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In this episode of Startups For The Rest Of Us, Rob and Mike talk about SaaS marketing from square one. Topics include where to start marketing, what types of channels to use, and what your timeline will look like.
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Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about SaaS marketing from square one. This is Startups For The Rest Of Us episode 381. 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: 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 had never realized that we say Startups For The Rest Of Us three times in the introduction.
Mike: Yeah. I stumble over it a little bit sometimes. I think you did it well.
Rob: It’s a long title. Yeah, I know. We should think about changing that.
But aside from that, things are actually going really well this week. As you know, I mentioned on the show before, Sherry and I have put together a book called the Entrepreneur’s Guide to Keeping Your Shit Together. Sherry was very much the first authored and the driving force behind this and I can contributed topics, stories, anecdotes, I did some of the writing, but for the most part it was Sherry writing. But super stoked to have it out, men.
It launched on Wednesday of last week and so far, sales have been good. We’re going with an all Amazon approach, which is interesting. It’s something I haven’t don’t before. It’s a trip because you don’t get your customer email addresses but the one click buy makes it so much easier for people to buy versus coming to your website and entering credit card and phone into a Stripe form or whatever.
So far two thumbs up. I think Sherry’s learning a ton. I’ve obviously been offering advice and helping draft emails and put the wrong link in the launch email, that was me in my own software. I said it though Drip and I told Sherry, “If it’s a bug in Drip, or it’s my copy paste error, I’m still screwed! I can’t even blame it on anybody. It’s my fault.” It wasn’t a bug in Drip. I just made a copy paste error and left the ‘h’ off the http for the book link. I had to resend the correction which I pretty much never done, ever in my launch career. I always triple check stuff and I was in too much of a hurry.
Mike: That’s funny. I was actually going to accuse you of writing only one line in the entire book and it was the little anecdote where it says Rob’s thoughts and then there is, “Uhm, no.” and then “and Rob.”
Rob: Yeah. Exactly. I wrote that. I also wrote a bunch of the stories in there. It was a fun project. You know what’s fun about it for me, was being able to contribute, I did more than just consult on it but the redrafts and the edit and help shape things. It was not the full burden. I was not the founder on this one, I was more like the board member, adviser or something. That’s kind of cool.
It’s also fun to see someone launch a product like this at this scale for the first time. Because you feel vulnerable, you’re excited but you’re not sure what to do, and you’re just stumbling along. I can just see all the stuff shaping up as she’s going through the process.
Mike: Yeah. I’m sure it’s nerve wracking for her too. When you first put something out there, especially with a book. I think with software there’s that layer of obstruction like, oh yeah, you created this but you’re in the background and the software is the thing that people are seeing. I think with the book, you’re putting your expertise out there as well and that can be a little nerve wracking, especially because you’re not sure how it’s going to be received, did you hit on the right pain points that people have, are they really the things that people are feeling. Not that you’re not confident, it’s just that there’s a difference between a small subset of people that you’ve actively worked with versus a much larger set, especially when you don’t know who those people are.
Rob: Totally. It’s always just vulnerable. I think vulnerable is the right word, when you throw something out and thousands of people in essence are going to wind up buying this book here and hopefully most of them read it. You just have to be prepared for thoughts and comments and that’ll be both positive as well as critiques. It’s just a lot to put yourself out there, whether it is with software or a book.
Mike: Yeah. I’m very glad that I got both the paperback version and the Kindle version because I had to fight my wife off for the book because she saw it and she took it.
Rob: Oh, that’s funny. Cool. Glad to hear it.
Mike: Yup. Anyway, we went through that over the weekends. It’s a good read, I liked it.
Rob: I was going to ask what you thought of it.
Mike: It touches on a lot of topics that have not been well talked about but they’re starting to and I think that Sherry’s probably a very big contributing factor to that just based on her talks at MicroConf and how well they’ve been received, but I think it’s a topic of discussion that people are a little bit more comfortable discussing now than they were 5 years or 10 years ago. It’s nice to have it now but I almost wish it was out there 10 years ago.
Rob: Yeah, I know. Absolutely, I wish I had this book when I started. If you don’t know what this book is about, it’s about how to run your business without letting it run you. It’s how not to spin out of control and be super stressed out and how to know yourself more, how not to burn your relationships, how to stay human, how to stay connected to people. She calls it like Founder Mental Health but I always think of that as like, I don’t know, if I’m not depressed, or I don’t have an anxiety, I don’t need it. But it’s not that. It’s just how to fight through and really stay sane and maintain solid relationship to not piss off your wife, and your kids, and neglect your family, and gain a bunch of weight, and go crazy. I was so freaking stressed running Drip and selling Drip, I wish that I had a resource like this.
If that sounds like you, or you think you might be encountering that anytime soon, you can search on Amazon, there’s a Kindle and a paperback version, Entrepreneur’s Guide To Keeping your Shit Together, and we’ll link it up in the show notes for sure. Sherry recorded an audio version and has submitted it to Audible but it is not approved yet. I’ll probably talk about that once it’s approved as well.
Mike: Very cool. I’m in the middle of working on my FemtoConf Talk and it’ll probably be something of a preview of my MicroConf Talk to be honest. It’s nice to be getting that much of a jumpstart on it. I don’t think that usually I start on my talks until probably a month or so before the conference. It’s like two and a half, three months out at this point. It’ll be nice to get that done in advance and then give a preview of it and see what resonates and what doesn’t and be able to go through it a few times in addition before a live audience as opposed to just getting up there and giving it in front of a live audience for the first time at MicroConf.
Rob: Yeah. I could see that. It’s really nice to be able to give a talk twice. I always give a talk better, almost always given better the second time.
Mike: And the other thing is paper spiders. If you enjoy pranks of any kind, go into the bathroom, and on the other side of the toilet paper roll, draw a giant black spider and then put it back so they can’t see it.
Rob: Really. Even though it’s just drawn?
Mike: Because you can’t see it until you flip the roll over.
Rob: Nice. Where did you hear about this?
Mike: I saw it online but I practiced that yesterday and my son was not pleased.
Rob: Yeah. That’s funny. Cool. What are we talking about today?
Mike: Today we’re going to be talking about SaaS marketing from square one. This actually comes to us as a sort of a listener question. I put out on Twitter a couple of weeks ago asking if there were any topics specifically that people wanted to hear about. One of them is from Phillip who’s asked, “How to start a product from scratch? After my MVP is ready, because growth hacks are everywhere but nobody talks about starting marketing from a blank page. No social media, no newsletter recipients, no SEO, nothing, zero traffic.” I thought we would go through this and talk though some ideas around where you would even start with that.
At the very base level, you’ve got an MVP, we talked about this extensively. If you haven’t done marketing before, you get to this point where you got a product to put out there, then you’ve done things wrong but I also feel like we just get a number of questions that are around this where people have already made that mistake and it’s too late to change it, so now what do I do?
We’re going to talk thorough where you start, different types of channels you can use, and strategies to put the product out there and try to make it into a success even if you haven’t started doing any of the marketing beforehand.
Rob: Sounds good. I know this is a common question. It’s something that overtime, if you listen back to previous episodes, and if you look in both of our books, Start Small, Stay Small, The Single Founder Handbook, or even blog posts. This is just such a common topic that we’ve covered but it’s worth revisiting every so often and trying to see if there is either new information or just to revisit for all of our edification and a reminder for all of us.
Mike: The first question to ask is where do you even start? I think that in a situation like this, you need to work a little bit backwards. The first thing to look at is knowing what’s your timeline and your runway look like. By this, I mean really what date is it that you need to be making x dollars and MRR, whether it’s $5000 a month or $10,000 a month. How much money is it that you’re spending on a monthly basis, how much do you need to leave your job, how much money do you need to recover in order to pay back a particular loan or something like that. What are the hard deadlines that you have set that you need to be conscious of? Then based on those things, what are their current pricing plans that you have, how many customers would you need in order to be able to meet whatever that MRR goal is?
Establishing this timeline really does two things for you. The first one is that it provides you with a required trajectory. How many customers do you need to add on a daily, weekly, or monthly basis in order to get there? And the second thing this does is it helps you to eliminate certain types of marketing channels, because if you have a really short timeline, some longer term marketing channels are simply not going to work for you so you can completely throw the out the window and focus on other things that are shorter. And they may not be repeatable or suitable but they will help get you to where you need to be.
Rob: I like the idea of this one. I think that as you get more experience, let’s say it’s your second or third app, or second or third success, I think you can get really good at determining these timelines, build timelines, actually building the product and then ramping up marketing and taking a half ass guess at it.
I remember that doc I put together for HitTail, it was like the marketing game plan. It wound up being somewhat accurate but I wasn’t as experienced as I was when we launched Drip in 2013. That doc, I put together this whole analysis of how many uniques I thought I could drive to the site each month, how many would convert to trial, how many would convert to paid, what the growth would look like. I mapped it out and it wound up being shockingly accurate. The only thing that killed us was we didn’t have a product market fit yet and so I underestimated churn.
When you don’t have product market fit, your churn can be 20%, 25%, so you lose a lot more people. If churn had been closer to what I thought, the growth would have been very, very much in line with what I was guessing at.
The one issue I have with this, with the thing that I think could be hard, if this is literally your first time, you don’t know any of the rules of thumb. You don’t know, hey if I asked for credit card up front, I’m going to get between 0.5% and 2% of visitors convert to trial depending on how appealing my site is, what the price point is, and all that. You don’t know if you’re asking for credit card upfront, you should convert between 40% and 60% of trials to paid users and then your churn should be pretty thing in the first two months and then drop.
It’s just all that stuff you can either learn from experience or you can listen to podcasts like this, when we had Ruben Gomez on the show, probably, 50-100 episodes ago, he and I threw out a bunch of rules of thumb exactly around this and it’s towards the end of that episode. If you want to go back and listen to it, I also put it in my MicroConf Talk last year or the year before. I just had one slide, the rules of thumb things I use to do it.
I like the idea of asking where do you need to get to because this is something investors would ask you if you took them. If you’re not taking investment, it is nice to think about where you’re going and not just go out and wander. I feel like if you don’t know where you’re going, how do you know how to get there?
Mike: That introduces the idea of having a fudge factor. The timeline that you can put together based on your pricing plans and how many customers you need and the timeline, that’s a best case scenario. You’re going to have to go over that. Let’s say that you need 200 customers in order to get to 10,000 a month, how many do you realistically need to shoot for? Is it 200? Probably not, because you’re going to have people who sign up and then decide that they are not going to become customers or they go through a trial and then they say, “This isn’t for me.” Or they just never even set up the software, or set up their account and do anything with it. There’s lots of people who fall into that category.
