talked about writing like a robot. Sentences that were too complicated, trying to do too much, and then clichés and nonsense phrases, and had a bunch listed there.
Again, microconfrecap.com if you want to see the specifics of that, but Lianna is in the trenches. She runs Punchline Copy and is on a day-to-day, week-to-week basis is writing a lot more copy than you and I frankly. She really is in the weeds on how this stuff should be done. She actually wrote the copy for bluetick.com, didn’t she?
Mike: Yes, she did. She wrote a couple of emails in the email sequence as well. I gave her access to all the notes and stuff that I had taken from all the customer interviews and customer development that I’ve done. She took that and she translated into the copy for the website. She also went through and tweaked all the onboarding emails and the educational emails that I put out there. Basically, overhauled the entire thing. Honestly, it’s doing its job. It’s just doing it really well.
Rob: That’s cool. I realized I just said bluetick.com but you’re bluetick.io. Sorry about that. Your website looks great. I just went to it. It looks really good. I’ve not seen it redesigned. How long ago did that happen?
Mike: That was a while ago. We talked about that on the podcast, that was probably close to a year ago.
Rob: Did we? I don’t remember it.
Mike: I mean there’s been little tweaks and stuff, it depends on what you’ve seen. I don’t know.
Rob: Yeah. The design it’s far superior to my memory of what Bluetick was. My memory must be dated at this point.
Mike: I’ve had it redone I think just before the last MicroConf.
Rob: Mike, do you hear the music in the background? We are on the 21st floor of a hotel in Las Vegas.
Mike: It’s interesting, I almost feel like there should be security coming over and kicking you out because you’re wearing flip flops and you look too old to be here.
Rob: Yeah, exactly. Wait a minute, I’m not doing either of those things. I did not look too old. Alright, I do a little bit.
Mike: Don’t you remember when that happened at the Hard Rock?
Rob: Yeah. Weren’t they filming some type of like an MTV something around the pool? I think what it was—now, they didn’t say it out loud that we were too old, and this was a few years ago, but we were in beach gear. I was wearing jeans and a t-shirt with flip flops. They wanted you to be in a full on no shirt, swim trunks, totally ripped abs, the whole deal. I was walking, “Sorry, sir. We’re filming.” “Really, what are you filming?”
Mike: I think you should correct that, it’s not us, it was you.
Rob: It was me. No, I was including you man.
Mike: I wasn’t there.
Rob: Alright, forget it. We didn’t notice. We didn’t go back to the Hard Rock the next year.
Mike: That’s true. Although they didn’t demolish it in later years.
Rob: A little known fact, the hotel that the first MicroConf was at was demolished shortly thereafter because it was so old.
Mike: Our next talk was from Omar Zenhom and he’s from WebinarNinja. I thought this was actually a fascinating talk, mostly because there was one takeaway that I think just kind of tramped all others that you could possibly take it away from that which was, “You should build an audience before building a product. If you don’t have an audience, you just simply do not have a product, and nothing you can do is going to change that.”
Rob: Yeah and I don’t agree with him on that. I think that’s how he did it and I appreciate his perspective of how he built the business using an audience, but I have seen too many founders who have built businesses without an audience. Do I agree that it makes it easier? Yes. Do I agree that maybe it’s a thing you should do? Maybe. But if you’re not that type of person, don’t do that. I have known founders and many founders who have amazingly successful businesses and did not start with an audience.
Mike: Maybe I should qualify that a little bit better. I agree with you that you don’t need the an audience before you start, you don’t have to build the audience before you build the product. But I do think that there is a certain amount of momentum that you kind of need to maintain over time and doing that almost requires an audience. That’s not for every product, but I think for any product of some scale and complexity where it takes time to educate people, and they’re not going to be at the right point in order to purchase your product, it may be three months or eight months out, or maybe even two years.
You need to be able to keep them around and the way you keep them around is through some sort of content marketing, or education, and you’re going to be able to catch them at that moment. If you don’t, it’s going to be hard to scale your business to a much higher level than if you’ve got a product and you’re only catching them at the time where they are experiencing that pain point enough to go look for a solution.
Rob: Yeah, maybe. I think of Salesforce, maybe Salesforce is a bad example, but think of just outbound cold email and companies that have grown doing that. They don’t have audience. I mean, I have talked to TinySeed applicants, they have zero audience. Actually, they have almost no traffic to their website, and yet they’re doing several thousand in MRR and growing, because they’re just using other tactics; using traditional sales tactics. The internet marketer space, or in the SMB space, so to speak, it could be a potential thing. WebinarNinja is definitely going after SMBs. It’s going after some aspirational entrepreneurs. It’s going after a crowd where building an audience is super important. It’s a great thing to leverage, but if you’re not in that space, I guess I would not wholeheartedly agree with that assessment.
Mike: Sure. I guess maybe I said that more because that’s the type of space that I operate in now and that I would want to work with. There’s obviously certain ones where I wouldn’t want to, and that I don’t think it would work there.
Rob: Yeah, totally. The other thing I liked that Omar said there, where had one slide where he said, “Take things that are unique about you and make them your advantage.” We talked about his name, how no one else has Omar Zenhom, and that was a unique thing. He could rank at Google really easily for that. No one else was from Egypt. He just talked a lot about himself, about how he used that as a superpower. I thought that was cool because I think it’s something a lot of us, me included, try to fit in and try to not be unique for some reason because we feel like fitting in is important, but I actually like the sentiment of making your unique thoughts, skills, and abilities your true advantage.
Mike: The last talk we’ll cover in this episode is Asia Matos who runs demandmaven.io. I really liked the fact that because of the split between Starter and Growth edition, she spoke at Starter edition. One of the great things about splitting the conference in two is that speakers can hone their talk to the audience. She really honed it down to basically telling them, “Look, there’s lots of different pieces of your sales funnel, but if you want to get to your first 100 customers, you really need to focus on that bottom of the funnel and try and make sure that you are talking to them directly about your product, and exactly what it can do.” Because the middle of the funnel, and at the top of the funnel, those are much broader areas to tackle and they’re harder to do if you’re not able to convert people at the bottom.
If you can’t convert them at the bottom, adding more people into your sales funnel isn’t going to change that and it’s not going to help. It will get you more customers, assuming you can add enough at scale, but if the bottom of your funnel is so leaky that it doesn’t really move the needle for you, then there’s no point in trying to do that. Really focus on the bottom, optimize that, and that’s really going to help you move forward.
Rob: Yeah. This is really good advice and it’s not talked about enough. I’m glad that this was the point of her talk really, is that people think they just need to send more people onto their website or into a trial, but if churning people out, or if people are not going trial to paid, or if people are not going visitor to trial, you have to start at that bottom and work up. Of course, you need another traffic that you can do some type of testing for the numbers to make sense. Certainly, scaling up and starting at the top of funnel just doesn’t make sense. She was a dense talk in a good way. It was a lot of information. She actually compressed a longer talk down to fit in our speaking slot. I think she did a good job of covering how to get your first 100 customers. 17th and 18th MicroConf are in the bag sir, how do you feel?
Mike: Tired.
Rob: Drunk.
Mike: Not yet.
Rob: I know. We’re like one shot. This is a good whiskey though.
Mike: Actually, I’m on my second or third. Probably second right now.
Rob: I’m in the other room. Mike and I always record across the country rather I guess at this point halfway across the country. It’s so weird when every five years, we happen to be in the same place, and we try to record, and there’s echo and all this stuff. We’re in the same hotel room, but it’s a suite, and we have a door closed between us. It’s just a unique experience.
Mike: For sure. I did realize something. Did you think about the fact that MicroConf Europe is going to be the 19th MicroConf, and then next year, Growth edition will be the 20th?
Rob: What a trip. How fitting.
Mike: Yeah.
Rob: I had not thought about that at all, that’s cool. Speaking of MicroConf Europe, it’s in Croatia again, at that amazing ridiculously cool hotel where every room as an ocean view of the Mediterranean. It is October 21st and 22nd of 2019. Tickets will go on sale. They may already be on sale to the early bird list as your listening with this. But go to microconfeurope.com, enter your email if you’re interested in potentially joining us and around 150 other software founders who are trying to get their stuff done.
Mike: Well, I think that about wraps us up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. 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 software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re going to share our experiences to help you avoid the same mistakes we’ve made. We’re in this week, man? You sound a little tired.
Mike: It’s mostly the voice, it’s just a little scratchy. I am a little tired, but it could be worse. I mean after seven days in Vegas, that will do it to you.
Rob: That’s the thing, right? Normally, we record this MicroConf recap episode the week after or at least a day or two after MicroConf and this year due to my travel schedule, I’m heading to London in a couple of days. We basically have been in Vegas for six and seven days respectively, and voices are shut, and all the things. Hopefully, it will go well. Aren’t we also both drinking rye whiskey right now?
Mike: Yes, it’s a WhistlePig rye, it’s called WhistlePig, but it’s a rye whiskey. It’s quite nice. They make it up in Vermont.
Rob: It’s very nice. This will be a fun episode. We have some takeaways that I pulled away from Starter and Growth, let’s see how many we can get through. What’s new with you in terms of the past week hanging out here at MicroConf?
Mike: One thing I noticed that was sort of a recurring theme was I saw people increasing their prices all over the place which was kind of interesting there. I was sitting outside while Starter edition was happening, and there’s some group of people around the table and one of them had been convinced to double his prices on the spot. They basically made him open up his laptop, change the pricing on his website, and then shut down his laptop. It was pretty cool.
Rob: There was someone else that did that. Someone 12xd their pricing. They were obviously priced quite a bit too low and they said that sales continued to come in after doing that. I heard a rumor, you may confirm or deny, that Bluetick’s pricing might be rising soon.
Mike: Yes, it will be going up in the very near future. Actually, probably by the time this podcast goes live, prices will be tripling.
Rob: That’s the way to do it.
Mike: We’ll see what happens. It’s an experiment like anything else, but that’s what you want to know is that price too high or is it not.
Rob: For me, obviously, I had a great week here. It’s super inspiring to see up and coming entrepreneurs, successful entrepreneurs, and have my laptop charger fail in the middle of the conference. Luis run the conference off our laptops and in this case, we did not, but it was a trip. I have a new MacBook and so I needed the USBC charger and not many people have one. The brick died, the cables all worked. I was like begging, stealing, and borrowing […] at the conference to keep my laptop charged.
Mike: I thought that was funny that of all the things that you had more than one of, the one thing you didn’t was the actual brick itself.
Rob: That’s the thing. I literally have extra this cable, extra that cable. I have two things of ChapStick, I have two or three phone, and iPad chargers. I carry multiples of everything, but I don’t bring an extra brick because it’s the heaviest piece, and I’ve never had one go out on me before just at the time when I needed it, it was kind of funny.
Mike: Actually, I love this, I just saw on Twitter that there is a photo proof of you sitting down on the job while I do all the work.
Rob: That’s fast. I’ll go look for that. You have this whole list of things to do at the end of the conference and I didn’t really know. They’re normally passing back and forth and I just kind of hang out. It was like Tom Sawyer in full effect. MicroConf is a conference you and I started in 2011. It’s for self-funded founders and now, even some not so self-funded founders with the kind of rise of folks like CartHook and LeadFuze who take small rounds of funding, but it’s bootstrappers at heart.
We split the conference three years ago. This week, we ran back-to-back conferences. Monday-Tuesday is MicroConf Growth. We had around, I believe 265 on total attendees including speaker sponsors attendees. At Starter which was the three days following Wednesday, Thursday, 180 people, […] at least this year and last year at the Tropicana in Las Vegas. I think a goal that we made while we were here is to do it somewhere other than Las Vegas next year.
Mike: That would be quite nice, I think.
Rob: We have tried to do that many times and every time, it winds up being so expensive to move out of here. That’s kind of the trap of Vegas, is it’s relatively easy to get to, and the hotel, and that the venue, and the rooms, like just everything is not that expensive, and it’s like less than a 10-minute drive from the airport, it’s all these things that make it, I don’t know, it’s seductive. Because if you look at San Diego, for example, it’s more expensive and it’s a 45-minute drive from the airport to a hotel. I think I’m at the point where I’m just kind of ready to pony up and realize it’s not going have all the pros at Vegas, but we will give up the con, which is it in Las Vegas.
Mike: It’s in Vegas, yes.
Rob: It’s like dry here. I don’t know how you feel. You can tell by our voices, they’re not usual perky Startups For The Rest Of Us, Rob and Mike today.
Mike: Yup.
Rob: We have nine takeaways, give or take. We might want to put eight or ten, but takeaways from MicroConf, we’re going to look at both. Growth and Starter, we obviously don’t have time to go through every talk. I believe we had 19 sessions, 19 speakers, our Q&A folks, not including the 12 attendee talks, so 31 talks. Of course, we couldn’t possibly cover those in a podcast episode. If you’re interested in seeing an awesome recap in writing, written by Christian Genco, it’s microconfrecap.com. You can go there and see his notes of all the sessions.
For now, let’s dive into our first talk of the entire conference. It was Chris Savage, co-founder of Wistia. The takeaway I took away from Chris was, know what you’re getting into when raising funding. It’s interesting because you could have watched his talk and thought about funding is bad, but I don’t think that’s the message. It was that they didn’t think it through when they raised their funding. The talk title was, How an Offer to Sell Inspired Us to Take On $17 Million In Debt. Wistia, they blogged about it as well, is that they raise funding because it just seemed like the right thing to do. They followed the typical venture path, they actually had pretty high expenses because they are video hosting, obviously, and they weren’t really aware bootstrapping what I understand, so they raise multiple rounds.
At certain point, they got an offer to sell Wistia, but they really thought it over, and agonized, and said, “If we sold it, we would probably start another Wistia. This is really the space we want to be in. We don’t necessarily want to exit this.” But once they realized that, they realized they had a responsibility to their investors of, “Look, if we never sell, how do they get a return?” Now, one thing he never thought about pulling dividends out, but I think they’re probably a C-Corp, and frankly, their investors probably didn’t want that. I guess that’s been a thing lately with alternative funding, the Indie.vc and TinySeed is that from the start or set up that if you wanted to just do dividends, and run it, and not sell it, works; if you decide to sell it works. That’s the optionality I don’t feel like Wistia had.
Mike: Yeah, I think you’re take on this is a little different than mine, where you had said that, you know what you’re getting into, when raising funding. I took it more as a revelation on their part that they realized after a while, after they take in the funding, and obviously, well after that because—I think they funded it in 2008 or 2009, well after that, things changed, and they decided that they wanted something different.
Because of that change, because of the way that they view things was different, the original path no longer suited them. They had to look for ways to change that. That’s how I interpreted it, but I can definitely see how there’s probably three or four different ways that his talk could be interpreted. I don’t think any of them are bad, it’s just that whatever lessons you take away from it, I think you’re going to be great. It was a fantastic talk, it was well put together. I do think that the story of what they went through and how they got there is just interesting in and of itself.
Rob: I would agree. I mean, to be honest Chris Savage was kind of a long time aspiration of mine to get to MicroConf, so it was super cool to have him here this year. Our second session, was, it wasn’t a talk, it was Q&A with Jason Fried. I felt like the takeaway from there was know what you’re good at and make sure to double down on that. What’s interesting is already, we have some ratings and reviews and such coming in because we sent a survey out at the end of the conference. Typically, Q&A sessions are ranked in the middle, they’re not at the top, they’re at the bottom, sometimes they’re at the bottom depending, but Jason Fried is probably the highest rated Q&A session we’ve ever had.
I think that his authenticity, and kind of just his honesty really came out. He answered some pretty fascinating questions about Basecamp, about what it was like to get started about why he grew so fast. I mean at one point, I asked him why did it grow so fast and he said, “We don’t know.” That’s awesome, like, “Thank you for saying that, and not acting like it was that you were super smart, and that you knew what you were doing.” He’s just like, “Yeah.” At a certain point, he said, “We got a little lucky, we had some good timing, and we did some things right as well.” I was like, “That is fantastic assessment.”
Mike: I think that’s the position of a lot of successful people are in. One thing that had come up during the Q&A was that the fact that Basecamp, originally it was 37signals and then they launched Basecamp, and Highrise, and Ta-Da List and several other products, they looked at trying to sell Highrise, which was making obviously millions of dollars at the time. They could not find the buyer because of the fact that they didn’t want to let the team that was working on it and go with it. They just wanted to sell the code base, and the revenue stream, and customers, and all that other stuff to somebody else, and nobody was willing to pay for it. I made sure that I had him kind of clarify this like, “This code base was worth nothing without the team behind it.” He was like, “Yeah, it was.”
Rob: Code base plus revenue stream.
Mike: We get a lot of questions to the podcast about, “How much effort should I put in to protecting my code and making sure that people aren’t stealing it? If I hire a contractor, what do I do?” To have Jason Fried come out and say that the code and the revenue stream behind it were worthless without the team behind it. That’s just a big answer, I think to that question, that continues to come up.
Rob: I wouldn’t say it was worthless. He said they got offers, they were just super low without the team. He said, “We didn’t want to give it away.” If you end up doing $1 million a year and if you bought the team with it, you can get $5 million, and if you didn’t bring the team, you can get $1 million. I get the feeling it was that kind of situation where it’s not that it’s worthless, but it’s worth a lot, lot less.
Mike: He did turn down my offer.
Rob: You offered to buy it from the money in your pocket?
Mike: Yes, I did. I had like $100, maybe $200. I don’t know.
Rob: He graciously declined. That was cool.
Mike: Yes.
Rob: Later in MicroConf, we had a speaker who had to cancel last minute. He actually made it to Las Vegas and then had a personal issue come up and had to leave. Big thanks to Patrick McKenzie, also known as Patio11 on the internet, for filling in and talking about things that Silicon Valley Companies do well. He basically wrote a talk in 24 hours. He said, “We can throw stones at Silicon Valley; yes, it does a lot of things wrong, there’s no doubt but there are certain things that they’re pretty good at.
We won’t dig into all the points of his talk. I think the biggest thing that I took away or the one that impacted the most when he was talking was something that a boss said to him at some point at Stripe. The question was, “After a 45-year career, what do you want to be true?” I would rephrase that almost like, “What do you want to feel or have accomplished looking back on your entire working career?” I think this is a great question to think about, is legacy. This is something I have thought about, not in depth, and extensively.
When I think about legacy—it’s interesting—I think much more about this podcast, and MicroConf, and blogs, and books than I do about the actual companies I’ve started. I bet Jason Fried thinks about his legacy is probably Basecamp. Maybe it’s the books that they’ve written as well, but it’s just interesting to think that different people have different answers for this. I don’t think there’s a right or wrong, but figure it out for yourself and then every day, make a bit of progress towards that.
Mike: I definitely think that this is the type of question that should make it onto the list of questions that you’re going to ask yourself at a personal retreat. But one of the other aspects of that was that, “What does it mean after that 45 years?” I think Patrick had said—and you can correct me if I’m misremembering this—but I think he had looked at and said, “Well, what does that mean to me and how would I quantify it?” I think his basic assessment of how he was going to quantify it was how much impact he’s had on other people over the course that 45 years, and what it means kind of collectively to give himself sort of a numeric score so to speak. I thought that was an interesting way of looking at it as well. Everybody can do it in any way that they want, but I just thought it was an interesting way for him to quantify what that meant to him.
Rob: We had a talk from Hanne Vervaeck, she’s the COO of Thrive Themes. The takeaway I had from her was, “Don’t build what your customers ask for.” Really, it’s don’t only build or just build, you can get a mess. We’ve talked about that a little bit on the podcast in the past. Basically, she talked through handling feature requests; they get hundreds and hundreds of them each month. She talked about instead of implementing every feature customers ask for, do one-on-one customer calls on a call. Shut up and listen, ask questions, and she had a cool process for handling that. In our last couple of years at Drip as it kept ramping up, we were getting probably 100-150 a month when we got acquired, and it was at least double that by the time I left. We had to figure out a way to do this as well. I liked hearing her approach and her thoughts on this.
Mike: The cool thing about when she was discussing that was really, it was a nice way of saying that customers don’t always know what should be built. They have an idea of like, “This is how you should solve the problem.” But the reality is that you should dig into that, and find out what problem they’re actually trying to solve. As opposed to listening to them and implementing things that they say, “You should be doing this. I need a feature that does that.” If you start digging in and trying to figure out more of a jobs-to-be-done type of thing, then you’re going to be much better off if you just blindly implement it, which I think is intuitively obvious to most people, but at the same time, your customers don’t know all the other things that are going on. Quite frankly, you may not even agree with them. You may decide, “Well, yes. That sounds great and all, but it’s just not the right direction for the business, or for the company, or the product,” and you may decide to ignore them because of that. Customers absolutely do not have all the information. Sometimes you have to overrule them.
Rob: I wrapped up the first day with my talk that was titled, The City Bootstrapping in 2019. I looked at some trends that have changed over the past 14 years since I’ve started talking about all this stuff, and then a bunch of things that have stayed the same. I think the takeaway I pulled from there is kind of, there’s more competition these days, but there are also more funding options. I definitely still and whole-heartedly a bootstrapper at heart and believe that the bootstrapping and self-funding are totally viable ways to go. Given that there is more competition, some of the scraps I had with just enormous amounts of VC funding reported SaaS in general.
We, as a community like you and I, with the podcast and the conference were kind of early to SaaS. Now, the big money is coming in over the past eight or nine years. Something I’m talking about is like more funding options are available and that funding is no longer binary. You can look at someone, like a lot of the angel investments I’ve done, where they literally plan to raise a single round, they’re not going to raise institutional funding. They don’t have a board, they never plan to go public or have a unicorn exit. They technically raised money, but they’re still very capital efficient, and they’re using this money to reach escape velocity with their start up faster and maybe a little less painful than that two to three years that we often now see it taking for a truly bootstrapped SaaS to do that.
Mike: I think that there definitely has to be a discussion in our circles around what the terminology actually ends up being, because I think that that’s a source of confusion for a lot of people. If you spend all of your own money on it, or you do it on credit cards, is that self-funding? Well, I guess technically, but at the same time, if you build a product up and then sell it outright to somebody else, and you get a pile of money, and then you put it into your next product, is that self-funding, is that bootstrap? Well, I don’t know. What does that actually mean? I think there’s going to be some discussions over the next coming months or years about some subtle changes to how we view some of the terms like bootstrapping, and self-funding, and maybe bootstrapping becomes more of a state of mind than anything else.
Rob: I would agree. Frankly, I wonder if the terms are—how important they actually are. I think they’re helpful to give context to things when you start to talk and you said, “Look, I’m a bootstrapper. This how I think about things.” That’s helpful versus if I sit up there and said, “Look, I’ve raised VC funding,” then take my advice in that context. That’s why I think it’s helpful, but I do think it’s unhelpful, and that people sometimes get dogmatic about this stuff, and I do not think you should never raise funding. “VC is the worst ever.” Or, “Bootstrapping, it’s just terrible. Why would you even do that?” I’ve heard people say this. I don’t think that’s helpful to do the always never should game. It’s like, let’s keep open minds and realize that this is now a continuum. There is bootstrapping where I literally have $50 to start it, and it has to grow on its own revenue. That’s very hard.
Self-funding is the next thing to the right I will say. It’s the next notch over where it’s like, “Yeah, I have $200,000 to pump into this business,” or, “$100,000 of my own money.” It’s a little different, it’s a different situation in bootstrapping. I’ve done both. I know, it’s very different. And then perhaps the next up step over is taking a small amount of funding from TinySeed or any .vc, or funding source that maybe isn’t expecting you to get huge and you can still build a profitable business selling real product to real customers and then maybe the next notch over is venture capital. Maybe there’s even a notch in between. That’s the thing, it’s not binary anymore.
Mike: I feel like maybe some people get too hung up on the terminology because it feels like their identity is being attacked like, “I’m a bootstrapper and you’re not.” As you said, it’s not binary anymore; it used to be, but now it’s not. I think there’s maybe something about identity crisis going on, but I definitely think that there’s going to be talks and discussions about that behind closed doors. Maybe we’ll come out with something new, or maybe it’ll just kind of be a perpetual issue for the next 20 years, I don’t know.
Rob: Another talk, kind of a last one we’ll cover with Growth, Joanna Wiebe who’s been a many time MicroConf speaker. The takeaway I took from her is that words matter as she talked about copywriting. She ran through seven words that work well in copy. […] here because rattling them off isn’t going to help you. It’s probably somewhere you want to watch the talk when it gets there, or look at Christian Genco’s notes at microconfrecap.com just to see what she talked about and how she presented it.
Mike: Next up, we have Starter. I think that we both want to say a big thank you to Ben Orenstein for being the MC. I think he did a fantastic job. It’s interesting because his talk was actually the last of the conference. Usually, in the past two years when we’ve had an MC, the talks that the MC gave, they were the first talk, and then they were the MC for the rest of it. Whereas Ben, he did the entire conference as the MC and then he got up and spoke which, I mean, that’s just a testament to his ability to get up there in front of everybody.
Rob: Yeah and his talk was great. He always brings it; entertaining, witty, charming. It’s almost like Ben’s here in the room and I’m talking to him. Tall, what did I say? The man with the plan. He’s 6’5 with a tan. You know what I like about his talk is it was, he didn’t even try to pull too many actionable bits out of it, although there was advice and such. It was just a really well told story. I know the story, I’ve listened to every episode of their podcast and yet, I sat there and listened just kind of riveted by how he would talk about the learning from this, and how they did this experiment, and he just set it up so well. Honestly, that’s another one where it’s like, we couldn’t do a justice in five bullet points, that’s one where you need to watch the video when it comes out.
Mike: Definitely. I love the story, and the way that he told it, and how some things came together really well and some things were like, “We discovered this along the way and who knew?” Some of the lessons were, I wouldn’t say they were obvious, but they’re obvious in hindsight. It’s like, “Yeah, that was probably going to be an issue and nobody really thought about it.”
Rob: Just to be clear, we didn’t mention his podcast. It’s called, The Art of Product Podcast and his product is called to Tuple which is a pair of programming SaaS. Another talk we had, it was on the first day of Starter was from Abi Noda. The takeaway I got from him was, “Start quickly by building on someone else’s platform.” Now, he also talked about how there’s a risk in doing that. A platform risk where you’re dependent on them and they could potentially implement a feature and put you out of business. I like that he’s at 21K MRR. He’s only been doing it for—how long is it? Eight months, nine months? It’s not that long.
Mike: Yeah, I think it was a little over a year.
Rob: Okay. It’s pretty quick for a solo founder with no employees. I don’t even the he has contractors to be at 21K MRR. That’s life changing man. The other thing is he talked multiple times about how he’s doing things wrong. He’s like, “I’m not sure about my pricing. I don’t actually think it’s optimal,” but enough things are working that he’s at 21K MRR. Maybe if he optimized to keep—that could be 30 or 40, and that’s great, you can do that. But at this point, he’s bought his own freedom and that’s what I liked about that story. He didn’t get up there and say, “I did everything right and look what all I did.” He’s like, “I did some things wrong and it still worked.”
I think the fact that he built on GitHub, he has a GitHub add-on that notifies you when there’s a pool request that need reviews and notifies you via Slack. He’s in the GitHub marketplace and that was kind of his big marketing approach. It was funny because when I when I talk about stair stepping and how there’s step one, two, and three, he combined step one and three. Step one is that one time downloadable product with a single traffic source, and then step three is recurring revenue. He has recurring revenue, but it’s a single traffic source in essence. I know he has some other traffic but most of it is focused in GitHub marketplace.
Mike: I did find it interesting that the way he opened his talk was the fact that he got fired, that was the day before Christmas or something like that. It was kind of a life-changing event for him and he’s like, “Okay, well now what do I do?” It took him a little while before he figured out, “Well, I kind of wanted to do this and launch my own thing,” and then he did it. There were a bunch of mistakes that he made along the way and things changed for him as he made tweaks to the business and as he basically, just improved things. I think that’s something that a lot of people forget is that, just launching is not the end of the story, that’s not even the destination or the goal, that’s the beginning of it; that’s where you start to learn things and where the rubber hits the road and you’re able to start adjusting what it is that you do. You hear from customers and tweak the business.
Rob: Another good talk was from Lianna Patch, a returning MicroConf speaker. The take away I have from her talk was, “Don’t make stupid copywriting mistakes.” She actually talked and covered a lot of topics, but the stupid copywriting mistake section was cool. She talked about having me-centric copy. Instead of having you and your, it has a lot of I’m, and we, and me. She talked about writing like a robot. Sentences that were too complicated, trying to do too much, and then clichés and nonsense phrases, and had a bunch listed there.
Again, microconfrecap.com if you want to see the specifics of that, but Lianna is in the trenches. She runs Punchline Copy and is on a day-to-day, week-to-week basis is writing a lot more copy than you and I frankly. She really is in the weeds on how this stuff should be done. She actually wrote the copy for bluetick.com, didn’t she?
Mike: Yes, she did. She wrote a couple of emails in the email sequence as well. I gave her access to all the notes and stuff that I had taken from all the customer interviews and customer development that I’ve done. She took that and she translated into the copy for the website. She also went through and tweaked all the onboarding emails and the educational emails that I put out there. Basically, overhauled the entire thing. Honestly, it’s doing its job. It’s just doing it really well.
Rob: That’s cool. I realized I just said bluetick.com but you’re bluetick.io. Sorry about that. Your website looks great. I just went to it. It looks really good. I’ve not seen it redesigned. How long ago did that happen?
Mike: That was a while ago. We talked about that on the podcast, that was probably close to a year ago.
Rob: Did we? I don’t remember it.
Mike: I mean there’s been little tweaks and stuff, it depends on what you’ve seen. I don’t know.
Rob: Yeah. The design it’s far superior to my memory of what Bluetick was. My memory must be dated at this point.
Mike: I’ve had it redone I think just before the last MicroConf.
Rob: Mike, do you hear the music in the background? We are on the 21st floor of a hotel in Las Vegas.
Mike: It’s interesting, I almost feel like there should be security coming over and kicking you out because you’re wearing flip flops and you look too old to be here.
Rob: Yeah, exactly. Wait a minute, I’m not doing either of those things. I did not look too old. Alright, I do a little bit.
Mike: Don’t you remember when that happened at the Hard Rock?
Rob: Yeah. Weren’t they filming some type of like an MTV something around the pool? I think what it was—now, they didn’t say it out loud that we were too old, and this was a few years ago, but we were in beach gear. I was wearing jeans and a t-shirt with flip flops. They wanted you to be in a full on no shirt, swim trunks, totally ripped abs, the whole deal. I was walking, “Sorry, sir. We’re filming.” “Really, what are you filming?”
Mike: I think you should correct that, it’s not us, it was you.
Rob: It was me. No, I was including you man.
Mike: I wasn’t there.
Rob: Alright, forget it. We didn’t notice. We didn’t go back to the Hard Rock the next year.
Mike: That’s true. Although they didn’t demolish it in later years.
Rob: A little known fact, the hotel that the first MicroConf was at was demolished shortly thereafter because it was so old.
Mike: Our next talk was from Omar Zenhom and he’s from WebinarNinja. I thought this was actually a fascinating talk, mostly because there was one takeaway that I think just kind of tramped all others that you could possibly take it away from that which was, “You should build an audience before building a product. If you don’t have an audience, you just simply do not have a product, and nothing you can do is going to change that.”
Rob: Yeah and I don’t agree with him on that. I think that’s how he did it and I appreciate his perspective of how he built the business using an audience, but I have seen too many founders who have built businesses without an audience. Do I agree that it makes it easier? Yes. Do I agree that maybe it’s a thing you should do? Maybe. But if you’re not that type of person, don’t do that. I have known founders and many founders who have amazingly successful businesses and did not start with an audience.
Mike: Maybe I should qualify that a little bit better. I agree with you that you don’t need the an audience before you start, you don’t have to build the audience before you build the product. But I do think that there is a certain amount of momentum that you kind of need to maintain over time and doing that almost requires an audience. That’s not for every product, but I think for any product of some scale and complexity where it takes time to educate people, and they’re not going to be at the right point in order to purchase your product, it may be three months or eight months out, or maybe even two years.
You need to be able to keep them around and the way you keep them around is through some sort of content marketing, or education, and you’re going to be able to catch them at that moment. If you don’t, it’s going to be hard to scale your business to a much higher level than if you’ve got a product and you’re only catching them at the time where they are experiencing that pain point enough to go look for a solution.
Rob: Yeah, maybe. I think of Salesforce, maybe Salesforce is a bad example, but think of just outbound cold email and companies that have grown doing that. They don’t have audience. I mean, I have talked to TinySeed applicants, they have zero audience. Actually, they have almost no traffic to their website, and yet they’re doing several thousand in MRR and growing, because they’re just using other tactics; using traditional sales tactics. The internet marketer space, or in the SMB space, so to speak, it could be a potential thing. WebinarNinja is definitely going after SMBs. It’s going after some aspirational entrepreneurs. It’s going after a crowd where building an audience is super important. It’s a great thing to leverage, but if you’re not in that space, I guess I would not wholeheartedly agree with that assessment.
Mike: Sure. I guess maybe I said that more because that’s the type of space that I operate in now and that I would want to work with. There’s obviously certain ones where I wouldn’t want to, and that I don’t think it would work there.
Rob: Yeah, totally. The other thing I liked that Omar said there, where had one slide where he said, “Take things that are unique about you and make them your advantage.” We talked about his name, how no one else has Omar Zenhom, and that was a unique thing. He could rank at Google really easily for that. No one else was from Egypt. He just talked a lot about himself, about how he used that as a superpower. I thought that was cool because I think it’s something a lot of us, me included, try to fit in and try to not be unique for some reason because we feel like fitting in is important, but I actually like the sentiment of making your unique thoughts, skills, and abilities your true advantage.
Mike: The last talk we’ll cover in this episode is Asia Matos who runs demandmaven.io. I really liked the fact that because of the split between Starter and Growth edition, she spoke at Starter edition. One of the great things about splitting the conference in two is that speakers can hone their talk to the audience. She really honed it down to basically telling them, “Look, there’s lots of different pieces of your sales funnel, but if you want to get to your first 100 customers, you really need to focus on that bottom of the funnel and try and make sure that you are talking to them directly about your product, and exactly what it can do.” Because the middle of the funnel, and at the top of the funnel, those are much broader areas to tackle and they’re harder to do if you’re not able to convert people at the bottom.
If you can’t convert them at the bottom, adding more people into your sales funnel isn’t going to change that and it’s not going to help. It will get you more customers, assuming you can add enough at scale, but if the bottom of your funnel is so leaky that it doesn’t really move the needle for you, then there’s no point in trying to do that. Really focus on the bottom, optimize that, and that’s really going to help you move forward.
Rob: Yeah. This is really good advice and it’s not talked about enough. I’m glad that this was the point of her talk really, is that people think they just need to send more people onto their website or into a trial, but if churning people out, or if people are not going trial to paid, or if people are not going visitor to trial, you have to start at that bottom and work up. Of course, you need another traffic that you can do some type of testing for the numbers to make sense. Certainly, scaling up and starting at the top of funnel just doesn’t make sense. She was a dense talk in a good way. It was a lot of information. She actually compressed a longer talk down to fit in our speaking slot. I think she did a good job of covering how to get your first 100 customers. 17th and 18th MicroConf are in the bag sir, how do you feel?
Mike: Tired.
Rob: Drunk.
Mike: Not yet.
Rob: I know. We’re like one shot. This is a good whiskey though.
Mike: Actually, I’m on my second or third. Probably second right now.
Rob: I’m in the other room. Mike and I always record across the country rather I guess at this point halfway across the country. It’s so weird when every five years, we happen to be in the same place, and we try to record, and there’s echo and all this stuff. We’re in the same hotel room, but it’s a suite, and we have a door closed between us. It’s just a unique experience.
Mike: For sure. I did realize something. Did you think about the fact that MicroConf Europe is going to be the 19th MicroConf, and then next year, Growth edition will be the 20th?
Rob: What a trip. How fitting.
Mike: Yeah.
Rob: I had not thought about that at all, that’s cool. Speaking of MicroConf Europe, it’s in Croatia again, at that amazing ridiculously cool hotel where every room as an ocean view of the Mediterranean. It is October 21st and 22nd of 2019. Tickets will go on sale. They may already be on sale to the early bird list as your listening with this. But go to microconfeurope.com, enter your email if you’re interested in potentially joining us and around 150 other software founders who are trying to get their stuff done.
Mike: Well, I think that about wraps us up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 438 | Casual Conversations with Rob & Mike
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike have a casual conversation about what’s going on with each other recently. Some of the topics they touch on include Dungeons & Dragons, personal computer setups, new ideas for MicroConf, and Bluetick/TinySeed updates.
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Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be having a casual conversation about what’s going on. This is Startups For The Rest Of Us episode 438.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob: I just felt like we haven’t done kind of a casual episode in a while where you and I talk about things that are going on. We often get stuck in this odd place where we might have a lot going on, but it’s not necessarily stuff you can talk about or feel comfortable broadcasting to tens of thousands of people. I feel like we’re in a good place, we’re obviously pre-recording this episode because it’s going to go live after MicroConf—I think the week after—and we’re recording it the week before just because so much is going on that whole week. Since we do Growth and Starter now, I mean the week is just torched for me. When do you fly out and when do you fly back?
Mike: I fly out on Friday. I get in at like 8:00 PM or so on Friday night and then I don’t leave until the following Friday. I think my flight is at 12:00 PM or 1:00 PM or something like that.
Rob: Yeah. It’s a full on week for you. I go Saturday to Friday. It’s only six days but still, A, six days, seven days in Vegas is too long. B, pretty much the whole time—I don’t know about you—but all I’m thinking about is, what am I forgetting? What am I missing this year? Oh yeah, we need that opening slideshow for the first 10 minutes of each conference. I need to update that. There’s all these little things and then stuff just really ramps up Sunday. Honest question, do you sleep very well at MicroConf typically?
Mike: I haven’t slept well in 4-5 years so it’s not a really fair question.
Rob: Yeah, you’re the wrong person to ask. I tend to sleep well. I don’t have many sleep problems in general aside from grinding my teeth which is irritating as heck for Sherry. At MicroConf I always struggle and I think it’s just how much I have going on in my mind. I wake up at 5:00 AM and I got to make sure to do that one thing or to tell that to that one person who needs to be at that one place at that time. There’s just a lot of details.
Xander has changed the game for us absolutely. But even then, I’m still thinking about stuff. Frequently what happens is I think of it, “Oh yeah, we need to do that one thing.” Then I wake up in the morning and I text you and Xander and Xander’s like, “Yeah, I already took care of that a week ago.” That’s actually the most often thing, but it still wakes me up in the middle of the night.
Mike: I think when I am in Vegas for MicroConf, I tend to actually sleep better I think when I’m there than when I’m at home, but that’s also I think partially a result of me remembering to bring a sleep mask because otherwise, the blinds of the hotel rooms are absolutely horrendous. You flip and shut but any hotel I’ve ever been in, they’re never very good so you have to have something else.
It feels like it gets so light so early and it just screws me because I tend to be up late and then the light comes and wakes me up in the morning. That’s the biggest problem I think I have. I agree with you in like having all those little things that are hanging out, they come up and you have to remember that, “We have to do this. I have to go back and tweak that from last year’s slides,” or whatever. That obviously comes up just constantly.
I carry around a pen and a notebook at all times just so I can make sure to write things down as they’re happening, or keep track of what has to go on with different sponsors, or different times of each conference. There’s just lots of little things to keep track of and trying to keep them in your brain is just not going to happen.
Rob: Yeah and that’s a good point too, because in my day-to-day workflow, I use email a ton. I use Trello. I just have a system that all goes out the window when I’m at MicroConf because I’m not checking email very much at all and I’m not looking at my Trello board. I have email to Trello basically. If you and I are talking in day-to-day or I’m at a dinner party and someone mentions a book I should read, or a something I should check out, a website, a person I should contact, whatever, I pop open Gmail, I email my own Trello board and it goes to the top of it. The next time I sit on my computer, I put it into the right queue. It’s an Amazon wish list, or an Audible wish list, or I fire off an email or whatever.
I don’t do that at MicroConf because I’ve just not checked my Trello board at all. That pen and paper approach you’re talking about, it’s either that or Simple Note because I have Simple Note on my phone. I just open up like a MicroConf-only to-do that I have to keep referring back to because I just find that my systems don’t work when we’re just running 110% for five days straight.
Mike: Yeah, I agree. That’s why I kind of switched over to the pen and paper. One of the things that tends to drop down on my list is the email and text notifications, though text notifications are different than Slack notifications. I totally don’t pay attention to it. You’re right though, being in a different environment like that where you’re not at your desktop, you don’t have all the tools available to you because you’ve just got so many other things going on, and you’re not really able to get into any sort of deep work because you don’t have your desktop, or laptop, or whatever. It’s just a very different operating environment.
Rob: Do you still use a desktop, Mike?
Mike: I do.
Rob: Are you going to bring that with you to MicroConf?
Mike: No, I’m not. I think the 30-inch monitor would probably be hard to get through.
Rob: For the love of god man, why do you use a desktop at home and not a laptop?
Mike: I have yet to find an actual laptop that I like and like enough to take with me, that’s part of it I think. I built my desktop from hand, because I’ve always kind of built my own computers even back when I was in college. I like the hardware that went with it but at the same time, because I built this 5-6 years ago, actually no, it’s more than that because I just recently reformatted everything, but I didn’t replace any of the hardware. I’m trying to remember, I think I found a software that was installed like 2010-2011. Most of the hardware is that old. I think it’s a hex core machine. It was a top of the line Core i7 at the time. I’ve got 64 gigs of RAM in it and SSD drives. The thing is it’s still a beastly machine all things considered.
Rob: Given that it’s 10 years old or 9 years old I guess, that’s a trip. I guess my question is and it’s going to die eventually. It’ll either fail or it’ll just be too slow to run stuff. When that happens, are you going to buy or build another desktop or you just kind of pony up for top of the line, because you’re in Windows right? It’s top of the line Dell, or HP, or whoever’s making Lenovo these days.
Mike: Yeah. For a while, I’ve been using a MacBook Pro and just ran VMware on top of it.
Rob: Dual booting or VMware. Are you going to just buy a high-end MacBook?
Mike: I don’t think so. I have not heard anybody have great things to say about the newer Macs. Everybody I see talking about them kind of hates them. They’re like, “I wish I could go back to the 2013 model.” Funny enough, I actually have a 2013 MacBook Pro. I use that when I travel, but I go back and forth on this. I think the biggest thing for me is, in order to be productive, I feel like I have to have more screen real estate available to me. I run three monitors at all times. One of them is a 30-inch and a pair of 20-inch monitors. That really works well for me. Going to a laptop kind of sucks. I looked at like the Surface Books…
Rob: You can do that because I run two monitors, two 24-inch or whatever off of my laptop. My laptop is one monitor and it’s retina so it’s amazing, and then I have the two 24s, so I essentially have three. How is that different than what you’re doing?
Mike: It’s not, except that on the one laptop that I was looking at was the Microsoft Surface Book and it doesn’t have the ability to do three monitors at 60 hertz because of the bandwidth limitations or something like that for 4K monitors. They’re so close, they really are.
Rob: That’s the limitation. I wonder if there isn’t a laptop out there—you don’t need to drive three monitors, you just need to drive two because the laptop itself if it’s high-res, you can use that in the center. I have an elevated thing. My laptop is up at eye level, and then I have a remote Bluetooth keyboard and mouse that I sit on my lap, basically on a panel, that’s the center monitor and then I have two on the other side. I just need to drive two. A, will that situation work for you and B, can you find a windows laptop that can drive two 4K monitors?
Mike: I haven’t tried doing that yet. Would it work for me or could I make it work for me? I probably could, but your comment about, “Oh, eventually my machine is not going to be able to do it.” My machine’s lasted long enough. Since that time, processors haven’t gone to six or seven gigahertz. I don’t think it’s an issue of that so much as just being able to have the laptop itself. I don’t have a justifiable reason to just go drop $3000-$4000 on a new laptop.
Rob: I agree and I don’t think you should do that now. I was just wondering when your desktop fails because it will. Something’s going to happen or it’s going to get too slow in the next five years. It’s not going to last 15 years. I was just wondering what you were going to do at that point, but maybe you’ll evaluate it when you get there.
I guess the thing of just working on a laptop all the time is then when you’re traveling, you’re not in this weird environment where you don’t have your stuff and it’s not the way it is. I have a 13-inch MacBook Pro and it is the new one with the touch bar. I don’t love the touch bar but I’ve gotten used to it. When I’m at home, I have extra screen real estate it’s amazing. When I’m on the road, I don’t but you can flip back and forth between the windows and I have the exact same shortcuts, icons everywhere, the same files, everything. It’s the same hard drive.
To me, traveling isn’t this big issue. I hate switching computers I guess is what I’m saying. I figure that’s why most people have moved to laptop so they can be mobile and go to a coffee shop or do something and it’s not this step down, aside from screen real estate, it’s not a step down in productivity. That’s all I was wondering for you.
Mike: That’s something I look at. My preference I think would be able to have a laptop that can do everything that I want and needed to do and that I just have a docking station. Just plug it in and everything’s the same. I can go on the road, or go to a coffee shop, or something like that, but I don’t work well or at least I haven’t historically worked very well in coffee shops or remote locations. It’s partly because I have back problems.
For me to sit at a coffee shop or in some weird chair that doesn’t do a good job of distributing my weight, I have kind of a hard time just sitting there and trying to be productive because I’m just sitting there in pain more than anything else. Maybe that’s part of why it doesn’t matter nearly as much to me as it probably would to somebody else. But I do want to at some point be able to switch and just say I just grab the thing and go, and that’s my entire environment, and nothing’s changed, I don’t have to worry about any of the stuff that you talked about where syncing things back and forth.
Most of the time for the current setup I have like, I have a MacBook Pro but then I have a windows VM that’s running on it. I reinstall all the software there. It’s a very similar environment. It’s not exactly the same, but anything that needs to be there, I just keep it in Dropbox, or Google docs, or something like that. It’s not that big a deal and Chrome keeps all my bookmarks in the same places. It’s not nearly as painful as it probably was 10-15 years ago.
Rob: That’s what I was going to say. With Dropbox and being able to sign in to Chrome and have your browser. You’re in your browser a lot of the time anywhere unless you’re writing code so it is nice. We were talking about MicroConf and we veered into that. I’m pretty stoked man. You’re running a little mini campaign fifth edition D&D on Saturday.
Mike: I am. I’m looking forward to that. I’ve got a bunch of stuff that’s already kind of laid out. I have just a couple of things I got to send you guys. I have to do that in the next day or so. It should be good. I almost wish I could talk a little bit more about it because I think it’s going to be interesting. I’ve actually run it twice so far. It’s not like everything is completely new. There are certain places where I know that there’s a few issues to iron out, but I think I’ve got them all straightened out. I took all of your characters and I gave them to other people and said, I want you to play these characters and I wanted to see how things kind of shook out. I’m hoping it’s well prepared.
Rob: That’s cool. If you’ve done it multiple times, to me it’s like a conference talk. The second, third, and fourth time I do a talk, it just gets better and better until to the point where I get bored of it, and it starts getting worse. I think you’re still on the upswing with this campaign.
Mike: Yeah. We’ll see. I mean it’s just a simple one shot. I expect it to take maybe three—like both times I ran it before, it’s taken four hours. I got to come and tighten that in somehow.
Rob: A little bit, yeah.
Mike: I have an idea of how to do that, I’m not sure you guys will like it though.
Rob: To kill it, do a TPK.
Mike: No. Well, I could do that. The very first room you walk into, “Hey, nobody dies. Let’s go get a beer.” I was thinking something along the lines of like a timer or something like that would be like, “Hey, this is kind of timed here, you’ve got to go a little bit quicker than you normally would.” I don’t know.
Rob: There’s a nuclear bomb waiting to go off and goes off of you if you don’t get this done. Is this campaign something you came up with or is it like a module?
Mike: It’s a module. Somebody ported it from fourth edition to fifth, and then I ported it from that platform because it was made for Fantasy Grounds which allows you to play D&D online. You get tokens and stuff to drag around and stuff, but the module itself because it was ported from fourth edition to fifth edition, it’s got errors in it. That’s why I wanted to play it a couple times in advance because the very first time I run it I was like, “This is a problem. That’s a problem. This is wrong like flat out.” They’re referring to things that just simply don’t exist and the authors never went back and fixed any of it. It’s like, “Well, what’s my interpretation of what it should be or how it’s supposed to be?”
Rob: It’s going to exciting and for folks who don’t know, it’s fifth edition Dungeons and Dragons that we’re talking about which is the current edition of that. You and I have never gamed together before, so this would be kind of cool. Frankly, I got out of D&D until 4-5 years ago when my oldest son got old enough to start playing, then I had the impetus to get into it again. Did you also take a bunch of time off from it and recently get back into it?
Mike: When I graduated from high school and went to college, I think I played once once or twice. I played once in college that I remember and I might have played over the summer the year after I went to college or something like that with some friends back home. But like you, I took a bunch of time off and I started again. When they first published fifth edition, I bought the books as they came out. When those were published I think back in 2014, this was about five years ago, that’s when I got back into it and started rereading stuff.
I basically skipped from the second edition all the way to the fifth and know very little about the third and fourth editions other than what I’ve read about what the differences are between those and the fifth edition. Just because some people I play with have played the version three and I didn’t know much about it. I was trying to educate them about what the differences were, but most of the people I play with now, they’ve either played second edition or they’re kind of new.
Rob: I did the same thing. I played basic back in the early 80s and then played [inaudible 00:15:39]. When the first edition AD&D came out, we played that. I don’t think I ever played second edition, never played third or fourth. When I got back into it, let’s say 4-5 years ago, I Googled, “Coming back into D&D. I’m going to teach my kid. Should we play first edition because that’s what I’m most familiar with or is fifth edition good?” There were some really cool threads talking about the pros and cons of it.
In the end, people are like, “Fifth edition is a better,” not better, that was not the word they used, but it’s a faster rule set. The game moves quicker. It’s easier to understand for someone who’s never played it and there’s tons of new stuff being put out for. You can do either one, but consider checking out fifth edition. It’s nice that the rules are available for free. There’s a PDF that Wizards of the Coast lets you down. I downloaded it and I was blown away by the simplicity and how they’ve gotten rid of all of descending armor class, and all these tables to hit, and saving throws and stuff and it’s just come down to difficulty checks with advantage and disadvantages. It’s just really elegant to me—elegant simplifications of things.
I know folks who are used to the old stuff, adapting something new is like changing programming languages from SEED to Ruby or something, seed.net where it’s like, “Oh my gosh, this is such a different paradigm.” Even if it might be more elegant or whatever, it doesn’t feel that way because it’s different. When I was 10, 12, or 14, I just had hours and hours to pour into it, invented our own stuff, and read every book, but I just don’t have that time now. It’s like, “Look, I have two hours a week maybe three hours to hammer something out. What’s fast and what’s fun to play?”
Mike: Now you can go online and there’s like random dungeon generators, and random character generators, and all the stuff, they’re fantastic tools that streamline things. I remember I used to spend an hour or two creating a character and now you can just go and use one of these tools, and you can have a character done in 10-15 minutes tops. That’s just fantastic.
Rob: Yeah.
Mike: I agree. I love the fifth edition rule set overall the other ones over the basic edition, the AD&D first edition, and second edition just because I think the biggest thing that I think it has going for it is that your character will get more powerful as they level up, as opposed to depending so much on items and things like that in order to make you more powerful. That’s the thing I think I disliked the most about some of the previous editions, because you could just make somebody completely overpowered at a super low level just by giving them a bunch of magic items. Whereas with this one, you’re competitive every step of the way with no magic item which is kind of awesome.
Rob: Right, it makes sense. I know we can talk about D&D. This could be a casual D&D conversation with just Rob and Mike, or tabletop gaming. Folks who don’t play D&D might have already tuned out. Those two listeners are gone. I have a question for you. Have you ever been to a conference where the opening 10 minutes, where the host gets on stage and talks about things, sets the stage so to speak, for what’s going to happen during the conference. What’s the best one of those you’ve ever seen? Have you seen any that have blown you away, I think. Obviously, the reason I’m asking you is, we have adapted ours over the years especially last year changed, the whole slide deck changed, the format changed, and stuff. I’m just trying to think about the best way to keep improving that.
Mike: I don’t know about best. I would say the most interesting one I ever saw—and I wasn’t there personally for this—I’m think this is a little bit of secondhand information. I was there the year after and I think that as a result of that previous year, things have changed in terms of policies of the company. It was at a Altiris conference back in, I want to say 2007-2009 timeframe, or something like that maybe it was even slightly before that, but the founder of the company came in through the back, and went through the aisles, and up on the stage riding a motorcycle.
Rob: Okay. Let’s talk to Xander, and on Monday, I want you to do that.
Mike: Sure. I do have my motorcycle. I could do that theoretically.
Rob: Fantastic.
Mike: I think we may need to update the insurance, and waivers, and various other things.
Rob: And all the things, yeah, and rent a motorcycle, and get the drop to let us drive it through the hall. Alright, so that’s not helpful. That was completely unhelpful.
Mike: That’s my job here I think, to be completely unhelpful.
Rob: Exactly. Doing it 438 episodes since 2010—being unhelpful.
Mike: Yeah. I don’t know what the most interesting thing is. I mean I’ve been to conferences where the founder of whatever the business is, will come out and then give a really good opening talk or presentation, and it talks about the future, but it’s not like a 5 or 10 minute intro. It’s usually the keynote speech or something like that.
Rob: It’s a keynote, right. It’s an actual talk. Obviously, at MicroConf, for folks who haven’t been, you and I get up and we have between 10-15 minutes right at the start of the conference where we welcome everybody, we talk about what MicroConf is, we go through a breakdown of attendees, and stages they’re at, and that kind of stuff. It sets the stage for where we’re headed. Because it would be weird if everyone shows up at 10:00 AM on Monday and you and I get up and we’re just like, “Ladies and gentlemen, Jason Cohen, Chris Savage,” or whoever our speaker is and they get up on stage, because it’s not a program, it’s just a disjointed speaker after speaker. There’s no context for all of it. That’s why we’ve always done the welcome of like, “Welcome.” I don’t know. I’m just trying to think of something that’s not a keynote per se. We could do whatever we want. We can’t do it this year because the schedule is already set but next year, you and I could…
Mike: Are you looking for something different like to change it up in terms of saying how can we do this differently, or just looking for ideas of what other things, or are you just looking for validation of, “Is this the best thing for us to do or not?”
Rob: I think we should do it. I don’t think that’s part of the conversation of us not getting up there. It could be super weird if we weren’t there to welcome the people. Someone has to be there. I think we should do something. I think what we did last year was better than what we have done in prior years. I just am looking, is there anything else we can add to that to make it even better. That’s what I’m thinking about.
I think the best one I’ve seen was at SaaStr. Jason Lemkin got up and talked for maybe 15 minutes. It wasn’t a keynote, it was kind of like the state of SaaStr. He talked about the conference, and he talked about their community, and he talked about their fund, and it really was just an overview. It’s like when you think about writing a 10-page paper. You start high level, and then you dig in deep, and then at the end you come back to high level to conclude, and that’s how I think we structure MicroConf.
We have that introduction that really is this high level context setting, and then at the end, we should wrap it up with context and stuff, and we even have to structure the talks that way. We don’t tend to put a super tactical talk as the first talk on Monday because the vibe is off if you do that. That’s it. I think I might try to think back to what SaaStr’s opening was like and see if there’s any elements of that that could apply to us. We are similar to that opening and that we do set context, but I think there’s just ways to do it better.
Mike: What we do is we set context for the attendees at the conference. An idea that comes to mind—and obviously, there’s zero time to do that for this year—this is actually something that I have had an idea of the within the past couple of years like, “Hey, it would be cool if somebody kind of headed this up.” Not that I really had the time to do it, but it’s something that either we could potentially put together because of the audience and community.
But as you said, kind of give the state of self-funded entrepreneurs, or the state of SaaS applications, or the state of software in general for extremely small software companies like ours. Give a 10-15 minute overview of, “Hey, this is some of the major changes that have kind of come out over the past year. This is how things are progressing. These are things that are going on in the industry that people should kind of either be on the lookout for or be careful of. These are some opportunities that you guys might want to think about.” As opposed to what we do right now which is welcome them to the conference which I do think we still need to do that. But I also think that it would be nice if there was this extra piece there that was kind of an opening that did set the stage for other stuff. I think what that would actually probably take is doing interviews with founders, or calls, or surveys, and things along those lines to help gather information from the community to be able to compile that and show it to them.
I did a talk in MicroConf Europe in 2016 that I basically did that. I asked people for information and say, “Hey, could you submit this?” I’m basically writing a talk about it. I included a bunch of that information, but it’s not something I could potentially do like every single year so I just didn’t keep it up. I think something along those lines could be helpful and useful for the audience.
Rob: Do you know what the name of my talk is on Monday afternoon? You have not looked have you?
Mike: You know, I don’t even know the names of all the speakers.
Rob: I know. Well, we do keep a firewall between speakers and sponsors. Literally, we were talking last week I guess and I said, “Yeah, I don’t know.” I know some of the sponsors because there’s a lot of them returning, but I tend to wait until a day or two before to look through all the sponsors. Because this is our editorial firewall. Advertising versus editorial, we don’t link those two up. I don’t want that to influence decisions.
Mike: Right.
Rob: But the name of my talk is, The State of Bootstrapping in 2019. It’s not exactly what you are talking about, but I am trying to give that overview and talk about trends, and what’s happened over the past 10 years. I mean, you saw my Europe talk from eight months ago, or six months ago. It’s an expansion of that.
Mike: That would be cool. I mean obviously, you don’t want to do a one hour talk at the very beginning like that.
Rob: Exactly.
Mike: I don’t know how you would condense your talk into 10-15 minutes. That’s the other thing I think I would struggle with is how to gather enough data that is meaningful and useful to the audience, and present it in a short enough timeframe that isn’t distracting, or it doesn’t create a whole host of other questions.
Rob: Right. We have all these questions and then it’s like, “Alright and now our first speaker.” And people are like, “No wait, I want to hear more. That was in the middle of it. I’m so confused.” What’s up with Bluetick?
Mike: Oh, let’s see here.
Rob: Oh, that? What’s Bluetick?
Mike: What’s that? Could you spell that? I need to Google it real quick while we’re on a call.
Rob: What’s the news on that? I’m sure people want to hear it. Have you been working on it? Are you too bogged down with MicroConf stuff?
Mike: I’ve been so bogged down with MicroConf stuff and all sorts of other things going on. I think we talked about it a little bit in the last episode or the one before that. Just the timing of MicroConf and lots of other things that are going on has been so incredibly bad that I have not had time to look at it. Last week I had to sit down for a day or two and look at renewing my health insurance, because I think most people renew their health insurance at the beginning of the year and mine’s up for renewal on April 1st. I and had to call them and I’m just like, “Look, this is really bad timing.” They’re like, “We need to have this paperwork in by the 1st. Otherwise, it’s going to renew at the current rates.” I’m like, “Dear god.” It’s the worst timing.
Rob: I don’t renew my health insurance. What does that even mean? You have to reapply and fill out paperwork? I’ve never done that.
Mike: They change the plans every year. I don’t know whether this happens for everybody. They change the insurance plans that are available and the rates for all of them change as well. Sometime they will move things around. It’ll change the prescription coverage, or they’ll change what is covered under a particular plan, or they’ll change copays or which hospitals they cover. It’s just like, “Dear god, this sucks.” I have to renew by April 1st or basically, I just don’t have coverage.
It will automatically renew but because of the timeframe, I have to look at it now and figure out whether what I’m going to be doing now is the right thing or not. I was like, “Well, what about an HSA account or something like that?” They said, “Well, in order for you to do an HSA account, we have to give you entirely new plans because these are not HSA certified.” I’m like, “Oh my god.” Then there’s like a health savings account which is not…
Rob: Wait, that’s not HSA. You’re FSA, flexible spending account.
Mike: I think that’s it. Yeah.
Rob: Yeah.
Mike: Yeah. All these terms that are very close to one another that I’m not familiar with because I’m not in that industry. I’m just like, “I’m so confused. Why do I have to learn this right now and have 10 minutes to do it?” Like I said, it’s just bad timing and lots of major things all in a very compressed timeframe and it sucks.
Rob: You’ve been doing health insurance, taxes, prepping for MicroConf, right?
Mike: Yeah.
Rob: And so Bluetick is just kind of ‘blue ticking’ along?
Mike: Yeah, basically. I mean aside from the things that I talked about the last couple weeks. The webcast I’m going to be doing. That’s scheduled in late April. I’ve been doing little things here and there trying to move things along. I’ve also been doing research on the backend framework that runs Bluetick. Maybe this is a good time to talk about that, or maybe we should talk about it in the future episodes. I talked to Andrew Culver briefly about it because he is the founder Bullet Train which is essentially a framework that you can use as a starting point for your app whatever it happens to be. He takes care of all of the fundamental things like sign in, password reset, Stripe integration, and all these things. Basically, you start plugging the logic of your application.
When I was first building Bluetick and started out, I couldn’t really find anything like that, but I did find an open source project where they said, “Hey, here’s the MIT license for this,” or whatever, “and you can use this stuff.” It looked like it was pretty decent it’s just it didn’t do everything that I needed to do, and then you’re seeing some of the same library. I based a lot of stuff in on it, imported some of the code, but then there’s obviously a divergence there. They did their own thing and I did mine.
I went back and looked at it and it’s much farther along than it was at the time, and more advanced in certain cases which would actually make it easier for me to use that and plug in more functionality, but the database tables don’t line up. I’d have to port things over and deal with that stuff. I’m just like, “Is it worth it?” I’ve done a little bit of exploration there, but by porting it over would give me all the core functions or the features of just like a SaaS application would be taken cared of for me, and I wouldn’t have to worry about them. I just don’t know if I have a good sense of how long it would take to do that or whether it’s worth it. It maybe something I just do it over time and not necessarily worry too much about it.
Rob: I think the question I asked is like, to me, your number one goal right now is more paying customers. It’s ensure problem-solution fit, ensure product-market fit, and more paying customers, and this doesn’t do that. I know that it makes longer term, it’s a good call. If you run this app for 10 years, 20 years, then yeah, it’s good to be on a framework assuming that they maintain it. But I think that’s pushing off the number one priority which is get more people in your funnel, close more deals, get more revenue because that’s really the point you’re at. Just my take.
Mike: I totally agree with that. That’s why I haven’t tried to bite the bullet and actually do it. There are certain issues that the app has in terms of team accounts and things like that. I’m just like, I don’t want to go down the path of some of those things right now until I have more customers and more revenue because it’s just not—I don’t want to say it’s not important—it’s not the top priority.
Rob: Yeah.
Mike: At some point, I’ll do it, but I have a hard time doing it now.
Rob: I would agree. There’s always a lot of distractions like that. I think we talked about last time where customers give you more things or even you have more great ideas and you can never implement. You, as part of being a founder and making the right choice, is picking the ones that are going to have the most impact for you. It’s like, “What are you trying to impact now?” To me, it’s your top line, or bottom line, or however you want to phrase that.
Mike: Yeah.
Rob: Cool. I guess in the interest of time, we’ll wrap up here in the next couple of minutes. There’s some new stuff at TinySeed but it’s in that weird phase where we have all these applicants and I’m interviewing a lot of them. I’m having fun doing it. It’s super busy and then like you, trying to get taxes done, prepping for MicroConf. My talk is not done and I fly out basically in 48 hours. I know. The dirty little secret of you do enough talks, and you find that you’re closer and closer to your deadline.
I remember Dharmesh Shah at BOS years ago; it was probably a decade ago now. We were talking and we’re both doing a talk that year I believe. I might’ve been doing like a lightning talking and he was doing a full one. Anyways, he said, “Yeah, I’ll start my talk at 11:00 tonight,” and he did it the next day. I was like, “What? I’ve been prepping for weeks.” I was obviously much earlier in my conference speaking than he was. He said, “Yeah.” He typically sits until three in the morning and just writes his talk all at once the night before and that that’s kind of his best way to work.
That’s not mine because I don’t like staying up that late, but I do find that the pressure of having to get it done often forces me to really focus and ship good material. I can burn dozens of hours over the course of weeks if I have all this time to write the talk. Now the practice of it I think is another thing. I think having more time to practice does improve the talks. Off to figure out some good times to do that.
Mike: That’s something I kind of struggle with too is, getting the talk done early enough to be able to also do a lot of practice. I don’t know about you, I have little hacks and stuff that I put in a bunch of my slides where if I’m going through it—and I have a couple bullet points—if there is a bullet point that has a period at the end of it, then I know that hitting the button again goes to the next slide and things like that. Most people wouldn’t catch those types of things, but there’s little things that I use as visual indicators for myself to know what’s coming next, or to pay attention to a certain thing, or make a certain point.
Rob: Yeah, that makes sense. I guess the last thing for me is with TinySeed. As with any startup in the early days—here’s the difference actually is, nowadays, if I were to start a new company that’s going to build a software product, I would go to Stripe Atlas and I would form an LLC or a C-Corp through their one click thing and it creates a bank account that does all these stuff. It’s a solved problem now. I know that you’re then going to need some other paperwork as you hire employees and stuff. There’s gusto and there’s benefits. There are ways that have simplified it.
It’s not there yet with starting an accelerator and essentially an investment fund. The nature starting those is not as refined. You go straight to law firm, and you’re forming multiple LLCs that reference one another, and there’s just a lot of complexity there. Luckily, Einar, my cofounder with TinySeed, has taken care of most of that. But there have just been a few points where I’ve been involved in conversations as we’re trying to get term sheets nailed down and stuff. I had one simple question about changing one word to make things clearer and it wound up being this 10 email back and forth that got more and more complicated.
I don’t know if I wasn’t explaining myself well, but it was one of those moments where I finally said, “I give up. It’s just going to have to be complicated on the dock because to change it from pre-money to post-money would require a huge paragraph, and all these exceptions, and this huge bulleted list in what is otherwise a 10-word sentence right now.” If we do pre-money, then it’s 10-word sentence. If we do post-money, I think based on what he was telling me, I couldn’t actually understand, it just [inaudible 00:36:04] out of control. That’s the kind of stuff that is so frustrating to me as someone who is trying to get things done.
I was trying to send things to people three days ago and then it winds up being this back and forth back. We were going to jump on the phone, I know it would have helped, it would’ve been the same conversation that happened via email. I think the perpetual frustration of being a founder is, you always have these things that are just outside of your control or maybe your expertise. They get complicated and they become time sucks beyond what they should I think. I’m learning when to just throw my head up and say, “I’m going to give up on this one. I’m not going to fight this anymore. I’m not going to waste anymore time.” I think as a younger entrepreneur, I wasted a lot of time fighting against things like this rather than eventually just saying, “Look, it doesn’t really matter. Just do it the way it is.”
Mike: You raged against a machine when you were younger?
Rob: Indeed I did, over and over.
Mike: I think that that type of problem happens in general when you start a business. There’s going to be certain things that are out of your control and it sucks because you want to move fast and you want to get them done. At the same time, I think that one of the issues that you’re running into is that, when it comes to legal terminology, there’s hundreds of years of history of legal things that have happened, and there is precedence that has been set. When you say one word versus another word, it can drastically change how that is interpreted in the eyes of the courts. It sucks to have to deal with that stuff.
I don’t want to say it’s exactly like programming because with writing code, you have to be very explicit about what you wanted to do, and then what the exceptions are. But with legal terminology, there’s always—I don’t want to say ambiguity—but there’s different ways to interpret the exact same words. It kind of sucks sometimes.
Rob: Yeah. It is what it is. I know that people out there are probably not in their head. It’s like taxes, legal stuff, there are others. I don’t know, plumbing code in your SaaS app. It’s things that don’t move your business forward.
Mike: You said plumbing code and I thought the actual plumbing pipes.
Rob: That too.
Mike: [inaudible 00:38:09].
Rob: It’s stuff that doesn’t move your business forward.
Mike: Right.
Rob: That’s all I have to say. We should probably wrap it up for the day huh?
Mike: Yeah, I think so.
Rob: Most of our episodes are not this casual. We answer a lot of listener questions as well as dive into detailed and interesting startup topics. If you have a question for us call our voicemail number at 888-801-9690 or you can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob: I just felt like we haven’t done kind of a casual episode in a while where you and I talk about things that are going on. We often get stuck in this odd place where we might have a lot going on, but it’s not necessarily stuff you can talk about or feel comfortable broadcasting to tens of thousands of people. I feel like we’re in a good place, we’re obviously pre-recording this episode because it’s going to go live after MicroConf—I think the week after—and we’re recording it the week before just because so much is going on that whole week. Since we do Growth and Starter now, I mean the week is just torched for me. When do you fly out and when do you fly back?
Mike: I fly out on Friday. I get in at like 8:00 PM or so on Friday night and then I don’t leave until the following Friday. I think my flight is at 12:00 PM or 1:00 PM or something like that.
Rob: Yeah. It’s a full on week for you. I go Saturday to Friday. It’s only six days but still, A, six days, seven days in Vegas is too long. B, pretty much the whole time—I don’t know about you—but all I’m thinking about is, what am I forgetting? What am I missing this year? Oh yeah, we need that opening slideshow for the first 10 minutes of each conference. I need to update that. There’s all these little things and then stuff just really ramps up Sunday. Honest question, do you sleep very well at MicroConf typically?
Mike: I haven’t slept well in 4-5 years so it’s not a really fair question.
Rob: Yeah, you’re the wrong person to ask. I tend to sleep well. I don’t have many sleep problems in general aside from grinding my teeth which is irritating as heck for Sherry. At MicroConf I always struggle and I think it’s just how much I have going on in my mind. I wake up at 5:00 AM and I got to make sure to do that one thing or to tell that to that one person who needs to be at that one place at that time. There’s just a lot of details.
Xander has changed the game for us absolutely. But even then, I’m still thinking about stuff. Frequently what happens is I think of it, “Oh yeah, we need to do that one thing.” Then I wake up in the morning and I text you and Xander and Xander’s like, “Yeah, I already took care of that a week ago.” That’s actually the most often thing, but it still wakes me up in the middle of the night.
Mike: I think when I am in Vegas for MicroConf, I tend to actually sleep better I think when I’m there than when I’m at home, but that’s also I think partially a result of me remembering to bring a sleep mask because otherwise, the blinds of the hotel rooms are absolutely horrendous. You flip and shut but any hotel I’ve ever been in, they’re never very good so you have to have something else.
It feels like it gets so light so early and it just screws me because I tend to be up late and then the light comes and wakes me up in the morning. That’s the biggest problem I think I have. I agree with you in like having all those little things that are hanging out, they come up and you have to remember that, “We have to do this. I have to go back and tweak that from last year’s slides,” or whatever. That obviously comes up just constantly.
I carry around a pen and a notebook at all times just so I can make sure to write things down as they’re happening, or keep track of what has to go on with different sponsors, or different times of each conference. There’s just lots of little things to keep track of and trying to keep them in your brain is just not going to happen.
Rob: Yeah and that’s a good point too, because in my day-to-day workflow, I use email a ton. I use Trello. I just have a system that all goes out the window when I’m at MicroConf because I’m not checking email very much at all and I’m not looking at my Trello board. I have email to Trello basically. If you and I are talking in day-to-day or I’m at a dinner party and someone mentions a book I should read, or a something I should check out, a website, a person I should contact, whatever, I pop open Gmail, I email my own Trello board and it goes to the top of it. The next time I sit on my computer, I put it into the right queue. It’s an Amazon wish list, or an Audible wish list, or I fire off an email or whatever.
I don’t do that at MicroConf because I’ve just not checked my Trello board at all. That pen and paper approach you’re talking about, it’s either that or Simple Note because I have Simple Note on my phone. I just open up like a MicroConf-only to-do that I have to keep referring back to because I just find that my systems don’t work when we’re just running 110% for five days straight.
Mike: Yeah, I agree. That’s why I kind of switched over to the pen and paper. One of the things that tends to drop down on my list is the email and text notifications, though text notifications are different than Slack notifications. I totally don’t pay attention to it. You’re right though, being in a different environment like that where you’re not at your desktop, you don’t have all the tools available to you because you’ve just got so many other things going on, and you’re not really able to get into any sort of deep work because you don’t have your desktop, or laptop, or whatever. It’s just a very different operating environment.
Rob: Do you still use a desktop, Mike?
Mike: I do.
Rob: Are you going to bring that with you to MicroConf?
Mike: No, I’m not. I think the 30-inch monitor would probably be hard to get through.
Rob: For the love of god man, why do you use a desktop at home and not a laptop?
Mike: I have yet to find an actual laptop that I like and like enough to take with me, that’s part of it I think. I built my desktop from hand, because I’ve always kind of built my own computers even back when I was in college. I like the hardware that went with it but at the same time, because I built this 5-6 years ago, actually no, it’s more than that because I just recently reformatted everything, but I didn’t replace any of the hardware. I’m trying to remember, I think I found a software that was installed like 2010-2011. Most of the hardware is that old. I think it’s a hex core machine. It was a top of the line Core i7 at the time. I’ve got 64 gigs of RAM in it and SSD drives. The thing is it’s still a beastly machine all things considered.
Rob: Given that it’s 10 years old or 9 years old I guess, that’s a trip. I guess my question is and it’s going to die eventually. It’ll either fail or it’ll just be too slow to run stuff. When that happens, are you going to buy or build another desktop or you just kind of pony up for top of the line, because you’re in Windows right? It’s top of the line Dell, or HP, or whoever’s making Lenovo these days.
Mike: Yeah. For a while, I’ve been using a MacBook Pro and just ran VMware on top of it.
Rob: Dual booting or VMware. Are you going to just buy a high-end MacBook?
Mike: I don’t think so. I have not heard anybody have great things to say about the newer Macs. Everybody I see talking about them kind of hates them. They’re like, “I wish I could go back to the 2013 model.” Funny enough, I actually have a 2013 MacBook Pro. I use that when I travel, but I go back and forth on this. I think the biggest thing for me is, in order to be productive, I feel like I have to have more screen real estate available to me. I run three monitors at all times. One of them is a 30-inch and a pair of 20-inch monitors. That really works well for me. Going to a laptop kind of sucks. I looked at like the Surface Books…
Rob: You can do that because I run two monitors, two 24-inch or whatever off of my laptop. My laptop is one monitor and it’s retina so it’s amazing, and then I have the two 24s, so I essentially have three. How is that different than what you’re doing?
Mike: It’s not, except that on the one laptop that I was looking at was the Microsoft Surface Book and it doesn’t have the ability to do three monitors at 60 hertz because of the bandwidth limitations or something like that for 4K monitors. They’re so close, they really are.
Rob: That’s the limitation. I wonder if there isn’t a laptop out there—you don’t need to drive three monitors, you just need to drive two because the laptop itself if it’s high-res, you can use that in the center. I have an elevated thing. My laptop is up at eye level, and then I have a remote Bluetooth keyboard and mouse that I sit on my lap, basically on a panel, that’s the center monitor and then I have two on the other side. I just need to drive two. A, will that situation work for you and B, can you find a windows laptop that can drive two 4K monitors?
Mike: I haven’t tried doing that yet. Would it work for me or could I make it work for me? I probably could, but your comment about, “Oh, eventually my machine is not going to be able to do it.” My machine’s lasted long enough. Since that time, processors haven’t gone to six or seven gigahertz. I don’t think it’s an issue of that so much as just being able to have the laptop itself. I don’t have a justifiable reason to just go drop $3000-$4000 on a new laptop.
Rob: I agree and I don’t think you should do that now. I was just wondering when your desktop fails because it will. Something’s going to happen or it’s going to get too slow in the next five years. It’s not going to last 15 years. I was just wondering what you were going to do at that point, but maybe you’ll evaluate it when you get there.
I guess the thing of just working on a laptop all the time is then when you’re traveling, you’re not in this weird environment where you don’t have your stuff and it’s not the way it is. I have a 13-inch MacBook Pro and it is the new one with the touch bar. I don’t love the touch bar but I’ve gotten used to it. When I’m at home, I have extra screen real estate it’s amazing. When I’m on the road, I don’t but you can flip back and forth between the windows and I have the exact same shortcuts, icons everywhere, the same files, everything. It’s the same hard drive.
To me, traveling isn’t this big issue. I hate switching computers I guess is what I’m saying. I figure that’s why most people have moved to laptop so they can be mobile and go to a coffee shop or do something and it’s not this step down, aside from screen real estate, it’s not a step down in productivity. That’s all I was wondering for you.
Mike: That’s something I look at. My preference I think would be able to have a laptop that can do everything that I want and needed to do and that I just have a docking station. Just plug it in and everything’s the same. I can go on the road, or go to a coffee shop, or something like that, but I don’t work well or at least I haven’t historically worked very well in coffee shops or remote locations. It’s partly because I have back problems.
For me to sit at a coffee shop or in some weird chair that doesn’t do a good job of distributing my weight, I have kind of a hard time just sitting there and trying to be productive because I’m just sitting there in pain more than anything else. Maybe that’s part of why it doesn’t matter nearly as much to me as it probably would to somebody else. But I do want to at some point be able to switch and just say I just grab the thing and go, and that’s my entire environment, and nothing’s changed, I don’t have to worry about any of the stuff that you talked about where syncing things back and forth.
Most of the time for the current setup I have like, I have a MacBook Pro but then I have a windows VM that’s running on it. I reinstall all the software there. It’s a very similar environment. It’s not exactly the same, but anything that needs to be there, I just keep it in Dropbox, or Google docs, or something like that. It’s not that big a deal and Chrome keeps all my bookmarks in the same places. It’s not nearly as painful as it probably was 10-15 years ago.
Rob: That’s what I was going to say. With Dropbox and being able to sign in to Chrome and have your browser. You’re in your browser a lot of the time anywhere unless you’re writing code so it is nice. We were talking about MicroConf and we veered into that. I’m pretty stoked man. You’re running a little mini campaign fifth edition D&D on Saturday.
Mike: I am. I’m looking forward to that. I’ve got a bunch of stuff that’s already kind of laid out. I have just a couple of things I got to send you guys. I have to do that in the next day or so. It should be good. I almost wish I could talk a little bit more about it because I think it’s going to be interesting. I’ve actually run it twice so far. It’s not like everything is completely new. There are certain places where I know that there’s a few issues to iron out, but I think I’ve got them all straightened out. I took all of your characters and I gave them to other people and said, I want you to play these characters and I wanted to see how things kind of shook out. I’m hoping it’s well prepared.
Rob: That’s cool. If you’ve done it multiple times, to me it’s like a conference talk. The second, third, and fourth time I do a talk, it just gets better and better until to the point where I get bored of it, and it starts getting worse. I think you’re still on the upswing with this campaign.
Mike: Yeah. We’ll see. I mean it’s just a simple one shot. I expect it to take maybe three—like both times I ran it before, it’s taken four hours. I got to come and tighten that in somehow.
Rob: A little bit, yeah.
Mike: I have an idea of how to do that, I’m not sure you guys will like it though.
Rob: To kill it, do a TPK.
Mike: No. Well, I could do that. The very first room you walk into, “Hey, nobody dies. Let’s go get a beer.” I was thinking something along the lines of like a timer or something like that would be like, “Hey, this is kind of timed here, you’ve got to go a little bit quicker than you normally would.” I don’t know.
Rob: There’s a nuclear bomb waiting to go off and goes off of you if you don’t get this done. Is this campaign something you came up with or is it like a module?
Mike: It’s a module. Somebody ported it from fourth edition to fifth, and then I ported it from that platform because it was made for Fantasy Grounds which allows you to play D&D online. You get tokens and stuff to drag around and stuff, but the module itself because it was ported from fourth edition to fifth edition, it’s got errors in it. That’s why I wanted to play it a couple times in advance because the very first time I run it I was like, “This is a problem. That’s a problem. This is wrong like flat out.” They’re referring to things that just simply don’t exist and the authors never went back and fixed any of it. It’s like, “Well, what’s my interpretation of what it should be or how it’s supposed to be?”
Rob: It’s going to exciting and for folks who don’t know, it’s fifth edition Dungeons and Dragons that we’re talking about which is the current edition of that. You and I have never gamed together before, so this would be kind of cool. Frankly, I got out of D&D until 4-5 years ago when my oldest son got old enough to start playing, then I had the impetus to get into it again. Did you also take a bunch of time off from it and recently get back into it?
Mike: When I graduated from high school and went to college, I think I played once once or twice. I played once in college that I remember and I might have played over the summer the year after I went to college or something like that with some friends back home. But like you, I took a bunch of time off and I started again. When they first published fifth edition, I bought the books as they came out. When those were published I think back in 2014, this was about five years ago, that’s when I got back into it and started rereading stuff.
I basically skipped from the second edition all the way to the fifth and know very little about the third and fourth editions other than what I’ve read about what the differences are between those and the fifth edition. Just because some people I play with have played the version three and I didn’t know much about it. I was trying to educate them about what the differences were, but most of the people I play with now, they’ve either played second edition or they’re kind of new.
Rob: I did the same thing. I played basic back in the early 80s and then played [inaudible 00:15:39]. When the first edition AD&D came out, we played that. I don’t think I ever played second edition, never played third or fourth. When I got back into it, let’s say 4-5 years ago, I Googled, “Coming back into D&D. I’m going to teach my kid. Should we play first edition because that’s what I’m most familiar with or is fifth edition good?” There were some really cool threads talking about the pros and cons of it.
In the end, people are like, “Fifth edition is a better,” not better, that was not the word they used, but it’s a faster rule set. The game moves quicker. It’s easier to understand for someone who’s never played it and there’s tons of new stuff being put out for. You can do either one, but consider checking out fifth edition. It’s nice that the rules are available for free. There’s a PDF that Wizards of the Coast lets you down. I downloaded it and I was blown away by the simplicity and how they’ve gotten rid of all of descending armor class, and all these tables to hit, and saving throws and stuff and it’s just come down to difficulty checks with advantage and disadvantages. It’s just really elegant to me—elegant simplifications of things.
I know folks who are used to the old stuff, adapting something new is like changing programming languages from SEED to Ruby or something, seed.net where it’s like, “Oh my gosh, this is such a different paradigm.” Even if it might be more elegant or whatever, it doesn’t feel that way because it’s different. When I was 10, 12, or 14, I just had hours and hours to pour into it, invented our own stuff, and read every book, but I just don’t have that time now. It’s like, “Look, I have two hours a week maybe three hours to hammer something out. What’s fast and what’s fun to play?”
Mike: Now you can go online and there’s like random dungeon generators, and random character generators, and all the stuff, they’re fantastic tools that streamline things. I remember I used to spend an hour or two creating a character and now you can just go and use one of these tools, and you can have a character done in 10-15 minutes tops. That’s just fantastic.
Rob: Yeah.
Mike: I agree. I love the fifth edition rule set overall the other ones over the basic edition, the AD&D first edition, and second edition just because I think the biggest thing that I think it has going for it is that your character will get more powerful as they level up, as opposed to depending so much on items and things like that in order to make you more powerful. That’s the thing I think I disliked the most about some of the previous editions, because you could just make somebody completely overpowered at a super low level just by giving them a bunch of magic items. Whereas with this one, you’re competitive every step of the way with no magic item which is kind of awesome.
Rob: Right, it makes sense. I know we can talk about D&D. This could be a casual D&D conversation with just Rob and Mike, or tabletop gaming. Folks who don’t play D&D might have already tuned out. Those two listeners are gone. I have a question for you. Have you ever been to a conference where the opening 10 minutes, where the host gets on stage and talks about things, sets the stage so to speak, for what’s going to happen during the conference. What’s the best one of those you’ve ever seen? Have you seen any that have blown you away, I think. Obviously, the reason I’m asking you is, we have adapted ours over the years especially last year changed, the whole slide deck changed, the format changed, and stuff. I’m just trying to think about the best way to keep improving that.
Mike: I don’t know about best. I would say the most interesting one I ever saw—and I wasn’t there personally for this—I’m think this is a little bit of secondhand information. I was there the year after and I think that as a result of that previous year, things have changed in terms of policies of the company. It was at a Altiris conference back in, I want to say 2007-2009 timeframe, or something like that maybe it was even slightly before that, but the founder of the company came in through the back, and went through the aisles, and up on the stage riding a motorcycle.
Rob: Okay. Let’s talk to Xander, and on Monday, I want you to do that.
Mike: Sure. I do have my motorcycle. I could do that theoretically.
Rob: Fantastic.
Mike: I think we may need to update the insurance, and waivers, and various other things.
Rob: And all the things, yeah, and rent a motorcycle, and get the drop to let us drive it through the hall. Alright, so that’s not helpful. That was completely unhelpful.
Mike: That’s my job here I think, to be completely unhelpful.
Rob: Exactly. Doing it 438 episodes since 2010—being unhelpful.
Mike: Yeah. I don’t know what the most interesting thing is. I mean I’ve been to conferences where the founder of whatever the business is, will come out and then give a really good opening talk or presentation, and it talks about the future, but it’s not like a 5 or 10 minute intro. It’s usually the keynote speech or something like that.
Rob: It’s a keynote, right. It’s an actual talk. Obviously, at MicroConf, for folks who haven’t been, you and I get up and we have between 10-15 minutes right at the start of the conference where we welcome everybody, we talk about what MicroConf is, we go through a breakdown of attendees, and stages they’re at, and that kind of stuff. It sets the stage for where we’re headed. Because it would be weird if everyone shows up at 10:00 AM on Monday and you and I get up and we’re just like, “Ladies and gentlemen, Jason Cohen, Chris Savage,” or whoever our speaker is and they get up on stage, because it’s not a program, it’s just a disjointed speaker after speaker. There’s no context for all of it. That’s why we’ve always done the welcome of like, “Welcome.” I don’t know. I’m just trying to think of something that’s not a keynote per se. We could do whatever we want. We can’t do it this year because the schedule is already set but next year, you and I could…
Mike: Are you looking for something different like to change it up in terms of saying how can we do this differently, or just looking for ideas of what other things, or are you just looking for validation of, “Is this the best thing for us to do or not?”
Rob: I think we should do it. I don’t think that’s part of the conversation of us not getting up there. It could be super weird if we weren’t there to welcome the people. Someone has to be there. I think we should do something. I think what we did last year was better than what we have done in prior years. I just am looking, is there anything else we can add to that to make it even better. That’s what I’m thinking about.
I think the best one I’ve seen was at SaaStr. Jason Lemkin got up and talked for maybe 15 minutes. It wasn’t a keynote, it was kind of like the state of SaaStr. He talked about the conference, and he talked about their community, and he talked about their fund, and it really was just an overview. It’s like when you think about writing a 10-page paper. You start high level, and then you dig in deep, and then at the end you come back to high level to conclude, and that’s how I think we structure MicroConf.
We have that introduction that really is this high level context setting, and then at the end, we should wrap it up with context and stuff, and we even have to structure the talks that way. We don’t tend to put a super tactical talk as the first talk on Monday because the vibe is off if you do that. That’s it. I think I might try to think back to what SaaStr’s opening was like and see if there’s any elements of that that could apply to us. We are similar to that opening and that we do set context, but I think there’s just ways to do it better.
Mike: What we do is we set context for the attendees at the conference. An idea that comes to mind—and obviously, there’s zero time to do that for this year—this is actually something that I have had an idea of the within the past couple of years like, “Hey, it would be cool if somebody kind of headed this up.” Not that I really had the time to do it, but it’s something that either we could potentially put together because of the audience and community.
But as you said, kind of give the state of self-funded entrepreneurs, or the state of SaaS applications, or the state of software in general for extremely small software companies like ours. Give a 10-15 minute overview of, “Hey, this is some of the major changes that have kind of come out over the past year. This is how things are progressing. These are things that are going on in the industry that people should kind of either be on the lookout for or be careful of. These are some opportunities that you guys might want to think about.” As opposed to what we do right now which is welcome them to the conference which I do think we still need to do that. But I also think that it would be nice if there was this extra piece there that was kind of an opening that did set the stage for other stuff. I think what that would actually probably take is doing interviews with founders, or calls, or surveys, and things along those lines to help gather information from the community to be able to compile that and show it to them.
I did a talk in MicroConf Europe in 2016 that I basically did that. I asked people for information and say, “Hey, could you submit this?” I’m basically writing a talk about it. I included a bunch of that information, but it’s not something I could potentially do like every single year so I just didn’t keep it up. I think something along those lines could be helpful and useful for the audience.
Rob: Do you know what the name of my talk is on Monday afternoon? You have not looked have you?
Mike: You know, I don’t even know the names of all the speakers.
Rob: I know. Well, we do keep a firewall between speakers and sponsors. Literally, we were talking last week I guess and I said, “Yeah, I don’t know.” I know some of the sponsors because there’s a lot of them returning, but I tend to wait until a day or two before to look through all the sponsors. Because this is our editorial firewall. Advertising versus editorial, we don’t link those two up. I don’t want that to influence decisions.
Mike: Right.
Rob: But the name of my talk is, The State of Bootstrapping in 2019. It’s not exactly what you are talking about, but I am trying to give that overview and talk about trends, and what’s happened over the past 10 years. I mean, you saw my Europe talk from eight months ago, or six months ago. It’s an expansion of that.
Mike: That would be cool. I mean obviously, you don’t want to do a one hour talk at the very beginning like that.
Rob: Exactly.
Mike: I don’t know how you would condense your talk into 10-15 minutes. That’s the other thing I think I would struggle with is how to gather enough data that is meaningful and useful to the audience, and present it in a short enough timeframe that isn’t distracting, or it doesn’t create a whole host of other questions.
Rob: Right. We have all these questions and then it’s like, “Alright and now our first speaker.” And people are like, “No wait, I want to hear more. That was in the middle of it. I’m so confused.” What’s up with Bluetick?
Mike: Oh, let’s see here.
Rob: Oh, that? What’s Bluetick?
Mike: What’s that? Could you spell that? I need to Google it real quick while we’re on a call.
Rob: What’s the news on that? I’m sure people want to hear it. Have you been working on it? Are you too bogged down with MicroConf stuff?
Mike: I’ve been so bogged down with MicroConf stuff and all sorts of other things going on. I think we talked about it a little bit in the last episode or the one before that. Just the timing of MicroConf and lots of other things that are going on has been so incredibly bad that I have not had time to look at it. Last week I had to sit down for a day or two and look at renewing my health insurance, because I think most people renew their health insurance at the beginning of the year and mine’s up for renewal on April 1st. I and had to call them and I’m just like, “Look, this is really bad timing.” They’re like, “We need to have this paperwork in by the 1st. Otherwise, it’s going to renew at the current rates.” I’m like, “Dear god.” It’s the worst timing.
Rob: I don’t renew my health insurance. What does that even mean? You have to reapply and fill out paperwork? I’ve never done that.
Mike: They change the plans every year. I don’t know whether this happens for everybody. They change the insurance plans that are available and the rates for all of them change as well. Sometime they will move things around. It’ll change the prescription coverage, or they’ll change what is covered under a particular plan, or they’ll change copays or which hospitals they cover. It’s just like, “Dear god, this sucks.” I have to renew by April 1st or basically, I just don’t have coverage.
It will automatically renew but because of the timeframe, I have to look at it now and figure out whether what I’m going to be doing now is the right thing or not. I was like, “Well, what about an HSA account or something like that?” They said, “Well, in order for you to do an HSA account, we have to give you entirely new plans because these are not HSA certified.” I’m like, “Oh my god.” Then there’s like a health savings account which is not…
Rob: Wait, that’s not HSA. You’re FSA, flexible spending account.
Mike: I think that’s it. Yeah.
Rob: Yeah.
Mike: Yeah. All these terms that are very close to one another that I’m not familiar with because I’m not in that industry. I’m just like, “I’m so confused. Why do I have to learn this right now and have 10 minutes to do it?” Like I said, it’s just bad timing and lots of major things all in a very compressed timeframe and it sucks.
Rob: You’ve been doing health insurance, taxes, prepping for MicroConf, right?
Mike: Yeah.
Rob: And so Bluetick is just kind of ‘blue ticking’ along?
Mike: Yeah, basically. I mean aside from the things that I talked about the last couple weeks. The webcast I’m going to be doing. That’s scheduled in late April. I’ve been doing little things here and there trying to move things along. I’ve also been doing research on the backend framework that runs Bluetick. Maybe this is a good time to talk about that, or maybe we should talk about it in the future episodes. I talked to Andrew Culver briefly about it because he is the founder Bullet Train which is essentially a framework that you can use as a starting point for your app whatever it happens to be. He takes care of all of the fundamental things like sign in, password reset, Stripe integration, and all these things. Basically, you start plugging the logic of your application.
When I was first building Bluetick and started out, I couldn’t really find anything like that, but I did find an open source project where they said, “Hey, here’s the MIT license for this,” or whatever, “and you can use this stuff.” It looked like it was pretty decent it’s just it didn’t do everything that I needed to do, and then you’re seeing some of the same library. I based a lot of stuff in on it, imported some of the code, but then there’s obviously a divergence there. They did their own thing and I did mine.
I went back and looked at it and it’s much farther along than it was at the time, and more advanced in certain cases which would actually make it easier for me to use that and plug in more functionality, but the database tables don’t line up. I’d have to port things over and deal with that stuff. I’m just like, “Is it worth it?” I’ve done a little bit of exploration there, but by porting it over would give me all the core functions or the features of just like a SaaS application would be taken cared of for me, and I wouldn’t have to worry about them. I just don’t know if I have a good sense of how long it would take to do that or whether it’s worth it. It maybe something I just do it over time and not necessarily worry too much about it.
Rob: I think the question I asked is like, to me, your number one goal right now is more paying customers. It’s ensure problem-solution fit, ensure product-market fit, and more paying customers, and this doesn’t do that. I know that it makes longer term, it’s a good call. If you run this app for 10 years, 20 years, then yeah, it’s good to be on a framework assuming that they maintain it. But I think that’s pushing off the number one priority which is get more people in your funnel, close more deals, get more revenue because that’s really the point you’re at. Just my take.
Mike: I totally agree with that. That’s why I haven’t tried to bite the bullet and actually do it. There are certain issues that the app has in terms of team accounts and things like that. I’m just like, I don’t want to go down the path of some of those things right now until I have more customers and more revenue because it’s just not—I don’t want to say it’s not important—it’s not the top priority.
Rob: Yeah.
Mike: At some point, I’ll do it, but I have a hard time doing it now.
Rob: I would agree. There’s always a lot of distractions like that. I think we talked about last time where customers give you more things or even you have more great ideas and you can never implement. You, as part of being a founder and making the right choice, is picking the ones that are going to have the most impact for you. It’s like, “What are you trying to impact now?” To me, it’s your top line, or bottom line, or however you want to phrase that.
Mike: Yeah.
Rob: Cool. I guess in the interest of time, we’ll wrap up here in the next couple of minutes. There’s some new stuff at TinySeed but it’s in that weird phase where we have all these applicants and I’m interviewing a lot of them. I’m having fun doing it. It’s super busy and then like you, trying to get taxes done, prepping for MicroConf. My talk is not done and I fly out basically in 48 hours. I know. The dirty little secret of you do enough talks, and you find that you’re closer and closer to your deadline.
I remember Dharmesh Shah at BOS years ago; it was probably a decade ago now. We were talking and we’re both doing a talk that year I believe. I might’ve been doing like a lightning talking and he was doing a full one. Anyways, he said, “Yeah, I’ll start my talk at 11:00 tonight,” and he did it the next day. I was like, “What? I’ve been prepping for weeks.” I was obviously much earlier in my conference speaking than he was. He said, “Yeah.” He typically sits until three in the morning and just writes his talk all at once the night before and that that’s kind of his best way to work.
That’s not mine because I don’t like staying up that late, but I do find that the pressure of having to get it done often forces me to really focus and ship good material. I can burn dozens of hours over the course of weeks if I have all this time to write the talk. Now the practice of it I think is another thing. I think having more time to practice does improve the talks. Off to figure out some good times to do that.
Mike: That’s something I kind of struggle with too is, getting the talk done early enough to be able to also do a lot of practice. I don’t know about you, I have little hacks and stuff that I put in a bunch of my slides where if I’m going through it—and I have a couple bullet points—if there is a bullet point that has a period at the end of it, then I know that hitting the button again goes to the next slide and things like that. Most people wouldn’t catch those types of things, but there’s little things that I use as visual indicators for myself to know what’s coming next, or to pay attention to a certain thing, or make a certain point.
Rob: Yeah, that makes sense. I guess the last thing for me is with TinySeed. As with any startup in the early days—here’s the difference actually is, nowadays, if I were to start a new company that’s going to build a software product, I would go to Stripe Atlas and I would form an LLC or a C-Corp through their one click thing and it creates a bank account that does all these stuff. It’s a solved problem now. I know that you’re then going to need some other paperwork as you hire employees and stuff. There’s gusto and there’s benefits. There are ways that have simplified it.
It’s not there yet with starting an accelerator and essentially an investment fund. The nature starting those is not as refined. You go straight to law firm, and you’re forming multiple LLCs that reference one another, and there’s just a lot of complexity there. Luckily, Einar, my cofounder with TinySeed, has taken care of most of that. But there have just been a few points where I’ve been involved in conversations as we’re trying to get term sheets nailed down and stuff. I had one simple question about changing one word to make things clearer and it wound up being this 10 email back and forth that got more and more complicated.
I don’t know if I wasn’t explaining myself well, but it was one of those moments where I finally said, “I give up. It’s just going to have to be complicated on the dock because to change it from pre-money to post-money would require a huge paragraph, and all these exceptions, and this huge bulleted list in what is otherwise a 10-word sentence right now.” If we do pre-money, then it’s 10-word sentence. If we do post-money, I think based on what he was telling me, I couldn’t actually understand, it just [inaudible 00:36:04] out of control. That’s the kind of stuff that is so frustrating to me as someone who is trying to get things done.
I was trying to send things to people three days ago and then it winds up being this back and forth back. We were going to jump on the phone, I know it would have helped, it would’ve been the same conversation that happened via email. I think the perpetual frustration of being a founder is, you always have these things that are just outside of your control or maybe your expertise. They get complicated and they become time sucks beyond what they should I think. I’m learning when to just throw my head up and say, “I’m going to give up on this one. I’m not going to fight this anymore. I’m not going to waste anymore time.” I think as a younger entrepreneur, I wasted a lot of time fighting against things like this rather than eventually just saying, “Look, it doesn’t really matter. Just do it the way it is.”
Mike: You raged against a machine when you were younger?
Rob: Indeed I did, over and over.
Mike: I think that that type of problem happens in general when you start a business. There’s going to be certain things that are out of your control and it sucks because you want to move fast and you want to get them done. At the same time, I think that one of the issues that you’re running into is that, when it comes to legal terminology, there’s hundreds of years of history of legal things that have happened, and there is precedence that has been set. When you say one word versus another word, it can drastically change how that is interpreted in the eyes of the courts. It sucks to have to deal with that stuff.
I don’t want to say it’s exactly like programming because with writing code, you have to be very explicit about what you wanted to do, and then what the exceptions are. But with legal terminology, there’s always—I don’t want to say ambiguity—but there’s different ways to interpret the exact same words. It kind of sucks sometimes.
Rob: Yeah. It is what it is. I know that people out there are probably not in their head. It’s like taxes, legal stuff, there are others. I don’t know, plumbing code in your SaaS app. It’s things that don’t move your business forward.
Mike: You said plumbing code and I thought the actual plumbing pipes.
Rob: That too.
Mike: [inaudible 00:38:09].
Rob: It’s stuff that doesn’t move your business forward.
Mike: Right.
Rob: That’s all I have to say. We should probably wrap it up for the day huh?
Mike: Yeah, I think so.
Rob: Most of our episodes are not this casual. We answer a lot of listener questions as well as dive into detailed and interesting startup topics. If you have a question for us call our voicemail number at 888-801-9690 or you can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups.
Episode 437 | Monetizing B2C, Selling a Small SaaS, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of US, Rob and Mike answer a number of listener questions on topics including monetizing B2C, selling a small SaaS,and insurance. They also get a update from a past listener’s question.
Items mentioned in this episode:
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about monetizing B2C, selling a small SaaS versus running it, and more listener questions. This is Startups For The Rest Of Us Episode 437.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Speaking of mistakes, Mike, you’ve got on a podcast with me today and that was your first mistake. So don’t make the same mistake that Mike has just made.
Mike: 436 times in a row?
Rob: Exactly. You’d think you’d learn. Fool me once, shame on you. All right. Who is the only non-Jedi in the original Star Wars trilogy to use a lightsaber?
Mike: The only non-Jedi? That would have been Han Solo.
Rob: Nice. Which movie and what was he doing?
Mike: Empire Strikes Back and he was slicing it to open to keep Luke warmer after freezing.
Rob: There it is. Well done, Mike. I thought they smelled bad on the outside. What is the word this week, sir?
Mike: That was not a great lead-in.
Rob: Not at all. We lost our three listeners.
Mike: Well, I have an article that’s going to be in the SaaS Mag on email follow-ups. It’s coming out I think in the next week or two. We are at MicroConf this week and my understanding is that the magazine is going to be distributed at MicroConf by FE International, who is a MicroConf sponsor.
I’ve been working on the article since the fall at some point. It’s very different than working with online articles where can do all the editing and you just publish it versus something that’s actually printed and then months later it’s actually printed.
Rob: We have lead time on them because they’ll have them sure printed overseas and they get shipped here, they have all that layout and all that stuff. It’s tough. I’ve heard when I’ve contributed articles to a magazine, it’s like 3–4 months lead time.
Mike: Yeah and my wife used to work in the magazine industry at EH Publishing and that what they did is the same thing. She never knew what date it was because they had to work three or four months in advance, so all of her work was three or four months out and she’s just like, “What is today? I have no idea what the month even is,” so she’d always gets confused about that.
It should be coming out next week. I haven’t seen the final article but it should be good. It will be interesting to see that in print.
Rob: Congratulations. That will be good. And as you said, we have at MicroConf day, we’re hanging out emceeing and doing all that kind of stuff when this episode comes out. I also wanted to mention again that next week in a sense, I’ll be in London with my family and I’m thinking about putting together a bootstrappers’ meetup with Sherry. So if you have an evening between April first and sixth, go to robwalling.com/london, fill out a quick three-question survey to figure out if we can pull something together. I believe we’re staying in the West End of London, so we’ll probably be within that vicinity. I hope to see you there.
Mike: Cool. I would recommend that we should never have MicroConf scheduled in late March ever again. That is the worst time ever.
Rob: I know. This is the first time we’ve done it early and it will never happen again. I think you and I have both just had experienced great pain of trying to pull it together.
Mike: Yeah. Part of it is just because of the beginning of the year and obviously, taxes kind of factors into it but my health insurance is right up for renewal about this time. So, I’ve got all this paperwork to go through for that. Between my business, my wife’s business, then personal taxes, and all the stuff going on with MicroConf, it’s just really, really hard to keep up with everything.
Rob: And then it’s one last month to sell tickets. I think you and I have to start thinking about the first of the year, like, “Hey, MicroConf’s in a few months,” but that didn’t work this year because we had 90 days from the first of the month, so we just had to push everything on a different time scale. Given that I’m cranking on all this TinySeed stuff, which we have mental goals to get a bunch of stuff done by MicroConf, if we had another month, things would be just so much better. In the past, we’ve often done MicroConf like April 30th and I think if we can get as close to that date as possible, that’s where we want it to be.
Mike: One last thing on MicroConf, if you’re listening to this and are coming to Starter Edition this year, we have a new addition. We have a MicroConf community ambassador I want to introduce you to. This is Marie Poulin. She has spoken at MicroConf this past year and she’s also attended the previous two years.
What we wanted to do is we wanted to have essentially a community ambassador in place that people could go talk to. I get the impression that some people are a little hesitant to come talk to you and me directly just because we’re involved in the conference itself, but at Started Edition it really made a lot of sense to bring somebody else in who could act as the interface and the ambassador, either on their behalf and make them feel comfortable to coming to MicroConf. Not that we don’t do that ourselves but I do sense some hesitation from some people in talking to us just because they’re just starting out.
Rob: Sure and we can’t talk to everyone and we can’t gather everyone. The first year we did the conference, if I recall, it’s like 110 people. You and I could almost single-handedly—seemingly stayed up until 4:00 AM every night which we did—almost talked to everyone there, almost get everyone gathered, and try to build that community. That was a lot of hustle in the early days but given that we had back-to-back conferences, both of the conferences were substantially larger than that and since they are bigger, there’s more moving parts, you and I are just busier than we used to be with stuff. This makes a lot of sense is to have another person. Zander does as much as he can, too, although he tends to be running a lot of the logistics and such, but to have someone else who can help connect to people and who they feel comfortable gathering around, I think is a really good idea. You’ve come up with that idea yourself?
Mike: Yeah, I did. I reached out to her and asked her if it’s something she’d be interested in doing, she said yes, and it kind of worked things out.
Rob: That’s cool. I think we are both excited to have Marie hanging out and building some community at MicroConf Starter.
Mike: What are we talking about this week?
Rob: This week we’re going to be running through some listener questions, some comments, we actually have a callback to a question we discussed a few weeks ago. It’s a pretty good mix today. Several voicemails which, as you know, I like.
The first question is actually a comment from Michael Needle. And he says, “You guys so crush it. I’ve written before and you responded to at least one of my questions on-the-air. I just listened to the latest episode about SaaS KPIs and I wanted to say that you nailed it. This info came at exactly the right time for a project I’m working on, so thanks for keeping the podcast going and keeping it so relevant. I’m always learning something from you guys, but today it was really helpful. Thanks.”
Really, I appreciate that. It’s nice when we hit someone right where they are at that time.
Our next email is a follow-up from Zamir Khan who had emailed a few weeks ago about his B2C SaaS app called VidHug, which he built as a scratch around itch and has a little LTV and that kind of stuff. He asked us if he was crazy and you and I discussed it for a while. He says, “Hey guys. Thanks so much for answering my question on the podcast and in such great detail. I have to admit, when Mike first answered yes to my, ‘Am I crazy?’ question, my heart sank, but I soon realized it was a joke. You guys really got me.”
“I was actually bracing myself the whole time for a take that I would strongly disagree with, but it never came. I pretty much agree with everything you guys said and giving myself a finite timeline, likely the end of the summer if not earlier, to scale VidHug beyond the point you talked about, for example, $5000 a month. If not, then I’ll put in the word to remove myself from it and make it a mostly passive income stream if that’s possible.”
“Recently, the experience I’ve had that I think is another downside of B2C is it’s extremely important to set support expectations. I’ve got customers in multiple time zones and they’re all working on an important special occasion. I can’t afford, from a mental standpoint, to take all of that on, so I’m putting in work to set up some real expectations when we’ll be available to respond, et cetera.”
“I appreciate now that in a B2B North America-focused business, that problem is quite easier to manage. Even still, I imagine setting support expectations as something a lot of new founders don’t get right away. Things like having a live chat widget on your site. I have one from Drift and I’m removing it. The value-add hasn’t been great in terms of talking to customers, where it seems to signal that we’re available at all hours even when it shows offline. People aren’t understanding that. I love to hear your take on setting support expectations chat versus email, et cetera.”
I don’t know. In all honesty, I think he’s doing a good job of it. I think just setting them is the right step to letting people know how long it will take you to respond. With some businesses, I think chat works great. When I was still a single founder, I would never put chat on the site. It’s just too interruptive. If you’re trying to write code and get other things done, you push them towards email. People do tend to think deeper about what they’re going to email about, whereas with chat, they can just start typing as soon as they have any thought. If you’re B2C and you’re a high-volume-low-cost thing, you really do need to think about narrowing that focus down to just the critical chats to get through. If you’re higher-priced, it might be a lot less of an issue.
Mike: I think if you are going to have that support, if you get a true support system in place—there’s lots of direct apps out there that will do it; there’s Zendesk, there’s Teamwork Desk, there’s Groove, there’s all kinds of different things out there—just about any one of them should respond to an email with a ticket number or should be able to and give them a ticket number, and tell them, “This is what you should expect in terms of a response time.” If you don’t set that expectation with them through email, they send the email, and they don’t hear back from you, it’s very easy for them to say, “Oh, I haven’t heard from you guys in three hours. I’m going to send another email,” or five minutes. There are people out there who will send you an email and five minutes later they’re like, “I haven’t heard from you, yet.” So, you need to set those expectations and having some sort of automatic reply with a ticket number and saying, “Hey, this is when you’ll hear back from us, and this is the days of the week we will respond to tickets.” That’s going to go a long way.
Rob: I wouldn’t do that from the start. I would do it when it becomes a problem. It’s nothing personal because I personally find them irritating when I get the response. It’s like, “I don’t want that.” If it’s not a problem, don’t clutter people’s inboxes. Thanks for the feedback and input and best of luck. Moving forward, feel free to update us at the end of the summer, based on what happens with VidHug. I think we’re all curious to hear about it.