You have to overshoot by some margin but at the same time you need a starting point of some kind. This simple calculation of your timeline runway and number of customers is going to at least help put you in the right ballpark. That’s really what you’re looking for. How do I get in the right ballpark? How do I get started on the right path versus I’m not going to do anything because I don’t even know where to start.
The next step is once you got that information in mind, the next thing to do is to break out your plan of attack into the different types of marketing channels that you’re going to go after. These aren’t specifically marketing channels you probably find in a book that it would say that okay, these are all encompassing.
These are two that I thought would apply specifically to this type of situation. The first pair of marketing channel is sustainable versus unsustainable. It’s really just a broad categorization of the different types of marketing approaches you might try. And then the second one is inbound versus outbound efforts. There’s lots of different ways to categorize or classify different marketing efforts but let’s just focus on these two pair.
Sustainable versus unsustainable, the way I really put these into perspective or talk about these is that with sustainable, it requires some sort of systematic repetition over time. It’s usually harder to get going but they tend to have a longer life to them.
Some examples of this will be things like SEO, content marketing, blogging, email newsletters, video channels on YouTube, paid acquisition, etc. And then with unsustainable marketing channels, these tend to be one time or burstable activities. If it’s one time, typically you can do it once and then that’s it. An example of something like that would be listing your website on product time. You could do that once but the chances of you being able to do that more than once for the same application are probably pretty slim. You can come out with new features or subsets of things you could add on there but they tend to be things that you’re not going to do for a while.
And then there’s burstable activities like doing a podcast story. You’re probably not going to go on the same podcast over and over again but you could go to multiple podcasts and do it like a podcast story. You could answer a bunch of questions on Quora, you could do joint seminars with other people, you could do integration marketing. Again, that’s an example of something that you would be able to do one time but you’re not going to integrate with Calendly more than once for example.
Those are the types of sustainable versus unsustainable activities that I would look at and I will classify your marketing activities as one of the two. That leads us down the road in the inbound versus outbound.
Rob: Yeah. Some of the sustainable channels you mentioned, most of them require ongoing work but they’re like a flywheel, they’re this big heavy wheel that just getting going is going to take you months and months. It’s going to start yielding rewards maybe three, six, nine months down the line. But the longer you push it, the faster it’s going to go.
SEO is that where boy, you’re going to see nothing for maybe six months. Obviously, there’s ways to hack around that and stuff, I’m just setting some expectations. It’s like don’t expect a bunch of results right away. But if you start seeing results, then you just build on those and build on those and then they last for a long time.
As you said, the unsustainable are those one time activities that I do actually think so you have questions on Quora in the unsuitable. I’ve seen some folks take an approach where those get upvoted and they wind up being popular and they get a lot of SEO traffic overtime. It depends on how you do it. I think there are still some question I’ve answered on Quora that continued to get votes two, three years later. When you look at it, they’ve had thousands and thousands of views.
I think you need a mix of both but as I said, I think it was last episode, an answer to Craig Hewitt’s question. The one time things or the things I would do early on because they get you the big boost, they’re one time and they’re quick. Doing that joint webinar, if that gets you 10, 20 paying customers, you might not see 20 paying customers from SEO for six months or more. Right now, what you need is revenue. You need customers, you need people paying you. Once you have the people paying you, then you can use that money then to par lay up and reinvest it back into more joint webinars or you can invest in SEO content marketing, etc.
Mike: When I mentioned answering questions on Quora, it wasn’t so much that your traffic was sustainable, it was like you can’t answer the same questions on Quora more than once or it’s a burstable thing where you might answer 10 or 15 or 20 different questions and then you wouldn’t continue looking for more questions because there aren’t more questions to answer. You basically have to wait a while. That’s really what I meant by classifying it as unsustainable. Not that ongoing benefit from it is not sustained, but the activity that you do around it is just that one time or you do it a couple of times and that’s it. Does that makes sense?
Rob: Oh yeah, totally.
Mike: Again, I think as Rob pointed out, some of these things will cross over from one side to the other. It’s not very much black and white. Some things will cross over from one type to the next. That leads us over into inbound versus outbound. The way I separate or classify things as inbound or outbound is inbound is functions on the basis of attracting people versus outbound activities and marketing channels, they function on the basis of actively and proactively going out and contacting people.
Inbound would be things like the SEO content marketing where you’re publishing things and you’re trying to attract people to your platform or you blog or email newsletter, things like that, versus outbound which is you’re actively doing cold calling, sending out cold emails, doing outbound email prospecting on LinkedIn or doing paid advertisements. Paid ads is kind of a mixed bag as well because that flips a couple of different categories of these channels. That’s the main differences between inbound versus outbound.
When you’re early on and if your timeline is short, you want to focus mostly on the outbound efforts. The reason for that is because you need a lot more control over the activity. You want to be able to tie the activity that you’re doing to the number of people coming in because waiting for customers to come to you is not going to be enough. You could wait for months or years, you may not still get the number of customers that you need versus doing those outbound activities where you can essentially drive the conversation and you can go actively get in front of those people as opposed to waiting for them to come to you.
Rob: I agree. I think that outbound has become more and more prominent in SaaS. I think it’s become more prominent as the enterprise players or enterprise software has come in. If you think back 10 years, they were very, very few enterprise SaaS or even mid-market SaaS companies that were targeting mid-market and enterprise companies. In those fields, there’s a lot outbound. There’s a lot of outbound cold calling, is what it’s traditionally been.
I think when SaaS was mostly focused on the Fortune 5 Million as 37signals says, it’s so much more about creating content. It’s the Joel Spolsky approach, it’s the Basecamp approach, and those were the models that I think we saw and those are the models that certainly resonated with me coming over as a developer. I didn’t want to do the cold calls, and the cold emails, and the outbound stuff.
I see a lot of value in both, to be honest. Probably not cold calls myself these days but I think even if you’re bootstrapped, I think getting over the mental stigma of not doing outbound, I think is something that you’re going to want to at least wrestle with internally and not just focus on the SEO, and the split testing, and the content marketing. Those are the things that I was blogging about 2007, 2008, and they do still work but they’re not nearly as easy because there’s so much more competition.
If you want to get somewhere faster than I do think you’re going to a mix of inbound and outbound. Again, going back to HitTail, I did no outbound except for JV emails that I would do with folks, but with Drip, we absolutely did outbound cold emails and we did a lot of paid advertising both for HItTail and Drip.
Mike: Once you’ve established a revenue base or gotten to your initial goals, you can switch over a little bit. Or if your timeline is long enough because you’ve got a lot of runway to work with or you love your full time job and you don’t want to quit but you like doing something on the side, then it’s easier to wait for those longer term strategies to pan out. Basically, it gives you more options when you’ve got a longer runway or you’ve got a longer timeline.
At that point, things like concept marketing make a lot more sense because you can decouple the customer acquisition rate from the activities that you’re doing. You can do link building, you can create content, create videos for YouTube, all those different things because you have the time to spare. But if you are in a position where you want to find out quickly whether or not this is going to go anywhere, you need to push on those things and you need to do those outbound efforts in order to verify quickly versus waiting because you could wait for a very long time to find out, and you almost never know for sure. But obviously, if somebody posts a link on Reddit or something like that and you get 10,000 customers, yeah, that’s a pretty good stamp of approval. But the chances of that happening are so minute that it’s not realistic to even think about depending on those things.
I think with the things that we’ve talked about so far, the next question that comes to mind is, okay, all of this sounds great but where do I actually start? We’ve talked around the issue and I think to address it head on, the first place that I would start is looking at your personal network and seeing if there’s anyone in that personal network who can help you.
The prime example that I think I would point people to in most cases is go to your LinkedIn profile and see who you’re connected to, who you’ve worked with in the past, or go to your Twitter profile and see who you follow or who follows you and find those people, contact them, and say, “This is what I’m doing, this is what I’m working on. Is there a use for this either in your business or do you know somebody it could be useful for?”
There’s ways to go about it without seeming overly salesy. You can definitely just say, “Hey, I’m working on this. Can you take a look at it and give me some advice.” Or, “I’d like a little bit of help. What do you think that I should do?” Those are great places to start the conversations because it’s asking somebody for help versus, “Hey, can I sell this to you?”
That’s a much better starting point for conversation especially if you don’t have a good working relationship with that person or you haven’t met them in person before because then it opens the door for them to put themselves in a position of “expert” where they’re giving you advice. People love to give advice on whatever your new product is.
No matter what you built, people will always want to give you advice on it. It doesn’t mean that it’s good or bad or that it’s going to be exactly what you should be doing, but it’s at least a starting point for conversation. From there, you can branch out, find out who they know, see if there’s channels that they can promote it through, or if they’re just interested.
Some types of products are going to resonate very, very well with certain people and they may say, “Hey, I can’t personally use this but I have an audience that I cater to and they would love to take a look at this. Can we take a look at it and do a deep dive, or get on a call and talk about a little bit more, or maybe go through a demo?” That gives them a little bit more materials to work with than you just sending them a cold email saying, “Hey, I would like you to take a look at this and I think it might help your business.” Those conversations and discussions are going to get you a lot farther if you have some sort context with the person, try to help them to understand what it is that you’re doing.
Rob: That’s a good point. I think that if I was starting out today, some of the approaches that I would focus on early on, I would definitely be looking at paid acquisition. I’d be looking depending on your product, it’s going to be Facebook, or Instagram, or LinkedIn, or Twitter probably. AdWords is probably not going to work because it’s just too expensive these days. It depends on how much you want to get in to run the ads.
I know some people just are averse to it and I had someone doing some marketing for me at one point. I was mentoring and teaching him and he said, “Is there anything I can do aside from running ads?” He just really didn’t want to learn that. It’s an interesting opinion and perspective.
Some people want to do it more the viral approach or with content. You have to figure out what you’re going to enjoy. If you have budget to hire somebody, that’s great because folks who know how to run ads are going to be way, way, way better at it than you. But if you have to suck it up and you don’t have any money to hire someone, then obviously, that’s going to be an option.
The thing that I like about paid acquisition, man, is even in the early days, if it’s not profitable at least you’re getting people in there to try it out and you get some kind of feedback.
Another thing I would consider right off the bat of course is an email newsletter. Email has just been a critical part for everything I have ever done including MicroConf, and my blog, and selling books, and selling software, getting people to use SaaS. It’s just such an asset to have.
I don’t know these days that I would start a blog if I were going to try to market a new SaaS app. If I was going to do content marketing, I would probably take a different approach to it. I would at least debate whether the resources that I would need and the on-going publication, the on–going article cost would not be better spent doing more bigger content efforts. We did this with Drip, we started getting success, we had an ebook, and then I did an audio version of that ebook. It was about email marketing automation I think I was getting started with.
I think maybe we did a video course and we submit those to Producton, and we put it on Gumroad, and we sold a bunch of copies but we gave it away for the first few days and it got a bunch of traction through those. They were more one time bursts but they did help longer term with SEO because we had so many backlinks from these things. It’s an interesting thing to think about instead of publishing content constantly.
Is it an option to do less frequent content but just try to make a bigger splash? This is part of the thing that you see, let’s say Neil Patel or some of the other big blogger, content marketers moving in that direction writing. Even if they aren’t doing ebooks or package products that they’re giving away, they are doing this longer form stuff. It’s less content or fewer posts but they’re a lot longer form.
Of course then that leads you to SEO. If you know how to do SEO and you’re good at it, by all means do it. If you’re trying to learn it from scratch today, it’s going to take a while, I’m not saying don’t do it but it is much harder than it used to be and it’s going to be a big road up there, but if you can get SEO content marketing, email newsletter, and paid acquisition, if you get two of those working, you’re going to have a pretty nice growth engine.
In the early days of Drip, I just have alerts on Quora and when stuff would come up in the email marketing category or startup category, I try to jump in and answer those. I’m a big fan of podcasts tours. I have done them for years and if you can pull one off, I think there’s a lot of value there, for not a lot of time investment.
And then of course, join webinars if you do have the network. It all depends on what your unique asset it. If you’re really good at SEO, then go after that, if you’re good at paid acquisition then go after that, and if you have a good network then you can work that to get people to email you.
If you have none of these, one day, back in the day, all of us had none of those. You have to pick one, you have to start from scratch, you have to hustle.
That’s the thing is it’s never going to be as hard as this first app. When you’re starting it with no revenue, no customer base, no network, no audience, that’s when it’s going to be the hardest. That’s when you have to push the hardest. It’s only going to get easier from then on.
Mike: Something else I mentioned that goes along with what you said was that in those early days, when you’re trying to get the product out the door and get it in the hands of people, there’s almost no substitute for getting directly in front of somebody and talking to them about your products and what it is that you’re trying to achieve and how it solves the problem that you went after.
There’s a lot of credibility and trust that goes into signing up for a SaaS app these days. You can overcome a lot of objections just by having a conversation with somebody. Whether it’s a phone call, or a webinar, or one on one demo through a Zoom account or Skype or something like that, you can overcome a lot of trust issues just by having that one on one conversation with somebody and answering their questions. Your website doesn’t need to look fantastic, you don’t have to have a great onboarding experience.
You can hand walk somebody through your onboarding and talk them through every single question they have and the information you’re going to get from them about what concerns they have or just the questions that they ask are going to be very valuable to you and being able to come up with answers that will not only answer them but also answer everyone after them who’s going to have the same types of questions. If they ask, “How do I use this piece over here?” You know that that’s probably going to come up for other customers. Or if they say, “What does this button on the bottom right here do?” If it’s got a weird icon, they may say something to you. If they do, you can use that to make the product better and hopefully reduce the number of questions which ultimately reduces the friction which helps people move through the sales pipeline a little bit better.
Yes, it’s tedious. It takes a long time to get through that but the insights that you’re going to get from that are massive. It just helps you move things along. It is slow, it’s a slow process but it does work over the long term. You just have to walk through every single step of it.
Rob: That wraps us 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 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 380 | Allocating Your Marketing Budget, Minimum SaaS Documentation 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. The topics include marketing budget allocation, documentation for SaaS, and digital marketing.
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Rob: In this episode of Startups For The Rest Of Us, Mike and I discuss allocating your marketing budget, minimum SaaS documentation, and we answer more listener questions. This is Startups For The Rest Of Us episode 380.
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: I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
Mike: Well, if I had a way to put an emoji in here, I’d put a sad face in because my new website is not live yet. I was expecting it to be done.
Rob: Yeah. It’s been a couple of weeks since we recorded last.
Mike: I handed the things off to a designer and he was working on it and then some stuff came up and he wasn’t able to finish it on the previously proposed schedule. Completely understandable stuff, completely out of his control, but I’m a little disappointed when things get pushed off a little bit. Still plugging forward and hoping that things will be pushed out and live within the next week or so anyway.
Rob: Got it. Next podcast episode I will give you a bunch of crap if it’s not live.
Mike: Yeah, sure. You can evaluate the design and I can tell you to go to hell.
Rob: “Hey, Mike. I would tweak these three things. Boy, that’s really an odd color,” and you’re like, “Dude, stop. It’s all done. I’m going with this.”
Mike: I like fluorescent orange.
Rob: Yeah, that’s funny.
Mike: I’m just kind of in a holding pattern right now waiting for that to get all squared away so that I can kind of launch some other marketing campaigns and see how things go.
Rob: That’s cool. It’ll be nice to get that. I’m excited to see it because we talked about it a couple of episodes ago. Your current site doesn’t do the product justice. I’m interested to see what it looks like. For me, I was in San Francisco last week at SaaStr. I will admit it, I liked it better this year than last year.
I’ve only been to two SaaStrs and my general appraisal is they’re way too damn big, way too big. They say that they’re 10,000 people there and it feels like more than that. I really think they should a, sell fewer tickets, and b, there’s this big emphasis on bring your whole team, so half of the people you talk to it’s like, “I run marketing for this startup. I am in support.”
Nothing against that but I don’t get a lot of value out of that. I wanna be with other founders or I wanna be, if it’s a marketing conference, I wanna be with people in marketing. But it’s this really broad swath of people. I find the lack of focus and the size to be detrimental to the conference. I think it would be better but I think the point there is different with MicroConf where it’s highly focused content, and we try to get the people together.
A lot of people were just there to network and business meetings. It wasn’t even hallway track conversation it was like, one guy I saw in the lobby, I’m trying to think. I think he recognized me or he recognized the Drip name of or the other. He said, “Yeah, a long time Drip user. I just lined up seven meeting a day. Here, I don’t go to any of this sessions.” There are people who came and did just that which I’m sure is fruitful but it’s an interesting way to view the conference. We had, I participated in about four or five meetings over the course of the three days myself.
Mike: I use to go do the Symantec and Altiris conferences out in Vegas and it was the same type of thing. There were people who would go solely so that they had easy access to people to line up meetings one after another. That was the only reason that they went. They didn’t go to any of the sessions or anything. They just go there to talk to people.
Rob: Yes. With that in mind, again, I went to somewhere between three and five meetings so I did miss a few sessions but with that in mind, my learning this year were that the panels, panels in general, not just at SaaStr, I’ve never seen a panel that’s any good. They’re always gonna be watered down and even if the topic is super intriguing, they’re just not well done.
That’s one of the reasons we don’t do panels at MicroConf. I think we’ve done one panel out of the 14 or 15 MicroConfs we’ve run. We set it up very specifically and we gave everybody a heads up and asked them to be super tactical but I just started avoiding the panels early on in the conference, the SaaStr conference. I was only going to the solo where it was one person, because I knew that they would have slides, and they would have thought through a premise, and be making a point, and having an opinion.
That’s what I really enjoyed about it where I saw several talks that were good. They were like, I’ll say, MicroConf quality with a high bar with a lot of – from experienced people like a former product leader at box.net, as an example. You know that she has a lot of experience and knows what she’s talking about.
Mike: Yeah, I’m with you. I’ve never really seen panels work out very well to the point that they’re interesting and you get any reasonable takeaways from them. I wonder if that has a lot to do with, I don’t think it’s just the format, but I also think that it’s a matter of trying to give everybody either equal opportunity to talk or I think another contributing factor is the issue of having questions that aren’t necessarily, I’ll say, as well prepared as a talk.
Because if somebody’s up on stage, they’ve given their talk generally a fair amount of thought behind it, have a story arc or something like that. There’s background, they can do lead ins to different pieces of the story but with a panel, you can’t do that at all. It’s very difficult to establish rapport and create some sort of an arc that people can follow.
Rob: It’s a good point. We’re touching on some things that could be fixed. I was talking to Jason Cohen, he was there, he did a talk and then he and I were hanging out, talking. We were having this exact conversation and he suggested, “You know what? If you instead made it a debate, it would be way more interesting.” It’s a panel but it’s essentially a debate and then I said, “Wow, but then don’t do three-person panels, just have two.”
Can you imagine Jason Cohen, Hiten Shah up on stage? “Alright, I want one of you to take the side of bootstrapping, one to take the side of raising funding, and then we’re gonna go through six topics.” We’re gonna say, “Alright, how does this impact hiring? Go.” And the two of them debate. Then, “How does this impact how fast you can grow? Go.” Just run through these topics. That, I was suddenly intrigued by.
Mike: Yeah, that is something interesting. As soon as you started mentioning that and saying that you’re gonna have two people like Hiten Shah and Jason Cohen up on stage and kind of debating something, I was like, “What happens when they agree on something?” Well, yeah, you have one of them take opposing sides, that makes more sense.
Rob: You have to set it up in advance to either that even if they don’t fully believe it, they just do it. Folks who are on the debating team or have done debate, you just have to do that. You sometimes have to debate something, you have to be on the side that you don’t agree with or you pick issues that you do know that they’re on the opposite sides of. You and I could debate things like…
Mike: Who’s gonna win an arm wrestling match?
Rob: Who’s gonna win an arm wrestling match, inbound and outbound email, because you’re outbound and I’m inb–anyway. Coming up with things off the cuff is not my strong – this is why I prepare talks.
Alright, we’re gonna answer some listener questions this week. First question is a voicemail. It’s about allocating your marketing budget. This question comes to us from our very own Craig Hewitt, the founder of PodcastMotor, and Seriously Simple Podcasting.
Mike: And Castos now.
Rob: And Castos now. “Hey, Rob and Mike. This is Craig Hewitt from the Rogue Startups podcast. I had a question for you guys today about how you would think about allocating marketing. Say you have $1000 month you wanna spend on marketing for a SaaS tool, how would you think about allocating that money for different things like content, or SEO, or paid acquisition, and let’s say that it’s a relatively young SaaS product that is, say, below a few thousand dollars a month at MRR. Interested to hear your thoughts on how you would approach this problem and if you have any specific answers that you think would be kind of best practices. As always, love the show, thanks for everything you guys do.”