Our next email is actually another follow-up. Zee has asked us about insurance and what insurance does a SaaS app need, I believe was the question a few weeks ago. You and I have discussed it. He says, “Hey guys. Thanks for taking my question and the feedback. I actually did find Founder Shield and got liability insurance through them before hearing your response on the podcast today. Funny that you mentioned it but yes, they are awesome, highly recommended.”
“This biggest thing was not just the personal insurance but the cyberdata security. As you grow your SaaS, I think it’s important to protect yourself, especially if you’re doing B2B and storing a good amount of data. The insurance was not too bad, roughly comes out to between $1500 and $3000 per year, depending on your policy, up to around $1–$3 million in protection. Hope that’s helpful as a follow-up. Thanks again. You guys are doing an awesome job. Keep it up.”
I always love to hear the follow-up. You and I can have ideas and thoughts and experience because I’ve used Founder Shield, but it was couple of years ago. It’s cool. We get better as the community gets better.
Mike: Yeah. Things change over time and you don’t necessarily always have the context from when you first did something versus what recent updates are. Sometimes we’ll grandfather people or sometimes we’ll change policies and you don’t necessarily notice because you’re just still a customer operating under some slightly different agreement that was in the past. So, it’s good to hear these types of updates.
Rob: For our first question of the day, we have a voicemail about monetizing a B2C app.
Gurpreet: Hi, Rob and Mike. This is Gurpreet. I’m calling you from India. I have a question regarding a new side project that I have just started. Check out the website flowlog.app. This is a personal productivity tracker, which was inspired from a recent podcast that I heard on the Tim Ferris show of a great writer called Jim Collins. He has a system to log his creative hours and so on. I’m making an app around it.
My question is more around monetization. This is a side project for me and I’m not planning to earn big money from this, but I would like that my expectation would be that in a reasonable period of time, let’s say about six months or so, that app should start generating $3000–$5000 a month so that I can continue working on it, developing it, maybe spend some resources on marketing and so on.
My question is, what, according to you, is the best way to do that? One way that I could think of is have a free app on the app store but have a subscription model for certain advanced features. That is one. It would have to be a very small amount $2–$5 a month, or I could just set up a Patreon page and see the people who are benefiting from this app might want to donate something. Can you share your thoughts or how would you think about it?
Rob: For listeners following along, it’s a personal productivity app, so very much B2C. It’s based on Jim Collin’s system that he talked about on the Tim Ferris podcast, and it’s flowlog.app. What do you think, Mike?
Mike: I think the question he’s trying to answer is what’s the best way for him to get the app to generate between $3000 and $5000 a month in 3–6 months. The thoughts that he had were maybe putting it out as a free app on the app store, maybe having a subscription model for advanced features, or maybe doing a Patreon page, what sorts of things would we think about in terms of going in that direction.
I think putting the free app on the app store, it’s a great idea in terms of getting distribution. The problem is determining which features you’re going to charge people for and how you’re going to get essentially traction there to the point that people are going to pay for it. I would be careful about, in terms of the subscription model, is I would not charge $2–$5 a month. I would charge a yearly fee instead of a monthly fee.
If you’re charging $2 or $5 a month, then what you’re going to end up with is people sign-up for a month or two and then they’re going to churn out versus those people who sign-up whether it’s because they’re aspirational or because they’re really committed to tracking that stuff and they want to get the full experience. You’re going to have a lot less charge-backs, a lot less churn. It’s going to be easier to deal with if you charge on an annual basis.
There’s a bunch of apps that I pay for on an annual basis but if I were paying for on a monthly basis, I would probably think twice just because sometimes, I’ll fall off the wagon, so to speak, and stop using it for a little bit, and then I’ll come back to it later. But with an annual plan, they can always come back to it later. If they’re going to charge for it every month, if they stop using it for even a couple of weeks, they may very well second-guess it and say, “Oh well, I’m not going to continue paying for this because I haven’t used it.”
Those are the things that I would probably think about. You have to do some customer research to figure out whether or not the features that you want to charge for are going to be worth it for people to pay for them. That’s going to take some customer development. You’re going to have to talk to people and without using your app, I don’t know exactly what those features would be.
Beyond that, you could also go the route of trying to charge outright for it. But I feel like that’s probably longer-term, potentially losing proposition because you have back-end stuff that you need to keep running to store their data or be able to export it, do reports on, those types of things are probably going to be a support burden for you that you’re not going to want.
Rob: I don’t think I have anything to add. B2C is really hard. I think $3000–$5000 a month in six months is extremely, extremely ambitious. You would have to just catch a lucky break to grow this to that if you’re charging, as you said, $60 a year or $100 a year. I guess that’s the thing.
Let’s say you were able to pull off $100 a year. You do only need to sell 30 people a month on it to be able to use it. If you use a freemium model, you’re going to get about 1%–3% to sign up. That means you need 10,000 people to get between 100 and 300 and that’s every month. I guess if you’re charging $100 a piece at that point and you could pull it off, then that would be a substantial amount of money because 100 times 100 is 10,000. But I think that getting 10,000 people that download your app every month, and I think the price sensitivity of this group, means that you’re not going to be able to charge $100. With some more realistic numbers, I feel it’s doable but very difficult and you’re going to have to catch a lucky break. You’re almost going to have to have Jim Collins endorse it, link to it from his website, or tweet about it and then get some momentum. Interesting stuff needs to happen.
So these are those plays where it’s a little more hit-based, meaning, it’s not exactly but it is more similar to writing a hit song or making a movie that everyone likes. It is B2C rather than building a more boring B2B app that has that repeatable process that we know how to execute on, whether it’s inbound or outbound sales, you do this marketing, you optimize your funnel, and this and that. It’s more erratic and it’s more difficult to accomplish with mobile.
I don’t want to discourage him from doing it. I think if you’re super interested in doing it, you want to do it as an experiment, and you don’t need that much money, I wouldn’t have the expectation of $3000–$5000 in six months. I think it’s one thing. I think you can make that as your high-end goal. If you achieve it, that’s awesome. Let us know. But I think it’s much more realistic to build this and make a few hundred dollars a month by the time you get down the road.
But again, it depends. You just have to get in. You’ll know more than us in two weeks or four weeks or whatever when you get this app in people’s hands. It’s like what is the price sensitivity and how are other apps like this charging? Can I only charge $30–$50 a year? How many people can you get in? And all that stuff. Definitely, I wish you the best of luck and hope it works out.
Mike: My other comment that I would add on, that I agree with you on the fact that it’s probably going to take longer than that 3–6 months to get there. There’s also the trajectory to consider because very early on, you’re not going to make as much money the first month.
Let’s say you make $50 or $100. You want to progressively be making more money as time goes on versus having a giant spike either early on or later on in the 3–6 months time frame that you’re looking at that is going to peak and then come back down. Maybe you hit it for one month but then it drops. I don’t know what that’s going to look like for your app or for these types of apps, but that’s something to be careful of is what does the trajectory looks like over time.
Even if you’re selling, let’s say, annual subscriptions. Let’s say you sold 10 annual subscriptions this month and 20 the next month. As long as those are continuing to go up, you’re going to get there at some point. But you want to make sure that you’re on that trajectory. If you’re not, then it’s a problem.
Rob: Thanks for the question and best of luck. Our next voice mail is about whether to sell a small SaaS app that’s doing about $100,000 a year versus continuing to run it.
Adam: Hey guys. My name is Adam. I have a SaaS Ruby on Rails app. I just hit yesterday $100,000 ARR, which is awesome. I have a question about choosing to have someone acquire an app versus running it myself. The question is, what is the true value of this thing that accrued? I actually talked to FE International and it looks like you get a bump for SaaS, but the multiples for a small company like mine seems to be two to an app.
So if I made $50,000 in net income from that $100,000 ARR—that’s without paying myself—they would say that it’s worth maybe $130,000. But for me, if I continue to run it, I’m going to make all those cash flows from the future cash flows for the business. It seems like I would be a sucker to sell it for 2½ times net income because if I run it for the next 10 years, I’ll get 10 times my current income and probably going to continue to grow. Are the valuations really, really low for small businesses like us?
I see companies traded on the stock exchange and they’re getting these huge multiples like 20, or 30, or 100. Is it true that we’re getting screwed as small micropreneurs and we only get 2½ of our income? Is that ever a big deal for a developer who’s running a company? Would you ever want to sell it for 2½? It seems the buyer really gets the benefit, not the seller. Could you talk about these issues? Even with success, what is the value of this thing even if you’ve made it to $100,000 ARR? Thanks so much. Sorry for the long message. Bye.
Rob: So just to clarify, 2½ times net profit sounds low to me. I would thing for a small SaaS app like this, you should get 3½, and if it’s growing, you should get between 3½ and 4 even for a small app like this.
But I don’t think that counters his point. He’s basically saying, 2½, 3½, whatever, he sees things on the public market trading at 10 or 100 times net multiple. And shouldn’t he just run it for 10 years and get 10 years of of running rather than taking 2½, 3½, whatever it is? What do you think, Mike?
Mike: I think one of the things to keep in mind is that your operating in this price range, I would say, where the multiple is going to be different based on where you’re at. If you have a business that has a, I think you’ve mentioned, $50,000 net income, if somebody takes it over, they’re probably going to have to put somebody in, which essentially reverses the earnings of that particular business, which again, is totally true. But if you had, let’s say, 10X that, you had $500,000 of net income, the difference in value of that business versus something that only brings in $50,000, is going to be very, very different.
That’s something to definitely keep in mind because there are certain ranges where, if a business is making just $50,000, it’s not going to be worth nearly as much as something that has $500,000 of disposable income. They can use that money to bring somebody in, pay them, and they still got $400,000 left to play around with to do other things, marketing, bring on more people, do growth experiments, all kinds of different things.
The other thing that I think he had mentioned was comparing it against larger businesses. Again, the earnings of those large businesses like public companies and things that you see in the stock market, they’re making a lot more money, so they are going to naturally be priced higher. Those are the things I would definitely keep in mind.
The thing that he didn’t mention at all was the fact that if you are going to run this for the next 10 years, for example—you said that you get to keep all of the net earnings from that, that is true—is the business going to be the same in 10 years? Is it going to grow? Is an event going to happen at some point during those 10 years that it’s going to wipe out a substantial portion of the market? Is Google going to launch a product that competes directly in your space? Or is a funded company going to do the same thing?
There’s all these things that create risk for your business moving forward. For a SaaS app, that risk is heavily reduced because people are already on a subscription and it’s easier to mitigate those types of risks, but it is still a risk. And because of the scale that you’re working at right now, it presents too much of a risk. I suspect that’s why there’s probably that 2½ multiple versus, like what Rob would said, either expect a three or four.
But you would have to keep in mind that something could happen tomorrow and your entire business goes away. You could get sued, or somebody could take the domain, or somebody could say, “Oh well, your app name is actually a trademark and we own that. We’re going to come after you and sue you for $100,000.” For only making $50,000 a year, that’s pushing it in a really tough spot. Those types of events factor in a risk over the next 10 years and you have no idea what those actually come out to be. It may happen, it may not, but there are factors you have to consider.
Rob: Yup, I agree. I think people with a first-time app feel like it will run forever. Ten years is forever in this space. This is why the small business analogy, like when people say, “I’ll just build a business. It’s like a bakery, or like a gymnasium, or a grocery store,” it doesn’t work the same with SaaS apps and technology because the stuff changes so fast. In 10 years, you said it all.
The apps that I had that were making money in 2005–2010, I sold all of them and a lot of them have basically shut down, not because of the code didn’t still work but it was often because the code is so out of date that no one can maintain it now. It’s a classic ASP or it’s like ASP.NET version 3.0 and you have to completely rewrite the product to keep it updated. If you don’t do that, then you just ran out of the ability to find developers.
Or Google makes an SEO change that completely decimates your product. I had this happen multiple times. I know dozens and dozens of founders who’ve have their business just turned upside-down overnight after years of building it into a five-, six-, or seven-figure annual business.
You can have new competitors, the market can change, you can have industries that get wiped out. Let’s say you have a job board for truckers. I’m just making stuff up here. The trucking industry is going to have a real issue, or at least truckers are, over the next 10–20 years as self-driving trucks come around.
There’s all these factors that you don’t think when you have your first app and you feel like no one can touch it. “There’s no chance that this Twitter client or this Facebook client that I’ve built is going to get completely decimated when they decide that they’re not going to support my API calls anymore,” which they do all the time. We’ve seen people within our community have apps, have to do layoffs, and get hit pretty hard revenue-wise by people churning out because you can’t provide the value anymore. Or if you run an ESP. If you don’t maintain it, you get on blacklist. Now your deliverability is not as good. On and on and on. You and I could sit here and name your name to getting sued. There are all these things that just happen the longer you do it.
I’m not saying that you should sell for 2½ or 3½ or whatever you can get for it. What I’m saying is don’t think that you’re going to run this business for 10 years without a substantial amount of work over that time. You may not have any work right now for six months, maybe nine months, then it will start sliding. Something will change out there.
If you want to put in that work, then great, but don’t think that you can just coast for 10 years and that your business isn’t going to get turned upside-down, let’s say, every 18-48 months. It’s a big range but it depends. I don’t know if you have APIs you’re relying on, who your competitors are, what space you’re in, but every couple of years you’re probably going to get this big curveball and if you’re doing something else and can’t pay attention to it, bad things happen.
That’s really why people sell for those “lower” multiples, is because there’s risk and because you want to take that cash flow ahead of time. Take this several years of cash flow and just put it into your next thing. Typically, it’s buy that next thing or buy out your own time so that you can then build the next bigger idea that can last longer. That’s what a lot of people do. Not necessarily bigger in terms of head count but bigger in terms of net profit, I think.
Mike: Yeah. I want to second that. I was not saying that you should take this because of all the risk involved. It’s more of, just be aware that that’s why some people do it and, to Rob’s point, sometimes where people will just want to take that money off the table and take a year or two of net earnings in order to be able to do other things. If that’s something you want to do, then great. If not, then you could continue to run it. Just be aware that there’s risks no matter what you do. There’s risk if you sell it. It could become huge and blow up or it may not. You may decide to run it for 10 years and it never grows beyond having a net profit of $60,000–$70,000. It’s high enough that you don’t want to get rid of it, but low enough that it’s hard to live off of that based on where you’re currently settled down.
Rob: Yeah and I think the idea of public companies are valued at 10 or 100 times, yeah, that’s true. Most are not of 100. Those are the outliers. We look at Amazon. Let’s get rid of Amazon because they […] special way. Let’s not look at the hot-hot, hyper growth, 50 million subscriber tech companies. They’re completely outliers. Look at the median price-to-earnings ratio or look at the bottom 50% and it starts to become a little more realistic. It still doesn’t tend to be down around 2–4 in the range that we’re talking about, but you’ll see a lot that are in that more 5–10 times annual earnings, which is in the ballpark. It’s within the order of magnitude we’re talking about.
And there’s the public companies. To be a public company, you have […] and all this crazy stuff you have to apply to, so you’re not going to do it if it’s going to be the same multiple. There’s so much scrutiny and all the stuff that comes along with it, so unless it had some type of premium, then you wouldn’t do it.
These are good things to think about. I think the other thing I drew out is, Mike, when I started buying apps in, let’s say, 2005–2011 time frame when it was really the heyday of me acquiring a bunch of stuff, the multiples were 12–18 months of net profit. There really was no FE International, there was no Quiet Light, there is no Empire Flippers. If they were around, we didn’t know about them.
It was all like Flippa, it was like deals on forums, it was called email, and that was the multiple. There was so much risk. There was potential for fraud, which I think has been greatly removed in our space and that is why I like the fact that we have these brokers now. I like the fact that the multiples have risen. It’s certainly a bummer from an acquirer’s perspective but I do think the whole community benefits by the fact that the multiples are where they are today.
Mike: We were just talking about how things were different then. Those were also the days where you had a Blockbuster card.
Rob: That’s true.
Mike: I’m just saying. That how old you are.
Rob: Exactly. No. That’s such a good point because you know, Mike, Blockbuster could have thought, “Why don’t we just run this thing for 20 years and just collect the revenue off of Blockbuster?” and now they’re bankrupt because Netflix came in and ate their lunch. It’s a perfect example. Blockbuster, I believe, was a public company. It’s just another example of how quickly things are eaten up by technology these days.
Mike: That’s actually exactly what happened to them because they had the opportunity to buy Netflix for $1 million or I forget how much it was, but they had an opportunity to buy Netflix at one point and they decided not to because they’re like, “Oh yeah, this is not going to fly and we’ll eat their lunch,” and it turned out it went the other way.
Rob: Yeah. Cool. So, good question. Thanks for sending that in. Our next question talks about what a SaaS app should look like at $10,000 MRR, $20,000 MRR, and beyond.
Adam: Hi guys. This is Adam again. I have a second question. I heard you say in one of your old podcast that the goal for probably Startups For The Rest Of Us listeners is to get your app to $10,000, or $20,000, or $30,000 MRR. Could you guys discuss what your business should look like at different MRRs, like when do you hire your first employee? When you do hire a customer support person?
Right now, I’m just doing everything myself with an offshore developer. That’s like $8300 MRR. What do you recommend at $5000 MRR? Could you say like, “$5000 MRR your company probably is like you have a full-time job and you’re in your basement weekends.” And then $10,000 and $15,000 and at $20,000 like the stages of growth based on the MRR, that would help a lot for me to get some kind of benchmark. Thanks so much guys for what you do. You’re awesome.
Rob: Mike, I will let you kick this off, but I think the answer is, “It depends.” It depends pretty heavily. There are people that can live on $5000 MRR. In that case, you’re not in your basement work the day job. But if you live in California, then maybe you are.
I also think it depends a lot on the app. Some apps need a ton of support. If you’re building an ESP, people have a ton of questions. It’s like Baremetrics where you just opt-in to Stripe and you […] off and then you have charts.
I bet in the early days, Josh didn’t need very many support people and could take that way, way further. And if you’re building a complicated app, it takes a lot of stuff to get set-up. Preface that and then kick it over to you.
Mike: I agree with you on the ‘it depends,’ and I think part of the problem is that we don’t necessarily have a lot of data points because so many different businesses are different from one another. For example, you Rob Walling. Your starting resources are going to be very different than the listener, or myself, or pretty much anybody else on the planet because it’s not just about the money that you have available. It’s also about the relationships the you have, the code or technology that you already have, the experiences that you have, and sometimes the relationships you have with certain people allow you to get into channels that other people would not.
By virtue of talking about those, you’re going to have to hire for different things than somebody like me or any given listener is going to have to hire for different things. The restraints on each individual are going to be different, based on whether you have a spouse, whether you have kids, whether you have a sick parent that you have to take care of on Thursday afternoons. All those things factor into it. It makes it hard to come up with a over reaching generalization that is globally applicable.
That said, you can come to certain, as you said, revenue benchmarks of $5000 and $10,000 and say this is probably where you might want to start thinking about this. It doesn’t mean you do it. It just means you start thinking about those things. I think when it gets to that stuff, anywhere between, I’d say, $3000–$5000 you probably want to start thinking about outsourcing support, when you get up to $10,000, you should probably be full-time on it, but again, it depends on whether or not you’re going to be able to support yourself when you are full-time on it.
I heard probably from Balsamic talk about this and I think it was at a business and software talk where he said that he held off on his first first hire until after he got to a point where he was just literally not sleeping because he could not possibly do all the stuff that was required of him. It’s interesting because its almost 10 years ago where that happened. It was around the beginning of 2009 and he was getting to the point of 2500 customers on a weekly basis. He was getting so much money coming in but he just could not keep up with the business. He’s like, “I have to hire somebody.”
If you do the math on it, 2500 customers in a week, I don’t remember how much Balsamic was selling for at the time. I’ll say $40 or $50 but at that rate, that’s a substantial amount of money. And that’s on a weekly basis. Not even a monthly basis. So you can figure $60,000-$80,000 on a monthly basis, something like that. That’s where he got to before he started bringing in one person and it’s because he didn’t want to hire. At some point you have to. Certain scales of problems are so large you have to do things that maybe you don’t want to. But at the same time, those things are sometimes good for the business.
Rob, I’ll let you jump in. Where do you think? At $10,000 it’s pretty not standard but that’s kind of the benchmark most people use for going full-time on it. But what does $15,000 mean? What does $20,000? What does $25,000 mean?
Rob: It really does depend on where you live, how far you can take that in, where you’re hiring out of. Let’s say you’re in Chiang Mai, Thailand, you can live on $2500 a month, you can hire people there or in your same time zone, full-time developers for $1500–$2000 a month, then you can move way faster if you want to. Or you can just bank money like crazy.
So, it does depend on are you doing this as a lifestyle thing? When I think back to my experience, I had some apps where I didn’t really want them to grow. I just wanted to rake in the $3000-$20,000 a month they were throwing off and just maintain that. I had no aspirations to 5X or 10X that, and that’s a great lifestyle business. If that’s your goal, then do that.
But if you do want to get as big as possible, you want to create as much value financially for yourself as possible, you want to grow it to $100,000 a month, and when you get into this seven figures and you have a SaaS app in a seven-figure revenue range, even high six figures but certainly if you get into seven figures, that is where the exit multiples change because there’s private equity that is willing to start talking about revenue multiples instead of net profit. So, it doesn’t become this 2½–3½ range. It can be 1½–3 times your top line revenue. But you have to get big enough that it’s worth them even having a conversation with you.
All that to say, there’s two totally different paths. I would say do support as long as humanly possible and don’t hire a support person until you feel like, “I’m either really tired of this, I’ve learned all I can from my customers, or I don’t want to do this anymore.” I can see hiring a support person well before $10,000. I can see hiring when you’re at $5000 if you just can move faster by not doing the support.
At $15,000 or $20,000 I would probably remove myself from development as much as possible, unless it’s something you really want to do. But if you want to maximize growth, stop doing it, hire someone who’s good. You have budget to do that. If you want to do it, that’s fine. You’re not going to grow as fast. Just know that that’s what you’re doing. You don’t have to. That’s the beauty of what we’re doing. We’re bootstrapping. You can do what you want.
When you get into the $30,000 or $40,000 that’s when you can either just be raking in buckets of money, which is awesome, or you can start thinking long term about, “Okay, now how do I double from here?” because I think it’s $83,333 is where you hit that $1 million a year. How do I get from $30,000 or $40,000 to $80,000, where are my plateaus up ahead and who do I need to hire to stay out ahead of that?
That’s typically when you start thinking about hiring someone to head up marketing or growth because the founders are often doing it up until that point. If that’s what you want to do, then focus. But if you want to rise up that one level to where you’re managing product, engineering, marketing, customer success, and sales, then that’s in that range where I think you have budget to hire someone who’s good at growth and is not someone junior you’re going to have to train, is expensive, much like a knowledgeable developer is expensive.
So those are the trade-offs. We could walk through a hypothetical example. I don’t know that it’s any more helpful than that. I think to me it’s like keep the team duty opposite to what’s venture fund companies do, which they try to grow headcount super fast and spend the money.
I think keep the team as small as possible, unless you’re putting yourself under undue stress, unless you’re more stressed than you should be, unless things are falling through the cracks. That’s where you’ve taken it too far. But in general, the more profit, the better because it just gives your optionality. It gives you optionality is take more money off the top. It gives you optionality to hire someone when you need it.
If you have $10,000 a month that you’re just throwing into that business bank account, that’s great. If you decide to […], “Oh my gosh, our competitor’s doing this and we really need a head of sales or a head of customer success or whatever,” you have the option to do that.
Mike: And I think that’s the entire point of the whole question is what are the different options? I think Rob just laid out a bunch of different places where, at those points you have those options, and it really boils down to what you want to do with the business, where you see it going, and what you don’t want to actually do inside the business. Those are the things you hire out at whatever those points along the way are.
Rob: So thanks for those two questions, Adam. I hope our discussion was helpful.
Mike: I think that about wraps us up for the day. If you have a question, you can call it into us at our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript to each episode. Thanks 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 software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Speaking of mistakes, Mike, you’ve got on a podcast with me today and that was your first mistake. So don’t make the same mistake that Mike has just made.
Mike: 436 times in a row?
Rob: Exactly. You’d think you’d learn. Fool me once, shame on you. All right. Who is the only non-Jedi in the original Star Wars trilogy to use a lightsaber?
Mike: The only non-Jedi? That would have been Han Solo.
Rob: Nice. Which movie and what was he doing?
Mike: Empire Strikes Back and he was slicing it to open to keep Luke warmer after freezing.
Rob: There it is. Well done, Mike. I thought they smelled bad on the outside. What is the word this week, sir?
Mike: That was not a great lead-in.
Rob: Not at all. We lost our three listeners.
Mike: Well, I have an article that’s going to be in the SaaS Mag on email follow-ups. It’s coming out I think in the next week or two. We are at MicroConf this week and my understanding is that the magazine is going to be distributed at MicroConf by FE International, who is a MicroConf sponsor.
I’ve been working on the article since the fall at some point. It’s very different than working with online articles where can do all the editing and you just publish it versus something that’s actually printed and then months later it’s actually printed.
Rob: We have lead time on them because they’ll have them sure printed overseas and they get shipped here, they have all that layout and all that stuff. It’s tough. I’ve heard when I’ve contributed articles to a magazine, it’s like 3–4 months lead time.
Mike: Yeah and my wife used to work in the magazine industry at EH Publishing and that what they did is the same thing. She never knew what date it was because they had to work three or four months in advance, so all of her work was three or four months out and she’s just like, “What is today? I have no idea what the month even is,” so she’d always gets confused about that.
It should be coming out next week. I haven’t seen the final article but it should be good. It will be interesting to see that in print.
Rob: Congratulations. That will be good. And as you said, we have at MicroConf day, we’re hanging out emceeing and doing all that kind of stuff when this episode comes out. I also wanted to mention again that next week in a sense, I’ll be in London with my family and I’m thinking about putting together a bootstrappers’ meetup with Sherry. So if you have an evening between April first and sixth, go to robwalling.com/london, fill out a quick three-question survey to figure out if we can pull something together. I believe we’re staying in the West End of London, so we’ll probably be within that vicinity. I hope to see you there.
Mike: Cool. I would recommend that we should never have MicroConf scheduled in late March ever again. That is the worst time ever.
Rob: I know. This is the first time we’ve done it early and it will never happen again. I think you and I have both just had experienced great pain of trying to pull it together.
Mike: Yeah. Part of it is just because of the beginning of the year and obviously, taxes kind of factors into it but my health insurance is right up for renewal about this time. So, I’ve got all this paperwork to go through for that. Between my business, my wife’s business, then personal taxes, and all the stuff going on with MicroConf, it’s just really, really hard to keep up with everything.
Rob: And then it’s one last month to sell tickets. I think you and I have to start thinking about the first of the year, like, “Hey, MicroConf’s in a few months,” but that didn’t work this year because we had 90 days from the first of the month, so we just had to push everything on a different time scale. Given that I’m cranking on all this TinySeed stuff, which we have mental goals to get a bunch of stuff done by MicroConf, if we had another month, things would be just so much better. In the past, we’ve often done MicroConf like April 30th and I think if we can get as close to that date as possible, that’s where we want it to be.
Mike: One last thing on MicroConf, if you’re listening to this and are coming to Starter Edition this year, we have a new addition. We have a MicroConf community ambassador I want to introduce you to. This is Marie Poulin. She has spoken at MicroConf this past year and she’s also attended the previous two years.
What we wanted to do is we wanted to have essentially a community ambassador in place that people could go talk to. I get the impression that some people are a little hesitant to come talk to you and me directly just because we’re involved in the conference itself, but at Started Edition it really made a lot of sense to bring somebody else in who could act as the interface and the ambassador, either on their behalf and make them feel comfortable to coming to MicroConf. Not that we don’t do that ourselves but I do sense some hesitation from some people in talking to us just because they’re just starting out.
Rob: Sure and we can’t talk to everyone and we can’t gather everyone. The first year we did the conference, if I recall, it’s like 110 people. You and I could almost single-handedly—seemingly stayed up until 4:00 AM every night which we did—almost talked to everyone there, almost get everyone gathered, and try to build that community. That was a lot of hustle in the early days but given that we had back-to-back conferences, both of the conferences were substantially larger than that and since they are bigger, there’s more moving parts, you and I are just busier than we used to be with stuff. This makes a lot of sense is to have another person. Zander does as much as he can, too, although he tends to be running a lot of the logistics and such, but to have someone else who can help connect to people and who they feel comfortable gathering around, I think is a really good idea. You’ve come up with that idea yourself?
Mike: Yeah, I did. I reached out to her and asked her if it’s something she’d be interested in doing, she said yes, and it kind of worked things out.
Rob: That’s cool. I think we are both excited to have Marie hanging out and building some community at MicroConf Starter.
Mike: What are we talking about this week?
Rob: This week we’re going to be running through some listener questions, some comments, we actually have a callback to a question we discussed a few weeks ago. It’s a pretty good mix today. Several voicemails which, as you know, I like.
The first question is actually a comment from Michael Needle. And he says, “You guys so crush it. I’ve written before and you responded to at least one of my questions on-the-air. I just listened to the latest episode about SaaS KPIs and I wanted to say that you nailed it. This info came at exactly the right time for a project I’m working on, so thanks for keeping the podcast going and keeping it so relevant. I’m always learning something from you guys, but today it was really helpful. Thanks.”
Really, I appreciate that. It’s nice when we hit someone right where they are at that time.
Our next email is a follow-up from Zamir Khan who had emailed a few weeks ago about his B2C SaaS app called VidHug, which he built as a scratch around itch and has a little LTV and that kind of stuff. He asked us if he was crazy and you and I discussed it for a while. He says, “Hey guys. Thanks so much for answering my question on the podcast and in such great detail. I have to admit, when Mike first answered yes to my, ‘Am I crazy?’ question, my heart sank, but I soon realized it was a joke. You guys really got me.”
“I was actually bracing myself the whole time for a take that I would strongly disagree with, but it never came. I pretty much agree with everything you guys said and giving myself a finite timeline, likely the end of the summer if not earlier, to scale VidHug beyond the point you talked about, for example, $5000 a month. If not, then I’ll put in the word to remove myself from it and make it a mostly passive income stream if that’s possible.”
“Recently, the experience I’ve had that I think is another downside of B2C is it’s extremely important to set support expectations. I’ve got customers in multiple time zones and they’re all working on an important special occasion. I can’t afford, from a mental standpoint, to take all of that on, so I’m putting in work to set up some real expectations when we’ll be available to respond, et cetera.”
“I appreciate now that in a B2B North America-focused business, that problem is quite easier to manage. Even still, I imagine setting support expectations as something a lot of new founders don’t get right away. Things like having a live chat widget on your site. I have one from Drift and I’m removing it. The value-add hasn’t been great in terms of talking to customers, where it seems to signal that we’re available at all hours even when it shows offline. People aren’t understanding that. I love to hear your take on setting support expectations chat versus email, et cetera.”
I don’t know. In all honesty, I think he’s doing a good job of it. I think just setting them is the right step to letting people know how long it will take you to respond. With some businesses, I think chat works great. When I was still a single founder, I would never put chat on the site. It’s just too interruptive. If you’re trying to write code and get other things done, you push them towards email. People do tend to think deeper about what they’re going to email about, whereas with chat, they can just start typing as soon as they have any thought. If you’re B2C and you’re a high-volume-low-cost thing, you really do need to think about narrowing that focus down to just the critical chats to get through. If you’re higher-priced, it might be a lot less of an issue.
Mike: I think if you are going to have that support, if you get a true support system in place—there’s lots of direct apps out there that will do it; there’s Zendesk, there’s Teamwork Desk, there’s Groove, there’s all kinds of different things out there—just about any one of them should respond to an email with a ticket number or should be able to and give them a ticket number, and tell them, “This is what you should expect in terms of a response time.” If you don’t set that expectation with them through email, they send the email, and they don’t hear back from you, it’s very easy for them to say, “Oh, I haven’t heard from you guys in three hours. I’m going to send another email,” or five minutes. There are people out there who will send you an email and five minutes later they’re like, “I haven’t heard from you, yet.” So, you need to set those expectations and having some sort of automatic reply with a ticket number and saying, “Hey, this is when you’ll hear back from us, and this is the days of the week we will respond to tickets.” That’s going to go a long way.
Rob: I wouldn’t do that from the start. I would do it when it becomes a problem. It’s nothing personal because I personally find them irritating when I get the response. It’s like, “I don’t want that.” If it’s not a problem, don’t clutter people’s inboxes. Thanks for the feedback and input and best of luck. Moving forward, feel free to update us at the end of the summer, based on what happens with VidHug. I think we’re all curious to hear about it.
Our next email is actually another follow-up. Zee has asked us about insurance and what insurance does a SaaS app need, I believe was the question a few weeks ago. You and I have discussed it. He says, “Hey guys. Thanks for taking my question and the feedback. I actually did find Founder Shield and got liability insurance through them before hearing your response on the podcast today. Funny that you mentioned it but yes, they are awesome, highly recommended.”
“This biggest thing was not just the personal insurance but the cyberdata security. As you grow your SaaS, I think it’s important to protect yourself, especially if you’re doing B2B and storing a good amount of data. The insurance was not too bad, roughly comes out to between $1500 and $3000 per year, depending on your policy, up to around $1–$3 million in protection. Hope that’s helpful as a follow-up. Thanks again. You guys are doing an awesome job. Keep it up.”
I always love to hear the follow-up. You and I can have ideas and thoughts and experience because I’ve used Founder Shield, but it was couple of years ago. It’s cool. We get better as the community gets better.
Mike: Yeah. Things change over time and you don’t necessarily always have the context from when you first did something versus what recent updates are. Sometimes we’ll grandfather people or sometimes we’ll change policies and you don’t necessarily notice because you’re just still a customer operating under some slightly different agreement that was in the past. So, it’s good to hear these types of updates.
Rob: For our first question of the day, we have a voicemail about monetizing a B2C app.
Gurpreet: Hi, Rob and Mike. This is Gurpreet. I’m calling you from India. I have a question regarding a new side project that I have just started. Check out the website flowlog.app. This is a personal productivity tracker, which was inspired from a recent podcast that I heard on the Tim Ferris show of a great writer called Jim Collins. He has a system to log his creative hours and so on. I’m making an app around it.
My question is more around monetization. This is a side project for me and I’m not planning to earn big money from this, but I would like that my expectation would be that in a reasonable period of time, let’s say about six months or so, that app should start generating $3000–$5000 a month so that I can continue working on it, developing it, maybe spend some resources on marketing and so on.
My question is, what, according to you, is the best way to do that? One way that I could think of is have a free app on the app store but have a subscription model for certain advanced features. That is one. It would have to be a very small amount $2–$5 a month, or I could just set up a Patreon page and see the people who are benefiting from this app might want to donate something. Can you share your thoughts or how would you think about it?
Rob: For listeners following along, it’s a personal productivity app, so very much B2C. It’s based on Jim Collin’s system that he talked about on the Tim Ferris podcast, and it’s flowlog.app. What do you think, Mike?
Mike: I think the question he’s trying to answer is what’s the best way for him to get the app to generate between $3000 and $5000 a month in 3–6 months. The thoughts that he had were maybe putting it out as a free app on the app store, maybe having a subscription model for advanced features, or maybe doing a Patreon page, what sorts of things would we think about in terms of going in that direction.
I think putting the free app on the app store, it’s a great idea in terms of getting distribution. The problem is determining which features you’re going to charge people for and how you’re going to get essentially traction there to the point that people are going to pay for it. I would be careful about, in terms of the subscription model, is I would not charge $2–$5 a month. I would charge a yearly fee instead of a monthly fee.
If you’re charging $2 or $5 a month, then what you’re going to end up with is people sign-up for a month or two and then they’re going to churn out versus those people who sign-up whether it’s because they’re aspirational or because they’re really committed to tracking that stuff and they want to get the full experience. You’re going to have a lot less charge-backs, a lot less churn. It’s going to be easier to deal with if you charge on an annual basis.
There’s a bunch of apps that I pay for on an annual basis but if I were paying for on a monthly basis, I would probably think twice just because sometimes, I’ll fall off the wagon, so to speak, and stop using it for a little bit, and then I’ll come back to it later. But with an annual plan, they can always come back to it later. If they’re going to charge for it every month, if they stop using it for even a couple of weeks, they may very well second-guess it and say, “Oh well, I’m not going to continue paying for this because I haven’t used it.”
Those are the things that I would probably think about. You have to do some customer research to figure out whether or not the features that you want to charge for are going to be worth it for people to pay for them. That’s going to take some customer development. You’re going to have to talk to people and without using your app, I don’t know exactly what those features would be.
Beyond that, you could also go the route of trying to charge outright for it. But I feel like that’s probably longer-term, potentially losing proposition because you have back-end stuff that you need to keep running to store their data or be able to export it, do reports on, those types of things are probably going to be a support burden for you that you’re not going to want.
Rob: I don’t think I have anything to add. B2C is really hard. I think $3000–$5000 a month in six months is extremely, extremely ambitious. You would have to just catch a lucky break to grow this to that if you’re charging, as you said, $60 a year or $100 a year. I guess that’s the thing.
Let’s say you were able to pull off $100 a year. You do only need to sell 30 people a month on it to be able to use it. If you use a freemium model, you’re going to get about 1%–3% to sign up. That means you need 10,000 people to get between 100 and 300 and that’s every month. I guess if you’re charging $100 a piece at that point and you could pull it off, then that would be a substantial amount of money because 100 times 100 is 10,000. But I think that getting 10,000 people that download your app every month, and I think the price sensitivity of this group, means that you’re not going to be able to charge $100. With some more realistic numbers, I feel it’s doable but very difficult and you’re going to have to catch a lucky break. You’re almost going to have to have Jim Collins endorse it, link to it from his website, or tweet about it and then get some momentum. Interesting stuff needs to happen.
So these are those plays where it’s a little more hit-based, meaning, it’s not exactly but it is more similar to writing a hit song or making a movie that everyone likes. It is B2C rather than building a more boring B2B app that has that repeatable process that we know how to execute on, whether it’s inbound or outbound sales, you do this marketing, you optimize your funnel, and this and that. It’s more erratic and it’s more difficult to accomplish with mobile.
I don’t want to discourage him from doing it. I think if you’re super interested in doing it, you want to do it as an experiment, and you don’t need that much money, I wouldn’t have the expectation of $3000–$5000 in six months. I think it’s one thing. I think you can make that as your high-end goal. If you achieve it, that’s awesome. Let us know. But I think it’s much more realistic to build this and make a few hundred dollars a month by the time you get down the road.
But again, it depends. You just have to get in. You’ll know more than us in two weeks or four weeks or whatever when you get this app in people’s hands. It’s like what is the price sensitivity and how are other apps like this charging? Can I only charge $30–$50 a year? How many people can you get in? And all that stuff. Definitely, I wish you the best of luck and hope it works out.
Mike: My other comment that I would add on, that I agree with you on the fact that it’s probably going to take longer than that 3–6 months to get there. There’s also the trajectory to consider because very early on, you’re not going to make as much money the first month.
Let’s say you make $50 or $100. You want to progressively be making more money as time goes on versus having a giant spike either early on or later on in the 3–6 months time frame that you’re looking at that is going to peak and then come back down. Maybe you hit it for one month but then it drops. I don’t know what that’s going to look like for your app or for these types of apps, but that’s something to be careful of is what does the trajectory looks like over time.
Even if you’re selling, let’s say, annual subscriptions. Let’s say you sold 10 annual subscriptions this month and 20 the next month. As long as those are continuing to go up, you’re going to get there at some point. But you want to make sure that you’re on that trajectory. If you’re not, then it’s a problem.
Rob: Thanks for the question and best of luck. Our next voice mail is about whether to sell a small SaaS app that’s doing about $100,000 a year versus continuing to run it.
Adam: Hey guys. My name is Adam. I have a SaaS Ruby on Rails app. I just hit yesterday $100,000 ARR, which is awesome. I have a question about choosing to have someone acquire an app versus running it myself. The question is, what is the true value of this thing that accrued? I actually talked to FE International and it looks like you get a bump for SaaS, but the multiples for a small company like mine seems to be two to an app.
So if I made $50,000 in net income from that $100,000 ARR—that’s without paying myself—they would say that it’s worth maybe $130,000. But for me, if I continue to run it, I’m going to make all those cash flows from the future cash flows for the business. It seems like I would be a sucker to sell it for 2½ times net income because if I run it for the next 10 years, I’ll get 10 times my current income and probably going to continue to grow. Are the valuations really, really low for small businesses like us?
I see companies traded on the stock exchange and they’re getting these huge multiples like 20, or 30, or 100. Is it true that we’re getting screwed as small micropreneurs and we only get 2½ of our income? Is that ever a big deal for a developer who’s running a company? Would you ever want to sell it for 2½? It seems the buyer really gets the benefit, not the seller. Could you talk about these issues? Even with success, what is the value of this thing even if you’ve made it to $100,000 ARR? Thanks so much. Sorry for the long message. Bye.
Rob: So just to clarify, 2½ times net profit sounds low to me. I would thing for a small SaaS app like this, you should get 3½, and if it’s growing, you should get between 3½ and 4 even for a small app like this.
But I don’t think that counters his point. He’s basically saying, 2½, 3½, whatever, he sees things on the public market trading at 10 or 100 times net multiple. And shouldn’t he just run it for 10 years and get 10 years of of running rather than taking 2½, 3½, whatever it is? What do you think, Mike?
Mike: I think one of the things to keep in mind is that your operating in this price range, I would say, where the multiple is going to be different based on where you’re at. If you have a business that has a, I think you’ve mentioned, $50,000 net income, if somebody takes it over, they’re probably going to have to put somebody in, which essentially reverses the earnings of that particular business, which again, is totally true. But if you had, let’s say, 10X that, you had $500,000 of net income, the difference in value of that business versus something that only brings in $50,000, is going to be very, very different.
That’s something to definitely keep in mind because there are certain ranges where, if a business is making just $50,000, it’s not going to be worth nearly as much as something that has $500,000 of disposable income. They can use that money to bring somebody in, pay them, and they still got $400,000 left to play around with to do other things, marketing, bring on more people, do growth experiments, all kinds of different things.
The other thing that I think he had mentioned was comparing it against larger businesses. Again, the earnings of those large businesses like public companies and things that you see in the stock market, they’re making a lot more money, so they are going to naturally be priced higher. Those are the things I would definitely keep in mind.
The thing that he didn’t mention at all was the fact that if you are going to run this for the next 10 years, for example—you said that you get to keep all of the net earnings from that, that is true—is the business going to be the same in 10 years? Is it going to grow? Is an event going to happen at some point during those 10 years that it’s going to wipe out a substantial portion of the market? Is Google going to launch a product that competes directly in your space? Or is a funded company going to do the same thing?
There’s all these things that create risk for your business moving forward. For a SaaS app, that risk is heavily reduced because people are already on a subscription and it’s easier to mitigate those types of risks, but it is still a risk. And because of the scale that you’re working at right now, it presents too much of a risk. I suspect that’s why there’s probably that 2½ multiple versus, like what Rob would said, either expect a three or four.
But you would have to keep in mind that something could happen tomorrow and your entire business goes away. You could get sued, or somebody could take the domain, or somebody could say, “Oh well, your app name is actually a trademark and we own that. We’re going to come after you and sue you for $100,000.” For only making $50,000 a year, that’s pushing it in a really tough spot. Those types of events factor in a risk over the next 10 years and you have no idea what those actually come out to be. It may happen, it may not, but there are factors you have to consider.
Rob: Yup, I agree. I think people with a first-time app feel like it will run forever. Ten years is forever in this space. This is why the small business analogy, like when people say, “I’ll just build a business. It’s like a bakery, or like a gymnasium, or a grocery store,” it doesn’t work the same with SaaS apps and technology because the stuff changes so fast. In 10 years, you said it all.
The apps that I had that were making money in 2005–2010, I sold all of them and a lot of them have basically shut down, not because of the code didn’t still work but it was often because the code is so out of date that no one can maintain it now. It’s a classic ASP or it’s like ASP.NET version 3.0 and you have to completely rewrite the product to keep it updated. If you don’t do that, then you just ran out of the ability to find developers.
Or Google makes an SEO change that completely decimates your product. I had this happen multiple times. I know dozens and dozens of founders who’ve have their business just turned upside-down overnight after years of building it into a five-, six-, or seven-figure annual business.
You can have new competitors, the market can change, you can have industries that get wiped out. Let’s say you have a job board for truckers. I’m just making stuff up here. The trucking industry is going to have a real issue, or at least truckers are, over the next 10–20 years as self-driving trucks come around.
There’s all these factors that you don’t think when you have your first app and you feel like no one can touch it. “There’s no chance that this Twitter client or this Facebook client that I’ve built is going to get completely decimated when they decide that they’re not going to support my API calls anymore,” which they do all the time. We’ve seen people within our community have apps, have to do layoffs, and get hit pretty hard revenue-wise by people churning out because you can’t provide the value anymore. Or if you run an ESP. If you don’t maintain it, you get on blacklist. Now your deliverability is not as good. On and on and on. You and I could sit here and name your name to getting sued. There are all these things that just happen the longer you do it.
I’m not saying that you should sell for 2½ or 3½ or whatever you can get for it. What I’m saying is don’t think that you’re going to run this business for 10 years without a substantial amount of work over that time. You may not have any work right now for six months, maybe nine months, then it will start sliding. Something will change out there.
If you want to put in that work, then great, but don’t think that you can just coast for 10 years and that your business isn’t going to get turned upside-down, let’s say, every 18-48 months. It’s a big range but it depends. I don’t know if you have APIs you’re relying on, who your competitors are, what space you’re in, but every couple of years you’re probably going to get this big curveball and if you’re doing something else and can’t pay attention to it, bad things happen.
That’s really why people sell for those “lower” multiples, is because there’s risk and because you want to take that cash flow ahead of time. Take this several years of cash flow and just put it into your next thing. Typically, it’s buy that next thing or buy out your own time so that you can then build the next bigger idea that can last longer. That’s what a lot of people do. Not necessarily bigger in terms of head count but bigger in terms of net profit, I think.
Mike: Yeah. I want to second that. I was not saying that you should take this because of all the risk involved. It’s more of, just be aware that that’s why some people do it and, to Rob’s point, sometimes where people will just want to take that money off the table and take a year or two of net earnings in order to be able to do other things. If that’s something you want to do, then great. If not, then you could continue to run it. Just be aware that there’s risks no matter what you do. There’s risk if you sell it. It could become huge and blow up or it may not. You may decide to run it for 10 years and it never grows beyond having a net profit of $60,000–$70,000. It’s high enough that you don’t want to get rid of it, but low enough that it’s hard to live off of that based on where you’re currently settled down.
Rob: Yeah and I think the idea of public companies are valued at 10 or 100 times, yeah, that’s true. Most are not of 100. Those are the outliers. We look at Amazon. Let’s get rid of Amazon because they […] special way. Let’s not look at the hot-hot, hyper growth, 50 million subscriber tech companies. They’re completely outliers. Look at the median price-to-earnings ratio or look at the bottom 50% and it starts to become a little more realistic. It still doesn’t tend to be down around 2–4 in the range that we’re talking about, but you’ll see a lot that are in that more 5–10 times annual earnings, which is in the ballpark. It’s within the order of magnitude we’re talking about.
And there’s the public companies. To be a public company, you have […] and all this crazy stuff you have to apply to, so you’re not going to do it if it’s going to be the same multiple. There’s so much scrutiny and all the stuff that comes along with it, so unless it had some type of premium, then you wouldn’t do it.
These are good things to think about. I think the other thing I drew out is, Mike, when I started buying apps in, let’s say, 2005–2011 time frame when it was really the heyday of me acquiring a bunch of stuff, the multiples were 12–18 months of net profit. There really was no FE International, there was no Quiet Light, there is no Empire Flippers. If they were around, we didn’t know about them.
It was all like Flippa, it was like deals on forums, it was called email, and that was the multiple. There was so much risk. There was potential for fraud, which I think has been greatly removed in our space and that is why I like the fact that we have these brokers now. I like the fact that the multiples have risen. It’s certainly a bummer from an acquirer’s perspective but I do think the whole community benefits by the fact that the multiples are where they are today.
Mike: We were just talking about how things were different then. Those were also the days where you had a Blockbuster card.
Rob: That’s true.
Mike: I’m just saying. That how old you are.
Rob: Exactly. No. That’s such a good point because you know, Mike, Blockbuster could have thought, “Why don’t we just run this thing for 20 years and just collect the revenue off of Blockbuster?” and now they’re bankrupt because Netflix came in and ate their lunch. It’s a perfect example. Blockbuster, I believe, was a public company. It’s just another example of how quickly things are eaten up by technology these days.
Mike: That’s actually exactly what happened to them because they had the opportunity to buy Netflix for $1 million or I forget how much it was, but they had an opportunity to buy Netflix at one point and they decided not to because they’re like, “Oh yeah, this is not going to fly and we’ll eat their lunch,” and it turned out it went the other way.
Rob: Yeah. Cool. So, good question. Thanks for sending that in. Our next question talks about what a SaaS app should look like at $10,000 MRR, $20,000 MRR, and beyond.
Adam: Hi guys. This is Adam again. I have a second question. I heard you say in one of your old podcast that the goal for probably Startups For The Rest Of Us listeners is to get your app to $10,000, or $20,000, or $30,000 MRR. Could you guys discuss what your business should look like at different MRRs, like when do you hire your first employee? When you do hire a customer support person?
Right now, I’m just doing everything myself with an offshore developer. That’s like $8300 MRR. What do you recommend at $5000 MRR? Could you say like, “$5000 MRR your company probably is like you have a full-time job and you’re in your basement weekends.” And then $10,000 and $15,000 and at $20,000 like the stages of growth based on the MRR, that would help a lot for me to get some kind of benchmark. Thanks so much guys for what you do. You’re awesome.
Rob: Mike, I will let you kick this off, but I think the answer is, “It depends.” It depends pretty heavily. There are people that can live on $5000 MRR. In that case, you’re not in your basement work the day job. But if you live in California, then maybe you are.
I also think it depends a lot on the app. Some apps need a ton of support. If you’re building an ESP, people have a ton of questions. It’s like Baremetrics where you just opt-in to Stripe and you […] off and then you have charts.
I bet in the early days, Josh didn’t need very many support people and could take that way, way further. And if you’re building a complicated app, it takes a lot of stuff to get set-up. Preface that and then kick it over to you.
Mike: I agree with you on the ‘it depends,’ and I think part of the problem is that we don’t necessarily have a lot of data points because so many different businesses are different from one another. For example, you Rob Walling. Your starting resources are going to be very different than the listener, or myself, or pretty much anybody else on the planet because it’s not just about the money that you have available. It’s also about the relationships the you have, the code or technology that you already have, the experiences that you have, and sometimes the relationships you have with certain people allow you to get into channels that other people would not.
By virtue of talking about those, you’re going to have to hire for different things than somebody like me or any given listener is going to have to hire for different things. The restraints on each individual are going to be different, based on whether you have a spouse, whether you have kids, whether you have a sick parent that you have to take care of on Thursday afternoons. All those things factor into it. It makes it hard to come up with a over reaching generalization that is globally applicable.
That said, you can come to certain, as you said, revenue benchmarks of $5000 and $10,000 and say this is probably where you might want to start thinking about this. It doesn’t mean you do it. It just means you start thinking about those things. I think when it gets to that stuff, anywhere between, I’d say, $3000–$5000 you probably want to start thinking about outsourcing support, when you get up to $10,000, you should probably be full-time on it, but again, it depends on whether or not you’re going to be able to support yourself when you are full-time on it.
I heard probably from Balsamic talk about this and I think it was at a business and software talk where he said that he held off on his first first hire until after he got to a point where he was just literally not sleeping because he could not possibly do all the stuff that was required of him. It’s interesting because its almost 10 years ago where that happened. It was around the beginning of 2009 and he was getting to the point of 2500 customers on a weekly basis. He was getting so much money coming in but he just could not keep up with the business. He’s like, “I have to hire somebody.”
If you do the math on it, 2500 customers in a week, I don’t remember how much Balsamic was selling for at the time. I’ll say $40 or $50 but at that rate, that’s a substantial amount of money. And that’s on a weekly basis. Not even a monthly basis. So you can figure $60,000-$80,000 on a monthly basis, something like that. That’s where he got to before he started bringing in one person and it’s because he didn’t want to hire. At some point you have to. Certain scales of problems are so large you have to do things that maybe you don’t want to. But at the same time, those things are sometimes good for the business.
Rob, I’ll let you jump in. Where do you think? At $10,000 it’s pretty not standard but that’s kind of the benchmark most people use for going full-time on it. But what does $15,000 mean? What does $20,000? What does $25,000 mean?
Rob: It really does depend on where you live, how far you can take that in, where you’re hiring out of. Let’s say you’re in Chiang Mai, Thailand, you can live on $2500 a month, you can hire people there or in your same time zone, full-time developers for $1500–$2000 a month, then you can move way faster if you want to. Or you can just bank money like crazy.
So, it does depend on are you doing this as a lifestyle thing? When I think back to my experience, I had some apps where I didn’t really want them to grow. I just wanted to rake in the $3000-$20,000 a month they were throwing off and just maintain that. I had no aspirations to 5X or 10X that, and that’s a great lifestyle business. If that’s your goal, then do that.
But if you do want to get as big as possible, you want to create as much value financially for yourself as possible, you want to grow it to $100,000 a month, and when you get into this seven figures and you have a SaaS app in a seven-figure revenue range, even high six figures but certainly if you get into seven figures, that is where the exit multiples change because there’s private equity that is willing to start talking about revenue multiples instead of net profit. So, it doesn’t become this 2½–3½ range. It can be 1½–3 times your top line revenue. But you have to get big enough that it’s worth them even having a conversation with you.
All that to say, there’s two totally different paths. I would say do support as long as humanly possible and don’t hire a support person until you feel like, “I’m either really tired of this, I’ve learned all I can from my customers, or I don’t want to do this anymore.” I can see hiring a support person well before $10,000. I can see hiring when you’re at $5000 if you just can move faster by not doing the support.
At $15,000 or $20,000 I would probably remove myself from development as much as possible, unless it’s something you really want to do. But if you want to maximize growth, stop doing it, hire someone who’s good. You have budget to do that. If you want to do it, that’s fine. You’re not going to grow as fast. Just know that that’s what you’re doing. You don’t have to. That’s the beauty of what we’re doing. We’re bootstrapping. You can do what you want.