Mike: I think this is an interesting question because the parameters of the problem here is that you have $1000 for the month and what marketing activities do you prioritize for your business or how do you go about evaluating them. I think, in some ways, the question is almost misphrased because not everything is going to have a dollar cost associated with it, especially if you’re bootstrapping and you’re early on, and you are able to do things yourself.
For example, if you’re doing SEO, there is not really a dollar cost associated with that. It’s actually more of your time than anything else versus if you’re doing paid advertising where clearly, there is a budget that you have to set aside, and you have to be able to do that or if you’re paying people to write articles, but at the same time, you can also write those articles yourself. It’s a question of resource allocation, not necessarily just dollars. There’s the time of yourself for doing it, and then there’s the money associated with those things, and then there’s the output of that. How much are you going to be able to reach people? How broad is your reach going to be after you spend the money and the time?
I think that that’s probably the most important thing to focus on is what is your reach going to be based on the resources you have spend. If you spend half your time for the month and you’re able to get 10x the reach, then if you were to spend $1000 or even $2000, then you’re going over your budget at that point, but you’re not gonna be able to get to as many people. I would look at it in terms of reach and then refine that over time because you’re probably not gonna get it right in the first month, you’re probably not even gonna get it right by the third or fourth month. You’ll be able to narrow it down and you’ll be able to start eliminating different options.
But I would probably focus on most three different things in any given month, and then at the end of every month evaluate them against one another to see how far of a reach did you get, and was it qualified. Did you reach the right people? Because if you’re not reaching the right people, and you’re not getting to a scale that you need, then it means that that channel or whatever it was that you were trying is basically worthless. It doesn’t do anything for you.
If you get in front of them and you are doing it at a rate that is, I’ll say reasonable, it’s gonna depend a lot on what your channel is because 1% in one channel could be, you should expect 50% in another. But as long as it’s reasonable, then I would essentially double down on that, and refine it, and optimize it.
But if you can’t get anywhere close to what is reasonable based on what objectively other people are telling you that they’re seeing in their industries, then I would switch to a different tactic and see if that one works out because it’s gonna be different for every type of business, every type of product.
Rob: Yeah, the way I would think about this is it’s actually an approach that I used to do. Well, I did it for HitTail and did it for Drip, and I saw Noah Kagan doing something similar but better. It’s basically take a Google spreadsheet or an Excel spreadsheet and write out all your marketing approaches, and then try to guesstimate how many trials you think or visitors you think you can drive from it.
You put the cost, estimated level of effort for hours whether that’s for you or someone on your team is doing it, and then you just try to sort them, you come up with a simple algorithm, just sort probably by impact unless there’s something that’s substantially more and more effort. You just want pure volume of trials, or new customers, or revenue, however you wanna measure that.
Early in the SaaS apps career, assuming you have product market fit where people are using it, paying for it, return is low, all you’re trying to do is find marketing approaches that work. You’re very likely, for small SaaS app, you’re gonna find one, maybe two. You’d love to have 10 but it’s gonna be one or two that’s gonna have the most impact over time. I like to think of them, there is short term, there is long term.
The short term ones are doing a joint venture mailing where you email your list – I’m gonna say podcast because we know that Craig runs Castos which is a podcast hosting and let’s just assume that that’s what he’s looking at. You’d find either a podcast blog or someone who does a podcast about podcasting, ask them to mention it, and you would also mention their podcast too to your audience or something like that. That’s a little bit of a quirky way to do it but you get the idea.
Maybe there’s another podcasting SaaS that helps with recording like ZenCastr or something and you do a JV with them where they email your people and you email yours. Then there’s just straight up affiliate stuff. That’s where you can approach people and just say, “Look, I’ll pay you 30% perpetual or 20% perpetual topline revenue from anybody you refer. Here’s your link.” See how many people will do that. There’d be podcast advertising.
The reason I keep coming back to podcast is because your audience’s podcast hosts are most likely to listen to other podcasts, and so you can just start buying spots on those podcasts that are talking to other content creators. There’s paid ads which these days I’m gonna say is Facebook. AdWords is gonna be very unlikely, it’s just gonna be too expensive for you to get to work although you could try it, outbound email. These are all the short term things.
When I say short term, they can work for a long time, but they can give you a short term boost. They’ll instantly, if you do a JV mailing, boom, you’ll get much customers that day, hopefully, you do. Then you have to do another one every month in order to make it work. Then there’s these longer kind of flywheel things, stuff like SEO, content marketing even, I’ll say, guest post is kind of in the middle there. Guest posts can get you a one-time shot but they also build up SEO overtime.
You may wanna do both but honestly, if I were in your shoes, and I were just getting started, I would go for a bunch of the short wins because when you’re doing, I don’t know Craig’s revenue, but I’m gonna try when Hittail was doing $1500 or $2000 a month, all I wanted to do was get it to $5000 or $10,000 a month. I didn’t care if it was unsustainable, or the marketing approaches completely didn’t scale at all.
As soon as I got to $5000 or $10,000, I had so many more options. I can hire better people, I can hire more people, I had huge budget than the market. I wasn’t constrained to the $1000. I didn’t have very high expenses so I had $5000 or $8000 a month to market this thing. Now things really open up for you. Then you can start doing multiple. “Alright, I’m gonna get a blog going with landing pages and blah, blah, blah.”
I have to admit, if I was marketing a podcast hosting service, I love the idea of – you know where all your customers are. They’re all in the iTunes store. It’s like the best deal ever, to be marketing to that audience. It’s not a huge audience but you know where they all are. You know that the business podcast and any kind of for profit podcast that takes advertising is making money.
There’s a lot of hobbyist podcasts talking about whatever, dungeons and dragons, movies, or whatever, that’s more like a B2C sale. You’re gonna want to stick to the more popular ones and you’re gonna want to stick to certain categories that common sense is gonna tell you, “These people have money and they’re gonna be willing to pay for it.” That would probably, to me, be the very first thing I do is either have VA scrape or write a scraper because you know all the iTunes pages are all on the web, in the browser.
Hopefully Craig hasn’t already come up with this. It’s like some secret sauce thing but I’m totally giving it away but I’m just coming off the top of my head and thinking how I would begin to approach it. Maybe I would test some paid advertising but probably not before I did outbound email, joint venture mailings, trying to get some affiliates to work with me, and even joint venture webinars are interesting, I don’t know if that one’s gonna work in this space but to basically latch onto someone else’s audiences and be like, “Hey, let’s either do a webinar to each other’s audiences,” or you say, “Hey, can I do it to your audience Mr. Podcaster? You fill the seats and I’ll give you cut of whatever the people buy.”
I realized that’s a long answer but that’s how I would think about it and with $1000 a month, I would, like I said, I would test things until something works because that’s something working buys you the luxury of being able to do multiple things at once. While I was testing, I would really stick to one thing at a time, and I would hustle, and I’d learn everything about it that I know. I’d read up on it and immerse myself in it for one to two weeks of just consuming content about it, and buying the Udemy course, and watching the MicroConf talk, and talking to XYZ expert about it, calling them up on clarity, paying them their $3 a minute that they need. Once I’ve figured I have my head around it, I would just dive in deep.
This is what I did with HitTail back in 2012, I think it was. I just picked the topic that I thought would work and dove into it. I spent one to two months just hammering on it. If it didn’t work, I moved on to the next one. The ones that did, they made that up. They made it so that I was able to grow it as substantially as I did.
Great question, Craig. I appreciate you sending that in.
Our next question is another voicemail. It’s about what documentation you might need for a SaaS. “Hi, Mike and Rob. Thanks so much for your podcast. It’s been so useful over the years I’ve been listening to it.
My question today is around documentation. What do both of you think you need, a standard, to run a SaaS online business? I’m looking for things like a test document to do routine tests on new releases, for example, checking everything is still working, documentation on service, processes, service definitions, the list could be endless. But I’d really like to hear from you in terms of what you think you need structurally, in terms of documentation set to operate, to run your businesses. Also, what was required, do you think, for selling businesses well or would be seen to be required by someone looking to invest or purchase your business? Thanks for this again.”
Mike: I think there’s actually two questions here. One is what is the documentation you need internally to run the business and then the second one is what do you need to have in place in order to sell the business. I think that there’s two answers to that. It can be on completely opposite extremes.
In order to run the business, at the very least, again this may depend on how complicated your business is, but there are businesses that are run with everything in the founder’s head and that’s really all they need because it’s small enough and it makes enough money. There’s not a lot of things that they need to do on a day-to-day basis that are gonna be things that they’re going to forget how to do. Then as your business gets more complicated and as you add more people into the business, that’s where you need to start documenting things and having things, processes written down so that whoever you bring in to help you out, they can follow those, and you don’t have to micromanage them because that’s really why you’re bringing somebody into the business is so that they can do things without you having to do them yourself.
Some of it is for scalability purposes of the business, some of it is just you don’t have enough hours in a day, but all of those things need to be documented so that you don’t have to still be involved in those things that you’re hiring somebody else to do. When you get to the point where you’re selling the business, that’s probably where there’s gonna be a lot more documentation that’s going to be needed so when somebody comes in to take over the business, they are going to be able to pick up the business and run without you having to be involved.
Again, this is a little bit more advanced. If you’re gonna be there for the next year or two, it’s probably not as big a deal. If somebody is acquiring your business and you’re required to be with them for the next 18 months, or 24 months, or 36 months, whatever happens to be, that’s probably less important but it still probably needs to be done at some point along the way because they don’t want to run into a situation where, let’s say, you stepped out on the street, you got hit by a bus and killed, they bought this asset that they don’t know how to leverage and you continue to make money from, that’s a very valid concern for the acquirer.
But if it’s something small and it’s very simple to run and operate, you’re probably gonna need less documentation. There is that slide and scale and it really depends a lot on your business complexity, revenue, number of employees, and overall risk tolerance, I’ll say.
Rob: Yeah. When I think of internal documentation, which is what we’re talking about here, I think of two types; I think of processes, non-technical processes, “This is how you do a marketing campaign.” Or, “This is how you check support. This is how you respond to these,” kind of a Wiki type thing. Then I think of kind of the technical docs of if stuff goes down, this is how you repair it, this is what the architectural schema is like in the end points and stuff.
Again, that’s all internal. If you have an API that’s external, you obviously need to document that but let’s just keep internal docs in mind. For internal processes, I never created documents until I was ready to hand it off to a person. If I was doing it myself, I did not spend the time. That has always worked. It’s just like in time documentation. Often, the way I would document it is I would bring the person on it and say, “Alright, here’s your job, it’s to check sporty mails and respond to these. Please look through the history and see I’ve responded, and I’m gonna throw together a Google doc, or I would throw together a Screencast.” And then I’d say, “Can you turn that into a Wiki? So that if we bring a second person on, then you can train them using the materials.” I have put the burden on the person doing it. I delegate that to them to create the processes.
This is just the way I do it. This is way more time-efficient for me. I don’t enjoy creating the processes. If you do, then by all means, you can do it. It’s gonna be better than the person creating it themselves. But for me, I’m trying to get stuff done in the business and I don’t wanna spend a bunch of time writing a bunch of stuff up for technical documentation.
If you’re a single developer and you’re working on it, I would veer very much on the side of less documentation purely because a lot of us came from these enterprise backgrounds, I was coding in Java, and .net, and doing these big consultant projects, and we had to document everything, you don’t wanna do that for your startup. It’s a waste of time. Until you’re bringing more people on and trying to get them ramped up, and even then, even these days where it’s as complicated as Drip is, we basically have a GitHub Wiki where we have articles written by internal developers on different subsystems, and then we do have these things called Runbooks. I’m not sure if you’ve heard this term but it’s a developer term, kind of a DevOps term to describe how to run a system.
If you get a page that something is down, if you got a text that something’s down, you go to the Runbook for that subsystem and it’s supposed to tell you how to troubleshoot and how to do things. Those are valuable. We did not have those until we were at probably 8-10 engineers. It didn’t feel like we did it too late, it didn’t at all. I’m glad we have them now but it wasn’t like we were running around for years with our hair on fire because we didn’t have this documentation.
With that said, Derrick was more stressed out than I would’ve liked and that he would’ve liked because we didn’t delegate this stuff soon enough, and Derrick was on call for years. It was too much. That is how the one regret is it would’ve been nice to have some Runbooks early on. But to document a system, extensive, detailed system documentation falls out of sync so fast when you’re in a startup, and not doing waterfall development, like we did 10 years ago. I would go very documentation light until there comes a time when you need it and then you can document it. That’s a good question. Thanks for sending that in. I hope that helps.
Our next question is from Eoin from Bitesize Irish Gaelic. He’s a developer and he has a question about hiring a developer to write code. He says, “Hi Mike and Rob. What are your thoughts on hiring a developer contractor rather than doing my own development? Do you generally see more leverage in stepping away from development? I’m thinking of Michael Gerber’s book, The E Myth Revisited. I lean towards not being a developer/technician,” as he calls it, “in my business.
Having said that, there’s time and energy involved in hiring and delegating, and on Odesk, a good developer can be $40 an hour. Admittedly, what probably muddies the water on my question is I like development. I’ve had a few developers working on my projects over the years and it’s hard psychologically to let go of the development to someone else. I found the best flow to be developing new features for my webapp, that’s not to say I get great satisfaction from trying to work straight to growing up the business, this really is my life’s work. Possibly, a better way for me to ask the question about it is how can I train my thinking to allow myself to get out of the way of my business’ growth?”
What do you think, Mike?
Mike: Well, there’s obviously definitely opportunities to hire somebody as a developer and pull yourself out of that particular role. As long as you hire the right person, that can be awesome because it will remove you from the heavy lifting of writing the code day in and day out, and having to flip back and forth between things like marketing activities, and sales activities, and then going hardcore into the software development, and then diving into customer support.
The ability to replace yourself in one of those areas that requires a lot of mental overhead is, I won’t say priceless, but there’s a lot of value in being able to do that. That said, I would also ask the question what is it that you are probably the best at? Is it writing code? Is it going to be that for you? Or are you much better at doing marketing activities? I would kind of make the conscious decision about whichever one of those roles you provide the most value for, you take on that responsibility and probably stay there.
It’s not to say that if you’re a developer you can’t learn marketing or that you’re not gonna be any good at it. But what is is that you enjoy doing, what is it that really kind of excites you, and drives you forward everyday. Because if you like diving back into the coding and you do it constantly, it’s gonna be difficult for you to step away from that and hand it over to somebody else and let them make all the difficult decisions.
You can, in some cases, stay heavily involved in the development side of things, if you wanna switch over to marketing, if that’s your passion, but I will say that it’s difficult to do both heavy marketing activities and also be heavily involved in the product architecture side of things especially if it gets to any level of complexity. It’s gonna be difficult. I would just keep those things in mind but it’s a balancing act.
There’s no one right way that’s going to work in every situation. It’s really about what is going to work for you and what is gonna be less distracting for you because if you’re in the middle of an email campaign, and you’re thinking, “God, I wish I can go in and fix this code,” for example and then you start doing it. You’re actually hurting yourself even if you have somebody else there who can do it and they are tasked with that.
You’re basically hurting the relationship or the parameters of the employee-contractor agreement by taking things over and doing them. Because then, it’s gonna feel to them like, “Oh, this person doesn’t trust me,” or “I’m being micromanaged.” Then you introduce yourself to a world of other problems that you had no idea that you were gonna run into.
Rob: Yeah. And to add one more piece of information, because we often shorten emails people send, and I skipped one paragraph. He said, “I run this business while working a full time job and I have a family. I spend around 45 minutes per day on ‘rock activities’.” Means developing new features, analyzing customer survey, planning new price points, like doing really solid stuff. Then another 45 minutes managing part time employees and generally trying to keep up with his inbox.
He’s very, very time constrained. That’s another data point. I think I’ll speak to his situation and then I’ll speak more generally. I think given his situation, it sounds, given that his time is so constrained, this is when I start to think about hiring help. At first it was VAs, then it was contractors even though I could write the code, and really enjoyed writing the code, with only 45 minutes a day for rock activities or big rock activities. I would seriously think about trying to find a good developer.
I think that’s the thing is he’s saying, “How can I train my thinking to allow myself to get out of the way?” It sounds like he already knows what the right answer is in his situation. I think that, assuming that the webapp features and having more of them are gonna help the business grow, and that there is enough competition that is warranted because sometimes, that’s not the case. Sometimes the app is good and it just needs marketing in which case I wouldn’t hire a developer, just let the app sit there, it’s a single feature, and it has a product market fit, and you just need to dump marketing into it, then go do that.
But if you really do need on-going development to continue acquiring new customers and/or compete with competitors, I would heavily, heavily lean in this situation towards finding a good contractor. I’m glad he suggested a $40/hour contract because I think at $15/hour, it can introduce a lot of headaches because you find kind of less experienced people and they can write crappy codes.
So yes, there is a hurdle, a mental hurdle to get over, I think I’ve repeated it to myself over and over, “Is this hassle worth it if it grows the business and allows me to quit my job?” What is your number one goal here? Is it to quit your job? Is it to have enough money to live on from your business and what’s the fastest way to get there? It’s probably, in this case, assuming you do need to develop features, it’s gonna be hiring someone.
I would also look, everyone else has done this, I shouldn’t say everyone else but a lot of people have done this. I made this work on a shoestring budget and almost exactly – [inaudible 00:28:47] you’re talking about, and so have many other people. Hiring developers when we were developers and it felt weird, and yes, you micromanage it first. You just figure it out.
As entrepreneurs, we tend to have growth mindsets, we tend to be somewhat flexible even if we don’t think we [inaudible 00:29:01] the code, and eventually you will, I think, feel better about it.
More generally when people ask this question, I kind of say, “What do you really wanna do? What’s gonna make you happy? What is your goal here?” My goal early on was to quit consulting and quit my job. That was more important to me than continuing coding even though I really, really liked to code.
For me, the quickest way to get there was to buy webapps or to pay contractors to build things because I was working 8-10 hours a day. I was booked full time, billing $100, $150 an hour, it didn’t make sense for me to take days when I was earning that money and go write something when I can hire someone back then for $20/hr, that was decent. That was my number one goal. I was willing to sacrifice writing code even though I loved it. Some people are not and that’s okay.
I listen to the Art of Product podcast with my co-founder Derrick and Ben Orenstein who a lot of folks know from MicroConf and Thoughtbot. I’m pretty sure at one point he said, “Yeah, if I’m gonna do a software product, I wanna write the code. I don’t wanna get out of it.” That’s okay. You can totally do this. You look at what Derrick did. Derrick still wrote a bunch of the code on Drip, or all the code for the first year.
In that case, he found essentially a non-technical co-founder in me. For Ben, I would just say okay, go into the business. But that can strain on you. You can do whatever you want. You’re just gonna have to move a little slower which is fine. You’re probably gonna have to contract out to do other things that normally I would tell you to do, like being the Chief Operations Office, handling and helping with support, and hiring.
If you’re really in the code, you need to be shielded from that. You’re gonna need to find somebody that can help shield you. Build a simpler product because you can’t build, and market, and do sales, and do all these things for a bigger product if you’re not gonna delegate the code. It’s gonna be a challenge for you long term.
But there are people that do it. Peter the CEO of Teamwork, he still writes some code. I’m sure he would admit that it’s probably not the best use of his time at times with a 100-150 person company, but he enjoys it so much that he still wants to be part of it. I think there’s leeway here but best practices, what I would advise, what I think maximizes your chance of success, and will get you there faster, is to stop writing code.
But I totally think you can succeed while still writing code if it really, really is what you wanna do, and you love it. I’ll add one final note. I still write code on the weekends. I wrote some crappy PHP script a few weeks ago just to scrape some websites and hit some APIs because it’s fun, for no other purpose and to do it. Even though I don’t do it for my job, I do have the freedom now to kind of do it for fun and really enjoy it.
I think we have time for one more question today. This one is about digital marketing and whether it works for B2B SaaS. This is from Alistair Scott from riskmemo.com. He says, “What’s the best marketing channels for B2B SaaS business? Is digital marketing such as Facebook, AdWords, etcetera, a viable technique for a B2B SaaS business or is it too broad?”
I don’t know if he’s talking about digital marketing or paid advertising because Facebook and AdWords are really more paid advertising. “My app will be ready to market in a couple of months, and I only need to target a specific role in a company, the person responsible for health and safety. I’m getting very promising feedback from people within my network but test digital marketing campaigns as a smoke test haven’t been successful. Your thoughts are much appreciated.”
Mike: I think this is a really hard question to answer because there’s so many variables involved in doing what appears to be just paid advertising which I think that’s what he’s referring to when he says digital marketing because there’s lots of other forms of digital marketing.
You could write ebooks for example. I’ve seen companies who write ebooks and then they publish it on Amazon and use that as a marketing channel. Now that’s digital marketing, but at the same time, you could also argue that it’s not necessarily marketing because you’ve got a book that you’re selling but you could say that’s a product, it’s a revenue stream. But at the same time, if you have a longer term goal of converting to people who are buying the book into customers of your SaaS application, and the book tells them how to do it, but your SaaS does it for them, then in theory that’s a marketing channel for you. It’s digital marketing.