When you get into the $30,000 or $40,000 that’s when you can either just be raking in buckets of money, which is awesome, or you can start thinking long term about, “Okay, now how do I double from here?” because I think it’s $83,333 is where you hit that $1 million a year. How do I get from $30,000 or $40,000 to $80,000, where are my plateaus up ahead and who do I need to hire to stay out ahead of that?
That’s typically when you start thinking about hiring someone to head up marketing or growth because the founders are often doing it up until that point. If that’s what you want to do, then focus. But if you want to rise up that one level to where you’re managing product, engineering, marketing, customer success, and sales, then that’s in that range where I think you have budget to hire someone who’s good at growth and is not someone junior you’re going to have to train, is expensive, much like a knowledgeable developer is expensive.
So those are the trade-offs. We could walk through a hypothetical example. I don’t know that it’s any more helpful than that. I think to me it’s like keep the team duty opposite to what’s venture fund companies do, which they try to grow headcount super fast and spend the money.
I think keep the team as small as possible, unless you’re putting yourself under undue stress, unless you’re more stressed than you should be, unless things are falling through the cracks. That’s where you’ve taken it too far. But in general, the more profit, the better because it just gives your optionality. It gives you optionality is take more money off the top. It gives you optionality to hire someone when you need it.
If you have $10,000 a month that you’re just throwing into that business bank account, that’s great. If you decide to […], “Oh my gosh, our competitor’s doing this and we really need a head of sales or a head of customer success or whatever,” you have the option to do that.
Mike: And I think that’s the entire point of the whole question is what are the different options? I think Rob just laid out a bunch of different places where, at those points you have those options, and it really boils down to what you want to do with the business, where you see it going, and what you don’t want to actually do inside the business. Those are the things you hire out at whatever those points along the way are.
Rob: So thanks for those two questions, Adam. I hope our discussion was helpful.
Mike: I think that about wraps us up for the day. If you have a question, you can call it into us at our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript to each episode. Thanks for listening and we’ll see you next time.
Episode 436 | How to Respond to Customer Suggestions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to respond to customer suggestions. The topic was inspired by a Tweet by Ken Wallace, the guys give six approaches they use to tackle this issue as well as some additional thoughts.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about how to respond to customer suggestions. This is Startups For The Rest Of Us episode 436.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?
Rob: Things are going good. We’re in the midst of interviewing and talking with founders who have applied to be part of TinySeed. As I mentioned before, there’s quite a few applicants to go through, and we’re having a lot of conversations and we’re coming up on our mental deadline of when we want to get everybody on board. We have started making offers to founders as things come together and as it becomes obvious that we’re a mutual fit for each other. That’s the thing, it’s not just do they have the chops or do they have the traction to get in, but are we going to be able to help them? Are they fit for us? I think that I’m trying to do as much evaluation of them as I’m trying to do of us.
We’ve had some folks apply who have traction but it’s like, “I just don’t know that we can help you.” It’s businesses that are perhaps outside of our expertise, outside of our mentor’s expertise. All that said, we have had five companies accept offers which feels really good, just to start making our way towards that. MicroConf is coming up here real soon. It’s about a week-and-a-half away from when we’re recording. I’m actually out in London the following week with the family. It just feels like there’s a lot going on right now.
Mike: Yeah, for sure. It’s interesting that you are evaluating whether or not you can help them, not just whether or not they have traction. It’s interesting seeing some of the questions, for example, that come in to people asking about whether MicroConf is a good fit for them as well. There are certain people who are just evaluating, for example, the station at the conference, like, “You really shouldn’t be going there because it’s not applicable to you or you’re not going to get the benefit out of it that you’re looking for.” I talk some of them out of it or talk them into the right direction. Some people is just not a good fit for it. Same thing with sponsorships as well. Some people will say, “I’m interested in sponsoring,” and I have to talk them out of it because it’s not going to do them any good, and I really don’t think that it’s good for us to accept sponsors where it’s not a good fit for the audience either.
Rob: Exactly. Are you in this for the long term or are you in it for a quick buck, so to speak. We could accept people into TinySeed that have, “Oh, you have tens of thousands of dollars of MRR,” but we’re not going to be able to help you that much. In the short term, that might be the right choice, but in the long term, they’re not going to get out of it what they deserve and what they should get out of it.
You’re just ding your reputation. Same thing with sponsors. You could sell a $5000 or $10,000 sponsorship, but if they don’t like it and they don’t get the value out of it, then you’ve caused yourself a problem to your reputation. Same thing running a SaaS app. Their customers will come to you and they could be your biggest customer. In the early days, a $500 a month deal is game changing for you when you’re doing a couple grand a month.
In the short term, that might be the right fit. But in the long term, if it’s not, it’s a real problem. I think that’s the thing. You and I have played long ball on so many fronts. Not only with the podcast doing 436 episodes, but with MicroConf talking attendees or talking sponsors out of it, with our apps, with Micropreneur Academy, with FounderCafe. I mean, we have turned away a lot of people. I actually think it’s a good policy to have.
Now, it means that the growth-at-all-cost mindset were not growing at all cost, because we’re not going to do it at the cost of our long-term relationships. I think that if you’re in this for decades, that it’s the right call to be smart about this, and to evaluate from both sides of the aisle so to speak.
Mike: I couldn’t agree with you more.
Rob: How about you? What’s going on?
Mike: Well, I have a upcoming webinar that I wanted to actually share with the audience. Remember probably three or four weeks ago, I had mentioned that there were some publications and stuff that I was going to be hopefully getting into, but I wanted to hold off on that. One of them that I want to share with the listeners is on April 29th at one o’clock. I’m going to be doing a webinar called Personal Email Strategies to Drive Traffic, Engage Leads, Close Deals, and More. That is going to be through hr.com.
I’ll link that up in the show notes, but I’ll work with them to put that on the calendar for them. I’d say it’s a big win just because of the size of their audience, but also working with anybody who’s got a 2-letter domain name. That’s interesting in and of itself.
Rob: Yeah. It’s just a URL that you’re doing your webinar at, it’s web.hr.com/u9vo.
Mike: Yeah, that’s just a short code, I’m sure.
Rob: We’ll link it up in the show notes if you want to do it.
Mike: Yeah, maybe we should. People have to remember that. Do you say U9VO or do we something special. I don’t know. Various conversations.
Rob: I mentioned that me and the family are going for my kids’ spring break, I believe, that we are headed to London for about a week after MicroConf. Sharon and I were thinking about putting together just an informal London bootstrapper’s meet up probably two hours on an evening. If you’re in London, I will be in London between April 1st and the 6th, head to robwalling.com/london and I have just a simple three-question Google form there that’s like, “What nights can’t you make it? What’s your name if you have one? What’s your email address?” That’ll be fun. We’ll put it together if it makes sense. If only one person responds, then maybe we won’t go to the effort of it.
I’m looking forward to it. I’ve been to London at least once. Trying to think if I’ve been twice, but our kids really wanted to go, because just of all the stuff these days. They read about Sherlock Holmes. They are fans of Harry Potter. Even Shakespeare, they have that familiarity. One of them was in a play with that. There’s just so much cool stuff there and we really haven’t taken the kids there or taken them to a lot of European cities. It feels like a good time to get out and go.
Mike: Cool. I almost went to London about probably four or five months ago, I think. I almost went there and then I realized I was in the wrong line and I would have gone out of the airport and into London itself instead of getting on my connecting flight.
Rob: Nice. That would’ve been fun if you missed your flight and then hung out in London. Saw the Eye and the Shakespeare Theater and all that.
Mike: Yeah. I’m sure that my connecting flight would have been thrilled with that.
Rob: It would have been a blast. What are we talking about today?
Mike: Today, we’re going to be talking about how to respond to customer suggestions. I say suggestions because it also incorporates feature requests as well. This can broadly apply across different types of businesses whether you have a SaaS app, or a downloadable app, or productized service, or something like that. We’ve talked about how to solicit feedback from your customers back in Episode 119, but it’s been awhile since we had a dedicated podcast episode about this. We’ll link up Episode 119 in the show notes.
The idea for this episode comes from a tweet stream that Ken Wallace had put out. Ken Wallace runs MastermindJam which you can find over at mastermindjam.com. I’m going to summarize a lot of what he said because he had hit a stream of 18 tweets. I’m going to summarize that a little bit and condense it. His basic thought process was questioning how to respond to customer suggestions. He said that for his business, customers tend to be entrepreneurs and transparency is big. It tends to lead naturally into, “Let’s dig into that.” For context, MastermindJam is a service that connects entrepreneurs with other entrepreneurs who are in similar types of businesses and lets them find other people who they wouldn’t otherwise normally find in order to form a mastermind group.
The question starts out where he’s offered a suggestion by a customer and he starts explaining why he does it in a particular way, what he’s tried in the past, and what he intends to do in the future. This approach worries him because there are times when he persuades the customer to agree with him and that’s where he thinks there’s a missed opportunity because he essentially talked the customer out of a particular way of doing something when they came to him with a suggestion.
Understand that there’s a lot of reasons why the customer might concede that point. They might be tired of debating the topic with him or they may leave the can they’re so entrenched in whatever the particular suggestion is. The person thinks, “Oh, I’m not going to convince him to change, so I’m just not going to bother,” or they don’t have the time and they just think, “Oh, this isn’t worth arguing over.” Its fundamental problem boils down to how do you know why it is that they agreed with you.
Rob: They may also agree because they actually agree and because he truly convinced them that it’s a better way. That’s another option.
Mike: Right but the lack of clarity there is what concerns him because if people fall into any of those previous camps where they didn’t necessarily actually agree with you, but they just say, “Agreed,” to move on the conversation or end it because they’ve got other things to do, then how does he know that? What are some recommended approaches to responding to that type of information?
What Ken wants to know is when a customer gives you a feedback or a suggestion like this, what should happen next in the conversation? What’s your response be and how should the conversation go from there? His belief is that if you just say something like, “Thanks for the suggestion I’ll take that in consideration. Where can I follow up with you?” it seems very patronizing. I think you chimed in and you talked about drilling into the five whys a little bit. I want to back up a little bit and take a look at a much broader approach to this.
Rob: Yeah, I would agree. He basically said, “Should I drive into the five whys?” The thing is, I actually started writing a response and it was more of a full-blown out like how I would handle it. I hate Twitter because it’s 280 characters. I eventually just stopped and gave in and said, “I’m not going to do that,” because we are going to talk about this for 30 to 40 minutes today and I bet we will cover it well but not even cover everything. To try to respond in a series of 10, 20, 30 tweets or whatever to truly summarize the nuance of this question, I felt like wasn’t going to going to do it. I just boiled it down to, “Yes, ask more questions. Thank them.” I tended to not commit to anything on the phone, but we’ll dig into more of that because you have a whole approach outlined here like a six-step process that I think is pretty worthwhile.
Mike: Let’s start going through these six steps. I think the first thing to do here is to mentally prioritize their suggestion and feedback. Categorize it and say, does it sound like (a) a problem they need a solution to, (b) an additional nice to have but not critical, or (c) this is a better way to do it. Essentially, an optimization of some kind. Really what you’re looking for is trying to figure out, is this something that is part of the experience or is it a new feature that they’re asking for? Are they trying to improve something that already exists or could exist in a different way or a better way, versus are they asking for something that’s fundamentally new. You have to drill into that and figure that out.
Rob: I agree. I think at a certain point, it can become kind of a gut feel. If you’ve talked to 50 customers, 100 customers, you do start to see repeating questions, repeating suggestions, repeating information. There’s a way to bucket them in your head of like, “Yeah, we know that. We’ll prioritize it,” or “Yeah, we thought of that,” and I would often say, “Here’s why we’re not going to do that,” but I guess that comes back to Ken’s point of, is that the wrong thing to do?
I think in my head it’s like, if you’re always trying to talk suggestions a customer that have suggestions, that’s a problem. I do think that there are going to be quite a few suggestions that come up that you’re not going to build and are not a good idea to build. Those are the ones where it’s not as much a debate but it’s a, “This is my vision for the product,” or “I’m not going to copy competitor features that doesn’t make sense,” or you’re going to have some good reasons that people who are not working day-to-day in your app or in your business, they’re not going to have because they’re not thinking about it all the time.
Anyways, I’ve skipped ahead in the thing. I think that for this first step, taking in the suggestion and trying to mentally bucket it early on can be helpful. Especially if you’re doing 5-10 calls a week, you’re having a lot of these conversations. It does help you to get some clarity as to how you talk about these things.
Mike: Right. I said that you should mentally prioritize, but I really meant categorize, or bucket like you had said, so just to clarify that particular piece of it.
The second piece of this is to start asking them questions and make sure that you understand their context and their point of view. They’re going to have different experiences based on their own life and their own business, versus the things that you do and see, because you have a viewpoint from inside the business whereas theirs comes from outside of it.
You also have to differentiate between the type of person they are where they are in your sales funnel. If they’re a prospect, is it a feature request? If it sounds something along those lines, you can ask them, “Is that something you need?” When you’re very early on in your business, what you’ll find is people will ask questions and they don’t necessarily care about whether or not you have a particular feature or not, but they just want to know. They’re curious as to whether or not that functionality or that piece of it exists.
A lot of times, what you’ll find is by asking that question, “Is that something you need?” they’ll just say, “No, I was just curious.” I found in cases where I’ve asked that question, it was for something that I knew was probably going to take 3-6 months to put together and they’re like, “No, I was just curious.” But had I gone down the rabbit hole and said, “Yes, we can do that,” and started trying to implement it, I suddenly pushed everything back by 3-6 months. You have to be very, very careful about whether or not it’s something that they absolutely need, versus is it nice to have?
One of the ways that I like to phrase this is to say something along the lines of, “Tell me more about that,” and as a follow up to that you can say, “What makes you say that?” When they give you a suggestion or they say, “You should do it in this particular way.” “Really? What is it that makes you say that?” It allows you to take that conversation and make it much more interactive.
Rob: Yeah. I love this idea of asking questions to dig in further to make sure you understand their context and their point of view. As you’ve said, digging into their context can show you that they were just curious. Digging into their context might show you that they are not a fit for you, that they should not, to our point earlier, they are not a good fit for your company, your conference, your SaaS app, your service, whatever.
I think having disqualifying questions that you could even come before this is a huge win in determining if someone is alternately a fit, as well as determining if someone is the perfect fit and that they might be suggesting something that you’ve never thought of before. That’s always a cool realization when you know that someone should get a ton of value out of what you’re offering and it’s almost like an epiphany. That’s why I said five whys when I responded to the tweet because to me, it’s not technically asking why, why, why, why, but it is asking a bunch of questions to be like, “What are you trying to accomplish with that? What does that mean? Where are you coming from with this? Blah-blah-blah,” just to try to dig in to really understand their true needs.
Sometimes you’ll find out it’s like, “Well, I know that my current tool, MailChimp, does that. I was just thinking if I ever wanted to use it, do you have it as well?” We got stuff like that back in the day with Drip and it’s like, “Cool. You have context of a competitor, you don’t use the feature today, is it a deal breaker?” “Well no, it’s not.” “Okay, but you would like it in the future?” “Yes, it’s on a roadmap.” It’s just digging into these things and not taking the face value is pretty important.
Mike: And a lot of that just gives you context for the feature data points that you can say, “I heard this from one customer. I heard this from 5, or 10, or 50,” and once you start hearing things over and over, it goes back to if you ask the question to begin with. If you didn’t ask, then it’s very easy to not get that information. You have to start drilling in as part of the second step to ask questions and make sure you understand where they’re coming from, why they’re asking those questions, and how they feel about it. How would they prioritize their particular suggestion.
If it’s critical to them, then you have to take it more seriously and give it a little bit more thought, versus something where they’re just like, “You should have this phrasing instead of that phrasing,” or “I don’t understand why this is on this particular menu in your app versus this other menu.” Those are the types of things which a lot of times they can go either way, but then there are certain things where they really have to be done in a particular way and you know the best way to do it because you had that context and thought about it, and it really happened.
Rob: Yeah. I think the third step for this approach is to compare their context to yours. Coming back to what I said earlier, is this something that they saw a competitor doing and is that a road you want to go down with this particular competitor or this particular feature? Do they have personal experience with that competitor or with this feature? What’s the frustration level with the fact that this doesn’t exist? Low, medium, high, or are they angry and belligerent? Have they considered the implications of what they’re asking? Do they have any idea about the amount of work involved? Do they know it’s going to take 3-6 months versus 1-2 weeks? They probably don’t. Any idea about the timeframe? Is this something only they would use? They’re probably not going to know that, but you should have a gut feel. This was always something that when we would get a feature request with Drip, I would try to get in the mental mindset of all our customers. It’s hard to do. You can’t do it 100%, but I would frequently say things like, “I think if we build this about 10% of our users will use it. They’re going to get a ton of value out of it and they’ll stick around forever,” or “I think about half our users will use this,” or “I think 2% will use it, but it’s the power users,” or whatever.
Again, those are guesses but that’s part of being an entrepreneur is making decisions with limited information. You don’t have all the information in a roadmap sense that you can just walk from here to X-marks-the-spot of victory and profit. Making decisions with incomplete information is a huge part of it and developing that, I’ll call it “gut feel,” but really what it is, is it’s years of experience working with your customer base, on your product, and in your space, that can help give you that context for it. I think the last thing to think about when you’re comparing contexts is, have you previously considered the suggestion or is it on your roadmap already?
Mike: Yeah. I think that last piece makes a big difference. If your response is off-the-cuff and just say, “Oh, we have thought about this before and this is how we’re going to do it,” versus something that you’ve put it on your roadmap already because you’ve heard it a lot, or you put it into a document based on things you’ve heard from people who’ve asked about that particular thing enough that it warranted having a, I don’t want to call it a stock response, but an answer that you can share with your team as to ‘this is why we are or are not going to be going in this particular direction.’
That lends itself to you have considered the implications of that. A lot of times what you’ll find is that the customers don’t necessarily consider all the implications. Part of that is just because they don’t see all the same things that you do. You’ve got all these priorities that you’re working on, maybe things at your bug tracker, or features, or particular customers that are high value that you want to be able to serve better, or a particular direction you want to take the product in. You have visibility to those and the customers or your prospects do not.
Rob: Yeah. As you go on, if you’re two, three, four years into it and you have 1000, 2000, 3000 customers, a steady influx of prospects, you’re going to get to the point where you’ve heard 90%+ of all the request that come in. You’ve heard them before. Maybe 95%. It’s crazy how much these things are just clustered. You can put them into these buckets of absolutely not going to build that because we’ve evaluated it and you can come up with 10 different reasons of why you wouldn’t build, but you just know that right now, you’re not going to build that, absolutely are going to build it, and it’s “on your roadmap.”
Now, in the early days we were super agile with Drip. Our roadmap was literally 2-3 weeks out, but we had a mental roadmap of where we’re going to go beyond that, but it was certainly in flux. A third bucket is, you don’t know yet, it depends on how stuff unfolds with what you’re currently building. Then there’s this fourth bucket that was the pleasant surprise of, “Wow, no one has ever suggested that and that’s a really good idea.” The issue is that is so rare. I mean it’s probably 1 in a 100, 1 in 200 feature requests if that as you get to scale. At least from my experience with the apps that I’ve built.
It becomes less and less frequent as it goes on. If I got one of those and I was on a call, I don’t know, that would blow me away and it would be a fun thing to dig into with that customer because if you haven’t heard it, you haven’t thought through the context of how it would be used and where they got the idea. I mean, I would really dig into that. Again, I do think that’s an edge case and not something that you’re going to have to deal with everyday.
Mike: I don’t think we specifically mentioned it, but part of comparing their context to yours is where they are in the sales funnel. Are they already a customer? Had they been a customer for a long time? Did they just sign up? Are they just evaluating your products to see if it’s a good fit? All of those things are going to make a difference when you start evaluating what your response is going to be.
Now, when it gets to response, this is step four in the approaches, you’re essentially inserting a massive if statement and a matrix here that indicates how you’re going to respond, because it’s going to depend on a comparison of how critical it is to them, how quickly it can be done, whether it aligns with what you want your product or service to do in the short term versus the long term, what the current state of your business is.
If you are very early on and either you’re pre-revenue or you just started selling it, you have a little bit but you’re not full time on it, all of those things are going to make an impact on whether or not you’re going to decide to move forward with that and implement it, versus you’re going to push off of it. One of the biggest pieces of this is whether or not you believe that you have a better solution to this suggestion or feature request than they have offered.
Sometimes, you just have a workaround. Sometimes you know that you can do it, but it’s not going to be a timeframe that they need. You can say, “Well, here’s a workaround, we can do this for now, and we’ll implement this in a month, or three months, or six months, just because it’s so much work in order to do that.”
That leads directly into step five which is to make sure that your response establishes a common context for the two of you. You want to make sure that you’re on the same page. You don’t want them to walk away from the conversation thinking, “Oh, he didn’t listen to me,” or “She didn’t take my suggestion seriously.” You have to make sure that they understand what it is that you are doing and why. You can go into the, “This is what we’ve tried to do in the past. This is what we’re doing now. This is what we’re going to do in the future,” but it’s extremely important that you make sure that they understand what you’re going to be doing in the future and why you have come to that decision.
They may not agree with you but ultimately, it’s your business. You’re the one who has to make that call. You can’t let the customers decide every single thing that’s going to happen inside of your business. Quite frankly, if you just sat there, respond to customer requests all day, and try to implement everything that they wanted you to do, you would never have time to do anything else. There’s lots of stuff in my business that I would love to do and I just don’t have the time to get to them.
You’re never going to have a to-do list that gets shorter and shorter over time. It will always get longer and you have to pick and choose which things you do and don’t implement. Sometimes you’re going to have to tell a customer, “No,” or “We can’t do that and here’s why,” or “This doesn’t align with our vision and here’s why.”
Rob: Yeah. I actually think that’s where the concept of customer development and listening to your customers does. Especially early product people, it doesn’t mean disservice. I haven’t read every book on the in-depth machinations of customer development, but I know the concept, how it’s used, the definitions and all that. It feels to me like people, whether it’s used correctly or they misuse it, they think that you ask your customers what they want and then you build those. That’s not going to work.
There’s such an issue when your customers are using some type of competitor. This is the major issue, if they’re using a competitor, they’re pretty much just going to ask you to duplicate all of that competitor’s features that they use. That is the non-product person’s initial reaction to everything. That tends to be a pretty bad choice and it’s going to come back to bite you later on.
I think the idea that it’s ultimately your business, points to having a vision for your product that you hold on to but are also willing to adapt. You know when to change it. In the early days of Drip it’s like, “Alright, we’re going to build this little add-on. Okay, now we’re going to change the vision to build an ESP. Okay, now we’re going to change it to add automation.” This division had a through line to it. We never veered off and built shopping carts software which was requested all the time. We didn’t build affiliate management which was requested all the time. There were other things that were just off. It was just like, “No. We’re going to integrate out for those,” but this through line of ESP add-on to marketing automation, we allowed the vision to adapt and adjust. We didn’t hold onto it so tightly that it was like, “No, we’re only going to be an add-on for an ESP.”
We would have still had some success, but we would never have had the success that Drip had. We also didn’t just go around building everything everyone asks. I think that’s a real problem. When you get into an app or someone has done that, you can tell. There’s settings everywhere. I unfortunately see this in a lot of older open source projects. Where people just come in and just bolted on this checkbox, that checkbox, this switch here and there, because they had some unique use case.
Frankly, if you’re building a SaaS app for the long term, thinking about how not to clutter your UX, clutter your app with these features that just make everything more complicated but almost no one uses or these edge cases, is something you really need to think about, because you can make a choice today that will just come back to bite you for years to come.
Mike: And running at the end of this approach is that you should always thank them for looking out for you. Find out if they have any more questions. Make sure that they understand what the responses that you’ve given them and why you have come to the conclusion that you have. Again, it’s not saying that they’re going to agree with you. You just want to make sure that they understand why it is that you made that decision. Part of this is just about making sure that they walk away having a good feeling as if you listened to them, and you truly understood what it is that they were asking for and made the decision, “Hey, that’s not right for this business and it’s not going to be right for you.”
I’ve heard from people who I’ve said, “Hey, this is not going to happen at any time frame that is close to what you’re looking for, you should probably find something else,” and then 6-9 months later, I’ve had them come back and say, “Okay, we tried a bunch of other things and those things didn’t work. We would like to come back and revisit this with you.” People appreciate you being candid with them and giving it to them straight. They don’t want to be jerked around. They don’t want to be told lies. They hate it when a sales rep will make promises, then suddenly they get in, they’ve spent all this time and effort trying to integrate their systems in with yours, only to find out you can’t deliver, or you haven’t delivered on exactly what it was that they wanted because you didn’t understand and you guys weren’t on the same page. Make sure that they know what they’re walking away from and make sure they understood what you’ve told them.
Rob: I think some additional thoughts we can run through is, sometimes taking a request that’s fast and simple, and something you can build in an hour or two, buys a lot of goodwill, even if it’s not a current priority for you but it’s something that you know you want to build long term, or if it’s a good suggestion. I loved doing this in the early days of both Drip, HitTail. There were other, Wedding Toolbox. There were other apps that it was the best.
I get this email and say, “Hey, how come I can’t blah, blah, blah, or can I?” and you would literally go write the code, ship the code, and then respond back within an hour and be like, “Hey yeah, that’s available now. We just implemented it for you.” It is the best feeling to be able to do that. It’s something you can do less and less as you scale, but I just love that idea. Again, only if it’s something you’re going to build. You don’t just want to add cruft because it’s quick. That’s also a mistake early product people make.
Mike: Another huge thing is that the communication medium that you’re using is extremely important because what you say and how you say it is going to be a lot different based on whether it’s a chat message, or an email, or Skype, or Zoom Call, or video call, or something along those lines. It’s a lot easier to determine if they really agree with you on a voice call than any other medium.
If you are having conversations in that particular communication medium, it’s so much easier, and so much more effective. The downside is that you don’t necessarily have as much time to think, so you have to make sure that if it is not something that you have thought of in the past, that you write it down and take notes, and give yourself an opportunity to say, “Look, I haven’t really thought about this. Let me think about it some more and I will get back to you.”
There’s a lot of times where just having time to think about it more is going to give you a lot more clarity on whether or not that suggestion is a good fit. You can always just say, “Hey, I really appreciate you looking out for us and I have written down a bunch of notes. I’m going to think about it and I’ll get back to you in three days, or five days, or what have you, with an answer about what it is that we’re going to do about this.” That way, you can take it offline into an email instead. Make sure that you follow through on those commitments because if you don’t, that’s going to reflect poorly on your business overall.
Rob: To come back to an earlier thought, you can’t possibly do everything that people request. You can’t possibly do everything you want to build. You have to pick and choose. You have to prioritize. You have to say no to a lot of good ideas. What separates a decent product person from a great product person is their ability to choose the right things to build because no way you can build all the good ideas that everyone has. A lot of things sound like good ideas and they might ultimately be, but it’s part of being a founder, or being a product person and deciding, “What is my vision for this? Which gets the most bang for the buck? Which will delight the most customers in the deepest way?” and that’s where you have to take a look in the mirror and just say, “We’re going in on this.”
I hope that was a helpful discussion and that wraps us up for today. If you have a question for us, call our voice mail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups, and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. 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 software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?
Rob: Things are going good. We’re in the midst of interviewing and talking with founders who have applied to be part of TinySeed. As I mentioned before, there’s quite a few applicants to go through, and we’re having a lot of conversations and we’re coming up on our mental deadline of when we want to get everybody on board. We have started making offers to founders as things come together and as it becomes obvious that we’re a mutual fit for each other. That’s the thing, it’s not just do they have the chops or do they have the traction to get in, but are we going to be able to help them? Are they fit for us? I think that I’m trying to do as much evaluation of them as I’m trying to do of us.
We’ve had some folks apply who have traction but it’s like, “I just don’t know that we can help you.” It’s businesses that are perhaps outside of our expertise, outside of our mentor’s expertise. All that said, we have had five companies accept offers which feels really good, just to start making our way towards that. MicroConf is coming up here real soon. It’s about a week-and-a-half away from when we’re recording. I’m actually out in London the following week with the family. It just feels like there’s a lot going on right now.
Mike: Yeah, for sure. It’s interesting that you are evaluating whether or not you can help them, not just whether or not they have traction. It’s interesting seeing some of the questions, for example, that come in to people asking about whether MicroConf is a good fit for them as well. There are certain people who are just evaluating, for example, the station at the conference, like, “You really shouldn’t be going there because it’s not applicable to you or you’re not going to get the benefit out of it that you’re looking for.” I talk some of them out of it or talk them into the right direction. Some people is just not a good fit for it. Same thing with sponsorships as well. Some people will say, “I’m interested in sponsoring,” and I have to talk them out of it because it’s not going to do them any good, and I really don’t think that it’s good for us to accept sponsors where it’s not a good fit for the audience either.
Rob: Exactly. Are you in this for the long term or are you in it for a quick buck, so to speak. We could accept people into TinySeed that have, “Oh, you have tens of thousands of dollars of MRR,” but we’re not going to be able to help you that much. In the short term, that might be the right choice, but in the long term, they’re not going to get out of it what they deserve and what they should get out of it.
You’re just ding your reputation. Same thing with sponsors. You could sell a $5000 or $10,000 sponsorship, but if they don’t like it and they don’t get the value out of it, then you’ve caused yourself a problem to your reputation. Same thing running a SaaS app. Their customers will come to you and they could be your biggest customer. In the early days, a $500 a month deal is game changing for you when you’re doing a couple grand a month.
In the short term, that might be the right fit. But in the long term, if it’s not, it’s a real problem. I think that’s the thing. You and I have played long ball on so many fronts. Not only with the podcast doing 436 episodes, but with MicroConf talking attendees or talking sponsors out of it, with our apps, with Micropreneur Academy, with FounderCafe. I mean, we have turned away a lot of people. I actually think it’s a good policy to have.
Now, it means that the growth-at-all-cost mindset were not growing at all cost, because we’re not going to do it at the cost of our long-term relationships. I think that if you’re in this for decades, that it’s the right call to be smart about this, and to evaluate from both sides of the aisle so to speak.
Mike: I couldn’t agree with you more.
Rob: How about you? What’s going on?
Mike: Well, I have a upcoming webinar that I wanted to actually share with the audience. Remember probably three or four weeks ago, I had mentioned that there were some publications and stuff that I was going to be hopefully getting into, but I wanted to hold off on that. One of them that I want to share with the listeners is on April 29th at one o’clock. I’m going to be doing a webinar called Personal Email Strategies to Drive Traffic, Engage Leads, Close Deals, and More. That is going to be through hr.com.
I’ll link that up in the show notes, but I’ll work with them to put that on the calendar for them. I’d say it’s a big win just because of the size of their audience, but also working with anybody who’s got a 2-letter domain name. That’s interesting in and of itself.
Rob: Yeah. It’s just a URL that you’re doing your webinar at, it’s web.hr.com/u9vo.
Mike: Yeah, that’s just a short code, I’m sure.
Rob: We’ll link it up in the show notes if you want to do it.
Mike: Yeah, maybe we should. People have to remember that. Do you say U9VO or do we something special. I don’t know. Various conversations.
Rob: I mentioned that me and the family are going for my kids’ spring break, I believe, that we are headed to London for about a week after MicroConf. Sharon and I were thinking about putting together just an informal London bootstrapper’s meet up probably two hours on an evening. If you’re in London, I will be in London between April 1st and the 6th, head to robwalling.com/london and I have just a simple three-question Google form there that’s like, “What nights can’t you make it? What’s your name if you have one? What’s your email address?” That’ll be fun. We’ll put it together if it makes sense. If only one person responds, then maybe we won’t go to the effort of it.
I’m looking forward to it. I’ve been to London at least once. Trying to think if I’ve been twice, but our kids really wanted to go, because just of all the stuff these days. They read about Sherlock Holmes. They are fans of Harry Potter. Even Shakespeare, they have that familiarity. One of them was in a play with that. There’s just so much cool stuff there and we really haven’t taken the kids there or taken them to a lot of European cities. It feels like a good time to get out and go.
Mike: Cool. I almost went to London about probably four or five months ago, I think. I almost went there and then I realized I was in the wrong line and I would have gone out of the airport and into London itself instead of getting on my connecting flight.
Rob: Nice. That would’ve been fun if you missed your flight and then hung out in London. Saw the Eye and the Shakespeare Theater and all that.
Mike: Yeah. I’m sure that my connecting flight would have been thrilled with that.
Rob: It would have been a blast. What are we talking about today?
Mike: Today, we’re going to be talking about how to respond to customer suggestions. I say suggestions because it also incorporates feature requests as well. This can broadly apply across different types of businesses whether you have a SaaS app, or a downloadable app, or productized service, or something like that. We’ve talked about how to solicit feedback from your customers back in Episode 119, but it’s been awhile since we had a dedicated podcast episode about this. We’ll link up Episode 119 in the show notes.
The idea for this episode comes from a tweet stream that Ken Wallace had put out. Ken Wallace runs MastermindJam which you can find over at mastermindjam.com. I’m going to summarize a lot of what he said because he had hit a stream of 18 tweets. I’m going to summarize that a little bit and condense it. His basic thought process was questioning how to respond to customer suggestions. He said that for his business, customers tend to be entrepreneurs and transparency is big. It tends to lead naturally into, “Let’s dig into that.” For context, MastermindJam is a service that connects entrepreneurs with other entrepreneurs who are in similar types of businesses and lets them find other people who they wouldn’t otherwise normally find in order to form a mastermind group.
The question starts out where he’s offered a suggestion by a customer and he starts explaining why he does it in a particular way, what he’s tried in the past, and what he intends to do in the future. This approach worries him because there are times when he persuades the customer to agree with him and that’s where he thinks there’s a missed opportunity because he essentially talked the customer out of a particular way of doing something when they came to him with a suggestion.
Understand that there’s a lot of reasons why the customer might concede that point. They might be tired of debating the topic with him or they may leave the can they’re so entrenched in whatever the particular suggestion is. The person thinks, “Oh, I’m not going to convince him to change, so I’m just not going to bother,” or they don’t have the time and they just think, “Oh, this isn’t worth arguing over.” Its fundamental problem boils down to how do you know why it is that they agreed with you.
Rob: They may also agree because they actually agree and because he truly convinced them that it’s a better way. That’s another option.
Mike: Right but the lack of clarity there is what concerns him because if people fall into any of those previous camps where they didn’t necessarily actually agree with you, but they just say, “Agreed,” to move on the conversation or end it because they’ve got other things to do, then how does he know that? What are some recommended approaches to responding to that type of information?
What Ken wants to know is when a customer gives you a feedback or a suggestion like this, what should happen next in the conversation? What’s your response be and how should the conversation go from there? His belief is that if you just say something like, “Thanks for the suggestion I’ll take that in consideration. Where can I follow up with you?” it seems very patronizing. I think you chimed in and you talked about drilling into the five whys a little bit. I want to back up a little bit and take a look at a much broader approach to this.
Rob: Yeah, I would agree. He basically said, “Should I drive into the five whys?” The thing is, I actually started writing a response and it was more of a full-blown out like how I would handle it. I hate Twitter because it’s 280 characters. I eventually just stopped and gave in and said, “I’m not going to do that,” because we are going to talk about this for 30 to 40 minutes today and I bet we will cover it well but not even cover everything. To try to respond in a series of 10, 20, 30 tweets or whatever to truly summarize the nuance of this question, I felt like wasn’t going to going to do it. I just boiled it down to, “Yes, ask more questions. Thank them.” I tended to not commit to anything on the phone, but we’ll dig into more of that because you have a whole approach outlined here like a six-step process that I think is pretty worthwhile.
Mike: Let’s start going through these six steps. I think the first thing to do here is to mentally prioritize their suggestion and feedback. Categorize it and say, does it sound like (a) a problem they need a solution to, (b) an additional nice to have but not critical, or (c) this is a better way to do it. Essentially, an optimization of some kind. Really what you’re looking for is trying to figure out, is this something that is part of the experience or is it a new feature that they’re asking for? Are they trying to improve something that already exists or could exist in a different way or a better way, versus are they asking for something that’s fundamentally new. You have to drill into that and figure that out.
Rob: I agree. I think at a certain point, it can become kind of a gut feel. If you’ve talked to 50 customers, 100 customers, you do start to see repeating questions, repeating suggestions, repeating information. There’s a way to bucket them in your head of like, “Yeah, we know that. We’ll prioritize it,” or “Yeah, we thought of that,” and I would often say, “Here’s why we’re not going to do that,” but I guess that comes back to Ken’s point of, is that the wrong thing to do?
I think in my head it’s like, if you’re always trying to talk suggestions a customer that have suggestions, that’s a problem. I do think that there are going to be quite a few suggestions that come up that you’re not going to build and are not a good idea to build. Those are the ones where it’s not as much a debate but it’s a, “This is my vision for the product,” or “I’m not going to copy competitor features that doesn’t make sense,” or you’re going to have some good reasons that people who are not working day-to-day in your app or in your business, they’re not going to have because they’re not thinking about it all the time.
Anyways, I’ve skipped ahead in the thing. I think that for this first step, taking in the suggestion and trying to mentally bucket it early on can be helpful. Especially if you’re doing 5-10 calls a week, you’re having a lot of these conversations. It does help you to get some clarity as to how you talk about these things.
Mike: Right. I said that you should mentally prioritize, but I really meant categorize, or bucket like you had said, so just to clarify that particular piece of it.
The second piece of this is to start asking them questions and make sure that you understand their context and their point of view. They’re going to have different experiences based on their own life and their own business, versus the things that you do and see, because you have a viewpoint from inside the business whereas theirs comes from outside of it.
You also have to differentiate between the type of person they are where they are in your sales funnel. If they’re a prospect, is it a feature request? If it sounds something along those lines, you can ask them, “Is that something you need?” When you’re very early on in your business, what you’ll find is people will ask questions and they don’t necessarily care about whether or not you have a particular feature or not, but they just want to know. They’re curious as to whether or not that functionality or that piece of it exists.
A lot of times, what you’ll find is by asking that question, “Is that something you need?” they’ll just say, “No, I was just curious.” I found in cases where I’ve asked that question, it was for something that I knew was probably going to take 3-6 months to put together and they’re like, “No, I was just curious.” But had I gone down the rabbit hole and said, “Yes, we can do that,” and started trying to implement it, I suddenly pushed everything back by 3-6 months. You have to be very, very careful about whether or not it’s something that they absolutely need, versus is it nice to have?
One of the ways that I like to phrase this is to say something along the lines of, “Tell me more about that,” and as a follow up to that you can say, “What makes you say that?” When they give you a suggestion or they say, “You should do it in this particular way.” “Really? What is it that makes you say that?” It allows you to take that conversation and make it much more interactive.
Rob: Yeah. I love this idea of asking questions to dig in further to make sure you understand their context and their point of view. As you’ve said, digging into their context can show you that they were just curious. Digging into their context might show you that they are not a fit for you, that they should not, to our point earlier, they are not a good fit for your company, your conference, your SaaS app, your service, whatever.
I think having disqualifying questions that you could even come before this is a huge win in determining if someone is alternately a fit, as well as determining if someone is the perfect fit and that they might be suggesting something that you’ve never thought of before. That’s always a cool realization when you know that someone should get a ton of value out of what you’re offering and it’s almost like an epiphany. That’s why I said five whys when I responded to the tweet because to me, it’s not technically asking why, why, why, why, but it is asking a bunch of questions to be like, “What are you trying to accomplish with that? What does that mean? Where are you coming from with this? Blah-blah-blah,” just to try to dig in to really understand their true needs.
Sometimes you’ll find out it’s like, “Well, I know that my current tool, MailChimp, does that. I was just thinking if I ever wanted to use it, do you have it as well?” We got stuff like that back in the day with Drip and it’s like, “Cool. You have context of a competitor, you don’t use the feature today, is it a deal breaker?” “Well no, it’s not.” “Okay, but you would like it in the future?” “Yes, it’s on a roadmap.” It’s just digging into these things and not taking the face value is pretty important.
Mike: And a lot of that just gives you context for the feature data points that you can say, “I heard this from one customer. I heard this from 5, or 10, or 50,” and once you start hearing things over and over, it goes back to if you ask the question to begin with. If you didn’t ask, then it’s very easy to not get that information. You have to start drilling in as part of the second step to ask questions and make sure you understand where they’re coming from, why they’re asking those questions, and how they feel about it. How would they prioritize their particular suggestion.
If it’s critical to them, then you have to take it more seriously and give it a little bit more thought, versus something where they’re just like, “You should have this phrasing instead of that phrasing,” or “I don’t understand why this is on this particular menu in your app versus this other menu.” Those are the types of things which a lot of times they can go either way, but then there are certain things where they really have to be done in a particular way and you know the best way to do it because you had that context and thought about it, and it really happened.
Rob: Yeah. I think the third step for this approach is to compare their context to yours. Coming back to what I said earlier, is this something that they saw a competitor doing and is that a road you want to go down with this particular competitor or this particular feature? Do they have personal experience with that competitor or with this feature? What’s the frustration level with the fact that this doesn’t exist? Low, medium, high, or are they angry and belligerent? Have they considered the implications of what they’re asking? Do they have any idea about the amount of work involved? Do they know it’s going to take 3-6 months versus 1-2 weeks? They probably don’t. Any idea about the timeframe? Is this something only they would use? They’re probably not going to know that, but you should have a gut feel. This was always something that when we would get a feature request with Drip, I would try to get in the mental mindset of all our customers. It’s hard to do. You can’t do it 100%, but I would frequently say things like, “I think if we build this about 10% of our users will use it. They’re going to get a ton of value out of it and they’ll stick around forever,” or “I think about half our users will use this,” or “I think 2% will use it, but it’s the power users,” or whatever.
Again, those are guesses but that’s part of being an entrepreneur is making decisions with limited information. You don’t have all the information in a roadmap sense that you can just walk from here to X-marks-the-spot of victory and profit. Making decisions with incomplete information is a huge part of it and developing that, I’ll call it “gut feel,” but really what it is, is it’s years of experience working with your customer base, on your product, and in your space, that can help give you that context for it. I think the last thing to think about when you’re comparing contexts is, have you previously considered the suggestion or is it on your roadmap already?
Mike: Yeah. I think that last piece makes a big difference. If your response is off-the-cuff and just say, “Oh, we have thought about this before and this is how we’re going to do it,” versus something that you’ve put it on your roadmap already because you’ve heard it a lot, or you put it into a document based on things you’ve heard from people who’ve asked about that particular thing enough that it warranted having a, I don’t want to call it a stock response, but an answer that you can share with your team as to ‘this is why we are or are not going to be going in this particular direction.’
That lends itself to you have considered the implications of that. A lot of times what you’ll find is that the customers don’t necessarily consider all the implications. Part of that is just because they don’t see all the same things that you do. You’ve got all these priorities that you’re working on, maybe things at your bug tracker, or features, or particular customers that are high value that you want to be able to serve better, or a particular direction you want to take the product in. You have visibility to those and the customers or your prospects do not.
Rob: Yeah. As you go on, if you’re two, three, four years into it and you have 1000, 2000, 3000 customers, a steady influx of prospects, you’re going to get to the point where you’ve heard 90%+ of all the request that come in. You’ve heard them before. Maybe 95%. It’s crazy how much these things are just clustered. You can put them into these buckets of absolutely not going to build that because we’ve evaluated it and you can come up with 10 different reasons of why you wouldn’t build, but you just know that right now, you’re not going to build that, absolutely are going to build it, and it’s “on your roadmap.”
Now, in the early days we were super agile with Drip. Our roadmap was literally 2-3 weeks out, but we had a mental roadmap of where we’re going to go beyond that, but it was certainly in flux. A third bucket is, you don’t know yet, it depends on how stuff unfolds with what you’re currently building. Then there’s this fourth bucket that was the pleasant surprise of, “Wow, no one has ever suggested that and that’s a really good idea.” The issue is that is so rare. I mean it’s probably 1 in a 100, 1 in 200 feature requests if that as you get to scale. At least from my experience with the apps that I’ve built.
It becomes less and less frequent as it goes on. If I got one of those and I was on a call, I don’t know, that would blow me away and it would be a fun thing to dig into with that customer because if you haven’t heard it, you haven’t thought through the context of how it would be used and where they got the idea. I mean, I would really dig into that. Again, I do think that’s an edge case and not something that you’re going to have to deal with everyday.
Mike: I don’t think we specifically mentioned it, but part of comparing their context to yours is where they are in the sales funnel. Are they already a customer? Had they been a customer for a long time? Did they just sign up? Are they just evaluating your products to see if it’s a good fit? All of those things are going to make a difference when you start evaluating what your response is going to be.
Now, when it gets to response, this is step four in the approaches, you’re essentially inserting a massive if statement and a matrix here that indicates how you’re going to respond, because it’s going to depend on a comparison of how critical it is to them, how quickly it can be done, whether it aligns with what you want your product or service to do in the short term versus the long term, what the current state of your business is.
If you are very early on and either you’re pre-revenue or you just started selling it, you have a little bit but you’re not full time on it, all of those things are going to make an impact on whether or not you’re going to decide to move forward with that and implement it, versus you’re going to push off of it. One of the biggest pieces of this is whether or not you believe that you have a better solution to this suggestion or feature request than they have offered.
Sometimes, you just have a workaround. Sometimes you know that you can do it, but it’s not going to be a timeframe that they need. You can say, “Well, here’s a workaround, we can do this for now, and we’ll implement this in a month, or three months, or six months, just because it’s so much work in order to do that.”
That leads directly into step five which is to make sure that your response establishes a common context for the two of you. You want to make sure that you’re on the same page. You don’t want them to walk away from the conversation thinking, “Oh, he didn’t listen to me,” or “She didn’t take my suggestion seriously.” You have to make sure that they understand what it is that you are doing and why. You can go into the, “This is what we’ve tried to do in the past. This is what we’re doing now. This is what we’re going to do in the future,” but it’s extremely important that you make sure that they understand what you’re going to be doing in the future and why you have come to that decision.
They may not agree with you but ultimately, it’s your business. You’re the one who has to make that call. You can’t let the customers decide every single thing that’s going to happen inside of your business. Quite frankly, if you just sat there, respond to customer requests all day, and try to implement everything that they wanted you to do, you would never have time to do anything else. There’s lots of stuff in my business that I would love to do and I just don’t have the time to get to them.
You’re never going to have a to-do list that gets shorter and shorter over time. It will always get longer and you have to pick and choose which things you do and don’t implement. Sometimes you’re going to have to tell a customer, “No,” or “We can’t do that and here’s why,” or “This doesn’t align with our vision and here’s why.”
Rob: Yeah. I actually think that’s where the concept of customer development and listening to your customers does. Especially early product people, it doesn’t mean disservice. I haven’t read every book on the in-depth machinations of customer development, but I know the concept, how it’s used, the definitions and all that. It feels to me like people, whether it’s used correctly or they misuse it, they think that you ask your customers what they want and then you build those. That’s not going to work.
There’s such an issue when your customers are using some type of competitor. This is the major issue, if they’re using a competitor, they’re pretty much just going to ask you to duplicate all of that competitor’s features that they use. That is the non-product person’s initial reaction to everything. That tends to be a pretty bad choice and it’s going to come back to bite you later on.
I think the idea that it’s ultimately your business, points to having a vision for your product that you hold on to but are also willing to adapt. You know when to change it. In the early days of Drip it’s like, “Alright, we’re going to build this little add-on. Okay, now we’re going to change the vision to build an ESP. Okay, now we’re going to change it to add automation.” This division had a through line to it. We never veered off and built shopping carts software which was requested all the time. We didn’t build affiliate management which was requested all the time. There were other things that were just off. It was just like, “No. We’re going to integrate out for those,” but this through line of ESP add-on to marketing automation, we allowed the vision to adapt and adjust. We didn’t hold onto it so tightly that it was like, “No, we’re only going to be an add-on for an ESP.”
We would have still had some success, but we would never have had the success that Drip had. We also didn’t just go around building everything everyone asks. I think that’s a real problem. When you get into an app or someone has done that, you can tell. There’s settings everywhere. I unfortunately see this in a lot of older open source projects. Where people just come in and just bolted on this checkbox, that checkbox, this switch here and there, because they had some unique use case.
Frankly, if you’re building a SaaS app for the long term, thinking about how not to clutter your UX, clutter your app with these features that just make everything more complicated but almost no one uses or these edge cases, is something you really need to think about, because you can make a choice today that will just come back to bite you for years to come.
Mike: And running at the end of this approach is that you should always thank them for looking out for you. Find out if they have any more questions. Make sure that they understand what the responses that you’ve given them and why you have come to the conclusion that you have. Again, it’s not saying that they’re going to agree with you. You just want to make sure that they understand why it is that you made that decision. Part of this is just about making sure that they walk away having a good feeling as if you listened to them, and you truly understood what it is that they were asking for and made the decision, “Hey, that’s not right for this business and it’s not going to be right for you.”
I’ve heard from people who I’ve said, “Hey, this is not going to happen at any time frame that is close to what you’re looking for, you should probably find something else,” and then 6-9 months later, I’ve had them come back and say, “Okay, we tried a bunch of other things and those things didn’t work. We would like to come back and revisit this with you.” People appreciate you being candid with them and giving it to them straight. They don’t want to be jerked around. They don’t want to be told lies. They hate it when a sales rep will make promises, then suddenly they get in, they’ve spent all this time and effort trying to integrate their systems in with yours, only to find out you can’t deliver, or you haven’t delivered on exactly what it was that they wanted because you didn’t understand and you guys weren’t on the same page. Make sure that they know what they’re walking away from and make sure they understood what you’ve told them.
Rob: I think some additional thoughts we can run through is, sometimes taking a request that’s fast and simple, and something you can build in an hour or two, buys a lot of goodwill, even if it’s not a current priority for you but it’s something that you know you want to build long term, or if it’s a good suggestion. I loved doing this in the early days of both Drip, HitTail. There were other, Wedding Toolbox. There were other apps that it was the best.
I get this email and say, “Hey, how come I can’t blah, blah, blah, or can I?” and you would literally go write the code, ship the code, and then respond back within an hour and be like, “Hey yeah, that’s available now. We just implemented it for you.” It is the best feeling to be able to do that. It’s something you can do less and less as you scale, but I just love that idea. Again, only if it’s something you’re going to build. You don’t just want to add cruft because it’s quick. That’s also a mistake early product people make.
Mike: Another huge thing is that the communication medium that you’re using is extremely important because what you say and how you say it is going to be a lot different based on whether it’s a chat message, or an email, or Skype, or Zoom Call, or video call, or something along those lines. It’s a lot easier to determine if they really agree with you on a voice call than any other medium.
If you are having conversations in that particular communication medium, it’s so much easier, and so much more effective. The downside is that you don’t necessarily have as much time to think, so you have to make sure that if it is not something that you have thought of in the past, that you write it down and take notes, and give yourself an opportunity to say, “Look, I haven’t really thought about this. Let me think about it some more and I will get back to you.”
There’s a lot of times where just having time to think about it more is going to give you a lot more clarity on whether or not that suggestion is a good fit. You can always just say, “Hey, I really appreciate you looking out for us and I have written down a bunch of notes. I’m going to think about it and I’ll get back to you in three days, or five days, or what have you, with an answer about what it is that we’re going to do about this.” That way, you can take it offline into an email instead. Make sure that you follow through on those commitments because if you don’t, that’s going to reflect poorly on your business overall.
Rob: To come back to an earlier thought, you can’t possibly do everything that people request. You can’t possibly do everything you want to build. You have to pick and choose. You have to prioritize. You have to say no to a lot of good ideas. What separates a decent product person from a great product person is their ability to choose the right things to build because no way you can build all the good ideas that everyone has. A lot of things sound like good ideas and they might ultimately be, but it’s part of being a founder, or being a product person and deciding, “What is my vision for this? Which gets the most bang for the buck? Which will delight the most customers in the deepest way?” and that’s where you have to take a look in the mirror and just say, “We’re going in on this.”
I hope that was a helpful discussion and that wraps us up for today. If you have a question for us, call our voice mail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups, and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 435 | The Value of Startup Accelerators, Better Onboarding, Liability Insurance, and More Listener Questions
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In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions on topics including the value of startup accelerators, onboarding, liability insurance and more.
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Rob: In this episode of Startups for the Rest of Us, Mike and I talk about the value of startup accelerators, better onboarding, liability insurance, and answering more listener questions. This is Startups for the Rest of Us, episode 435.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. To where this week sir?
Mike: Well, I wanted to give a congratulations to Ty Wood. He was the winner of the AppSumo contest last month and he won a all expense paid trip to both MicroConfs.
Rob: Nice.
Mike: That was courtesy of AppSumo. I just wanted to say a big shout out to those guys and say thank you to them for sponsoring that. We’ll see Ty Wood at MicroConf.
Rob: Yeah, Ty, please come up, introduce yourself. It would be good to meet you. Thanks to AppSumo for that. Speaking of MicroConf, I believe this episode goes live just a couple of weeks before MicroConf. I’m guessing we might have a few tickets left either for Starter or Growth. If you’re interested with hanging around with a couple of hundred other serious SaaS software startup founders, you should head over to microconf.com, take a peek at it and hopefully, we’ll see you in Vegas.
Today, we’re going to dig into some listener questions after we’re down to absolute zero a couple of episodes ago. We got a nice little influx, we got a few voicemails, but I wanted to kick us off with first a thank you from James.
He says, “Hi, Mike and Rob. I’ve been listening since 2014. I’m a solo entrepreneur living in Central Africa, in Burundi, Rwanda. Here, we don’t have angel investors. Instead there are people with cash but most of the time, they aren’t people who share my same values. There’s a lot of financial corruption here. I decided to go solo, train another developer. Now we have two main products that can serve two different niches locally. The wisdom on your podcast has helped me so much during my journey. We have different realities, but I regularly find motivation to continue on and a clear understanding during the journey, so thank you so much.”
Thanks so much for that, James. I really appreciate it. We started the podcast, both to find other people like us because it was like, “Hey, you and me, are the only people doing this,” and then to find a handful of others that were doing it? Along the way, I’ve really seen it as an amazing by product that we’re able to help people whether it’s directly or indirectly, whether it’s us just talking and giving motivation or tactics or through the conference that we started and the community we’ve built. I love getting emails like this. these kinds of things make my week.