I would differentiate between those two and say that digital marketing can absolutely work but it really depends on the specific implementation of it. In terms of doing paid advertising, it’s hard for me to say. I feel like there are certain types of industries where paid ads are simply not going to work. It’s not because they can’t work, it’s because the ROI does not work. The numbers themselves don’t make sense. If you have to spend $50 to get a customer and their lifetime value is only $30, yes, you can spend money and acquire those customers but you’re losing money every single time so you can’t sell at a loss and make it up on volume. It’s not gonna happen.
Rob: You make it up on volume.
Mike: Yeah, you can’t do that. I mean, you can but you’re gonna go broke. That’s the bottomline. You can try to spend your way out of it and maybe it’s possible that you have to do that in the short term to figure out something that you can tweak and optimize because your first cuts at it are not going to probably work out very well. You’re still learning what to do, what things work, what the software does, and how you target different types of people, and different companies. There’s a learning curve associated with it.
You’re not gonna be the best at it when you first go out there and try it but eventually over time, your costs are going to go down because you’re gonna get better at it, and you’re gonna be able to outperform your competitors, and get in front of the right people. That said, even after you have all that, it still may not work out financially because you’re still losing money on it. It could be that there’s other things that you have to do aside from paid advertising. But I think that if you’re selling a B2B SaaS product, in most cases, doing online marketing in some format, is probably going to drive revenue for you especially if it’s a low touch sales process.
If it’s high touch, the digital marketing may bring awareness, but you may very well have to do outbound campaigns, and cold calling, and direct marketing, and things like that. I would combine it if that’s the case but this sounds to me like this question’s really aimed directly at how do I do digital marketing to make it successful.
Rob: Yeah. The answer to will this work is I don’t know until you try it. That’s what I would do. I would think that your odds are gonna be…
Mike: Well, it sounds like he has tried it and it hasn’t worked.
Rob: Yeah, I guess you’re right. Here’s what I would think. Facebook, I can’t imagine it working for this. I don’t think you can get someone’s title from Facebook. Can you, in the ads? I don’t know what their segmentation is like these days.
Mike: I don’t know. I don’t think so.
Rob: Here’s the two things I would try for this; outbound email and LinkedIn advertising. Yep, LinkedIn advertising because you can then target based on someone’s title, their job title. You can title regions and all that stuff. Then outbound email, because then you just go somewhere, find a list, outbound email or calling, whatever it is. Because then you can find the list of people. It’s cold calling in essence but at least you know that they are the role that you need if it’s that specific.
I could see toying around with some AdWords because you don’t necessarily need someone to be the role but you need them to searching for something that implies they need your software. The problem with that is it’s gonna be too expensive. I don’t know any AdWords keywords anymore that are possibly affordable unless your LTV is just through the roof. Those are the two things I would try. Facebook, probably not. AdWords, probably too expensive. Thanks or the question. I hope that helps.
Mike: I think that about wraps us up for today. If you have a question, 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 379 | There and Back Again, a Founders Tale of Services to Product to Services
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In this episode of Startups For The Rest Of Us, Mike interviews Marie Poulin, chief designer and digital strategist at Oki Doki, about her journey from consulting to products and services.
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Episode 378 | Billing Systems Suck, Here’s How to Make Yours Suck Less
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In this episode of Startups For The Rest Of Us, Rob and Mike talk about billing systems. Some of the topics covered include monthly vs. annual, credit cards upfront/or not, dunning, and paid vs free trials.
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Mike: In this episode of Startups for the Rest of Us, Rob and I are gonna be talking about why billing systems suck, and how to make yours suck less. This is Startups for the Rest of Us Episode 378.
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: I’m not eating a sandwich.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob, aside from not having a sandwich?
Rob: I’m hungry and you’re eating a sandwich.
Mike: Yes.
Rob: You have a turkey sandwich.
Mike: I do. I described it to you in exquisite details just before the podcast.
Rob: I know you did. I’m like starving. I realized it was lunch time right now. This week’s pretty good, man. I think it feels like when I dropped my 11-year old off to school, was 23 below, but it’s up to 17 below. That’s not too bad. T-shirts and shorts day.
Mike: I think it was Brennan Dunn who had asked on Twitter earlier today why you didn’t ski.
Rob: I saw that. Yeah. I have a serious answer for it.
Mike: Oh, yeah.
Rob: Yeah.
Mike: I’ll tell you what, you give your answer and then I was gonna give my answer that I was…
Rob: Oh, got it. In all honesty, I grew up, we just didn’t really have the money to go to the mountains, and get all the gear, or I should say we spent the money doing other things. We didn’t go on ski vacations. There were mountains a couple of hours drive from us in Tahoe, but it just wasn’t a thing we did, and we always played sports, and so you didn’t wanna get injured, because I had friends who busted their knees up, they needed surgery.
I ran track for nine years, and my brother played football for eight. It was just something that we’re like sports were more important to us than the potential danger of doing that. That’s the serious answer. Now, what’s your take?
Mike: Mine was gonna be that because you grew up in California, whenever the temperature got below 70, you wrap yourself in a parka and just didn’t go outside.
Rob: This is true. Yeah, that’s the real answer.
Mike: But, of course, it’s ironic that now you’re in Minneapolis and it feels like 23 below.
Rob: I know. It hurts you’re nose and stuff, but man, with the right gear, it’s not the end of the world. You don’t wanna stay out for too long, but it sounds really awful and it’s fun. The sun’s out, you know, the sun’s shining, it’s bright.
Mike: As long as you’re not standing still, you’re fine. If you’re standing out there, of course, you’re gonna get cold, but if you’re moving around, it’s not a big deal.
Rob: Right. Yep. Anyways, I wanna extend an invitation. If you’re a listener, and you or your company might be interested in sponsoring MicroConf, or sponsoring some scholarships. We have quite a few companies that are lining up to pay for folks who can’t afford to come to MicroConf but feel those people would get some value out of it.
If you’re interested in doing either of those things, we’ll give you a recognition on the podcast. You’re obviously talked about a lot at MicroConf itself. And then we have you on the website, and people are hearing about you, you’re just kind of doing good for the founder community. Get in touch with Mike at sponsors@microconf.com.
How about you, what’s going on?
Mike: Well, I’ve had a rough week of support tickets after I pushed my new release. I’ve talked about this before. I was working on this major release. I got to a point where I’d done enough testing on it that I said, “Okay, everything looks good. Let me push this out.” Pushed it out, and see here is two weeks ago on Thursday. It was the week before I went to Big Snow Tiny Conf and pushed it out, everything looked fine, everything was great for four days or so.
Then, Monday I leave. Then, I started getting a couple of support tickets, and I started to get more support tickets. I ended up spending basically a full day while I was at Big Snow Tiny Conf just working on those things and trying to figure out what was going on. It got to the point where I actually rolled back to the previous release and then the problems kept continuing, I’m like, “Oh, God. What is going on here?”
Finally, I tracked it down, it turns out that it was a library from Google that I was using for authentication that was causing the issue, that was causing like one piece of the app to break. But everything else was still working. Eventually, I fixed that. Unfortunately, it was not actually directly related to the release itself, it happened to show up at the same time. I spent a lot of time trying to figure out what I did wrong versus, “Hey, what library is causing this?”
Rob: Wow, yeah, that sucks. That happens every once in a while. Obviously, it’s something you try to avoid but it will happen with these apps that we’re just constantly changing. It’s like you’re rolling changes out, or a library itself changes and breaks things. Are you completely past it now or is there any fall out?
Mike: I’m still dealing with the support issues here and there. Part of the reason for me pushing out was that I knew I didn’t have 100% test code coverage, but I also knew that the vast majority of it was working, and I just don’t know what little things are broken. There’s been a few things here and there that I’ve had to fix, but nothing major aside from the one issue, the Google library.
Everything’s working fine. It actually functions a lot faster, and is more scalable than it was before as well. I think it’s in a better place. It’s just that week or so was rough while trying to figure out what was going on. I was doing like a lot of stuff manually.
Rob: Yeah, that’s a bummer, man. That’s when your hair is on fire, and you’re not shipping any features because you’re just rushing around from one thing to the next, trying to figure it out.
Mike: What’s worse is that it’s just things sort of worked. That was the worst part. There were fundamental changes I made, and it’s just, I couldn’t figure it out. It’s just forever.
Rob: That’s a bummer. Cool.
What are we talking about this week?
Mike: We’re gonna be talking about billing systems, and mostly why they suck, and how do you make yours suck a little bit less. This question had come to us, I asked on Twitter what people wanted to hear, and Brennan Dunn had asked a question about billing. I pointed them to Derrick’s article, Derrick your co-founder on Drip, where he’d written a blog article about when to build your own billing engine. We’ll link that up in the show notes. This discussion, I think, kind of relates back to episode 375 where we talked about how to evaluate per seat versus tiered pricing models. But this is more about the mechanics of the billing system.
I think the place to start the discussion is really what is it that you’re actually billing people for? Because this is gonna impact your product messaging, your marketing, the positioning in the industry versus competitors, and the pricing itself.
Rob: Yeah. There’s a lot of things to think about with this. Brennan’s particular question was on handling annual billing and kind of talking through do you do credits versus just do an annual bill where you bill someone upfront. We’ll certainly be talking about that as well as a number of other things that you have listed here in the outline.
Mike: As I said with the first question, what is it that you’re actually billing people for. I think you have to narrow it down and talk about it in terms of what is going to be on your pricing page. I actually saw a website earlier today where they had three different pricing tiers, and then they had the enterprise plan which you would kind of expect.
But then when you start looking through at the different limits on the different plans, it was all over the map. It was actually very difficult to figure out where you would fit into each of these. They build on the number of users, and then there were two other metrics that they build on, but both of them were variable.
Some customers may have a lot of one metric versus the second metric. Some of them may have a lot of both, and then there’s obviously room for somebody to say, “Well, I don’t need that at all, that doesn’t matter to me.” Like, “Why am I actually being billed for this?” I just think that it’s interesting to note that. You have to make sure that what you’re billing people for is what they care about.
Rob: Yeah, exactly. We talked about this a few weeks ago with per seat versus kind of a metered billing based on subscribers, or disc space, or whatever. As soon as you go to multiple of those, you’re gonna make some people mad. That’s not to say you shouldn’t do it. But like we talked about, in the early days, you don’t have a lot of data, just pick one. Pick one thing to kind of meter on and make some tiers, and go with it. Then, as you get more data, you can later add them. But the more complicated your billing, the more complicated your billing engine. That is not something that you wanna be dealing with when you’re trying to find product market fit.