Mike: Yeah, congratulations, James. It’s hard enough to put one product together but you’ve got two that are serving two different niches and both helping out underground where you’re living. It’s fantastic to be able to help out the local community and be able to make a living from it as well. Really appreciate hearing from you and best of luck with that.
Rob: Our first question of the day is a voicemail on the value of joining an accelerator if you ultimately want to raise institutional funding.
“Hey, Rob and Mike. This is Sree, cofounder of clocr.com, it’s short for cloud locker. We are an early stage startup company based out of Austin, Texas. CLOCR empowers you to manage and protect your family’s most important documents and enables you or your loved ones to have instant access in case of financial, personal, or medical emergencies. We are currently in a pre-launch stage and we’re giving away about 1000 lifetime subscriptions for early adopters. I found you guys about four months ago on the podcast and it changed my life forever. Seriously. The amount of guidance you both provide is invaluable. I wish I had found this podcast about a year ago. Please do keep up the good work. I can’t wait to meet both of you at the Micro Conference.
I found several co-founders for CLOCR and that is [inaudible 00:04:20] our LinkedIn and angellist. I’ve been self-funding CLOCR for about a year or so—less lower than a year. I’m getting ready for the launch in the next four weeks. My strategy is to seek a small amount of funding, $200k-$300k for the next 18 months or so to a kind of a workable debt. Our plan is to aggressively bring in users before going in for institutional funding. I denied a few requests for funding. Here are the questions: Now that I have a few advisers joining CLOCR and I continue to add advisors as we go, is there a value in going down the accelerator path? Will that add any value in terms of the buzz and visibility or will it be a distraction? Will these accelerator programs help set-up for funding, or will they help me grow the user base? My main goal is to increase the user base and set-up the [00:05:17] vision thing and folks to build the company. Second question, I do like the participate in a startup innovation competition, do you have a short list of companies that we can participate on? Thank you.”
I kind of took three questions away from that. He said, “Is there value in joining an accelerator? Will it provide buzz or visibility?” Second question is, “Do accelerators help grow the user base?” and will it help him get set-up for funding or will it be counter to that, will it be a distraction. The third one is about innovation competition.
I think I’ll start with the innovation competition and say, I don’t know, I would probably just Google it. There’s one called 59 Days of Coding in Fresno. That’s really the only one I’ve been involved in that and that’s the only one I know off the top of my head.
Mike: Going back to Sree’s first couple of questions, is there value in going through an accelerator in terms of buzz and visibility. I would think that for some accelerators you would get some buzz from it but for something like CLOCR that is more B2C oriented, I suspect that the buzz you get from it is probably not going be to nearly as helpful. They may have PR outlets that could help you generate more publicity and get in front of more consumer type of users. But I think the main value in joining an accelerator—I guess there’s a couple of different things you can get out of it—but the first one would be the mentorship.
It’s not necessarily about growing your user base directly by virtue of joining an accelerator but rather you get mentorship to point you in the right direction and helps guide you in terms of what other people have done before you, what mistakes they’ve made, what things they’ve done that’s gone really well, people they can introduce you to, the network. Those are the types of things that are going to grow your user base. It’s not like you just join and you suddenly get a magic ticket that pumps 5000 new users into your app. It’s not how it works. You have to basically go through the program and talk to people and figure out what it is that you’re supposed to do that’s going to have the most impact and then go do it. That is going to grow your user base.
The other thing that the accelerator’s going to do for you is if it’s coupled with funding of any kind, it’s going to help give you runway and allow you to focus on working on the business as opposed to working on it as a side venture. Because if you’re trying to do something nights and weekends, that’s great and all, but you only have so much time to do that, and a lot of your time is probably going to be spent on your main job trying to make ends meet for you and your family. Getting rid of that as a distraction is going to be one of those main benefits of that accelerator.
The other one is if you’re looking to raise money down the road, an accelerator, going through a program like essentially gives you validation, and to some extent, trust from other investors that, “Oh, this accelerator invested in me and the business because they believe what we’re doing.” By virtue of that, that’s transferred to other investors. There’s a lot of credibility that you can gain in your business just by virtue of being attached to them. But because they have presumably vetted you in some way, shape, or form in order to accept you into the accelerator program.
Rob: I would agree with that. I imagine someone gets 900 applicants and they pick 10 and you’re one of the 10. There’s some signaling there. There’s some halo effect—I don’t know what you want to call it—but you were chosen. It’s different but it’s like getting into Harvard or getting into Yale; you make it through a selection process and that does lend some type of credibility.
I think like you said, it’s going to depend on the accelerator. I mean, there’s hundreds of accelerators and some of them are going to be really good, like helping you grow your user base. But you can either contact prior companies who have gone through it or you can look at the people who are running it and who the mentors are and think to yourself, “Do those people know how to grow a user base? Do I think that their advice or their network, whatever it is that they have can help translate into that?”
I have seen accelerators where I’ve looked at the list of mentors and I don’t know who any of them are or a lot of them are business coaches or college professors or people who maybe have not run a business directly. That’s always a question in my mind of like, “Are they going to give me MBA advise or are they going to be boots on the ground and really dig in to what’s going?” That’s one question I would ask about how to do that.
Certainly, a top name accelerator like YCombinator or TechStars, I think that gives you buzz and visibility. Obviously, the elephant in the room is I run TinySeed which is a startup accelerator designed for all community. I think that there will be a certain amount of buzz and visibility given within our sphere when we announce. I think that as time goes on that buzz and visibility will get bigger and bigger as we become more successful, and as our alumni, do more interesting things.
Our answer is probably the same, yours and mine. It’s like, yeah there is value, but I also—you’ve probably heard this advise of like, “If you’re going to get an MBA, you do it for the network and you do it for certain things.” There’s advises I don’t bother getting it from bottom tier school because it’s not the information, it’s more about the prestige of having Harvard on your diploma or whatever. I would think similarly of there are going to be accelerators that I’ve heard that don’t bring a ton of value. This is not a blanket answer for all accelerators. There really is a vetting process that you’re going to have to go through.
I think his second question was kind of like, “Do accelerators help set you up to raise subsequent funding?” My understanding is pretty much unequivocally, yes. That’s actually the goal of most accelerators, to provide you enough money to get to that demo day to have a product to raise funding. TinySeed in particular, that’s not our end goal, but there’s nothing in our terms or even in our goals for our companies that say you should or should not raise subsequent rounds.
One example is some of the angel investments that I’ve made in the “bootstrap space” most of them have not gone on to raise subsequent rounds but one or two have. I’ve been super encouraging about that because the founder saw the opportunity, wanted to level up, the money was there, and the choice is something you evaluate when you get there. I guess the answer to, do startup accelerators help set-up for funding, I think across the board, yes. I don’t know of an accelerator that won’t help you do that, that won’t connect you to angel investors or VCs down the line should you want to raise that money.
Now, one thing I would say is that there are some funds that are offering money to the bootstrapper space that do have clauses in them that will make it hard to raise funding later on. Just be sure you have a good lawyer, or you really look at the terms, or read. There are comparisons of these alternative funding approaches, the non-traditional VC stuff. Do your research and figure out, “If I did want to raise the $2 million later on, is this basically a poison pill?” Poison pill clause doesn’t allow me to do that. As I’ve said, we do not have that in Tiny Seed. We’re going to make it very easy to have [inaudible 00:12:37] investments. I’m thinking most will but there are some that whether intentionally or accidentally do have some clauses but those are not, as I said, they’re not accelerators.
The last thing I realized, innovation competitions. Since he’s a B2C, you should try to go on Shark Tank. It’s not a competition per se. I don’t think Shark Tank is the [00:12:58] all of anything but I do enjoy it for the entertainment value and that’s why B2C companies go on there, is to get that exposure. In addition to potentially getting a high-profile investor, but just going on there is going to drive some interest.
Mike: I’ve seen stories of people who’ve gone on to Shark Tank and whether they got a deal or not, sometimes there’s stories that circle back on those companies afterwards. There is that exposure piece of being on there whether that investor helps you or not doesn’t matter because people will see you. They see your business, they see your company, and you’re getting exposure that you probably would not have gotten otherwise.
Rob: Thanks for the question. Super interesting one. It’s good for this community to be thinking about it and talking about this. our next question is super interesting. It’s about how to better communicate to users who should be connecting to an existing SaaS account. Basically, they’ve been invited as sub-users but instead, they’re signing up for new trials over and over and over. Let’s listen to this one.
“Hi guys. It’s Jarrod from sportstrackerapp.com here. We run a website that helps teachers and students organize their track and field and swimming needs. We’ve been really successful watching it grow. At certain stage, we introduced the feature that will allow admin staff to welcome sub-account access to their students so that they can login and register themselves into different events.
It’s dramatically cut down the workload of the admin staff. However, we’ve noticed that since opening up this feature, some students—regardless of the communication that we make available to the admin staff—students are coming through and signing-up to the website as an admin user and starting trial accounts and obviously, that’s not something that’s even remotely close to what they need to do.
What actually happens is the admin staff are given a piece of print out paper or an email that they pass onto the students and it sends them to a different URL [inaudible 00:15:13]. However, regardless of that communication, we still can’t get past the few students signing up on a daily basis. What thoughts do you have around making this as clear as possible without making a trial require a credit card, because obviously that would stop students. I look forward to hearing what you think about it. Thanks!”
Should we start by saying how we would design the ideal flow just to make sure, because I know he said no matter what the communication is, the students still come in sign-up for the trial. But could we walk down the steps of how we would do it. What would the ideal flow to at least communicate to them so that maybe there’s one or two things that he’s not doing that they could try then actually get to his question.
Mike: I think that there’s a couple of assumptions that you need to make or at least clarify as part of this while we’re going through this mental exercise. Are we assuming that this app is design explicitly for colleges, universities, schools, etc., and then the students that are part of it? Or is it like a general-purpose app that can be used outside of that system because it seems that this is a very specific situation. I’m not clear on whether or not the app is geared that way.
Rob: I think it’s focused on the niche of sports, managing sports teams. I’m guessing it’s more like junior high high school.
Mike: Okay.
Rob: Let’s make that assumption.
Mike: I guess based on that, it sounds like that the fundamental problem is that there’s confusion passing the information onto the teachers as to how to invite those students. If they’re getting forwarded to a particular URL, that’s fine, but if they’re printing something out and handing it to them and then the student comes to the website because they see that on it, that poses something of a problem.
I think that one thing that does come to mind though is if this is such a serious problem and it comes up constantly then I would take a look at the sign-up process itself and ask people when they go to register, are they a student or are they a teacher/coach or whatever. By that, you could basically interject yourself into that sign-up process and say, “Well, if you are a student coming in here, chances are you’re not going to be signing up for an actual trial of the product, you actually want to be attached with a sub-account.” How do you direct them to that?
Obviously, that’s going to depend on whether or not they’re signing in with an email address that is part of the school system for example. Because with this, you can match them up and let them select stuff, but I don’t know how much privacy controls or concerns are around that either. I think that the very first thing that I would look at doing is seeing whether or not you can differentiate between a student signing up and a teacher/coach because that right there should tell you whether or not they should be actually creating a trial or not.
Rob: I would agree with that. I think that what you could do is sign-up for trial and it’s like, “Are you a student? Are you a coach or administrator?” If they say student, then you default to saying, “You should’ve received an invite from your whatever. Check that email or check the flyer. But if you really are trying to sign up for a brand-new account for your school, then click here.” Make it like really have to opt in. you have to double opt in if you’re a student where you have to click that and then click another thing whereas if you’re a coach or administrator or whatever, then make that the default.
The other thing I was thinking about—I’m trying to think how to make this work. What I’m imagining is that I’m a coach, I have my account, I log in, and it says, “Invite Users.” I can enter some email addresses of students. Then it either gives me a PDF to print out and physically hand to them, he said, the physical paper, or it sends them an email. What if on that PDF and the email that goes to the student there is no mention of the name of the URL? It does not say Sports Tracker. All it says is, “Your coach so and so is inviting you as an administrator on the thing that organizes your sports team. Go here to sign-up or to accept this invitation.”
That URL could feasibly be just a totally different URL. Just pick whatever, a random one, thesportstrackersignup.com or even just signupfortheapp.com—just pick something. If they go to the homepage or if they go to the full URL, because my guess is it says like right now, it’s sportstracker.com or .com—I don’t even know what their URL is—but let’s say sportstracker.co/ a bunch of stuff to accept the invite, and people are just typing in sporttracker.co and then hitting trial. Don’t even allow them to do that. Just give them a completely different URL and the homepage is something that says, “You need a special code. Enter the code in the URL,” or whatever. You can figure out a way how to do this intelligently but not let them get back to your main URL in anyway because you can control the message. You have this PDF and this email that go directly to them. What do you think about that?
Mike: I think that’s fine. Unless you have a situation where the professor or the coach or whoever is telling them, “Hey, I use this app. Here’s the name of it.” Because if they search for it and I think that that’s the problem he’s alluding to is that if they go online, presumably they’re web savvy enough to go online and search and then they come to the website. The one thing I would think about is giving somebody a sign up that is literally just a single field that says, “Accept Invitation,” or something along those lines or as you said, give them a PDF that they can print out.
I don’t know the mechanics of how it’s currently being done because do you want to just print something out that’s exactly the same for all 30 people on the team or do you have individual ones for all 30 of them? I would imagine you would want the former rather than the latter so that you don’t have to plug in 30 different email addresses. You print the exact same thing, hand it out to everybody in the team and say, “Go here and do this.” And then they basically join. Maybe it’s like a 6-digit code or a 10-digit code or something like that. They just go to, as you said, the URL, plug it in, and that’s the end of it. I think hiding the name of the product is probably the best bet because that way, the kids won’t search for it.
Rob: To be honest, Sports Tracker, when I go to just search for that phrase in Google, there’s a bunch of iOS apps that come up. I can’t find the app that he’s talking about in Google right now. There’s sports-tracker.com, there’s SportsTrackr with no E, there’s all these things and I don’t think any of them are his app. I actually don’t know that even hiding the name, I really think it’s just the URL. You know what people could do is if it says Sports Tracker on the PDF and they go to Google and type it in then sign-up for the first one, it’s going to be the wrong app. Maybe they should just hide the name and the URL and try to get them there.
Like I said, it’s an interesting problem—user behavior thing—to have but I think there are probably some ways that we’ve thrown out. Hopefully, those are helpful to him. Thanks for the question.
Our next question is about liability insurance. It’s from Z and he says, “Hey guys. Could you talk about what types of liability insurance SaaS companies should get? It’s very confusing, there’s not much information out there. What type of insurance should founders get for their companies depending on the stage they’re in and to protect themselves and the company?”
We have talked about this in the past, right, Mike? We’ve talked about getting an LLC and maybe worrying less about the insurance aspect of it because you have the liability protection there in the early stages. Obviously, we’re not attorneys, we can’t give legal advice and really, you should not take advice from two chuckle heads like us. But in the early days of a product, I would tend to have any type of E&O insurance. When you have 10 customers or something unless you’re in a particularly litigious niche.
Mike: I think the question here is different though. He’s talking specifically about liability insurance versus the liability of having things under a company. To his point, this is very confusing and there’s not much information out there. The reason it’s confusing is because insurance is one of those old industries where they profit based on your lack of knowledge and them being able to be kind of opaque about stuff.
If you go to, let’s say, two or three or five different insurance companies and ask them for a quote for liability insurance for your company, they’re going to say, “Okay. Fill out this form and give us a bunch of information.” Every single one of those forms is going to be different. It’s not like going to a sandwich shop and ordering a ham sandwich. That’s going to be basically the same between 30 different ham sandwich shops.
But with insurance, even liability insurance, it’s different for every single one of them. They’re going to have different questions, they’re going to want to know different things, and each of those forms is going to be different. Then they’re going to plug it in their back end of the engine and they’re going to say, “Okay. Here’s the risk profile, etc., and these are the things that we cover.” If you compare the output of each of those plans, there are going to be differences between them. It’s not like there’s a standardized liability insurance. There’s going to be some like Plan 1 from Company 1 might include XY and Z and then the same exact information that you gave to Company 2, they’re going to say, “We cover X and Y,” but they’re not even going to mention Z because it’s not covered but they cover QR and L.
It’s complicated and the reason you’re finding it that it’s confusing is because it is confusing. It sucks. It’s weird when you have to go through those things but really, there’s the umbrella policies. You have to be careful about what you’re doing in terms of what access to customer information you have, what your access level is to your on-site software or databases, or level of access that you need in their environment. All those things are going to be questions, are beyond those forms. Every company is going to quote you differently.
Rob: Yep. Insurance—not fun. I think that to protect yourself from personal liability, you can of course get an LLC or an S-Corp or whatever is the equivalent in whatever country you live in. I tend to say, when you’re young and you don’t have a lot of money or what’s called judgement proof, no one’s going to sue you because you don’t have any money. When you get to the point where you have some assets, I recommend getting a personal liability plan. I shouldn’t say recommend, this is what I have done. [inaudible 00:25:43] recommended to me and this is what I did, and it’s to get a personal liability coverage.
You can get $1 million or even a $2 million coverage for literally a few hundred dollars a year protects you from personal liability if you get in a car accident and someone sues you because their neck hurts or whatever. I think it protects your personal wealth and I don’t know all the details. It’s going to depend on your circumstance in the policy you get as to whether or not someone piercing a corporate veil. You don’t come in through an LLC after your personal asset. It’s going to protect that or not.
And then if you really want insurance for your company, personally, I would go to foundershiled.com, that’s who I use. I’m trying to think of some type of E&O or some insurance when we had to deal with a big Fortune 500 company and they required us to have, of course, crazy stuff that no one else requires you to have. I went to foundershiled.com, had a great experience with them when they were first starting out. They’re much further along now and really can’t recommend them highly enough for folks like us who really don’t want to deal with all the nuts and bolts of it but kind of need to get some [inaudible 00:26:49].
It depends on your risk tolerance how soon you want to do this but those are our general thoughts. Thanks for the question, Z. I hope that was helpful. Our next question is from Hamish and it’s about outsourcing development and NDAs.
He says, “I’m a new listener. I’m catching up with previous episodes. I’ve a question. I have a website which at the moment is no more than a hobby. I want to outsource some development to see if I can take it to the next level. I’m presuming NDA is not worth much for a small website. Should I be at all bothered about giving access to the code to a third-party developer? Are there any basic steps I can take to protect the copyright and the ideas?”
What do you think, Mike?
Mike: It goes back to the standard disclaimer: We’re not lawyers or insurance agents. An NDA is probably not going to be worth the time. The one thing I would be aware of or at least pay attention to is it when you are having somebody else build the code for you or write anything for you that you want to have a contract of some kind in place. If you’re hiring them through something like Upwork, that is generally taking care of it for you, but otherwise, you’re going to want to have something that says that it’s essentially a work for hire and that you own the output of that. That is probably the most basic thing that I would do. That ensures that you own whatever it is that they write for you. Beyond that, I don’t know. I wouldn’t worry too much about it because at this stage, it’s just an idea and it may or may not go anywhere.
Let’s say that they build it and you start making a couple of thousand dollars a month from it. The chances of them stealing it and trying to do the same thing, I would say are probably small. But even if they did try to do it, it’s not the app itself; it’s all the marketing and the sales engine and the sales funnel and emails—all the stuff that you do alongside of it—that is going to make that much money, it’s not the code itself and the app.
Rob: Yeah. I’m not sure how much I have to add there. There’s always risk with this kind of stuff. I would say that I’ve had dozens and dozens of developers that I’ve hired, some for really small projects, some for really big ones. As far as I know, none of them have ever stolen my code and gone off and tried to compete with it. I mean, maybe here’s a chance that I had a class in something that interacted with Stripe or with Twilio and they took it and used it in another project. How would I possibly know? But I have not had that experience.
I think that it’s easy to be bothered by this stuff. I think it’s easy to be overly concerned with it. It does depend on risk tolerance, but I would really air on the side of just hiring someone good and interviewing them to the point where you trust them and letting them do it and trust that they’re not going to steal your code because most people frankly, want the paycheck. It’s just so much effort to steal your code and try to do something with it. The odds of it happening I think are pretty slim.
Our next question, Mike, I pulled off of Quora. It was in the startup section and it said, “How much should an MVP cost?” What do you think about that? I love the premise of the question. It’s just like, “Oh boy!”
Mike: How much should an MVP cost? This seem like a trick question.
Rob: I would say that an MVP should cost zero.
Mike: Zero, yes.
Rob: I mean, not in all cases but remember, an MVP really shouldn’t be a software product, if at all possible. It should be me strapping a Google spreadsheet to Zapier, to a VA, to me peddling a hamster wheel that makes the thing go on, and to make give the appearance that I have a product but in fact it’s just all human-powered. I mean, that’s just one example. But I think an MVP should as little as possible. Take the number in your head and remove a zero or two.
Mike: I think the interesting thing about this question and maybe is because it comes from Quora, there’s people who are not necessarily as experienced in understanding exactly what a minimum viable product would actually be. But really what you’re looking for there is, “What is the least amount of work you can do to answer a particular question?” And you have to start with the question. If you don’t start with the question, you’re really not doing the whole MVP process correctly.
That’s kind of the core of the issue here I think is if you don’t understand what an MVP actually means, then asking how much it should cost is almost irrelevant because it really depends on what the question you’re trying to answer is. Like, “Will people pay for this?” “Well, just go online and do a Google search and see if there are other products out there that exist that solve that problem. If so, then yes.” That’s a very simple thing to do and it costs you absolutely nothing more than a few keystrokes. But if it’s a lot more complicated like, “Can you get $1000 or $10,000 people to your website in order to validate that you can acquire that traffic in order to potentially sell them something?” Well, that’s a very different question that you’re trying to answer. The amount that it’s going to cost is going to be different.
I would actually differentiate between how much time it’s going to cost you versus how much money and over what time period because all three of those things are very different. You might be able to find out a piece of information, but it could take three months. It might only take an hour or a week for the three months but the total time span that it takes is going to make a difference. If you’re trying to validate a couple of different ideas against one another or answer several different questions, it can become difficult to answer all of them in a time frame that is appropriate to whatever your current life situation is.
Rob: Yup. I think those are good points. Like I said, I think it should cost, frankly, as little as possible. You should be able to strap together a lot of tools and not have to actually build software if you’ve validated to that point or you get your 10 or 20 buy-ins, your purchases, pre-purchases, commitments, or whatever you’re going to do. I agree with you. I think I like the different dimensions you put on that words like there’s price, there’s hours of your time, and then there’s duration–is it 6 months or 12 months or 2 months or whatever.
I would love to get an MVP done in less than two months for, I don’t know, less than $5000, less than $10,000. It depends on who you hire. If you hire in the States, it’s going to be more expensive. It’s kind of hard to say, I think but I do think it’s an interesting thought experiment. It’s like, “Are you building an MVP of an email service provider or are you building an MVP of a little form app, like something that compete with Typeform or Google Forms or something.” That’s a totally different use case.
Again, if you’re going to give people Type Form, you just build the form UI, have it go straight into a Google spreadsheet so you don’t [inaudible 00:33:48] have a database and then to actually build the UI to build the form, you manually build that directly with your customers, you don’t build any type of form builder. You know what I mean? That could literally be like a weekend project of just displaying a landing page with the forms that you plug into some XML file or some database or JSON thing. That’s pretty minimally viable but it would be a product if you’re trying to test something out.
Anyways, I think that probably wraps us up for the day except for our final question of the day, Mike. The Star Wars Holiday Special marked the first appearance of which Star Wars character? There are four choices: Jabba the Hutt, Boba Fett, Jar Jar Binks, Lando Calrissian. Do you know the Star Wars holiday special? Have you heard of it?
Mike: I’ve heard of it.
Rob: It’s from the ‘70s. It’s awful. Go to YouTube and look it up. It is really not good. There’s this thing called life day and there’s wookiees and it’s really not canon.
Mike: I sort of vaguely remember hearing about it or seeing it. The question is which of these four characters shows up for the first time in that?
Rob: For the first time in the Star Wars Holiday Special that came out in ’78. It’s Jabba the Hutt, Boba Fett, Jar Jar Binks, Lando Calrissian.
Mike: I’m thinking Boba Fett.
Rob: You are correct.
Mike: Yes.
Rob: It’s in an animated segment of the show.
Mike: Oh!
Rob: Yup. This has never been released on video but as I said, you can hit YouTube or other places to find recordings of it.
Mike: Oh, that is shockingly nerdy.
Rob: It is. It is nerdy. I couldn’t get through it. I watched five minutes of it, and I had to scrap it.
Mike: Is it that painful?
Rob: It’s awful.
Mike: It’s painful as a podcast and our jokes.
Rob: Yes, it is indeed.
Mike: Oh, that’s terrible. Well, on that note, if you have a question for us, you can call it into our voicemail number 888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. 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 software products whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. To where this week sir?
Mike: Well, I wanted to give a congratulations to Ty Wood. He was the winner of the AppSumo contest last month and he won a all expense paid trip to both MicroConfs.
Rob: Nice.
Mike: That was courtesy of AppSumo. I just wanted to say a big shout out to those guys and say thank you to them for sponsoring that. We’ll see Ty Wood at MicroConf.
Rob: Yeah, Ty, please come up, introduce yourself. It would be good to meet you. Thanks to AppSumo for that. Speaking of MicroConf, I believe this episode goes live just a couple of weeks before MicroConf. I’m guessing we might have a few tickets left either for Starter or Growth. If you’re interested with hanging around with a couple of hundred other serious SaaS software startup founders, you should head over to microconf.com, take a peek at it and hopefully, we’ll see you in Vegas.
Today, we’re going to dig into some listener questions after we’re down to absolute zero a couple of episodes ago. We got a nice little influx, we got a few voicemails, but I wanted to kick us off with first a thank you from James.
He says, “Hi, Mike and Rob. I’ve been listening since 2014. I’m a solo entrepreneur living in Central Africa, in Burundi, Rwanda. Here, we don’t have angel investors. Instead there are people with cash but most of the time, they aren’t people who share my same values. There’s a lot of financial corruption here. I decided to go solo, train another developer. Now we have two main products that can serve two different niches locally. The wisdom on your podcast has helped me so much during my journey. We have different realities, but I regularly find motivation to continue on and a clear understanding during the journey, so thank you so much.”
Thanks so much for that, James. I really appreciate it. We started the podcast, both to find other people like us because it was like, “Hey, you and me, are the only people doing this,” and then to find a handful of others that were doing it? Along the way, I’ve really seen it as an amazing by product that we’re able to help people whether it’s directly or indirectly, whether it’s us just talking and giving motivation or tactics or through the conference that we started and the community we’ve built. I love getting emails like this. these kinds of things make my week.
Mike: Yeah, congratulations, James. It’s hard enough to put one product together but you’ve got two that are serving two different niches and both helping out underground where you’re living. It’s fantastic to be able to help out the local community and be able to make a living from it as well. Really appreciate hearing from you and best of luck with that.
Rob: Our first question of the day is a voicemail on the value of joining an accelerator if you ultimately want to raise institutional funding.
“Hey, Rob and Mike. This is Sree, cofounder of clocr.com, it’s short for cloud locker. We are an early stage startup company based out of Austin, Texas. CLOCR empowers you to manage and protect your family’s most important documents and enables you or your loved ones to have instant access in case of financial, personal, or medical emergencies. We are currently in a pre-launch stage and we’re giving away about 1000 lifetime subscriptions for early adopters. I found you guys about four months ago on the podcast and it changed my life forever. Seriously. The amount of guidance you both provide is invaluable. I wish I had found this podcast about a year ago. Please do keep up the good work. I can’t wait to meet both of you at the Micro Conference.
I found several co-founders for CLOCR and that is [inaudible 00:04:20] our LinkedIn and angellist. I’ve been self-funding CLOCR for about a year or so—less lower than a year. I’m getting ready for the launch in the next four weeks. My strategy is to seek a small amount of funding, $200k-$300k for the next 18 months or so to a kind of a workable debt. Our plan is to aggressively bring in users before going in for institutional funding. I denied a few requests for funding. Here are the questions: Now that I have a few advisers joining CLOCR and I continue to add advisors as we go, is there a value in going down the accelerator path? Will that add any value in terms of the buzz and visibility or will it be a distraction? Will these accelerator programs help set-up for funding, or will they help me grow the user base? My main goal is to increase the user base and set-up the [00:05:17] vision thing and folks to build the company. Second question, I do like the participate in a startup innovation competition, do you have a short list of companies that we can participate on? Thank you.”
I kind of took three questions away from that. He said, “Is there value in joining an accelerator? Will it provide buzz or visibility?” Second question is, “Do accelerators help grow the user base?” and will it help him get set-up for funding or will it be counter to that, will it be a distraction. The third one is about innovation competition.
I think I’ll start with the innovation competition and say, I don’t know, I would probably just Google it. There’s one called 59 Days of Coding in Fresno. That’s really the only one I’ve been involved in that and that’s the only one I know off the top of my head.
Mike: Going back to Sree’s first couple of questions, is there value in going through an accelerator in terms of buzz and visibility. I would think that for some accelerators you would get some buzz from it but for something like CLOCR that is more B2C oriented, I suspect that the buzz you get from it is probably not going be to nearly as helpful. They may have PR outlets that could help you generate more publicity and get in front of more consumer type of users. But I think the main value in joining an accelerator—I guess there’s a couple of different things you can get out of it—but the first one would be the mentorship.
It’s not necessarily about growing your user base directly by virtue of joining an accelerator but rather you get mentorship to point you in the right direction and helps guide you in terms of what other people have done before you, what mistakes they’ve made, what things they’ve done that’s gone really well, people they can introduce you to, the network. Those are the types of things that are going to grow your user base. It’s not like you just join and you suddenly get a magic ticket that pumps 5000 new users into your app. It’s not how it works. You have to basically go through the program and talk to people and figure out what it is that you’re supposed to do that’s going to have the most impact and then go do it. That is going to grow your user base.
The other thing that the accelerator’s going to do for you is if it’s coupled with funding of any kind, it’s going to help give you runway and allow you to focus on working on the business as opposed to working on it as a side venture. Because if you’re trying to do something nights and weekends, that’s great and all, but you only have so much time to do that, and a lot of your time is probably going to be spent on your main job trying to make ends meet for you and your family. Getting rid of that as a distraction is going to be one of those main benefits of that accelerator.
The other one is if you’re looking to raise money down the road, an accelerator, going through a program like essentially gives you validation, and to some extent, trust from other investors that, “Oh, this accelerator invested in me and the business because they believe what we’re doing.” By virtue of that, that’s transferred to other investors. There’s a lot of credibility that you can gain in your business just by virtue of being attached to them. But because they have presumably vetted you in some way, shape, or form in order to accept you into the accelerator program.
Rob: I would agree with that. I imagine someone gets 900 applicants and they pick 10 and you’re one of the 10. There’s some signaling there. There’s some halo effect—I don’t know what you want to call it—but you were chosen. It’s different but it’s like getting into Harvard or getting into Yale; you make it through a selection process and that does lend some type of credibility.
I think like you said, it’s going to depend on the accelerator. I mean, there’s hundreds of accelerators and some of them are going to be really good, like helping you grow your user base. But you can either contact prior companies who have gone through it or you can look at the people who are running it and who the mentors are and think to yourself, “Do those people know how to grow a user base? Do I think that their advice or their network, whatever it is that they have can help translate into that?”
I have seen accelerators where I’ve looked at the list of mentors and I don’t know who any of them are or a lot of them are business coaches or college professors or people who maybe have not run a business directly. That’s always a question in my mind of like, “Are they going to give me MBA advise or are they going to be boots on the ground and really dig in to what’s going?” That’s one question I would ask about how to do that.
Certainly, a top name accelerator like YCombinator or TechStars, I think that gives you buzz and visibility. Obviously, the elephant in the room is I run TinySeed which is a startup accelerator designed for all community. I think that there will be a certain amount of buzz and visibility given within our sphere when we announce. I think that as time goes on that buzz and visibility will get bigger and bigger as we become more successful, and as our alumni, do more interesting things.
Our answer is probably the same, yours and mine. It’s like, yeah there is value, but I also—you’ve probably heard this advise of like, “If you’re going to get an MBA, you do it for the network and you do it for certain things.” There’s advises I don’t bother getting it from bottom tier school because it’s not the information, it’s more about the prestige of having Harvard on your diploma or whatever. I would think similarly of there are going to be accelerators that I’ve heard that don’t bring a ton of value. This is not a blanket answer for all accelerators. There really is a vetting process that you’re going to have to go through.
I think his second question was kind of like, “Do accelerators help set you up to raise subsequent funding?” My understanding is pretty much unequivocally, yes. That’s actually the goal of most accelerators, to provide you enough money to get to that demo day to have a product to raise funding. TinySeed in particular, that’s not our end goal, but there’s nothing in our terms or even in our goals for our companies that say you should or should not raise subsequent rounds.
One example is some of the angel investments that I’ve made in the “bootstrap space” most of them have not gone on to raise subsequent rounds but one or two have. I’ve been super encouraging about that because the founder saw the opportunity, wanted to level up, the money was there, and the choice is something you evaluate when you get there. I guess the answer to, do startup accelerators help set-up for funding, I think across the board, yes. I don’t know of an accelerator that won’t help you do that, that won’t connect you to angel investors or VCs down the line should you want to raise that money.
Now, one thing I would say is that there are some funds that are offering money to the bootstrapper space that do have clauses in them that will make it hard to raise funding later on. Just be sure you have a good lawyer, or you really look at the terms, or read. There are comparisons of these alternative funding approaches, the non-traditional VC stuff. Do your research and figure out, “If I did want to raise the $2 million later on, is this basically a poison pill?” Poison pill clause doesn’t allow me to do that. As I’ve said, we do not have that in Tiny Seed. We’re going to make it very easy to have [inaudible 00:12:37] investments. I’m thinking most will but there are some that whether intentionally or accidentally do have some clauses but those are not, as I said, they’re not accelerators.
The last thing I realized, innovation competitions. Since he’s a B2C, you should try to go on Shark Tank. It’s not a competition per se. I don’t think Shark Tank is the [00:12:58] all of anything but I do enjoy it for the entertainment value and that’s why B2C companies go on there, is to get that exposure. In addition to potentially getting a high-profile investor, but just going on there is going to drive some interest.
Mike: I’ve seen stories of people who’ve gone on to Shark Tank and whether they got a deal or not, sometimes there’s stories that circle back on those companies afterwards. There is that exposure piece of being on there whether that investor helps you or not doesn’t matter because people will see you. They see your business, they see your company, and you’re getting exposure that you probably would not have gotten otherwise.
Rob: Thanks for the question. Super interesting one. It’s good for this community to be thinking about it and talking about this. our next question is super interesting. It’s about how to better communicate to users who should be connecting to an existing SaaS account. Basically, they’ve been invited as sub-users but instead, they’re signing up for new trials over and over and over. Let’s listen to this one.
“Hi guys. It’s Jarrod from sportstrackerapp.com here. We run a website that helps teachers and students organize their track and field and swimming needs. We’ve been really successful watching it grow. At certain stage, we introduced the feature that will allow admin staff to welcome sub-account access to their students so that they can login and register themselves into different events.
It’s dramatically cut down the workload of the admin staff. However, we’ve noticed that since opening up this feature, some students—regardless of the communication that we make available to the admin staff—students are coming through and signing-up to the website as an admin user and starting trial accounts and obviously, that’s not something that’s even remotely close to what they need to do.
What actually happens is the admin staff are given a piece of print out paper or an email that they pass onto the students and it sends them to a different URL [inaudible 00:15:13]. However, regardless of that communication, we still can’t get past the few students signing up on a daily basis. What thoughts do you have around making this as clear as possible without making a trial require a credit card, because obviously that would stop students. I look forward to hearing what you think about it. Thanks!”
Should we start by saying how we would design the ideal flow just to make sure, because I know he said no matter what the communication is, the students still come in sign-up for the trial. But could we walk down the steps of how we would do it. What would the ideal flow to at least communicate to them so that maybe there’s one or two things that he’s not doing that they could try then actually get to his question.
Mike: I think that there’s a couple of assumptions that you need to make or at least clarify as part of this while we’re going through this mental exercise. Are we assuming that this app is design explicitly for colleges, universities, schools, etc., and then the students that are part of it? Or is it like a general-purpose app that can be used outside of that system because it seems that this is a very specific situation. I’m not clear on whether or not the app is geared that way.
Rob: I think it’s focused on the niche of sports, managing sports teams. I’m guessing it’s more like junior high high school.
Mike: Okay.
Rob: Let’s make that assumption.
Mike: I guess based on that, it sounds like that the fundamental problem is that there’s confusion passing the information onto the teachers as to how to invite those students. If they’re getting forwarded to a particular URL, that’s fine, but if they’re printing something out and handing it to them and then the student comes to the website because they see that on it, that poses something of a problem.
I think that one thing that does come to mind though is if this is such a serious problem and it comes up constantly then I would take a look at the sign-up process itself and ask people when they go to register, are they a student or are they a teacher/coach or whatever. By that, you could basically interject yourself into that sign-up process and say, “Well, if you are a student coming in here, chances are you’re not going to be signing up for an actual trial of the product, you actually want to be attached with a sub-account.” How do you direct them to that?
Obviously, that’s going to depend on whether or not they’re signing in with an email address that is part of the school system for example. Because with this, you can match them up and let them select stuff, but I don’t know how much privacy controls or concerns are around that either. I think that the very first thing that I would look at doing is seeing whether or not you can differentiate between a student signing up and a teacher/coach because that right there should tell you whether or not they should be actually creating a trial or not.
Rob: I would agree with that. I think that what you could do is sign-up for trial and it’s like, “Are you a student? Are you a coach or administrator?” If they say student, then you default to saying, “You should’ve received an invite from your whatever. Check that email or check the flyer. But if you really are trying to sign up for a brand-new account for your school, then click here.” Make it like really have to opt in. you have to double opt in if you’re a student where you have to click that and then click another thing whereas if you’re a coach or administrator or whatever, then make that the default.
The other thing I was thinking about—I’m trying to think how to make this work. What I’m imagining is that I’m a coach, I have my account, I log in, and it says, “Invite Users.” I can enter some email addresses of students. Then it either gives me a PDF to print out and physically hand to them, he said, the physical paper, or it sends them an email. What if on that PDF and the email that goes to the student there is no mention of the name of the URL? It does not say Sports Tracker. All it says is, “Your coach so and so is inviting you as an administrator on the thing that organizes your sports team. Go here to sign-up or to accept this invitation.”
That URL could feasibly be just a totally different URL. Just pick whatever, a random one, thesportstrackersignup.com or even just signupfortheapp.com—just pick something. If they go to the homepage or if they go to the full URL, because my guess is it says like right now, it’s sportstracker.com or .com—I don’t even know what their URL is—but let’s say sportstracker.co/ a bunch of stuff to accept the invite, and people are just typing in sporttracker.co and then hitting trial. Don’t even allow them to do that. Just give them a completely different URL and the homepage is something that says, “You need a special code. Enter the code in the URL,” or whatever. You can figure out a way how to do this intelligently but not let them get back to your main URL in anyway because you can control the message. You have this PDF and this email that go directly to them. What do you think about that?
Mike: I think that’s fine. Unless you have a situation where the professor or the coach or whoever is telling them, “Hey, I use this app. Here’s the name of it.” Because if they search for it and I think that that’s the problem he’s alluding to is that if they go online, presumably they’re web savvy enough to go online and search and then they come to the website. The one thing I would think about is giving somebody a sign up that is literally just a single field that says, “Accept Invitation,” or something along those lines or as you said, give them a PDF that they can print out.
I don’t know the mechanics of how it’s currently being done because do you want to just print something out that’s exactly the same for all 30 people on the team or do you have individual ones for all 30 of them? I would imagine you would want the former rather than the latter so that you don’t have to plug in 30 different email addresses. You print the exact same thing, hand it out to everybody in the team and say, “Go here and do this.” And then they basically join. Maybe it’s like a 6-digit code or a 10-digit code or something like that. They just go to, as you said, the URL, plug it in, and that’s the end of it. I think hiding the name of the product is probably the best bet because that way, the kids won’t search for it.
Rob: To be honest, Sports Tracker, when I go to just search for that phrase in Google, there’s a bunch of iOS apps that come up. I can’t find the app that he’s talking about in Google right now. There’s sports-tracker.com, there’s SportsTrackr with no E, there’s all these things and I don’t think any of them are his app. I actually don’t know that even hiding the name, I really think it’s just the URL. You know what people could do is if it says Sports Tracker on the PDF and they go to Google and type it in then sign-up for the first one, it’s going to be the wrong app. Maybe they should just hide the name and the URL and try to get them there.
Like I said, it’s an interesting problem—user behavior thing—to have but I think there are probably some ways that we’ve thrown out. Hopefully, those are helpful to him. Thanks for the question.
Our next question is about liability insurance. It’s from Z and he says, “Hey guys. Could you talk about what types of liability insurance SaaS companies should get? It’s very confusing, there’s not much information out there. What type of insurance should founders get for their companies depending on the stage they’re in and to protect themselves and the company?”
We have talked about this in the past, right, Mike? We’ve talked about getting an LLC and maybe worrying less about the insurance aspect of it because you have the liability protection there in the early stages. Obviously, we’re not attorneys, we can’t give legal advice and really, you should not take advice from two chuckle heads like us. But in the early days of a product, I would tend to have any type of E&O insurance. When you have 10 customers or something unless you’re in a particularly litigious niche.
Mike: I think the question here is different though. He’s talking specifically about liability insurance versus the liability of having things under a company. To his point, this is very confusing and there’s not much information out there. The reason it’s confusing is because insurance is one of those old industries where they profit based on your lack of knowledge and them being able to be kind of opaque about stuff.
If you go to, let’s say, two or three or five different insurance companies and ask them for a quote for liability insurance for your company, they’re going to say, “Okay. Fill out this form and give us a bunch of information.” Every single one of those forms is going to be different. It’s not like going to a sandwich shop and ordering a ham sandwich. That’s going to be basically the same between 30 different ham sandwich shops.
But with insurance, even liability insurance, it’s different for every single one of them. They’re going to have different questions, they’re going to want to know different things, and each of those forms is going to be different. Then they’re going to plug it in their back end of the engine and they’re going to say, “Okay. Here’s the risk profile, etc., and these are the things that we cover.” If you compare the output of each of those plans, there are going to be differences between them. It’s not like there’s a standardized liability insurance. There’s going to be some like Plan 1 from Company 1 might include XY and Z and then the same exact information that you gave to Company 2, they’re going to say, “We cover X and Y,” but they’re not even going to mention Z because it’s not covered but they cover QR and L.
It’s complicated and the reason you’re finding it that it’s confusing is because it is confusing. It sucks. It’s weird when you have to go through those things but really, there’s the umbrella policies. You have to be careful about what you’re doing in terms of what access to customer information you have, what your access level is to your on-site software or databases, or level of access that you need in their environment. All those things are going to be questions, are beyond those forms. Every company is going to quote you differently.
Rob: Yep. Insurance—not fun. I think that to protect yourself from personal liability, you can of course get an LLC or an S-Corp or whatever is the equivalent in whatever country you live in. I tend to say, when you’re young and you don’t have a lot of money or what’s called judgement proof, no one’s going to sue you because you don’t have any money. When you get to the point where you have some assets, I recommend getting a personal liability plan. I shouldn’t say recommend, this is what I have done. [inaudible 00:25:43] recommended to me and this is what I did, and it’s to get a personal liability coverage.
You can get $1 million or even a $2 million coverage for literally a few hundred dollars a year protects you from personal liability if you get in a car accident and someone sues you because their neck hurts or whatever. I think it protects your personal wealth and I don’t know all the details. It’s going to depend on your circumstance in the policy you get as to whether or not someone piercing a corporate veil. You don’t come in through an LLC after your personal asset. It’s going to protect that or not.
And then if you really want insurance for your company, personally, I would go to foundershiled.com, that’s who I use. I’m trying to think of some type of E&O or some insurance when we had to deal with a big Fortune 500 company and they required us to have, of course, crazy stuff that no one else requires you to have. I went to foundershiled.com, had a great experience with them when they were first starting out. They’re much further along now and really can’t recommend them highly enough for folks like us who really don’t want to deal with all the nuts and bolts of it but kind of need to get some [inaudible 00:26:49].
It depends on your risk tolerance how soon you want to do this but those are our general thoughts. Thanks for the question, Z. I hope that was helpful. Our next question is from Hamish and it’s about outsourcing development and NDAs.
He says, “I’m a new listener. I’m catching up with previous episodes. I’ve a question. I have a website which at the moment is no more than a hobby. I want to outsource some development to see if I can take it to the next level. I’m presuming NDA is not worth much for a small website. Should I be at all bothered about giving access to the code to a third-party developer? Are there any basic steps I can take to protect the copyright and the ideas?”
What do you think, Mike?
Mike: It goes back to the standard disclaimer: We’re not lawyers or insurance agents. An NDA is probably not going to be worth the time. The one thing I would be aware of or at least pay attention to is it when you are having somebody else build the code for you or write anything for you that you want to have a contract of some kind in place. If you’re hiring them through something like Upwork, that is generally taking care of it for you, but otherwise, you’re going to want to have something that says that it’s essentially a work for hire and that you own the output of that. That is probably the most basic thing that I would do. That ensures that you own whatever it is that they write for you. Beyond that, I don’t know. I wouldn’t worry too much about it because at this stage, it’s just an idea and it may or may not go anywhere.
Let’s say that they build it and you start making a couple of thousand dollars a month from it. The chances of them stealing it and trying to do the same thing, I would say are probably small. But even if they did try to do it, it’s not the app itself; it’s all the marketing and the sales engine and the sales funnel and emails—all the stuff that you do alongside of it—that is going to make that much money, it’s not the code itself and the app.
Rob: Yeah. I’m not sure how much I have to add there. There’s always risk with this kind of stuff. I would say that I’ve had dozens and dozens of developers that I’ve hired, some for really small projects, some for really big ones. As far as I know, none of them have ever stolen my code and gone off and tried to compete with it. I mean, maybe here’s a chance that I had a class in something that interacted with Stripe or with Twilio and they took it and used it in another project. How would I possibly know? But I have not had that experience.
I think that it’s easy to be bothered by this stuff. I think it’s easy to be overly concerned with it. It does depend on risk tolerance, but I would really air on the side of just hiring someone good and interviewing them to the point where you trust them and letting them do it and trust that they’re not going to steal your code because most people frankly, want the paycheck. It’s just so much effort to steal your code and try to do something with it. The odds of it happening I think are pretty slim.
Our next question, Mike, I pulled off of Quora. It was in the startup section and it said, “How much should an MVP cost?” What do you think about that? I love the premise of the question. It’s just like, “Oh boy!”
Mike: How much should an MVP cost? This seem like a trick question.
Rob: I would say that an MVP should cost zero.
Mike: Zero, yes.
Rob: I mean, not in all cases but remember, an MVP really shouldn’t be a software product, if at all possible. It should be me strapping a Google spreadsheet to Zapier, to a VA, to me peddling a hamster wheel that makes the thing go on, and to make give the appearance that I have a product but in fact it’s just all human-powered. I mean, that’s just one example. But I think an MVP should as little as possible. Take the number in your head and remove a zero or two.
Mike: I think the interesting thing about this question and maybe is because it comes from Quora, there’s people who are not necessarily as experienced in understanding exactly what a minimum viable product would actually be. But really what you’re looking for there is, “What is the least amount of work you can do to answer a particular question?” And you have to start with the question. If you don’t start with the question, you’re really not doing the whole MVP process correctly.
That’s kind of the core of the issue here I think is if you don’t understand what an MVP actually means, then asking how much it should cost is almost irrelevant because it really depends on what the question you’re trying to answer is. Like, “Will people pay for this?” “Well, just go online and do a Google search and see if there are other products out there that exist that solve that problem. If so, then yes.” That’s a very simple thing to do and it costs you absolutely nothing more than a few keystrokes. But if it’s a lot more complicated like, “Can you get $1000 or $10,000 people to your website in order to validate that you can acquire that traffic in order to potentially sell them something?” Well, that’s a very different question that you’re trying to answer. The amount that it’s going to cost is going to be different.
I would actually differentiate between how much time it’s going to cost you versus how much money and over what time period because all three of those things are very different. You might be able to find out a piece of information, but it could take three months. It might only take an hour or a week for the three months but the total time span that it takes is going to make a difference. If you’re trying to validate a couple of different ideas against one another or answer several different questions, it can become difficult to answer all of them in a time frame that is appropriate to whatever your current life situation is.
Rob: Yup. I think those are good points. Like I said, I think it should cost, frankly, as little as possible. You should be able to strap together a lot of tools and not have to actually build software if you’ve validated to that point or you get your 10 or 20 buy-ins, your purchases, pre-purchases, commitments, or whatever you’re going to do. I agree with you. I think I like the different dimensions you put on that words like there’s price, there’s hours of your time, and then there’s duration–is it 6 months or 12 months or 2 months or whatever.
I would love to get an MVP done in less than two months for, I don’t know, less than $5000, less than $10,000. It depends on who you hire. If you hire in the States, it’s going to be more expensive. It’s kind of hard to say, I think but I do think it’s an interesting thought experiment. It’s like, “Are you building an MVP of an email service provider or are you building an MVP of a little form app, like something that compete with Typeform or Google Forms or something.” That’s a totally different use case.
Again, if you’re going to give people Type Form, you just build the form UI, have it go straight into a Google spreadsheet so you don’t [inaudible 00:33:48] have a database and then to actually build the UI to build the form, you manually build that directly with your customers, you don’t build any type of form builder. You know what I mean? That could literally be like a weekend project of just displaying a landing page with the forms that you plug into some XML file or some database or JSON thing. That’s pretty minimally viable but it would be a product if you’re trying to test something out.
Anyways, I think that probably wraps us up for the day except for our final question of the day, Mike. The Star Wars Holiday Special marked the first appearance of which Star Wars character? There are four choices: Jabba the Hutt, Boba Fett, Jar Jar Binks, Lando Calrissian. Do you know the Star Wars holiday special? Have you heard of it?
Mike: I’ve heard of it.
Rob: It’s from the ‘70s. It’s awful. Go to YouTube and look it up. It is really not good. There’s this thing called life day and there’s wookiees and it’s really not canon.
Mike: I sort of vaguely remember hearing about it or seeing it. The question is which of these four characters shows up for the first time in that?
Rob: For the first time in the Star Wars Holiday Special that came out in ’78. It’s Jabba the Hutt, Boba Fett, Jar Jar Binks, Lando Calrissian.
Mike: I’m thinking Boba Fett.
Rob: You are correct.
Mike: Yes.
Rob: It’s in an animated segment of the show.
Mike: Oh!
Rob: Yup. This has never been released on video but as I said, you can hit YouTube or other places to find recordings of it.
Mike: Oh, that is shockingly nerdy.
Rob: It is. It is nerdy. I couldn’t get through it. I watched five minutes of it, and I had to scrap it.
Mike: Is it that painful?
Rob: It’s awful.
Mike: It’s painful as a podcast and our jokes.
Rob: Yes, it is indeed.
Mike: Oh, that’s terrible. Well, on that note, if you have a question for us, you can call it into our voicemail number 888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 434 | SaaS KPIs You Should Focus on From Day 1
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about what KPI’s to look at when launching, key metrics you should track, and what they should be.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about SaaS KPIs that you should focus on from day one. This is Startups For The Rest Of Us episode 434.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?
Rob: Well, I got my tan on in Mexico. I mentioned that last episode. We got out of Minneapolis for about eight days and it was good. It was interesting that that my two boys got so much sun the first day. They got a little sunburn, but it wasn’t bad. They then the next two days had fevers and it was almost like they had sunstroke, because we have been out in the sun so little since whatever, October.
It was a trip. I was like, did they get vitamin D overload? What was the deal? But they both got sick. It was Mexico. Several of us had stomach issues, but the boys didn’t and they had this different reaction to things. They were all hot and they were tired with headaches. It was definitely like sunstroke attributes.
Mike: Interesting. I wonder if it’s just a byproduct of living in California first of all.
Rob: What do you mean living in California?
Mike: Well, because you live in California and then you moved to Minneapolis. Suddenly you’re not getting any sun and then you go back. It’s almost like dying of starvation or thirst, you suddenly get it, and then you get sick because of it.
Rob: Totally. The thing was, my boys tan really well. Before we went to Mexico, they looked grey. They looked like this really odd grey color, because again no sun exposure because it’s so cold. It’s super sunny here in Minneapolis, but it’s just so cold. You don’t go out without coverage. Your face is typically the only thing showing. If you’re going to be out for an extended time, you have gloves on, you have stuff over your arm. It was a fun trip overall and I’d recommend it.
We actually went to this smaller town called Sayulita. It’s about 45 minutes north of Port of Aorta. I know you mentioned you’ve never been to Mexico. For your first trip, maybe do go to Cancun or Port of Aorta. Those places are fine, we’ve gone there. Once you go there once, it’s super touristy, it’s packed with people and you’re not among the locals. You’re just a bunch of other vacationers. You’re hanging out with other tourists.
Whereas Sayulita is small and it’s 45 minutes north. It was a much better experience. It felt slightly more authentic and we still had access to what we needed in terms of food and such, but it did feel just like a better experience. Folks listening, if you haven’t checked it out, I recommend it. How about you, what’s going on?
Mike: I’m in the process of going through the scholarship applications that came in.
Rob: For MicroConf, right?
Mike: Yes, for MicroConf. I really think that if I were going to make any predictions right now, that this would probably be the single biggest mistake that I will make for the entire year. I forgot to include the email address field until basically like 2/3 or 3/4 of the way through it and I didn’t notice it until then.
Rob: You have a scholarship application like a Google form or Typekit, you send an email to the MicroConf list, you send people to come apply for scholarships, they give all this information, and you have no email address form?
Mike: Exactly.
Rob: That’s nuts. There’s no way to map since it’s third party. I was trying to get you the link back because when they click through the Drip email, there’s going to be their subscriber ID and the URL, but there’s no way to go back and try to get that matched up or anything.
Mike: No, not from a Google Form. The thing is, it’s not even that I actually forgot it, it’s that it disappeared because I copied the application form from last year. I don’t know what happened. I must’ve clicked something and accidentally deleted it or something, I don’t know. I didn’t notice until well into it and I was just like, “Oh my God.” I’m in the process right now of going through and trying to figure out how to reach each of these people. The nice thing is, because it’s an application, it asks for a lot of information.
Most of the ones that are missing, I have at least Twitter account information for it. I can send them a message and try and get in touch with them through that. Then other ones I’ve been able to map back to some of the different email lists that we have. The one really helpful piece of information is that I ask where they heard about it from and if they say email list, then I can go look at the email at list.
If they say that they heard from a certain person, I think there was only one, possibly two that I’m not sure how I’m going to be able to get that information. But I think for the most part, I’m going to be able to clear it out. It’s just going to take time and effort though. That’s the part that sucks.
Rob: That’s the thing. These are those fixable problems that are a ton of ground work to get done. It’s like, “I could have saved myself hours taking through this thing if I’d remembered to put the email address.” I have done this plus way worse. These are things that happen as you’re moving fast and doing a bunch of stuff. That’s brutal.
Mike: Oh well, I got to do what I got to do, though.
Rob: Yeah. My guess is you will never ever again forget to put an email address on a form like this.
Mike: Like I said, I don’t think I forgot. I think it’s accidentally deleted.
Rob: It deleted itself, yeah. From my end speaking of applications, the TinySeed application process ran for a month from mid-January to mid-February. I guess around four weeks. We got just under 900 applicants. It was a lot more than I thought. I was ambitious in hoping we’d get 400. I had heard through the GreatFind that a lot of more well-known accelerators get 500 to 700 depending on location. I’m sure Y Combinator gets more than that I’d imagine. It’s a big number and it’s what I’m very happy with.
It also creates what we call a good problem to have. The good problem is we have a lot of applicants. The bad problem is, I’ve been sifting through almost 900 applicants for the past two weeks. It’s just a lot of work. I’m not complaining obviously because this is what I would want to be doing, but it’s definitely going to be a process to get through all these. I already started having conversations with founders as I mentioned a few weeks ago. It’s going well.
Mike: Awesome. The only other thing on my side is that I’ve got an upcoming webinar that I’m going to be doing for hr.com which is kind of, I don’t know, you look at those 2-letter domain names and you’re like, “Wow,” it’s nice that I was able to finagle that. I’ll be doing a webinar for them on personalized email strategies to drive traffic, engage leads, close deals, and more. That will be on April 29th and I’ll link it up in the show notes in case anybody’s interested.
Obviously because it’s for them, their audience tends to be people who are reaching out to HR professionals in that particular space. They have a couple of different audiences, but one of them is the HR reps themselves, and then the other one is people and vendors who are trying to get in touch with HR people. This is basically aimed at those people who are trying to get in touch with the HR reps. It’s more of a general presentation that I’m putting together for them. It could very well be applicable to people who are listening.
Rob: We will link that up in the show notes.
Mike: I know I did the intro today, but what are we talking about?
Rob: Actually, we designed the entire outline around a listener question. I’ll play the voicemail in a second, but it’s about what are the key performance indicators or KPIs. By the way, I hate that term. I feel like it’s such an MBI, I hate it. It’s a shorthand that everyone understands. What are the numbers, the metrics that you should be tracking when launching and growing a SaaS app. Let’s dive into the voicemail here.
Adam: Hey Rob and Mike, I’m Adam Hawkins. Thanks for running the show, it’s been awesome. I’ve learned a lot from you over the past few episodes and I appreciate that both of you mention metrics and discuss these app businesses. One of you mentioned that you needed to have X thousand visitors on your landing page to pull your funnel in a previous episode. That really got me thinking of a fellow bootstrapper. Here’s my question, what are the KPIs and target values in launching in SaaS? I’m kind of thinking something along the lines of numbers that will keep me on track in launching my own SaaS. That’s all for me. Thanks guys and keep up the good work.
Rob: The first thing I want to say about this is, when we make statements like you need X thousand people to hit your landing page to validate or whatever. Often that’s a rule of thumb and it’s something to start from, but please don’t take that as gospel. I think in the past we’ve said you need 30 people, or you should talk to 30 people and have them say yes to your product, and consider that validated.
With Drip, I only did 10. It just depends. It’s all a spectrum. It’s like a risk tolerance. These numbers are not set in stone. None of this stuff is set in stone. With that said, there are rules of thumb. From doing this for 15 years, you start to see patterns and you know that a metric is out of whack if, let’s say I have a SaaS app that’s $50 Bucks a month, I ask for a credit card upfront, and my trial to pay is 10%. I know that is way too low and we have a major problem in our funnel.
That’s what we’re going to talk through today. These loose ranges when I see an app performing at 40% versus 60%, how we think about that, and how it indicates where you might have an issue in your funnel. It really helps you figure out what to focus on, because at any given time, you’re going to have one or more things that are just going sideways with your business. It’s just the nature of doing startups. You’re always that duck on the pond where above the water, you look like you’re just gracefully moving along, and under the water you’re just paddling like crazy to stay afloat. Your numbers are sideways and you got to figure out what do you focus on.
That’s really the point of this episode. It’s to try to give you some guidance so that you’re thinking about it as someone with a background. Even if this is your first time that you’re kind of taking the wisdom and the rules of thumb from us. Basically, folks who have seen these SaaS apps, seen a lot of numbers, know what a healthy SaaS business looks like, and know where to focus on to help improve them.
Mike: Yeah. As you said, these are guidelines and general patterns. It doesn’t necessarily mean that if you are in this range, then things are going great. I think one of the big drawbacks of using this information as gospel is the fact that you never really know whether or not you have room for improvement or how much will you have room for improvement. If you have this general range, let’s say it’s between 2% and 4% for any given number, and let’s say you’re smack in the middle at 3%, that seems reasonable.
There’s probably other areas in your business that you should be focusing on, but is it possible that that number could be 6% or 8% depending on your type of business or the vertical that you are in. The answer is absolutely yes, it could be that high, but you don’t really know unless you are directly comparing yourself against other businesses that are similar to yours.
Again, these are general guidelines. They are helpful in terms of determining whether or not you should continue to focus on that area. Maybe you should, but chances are good that if you’re in the general ballpark, I’ll say that there’s other things you should be going to look at before you come back and try to optimize and double down on whatever that particular thing is to improve it.
Rob: That’s the thing, if you’ve ever gotten a piece of mail from your city water quality control board, they’ll show you all the lead and this and that, and then they’ll show you the acceptable ranges, because without the acceptable ranges, you have no idea what the numbers mean. It’s like one part per million of lead. Does that mean anything to you? It doesn’t to me, so then you want to see the acceptable range, or if you get a blood test, Mike. I know you’ve never had any test on you.
Mike: Of course not.
Rob: I’m curious. You’ve talked about it on the show, that’s why I’m bringing it up. I get a blood test every few years or whatever. There’s all these numbers that mean nothing without that guideline on the right that this is the normal range. That’s really what this is trying to do. I don’t want to over couch this and say, “These numbers? We’re just going to ballpark them and it don’t really mean anything.” They do mean things, but there’s always the caveats of, if you’re selling a $19 a month SaaS—I will try to call those out as we go through because I’ve sold $19 a month SaaSes—and then if you have one that’s $500 a month, the numbers are going to be different. We’ll try to talk through those differences as we go.
Mike: We’ve talked about KPIs and various metrics in a few other episodes. The first one was episode 112 where we talked about the startup metrics for Pirates and that’s based on AAARR. Is that what it is? I forgot.
Rob: Yes, something like that. It’s either AARRR or AAARR, I forget which it is.
Mike: I think it’s AARRR. There’s another one, Episode 187 where there is a whole slide deck that we went through from Andrea’s Cleaner. That slide deck is around 150 pages or so. It’s really in-depth. There’s a lot of good information in there. It specifically talks about the fact that your KPIs are going to change over time and very early on, there are going to be data points that you’re looking at. You have to be really careful about how you interpret them because the numbers are probably going to be much smaller, and your product market fit isn’t quite right yet.
There’s a lot of caveats to those very early numbers. We will call them out as well, but that’s something really important to keep in mind when you’re trying to figure out whether or not you should optimize something more or move on to something else. The third episode is Episode 231 with Ruben Gamez where you and him at the very end of the episode started talking about some of these general ranges that we’ll rehash in this episode.
Rob: I’ll be interested to see how close the ranges are. We literally did it off the cuff in that episode, and I’m kind of getting into it off the cuff again today. I’m hoping that the ranges are pretty close. What I’d like to do is start at the top of the funnel. Going from unique visits to your site and just go all the way down the funnel. Visits-to-trial, trial-to-paid, turn, blah-blah-blah, and go down the line.
So, starting at the top of the funnel with unique visitors. This is an interesting one because I don’t think there is a KPI for this. You want the most unique visitors you can get that are targeted at your website in any given month. I have had software products that get literally 1500 unique visitors a month that sold upwards of $4000 or $5000 a month in software. Now, it was not SaaS, it was a $300 one time purchase. The traffic was targeted, it was in a pretty tight niche, and it obviously converted quite well.
Whereas most SaaS apps I know, you’re going to be priced between let’s say $20 and $100 a month for your starting tier if you’re doing self-service. You really want to start getting into that 5000-10,000 uniques a month to try to start scaling it up. The challenge here is, if we’re talking about day one and you’ve just launched, unique visitors doesn’t have much meaning yet. What you really want to do is you’re still trying to validate your product, you’re trying to find product market fit, driving more traffic, trying to split test, and look at these aggregate numbers isn’t helpful yet.
In the early days, you should probably couch all of these metrics with that. In the early days, your numbers are going to be so small. When you have 10-20 customers and one of them turns, that doesn’t really mean you have 5% or 10% churn rate. It does technically, but it’s meaningless because you don’t have enough numbers to accurately measure things. I think that is another thing. Early day KPIs are different than later day KPIs. Early day KPIs are really how many people am I talking to? Do I think we have product market fit? Is churn going down? These are marketing resonating.
There’s a lot more qualitative questions that I ask in the early days than in the later days. You’re looking at more quantitative, because you’re just past that point. It’s hard to say for everyone, but I feel like when you hit about somewhere between 5000-15,000 MRR, that’s where I start to shift into that. You probably have 100-200 customers. That’s where you can start having numbers that are more easily measurable and you can start seeing trends instead of seeing these very spiky results because the numbers are small.
Mike: I think one of the interesting things about the number of unique visitors is that, as you said, all those not edge cases but those different factors that play into it like price point, how long it’s been around, do you have product market fit, all that kind of stuff. One of the really challenging things when you’re that early on is that a link on Hacker News, for example, can drive traffic through the roof and it is untargeted traffic. It’s good to get it and it’s nice to see that there are more eyeballs coming to your site, but what it does is it really heavily skews your metrics, because those people aren’t necessarily there as interested people, they’re there because you got a PR bump and that really seriously starts skewing your metrics.
You really have to be careful when you’re looking at everything else just because if you’re only averaging let’s say 3000 views a month, and then suddenly you get an incoming link and you end up getting 5000 over the course of a couple days, that 5000 is going to overshadow your typical 3000. And because it’s untargeted, your visitors trial and your trial-to-paid, all those numbers completely gets out of whack because of that. It skews them. It makes it a little bit more challenging to figure out what is my actual visitor-to-trial rate. You have to look at that and say, “Well, how well targeted was that traffic? Do I apply a percentage to that?” Well yes, 5000 people, but maybe only 0.5% or 1% of them were actually targeted then you multiply out from there and figure out what your actual visitor trial rate would be.
Rob: Yeah. The nice part about all these metrics but specifically visitor trial is, the more visits you get and the more trials you get, just that the further along you get, it does standardize. I used to be able to look in Google analytics or whatever dashboard I was running and just instantly know if it was a good number. My range for this is for SaaS, I want to specifically say that. For info products or for onetime purchases, you can get dramatically higher numbers, but people signing up for SaaS apps with a credit card upfront, I want to be between 0.5% and 2%.
The difference there could be a lot of things. It can definitely be your messaging and your marketing. It can be the quality of your traffic. It can also be your price point and that’s a big one. If I had an app that was $10-$20 a month for the lowest pricing tier, I would want to be closer to that 1.5% and 2% number of unique visitors translating into trials with a credit card on file. If I’m selling something that’s $50-$100 a month as the lowest tier, I’m going to be looking between 0.5% and 1%, 1% would be a pretty nice number to get on that.
Something else to think about is this is for one funnel. That’s like the visitors and turning into trial. You can also have a longer funnel that visitors turning into email subscribers and then you know how many email subscribers, over time, turn into trials. You can look at that number. If you have a good converting landing page, let’s say you’re sending either ad traffic or SEO traffic, and you’re trying to squeeze for an email address, and your offering something of value to folks with download in exchange for that email, I want the range to be between about 15% and 25% of people entering their email address on the landing page. I’ve had upwards of between 40% and 50% for certain calls-to-action with the really targeted traffic, but that’s pretty exceptional. If I’m below 15% I’m a little concerned and if I’m below 10% then I’m doing something wrong. The traffics mismatch or the call-to-action isn’t very good. If you’re going to do that, it’s a longer funnel, it’s a longer journey, but you need to then look at your email numbers in aggregate and see how many of these are turning into trials over time.
That’s where you need a good system with good tracking like Drip or I believe ActiveCampaign could do this. I’m not sure that Mailchimp, I haven’t used it in so long, I’m not sure that it’s easy to do that with Mailchimp. If you are going to go that route, you’re going to want to dial in the analytics at least to the point where you can have a relatively good insight into how many new subscribers are converting into trials. One other thing, if you’re not asking for credit card upfront and your unique visitor-to-trial rate is 5%, I’d say 5%-15%, but 5% is actually too low. I think I’d want to be more in probably 10%-20% range is where I feel comfortable. This one I have done very little because I tend to ask for credit card upfront. I have done tests with it and such, but I’ve talked to a bunch founders who run credit card free trials and that does tend to be the range.
Number three, the next KPI is of course trial-to-paid conversion. If I’m asking for a credit card upfront, I want between 40% and 60%. If I’m at 39%, I know that I have a problem. If I’m at 58%, I know that I’m doing quite well. I mean that’s really towards the top range. There was a time when Drip bumped above 60% at different times, then you know you’re kind of killing it and your onboarding is doing really well. When I took over HitTail, I acquired that in 2011, it was credit card upfront and the trial-to-paid was 15%, and so you know that there’s a major problem in onboarding. That was one of the first things that I cleaned up.
That’s why these ranges are fairly important is that you know you’re so out of whack there that if you fix that, you’re going to be going to be in a better position. If you’re not asking for credit card upfront, trial-to-paid, I would want to that one between let’s say 5% and 15% is probably a relatively decent mark. I mean I would want to be between 8% and 15% myself, but you’re just kind of a lot lower when you’re not asking for credit card, that’s kind of the nature of the beast.
Mike: One of the things that I think is probably the most challenging with trying to find out or to track some of this information is that when you’re very early on, these numbers are very misleading when one person cancels. If you’ve got 10 customers or 20 customers, having one or two customers cancel is a huge deal. One or two people who come through the funnel that don’t convert, let’s say you’ve got four of them through and not one of them converts, that’s 0%. Even having a couple after that, it doesn’t really put the number back to really where it should.
You have to eyeball those things and try to capture as much information from people who are leaving or not following through with the trial to figure out what it is that drove them away. Why did they not actually decide to follow through and sign-up for the service or continue using it. Use that information to try and figure out what it is that you’re supposed to do because the numbers are not going to be enough, especially early on.
Now, that’s not to say you shouldn’t track those numbers, just that they’re going to be misleading early on. Over time, it will get better, but those first few that come through, first 100-200 that come through, is going to be hard. You have to talk to people to figure out what the reasons are for them to move in one direction or the other.
Rob: Exactly. The numbers aren’t going to tell you the whole story. Especially in the early days. That’s something you got to dig into. The fourth KPI we’re going to talk about is churn. I’ve seen people look at churn as a blanket number. It really obfuscates what’s going on underneath. If you go to Amazon and you see that the average rating for something is 2.5 stars, but there’s actually 101 stars and 105 stars, I guess that would actually average to 3%, but you get the idea. 100 0 stars and a and 100 5 stars in average is 2.5%.
If you just have the 2.5%, it looks like a crappy product, but as it turns out with five and zero, the zeros are probably either misunderstanding, or there’s something wrong, there’s more information under that data. Churn I feel is the same way. If you look at your churn across your entire customer base, you’re missing some information. What I’ve typically seen the most success with is to look at your first 60-day of churn, and then your post 60-day churn, and separate those numbers out.
Sometime it’s up to 90 days, but really, a lot of people do an extended trial where they might enter their credit card. When the trial expires, they pay one month. They never get set up. They never get onboard and then they churn, but really what they did is they were kind of like a trial that didn’t convert to paid. I started seeing these patterns, it was before HitTail, but when I got into HitTail and really dig into the numbers, it was a huge difference. Literally in the first 60 days, especially if you’re asking for credit card upfront, but it can happen both ways, you might see churn upwards and a per cohort of between 20% and 40%.
It can be a huge number of people that are canceling there and 40% I start to feel uncomfortable, 20% I actually don’t feel terrible about that for 60 days. Then post 60 days, you want to get your churn obviously as low as possible, but I feel most comfortable in let’s say for lower priced products that are not enterprise, not annual contracts, I think between 5% and 8%. If you’re at 9% or 10%, it’s pretty brutal, 8% is about the top in where I feel comfortable. Realistically, if you’re a big SaaS app, I think WP engine probably has negative churn at this point.
I remember Jason saying in the early days, they had 2% churn. I’ve had apps that have 2% to 3% churn in that post 60-day, post 90-day mark. That’s where you want to get to. The problem is, the lower your price point, the higher your churn tends to be. That’s why a lot of folks go up market, a lot of SaaS apps do. If you can, you want to get to net negative churn where you do churn out 2%, 3%, 4% but just the growth in your existing customer base of people upgrading actually wipes out the churn. It’s a crazy thing. I’ve seen it firsthand. It just catapults your growth. Those are my loose numbers that I keep in mind when I’m looking at churn rates.
When I see someone come through with a 12% monthly churn rate, I think that’s the first thing I would attack. If I see someone come through with a 3% churn rate, I think that’s amazing. I believe you have a product market fit depending on how many people you’re putting through your funnel. Let’s look at your other metrics to figure out where we should focus position not be on churn, if your number is that low.
Mike: One thing that we should probably drill into a little bit is the idea of that negative churn, because I think that some people might get confused about that. It’s not that you’re gaining more users than you have actually signed up. Although in some cases that may actually be true, because if somebody comes in and then they invite somebody else on their team, initially they sign up with one account and then they may fall into a different tier. That’s part of where that negative churn comes from because people are essentially upgrading to a higher tier paid accounts.
Whether they’re adding users, or going to a new pricing tier, each of those things can qualify. A question for you Rob, because I’m actually not sure about this, does it qualify if they upgrade from a monthly plan to an annual plan? I don’t think that it does.
Rob: No, it doesn’t. The annual plan should be divided by 12 and added to your MRR anyways. It’s not net revenue. It really is actual MRR that I’m looking at. I’m glad you brought this up because I should have couched this when I was talking about churn and the churn you should focus on is revenue churn, not user churn or customer churn. Revenue churn is when you look at, we started the month with $100,000 in MRR and we lost $10,000 in MRR, so that’s a 10% revenue churn.
First is we started the month with 1000 customers who are paying, 1000 credit cards on file, no matter how many users are within each account. We started with 1000 customers paying us and we ended the month with 900. That’s 10% user churn or customer churn. I’ve always looked at both. By far, the most important is revenue churn. I don’t think you could have negative customer churn, because you can’t add more customers than you signed up, but you can have a net negative revenue churn. That’s where you only lose a small amount of revenue from people canceling, but the rest of your customer base is either so large or they naturally move up tiers and pay you more for stuff.
Drip is a great example of this. As people’s lists grew, they naturally moved up in tiers automatically. There was just a natural movement towards paying more to your ESP. Those are the kinds of businesses that can have negative churn. Slack probably has a negative churn rate, because teams do tend to grow. Yeah, companies go out of business, there are layoffs now, but there are layoffs from time to time in your customer base.
In general, teams that sign up Slack and start paying, I’m guessing these are startups that are adding more and more people and Slack charges $6 or $8 a month per person. I would guess with the stickiness of Slack, they’re kind of gross churn is very low. I bet their net churn including expansion revenue is what it’s called, as people expand and hire tiers is quite substantial. That’s the holy grail of SaaS.
I know people say, recurring revenue is the holy grail of software, and that’s why SaaS is such a big thing. Net negative churn is the holy grail of SaaS if you want to get into it, because that just snowballs and it means that if you do nothing, your company grows. It’s crazy to even think about it when you actually look at charts, and you look at how the numbers work out, you look at graphs of it, once you hit net negative churn, you don’t need to do much. I shouldn’t say you don’t need to do much, but you need to do a lot less to grow a lot faster is what happens.
Mike: Is that where the passive income comes in?
Rob: Passive income, money wisely. Let’s run through the last few pretty quickly. The fifth thing is MRR and that’s just your monthly recurring revenue. As we said earlier, it can get tricky if you have annual plans, you’re supposed to technically divide by 12 that annual plan and then add it onto your MRR. Hopefully you have a software that can do that like Baremetrics or ProfitWell. MRR was the number that I tracked religiously. Every night I would get an email after billing ran and it would tell me what MRR was, what the daily billing was, and all that stuff.
It’s kind of a no brainer when you think all of us track it and it’s something that talks about the health of your business. The other one is MRR growth. I always looked at this as dollar rather than percentage. A lot of people talk percentages, but it’s like when you’re at $1000 MRR, or you’re at $100,000 MRR, the percentages obfuscate so much stuff. Truly, how many dollars did you add and you want to look at not just net add, but you want to look at how many did you lose to churn, how many did you add from new customers, and how much did you add from expansion revenue. Seeing those three different numbers and then the net. There’s four different numbers that you can get into and a lot of people who are really into their SaaS numbers know these numbers cold and know where they want to be with them.
The last one is ARPU, average revenue per user. I like to call this ARPC, which is average revenue per customer, because frankly when I’m charging people money, I think of them as customers, not users. Like Drip, one account might have 20 users in it, but to me that’s a single customer. It’s apples to apples, but it’s just a terminology thing. Average revenue per user, average revenue per customer.
Frankly, if your average revenue per user is $10 or $20 a month, you have a nice little business. You can grow that to something, but the odds of you growing that to a multimillion dollar business are very low. I’ve seen businesses with very low churn, good trial-to-paid, and average revenue per customer of $10 or $15 a month. I think that’s going to be a great 30K MRR business. That’s not a bad business to have, but you’re going to struggle to get past that 30K or 50K mark. If you want to build something into a 7-figure business, not across the board, not unequivocally but in general, you need that average revenue per customer to be upwards of that $40, $50, $60 and up price point.
You want to be in triple digits. You want to get there eventually. You don’t have to be there on day one, but aspiring to get into that $100 to $500 per month, per customer. That’s where you can scale, it’s so much easier to scale a business into that seven- and eight-figure range. Because you have the money to acquire customers, the payback is fairly quick. If most people are paying you $200 a month, you can spend quite a bit on ads and salespeople. Frankly, churn will be lower. It’s always counter intuitive to say this, but lower priced products, lower ARPCs tend to lead to higher churn.
Mike: Something we didn’t talk about when we were talking about the revenue churn between the first 60 days and then post 60 days was that, if you do any sort of a pricing change that can have a massive impact on what your revenue churn looks like. If you raise prices, let’s say by 50%, make things simple. If you raise prices by 100%, you double your prices. If you lose less than half your customers, then technically you’re coming out ahead because you’re making more money. In theory, your infrastructure costs have probably gone down. The obvious downside of that is, potentially losing customers after that first month or after you initially make that change, assuming you didn’t grandfather them. At least be a little cautious of or cognizant of, because that that can seriously change some of those numbers.
It’s not something you have to worry about, as you’re launching, but down the road when you are calculating these numbers and try to figure out how to grow the company, those are things that you should at least bear in mind when you’re trying to figure out if you’re running into financial issues and you need to be able to make more money. You can just do some calculations and say, “Well, if I raised by 10%, this is how much we could get, and how many of those customers are we going to lose the because of us raising those prices.”
The other thing that I was thinking about was that, all of this information sounds great to be looking at, but how do you actually go about tracking it? There’s a lot of different tools out there that you can use. Sunrise KPI for example is one. We can look this up in the show notes. CYFE is another one. Honestly, the simplest thing to do, instead of going in and trying to figure out a bunch of different tools and things to integrate, you can just use a spreadsheet. Whether it’s a Google doc or Excel spreadsheet, it doesn’t really matter. Throw your information in there, maybe update it. You can do it as much as once a day, but you could also do it once a week or once a month, and it really gives you a sense of where things are at and what you should be focusing on. If you’re not plugging this information in and at least looking at it, then you’re never going to do anything about it. That’s the big problem that most people run into is they just don’t even look at these things or they don’t update them and keep track of them.
Rob: Yeah, that makes sense. I mean, I’ll admit with pretty much all, I think without exception, all the SaaS apps I’ve ever run, I’ve built a little scrappy page and these are just simple queries. You should have all the stuff in your own database, I’m imagining. I always did and it’s a little bit of a pain. Churn can be a pain to calculate that can take some time, but I remember hacking together a dashboard with most of these numbers in a few hours, one evening.
I was listening to music and have the lava lamp on sipping Bourbon and I just hammered through these one at a time. I really don’t have a very impressive life, do I, Mike? It’s kind of sad that that would, but it was a fun night, I’ll admit. Because once I had that, I was looking at that thing every day. It was super cool. Then by the time we were launching Drip, I remember telling Derrick, “These are the numbers I know I need. Let’s figure them out,” and it did take him probably a day to get the initial version done.
We had to kill a day of developer productivity to do it, but it was really nice to (a) be in control of those, to (b) have a all in one place, and to have them displayed in exactly like the order that I wanted. I mean, we even have trailing 7-day trials, how much each day it had, have it trailing 30-day. Then we modified it and adjusted it over time. The other cool thing is that whole dashboard and admin area became a nice training ground for new developers. We’d bring in like a junior dev or whatever. You may not want them to push production code into your app right away, because it could break something for customer, but that becomes a nice playground to be like, “Hey, let’s add this number or let’s tweak this,” and it becomes this code base that can get screwed up. If the admin console crashes or has some weird thing that happens in it, it’s not the end of the world, because it’s just us using it. That was kind of also a bonus to having that all built out.
Mike: I’ve daily email sent to me from Bluetick just to see a lot of those different pieces of data.
Rob: It’s a good way to do it. I always had it as a shortcut on my browser but it’s same thing, and that’s your pulse. We actually called it, the page that displayed all this, we called it Pulse in Drip. I always thought that was a pretty fitting name, because it’s the pulse of the business.
Mike: Got it, cool.
Rob: Forty minutes on SaaS Metrics, KPIs. I think the next episode needs to just be all jokes. You and I need to just talk about movies and jokes.
Mike: I don’t know if that’s going to be a very compelling episode.
Rob: That would be even worse than this one. All right. Let’s call it a wrap. I guess I’m the wrap guy today.
Mike: Yes, you are.
Rob: This whole episode was outlined based on a single listener question. If you have a question for us, you can voice mail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups, and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. 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 software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?
Rob: Well, I got my tan on in Mexico. I mentioned that last episode. We got out of Minneapolis for about eight days and it was good. It was interesting that that my two boys got so much sun the first day. They got a little sunburn, but it wasn’t bad. They then the next two days had fevers and it was almost like they had sunstroke, because we have been out in the sun so little since whatever, October.
It was a trip. I was like, did they get vitamin D overload? What was the deal? But they both got sick. It was Mexico. Several of us had stomach issues, but the boys didn’t and they had this different reaction to things. They were all hot and they were tired with headaches. It was definitely like sunstroke attributes.
Mike: Interesting. I wonder if it’s just a byproduct of living in California first of all.
Rob: What do you mean living in California?
Mike: Well, because you live in California and then you moved to Minneapolis. Suddenly you’re not getting any sun and then you go back. It’s almost like dying of starvation or thirst, you suddenly get it, and then you get sick because of it.
Rob: Totally. The thing was, my boys tan really well. Before we went to Mexico, they looked grey. They looked like this really odd grey color, because again no sun exposure because it’s so cold. It’s super sunny here in Minneapolis, but it’s just so cold. You don’t go out without coverage. Your face is typically the only thing showing. If you’re going to be out for an extended time, you have gloves on, you have stuff over your arm. It was a fun trip overall and I’d recommend it.
We actually went to this smaller town called Sayulita. It’s about 45 minutes north of Port of Aorta. I know you mentioned you’ve never been to Mexico. For your first trip, maybe do go to Cancun or Port of Aorta. Those places are fine, we’ve gone there. Once you go there once, it’s super touristy, it’s packed with people and you’re not among the locals. You’re just a bunch of other vacationers. You’re hanging out with other tourists.
Whereas Sayulita is small and it’s 45 minutes north. It was a much better experience. It felt slightly more authentic and we still had access to what we needed in terms of food and such, but it did feel just like a better experience. Folks listening, if you haven’t checked it out, I recommend it. How about you, what’s going on?
Mike: I’m in the process of going through the scholarship applications that came in.
Rob: For MicroConf, right?
Mike: Yes, for MicroConf. I really think that if I were going to make any predictions right now, that this would probably be the single biggest mistake that I will make for the entire year. I forgot to include the email address field until basically like 2/3 or 3/4 of the way through it and I didn’t notice it until then.
Rob: You have a scholarship application like a Google form or Typekit, you send an email to the MicroConf list, you send people to come apply for scholarships, they give all this information, and you have no email address form?
Mike: Exactly.
Rob: That’s nuts. There’s no way to map since it’s third party. I was trying to get you the link back because when they click through the Drip email, there’s going to be their subscriber ID and the URL, but there’s no way to go back and try to get that matched up or anything.
Mike: No, not from a Google Form. The thing is, it’s not even that I actually forgot it, it’s that it disappeared because I copied the application form from last year. I don’t know what happened. I must’ve clicked something and accidentally deleted it or something, I don’t know. I didn’t notice until well into it and I was just like, “Oh my God.” I’m in the process right now of going through and trying to figure out how to reach each of these people. The nice thing is, because it’s an application, it asks for a lot of information.
Most of the ones that are missing, I have at least Twitter account information for it. I can send them a message and try and get in touch with them through that. Then other ones I’ve been able to map back to some of the different email lists that we have. The one really helpful piece of information is that I ask where they heard about it from and if they say email list, then I can go look at the email at list.
If they say that they heard from a certain person, I think there was only one, possibly two that I’m not sure how I’m going to be able to get that information. But I think for the most part, I’m going to be able to clear it out. It’s just going to take time and effort though. That’s the part that sucks.
Rob: That’s the thing. These are those fixable problems that are a ton of ground work to get done. It’s like, “I could have saved myself hours taking through this thing if I’d remembered to put the email address.” I have done this plus way worse. These are things that happen as you’re moving fast and doing a bunch of stuff. That’s brutal.
Mike: Oh well, I got to do what I got to do, though.
Rob: Yeah. My guess is you will never ever again forget to put an email address on a form like this.
Mike: Like I said, I don’t think I forgot. I think it’s accidentally deleted.
Rob: It deleted itself, yeah. From my end speaking of applications, the TinySeed application process ran for a month from mid-January to mid-February. I guess around four weeks. We got just under 900 applicants. It was a lot more than I thought. I was ambitious in hoping we’d get 400. I had heard through the GreatFind that a lot of more well-known accelerators get 500 to 700 depending on location. I’m sure Y Combinator gets more than that I’d imagine. It’s a big number and it’s what I’m very happy with.
It also creates what we call a good problem to have. The good problem is we have a lot of applicants. The bad problem is, I’ve been sifting through almost 900 applicants for the past two weeks. It’s just a lot of work. I’m not complaining obviously because this is what I would want to be doing, but it’s definitely going to be a process to get through all these. I already started having conversations with founders as I mentioned a few weeks ago. It’s going well.
Mike: Awesome. The only other thing on my side is that I’ve got an upcoming webinar that I’m going to be doing for hr.com which is kind of, I don’t know, you look at those 2-letter domain names and you’re like, “Wow,” it’s nice that I was able to finagle that. I’ll be doing a webinar for them on personalized email strategies to drive traffic, engage leads, close deals, and more. That will be on April 29th and I’ll link it up in the show notes in case anybody’s interested.
Obviously because it’s for them, their audience tends to be people who are reaching out to HR professionals in that particular space. They have a couple of different audiences, but one of them is the HR reps themselves, and then the other one is people and vendors who are trying to get in touch with HR people. This is basically aimed at those people who are trying to get in touch with the HR reps. It’s more of a general presentation that I’m putting together for them. It could very well be applicable to people who are listening.
Rob: We will link that up in the show notes.
Mike: I know I did the intro today, but what are we talking about?
Rob: Actually, we designed the entire outline around a listener question. I’ll play the voicemail in a second, but it’s about what are the key performance indicators or KPIs. By the way, I hate that term. I feel like it’s such an MBI, I hate it. It’s a shorthand that everyone understands. What are the numbers, the metrics that you should be tracking when launching and growing a SaaS app. Let’s dive into the voicemail here.
Adam: Hey Rob and Mike, I’m Adam Hawkins. Thanks for running the show, it’s been awesome. I’ve learned a lot from you over the past few episodes and I appreciate that both of you mention metrics and discuss these app businesses. One of you mentioned that you needed to have X thousand visitors on your landing page to pull your funnel in a previous episode. That really got me thinking of a fellow bootstrapper. Here’s my question, what are the KPIs and target values in launching in SaaS? I’m kind of thinking something along the lines of numbers that will keep me on track in launching my own SaaS. That’s all for me. Thanks guys and keep up the good work.
Rob: The first thing I want to say about this is, when we make statements like you need X thousand people to hit your landing page to validate or whatever. Often that’s a rule of thumb and it’s something to start from, but please don’t take that as gospel. I think in the past we’ve said you need 30 people, or you should talk to 30 people and have them say yes to your product, and consider that validated.
With Drip, I only did 10. It just depends. It’s all a spectrum. It’s like a risk tolerance. These numbers are not set in stone. None of this stuff is set in stone. With that said, there are rules of thumb. From doing this for 15 years, you start to see patterns and you know that a metric is out of whack if, let’s say I have a SaaS app that’s $50 Bucks a month, I ask for a credit card upfront, and my trial to pay is 10%. I know that is way too low and we have a major problem in our funnel.
That’s what we’re going to talk through today. These loose ranges when I see an app performing at 40% versus 60%, how we think about that, and how it indicates where you might have an issue in your funnel. It really helps you figure out what to focus on, because at any given time, you’re going to have one or more things that are just going sideways with your business. It’s just the nature of doing startups. You’re always that duck on the pond where above the water, you look like you’re just gracefully moving along, and under the water you’re just paddling like crazy to stay afloat. Your numbers are sideways and you got to figure out what do you focus on.
That’s really the point of this episode. It’s to try to give you some guidance so that you’re thinking about it as someone with a background. Even if this is your first time that you’re kind of taking the wisdom and the rules of thumb from us. Basically, folks who have seen these SaaS apps, seen a lot of numbers, know what a healthy SaaS business looks like, and know where to focus on to help improve them.
Mike: Yeah. As you said, these are guidelines and general patterns. It doesn’t necessarily mean that if you are in this range, then things are going great. I think one of the big drawbacks of using this information as gospel is the fact that you never really know whether or not you have room for improvement or how much will you have room for improvement. If you have this general range, let’s say it’s between 2% and 4% for any given number, and let’s say you’re smack in the middle at 3%, that seems reasonable.
There’s probably other areas in your business that you should be focusing on, but is it possible that that number could be 6% or 8% depending on your type of business or the vertical that you are in. The answer is absolutely yes, it could be that high, but you don’t really know unless you are directly comparing yourself against other businesses that are similar to yours.
Again, these are general guidelines. They are helpful in terms of determining whether or not you should continue to focus on that area. Maybe you should, but chances are good that if you’re in the general ballpark, I’ll say that there’s other things you should be going to look at before you come back and try to optimize and double down on whatever that particular thing is to improve it.
Rob: That’s the thing, if you’ve ever gotten a piece of mail from your city water quality control board, they’ll show you all the lead and this and that, and then they’ll show you the acceptable ranges, because without the acceptable ranges, you have no idea what the numbers mean. It’s like one part per million of lead. Does that mean anything to you? It doesn’t to me, so then you want to see the acceptable range, or if you get a blood test, Mike. I know you’ve never had any test on you.
Mike: Of course not.
Rob: I’m curious. You’ve talked about it on the show, that’s why I’m bringing it up. I get a blood test every few years or whatever. There’s all these numbers that mean nothing without that guideline on the right that this is the normal range. That’s really what this is trying to do. I don’t want to over couch this and say, “These numbers? We’re just going to ballpark them and it don’t really mean anything.” They do mean things, but there’s always the caveats of, if you’re selling a $19 a month SaaS—I will try to call those out as we go through because I’ve sold $19 a month SaaSes—and then if you have one that’s $500 a month, the numbers are going to be different. We’ll try to talk through those differences as we go.
Mike: We’ve talked about KPIs and various metrics in a few other episodes. The first one was episode 112 where we talked about the startup metrics for Pirates and that’s based on AAARR. Is that what it is? I forgot.
Rob: Yes, something like that. It’s either AARRR or AAARR, I forget which it is.
Mike: I think it’s AARRR. There’s another one, Episode 187 where there is a whole slide deck that we went through from Andrea’s Cleaner. That slide deck is around 150 pages or so. It’s really in-depth. There’s a lot of good information in there. It specifically talks about the fact that your KPIs are going to change over time and very early on, there are going to be data points that you’re looking at. You have to be really careful about how you interpret them because the numbers are probably going to be much smaller, and your product market fit isn’t quite right yet.
There’s a lot of caveats to those very early numbers. We will call them out as well, but that’s something really important to keep in mind when you’re trying to figure out whether or not you should optimize something more or move on to something else. The third episode is Episode 231 with Ruben Gamez where you and him at the very end of the episode started talking about some of these general ranges that we’ll rehash in this episode.
Rob: I’ll be interested to see how close the ranges are. We literally did it off the cuff in that episode, and I’m kind of getting into it off the cuff again today. I’m hoping that the ranges are pretty close. What I’d like to do is start at the top of the funnel. Going from unique visits to your site and just go all the way down the funnel. Visits-to-trial, trial-to-paid, turn, blah-blah-blah, and go down the line.
So, starting at the top of the funnel with unique visitors. This is an interesting one because I don’t think there is a KPI for this. You want the most unique visitors you can get that are targeted at your website in any given month. I have had software products that get literally 1500 unique visitors a month that sold upwards of $4000 or $5000 a month in software. Now, it was not SaaS, it was a $300 one time purchase. The traffic was targeted, it was in a pretty tight niche, and it obviously converted quite well.
Whereas most SaaS apps I know, you’re going to be priced between let’s say $20 and $100 a month for your starting tier if you’re doing self-service. You really want to start getting into that 5000-10,000 uniques a month to try to start scaling it up. The challenge here is, if we’re talking about day one and you’ve just launched, unique visitors doesn’t have much meaning yet. What you really want to do is you’re still trying to validate your product, you’re trying to find product market fit, driving more traffic, trying to split test, and look at these aggregate numbers isn’t helpful yet.
In the early days, you should probably couch all of these metrics with that. In the early days, your numbers are going to be so small. When you have 10-20 customers and one of them turns, that doesn’t really mean you have 5% or 10% churn rate. It does technically, but it’s meaningless because you don’t have enough numbers to accurately measure things. I think that is another thing. Early day KPIs are different than later day KPIs. Early day KPIs are really how many people am I talking to? Do I think we have product market fit? Is churn going down? These are marketing resonating.
There’s a lot more qualitative questions that I ask in the early days than in the later days. You’re looking at more quantitative, because you’re just past that point. It’s hard to say for everyone, but I feel like when you hit about somewhere between 5000-15,000 MRR, that’s where I start to shift into that. You probably have 100-200 customers. That’s where you can start having numbers that are more easily measurable and you can start seeing trends instead of seeing these very spiky results because the numbers are small.
Mike: I think one of the interesting things about the number of unique visitors is that, as you said, all those not edge cases but those different factors that play into it like price point, how long it’s been around, do you have product market fit, all that kind of stuff. One of the really challenging things when you’re that early on is that a link on Hacker News, for example, can drive traffic through the roof and it is untargeted traffic. It’s good to get it and it’s nice to see that there are more eyeballs coming to your site, but what it does is it really heavily skews your metrics, because those people aren’t necessarily there as interested people, they’re there because you got a PR bump and that really seriously starts skewing your metrics.
You really have to be careful when you’re looking at everything else just because if you’re only averaging let’s say 3000 views a month, and then suddenly you get an incoming link and you end up getting 5000 over the course of a couple days, that 5000 is going to overshadow your typical 3000. And because it’s untargeted, your visitors trial and your trial-to-paid, all those numbers completely gets out of whack because of that. It skews them. It makes it a little bit more challenging to figure out what is my actual visitor-to-trial rate. You have to look at that and say, “Well, how well targeted was that traffic? Do I apply a percentage to that?” Well yes, 5000 people, but maybe only 0.5% or 1% of them were actually targeted then you multiply out from there and figure out what your actual visitor trial rate would be.
Rob: Yeah. The nice part about all these metrics but specifically visitor trial is, the more visits you get and the more trials you get, just that the further along you get, it does standardize. I used to be able to look in Google analytics or whatever dashboard I was running and just instantly know if it was a good number. My range for this is for SaaS, I want to specifically say that. For info products or for onetime purchases, you can get dramatically higher numbers, but people signing up for SaaS apps with a credit card upfront, I want to be between 0.5% and 2%.
The difference there could be a lot of things. It can definitely be your messaging and your marketing. It can be the quality of your traffic. It can also be your price point and that’s a big one. If I had an app that was $10-$20 a month for the lowest pricing tier, I would want to be closer to that 1.5% and 2% number of unique visitors translating into trials with a credit card on file. If I’m selling something that’s $50-$100 a month as the lowest tier, I’m going to be looking between 0.5% and 1%, 1% would be a pretty nice number to get on that.
Something else to think about is this is for one funnel. That’s like the visitors and turning into trial. You can also have a longer funnel that visitors turning into email subscribers and then you know how many email subscribers, over time, turn into trials. You can look at that number. If you have a good converting landing page, let’s say you’re sending either ad traffic or SEO traffic, and you’re trying to squeeze for an email address, and your offering something of value to folks with download in exchange for that email, I want the range to be between about 15% and 25% of people entering their email address on the landing page. I’ve had upwards of between 40% and 50% for certain calls-to-action with the really targeted traffic, but that’s pretty exceptional. If I’m below 15% I’m a little concerned and if I’m below 10% then I’m doing something wrong. The traffics mismatch or the call-to-action isn’t very good. If you’re going to do that, it’s a longer funnel, it’s a longer journey, but you need to then look at your email numbers in aggregate and see how many of these are turning into trials over time.
That’s where you need a good system with good tracking like Drip or I believe ActiveCampaign could do this. I’m not sure that Mailchimp, I haven’t used it in so long, I’m not sure that it’s easy to do that with Mailchimp. If you are going to go that route, you’re going to want to dial in the analytics at least to the point where you can have a relatively good insight into how many new subscribers are converting into trials. One other thing, if you’re not asking for credit card upfront and your unique visitor-to-trial rate is 5%, I’d say 5%-15%, but 5% is actually too low. I think I’d want to be more in probably 10%-20% range is where I feel comfortable. This one I have done very little because I tend to ask for credit card upfront. I have done tests with it and such, but I’ve talked to a bunch founders who run credit card free trials and that does tend to be the range.
Number three, the next KPI is of course trial-to-paid conversion. If I’m asking for a credit card upfront, I want between 40% and 60%. If I’m at 39%, I know that I have a problem. If I’m at 58%, I know that I’m doing quite well. I mean that’s really towards the top range. There was a time when Drip bumped above 60% at different times, then you know you’re kind of killing it and your onboarding is doing really well. When I took over HitTail, I acquired that in 2011, it was credit card upfront and the trial-to-paid was 15%, and so you know that there’s a major problem in onboarding. That was one of the first things that I cleaned up.
That’s why these ranges are fairly important is that you know you’re so out of whack there that if you fix that, you’re going to be going to be in a better position. If you’re not asking for credit card upfront, trial-to-paid, I would want to that one between let’s say 5% and 15% is probably a relatively decent mark. I mean I would want to be between 8% and 15% myself, but you’re just kind of a lot lower when you’re not asking for credit card, that’s kind of the nature of the beast.
Mike: One of the things that I think is probably the most challenging with trying to find out or to track some of this information is that when you’re very early on, these numbers are very misleading when one person cancels. If you’ve got 10 customers or 20 customers, having one or two customers cancel is a huge deal. One or two people who come through the funnel that don’t convert, let’s say you’ve got four of them through and not one of them converts, that’s 0%. Even having a couple after that, it doesn’t really put the number back to really where it should.
You have to eyeball those things and try to capture as much information from people who are leaving or not following through with the trial to figure out what it is that drove them away. Why did they not actually decide to follow through and sign-up for the service or continue using it. Use that information to try and figure out what it is that you’re supposed to do because the numbers are not going to be enough, especially early on.
Now, that’s not to say you shouldn’t track those numbers, just that they’re going to be misleading early on. Over time, it will get better, but those first few that come through, first 100-200 that come through, is going to be hard. You have to talk to people to figure out what the reasons are for them to move in one direction or the other.
Rob: Exactly. The numbers aren’t going to tell you the whole story. Especially in the early days. That’s something you got to dig into. The fourth KPI we’re going to talk about is churn. I’ve seen people look at churn as a blanket number. It really obfuscates what’s going on underneath. If you go to Amazon and you see that the average rating for something is 2.5 stars, but there’s actually 101 stars and 105 stars, I guess that would actually average to 3%, but you get the idea. 100 0 stars and a and 100 5 stars in average is 2.5%.
If you just have the 2.5%, it looks like a crappy product, but as it turns out with five and zero, the zeros are probably either misunderstanding, or there’s something wrong, there’s more information under that data. Churn I feel is the same way. If you look at your churn across your entire customer base, you’re missing some information. What I’ve typically seen the most success with is to look at your first 60-day of churn, and then your post 60-day churn, and separate those numbers out.
Sometime it’s up to 90 days, but really, a lot of people do an extended trial where they might enter their credit card. When the trial expires, they pay one month. They never get set up. They never get onboard and then they churn, but really what they did is they were kind of like a trial that didn’t convert to paid. I started seeing these patterns, it was before HitTail, but when I got into HitTail and really dig into the numbers, it was a huge difference. Literally in the first 60 days, especially if you’re asking for credit card upfront, but it can happen both ways, you might see churn upwards and a per cohort of between 20% and 40%.
It can be a huge number of people that are canceling there and 40% I start to feel uncomfortable, 20% I actually don’t feel terrible about that for 60 days. Then post 60 days, you want to get your churn obviously as low as possible, but I feel most comfortable in let’s say for lower priced products that are not enterprise, not annual contracts, I think between 5% and 8%. If you’re at 9% or 10%, it’s pretty brutal, 8% is about the top in where I feel comfortable. Realistically, if you’re a big SaaS app, I think WP engine probably has negative churn at this point.
I remember Jason saying in the early days, they had 2% churn. I’ve had apps that have 2% to 3% churn in that post 60-day, post 90-day mark. That’s where you want to get to. The problem is, the lower your price point, the higher your churn tends to be. That’s why a lot of folks go up market, a lot of SaaS apps do. If you can, you want to get to net negative churn where you do churn out 2%, 3%, 4% but just the growth in your existing customer base of people upgrading actually wipes out the churn. It’s a crazy thing. I’ve seen it firsthand. It just catapults your growth. Those are my loose numbers that I keep in mind when I’m looking at churn rates.
When I see someone come through with a 12% monthly churn rate, I think that’s the first thing I would attack. If I see someone come through with a 3% churn rate, I think that’s amazing. I believe you have a product market fit depending on how many people you’re putting through your funnel. Let’s look at your other metrics to figure out where we should focus position not be on churn, if your number is that low.
Mike: One thing that we should probably drill into a little bit is the idea of that negative churn, because I think that some people might get confused about that. It’s not that you’re gaining more users than you have actually signed up. Although in some cases that may actually be true, because if somebody comes in and then they invite somebody else on their team, initially they sign up with one account and then they may fall into a different tier. That’s part of where that negative churn comes from because people are essentially upgrading to a higher tier paid accounts.
Whether they’re adding users, or going to a new pricing tier, each of those things can qualify. A question for you Rob, because I’m actually not sure about this, does it qualify if they upgrade from a monthly plan to an annual plan? I don’t think that it does.
Rob: No, it doesn’t. The annual plan should be divided by 12 and added to your MRR anyways. It’s not net revenue. It really is actual MRR that I’m looking at. I’m glad you brought this up because I should have couched this when I was talking about churn and the churn you should focus on is revenue churn, not user churn or customer churn. Revenue churn is when you look at, we started the month with $100,000 in MRR and we lost $10,000 in MRR, so that’s a 10% revenue churn.
First is we started the month with 1000 customers who are paying, 1000 credit cards on file, no matter how many users are within each account. We started with 1000 customers paying us and we ended the month with 900. That’s 10% user churn or customer churn. I’ve always looked at both. By far, the most important is revenue churn. I don’t think you could have negative customer churn, because you can’t add more customers than you signed up, but you can have a net negative revenue churn. That’s where you only lose a small amount of revenue from people canceling, but the rest of your customer base is either so large or they naturally move up tiers and pay you more for stuff.
Drip is a great example of this. As people’s lists grew, they naturally moved up in tiers automatically. There was just a natural movement towards paying more to your ESP. Those are the kinds of businesses that can have negative churn. Slack probably has a negative churn rate, because teams do tend to grow. Yeah, companies go out of business, there are layoffs now, but there are layoffs from time to time in your customer base.
In general, teams that sign up Slack and start paying, I’m guessing these are startups that are adding more and more people and Slack charges $6 or $8 a month per person. I would guess with the stickiness of Slack, they’re kind of gross churn is very low. I bet their net churn including expansion revenue is what it’s called, as people expand and hire tiers is quite substantial. That’s the holy grail of SaaS.
I know people say, recurring revenue is the holy grail of software, and that’s why SaaS is such a big thing. Net negative churn is the holy grail of SaaS if you want to get into it, because that just snowballs and it means that if you do nothing, your company grows. It’s crazy to even think about it when you actually look at charts, and you look at how the numbers work out, you look at graphs of it, once you hit net negative churn, you don’t need to do much. I shouldn’t say you don’t need to do much, but you need to do a lot less to grow a lot faster is what happens.
Mike: Is that where the passive income comes in?
Rob: Passive income, money wisely. Let’s run through the last few pretty quickly. The fifth thing is MRR and that’s just your monthly recurring revenue. As we said earlier, it can get tricky if you have annual plans, you’re supposed to technically divide by 12 that annual plan and then add it onto your MRR. Hopefully you have a software that can do that like Baremetrics or ProfitWell. MRR was the number that I tracked religiously. Every night I would get an email after billing ran and it would tell me what MRR was, what the daily billing was, and all that stuff.
It’s kind of a no brainer when you think all of us track it and it’s something that talks about the health of your business. The other one is MRR growth. I always looked at this as dollar rather than percentage. A lot of people talk percentages, but it’s like when you’re at $1000 MRR, or you’re at $100,000 MRR, the percentages obfuscate so much stuff. Truly, how many dollars did you add and you want to look at not just net add, but you want to look at how many did you lose to churn, how many did you add from new customers, and how much did you add from expansion revenue. Seeing those three different numbers and then the net. There’s four different numbers that you can get into and a lot of people who are really into their SaaS numbers know these numbers cold and know where they want to be with them.
The last one is ARPU, average revenue per user. I like to call this ARPC, which is average revenue per customer, because frankly when I’m charging people money, I think of them as customers, not users. Like Drip, one account might have 20 users in it, but to me that’s a single customer. It’s apples to apples, but it’s just a terminology thing. Average revenue per user, average revenue per customer.
Frankly, if your average revenue per user is $10 or $20 a month, you have a nice little business. You can grow that to something, but the odds of you growing that to a multimillion dollar business are very low. I’ve seen businesses with very low churn, good trial-to-paid, and average revenue per customer of $10 or $15 a month. I think that’s going to be a great 30K MRR business. That’s not a bad business to have, but you’re going to struggle to get past that 30K or 50K mark. If you want to build something into a 7-figure business, not across the board, not unequivocally but in general, you need that average revenue per customer to be upwards of that $40, $50, $60 and up price point.
You want to be in triple digits. You want to get there eventually. You don’t have to be there on day one, but aspiring to get into that $100 to $500 per month, per customer. That’s where you can scale, it’s so much easier to scale a business into that seven- and eight-figure range. Because you have the money to acquire customers, the payback is fairly quick. If most people are paying you $200 a month, you can spend quite a bit on ads and salespeople. Frankly, churn will be lower. It’s always counter intuitive to say this, but lower priced products, lower ARPCs tend to lead to higher churn.
Mike: Something we didn’t talk about when we were talking about the revenue churn between the first 60 days and then post 60 days was that, if you do any sort of a pricing change that can have a massive impact on what your revenue churn looks like. If you raise prices, let’s say by 50%, make things simple. If you raise prices by 100%, you double your prices. If you lose less than half your customers, then technically you’re coming out ahead because you’re making more money. In theory, your infrastructure costs have probably gone down. The obvious downside of that is, potentially losing customers after that first month or after you initially make that change, assuming you didn’t grandfather them. At least be a little cautious of or cognizant of, because that that can seriously change some of those numbers.
It’s not something you have to worry about, as you’re launching, but down the road when you are calculating these numbers and try to figure out how to grow the company, those are things that you should at least bear in mind when you’re trying to figure out if you’re running into financial issues and you need to be able to make more money. You can just do some calculations and say, “Well, if I raised by 10%, this is how much we could get, and how many of those customers are we going to lose the because of us raising those prices.”
The other thing that I was thinking about was that, all of this information sounds great to be looking at, but how do you actually go about tracking it? There’s a lot of different tools out there that you can use. Sunrise KPI for example is one. We can look this up in the show notes. CYFE is another one. Honestly, the simplest thing to do, instead of going in and trying to figure out a bunch of different tools and things to integrate, you can just use a spreadsheet. Whether it’s a Google doc or Excel spreadsheet, it doesn’t really matter. Throw your information in there, maybe update it. You can do it as much as once a day, but you could also do it once a week or once a month, and it really gives you a sense of where things are at and what you should be focusing on. If you’re not plugging this information in and at least looking at it, then you’re never going to do anything about it. That’s the big problem that most people run into is they just don’t even look at these things or they don’t update them and keep track of them.