Mike: Some of the things you might want to bill people on, obviously, like there’s the pricing tiers themselves and the different metrics within it, but Drip for example uses a metered billing system. You bill based on the number of subscribers that are in your account. Why don’t you talk a little bit about metered billing because that applies a lot to web hosts, for example, where you’re paying for storage, or bandwidth, or processing usage, and things like that. But talk a little bit about what was it that made you decide to choose that specifically for Drip?
Rob: Yeah. Metered billing is a bit of a misnomer for Drip. When I think of metered billing, I think of Amazon, AWS, where it’s truly like per minute billing, or per gigabyte used, whereas Drip is metered with tiers, and it’s based on subscriber count.
In the early days of Drip, it was a different metric. It was the number of new subscribers you got into your account each month because Drip was more focused around just having an email mini course. It was not a full-blown ESP. Once we became an email service provider, it just made more sense to kind of fit into the mental model that other competitors were doing. That’s how we started.
It probably won’t be that way forever. We’ve got to the point where we’re a marketing automation platform now, and there are some people with 20,000 subscribers who send 4 million webhooks a month. It really hammers our servers, and you think about it, and you’re like, “Huh. That person’s actually getting quite a bit of value out of Drip. More value than someone with 20,000 subscribers, and sending 0 webhooks, and it costs us more because we need to add more servers and such.”
There’s something to think about. Again we started fairly simple, we adjusted, we’ve had multiple versions of our billing. At this point, for the most part, how many subscribers you have should be how much value you get out of the app. That’s the key thing to think about. What is the thing in your app that someone gets a lot of value by having more of it?
With Amazon EC2, which is Elastic Computing, it’s how many minutes you have a server running. With Dropbox, it’s how much storage space you need. With something like Drip, it’s how many subscribers you have or email sends. You could argue that way, but the standard way to do it is subscribers. Or with a tool like a CRM system or a sales management system, it would most likely be seats, because the more people that are using it, the more value you get out of it.
Mike: That’s kind of an overview of the metered side of things, but then there’s also per subscription, and you also mentioned per user, and then you could feature gate based on the features themselves. You could charge more for certain features versus other features. You could have add-ons. But all of these things kind of factor into what it is that you’re actually billing people for, and that’s what you need to pay attention to when you’re looking at your billing system or you’re trying to implement one for your product.
Once you’ve decided on that piece of it, you need to understand whether or not you’re gonna be offering a free trial, or it’s essentially going to be paid upfront. That has implications on the database itself, and whether you can have a user that doesn’t have a credit card. Do they have to give you money first? Do you have the opportunity to put something in there that says, “Okay, somebody can sign up without a credit card.” Do you have to build that side of things?
These are things that I’m kind of looking at now with Bluetick. Initially, it was designed in a very particular way, and then I just kind of ripped out the subscription side of things and then did everything through like a WordPress plugin and had people paying me that way. I’m just kind of like manually doing things back and forth to kind to synchronize between Stripe, and between the application. I’m still doing that today. But it made me think about, “Oh, well, had I gone down the road of trying to design all these things in early on, it would have been a lot more difficult because I was trying to answer questions that I didn’t know the answers to, it just would have been really, really hard.”
That’s something else to think about. Are you going to require that credit card upfront or not? Can you have users without a subscription attached to them? Can users be shared between accounts or between subscriptions, for example, are you gonna have a multi-user system? Those are things to take into account.
Rob: Yeah. I think there are four stages, or four different levels of providing friction upfront. Friction is a negative way to say it, but it’s how a new trial user will think about it. You can ask for a credit card upfront and charge them in advance. Then, refund them on request. That’s the most amount of friction because they literally have to put money out. You can ask for credit card upfront and not bill them upfront, but then bill them after a 14-day trial, or 21, or 30-day trial. That’s a pretty standard way to do it.
You can not ask for a credit card upfront. I guess there’s only three, as I’ve thought through it, you cannot ask for a credit card up front then they basically have a free trial until it expires, and then at that point you ask for a credit card. I guess the fourth would be that it’s a free trial, a freemium model where it’s free perpetually at a small usage number like a Dropbox, or like Drip, Drip has a forever free plan.
Typically, when I default, it depends on the space you’re in. If you’re B2C, you’re probably gonna wanna go more either freemium or no credit card upfront. Your conversion rates to paid are gonna be a lot lower. But you’re gonna get a lot more people in the funnel. If you’re going enterprise, you either want to not have self-service sign up at all or if you’re more mid market which is below enterprise but not quite small to medium, you probably don’t wanna have a credit card because a lot of folks let’s say you’re in a $50 million company, the marketing manager may or may not have access to a credit card to just sign up for free trials. It’s not as common as we think it is when you’re dealing with really small businesses or kind of 10-person startups like we think about.
But for the most part, if you’re going kind of B to small B, B to SMB, might think of an app like HitTail, I think of maybe even like a Bluetick. They’re probably gonna have a credit card available, asking for it upfront does not tend to be too much of a blocker and having a free trial where you charge them at the end is what I’ve defaulted to in the past. Probably, if I were to launch a new app, that’s what I would do.
The one kicker there is if you have enough people who can handle the support and/or the sales burden of all the leads that you’re gonna get without asking for credit card, then by all means, do that. But you’re gonna have more pre-qualified leads, or I should say, the leads you get, you’ll have fewer of them but they’re going to be more qualified if you do ask for that credit card. It is a way to limit the number of people that are signing up for your app if you are bootstrapped. If you’re underfunded, and understaffed, asking for a credit card upfront is a good way to do that.
But there are pros and cons to each of these. It’s probably an entire episode on its own. I think we may even have one or two episodes where we just discussed that. But those are the kind of levels to think about. All of those impact your billing system, because it’s gonna impact how your billing systems works, when emails are sent out, if you have a trial versus credit card. You have an entirely different sequence of emails that need to be triggered to notify people.
My advice is if you’re gonna build a billing system that’s gonna handle this, then, you keep in mind that you very well may want to switch this. You don’t hard code a bunch of stuff. You make it extremely flexible, such that you could later go in and just change the length of your trial without modifying a bunch of code and having to retroactively update the database, or that you can switch from credit card upfront to credit card after without catastrophic consequences.
Mike: That’s all the hard part really is trying to figure out all that stuff out in advance, and knowing that if you go down a particular path with the marketing side of things, if you want to experiment or change things, or run into and educate a certain situation that you didn’t expect for example, the person signing up does not have a credit card available for them typically that they can use for this.
Or if they want to be able to sign up for it, and then use the value that they received out of it to go back to their manager and say, “Hey, can I get the corporate credit card now?” Versus asking for it upfront, kind of putting their own reputation on the line. If things don’t work out, then they look bad to their manager. Those are things that you probably don’t know upfront until you get far enough down the path of validating the product for your customers and getting them on boarded. You have to be able to reverse course on some of those things, and that’s what makes this stuff challenging.
I guess the next question is where do you store this data? Where do you store this information? I referred to this kind of thing or this question as what’s your source of authority? A lot of people just use Stripe or whatever the payment gateway is that they use for it. A lot of different payment vendors will have this data available for you, but it’s not always easy to get at and there may not always be an API for it.
I think most listeners are probably developers and they’re going to want to store this information in their own database, but you can only store so much of it. You can’t store every credit card number for example because it’s a PCI compliance violation. There’s a lot of stuff that you can’t store in your own database. There’s gonna be a need to synchronize, in some way, shape, or form between your own database and the other systems. Is that gonna be webhooks? Is that going to be a data dump that you just bring down from them, and upload into your own database? Do you need to synchronize with an accounting system? Those are all the things you need to at least think about.
But really, the fundamental question you’re trying to answer here is what is going to be your source of authority for this data, because you have to keep in mind not only all of those things, but all of the different situations that we’ve talked about previously. Where are you getting credit card upfront, or afterwards, and then other stuff that we’re gonna be talking about which is things like chargebacks and credits, and upgrades, and downgrades, and proration, and things like that.
Rob: Yeah. In the past, I think HitTail was already built, it was actually built using PayPal subscriptions. I acquired it, I turned it to Stripe, and I kept some of the info in the database but I also had to login to Stripe to do certain things, and that was a pain in the butt and I regretted it.
When we did Drip, we agreed that the Drip database itself would be the source of truth, and it was made super easy to report so that you could just do a select in the database. Didn’t need to go out and hit other APIs. That meant that every monetary transaction has to come from within the Drip app. We have a web admin where you don’t go into Stripe to refund people. You literally hit a refund button in the Drip admin, it goes out and hits Stripe and refunds it.
In very early days, it was kind of a pain in the butt because let’s say we had a refund the second month we were live and we had 20 people, 20 customers, I remember saying, “Derrick, I’m just gonna go onto Stripe really quick and do it.” He said, “No, no, no. Don’t. We want everything in the database, and I don’t wanna have to go back.” He spent an hour wiring up a little refund button, just hacking it in. It was kind of a pain in the early days because I didn’t wanna spend that time working on that. But now, once we kind of hit escape velocity, I was very, very thankful that we did take the time to do it.
Moving forward, if I were to build another app like this with recurring billing, I would want all the data. I would lean towards having all of the data in my database. But there obviously are tradeoffs with that, because it’s gonna require a little more time upfront.
Mike: Yeah. I was gonna mention that. The requirement for you to essentially do development every single time you need to make an update in one of those systems, it just adds to the number of things that you need to implement. Sometimes, they’re not always straight forward, not every vendor has an API that’s as easy to navigate and use as Stripe does. A lot of them are just terrible, some of them just don’t have something you can use.
There’s other sides of storing all of that data in your own app which is, for example, reporting or using other third party services like dunning services, or something like Baremetrics where you’re trying to figure out what does my revenue look like over time. You may be able to hook it in, and just say, “Okay, use Stripe and pull that information out.” But if you’re doing your own billing system with your own subscriptions versus Stripe subscriptions, it can be a lot more difficult to pull those reports.
Rob: That’s exactly correct, yup. It’s a bummer there. A bunch of services that you’ve named, Churn Buster, and I think Stunning, and certainly Baremetrics, and there’s a bunch that tie into Stripe subscriptions. If you don’t use that and you build your own, you miss out on that.