Rob: Yeah, that makes sense. I mean, I’ll admit with pretty much all, I think without exception, all the SaaS apps I’ve ever run, I’ve built a little scrappy page and these are just simple queries. You should have all the stuff in your own database, I’m imagining. I always did and it’s a little bit of a pain. Churn can be a pain to calculate that can take some time, but I remember hacking together a dashboard with most of these numbers in a few hours, one evening.
I was listening to music and have the lava lamp on sipping Bourbon and I just hammered through these one at a time. I really don’t have a very impressive life, do I, Mike? It’s kind of sad that that would, but it was a fun night, I’ll admit. Because once I had that, I was looking at that thing every day. It was super cool. Then by the time we were launching Drip, I remember telling Derrick, “These are the numbers I know I need. Let’s figure them out,” and it did take him probably a day to get the initial version done.
We had to kill a day of developer productivity to do it, but it was really nice to (a) be in control of those, to (b) have a all in one place, and to have them displayed in exactly like the order that I wanted. I mean, we even have trailing 7-day trials, how much each day it had, have it trailing 30-day. Then we modified it and adjusted it over time. The other cool thing is that whole dashboard and admin area became a nice training ground for new developers. We’d bring in like a junior dev or whatever. You may not want them to push production code into your app right away, because it could break something for customer, but that becomes a nice playground to be like, “Hey, let’s add this number or let’s tweak this,” and it becomes this code base that can get screwed up. If the admin console crashes or has some weird thing that happens in it, it’s not the end of the world, because it’s just us using it. That was kind of also a bonus to having that all built out.
Mike: I’ve daily email sent to me from Bluetick just to see a lot of those different pieces of data.
Rob: It’s a good way to do it. I always had it as a shortcut on my browser but it’s same thing, and that’s your pulse. We actually called it, the page that displayed all this, we called it Pulse in Drip. I always thought that was a pretty fitting name, because it’s the pulse of the business.
Mike: Got it, cool.
Rob: Forty minutes on SaaS Metrics, KPIs. I think the next episode needs to just be all jokes. You and I need to just talk about movies and jokes.
Mike: I don’t know if that’s going to be a very compelling episode.
Rob: That would be even worse than this one. All right. Let’s call it a wrap. I guess I’m the wrap guy today.
Mike: Yes, you are.
Rob: This whole episode was outlined based on a single listener question. If you have a question for us, you can voice mail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups, and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 433 | Managing Your Emotions, the Cost of an MVP, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions on topics including managing emotions, cost of an MVP, taking a business idea and more.
Items mentioned in this episode:
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about managing your emotions, the cost of an MVP, and more listener questions. This is Startups For The Rest Of Us Episode 433.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
Mike: Well, just wanted to give people a reminder that today is the last day to apply for the Starter Edition scholarship and I said before, we’ve got over 25 to give away. We will link it up in the show notes, but definitely go check it out if you’re interested at all in coming to MicroConf Starter Edition. Just fill out the application, it doesn’t take more than 5-10 minutes to do, and we will have those within the next couple of days. The notifications will go out and let people know who’s been awarded the scholarships and hopefully everybody who is able to accept them. If not, then we’ll go back to the pool and go to the “runners-up” to see who else is available. Obviously, some people’s travel plans change or whatever. So, we’ll make sure that if we’re going to give somebody a scholarship, they can actually use this. It may take a few extra days.
Rob: Yup. Head over to Episode 433 on startupsfortherestofus.com for a link to that in our show notes. For me, not a ton of updates. Was on vacation and now, looking forward to some home construction being done on our house here in Minneapolis. We bought it about eight months ago and during the escrow process, an inspection picked up some anomalies in the stucco so we got a credit to have those fixed. All that’s fine except for the fact that it was supposed to take two months and it’s been like seven months of construction.
Things are getting put back together now but it just kind of wears on you and it can be loud. You and I’ve recorded in the past few months, I’m having to mute, we have to edit out things, and there’s people in my house all the time. So, I’m really looking forward to that being done. They had to replace some windows and re-stucco things. They can’t re-stucco things because it’s too cold right now, so they have to wait. There’s scaffolding and such. It’ll still be up, I’m guessing, for another month or two until it warms up. At least the inside can be completely done and all the outlets work again. They had to rip receptacles out and turn the power off on certain parts of the house.
Given that two of us work from home and we homeschool the kid, a lot of us are home a lot of the time. I think if I was going into an office, it will almost be easier because it will just be done while we’re not here. But when I’m talking to you on this podcast and then two construction workers walk in and start painting the walls, I’ll admit, it’s a little distracting.
Mike: You think?
Rob: Yeah. So I’m looking forward to that. That’s really in the kind of end-game right now. They’re just putting trim on things, and hanging blinds and such. I’m very much looking forward to getting past that.
Mike: Yeah. Having to redo anything in your house just really sucks. It’s just the worst.
Rob: Yup. Always costs more. It’s like software. Always costs more than you wanted to. It always takes longer to do than you think.
Mike: Yeah. So, what are we talking about this week?
Rob: Well, we have some listener questions. We’re going to kick us off with a voice mail. As always, voice mails rise to the top of our listener questions stack. This is a good question about the emotional side of running a startup and what to do when you make a change and it makes people angry. How to handle that?
Benjamin: Hey guys. It’s Benjamin from Philadelphia. I run a company called Commit Swimming. It’s a small SaaS app product. Recently, I raised prices and I’m looking to hear you guys thoughts on some feedback that I’ve gotten. I thought I did everything that I could to properly communicate to customers, like that the price increase was coming, why it’s happening, and what it was going to be. I also communicated clearly what it was then a couple of months later.
I inevitably would like about 1500 paying subscribers. I’ve gotten a few pretty nasty emails back on the topic and it’s one of those things that I just feel kind of down as a founder. It wasn’t like a money-grab situation. It was in order to pour more money developing features for the same customers that I’m serving. That type of emotional backlash can really take a toll.
I’m just curious to have a discussion around. I could hear Mike and Rob’s talk on what situations have you come across that made you feel like, “Oh did I do something wrong? How can I right this wrong?” and how do you deal with that internally? Another founder with all that emotional baggage riding on you, either in the sales process or in a situation with increasing prices or dissatisfied customer, that feeling that you just messed up and you disappointed somebody. How do you handle that internally and then how do you try to make it right with the customer?
I’d love to hear your thoughts, in particular, the emotional side of it? Thanks again for everything you guys do. I love your podcast, I love everything that you have done so far for the community, and I look forward to hearing your thoughts on this. Thanks guys. Bye.
Rob: So price increases huh, Mike? Nothing ever goes wrong with those.
Mike: Of course not.
Rob: That’s a good question. Obviously, we could talk about the price increase specifically, but that’s not really his question. It’s just that, what do you when people get mad. Did you do something wrong, didn’t you, and how do you deal with all that? What are your thoughts on it?
Mike: I think that the one piece of advice I have that trumps everything else is context matters here. If you were to take a few steps back and try to be extremely objective about what the situation was and what happened, does it makes sense for people to be extremely angry? The number of people has a big impact. He says he’s got 1500 paying subscribers. Well, how many nasty emails did you get from that? Was it 5 or was it 500? That’s a big difference.
Rob: Yeah. He says it was only a couple, which is an indicator, right?
Mike: Exactly. That was my point was that when he said he only got a couple of emails, to me that says that it’s probably not a big deal. That’s only partially related to his question because the question was how do you deal with the emotional side of it? My point here is that you should take a few steps back to make sure that you’re being objective about how you addressed the situation, how you brought it to them, how you let people know, and then is their response justifiable? If it was 500 people complaining, then obviously that means you probably screwed up. If it’s only a couple and even if they’re extremely vocal and extremely upset over, it’s probably not your fault.
I’ll point to an email that I got literally two days ago from Backblaze saying, “Hey, just wanted to let you know, we’re raising our prices.” They’re raising them from $5 a month to $6 a month. I literally just got done using Backblaze. To make sure that my entire machine was backed up, I’m going through and pulling down files that I wasn’t sure whether or not would be included in my end of backup that I did at home, and I’m extremely happy with it.
So when I got this email saying they’re going to increase it from $5 to $6 a month, that’s technically a 20% increase. But at the same time, I am ecstatic with that. You can raise it to $7.50 and I really would not care. I would pay you right now again. They even have a button there inside the email that says, “Hey, you can purchase an extension and essentially grandfather yourself in for the next two years at the original price that we had put forth back in 2008,” but they went through and they laid out their entire justification for it.
Again, that’s actually a little hack that I would say you can offer to them to extend their current pricing by a predetermined amount of time. If there were 5 or 10 people who emailed you and they were extremely upset about it, it has nothing to do with you. It’s about them. It’s about their situation. Whatever you did was like the straw that broke the camel’s back. It has nothing to do with the specifics of what you did or how you could have done things differently. It’s there’s probably something else going on there that you didn’t know about, you couldn’t have known about, and quite frankly there’s nothing you could have done about. I probably wouldn’t worry about it if it fell into that category.
Rob: Yeah. There are rules of thumb when doing price increases, specifically, and we’ve talked about it on the show, I had tweets written about it barely four weeks ago, and I don’t think that’s the point of this question. The point really is what you said, which is gathering context and trying to look at it rationally when it’s an emotional response that we all have because we relate to other people, we want to do well, we want to do right by our customers, and if you get even one or two really nasty emails, it can bring you down, even if you did everything right. Everything is right as you could possibly do it and communicated it well and all that stuff.
Just at any point when you make a person or some people angry, I think the things that I always remember is to number one, to apologize, number two, if it’s really a super small minority then to hold your ground. That’s something that you could always evaluate. If someone says, “Hey, I’ve been a customer for 10 years, I recommended all these people, and I use it when I teach my class at this college or blah-blah-blah,” then maybe you do make an exception.
Overall, if it’s just someone who’s just angry because you’re doing something that you need to keep your business afloat or you need to continue running your business, then you probably just need to apologize and be like, “Hey, maybe there are other options for you.” That is what I found over the years is the people who tend to get all huffy about things, get huffy about everything. They’re the most vocal ones and they’re frankly people who you would rather not have their money. I would rather have them use a competitor that can be something that you suggest to folks.
That doesn’t cover really his question which is, how do you handle it mentally and emotionally. I think there’s a few coping strategies that I’ve learned and developed over the years. The first thing is try not to take it personally. Easier said than done but really step back and say, “Look, this person doesn’t know me. They don’t know what’s going on. They’re just typing stuff. They wouldn’t say this to my face at a conference or whatever.” That’s the first thing. Second thing is get a sanity check on it. This is something I would bring up in my mastermind group. I would throw this out, “Hey, this is what’s happened, this was the email, and it was brutal.” You are going to have camaraderie. You’re going to have that community from people who are saying, “Yeah, this happened to me, too,” and then it normalizes the experience.
Let’s say a couple of times a year, I’ll get an email from a founder who’s like, “Oh my gosh. This person’s totally railing on me on Twitter about XYZ. Tell my what I should do?” or like, “Help me,” or whatever, and I will basically give them advice like, “Yup, this has happened to me. This is how you deal with it. It sucks but it happens to all of us.” If you’re doing anything interesting out in the world, you’re going to have people get mad about something at some point. That’s not a justification for pissing everybody off all the time, but once in a while you’re going to do something or say something or make a move that’s going to do it. Realize that that comes with doing interesting things and realize that it’s part of the course and it’s something you have to develop a thicker skin about.
Those are the basic open strategies and that’s probably what I would do. I would also not send flippant or rush responses. Boomerang or snooze those emails for a day to give yourself time to think about it. Don’t ruminate on it. Don’t sit there and stress about it constantly. It’s not as big of a deal as you think.
I think on the flip side is, did the person change and you have 100 people email you, like you said, Mike, 50 or 100, well then realize that you may have done something wrong and try to figure out what that is. Is it really unfair or did you just not communicate it well? Can you go back and communicate it better? Or do you need to back away? Do you need to undo it?
Intercom did this 3-4 years ago, where they were going to double or triple their prices and they grandfather for 6-12 months. People were furious and there was a huge uproar. They actually backed down and they didn’t raise their prices. Then and there, I think raise them two years later and they did the same thing but they communicated it better. It still made people mad but don’t give them an excuse to be mad. They’re going to be mad about a pricing change, anyway.
Check the boxes of grandfather if you can. If you can’t, then you really got to communicate why the product is better. There’s all these steps and mitigation to raising prices that I would do. But really, it’s with experience and going through this a few times, you just learn to not take it so personally and to try to get a realistic gauge of, anytime anyone’s mad it doesn’t mean you’re wrong.
That’s the thing. A lot of us take that on like, “Oh someone’s mad at me. I did something wrong.” That’s not necessarily true. There are people who are just mad at about everything all the time and today is their day to be mad at you for something that frankly probably is better for all of your customers in the long term. If you have more money to keep the business afloat and that build the app out and whatever else, and if no one else had an issue with it like you said, Mike, with CrashPlan, $5 to $6, you just don’t care. Netflix raise their prices a dollar, I just don’t care because it’s a good service. I’m going to keep it and I’m not going to get in this fake outrage over $12 a year.
Mike: Another strategy is, if you have objectively determined that you are not at fault and it is really the other person there, not you, you kind of step away from those things. If it’s emails that would come in, hand them to a support rep and say, “Just respond to this as nicely and politely as you can.” That way, you’re not the one who’s suffering the mental anguish over having to respond to those because honestly, you’ve got other things to deal with in the business than replying to a support email from somebody who is going to cancel anyway.
Rob: Thanks for that question. I hope our thoughts were helpful. The next question is from Rodrigo Pontes and his question is, “Should I target the manager or the company?” He says, “Long time fan, first time caller.” Actually he said first question but long time, first time. Have you heard that, Mike, on the morning DJ stuff?
Mike: Yeah, I have.
Rob: Long time, first time. Long time listener, first time question asker. “I’m a solo founder bootstrapping a SaaS web app called OneOneMeeting, oneonemeeting.com. OneOneMeeting is a note-taking app exclusively for one-on-one meetings. It allows you register meeting notes, commitments, goals, and share it between the leader and the team members. So, it’s specifically one-one-one between managers and people that report to them.”
“What should I do in my early marketing efforts? Target individual managers that could buy OneOneMeeting for their own use, or target HR executives that could implement it in the whole company? For more details, I have two paying customers that bought it for their own use and I have about five colleagues of my day job employer on a free trial and a scheduled meeting with our VP. They try to demo it and try to sell a corporate account for my whole company. I’m still at my day job, so I have limited time to do sales and in-person presentations during work hours.”
What are your thoughts?
Mike: This is one of those questions where I’m not necessarily the target market, so my advice here should be taken with a grain of salt. I think if I were to say one way or the other you should target this one or that one, the reality of the situation is I don’t really know, but what I would say is that there’s a couple of different ways I would try and find that out.
I think that the question or the point about having limited time to sales and personal meetings right now is a limiting factor, I would try to go outside of your current network and go to, as you said, the colleagues of your day job employer, go find out information from those people and try and narrow down, as quickly as possible, which of these two you should go after. Then from there, you also want to branch out and ask every single person who’s using it, if they would introduce you to somebody else who might be a good fit for it.
If you can get three introductions, that’s great. Always ask for three, settle for one, but push for that one. This is a one-to-one meeting note-taking app, so if they’re not willing to introduce you to one other person, then they’re probably not willing to actually use it to have these meetings anyway. So, I would go down that path and try to figure that out.
The other thing I would comment on is that, because it’s so early on, I don’t know if you really know what your pricing model is actually going to be yet, like individual plans versus corporate plans. I think those are kind of up the air and exactly what the pricing around those should be. I feel like it’s too early to tell. I seem to think that you need to go down a little bit further in the rabbit hole and try to figure out where it’s going to resonate and get traction before you start focusing on one or the other.
Rob: This wouldn’t normally be a clear-cut decision except for the fact he said his time is limited during the day. I think that if you go after a HR execs, they’re getting so hounded by people trying to sell them stuff, that they really are going to require a lot of hand-holding and a lot of proof to push it through.
I feel like you should go with the more guerrilla approach, like Slack and Dropbox do, where they infiltrate at a lower level in the org chart and then once you’ve got a bunch of people using it, then you ring them up and you say, “Hey, I’ve noticed that you have 10 different managers using this. You want to have good management of this, an insight, blah-blah-blah. You know, you need to get our enterprise account.”
I don’t know if that means that it needs to be free for one manager at a time or whatever. You look at Slack and you look at Dropbox, and that’s how they’re able to do that. People can sign-up essentially without a credit card and you can really infiltrate the org that way. You have to find if managers have a credit card with some type of limit on it so you could make it relatively inexpensive, but once you actually do sell their account to the VP of HR, that there would be a need to be a big step-up in price because selling a product like this is going to be hard to scale at a low price. Although if you do per seat pricing, then it should naturally scale itself because the successful companies tend to be growing anyway, and if it works, they’re going to want to add more and more of their teams on twit. I could see the whole $3, $5, $7 per seat pricing working if you can get 50-100 people at an org using it.
All that to say, if I were in your shoes, I would personally go after the managers because I think the managers are the ones that are going to get the value out of it. The person whose pain point it really solves in the most direct way and the managers are the ones that can start implementing it without a bunch of bureaucracy and approvals and all that stuff. If they can just run wild with it and prove it out, then it’s a much, much easier sale as you go up the chain. Thanks for the question, Rodrigo. I hope that was helpful.
Our next question is about taking someone’s business idea. I’m going to leave him anonymous. It’s interesting. He says, “Little background about me. I have a Bachelor’s of Science in Computer Science and Business Administration. I’ve been working on IT since 2006 as a developer and a manager. Two years ago, I worked for an online company that I found to be really interesting and right up my alley. I applied, I got hired on as a developer to help maintain and update their current website. Come to find out that their new site was never going to see the light of day due to the fact that the manager overseeing everything wanted to keep adding useless features to the site. The site was from the 90s and was written in a language that is no longer supported and it can’t support more modern features that a growing business website needs. This really bugged me so I left the company.”
“Then one day I was talking to a friend over drinks and he said I should start my own thing so I did. From there it snowballed into a reasonable product that I think I can take to market. My question is, when I started with the company, I had signed an NDA and a non-compete valid for one year after I left. That one year mark is coming up in the next week. I want to start pushing content out to get things going. I didn’t work on anything on the site while I was there and I’m not using any code or tech from the company because I consider that stealing. Everything I’ve created is 100% from scratch and of a different language and technology stack than the one at the prior company.”
“Have you guys ever had to deal with anything like this? Looking at it either my point of view as the startup or as the old company with the 1990s website? Also, I want to say a huge thanks for sharing your experiences. You guys answered a lot of my questions on your podcast.”
What do you think about this, Mike? Do you fully understand what he’s asking? He’s basically launching a competitor to something and they’re outdated tech. I don’t think he’s asking an ethical question because I think he’s going to do it. It’s more the legal side of it? Can they sue him?
Mike: Well, I think a lot of what he said seems to be different from what he’s actually asking. My understanding of what he has said was he was hired to help develop and maintain the current website of this other company and he signed an NDA and a non-compete. But then he left and he’s coming up a year later for his NDA and non-compete no longer being valid. And the products he wants to build is what the company was developing. I don’t think it’s actually anything related to the website for that company.
Rob: That’s what I’m confused about.
Mike: Yeah. That’s what I gather as the situation is what he’s building is actually what the company itself produced and that his non-compete would be wide enough to cover whatever their product was and is the product that he’s building is that, although he was hired to just work on the website.
Rob: Let’s go with that assumption because I was confused as to was it the website the product? Is it just like a lead gen company, the website is the product. There is no product behind it. You just drive ads or you do SEO and then you get people to send in form, and then you basically can sell those leads. That’s what I was thinking but maybe there’s a software behind it and he’s replicating that. What do you think here?
Mike: There’s the fine between what is legal and what’s not in which it’s impossible for us to comment on the specifics of that if we were in that situation. I have been in this exact situation. I was in this situation with AutoShark, where I basically knew that the product that I was rebuilding from scratch was going to go away at some point in the future. My thought was if I were to rebuild it, I can essentially come in and replace the product that was end-of-life.
What I found was that the fear of being sued by a large company that has the ability, the resources, and the lawyers that are just on staff already, was paralyzing. That is always going to stick in the back of your mind and you will not get away from it. I don’t know how big they are, or I don’t know what they do, or I don’t know how much of an impact you would have on them, but for me, it was paralyzing. I had a very hard time separating the business and marketing stuff that I was doing.
My situation was probably complicated because I was also still doing consulting work for them. It wasn’t really a non-compete because I was a separate company anyway but I was a subcontractor for them. So I was barred from going back to those existing companies that I’ve already done consulting work for which was installing the sort of software but then I’m also building a replacement for. Mentally, it’s very difficult to get past that.
I won’t say that the easier route is to just go on a completely different direction, but if you have the domain knowledge and expertise and you think you can execute on it better than them, by all means. Just be prepared that if you do a good enough job at some point, they may decide to come back and sue you, but they can sue you anyway. They can sue you and say, “Well, you developed this IP that we own,” and any company that you have left could theoretically make that claim. It doesn’t mean it will hold up, but that’s going to be an issue that you’re going to have to reconcile and come to terms with. Is it realistic that they can do it? Is it going to happen? It’s probably not, but it could.
Then there’s the other side of the coin where if you do a good enough job, they may decide, “Hey, it’s going to be better for us to acquire this than to continue building the thing that we have in-house.” That’s entirely possible as well. But again, it’s probably just as likely is them suing you. That’s something that you’re just going to have to mentally deal with, make a decision, and move on, because otherwise you’re going to spend far too much time thinking about it and not enough time actually working on the business.
Rob: Yeah. That’s a good point. It’s weird because this does get back to the ethical-moral conversation we had a couple of episodes ago. I think that legally, if you document everything and you really are on the right side of the law, then you should be okay in the long run. But they can still sue you and you still have to hire a lawyer to defend yourself. And you still have to either negotiate a settlement or go to court, which is very expensive, and you still have to prove all this. There’s a lot of ifs. Even if you’re on the right side of the law, in my distant third-hand experience with working at companies where lawsuits are going on, no one wins but the lawyers. The only ones that make money are the lawyers. It’s really not good to get involved in that. That’s always my thought with lawyers and lawsuits. It’s really kind of be on the right side of that.
Then there’s the side of it that I think about as an entrepreneur. It’s like, is this interesting to you to build this or will it be boring? Is it just an opportunistic view of like, “Hey, I can make some money with this,” or is it like, “No, this is actually something that I really, really want to do”?
I would caution against doing something just because you saw it work at a different company and you feel like you could build better tech than them. That’s not a recipe for success in my work. But if you have taken their success as a reason to not do customer development and not build an email list and not make sure there’s demand and not make sure that you have the credibility to do this, I think you’re making a mistake and I think you could build a product and release it to Crickets. Or it could be years and years of toil on this and does that sound fun? Just like any other product that would launch, I would ask myself, is there really a market here? Am I the one to do this? And does this sound interesting to me?
Mike: It looks like from the opportunistic nature of something like that, if it’s already in an established business, they are doing their sales and marketing and getting customers, it’s very easy to think you can replicate some of that. It’s like an iceberg. There’s tons and tons of things that go on under the covers of the business that you have absolutely no knowledge or exposure to and a lot of times, some of these things are very relationship-driven. You don’t even know it because you’re not even aware of how those conversations even happen. It’s very difficult to compete in those situations, so just be very cautious about that.
Rob: Yeah. It’s like you said, it’s easy to be inside a business, look around, see everything wrong with it, and be like, “I can do this better,” but it’s actually really hard to do better. It’s not something that can happen overnight. Just building better tech isn’t, in my opinion, going to be the key to that.
I think the other thing to think about is, you use the term taking someone else’s business idea. It’s a trip that if you hadn’t worked for them, you would just be a competitor. It’s like, did Drip take MailChimp’s business idea? Did Drip take Infusionsoft’s business idea because it competed with them? Well, no. We did our own thing our own way. We found customers, we got feedback, then we implemented features, and blah-blah-blah.
The difference here is you worked for them and you saw inside the business. There is complexity there where if you are going to compete with them that you need to get over the thought that you took their business idea. I think it comes back to what you said, Mike, is that it’s going to hang over your head mentally. Whether you think about the legal side of it or you just have this internal embarrassment or shame that you “took it/stole it” is what you’re implying, if you hadn’t worked for them, that wouldn’t be the case. If you think that you’re going to hang on to it like that and constantly think that you’ve taken this business idea from them, I would caution you against perhaps doing this. We’ll just ask you to think about it because it can get in your head.
More than half of being a successful founder, I believe, is just dealing with the mental side of things and being able to handle your own psychology, understanding yourself and not just stressing out or not putting much of a burden on yourself, not having things that aren’t true be running through you head, that negative self-talk, and this could be a source of that. In your shoes, I would really think hard about whether you can mentally get over that hurdle of thinking that potentially you took this business idea because you don’t want that hanging over your head for the next several years as you build this up. Thanks for the question, anonymous. I hope that was helpful.
Our next question is about how to approach a B2C company. This is a long email, someone summarized it. It says he’s a huge fan of the podcast, started listening about five years ago. He’s a senior developer, he’s always had the product itch, and he’s working on an app. It’s called VidHug, vidhug.com. It started as a scratch-your-own-itch project for his mother’s birthday and it’s definitely B2C. It’s low LTV. It’s non-recurring revenue. He says, “I feel like I have a mini Rob on my shoulder most days, saying ‘What are you even doing with this?!’ Thing is, I don’t really have a counterpoint for you except for a feeling and that feeling comes from talking to customers that are now able to do something they previously could not.”
So, the idea with VidHug is you can send out an email with a link and people can record basically birthday wishes or well wishes and they all get combined into this 30-second or 60-second video. If you go to vidhug.com you can see samples of these videos. If it’s someone’s birthday and then their grandkids in there, their kids in there, aunts and uncles, whatever, all recorded there and then all gets mashed up.
He said he launched it in July 2018 to Crickets. He didn’t do any pre-marketing, he got a few paying customers, didn’t really get a break until earlier this year when he’s got some organic traffic flowing from a referral in a blog post. He’s on pace to do $600 a month and that’s a funnel he can now improve. He says, “I’m also turned to build a B2B side of the business and I found a potential application of remote and distributed companies using VidHug to celebrate employees or onboard new employees. I’ve got three companies trying this out. I tried validating a separate B2B site for this, but I think it was spreading myself too thin and I’m just going to go down with vidhug.com for now.”
“The primary move forward is to focus on growing organic channels on the B2C side through SEO and referrals and also build a B2B side which would bring recurring revenue. Do you think I’m crazy for even trying this?” Just as a point of data, he has basically a free tier and then he has one that is $15. It’s a one-time thing for the B2C side. What do you think, Mike?
Mike: Well, to answer his question there actually, “Am I crazy for even trying?” The answer is yes. It’s just a matter of how crazy we all are.
Rob: Exactly. It’s just a specter.
Mike: It’s varying degree, yes. I feel a little bit early on to be trying to separate and go after both B2C and B2B. It seems like the revenue is a little bit low and I feel like the marketing channels you have to reach out to, the type of audience, the types of content that you have to build for them, the feature set, and all these other things, it feels like it creates two different businesses. I get where he said he tried validating a separate B2B site for the application and he felt like he’s spreading himself too thin, but it seems to me you’re going to do the same thing if you try and cater to a B2B market as well. Maybe not, maybe you can just integrate it with certain types of things or multiple-use for accounts, for example. Maybe there’s an obvious way to upsell people into a more B2B version of the app. Maybe that’s a way to go for that, but it does seem like it’s a little bit early.
So going back to the question of are you crazy for trying something that’s B2C? I would say no. I definitely think that there are opportunities out there for people to build B2C businesses that are solid and profitable. It’s just a matter of making sure you are methodical about how you pursue your different traffic sources, putting people in your mailing list, optimizing the product itself for revenue for getting people into it, and making them happy. If you can do those things, it doesn’t matter whether it’s B2B or B2C. You’re still going to have happy customers who are going to give you money. But that last piece of it is the key part. They have to be happy and give you money because if they’re not giving you money, you don’t really have a business.
I think that’s the challenge that most people run into with B2C companies is that your LTV tends to be much lower and you need a larger number of customers in order to make it work. There are a lot of viral components to something like this. You can email out to a bunch of people and if one person gets in there and then email 50 people, now you’re in front of 50 people instead of just one. That’s a huge viral aspect that a lot of things that try to do B2C don’t necessarily have because this has that kind of bait into it that’s an encouraging sign. It’s not the only thing I would look at but it’s definitely encouraging.
Rob: Yeah. It’s tough because B2C is just hard. It’s just a different game. With this customer lifetime value, you can’t run ads, you can’t pay salespeople. So many things you can’t do. It literally be outreach to bloggers, offering it free to bloggers, sponsoring bloggers, I keep saying bloggers, podcasters, whatever, people with audiences. Here’s the thing. If you’ve got a bunch if Instagramers with huge followings, YouTubers, bloggers, podcasters, yeah it would be possible to grow this. But it’s a completely different playbook than what we typically talk about or what you’re going to hear from MicroConf speakers, for example, or an attraction book where it really is more focused on doing a lot more B2B stuff.
You just have to ask yourself, is that what you want to do? Do you want to build those relationships with influencers and figure out how to get them to do it and then talk about it? That would be my playbook for this. Personally, I don’t enjoy that. It’s hard to do without the existing relationships, be it can be expensive response for them, it’s pretty risky, it’s not super repeatable, you just got to go one to the next, there’s just a lot to it. You got to ask yourself, “Hey, is this something that I want to do?” and if not, then I would look at the B2B side.
The tough part of it is it’s not a critical must-have thing, but I do think it’s kind of clever and it’s a fun nice-to-have that I have seen larger companies, even companies that 50 or 100 people, do special things when they onboard new people and make funny videos to welcome them or things like this. While I don’t know if they would pay for it, I think that would be a question you’d want to start having with people before you dug into the B2B side. That’s certainly a more repeatable thing but I still think there’s just a lot of risk.
I don’t see an angle here and that doesn’t mean there is no angle. Really, they’re just a feature. This is just one feature. It mashes up some video. It’s cool but it’s not as sweet a thing and it’s not something that people will use every week and rely on. It’s going to be harder. It’s not going to be the core of the HR’s workflow or the core of the manager’s workflow. It’s just a nice-to-have.
I think that’s the other thing to think about is, I had businesses in the early days that only made $1000 a month, $2000 a month, and frankly, I learned a lot from them. It was a stair step approach. I learned how to whatever, do run ads, do SEO, do display ads, do AdWords and that kind of stuff, and I took that experience with me to the next thing.
In its current incarnation, do I think VidHug can be a mid six-figure business? I don’t. It’s just my opinion, it doesn’t mean I’m right or wrong, but I don’t see an angle there as it stands today. But then again, I could have said that about Drip the month it launched because it was just an email capture form and autoresponder. Then we kept pivoting and grinding, customer developing, slow launching, and doing all the things that you heard me talk about on this podcast over the years, and eventually got it well under the seven-figure mark.
That’s the thing. As it stands today, VidHug is a cool side project and frankly I’m impressed that you’ve gotten it to $600 a month, given the price point and all that. But I think it depends on how you’re thinking about it. If you think about it as good learning and you want to build it up to $1000-$3000 a month, that to me seems doable, and it will be learning, it will be a little bit of income, I don’t know how you would ever get it past there. Maybe you’ll eventually come to a point where you see an angle to do that.
I also had a lot of businesses that never did. I had ebooks and info products. I had ecommerce site and I had small software products and I had one-time software products. All of those topped out and I could never get them past, let’s say, between $500-$5000 a month. I had several that were in that range. Eventually, I had to sunsetted them or I sold them as I moved on to bigger things.
My gut is that VidHug will will fit into that space, that role into your entrepreneurial career, there’s certainly a time and place for those, and you just got to figure out, I think, how you are thinking about it and where you want it to take you. Thanks for the question, Amir. That was a fund one and certainly wish you the best of luck as you move forward with VidHug.
At this point, we are completely out of questions. Zero questions, Mike.
Mike: Zero?
Rob: Zero.
Mike: I have a question for you.
Rob: What’s your question?
Mike: If Elon Musk actually gets us to the point of taking us out into the outer reaches of outer space, where do you think that we should go first?
Rob: Mars?
Mike: No, I mean not just outer space. Out of our solar system. Where do you think we should go first?
Rob: I have no idea. I don’t know enough about astronomy to know what’s interesting.
Mike: Well, do you know which star cluster’s the closest?
Rob: Alpha Centauri?
Mike: It is. You think we should go there?
Rob: Sure.
Mike: I don’t think so. I checked online, it’s only got three stars.
Rob: Badum-boom. There it was.
Mike: If you have a question for us, you call into our voicemail number 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript to each episode. Thanks 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 software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
Mike: Well, just wanted to give people a reminder that today is the last day to apply for the Starter Edition scholarship and I said before, we’ve got over 25 to give away. We will link it up in the show notes, but definitely go check it out if you’re interested at all in coming to MicroConf Starter Edition. Just fill out the application, it doesn’t take more than 5-10 minutes to do, and we will have those within the next couple of days. The notifications will go out and let people know who’s been awarded the scholarships and hopefully everybody who is able to accept them. If not, then we’ll go back to the pool and go to the “runners-up” to see who else is available. Obviously, some people’s travel plans change or whatever. So, we’ll make sure that if we’re going to give somebody a scholarship, they can actually use this. It may take a few extra days.
Rob: Yup. Head over to Episode 433 on startupsfortherestofus.com for a link to that in our show notes. For me, not a ton of updates. Was on vacation and now, looking forward to some home construction being done on our house here in Minneapolis. We bought it about eight months ago and during the escrow process, an inspection picked up some anomalies in the stucco so we got a credit to have those fixed. All that’s fine except for the fact that it was supposed to take two months and it’s been like seven months of construction.
Things are getting put back together now but it just kind of wears on you and it can be loud. You and I’ve recorded in the past few months, I’m having to mute, we have to edit out things, and there’s people in my house all the time. So, I’m really looking forward to that being done. They had to replace some windows and re-stucco things. They can’t re-stucco things because it’s too cold right now, so they have to wait. There’s scaffolding and such. It’ll still be up, I’m guessing, for another month or two until it warms up. At least the inside can be completely done and all the outlets work again. They had to rip receptacles out and turn the power off on certain parts of the house.
Given that two of us work from home and we homeschool the kid, a lot of us are home a lot of the time. I think if I was going into an office, it will almost be easier because it will just be done while we’re not here. But when I’m talking to you on this podcast and then two construction workers walk in and start painting the walls, I’ll admit, it’s a little distracting.
Mike: You think?
Rob: Yeah. So I’m looking forward to that. That’s really in the kind of end-game right now. They’re just putting trim on things, and hanging blinds and such. I’m very much looking forward to getting past that.
Mike: Yeah. Having to redo anything in your house just really sucks. It’s just the worst.
Rob: Yup. Always costs more. It’s like software. Always costs more than you wanted to. It always takes longer to do than you think.
Mike: Yeah. So, what are we talking about this week?
Rob: Well, we have some listener questions. We’re going to kick us off with a voice mail. As always, voice mails rise to the top of our listener questions stack. This is a good question about the emotional side of running a startup and what to do when you make a change and it makes people angry. How to handle that?
Benjamin: Hey guys. It’s Benjamin from Philadelphia. I run a company called Commit Swimming. It’s a small SaaS app product. Recently, I raised prices and I’m looking to hear you guys thoughts on some feedback that I’ve gotten. I thought I did everything that I could to properly communicate to customers, like that the price increase was coming, why it’s happening, and what it was going to be. I also communicated clearly what it was then a couple of months later.
I inevitably would like about 1500 paying subscribers. I’ve gotten a few pretty nasty emails back on the topic and it’s one of those things that I just feel kind of down as a founder. It wasn’t like a money-grab situation. It was in order to pour more money developing features for the same customers that I’m serving. That type of emotional backlash can really take a toll.
I’m just curious to have a discussion around. I could hear Mike and Rob’s talk on what situations have you come across that made you feel like, “Oh did I do something wrong? How can I right this wrong?” and how do you deal with that internally? Another founder with all that emotional baggage riding on you, either in the sales process or in a situation with increasing prices or dissatisfied customer, that feeling that you just messed up and you disappointed somebody. How do you handle that internally and then how do you try to make it right with the customer?
I’d love to hear your thoughts, in particular, the emotional side of it? Thanks again for everything you guys do. I love your podcast, I love everything that you have done so far for the community, and I look forward to hearing your thoughts on this. Thanks guys. Bye.
Rob: So price increases huh, Mike? Nothing ever goes wrong with those.
Mike: Of course not.
Rob: That’s a good question. Obviously, we could talk about the price increase specifically, but that’s not really his question. It’s just that, what do you when people get mad. Did you do something wrong, didn’t you, and how do you deal with all that? What are your thoughts on it?
Mike: I think that the one piece of advice I have that trumps everything else is context matters here. If you were to take a few steps back and try to be extremely objective about what the situation was and what happened, does it makes sense for people to be extremely angry? The number of people has a big impact. He says he’s got 1500 paying subscribers. Well, how many nasty emails did you get from that? Was it 5 or was it 500? That’s a big difference.
Rob: Yeah. He says it was only a couple, which is an indicator, right?
Mike: Exactly. That was my point was that when he said he only got a couple of emails, to me that says that it’s probably not a big deal. That’s only partially related to his question because the question was how do you deal with the emotional side of it? My point here is that you should take a few steps back to make sure that you’re being objective about how you addressed the situation, how you brought it to them, how you let people know, and then is their response justifiable? If it was 500 people complaining, then obviously that means you probably screwed up. If it’s only a couple and even if they’re extremely vocal and extremely upset over, it’s probably not your fault.
I’ll point to an email that I got literally two days ago from Backblaze saying, “Hey, just wanted to let you know, we’re raising our prices.” They’re raising them from $5 a month to $6 a month. I literally just got done using Backblaze. To make sure that my entire machine was backed up, I’m going through and pulling down files that I wasn’t sure whether or not would be included in my end of backup that I did at home, and I’m extremely happy with it.
So when I got this email saying they’re going to increase it from $5 to $6 a month, that’s technically a 20% increase. But at the same time, I am ecstatic with that. You can raise it to $7.50 and I really would not care. I would pay you right now again. They even have a button there inside the email that says, “Hey, you can purchase an extension and essentially grandfather yourself in for the next two years at the original price that we had put forth back in 2008,” but they went through and they laid out their entire justification for it.
Again, that’s actually a little hack that I would say you can offer to them to extend their current pricing by a predetermined amount of time. If there were 5 or 10 people who emailed you and they were extremely upset about it, it has nothing to do with you. It’s about them. It’s about their situation. Whatever you did was like the straw that broke the camel’s back. It has nothing to do with the specifics of what you did or how you could have done things differently. It’s there’s probably something else going on there that you didn’t know about, you couldn’t have known about, and quite frankly there’s nothing you could have done about. I probably wouldn’t worry about it if it fell into that category.
Rob: Yeah. There are rules of thumb when doing price increases, specifically, and we’ve talked about it on the show, I had tweets written about it barely four weeks ago, and I don’t think that’s the point of this question. The point really is what you said, which is gathering context and trying to look at it rationally when it’s an emotional response that we all have because we relate to other people, we want to do well, we want to do right by our customers, and if you get even one or two really nasty emails, it can bring you down, even if you did everything right. Everything is right as you could possibly do it and communicated it well and all that stuff.
Just at any point when you make a person or some people angry, I think the things that I always remember is to number one, to apologize, number two, if it’s really a super small minority then to hold your ground. That’s something that you could always evaluate. If someone says, “Hey, I’ve been a customer for 10 years, I recommended all these people, and I use it when I teach my class at this college or blah-blah-blah,” then maybe you do make an exception.
Overall, if it’s just someone who’s just angry because you’re doing something that you need to keep your business afloat or you need to continue running your business, then you probably just need to apologize and be like, “Hey, maybe there are other options for you.” That is what I found over the years is the people who tend to get all huffy about things, get huffy about everything. They’re the most vocal ones and they’re frankly people who you would rather not have their money. I would rather have them use a competitor that can be something that you suggest to folks.
That doesn’t cover really his question which is, how do you handle it mentally and emotionally. I think there’s a few coping strategies that I’ve learned and developed over the years. The first thing is try not to take it personally. Easier said than done but really step back and say, “Look, this person doesn’t know me. They don’t know what’s going on. They’re just typing stuff. They wouldn’t say this to my face at a conference or whatever.” That’s the first thing. Second thing is get a sanity check on it. This is something I would bring up in my mastermind group. I would throw this out, “Hey, this is what’s happened, this was the email, and it was brutal.” You are going to have camaraderie. You’re going to have that community from people who are saying, “Yeah, this happened to me, too,” and then it normalizes the experience.
Let’s say a couple of times a year, I’ll get an email from a founder who’s like, “Oh my gosh. This person’s totally railing on me on Twitter about XYZ. Tell my what I should do?” or like, “Help me,” or whatever, and I will basically give them advice like, “Yup, this has happened to me. This is how you deal with it. It sucks but it happens to all of us.” If you’re doing anything interesting out in the world, you’re going to have people get mad about something at some point. That’s not a justification for pissing everybody off all the time, but once in a while you’re going to do something or say something or make a move that’s going to do it. Realize that that comes with doing interesting things and realize that it’s part of the course and it’s something you have to develop a thicker skin about.
Those are the basic open strategies and that’s probably what I would do. I would also not send flippant or rush responses. Boomerang or snooze those emails for a day to give yourself time to think about it. Don’t ruminate on it. Don’t sit there and stress about it constantly. It’s not as big of a deal as you think.
I think on the flip side is, did the person change and you have 100 people email you, like you said, Mike, 50 or 100, well then realize that you may have done something wrong and try to figure out what that is. Is it really unfair or did you just not communicate it well? Can you go back and communicate it better? Or do you need to back away? Do you need to undo it?
Intercom did this 3-4 years ago, where they were going to double or triple their prices and they grandfather for 6-12 months. People were furious and there was a huge uproar. They actually backed down and they didn’t raise their prices. Then and there, I think raise them two years later and they did the same thing but they communicated it better. It still made people mad but don’t give them an excuse to be mad. They’re going to be mad about a pricing change, anyway.
Check the boxes of grandfather if you can. If you can’t, then you really got to communicate why the product is better. There’s all these steps and mitigation to raising prices that I would do. But really, it’s with experience and going through this a few times, you just learn to not take it so personally and to try to get a realistic gauge of, anytime anyone’s mad it doesn’t mean you’re wrong.
That’s the thing. A lot of us take that on like, “Oh someone’s mad at me. I did something wrong.” That’s not necessarily true. There are people who are just mad at about everything all the time and today is their day to be mad at you for something that frankly probably is better for all of your customers in the long term. If you have more money to keep the business afloat and that build the app out and whatever else, and if no one else had an issue with it like you said, Mike, with CrashPlan, $5 to $6, you just don’t care. Netflix raise their prices a dollar, I just don’t care because it’s a good service. I’m going to keep it and I’m not going to get in this fake outrage over $12 a year.
Mike: Another strategy is, if you have objectively determined that you are not at fault and it is really the other person there, not you, you kind of step away from those things. If it’s emails that would come in, hand them to a support rep and say, “Just respond to this as nicely and politely as you can.” That way, you’re not the one who’s suffering the mental anguish over having to respond to those because honestly, you’ve got other things to deal with in the business than replying to a support email from somebody who is going to cancel anyway.
Rob: Thanks for that question. I hope our thoughts were helpful. The next question is from Rodrigo Pontes and his question is, “Should I target the manager or the company?” He says, “Long time fan, first time caller.” Actually he said first question but long time, first time. Have you heard that, Mike, on the morning DJ stuff?
Mike: Yeah, I have.
Rob: Long time, first time. Long time listener, first time question asker. “I’m a solo founder bootstrapping a SaaS web app called OneOneMeeting, oneonemeeting.com. OneOneMeeting is a note-taking app exclusively for one-on-one meetings. It allows you register meeting notes, commitments, goals, and share it between the leader and the team members. So, it’s specifically one-one-one between managers and people that report to them.”
“What should I do in my early marketing efforts? Target individual managers that could buy OneOneMeeting for their own use, or target HR executives that could implement it in the whole company? For more details, I have two paying customers that bought it for their own use and I have about five colleagues of my day job employer on a free trial and a scheduled meeting with our VP. They try to demo it and try to sell a corporate account for my whole company. I’m still at my day job, so I have limited time to do sales and in-person presentations during work hours.”
What are your thoughts?
Mike: This is one of those questions where I’m not necessarily the target market, so my advice here should be taken with a grain of salt. I think if I were to say one way or the other you should target this one or that one, the reality of the situation is I don’t really know, but what I would say is that there’s a couple of different ways I would try and find that out.
I think that the question or the point about having limited time to sales and personal meetings right now is a limiting factor, I would try to go outside of your current network and go to, as you said, the colleagues of your day job employer, go find out information from those people and try and narrow down, as quickly as possible, which of these two you should go after. Then from there, you also want to branch out and ask every single person who’s using it, if they would introduce you to somebody else who might be a good fit for it.
If you can get three introductions, that’s great. Always ask for three, settle for one, but push for that one. This is a one-to-one meeting note-taking app, so if they’re not willing to introduce you to one other person, then they’re probably not willing to actually use it to have these meetings anyway. So, I would go down that path and try to figure that out.
The other thing I would comment on is that, because it’s so early on, I don’t know if you really know what your pricing model is actually going to be yet, like individual plans versus corporate plans. I think those are kind of up the air and exactly what the pricing around those should be. I feel like it’s too early to tell. I seem to think that you need to go down a little bit further in the rabbit hole and try to figure out where it’s going to resonate and get traction before you start focusing on one or the other.
Rob: This wouldn’t normally be a clear-cut decision except for the fact he said his time is limited during the day. I think that if you go after a HR execs, they’re getting so hounded by people trying to sell them stuff, that they really are going to require a lot of hand-holding and a lot of proof to push it through.
I feel like you should go with the more guerrilla approach, like Slack and Dropbox do, where they infiltrate at a lower level in the org chart and then once you’ve got a bunch of people using it, then you ring them up and you say, “Hey, I’ve noticed that you have 10 different managers using this. You want to have good management of this, an insight, blah-blah-blah. You know, you need to get our enterprise account.”
I don’t know if that means that it needs to be free for one manager at a time or whatever. You look at Slack and you look at Dropbox, and that’s how they’re able to do that. People can sign-up essentially without a credit card and you can really infiltrate the org that way. You have to find if managers have a credit card with some type of limit on it so you could make it relatively inexpensive, but once you actually do sell their account to the VP of HR, that there would be a need to be a big step-up in price because selling a product like this is going to be hard to scale at a low price. Although if you do per seat pricing, then it should naturally scale itself because the successful companies tend to be growing anyway, and if it works, they’re going to want to add more and more of their teams on twit. I could see the whole $3, $5, $7 per seat pricing working if you can get 50-100 people at an org using it.
All that to say, if I were in your shoes, I would personally go after the managers because I think the managers are the ones that are going to get the value out of it. The person whose pain point it really solves in the most direct way and the managers are the ones that can start implementing it without a bunch of bureaucracy and approvals and all that stuff. If they can just run wild with it and prove it out, then it’s a much, much easier sale as you go up the chain. Thanks for the question, Rodrigo. I hope that was helpful.
Our next question is about taking someone’s business idea. I’m going to leave him anonymous. It’s interesting. He says, “Little background about me. I have a Bachelor’s of Science in Computer Science and Business Administration. I’ve been working on IT since 2006 as a developer and a manager. Two years ago, I worked for an online company that I found to be really interesting and right up my alley. I applied, I got hired on as a developer to help maintain and update their current website. Come to find out that their new site was never going to see the light of day due to the fact that the manager overseeing everything wanted to keep adding useless features to the site. The site was from the 90s and was written in a language that is no longer supported and it can’t support more modern features that a growing business website needs. This really bugged me so I left the company.”
“Then one day I was talking to a friend over drinks and he said I should start my own thing so I did. From there it snowballed into a reasonable product that I think I can take to market. My question is, when I started with the company, I had signed an NDA and a non-compete valid for one year after I left. That one year mark is coming up in the next week. I want to start pushing content out to get things going. I didn’t work on anything on the site while I was there and I’m not using any code or tech from the company because I consider that stealing. Everything I’ve created is 100% from scratch and of a different language and technology stack than the one at the prior company.”
“Have you guys ever had to deal with anything like this? Looking at it either my point of view as the startup or as the old company with the 1990s website? Also, I want to say a huge thanks for sharing your experiences. You guys answered a lot of my questions on your podcast.”
What do you think about this, Mike? Do you fully understand what he’s asking? He’s basically launching a competitor to something and they’re outdated tech. I don’t think he’s asking an ethical question because I think he’s going to do it. It’s more the legal side of it? Can they sue him?
Mike: Well, I think a lot of what he said seems to be different from what he’s actually asking. My understanding of what he has said was he was hired to help develop and maintain the current website of this other company and he signed an NDA and a non-compete. But then he left and he’s coming up a year later for his NDA and non-compete no longer being valid. And the products he wants to build is what the company was developing. I don’t think it’s actually anything related to the website for that company.
Rob: That’s what I’m confused about.
Mike: Yeah. That’s what I gather as the situation is what he’s building is actually what the company itself produced and that his non-compete would be wide enough to cover whatever their product was and is the product that he’s building is that, although he was hired to just work on the website.
Rob: Let’s go with that assumption because I was confused as to was it the website the product? Is it just like a lead gen company, the website is the product. There is no product behind it. You just drive ads or you do SEO and then you get people to send in form, and then you basically can sell those leads. That’s what I was thinking but maybe there’s a software behind it and he’s replicating that. What do you think here?
Mike: There’s the fine between what is legal and what’s not in which it’s impossible for us to comment on the specifics of that if we were in that situation. I have been in this exact situation. I was in this situation with AutoShark, where I basically knew that the product that I was rebuilding from scratch was going to go away at some point in the future. My thought was if I were to rebuild it, I can essentially come in and replace the product that was end-of-life.
What I found was that the fear of being sued by a large company that has the ability, the resources, and the lawyers that are just on staff already, was paralyzing. That is always going to stick in the back of your mind and you will not get away from it. I don’t know how big they are, or I don’t know what they do, or I don’t know how much of an impact you would have on them, but for me, it was paralyzing. I had a very hard time separating the business and marketing stuff that I was doing.
My situation was probably complicated because I was also still doing consulting work for them. It wasn’t really a non-compete because I was a separate company anyway but I was a subcontractor for them. So I was barred from going back to those existing companies that I’ve already done consulting work for which was installing the sort of software but then I’m also building a replacement for. Mentally, it’s very difficult to get past that.
I won’t say that the easier route is to just go on a completely different direction, but if you have the domain knowledge and expertise and you think you can execute on it better than them, by all means. Just be prepared that if you do a good enough job at some point, they may decide to come back and sue you, but they can sue you anyway. They can sue you and say, “Well, you developed this IP that we own,” and any company that you have left could theoretically make that claim. It doesn’t mean it will hold up, but that’s going to be an issue that you’re going to have to reconcile and come to terms with. Is it realistic that they can do it? Is it going to happen? It’s probably not, but it could.
Then there’s the other side of the coin where if you do a good enough job, they may decide, “Hey, it’s going to be better for us to acquire this than to continue building the thing that we have in-house.” That’s entirely possible as well. But again, it’s probably just as likely is them suing you. That’s something that you’re just going to have to mentally deal with, make a decision, and move on, because otherwise you’re going to spend far too much time thinking about it and not enough time actually working on the business.
Rob: Yeah. That’s a good point. It’s weird because this does get back to the ethical-moral conversation we had a couple of episodes ago. I think that legally, if you document everything and you really are on the right side of the law, then you should be okay in the long run. But they can still sue you and you still have to hire a lawyer to defend yourself. And you still have to either negotiate a settlement or go to court, which is very expensive, and you still have to prove all this. There’s a lot of ifs. Even if you’re on the right side of the law, in my distant third-hand experience with working at companies where lawsuits are going on, no one wins but the lawyers. The only ones that make money are the lawyers. It’s really not good to get involved in that. That’s always my thought with lawyers and lawsuits. It’s really kind of be on the right side of that.
Then there’s the side of it that I think about as an entrepreneur. It’s like, is this interesting to you to build this or will it be boring? Is it just an opportunistic view of like, “Hey, I can make some money with this,” or is it like, “No, this is actually something that I really, really want to do”?
I would caution against doing something just because you saw it work at a different company and you feel like you could build better tech than them. That’s not a recipe for success in my work. But if you have taken their success as a reason to not do customer development and not build an email list and not make sure there’s demand and not make sure that you have the credibility to do this, I think you’re making a mistake and I think you could build a product and release it to Crickets. Or it could be years and years of toil on this and does that sound fun? Just like any other product that would launch, I would ask myself, is there really a market here? Am I the one to do this? And does this sound interesting to me?
Mike: It looks like from the opportunistic nature of something like that, if it’s already in an established business, they are doing their sales and marketing and getting customers, it’s very easy to think you can replicate some of that. It’s like an iceberg. There’s tons and tons of things that go on under the covers of the business that you have absolutely no knowledge or exposure to and a lot of times, some of these things are very relationship-driven. You don’t even know it because you’re not even aware of how those conversations even happen. It’s very difficult to compete in those situations, so just be very cautious about that.
Rob: Yeah. It’s like you said, it’s easy to be inside a business, look around, see everything wrong with it, and be like, “I can do this better,” but it’s actually really hard to do better. It’s not something that can happen overnight. Just building better tech isn’t, in my opinion, going to be the key to that.
I think the other thing to think about is, you use the term taking someone else’s business idea. It’s a trip that if you hadn’t worked for them, you would just be a competitor. It’s like, did Drip take MailChimp’s business idea? Did Drip take Infusionsoft’s business idea because it competed with them? Well, no. We did our own thing our own way. We found customers, we got feedback, then we implemented features, and blah-blah-blah.
The difference here is you worked for them and you saw inside the business. There is complexity there where if you are going to compete with them that you need to get over the thought that you took their business idea. I think it comes back to what you said, Mike, is that it’s going to hang over your head mentally. Whether you think about the legal side of it or you just have this internal embarrassment or shame that you “took it/stole it” is what you’re implying, if you hadn’t worked for them, that wouldn’t be the case. If you think that you’re going to hang on to it like that and constantly think that you’ve taken this business idea from them, I would caution you against perhaps doing this. We’ll just ask you to think about it because it can get in your head.
More than half of being a successful founder, I believe, is just dealing with the mental side of things and being able to handle your own psychology, understanding yourself and not just stressing out or not putting much of a burden on yourself, not having things that aren’t true be running through you head, that negative self-talk, and this could be a source of that. In your shoes, I would really think hard about whether you can mentally get over that hurdle of thinking that potentially you took this business idea because you don’t want that hanging over your head for the next several years as you build this up. Thanks for the question, anonymous. I hope that was helpful.
Our next question is about how to approach a B2C company. This is a long email, someone summarized it. It says he’s a huge fan of the podcast, started listening about five years ago. He’s a senior developer, he’s always had the product itch, and he’s working on an app. It’s called VidHug, vidhug.com. It started as a scratch-your-own-itch project for his mother’s birthday and it’s definitely B2C. It’s low LTV. It’s non-recurring revenue. He says, “I feel like I have a mini Rob on my shoulder most days, saying ‘What are you even doing with this?!’ Thing is, I don’t really have a counterpoint for you except for a feeling and that feeling comes from talking to customers that are now able to do something they previously could not.”
So, the idea with VidHug is you can send out an email with a link and people can record basically birthday wishes or well wishes and they all get combined into this 30-second or 60-second video. If you go to vidhug.com you can see samples of these videos. If it’s someone’s birthday and then their grandkids in there, their kids in there, aunts and uncles, whatever, all recorded there and then all gets mashed up.
He said he launched it in July 2018 to Crickets. He didn’t do any pre-marketing, he got a few paying customers, didn’t really get a break until earlier this year when he’s got some organic traffic flowing from a referral in a blog post. He’s on pace to do $600 a month and that’s a funnel he can now improve. He says, “I’m also turned to build a B2B side of the business and I found a potential application of remote and distributed companies using VidHug to celebrate employees or onboard new employees. I’ve got three companies trying this out. I tried validating a separate B2B site for this, but I think it was spreading myself too thin and I’m just going to go down with vidhug.com for now.”
“The primary move forward is to focus on growing organic channels on the B2C side through SEO and referrals and also build a B2B side which would bring recurring revenue. Do you think I’m crazy for even trying this?” Just as a point of data, he has basically a free tier and then he has one that is $15. It’s a one-time thing for the B2C side. What do you think, Mike?
Mike: Well, to answer his question there actually, “Am I crazy for even trying?” The answer is yes. It’s just a matter of how crazy we all are.
Rob: Exactly. It’s just a specter.
Mike: It’s varying degree, yes. I feel a little bit early on to be trying to separate and go after both B2C and B2B. It seems like the revenue is a little bit low and I feel like the marketing channels you have to reach out to, the type of audience, the types of content that you have to build for them, the feature set, and all these other things, it feels like it creates two different businesses. I get where he said he tried validating a separate B2B site for the application and he felt like he’s spreading himself too thin, but it seems to me you’re going to do the same thing if you try and cater to a B2B market as well. Maybe not, maybe you can just integrate it with certain types of things or multiple-use for accounts, for example. Maybe there’s an obvious way to upsell people into a more B2B version of the app. Maybe that’s a way to go for that, but it does seem like it’s a little bit early.
So going back to the question of are you crazy for trying something that’s B2C? I would say no. I definitely think that there are opportunities out there for people to build B2C businesses that are solid and profitable. It’s just a matter of making sure you are methodical about how you pursue your different traffic sources, putting people in your mailing list, optimizing the product itself for revenue for getting people into it, and making them happy. If you can do those things, it doesn’t matter whether it’s B2B or B2C. You’re still going to have happy customers who are going to give you money. But that last piece of it is the key part. They have to be happy and give you money because if they’re not giving you money, you don’t really have a business.
I think that’s the challenge that most people run into with B2C companies is that your LTV tends to be much lower and you need a larger number of customers in order to make it work. There are a lot of viral components to something like this. You can email out to a bunch of people and if one person gets in there and then email 50 people, now you’re in front of 50 people instead of just one. That’s a huge viral aspect that a lot of things that try to do B2C don’t necessarily have because this has that kind of bait into it that’s an encouraging sign. It’s not the only thing I would look at but it’s definitely encouraging.
Rob: Yeah. It’s tough because B2C is just hard. It’s just a different game. With this customer lifetime value, you can’t run ads, you can’t pay salespeople. So many things you can’t do. It literally be outreach to bloggers, offering it free to bloggers, sponsoring bloggers, I keep saying bloggers, podcasters, whatever, people with audiences. Here’s the thing. If you’ve got a bunch if Instagramers with huge followings, YouTubers, bloggers, podcasters, yeah it would be possible to grow this. But it’s a completely different playbook than what we typically talk about or what you’re going to hear from MicroConf speakers, for example, or an attraction book where it really is more focused on doing a lot more B2B stuff.
You just have to ask yourself, is that what you want to do? Do you want to build those relationships with influencers and figure out how to get them to do it and then talk about it? That would be my playbook for this. Personally, I don’t enjoy that. It’s hard to do without the existing relationships, be it can be expensive response for them, it’s pretty risky, it’s not super repeatable, you just got to go one to the next, there’s just a lot to it. You got to ask yourself, “Hey, is this something that I want to do?” and if not, then I would look at the B2B side.
The tough part of it is it’s not a critical must-have thing, but I do think it’s kind of clever and it’s a fun nice-to-have that I have seen larger companies, even companies that 50 or 100 people, do special things when they onboard new people and make funny videos to welcome them or things like this. While I don’t know if they would pay for it, I think that would be a question you’d want to start having with people before you dug into the B2B side. That’s certainly a more repeatable thing but I still think there’s just a lot of risk.
I don’t see an angle here and that doesn’t mean there is no angle. Really, they’re just a feature. This is just one feature. It mashes up some video. It’s cool but it’s not as sweet a thing and it’s not something that people will use every week and rely on. It’s going to be harder. It’s not going to be the core of the HR’s workflow or the core of the manager’s workflow. It’s just a nice-to-have.
I think that’s the other thing to think about is, I had businesses in the early days that only made $1000 a month, $2000 a month, and frankly, I learned a lot from them. It was a stair step approach. I learned how to whatever, do run ads, do SEO, do display ads, do AdWords and that kind of stuff, and I took that experience with me to the next thing.
In its current incarnation, do I think VidHug can be a mid six-figure business? I don’t. It’s just my opinion, it doesn’t mean I’m right or wrong, but I don’t see an angle there as it stands today. But then again, I could have said that about Drip the month it launched because it was just an email capture form and autoresponder. Then we kept pivoting and grinding, customer developing, slow launching, and doing all the things that you heard me talk about on this podcast over the years, and eventually got it well under the seven-figure mark.
That’s the thing. As it stands today, VidHug is a cool side project and frankly I’m impressed that you’ve gotten it to $600 a month, given the price point and all that. But I think it depends on how you’re thinking about it. If you think about it as good learning and you want to build it up to $1000-$3000 a month, that to me seems doable, and it will be learning, it will be a little bit of income, I don’t know how you would ever get it past there. Maybe you’ll eventually come to a point where you see an angle to do that.
I also had a lot of businesses that never did. I had ebooks and info products. I had ecommerce site and I had small software products and I had one-time software products. All of those topped out and I could never get them past, let’s say, between $500-$5000 a month. I had several that were in that range. Eventually, I had to sunsetted them or I sold them as I moved on to bigger things.
My gut is that VidHug will will fit into that space, that role into your entrepreneurial career, there’s certainly a time and place for those, and you just got to figure out, I think, how you are thinking about it and where you want it to take you. Thanks for the question, Amir. That was a fund one and certainly wish you the best of luck as you move forward with VidHug.
At this point, we are completely out of questions. Zero questions, Mike.
Mike: Zero?
Rob: Zero.
Mike: I have a question for you.
Rob: What’s your question?
Mike: If Elon Musk actually gets us to the point of taking us out into the outer reaches of outer space, where do you think that we should go first?
Rob: Mars?
Mike: No, I mean not just outer space. Out of our solar system. Where do you think we should go first?
Rob: I have no idea. I don’t know enough about astronomy to know what’s interesting.
Mike: Well, do you know which star cluster’s the closest?
Rob: Alpha Centauri?
Mike: It is. You think we should go there?
Rob: Sure.
Mike: I don’t think so. I checked online, it’s only got three stars.
Rob: Badum-boom. There it was.
Mike: If you have a question for us, you call into our voicemail number 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript to each episode. Thanks for listening and we’ll see you next time.
Episode 432 | How to Indirectly Overcome Sales Objections
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to indirectly overcome sales objections. Solving the problem of having to answer some of the same questions numerous times, the guys come up with some ways to combat sale objections when you’re not in a direct conversation with the potential customer.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about how to indirectly overcome sales objections. This is Startups For The Rest Of Us Episode 432.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve build your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob: I’m doing alright, sir. I’m getting ready to head out to Mexico for about a week with family and we’re just looking to escape the cold. We haven’t left Minneapolis every month like we normal do during the winter. We’ve been here three years and we made this commitment to one another, Sherry and I did, that if we’re going to stay here, we need to leave about once a month. It’s a Delta hub so it’s really easy to get places to rack. We can get to Florida. It’s about 2½-hour flight. We can get to Cancún in 3½. We can just get to a lot of warm places really easily and inexpensively. Our first and second year here we just left a lot, but this year, due to some family stuff and other things, we really have been here all winter. Sherry left a few times to speak at conferences but we have not done a family vacation, so we are very much looking forward to beating the cold, getting out of here, frankly hanging out, and catching some waves on a playa in Mexico.
Mike: That’s cool. I have never been to Mexico. It a place I’ve wanted to go to for a while. I just never really made it a priority, I guess.
Rob: It’s great fun and depending on where you go, it can be a fun cultural experience or it can just be a fun vacation if you don’t with the hotel and such, but I highly recommend it.
Mike: Oh, business expense. MicroConf Mexico.
Rob: Absolutely. We should totally do that. Don’t think that I have not start cooking that up already. Sherry suggest that every year in winter because there aren’t any winter conferences. It’s all spring and fall but I think there’s an opportunity there.
Mike: Yup, probably.
Rob: How about you? What’s going on?
Mike: Well, I spent the last several days rebuilding my desktop and basically reinstalling the operating system on it. It’s been running into a lot of problems where it would just crash at night when I put my computer to sleep and then the next day when I go to wake it up, things just did not every come back properly. It started out like it wasn’t very often and it surely got worse and worse over time, and then lately, the thing has just been crashing left and right.
So, I was just like, “All right, is this a software problem? Hardware problem?” I ran a bunch of hardware scans and stuff on it and everything looked fine, but something was wrong and I couldn’t figure out what it was. So, I was just like, “Alright, I really need to update this.” I was looking back through my programs that were installed and I realized I had not reinstalled it since 2010.
Rob: So you’re just imaging the drive?
Mike: No, it’s the same operating system I’ve had since October 2010.
Rob: Yeah, that doesn’t work well.
Mike: And I pushed off on it for so long. I was running Windows 7 and I needed to have IIS 8 on it at least, in order to do certain things and the development stuff that I’m doing. You can’t install it on Windows 7. You have to have at least 8 or higher. I pushed off on it for probably two years or so, and like, “All right, I’m done.” I spent the weekend backing everything up, copying things over, and up and running on Windows 10. It’s actually quite nice now. I haven’t had a single crash.
Rob: I was going to say, “Windows 7? Hasn’t 10 been out for years? What are you doing?”
Mike: I just did not want to go through the pain and hassle of copying everything over and possibly losing something that I actually needed, because things were back-and-forth between. Something were in Dropbox, some things were not. I have […] I could get things if I really wanted to but it’s still just a hassle. You lose a fair amount of time and then there’s always that fear on the back of your mind like, “Is there something that I’m missing?”
Rob: Yeah. That’s tough. I remember doing that. I remember rebuilding the machines. I tend to do it one to two years when I upgrade the laptops and I would rebuild from scratch just to avoid the cruft that were built up. I haven’t don’t that in a while. We’ve talked about this in the past. I think Windows has some things that are better than Mac and I think Mac has some things that are better than Windows. I think that particular piece that I have not rebuilt the laptop in seven years now or eight years since I switched, I think that’s something that MacOS does quite well. Since I do all the incremental upgrades and it auto updates, I’m always on the new version. I used to give myself about a day. It was like 8-12 hours to basically rebuild the machine and I don’t have to do that anymore.
Mike: Yeah. I had to track down licenses. That makes for a head for all the right files and right versions. That was a big hassle and I just didn’t want to go through it.
Rob: Totally. I hear you and I think the nice thing I think that’s gotten users who’ve gotten along is, “I’ve moved so much more into the cloud.” I used to have Microsoft Word and Excel, then I had all the data I had to move so it’s on an external hard drive. But now, everything is in Dropbox and I’m in Google Docs. It’s just so many more web-based things, so I have fewer and fewer apps that I actually install as I would need to move to a new machine.
Mike: Yeah and fortunately, things have progressed. I have a local NAS device that’s got three of four terabytes worth of space on it. What I did was I did a physical to virtual migration of my entire machine and moved it over there. Then I created another copy of the entire thing on my hard drive. Now, I’m running the new system but in a window over on the side. I have the old system up and running inside of a virtual machine. There’s been times this past week where I had to go in there and say, “Oh, I did not grab this file or these files weren’t backed up, or I need to pull from the registry and export these settings and import them over here. They weren’t anywhere else or the application just didn’t have any other way to get at them.”
Rob: Yeah. You realize, both of our listeners have now tuned out?
Mike: Yes, all two of them.
Rob: All two of them, yeah.
Mike: I thought we had three?
Rob: Three, maybe yeah. Hi mom.
What about MicroConf scholarships? There’s some cool stuff going on with this.
Mike: Yeah. Last year, we talked about this before where last year I had quietly put together a scholarship program and we ended up giving away a total of 14 scholarships. This year, we have over 25 to give away with. A total of 27 scholarships that we can award. I’ll link this up on the show notes and if you’re interested in coming to Starter Edition, you fill out the application, and the last day for that is Tuesday, February 26. I intentionally made it to Tuesday so we can do the announcement today and then we can also do an announcement on that day. If people happen to forget, there will be one more announcement for next week’s podcast. We’ll talk about that. You have the link there, just go fill out the application. It’s pretty short. It asks some fairly basic questions. It shouldn’t take you more than 5 or 10 minutes to fill out. We have plenty of scholarships to give away so if you are interested, head over there and hopefully we’ll see you there.
Rob: The only update on my end is TinySeed applications. They basically close tomorrow when we’re recording this, so they would have closed by the time folks are listening to this. Things have gone very well, to be honest. It was more of a response than I’ve expected given then it’s our first batch and we’re still trying to build a brand name. I remember when we started MicroConf and people were like, “Micro what?” It doesn’t have any meaning and then you do it year after year after year and then eventually it’s almost like this inside story or a brand, really. It invokes a meaning in their mind.
The same thing with Drip. When we launched Drip, no one knew what it was and then eventually, you can say the name of it and people know what it is. TinySeed is doing that, that seed stage, so to speak. But still, we got a lot of applications and I’m going through those, having some great conversations with founders, really looking forward to digging in here over the next couple of weeks, and figuring out who we’re going to go with.
Mike: That’s good to hear. Does it seem like the decision-making is going to be a lot more difficult than you thought it would be or is it going to be easier? Any insights that you can share or no?
Rob: That’s a good question. With some of the founders and companies we’re talking to, it’s obvious that they’re a good fit and we really want to make it happen. Then there are some that are just definite nos. It’s like hiring someone for a role. There’s yeses, there’s nos, then the maybes are the hard ones. You’re not going to get a dozen perfect applicants that perfectly fit everything so you have to figure out if they really dig into any type of yellow flag and figure out, “Do I think this business can do this? Do I think these founders can do this?”
I think it will be easier on some friends and also harder on others. It just depends on how many we can get. I’m trying to fill a cohort and I think the cohort’s going to be between 10 and 12 companies, I would guess. Finding that many is world’s different than hiring because typically, I’m hiring one person for one role, but in this case I’m essentially trying to hire 10 or 12 companies or founders for the role.
That’s been cool. It’s been a learning experience for me but also what I liked about it is it builds on all the knowledge and all the experience that I’ve built up through my whole career including interviewing people, digging into things, hiring, and then all the SaaS knowledge, the knowledge of businesses, knowing what metrics to ask for and knowing how to shape those, knowing when someone says their conversion rate is this versus that and then digging in and finding out it actually isn’t that because they’re calculating it different, all this stuff that if I wasn’t knee-deep in this stuff and hadn’t been for a decade or more, I think it would be even harder. But it’s in my wheelhouse to be able to evaluate these things.
It feels both daunting but also it feels good and it feels like I’m able to understand the business pretty quickly just having all the conversations we have, the MicroConf folks, the podcast listeners, the angel investing, the advising and all that stuff, as well as running my own companies, there’s a familiarity with this. I feel like we speak the same language, which is really nice.
Mike: I was going to say that familiarity probably helps to some extent just because you’re not trying to figure out what they know that you don’t. It’s like there’s a lot of stuff that’s built-in already, like you know the stuff, and it’s just a matter of do they know it too or are they making mistakes along the way that you’ll be able to help easily course correct.
Rob: Yeah and that’s the thing. That’s where doing something outside of our wheelhouse, like if we get an applicant who’s doing mobile app or it’s a B2C physical product subscription service, I’m not sure if my same evaluation criteria can apply. I’m not also sure are there levers we can pull like we can with a SaaS app? It’s that kind of stuff. That is where it gets complicated. They are edge cases that you have to evaluate and think through.
Mike: And also, I’m excited and it will be interesting to see how it turns out.
Rob: Indeed. What are we talking about today?
Mike: Today, we’re going to be talking a little bit about how to indirectly overcome sales objections. I think we’ve had a couple of episodes in the past where we’ve talked about when you are in one-to-one discussions and directly talking to people in more of a sales capacity, how to address different concerns or objections that they have. I think there’s also a lot of objections that comes up when people are just visiting your website or they’re learning about you, and they have all these things that are in their head, but you can’t tease it out of them because you’re not directly in front of them. Question is, how do you know that you’re giving them the right information, what ways can you get in front of them or provide that information to them that is going to make sense help to alleviate any of their concerns?
This idea for this episode came about because I received an email from one of my agency customers. They had some questions that were relayed to them from their customer because they’re managing this customer’s account. They said, “Well, what is it that you’re doing for data security inside of Bluetick?” I’m not really comfortable because I saw this message and I didn’t really understand what it meant. It made me step back a little bit and think about what other things am I doing that will put this information out there? I looked and I was like, “Oh, well I could just write a KB article about this,” but made me look at all the other different ways that you can present that information. So, this episode is really going to be about different ways you can present those things to people that will help overcome those sales objections.
Rob: Got it and the indirect piece is because directly overcoming a sales objection would be, you’re on a sales call, someone has an objection, and you say, “Well, this is how we handle it, blah-blah-blah,” whereas you’re saying, this is the way to document it or disseminate the information to many people in a more passive way. Is that right?
Mike: Yes, that’s correct. That’s a great differentiation between the direct versus indirect, but it’s also a matter of making sure that that stuff is publicly available to them so that they can go get it whenever they want because when you’re in that direct sales scenario, if they have a question, they’re going to ask it. You don’t know what questions that they have or that they’re going to ask when they’re just browsing your website or they’re reading something about your service or they’ve come across it on Google.
The idea is how do you put these things out there in such a way that it’s not, for example, a giant wall of text that they’re not going to read anyway because then they’ll just say, “I’m out of here,” or maybe they’ll fire an email to you that’s going to be something that’s buried in there someplace anyway.
Rob: Yeah, that makes a lot of sense. The thing that people should keep in mind is that for every person who asks you or who has a sales objection like this, there are probably 5, 10, 50 other people who have a similar thought and maybe just never asked, left your website or didn’t sign up because whether it gave them a negative feeling or whether it just felt like too much work to find you support email and email you, there can always be one-off questions or one-off concerns. You’ll start to recognize those over time but in the early days of anything, you start to get the same question over and over and that’s when you realize, “I really need to document this and push it to the forefront of my website or of my marketing.”
Mike: I think it’s very easy to get caught in the loop where somebody comes in with a question like that and you answer it, and then somebody else comes in with the same question and you answer it. It seems to be very easy to just answer the question and move on, but without documenting it or without putting something in place so that that information is available to people so they can go look for it, that’s basically just causing you more headache and pain down the road that is hard to measure.
Rob: Yeah for sure. There are obviously a bunch of different ways that we’ll talk through here. Let’s dive into the first one.
Mike: The first one is related to your website, specifically around the design and the sales copy. Obviously, people have to have a certain level of trust from your website and a lot of times they will get that from the design. But the sales copy needs to speak to them. It needs to talk to the problem that they’re trying to solve.
Specifically, one of the things that you can do is on the About page, explain who you are, explain why is it that you exist, and explain what sort of domain knowledge and expertise you have in this area. That, in and of itself, will build trust but at the same time it also lets them know what is it that you stand for, why are you even in business, and why should they (a) give you money, and (b) trust you with their data.
The second area that you can do this is with blog articles. Whether you have a dedicated content section on your site or blog articles that you publish and then you email out to your mailing list, either way you want a repository of information so you can essentially demonstrate that you have knowledge of the topic that your software addresses.
In the case of Bluetick, for example, beyond one-to-one email marketing or follow-ups, differences between sending bulk email versus individual emails directly to people from your own mailbox, all those types of things factor into giving you a footprint on your website and it contributes to the SEO, but it also contributes to the awareness of the customer that you have a set of knowledge that they could benefit from.
Rob: Yeah and a blog is a nice way to do it because people can search Google and find it. Another way to think about it or another alternative is to do KB articles, which are nice because people will specifically seek them out. I don’t tend to go to product blogs if I have more support questions but I will go to KBs. Often, I don’t want to email support and I think a lot of people don’t want to email and wait for an answer.
If you can make a lot of this stuff available in a KB that you know if it’s published, that it was probably reviewed by people, and assuming it’s not outdated, you can almost have more confidence in a KB article sometimes than email a one-off support question. They have 50 different support people answering questions like, “Do you know that that person knows what they’re talking about?”
I know that in the early days, it’s hard to build out a KB and it’s hard to justify the time, but these kinds of questions, if people can just answer them themselves, it really will save you a lot of time as well as, as we’re talking about here, handle overcoming these objections indirectly.
Mike: When you send an email to support and they answer that says X, Y, and Z, I’m definitely one those types of people who questions it a little bit especially if it’s an edge case or if it’s on the complete other end of the spectrum, where it’s something that seems like it should be straightforward basic functionality and they can’t point me to a KB article. The KB article just tend to give me a little bit more confidence that, “Hey, this is the official stance,” or, “This is exactly how it’s supposed to work and people have reviewed it,” like you said, and that trust factor versus somebody’s answering the emails for support and I don’t know who it is or what their level of skill or expertise is.
Rob: Right and the other nice part about KB articles is they often will have a screen cast or they’ll include a screenshot. You can just get so much more information from that than a quick one-off support reply that’s two or three sentences long and doesn’t have all the visual elements and the time invested in it.
Mike: Right. The level of information and the different ways you can present it in a KB article are a lot nicer just because you can use those visuals and you can use the text, or you can use a video of some kind and embed it in there. You can cater to different people’s ways of consuming that same information.
The next way to do this is through email courses and webinars. I lump these together because they are similar and that you’re essentially broadcasting. The idea here is that you’re doing a deep dive on a very specific topic that’s relevant to the audience. With a webinar, the prospect is going to get to know you a lot better and that lends a certain amount of trust and credibility to you just by virtue of them hearing your voice or seeing your face in the course of the webinar.
With email courses, if you’re writing the email course yourself or the same person has written the entire course, then it’s going to have a very particular voice to it. I’ve noticed in my writing. I can go back 5, 10, 15 years and see that my writing itself has a very particular voice associated with it that I can recognize. I don’t know if other people feel that way or maybe other people have changed quite a bit over time, but mine tends to feel very familiar when I go back and reread things that I’ve written in the past. You’ll get that consistency throughout an email course as well.
I think that that’s what people are looking for, is consistency in knowing that when they’re doing business with you, they can expect a certain level of quality and confidence that you know what you’re doing and you’re going to be able to help them, versus if you have an email course that is very disjointed or it’s all over the place, they don’t have that same sense and they’re going to start to ask questions, maybe not directly or that they could verbalize, but they’re going to have the sense of, “I don’t quite trust these people, I’m not quite sure why, and I can’t put my finger on it.”
Rob: Another way to indirectly overcome sales objections is with downloadable resources like white papers, case studies, ebooks, ultimate guides. People who educate others and do a really good job of it in a non-markety way, they are held in pretty high regard, especially if they’re really providing tools for folks to do their job better or to be better at what they do.
If you move back in the day a little bit, HubSpot has always been really good about this with their education leadpages, with all the webinars, the free guides, and the free stuff they gave away. I recall Kissmetrics having a ton of white papers that did a good job. I don’t know who’s doing this really well today in a way that I would model it, but I’m sure there are folks out there—feel free to post in the comments for this episode, it’s episode 432—you can build a lot of credibility by educating. Just look at anyone who has a podcast or a blog for years and years. You begin to respect their opinion. Or if they write a book. There’s a lot of ways to do this.
Now for a product, if you’re a SaaS app, you’ll probably not going to write a book or necessarily build a personal brand around it. But you can achieve some of that using things that people can download, take away, and read on their own. A Kindle version of an ebook or a PDF version of a white paper. If it’s well-done, it’s well-titled, it’s distributed to your list, it really is actionable stuff and it’s of the quality that people would be willing to pay for. I think that’s something to think about.
At Drip, we published an ebook, we published a video course with Patrick McKenzie, we published something else, and we were giving away this content that was quality that we could have sold. In fact, we would give it away for a week, and then I believe we would put on Gumroad and sell it for cheap, $9 or something. That actually became trivial but interesting revenue stream at a certain point that I have left unnoticed because it was just all hanging out in Gumroad. But there was real value to these things and when we gave them away to our customers and prospects, they appreciated them and I think they learned a lot.
Mike: I think it’s a really interesting point that you bring up about the quality of it and having it in a level that you could presumably charge for. That’s something I probably hadn’t quite put into words before, but that’s a very interesting take on it. I agree with you. It’s a fantastic way to get yourself out there and it’s a good way to establish a marketing channel as well. It sounds to me like it was a non-trivial revenue stream for Drip at one point.
Rob: Yeah it was in the early days. What’s interesting is 5, 10 years ago, just having a blog and having essays was enough and it would drive traffic if you’re doing it well. The bar has just become higher and higher. So, if you see people who are doing content marketing really well these days, they really are doing really long pieces, 5000, 10,000, 15,000 words. They really are ebook-level and whether those are downloadables, PDFs, or they’re just published as a single long-scrolling blog post, that is something that Google lends more authority and credibility to these days.
Content marketing has really been all about SEO in the long term. You can get the initial push, you can build your list, people are watching what you’re doing, and they can like your marketing. But longer-term to build a sustainable business, it can’t just be about that social bump. It has to be about the longer-term organic traffic and the authority that you’re gaining in the search engines.
Mike: I think one of the last places that I can think of where you can indirectly overcome sales objections was in testimonials. Most of the times, you see these embedded on somebody’s website but I have seen them embedded inside of a white paper before or case studies. Case studies are a great place where you’re essentially getting this massive testimonial from somebody. The idea here is that people will look at that and say, “Well, if it work for so and so,” and that person is a similar customer to them or similar profile, whether it’s the same business size or same market vertical, their thought is, “Well, this should work for me as well.” Even if they do have other objections, if they look at that company and they say, “Well, I either empathize with them or I feel like I’m very similar to them. If it work for them, it should work for me.” It goes a long way towards overcoming objections that they can’t necessarily put into words.
Rob: Yeah. Case studies are a nice one. It’s one of those where one thing you throw them on your home page, you throw them in your footer, the nice head hot, some quotes around it, and those are cool and they could lend credibility depending on your space. If you get case studies that are done well, those can have a lot of impact. By the time someone cares about a case study, it’s okay if it’s markety because they’re interested in and they’re evaluating your product at that point. It’s not top of funnel anymore. That’s how you have to think about these things.
I know we’ve gone from overcoming sales objections and I keep putting it back to the marketing funnel because I feel the two can overlap. You can do both at once. But top of funnel stuff tends to be educational content. You build them a list and everything, and by the time you’re doing case studies, you really are trying to address objections that people have, you’re trying to educate on some of the nitty-gritty of how other people are using your product, and it can be a nice example for folks who are just trying to figure out what you app does.
Mike: One thing I wanted to tack on the end of this which I didn’t specifically put in the outline here was about chat widgets. You can put a chat widget on your website that allows you to interject yourself into the conversation on a website. Whether you use something like Drift, or Intercom, or custom chat widget, or something along those lines, the idea is you’re having that direct conversation with people, which is exactly why I didn’t include it because at that point you’re no longer indirectly overcoming the sales objections. But that is another good way to help overcome them, so I do want to make sure that I brought it up.
Rob: That’s more of a direct way.
Mike: Right.
Rob: Until they get AI that is good enough to do it without human involvement. I guess even then, it would be direct. It will just be a computer directly doing it.
Mike: Yeah. It’s a good question. It’s an existential question.
Rob: It’s an existential question for the internet.
Mike: Which will lead for some future episode.
Rob: Indeed and if you have a question for us, call our voicemail at 888-801-9690 or email us at questions@startupsfortherestofus.com.
So Mike, if a tree falls in a chat widget and no human typed that tree falling, did it really happen?
Mike: Uh, I don’t know.
Rob: Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript of each episode.
So Mike, McDonald’s or Taco Bell?
Mike: Oh, I don’t know. Probably McDonald’s.
Rob: Neither?
Mike: Neither, yeah. If I had to choose, probably McDonald’s, I guess.
Rob: Here’s a funny story. It was 50 below. It was the coldest say in Minneapolis in decades. With wind chill, it was 50 below. I took my car into the shop. I had an appointment booked weeks in advance. I go there and it’s running really long. It’s 11:30 or 12:00, I’m starting to get super hungry, my car’s in the shop, and I can’t walk very far because it’s so cold.
I looked and there’s two fast food places right in front of the car dealership. I can’t see their signs from where I’m going. I walk over to one and it’s like 10 inches of snow all piled up and stuff. It’s cold, the wind’s blowing, and people were looking because I’m walking like Han Solo. My least favorite fast food of all fast food is Burger King and all I’m thinking is, “Please, for the love of God, do not let it be Burger King.” I walk up to it and it was a […] Burger King. I could not believe it. There it is, like what are the odds?
So I walked next door and I’m like, “Please, anything else. All of the Arby’s are fine. I don’t like McDonald’s but I’ll eat there, blah-blah-blah.” Then one next to it is Taco Bell, which I’m okay with but I don’t think I’ve had Taco Bell in a decade. We just don’t eat fast food, you know?
Mike: Yeah, I agree. I haven’t gone to Taco Bell in forever, either. Last time I remember going to something similar was went to a Del Taco. It was the first at MicroConf with Ethan Shaw at two o’clock in the morning.
Rob: Yeah. That’s funny. Anyway, Taco Bell was like I remember. It’s processed food but it’s got a lot of salt to it so it tastes really good and then I was super tired after. Now I know why I don’t go to Taco Bell.
Mike: Yup.
Rob: But it was good. It was tasty.
Mike: It’s tastier at 3:00 AM I’m sure.
Rob: Oh, absolutely. Thanks for listening. 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 software products, whether you’ve build your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob: I’m doing alright, sir. I’m getting ready to head out to Mexico for about a week with family and we’re just looking to escape the cold. We haven’t left Minneapolis every month like we normal do during the winter. We’ve been here three years and we made this commitment to one another, Sherry and I did, that if we’re going to stay here, we need to leave about once a month. It’s a Delta hub so it’s really easy to get places to rack. We can get to Florida. It’s about 2½-hour flight. We can get to Cancún in 3½. We can just get to a lot of warm places really easily and inexpensively. Our first and second year here we just left a lot, but this year, due to some family stuff and other things, we really have been here all winter. Sherry left a few times to speak at conferences but we have not done a family vacation, so we are very much looking forward to beating the cold, getting out of here, frankly hanging out, and catching some waves on a playa in Mexico.
Mike: That’s cool. I have never been to Mexico. It a place I’ve wanted to go to for a while. I just never really made it a priority, I guess.
Rob: It’s great fun and depending on where you go, it can be a fun cultural experience or it can just be a fun vacation if you don’t with the hotel and such, but I highly recommend it.
Mike: Oh, business expense. MicroConf Mexico.
Rob: Absolutely. We should totally do that. Don’t think that I have not start cooking that up already. Sherry suggest that every year in winter because there aren’t any winter conferences. It’s all spring and fall but I think there’s an opportunity there.
Mike: Yup, probably.
Rob: How about you? What’s going on?
Mike: Well, I spent the last several days rebuilding my desktop and basically reinstalling the operating system on it. It’s been running into a lot of problems where it would just crash at night when I put my computer to sleep and then the next day when I go to wake it up, things just did not every come back properly. It started out like it wasn’t very often and it surely got worse and worse over time, and then lately, the thing has just been crashing left and right.
So, I was just like, “All right, is this a software problem? Hardware problem?” I ran a bunch of hardware scans and stuff on it and everything looked fine, but something was wrong and I couldn’t figure out what it was. So, I was just like, “Alright, I really need to update this.” I was looking back through my programs that were installed and I realized I had not reinstalled it since 2010.
Rob: So you’re just imaging the drive?
Mike: No, it’s the same operating system I’ve had since October 2010.
Rob: Yeah, that doesn’t work well.
Mike: And I pushed off on it for so long. I was running Windows 7 and I needed to have IIS 8 on it at least, in order to do certain things and the development stuff that I’m doing. You can’t install it on Windows 7. You have to have at least 8 or higher. I pushed off on it for probably two years or so, and like, “All right, I’m done.” I spent the weekend backing everything up, copying things over, and up and running on Windows 10. It’s actually quite nice now. I haven’t had a single crash.
Rob: I was going to say, “Windows 7? Hasn’t 10 been out for years? What are you doing?”
Mike: I just did not want to go through the pain and hassle of copying everything over and possibly losing something that I actually needed, because things were back-and-forth between. Something were in Dropbox, some things were not. I have […] I could get things if I really wanted to but it’s still just a hassle. You lose a fair amount of time and then there’s always that fear on the back of your mind like, “Is there something that I’m missing?”
Rob: Yeah. That’s tough. I remember doing that. I remember rebuilding the machines. I tend to do it one to two years when I upgrade the laptops and I would rebuild from scratch just to avoid the cruft that were built up. I haven’t don’t that in a while. We’ve talked about this in the past. I think Windows has some things that are better than Mac and I think Mac has some things that are better than Windows. I think that particular piece that I have not rebuilt the laptop in seven years now or eight years since I switched, I think that’s something that MacOS does quite well. Since I do all the incremental upgrades and it auto updates, I’m always on the new version. I used to give myself about a day. It was like 8-12 hours to basically rebuild the machine and I don’t have to do that anymore.
Mike: Yeah. I had to track down licenses. That makes for a head for all the right files and right versions. That was a big hassle and I just didn’t want to go through it.
Rob: Totally. I hear you and I think the nice thing I think that’s gotten users who’ve gotten along is, “I’ve moved so much more into the cloud.” I used to have Microsoft Word and Excel, then I had all the data I had to move so it’s on an external hard drive. But now, everything is in Dropbox and I’m in Google Docs. It’s just so many more web-based things, so I have fewer and fewer apps that I actually install as I would need to move to a new machine.
Mike: Yeah and fortunately, things have progressed. I have a local NAS device that’s got three of four terabytes worth of space on it. What I did was I did a physical to virtual migration of my entire machine and moved it over there. Then I created another copy of the entire thing on my hard drive. Now, I’m running the new system but in a window over on the side. I have the old system up and running inside of a virtual machine. There’s been times this past week where I had to go in there and say, “Oh, I did not grab this file or these files weren’t backed up, or I need to pull from the registry and export these settings and import them over here. They weren’t anywhere else or the application just didn’t have any other way to get at them.”
Rob: Yeah. You realize, both of our listeners have now tuned out?
Mike: Yes, all two of them.
Rob: All two of them, yeah.
Mike: I thought we had three?
Rob: Three, maybe yeah. Hi mom.
What about MicroConf scholarships? There’s some cool stuff going on with this.
Mike: Yeah. Last year, we talked about this before where last year I had quietly put together a scholarship program and we ended up giving away a total of 14 scholarships. This year, we have over 25 to give away with. A total of 27 scholarships that we can award. I’ll link this up on the show notes and if you’re interested in coming to Starter Edition, you fill out the application, and the last day for that is Tuesday, February 26. I intentionally made it to Tuesday so we can do the announcement today and then we can also do an announcement on that day. If people happen to forget, there will be one more announcement for next week’s podcast. We’ll talk about that. You have the link there, just go fill out the application. It’s pretty short. It asks some fairly basic questions. It shouldn’t take you more than 5 or 10 minutes to fill out. We have plenty of scholarships to give away so if you are interested, head over there and hopefully we’ll see you there.
Rob: The only update on my end is TinySeed applications. They basically close tomorrow when we’re recording this, so they would have closed by the time folks are listening to this. Things have gone very well, to be honest. It was more of a response than I’ve expected given then it’s our first batch and we’re still trying to build a brand name. I remember when we started MicroConf and people were like, “Micro what?” It doesn’t have any meaning and then you do it year after year after year and then eventually it’s almost like this inside story or a brand, really. It invokes a meaning in their mind.
The same thing with Drip. When we launched Drip, no one knew what it was and then eventually, you can say the name of it and people know what it is. TinySeed is doing that, that seed stage, so to speak. But still, we got a lot of applications and I’m going through those, having some great conversations with founders, really looking forward to digging in here over the next couple of weeks, and figuring out who we’re going to go with.
Mike: That’s good to hear. Does it seem like the decision-making is going to be a lot more difficult than you thought it would be or is it going to be easier? Any insights that you can share or no?
Rob: That’s a good question. With some of the founders and companies we’re talking to, it’s obvious that they’re a good fit and we really want to make it happen. Then there are some that are just definite nos. It’s like hiring someone for a role. There’s yeses, there’s nos, then the maybes are the hard ones. You’re not going to get a dozen perfect applicants that perfectly fit everything so you have to figure out if they really dig into any type of yellow flag and figure out, “Do I think this business can do this? Do I think these founders can do this?”
I think it will be easier on some friends and also harder on others. It just depends on how many we can get. I’m trying to fill a cohort and I think the cohort’s going to be between 10 and 12 companies, I would guess. Finding that many is world’s different than hiring because typically, I’m hiring one person for one role, but in this case I’m essentially trying to hire 10 or 12 companies or founders for the role.
That’s been cool. It’s been a learning experience for me but also what I liked about it is it builds on all the knowledge and all the experience that I’ve built up through my whole career including interviewing people, digging into things, hiring, and then all the SaaS knowledge, the knowledge of businesses, knowing what metrics to ask for and knowing how to shape those, knowing when someone says their conversion rate is this versus that and then digging in and finding out it actually isn’t that because they’re calculating it different, all this stuff that if I wasn’t knee-deep in this stuff and hadn’t been for a decade or more, I think it would be even harder. But it’s in my wheelhouse to be able to evaluate these things.
It feels both daunting but also it feels good and it feels like I’m able to understand the business pretty quickly just having all the conversations we have, the MicroConf folks, the podcast listeners, the angel investing, the advising and all that stuff, as well as running my own companies, there’s a familiarity with this. I feel like we speak the same language, which is really nice.
Mike: I was going to say that familiarity probably helps to some extent just because you’re not trying to figure out what they know that you don’t. It’s like there’s a lot of stuff that’s built-in already, like you know the stuff, and it’s just a matter of do they know it too or are they making mistakes along the way that you’ll be able to help easily course correct.
Rob: Yeah and that’s the thing. That’s where doing something outside of our wheelhouse, like if we get an applicant who’s doing mobile app or it’s a B2C physical product subscription service, I’m not sure if my same evaluation criteria can apply. I’m not also sure are there levers we can pull like we can with a SaaS app? It’s that kind of stuff. That is where it gets complicated. They are edge cases that you have to evaluate and think through.
Mike: And also, I’m excited and it will be interesting to see how it turns out.
Rob: Indeed. What are we talking about today?
Mike: Today, we’re going to be talking a little bit about how to indirectly overcome sales objections. I think we’ve had a couple of episodes in the past where we’ve talked about when you are in one-to-one discussions and directly talking to people in more of a sales capacity, how to address different concerns or objections that they have. I think there’s also a lot of objections that comes up when people are just visiting your website or they’re learning about you, and they have all these things that are in their head, but you can’t tease it out of them because you’re not directly in front of them. Question is, how do you know that you’re giving them the right information, what ways can you get in front of them or provide that information to them that is going to make sense help to alleviate any of their concerns?
This idea for this episode came about because I received an email from one of my agency customers. They had some questions that were relayed to them from their customer because they’re managing this customer’s account. They said, “Well, what is it that you’re doing for data security inside of Bluetick?” I’m not really comfortable because I saw this message and I didn’t really understand what it meant. It made me step back a little bit and think about what other things am I doing that will put this information out there? I looked and I was like, “Oh, well I could just write a KB article about this,” but made me look at all the other different ways that you can present that information. So, this episode is really going to be about different ways you can present those things to people that will help overcome those sales objections.
Rob: Got it and the indirect piece is because directly overcoming a sales objection would be, you’re on a sales call, someone has an objection, and you say, “Well, this is how we handle it, blah-blah-blah,” whereas you’re saying, this is the way to document it or disseminate the information to many people in a more passive way. Is that right?
Mike: Yes, that’s correct. That’s a great differentiation between the direct versus indirect, but it’s also a matter of making sure that that stuff is publicly available to them so that they can go get it whenever they want because when you’re in that direct sales scenario, if they have a question, they’re going to ask it. You don’t know what questions that they have or that they’re going to ask when they’re just browsing your website or they’re reading something about your service or they’ve come across it on Google.
The idea is how do you put these things out there in such a way that it’s not, for example, a giant wall of text that they’re not going to read anyway because then they’ll just say, “I’m out of here,” or maybe they’ll fire an email to you that’s going to be something that’s buried in there someplace anyway.
Rob: Yeah, that makes a lot of sense. The thing that people should keep in mind is that for every person who asks you or who has a sales objection like this, there are probably 5, 10, 50 other people who have a similar thought and maybe just never asked, left your website or didn’t sign up because whether it gave them a negative feeling or whether it just felt like too much work to find you support email and email you, there can always be one-off questions or one-off concerns. You’ll start to recognize those over time but in the early days of anything, you start to get the same question over and over and that’s when you realize, “I really need to document this and push it to the forefront of my website or of my marketing.”
Mike: I think it’s very easy to get caught in the loop where somebody comes in with a question like that and you answer it, and then somebody else comes in with the same question and you answer it. It seems to be very easy to just answer the question and move on, but without documenting it or without putting something in place so that that information is available to people so they can go look for it, that’s basically just causing you more headache and pain down the road that is hard to measure.
Rob: Yeah for sure. There are obviously a bunch of different ways that we’ll talk through here. Let’s dive into the first one.
Mike: The first one is related to your website, specifically around the design and the sales copy. Obviously, people have to have a certain level of trust from your website and a lot of times they will get that from the design. But the sales copy needs to speak to them. It needs to talk to the problem that they’re trying to solve.
Specifically, one of the things that you can do is on the About page, explain who you are, explain why is it that you exist, and explain what sort of domain knowledge and expertise you have in this area. That, in and of itself, will build trust but at the same time it also lets them know what is it that you stand for, why are you even in business, and why should they (a) give you money, and (b) trust you with their data.
The second area that you can do this is with blog articles. Whether you have a dedicated content section on your site or blog articles that you publish and then you email out to your mailing list, either way you want a repository of information so you can essentially demonstrate that you have knowledge of the topic that your software addresses.
In the case of Bluetick, for example, beyond one-to-one email marketing or follow-ups, differences between sending bulk email versus individual emails directly to people from your own mailbox, all those types of things factor into giving you a footprint on your website and it contributes to the SEO, but it also contributes to the awareness of the customer that you have a set of knowledge that they could benefit from.
Rob: Yeah and a blog is a nice way to do it because people can search Google and find it. Another way to think about it or another alternative is to do KB articles, which are nice because people will specifically seek them out. I don’t tend to go to product blogs if I have more support questions but I will go to KBs. Often, I don’t want to email support and I think a lot of people don’t want to email and wait for an answer.
If you can make a lot of this stuff available in a KB that you know if it’s published, that it was probably reviewed by people, and assuming it’s not outdated, you can almost have more confidence in a KB article sometimes than email a one-off support question. They have 50 different support people answering questions like, “Do you know that that person knows what they’re talking about?”
I know that in the early days, it’s hard to build out a KB and it’s hard to justify the time, but these kinds of questions, if people can just answer them themselves, it really will save you a lot of time as well as, as we’re talking about here, handle overcoming these objections indirectly.
Mike: When you send an email to support and they answer that says X, Y, and Z, I’m definitely one those types of people who questions it a little bit especially if it’s an edge case or if it’s on the complete other end of the spectrum, where it’s something that seems like it should be straightforward basic functionality and they can’t point me to a KB article. The KB article just tend to give me a little bit more confidence that, “Hey, this is the official stance,” or, “This is exactly how it’s supposed to work and people have reviewed it,” like you said, and that trust factor versus somebody’s answering the emails for support and I don’t know who it is or what their level of skill or expertise is.
Rob: Right and the other nice part about KB articles is they often will have a screen cast or they’ll include a screenshot. You can just get so much more information from that than a quick one-off support reply that’s two or three sentences long and doesn’t have all the visual elements and the time invested in it.
Mike: Right. The level of information and the different ways you can present it in a KB article are a lot nicer just because you can use those visuals and you can use the text, or you can use a video of some kind and embed it in there. You can cater to different people’s ways of consuming that same information.
The next way to do this is through email courses and webinars. I lump these together because they are similar and that you’re essentially broadcasting. The idea here is that you’re doing a deep dive on a very specific topic that’s relevant to the audience. With a webinar, the prospect is going to get to know you a lot better and that lends a certain amount of trust and credibility to you just by virtue of them hearing your voice or seeing your face in the course of the webinar.
With email courses, if you’re writing the email course yourself or the same person has written the entire course, then it’s going to have a very particular voice to it. I’ve noticed in my writing. I can go back 5, 10, 15 years and see that my writing itself has a very particular voice associated with it that I can recognize. I don’t know if other people feel that way or maybe other people have changed quite a bit over time, but mine tends to feel very familiar when I go back and reread things that I’ve written in the past. You’ll get that consistency throughout an email course as well.
I think that that’s what people are looking for, is consistency in knowing that when they’re doing business with you, they can expect a certain level of quality and confidence that you know what you’re doing and you’re going to be able to help them, versus if you have an email course that is very disjointed or it’s all over the place, they don’t have that same sense and they’re going to start to ask questions, maybe not directly or that they could verbalize, but they’re going to have the sense of, “I don’t quite trust these people, I’m not quite sure why, and I can’t put my finger on it.”
Rob: Another way to indirectly overcome sales objections is with downloadable resources like white papers, case studies, ebooks, ultimate guides. People who educate others and do a really good job of it in a non-markety way, they are held in pretty high regard, especially if they’re really providing tools for folks to do their job better or to be better at what they do.
If you move back in the day a little bit, HubSpot has always been really good about this with their education leadpages, with all the webinars, the free guides, and the free stuff they gave away. I recall Kissmetrics having a ton of white papers that did a good job. I don’t know who’s doing this really well today in a way that I would model it, but I’m sure there are folks out there—feel free to post in the comments for this episode, it’s episode 432—you can build a lot of credibility by educating. Just look at anyone who has a podcast or a blog for years and years. You begin to respect their opinion. Or if they write a book. There’s a lot of ways to do this.
Now for a product, if you’re a SaaS app, you’ll probably not going to write a book or necessarily build a personal brand around it. But you can achieve some of that using things that people can download, take away, and read on their own. A Kindle version of an ebook or a PDF version of a white paper. If it’s well-done, it’s well-titled, it’s distributed to your list, it really is actionable stuff and it’s of the quality that people would be willing to pay for. I think that’s something to think about.
At Drip, we published an ebook, we published a video course with Patrick McKenzie, we published something else, and we were giving away this content that was quality that we could have sold. In fact, we would give it away for a week, and then I believe we would put on Gumroad and sell it for cheap, $9 or something. That actually became trivial but interesting revenue stream at a certain point that I have left unnoticed because it was just all hanging out in Gumroad. But there was real value to these things and when we gave them away to our customers and prospects, they appreciated them and I think they learned a lot.
Mike: I think it’s a really interesting point that you bring up about the quality of it and having it in a level that you could presumably charge for. That’s something I probably hadn’t quite put into words before, but that’s a very interesting take on it. I agree with you. It’s a fantastic way to get yourself out there and it’s a good way to establish a marketing channel as well. It sounds to me like it was a non-trivial revenue stream for Drip at one point.
Rob: Yeah it was in the early days. What’s interesting is 5, 10 years ago, just having a blog and having essays was enough and it would drive traffic if you’re doing it well. The bar has just become higher and higher. So, if you see people who are doing content marketing really well these days, they really are doing really long pieces, 5000, 10,000, 15,000 words. They really are ebook-level and whether those are downloadables, PDFs, or they’re just published as a single long-scrolling blog post, that is something that Google lends more authority and credibility to these days.
Content marketing has really been all about SEO in the long term. You can get the initial push, you can build your list, people are watching what you’re doing, and they can like your marketing. But longer-term to build a sustainable business, it can’t just be about that social bump. It has to be about the longer-term organic traffic and the authority that you’re gaining in the search engines.
Mike: I think one of the last places that I can think of where you can indirectly overcome sales objections was in testimonials. Most of the times, you see these embedded on somebody’s website but I have seen them embedded inside of a white paper before or case studies. Case studies are a great place where you’re essentially getting this massive testimonial from somebody. The idea here is that people will look at that and say, “Well, if it work for so and so,” and that person is a similar customer to them or similar profile, whether it’s the same business size or same market vertical, their thought is, “Well, this should work for me as well.” Even if they do have other objections, if they look at that company and they say, “Well, I either empathize with them or I feel like I’m very similar to them. If it work for them, it should work for me.” It goes a long way towards overcoming objections that they can’t necessarily put into words.
Rob: Yeah. Case studies are a nice one. It’s one of those where one thing you throw them on your home page, you throw them in your footer, the nice head hot, some quotes around it, and those are cool and they could lend credibility depending on your space. If you get case studies that are done well, those can have a lot of impact. By the time someone cares about a case study, it’s okay if it’s markety because they’re interested in and they’re evaluating your product at that point. It’s not top of funnel anymore. That’s how you have to think about these things.
I know we’ve gone from overcoming sales objections and I keep putting it back to the marketing funnel because I feel the two can overlap. You can do both at once. But top of funnel stuff tends to be educational content. You build them a list and everything, and by the time you’re doing case studies, you really are trying to address objections that people have, you’re trying to educate on some of the nitty-gritty of how other people are using your product, and it can be a nice example for folks who are just trying to figure out what you app does.
Mike: One thing I wanted to tack on the end of this which I didn’t specifically put in the outline here was about chat widgets. You can put a chat widget on your website that allows you to interject yourself into the conversation on a website. Whether you use something like Drift, or Intercom, or custom chat widget, or something along those lines, the idea is you’re having that direct conversation with people, which is exactly why I didn’t include it because at that point you’re no longer indirectly overcoming the sales objections. But that is another good way to help overcome them, so I do want to make sure that I brought it up.
Rob: That’s more of a direct way.
Mike: Right.
Rob: Until they get AI that is good enough to do it without human involvement. I guess even then, it would be direct. It will just be a computer directly doing it.
Mike: Yeah. It’s a good question. It’s an existential question.
Rob: It’s an existential question for the internet.
Mike: Which will lead for some future episode.
Rob: Indeed and if you have a question for us, call our voicemail at 888-801-9690 or email us at questions@startupsfortherestofus.com.
So Mike, if a tree falls in a chat widget and no human typed that tree falling, did it really happen?
Mike: Uh, I don’t know.
Rob: Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us in iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript of each episode.
So Mike, McDonald’s or Taco Bell?
Mike: Oh, I don’t know. Probably McDonald’s.
Rob: Neither?
Mike: Neither, yeah. If I had to choose, probably McDonald’s, I guess.
Rob: Here’s a funny story. It was 50 below. It was the coldest say in Minneapolis in decades. With wind chill, it was 50 below. I took my car into the shop. I had an appointment booked weeks in advance. I go there and it’s running really long. It’s 11:30 or 12:00, I’m starting to get super hungry, my car’s in the shop, and I can’t walk very far because it’s so cold.
I looked and there’s two fast food places right in front of the car dealership. I can’t see their signs from where I’m going. I walk over to one and it’s like 10 inches of snow all piled up and stuff. It’s cold, the wind’s blowing, and people were looking because I’m walking like Han Solo. My least favorite fast food of all fast food is Burger King and all I’m thinking is, “Please, for the love of God, do not let it be Burger King.” I walk up to it and it was a […] Burger King. I could not believe it. There it is, like what are the odds?
So I walked next door and I’m like, “Please, anything else. All of the Arby’s are fine. I don’t like McDonald’s but I’ll eat there, blah-blah-blah.” Then one next to it is Taco Bell, which I’m okay with but I don’t think I’ve had Taco Bell in a decade. We just don’t eat fast food, you know?
Mike: Yeah, I agree. I haven’t gone to Taco Bell in forever, either. Last time I remember going to something similar was went to a Del Taco. It was the first at MicroConf with Ethan Shaw at two o’clock in the morning.
Rob: Yeah. That’s funny. Anyway, Taco Bell was like I remember. It’s processed food but it’s got a lot of salt to it so it tastes really good and then I was super tired after. Now I know why I don’t go to Taco Bell.
Mike: Yup.
Rob: But it was good. It was tasty.
Mike: It’s tastier at 3:00 AM I’m sure.
Rob: Oh, absolutely. Thanks for listening. We’ll see you next time.