That is something that we did. We had to build some additional reporting that we know we’re not gonna be able to get from those apps, and that’s the tradeoff we had. The Drip billing is complicated enough that Stripe subscriptions were not a fit for us. It would have been catastrophic. We would have been very, very limited if we had used them. But there are cases where people are not bouncing up and down tiers as frequently, and you don’t want to take control of let’s say the trial and how prorating and all that’s done where Stripe subscriptions, I think, are a fit.
Mike: You mentioned upgrading and downgrading, that’s something else we should probably dive right into. I think this goes partially towards monthly subscriptions. I think you can get away with, let’s say for example, somebody decides to upgrade their account or downgrade their account, I think a lot of times you’d get away with it if they’re in a monthly subscription to not bother prorating it.
Either you just bite the bullet and take the loss on it or you kind of eyeball it, and say, “Okay, we’ll charge you this much to kind of get it in there.” Stripe does have a proration option that you can use. But if they’re on an annual plan and they decide that they wanna upgrade three months into it, what do you do? Clearly, you’re probably gonna wanna upgrade them at that point, but if they’ve already paid for a year in advance, you can’t just charge them for another year and extend the contract by another year on top of that. That’s something your billing system is going to need to take care of and handle.
In addition to that, there’s downgrades, but what happens if somebody accidentally upgrades, or they upgrade, and then the next day they upgrade again, or they upgrade an hour later, for example, maybe they chose the wrong one, how do you handle that?
Rob: Yeah. There’s a bunch of different ways to handle it, and all of them has some type of negative outcome, including just being confusing if it’s hard to explain to people, they might get confused. There are ways to do it. If you’re gonna do it annually, you can do it with credits where someone just buys a certain amount of credits upfront and then you consume them overtime. They could pay $500, get $600 in credit. Then, as they go up and down each month, you’re just drawing from their credits. That’s the way we chose to do with Drip.
Derrick and I had a three hour whiteboarding session trying to figure this out. I remember, trying to decide which approach to go. If you look at WP Engine, if you sign up for an annual account, you pay in advance, then you have overages like, I think, too many people hit your site or whatever, I think they just bill you that month. They’ll say you went over by $10, and here’s a $10 charge to your card. They trust that the card is gonna be good on file for the duration of that year. That’s certainly another way to approach it.
This is not an annual thing, but if someone’s mid-month–we have Drip customers who will literally get upgraded three times in a month, or four times in a month because their list is growing so fast. Each of those times, you can either bill them right on the spot as it goes up, which gets a little irritating for people, they don’t like seeing a bunch of charges, or you can bill them, you’re essentially billing them at the end of the month for the prior month’s usage. That’s how MailChimp does it. That’s how a lot of ESPs do it actually. When your first month billing is the plan, it bills you for the next 30 days for the plan that you’re currently on, and then, at the end of that month, it looks backwards, and it bills you for the next month, but it bills you the amount of the prior month. Again, it’s a little confusing, but it’s kind of technically the right way to do it, or certainly an accurate way to do it.
Mike: Yeah. That’s the problem with that type of metered billing, or a situation where they could go over some particular limit and you have to charge them more is that you don’t know that until afterwards. Clearly, if somebody goes over by one unit of whatever it is on a given day, you don’t wanna charge them for just that one, you wanna wait until the end of the month. It really depends on what the thing is that you’re actually billing people for. All the different other situations that could potentially come up, and anticipating those, and gearing your billing system to account for those, not just from a technical standpoint and a monetary standpoint, but how is it going to make the customer feel?
You mentioned the idea that somebody doesn’t wanna see a bunch of charges on their card, especially in a short period of time. If you’re charging them at the point where they upgrade or downgrade, that could be an issue because then they’re seeing all these things that are all on a short period of time. I use an American Express for a lot of things. I have it hooked to my phone. I will get like a little notification every time something gets charged on it. If other people have that hooked up, they’ll see it every single time you do it. You have to be sensitive to that kind of thing.
Rob: Another thing to think about is versioning your pricing and/or grandfathering. These things are related. Typically, if you’re gonna build your own system, you may change pricing overtime. You may even change what you bill on. Like I had said in the early days of Drip, we billed on the number of new subscribers, and now we bill on the number of subscribers that you have in your account at any given time.
During those changes, you don’t just want to rewrite your billing engine, you don’t just wanna rewrite that code. You wanna have a version of it that can still run at least in the short term, or if you decide to grandfather people, existing customers, which is what I’d recommend. It isn’t always the thing to do but it’s what I’ve always done. Eventually, at some point, you run an app for 10, 20 years, you probably don’t wanna have all these people still grandfathered in at your prices from 20 years ago. But grandfathering in in general, especially for long term customers, it makes them feel good, and let them know that you’ve done that. You can send out the email and say, “Hey, pricing is going up, but we’re gonna grandfather you in for now.” It’s also cool, you can use this as a way to get a bump in trials, or bump in new customers, is to be public that prices are going up in two or three weeks. If anyone’s on the fence thinking about signing up, they’ll sign up if you are gonna indeed grandfather people.
Mike: Something that’s probably not talked a lot about when you’re dealing with the billing system is things like chargebacks or credits. Let’s say that you have a customer where something goes wrong, or maybe you lost data of theirs, or something went wrong with their account, or you’ve made a promise that such and such feature will be delivered, and you had to roll it back, and it’s just not there or you wronged them in some way, or even if you just wanna give somebody a warm fuzzy feeling because you think that they deserve it or just wanna promote some good will, you may give them a credit.
If somebody’s really pissed off at you, they could do a chargeback and then those things need to somehow be reflected in whatever your source of authority is. If you’re doing that in your own database, you have to have the mechanisms in place to be able to surface those things, and then also be able to account for them in your reporting plus the customer’s reporting. If they have a page where they can go and see what they’ve been billed, they need to be able to see that stuff.
Rob: Another thing to think about is whether your free plan, if you have a free plan, if that is a billing plan. In general, I would recommend, that yes, it be a billing plan. It just helps with reporting and it helps if someone’s on a free plan that they get an email receipt at the end of every month saying, “Hey, you were billed $0 for this account.” Reminds people that the account is there. Obviously, people can cancel the account if they don’t wanna get the email anymore, but in our early days, we have compt accounts for developers who are working on integrations, and of course, we have a free plan now, and everyone gets essentially an invoice email that says, “You’ve been charged $0.” We really haven’t had issues with that. I think that’s the way to go.
Mike: Yeah. But I think that’s easy to overlook as well, because if you’re thinking about writing a billing engine, you’re not thinking about how do I send an invoice to somebody for $0 because they’re not being charged. Why would you even do that? But the points that you bring up are valid. I think the one that’s the most benefit you is that it gets you another excuse to get in their mailbox every month. Even if it’s for a free offering or you gave somebody a free plan.
I guess you probably wouldn’t do this for an annual plan, because you’re only sending them the billing emails at the billing cycle itself. You’re not gonna email them every month, but for all the other ones, you’re gonna wanna send that email regardless whether or not they got charged so that, if they’re not using that product, and you don’t have other automations in place to help bring them back, then it does remind them that the account exists, and they could use it.
I think the one other thing to think about that is probably not really commonly thought about for annual plans is that there’s an implication and an impact that an annual plan can have on an acquisition offer. If you are selling a business, or buying one, if there are people who have paid for annual plans, and let’s say that somebody gave you $1000 for an annual plan, if you’re six months into it and let’s say that you go to sell that business, well, whoever you’re selling it to is on the hook for delivering the other $500 of value that you’ve promised to that customer.
There’s almost a little bit of debt here that you’re accumulating in the product by offering that annual plan if you were to transfer ownership of it to somebody else. The reverse is true as well. If you buy a product from somebody and there’s a bunch of annual plans that have been paid, you still need to deliver on those services for the annual plans because that money is presumably already spent, or is considered inside of the bank account. But that’s something you have to take into account when you’re either acquiring or selling a company. If the company is big enough, that could mean a lot of money in one direction or the other.
Rob: I never sell lifetime plans.
Mike: Yes.
Rob: Throw that in there.
Another thing to think about is dunning. I remember, the first time I heard this phrase, I had no idea what it meant, but it just means how do you let people know that their credit card, or their payment method is failing? If you’ve used Stripe subscriptions, then you could use something like Churn Buster, or Stunning. If not, then you’re probably gonna have to either write your own. I think, with our Drip billing engine, we throw an event into Drip and it triggers a workflow in Drip. We’ve built it out in Drip which is an easy enough way to do it. But you do need to think about this.
Whether you’re gonna have to make phone calls, that’s the other thing. Are you gonna call people or are you just gonna email them, because you’re gonna get a lot more credit card members and accidental churn, in essence, or involuntary churn as it’s called. You’re gonna get a lot less of that if you make the phone calls. But do you have their number? Do you have the time to do that? I would say if you’re at any scale that it is worth your time to collect that phone number and give them a call, even if you’re not and you’re just in their early days, I would definitely use email. You’re gonna have to hit them up multiple times. You’re gonna wanna retry the charges as well, so there’s a lot to think about here.
That’s the cool part, if you do think about using Stunning or Churn Buster. They have figured out the best practices, so you don’t have to do that. I will disclose that I am an angel investor in Churn Buster. I’m not trying to necessarily promote them. But I do know that they get better results than you will probably get early on until you’ve done some testing, and you’ve seen what works, which may or may not be worth the effort.
Mike: That’s kind of the benefit of using those types of services. They’ve already got the process laid out, because they’ve worked on it, and implemented it with multiple people. If you’re doing all of this yourself, then you’re essentially forced to figure out what that process should look like, then evaluate later on whether or not it’s a good process. They’ve done that work for you so that you can just pay them. It kind of gets taken care of versus building it all out yourself and doing all the work and then kind of recovering from the mistakes that you’re gonna make along the way.
I think one of the most painful things that I’ve found is dealing with currency, taxes, and invoices. Depending on what it is that you’re selling, you may or may not have to collect sales tax for it. But currency, being able to accept currency in multiple denominations, and be able to provide invoices to people, it seems like you wouldn’t necessarily need that. But there are people in certain countries where they absolutely have to have an invoice, and there’s really no way around it. You can do them manually but it’s still painful to have to do it.
Early on, you can just do them manually, and you get on with your life but it’s nice if you can batch them up. But having an invoice in the apps so that your customers don’t have to ask you every single time, once you get to a certain scale, it really is not feasible to do them manually anymore. You just can’t do it. Either you have to build something, or you can use off-the-shelf services like Chargify or Chargebee, Biddly I think it is. Spreedly, I think that’s what they’re called. But a lot of them will create these invoices for you so that you don’t have to do it. But again, there’s downsides to that, because you have to do all the integrations with them. They will take care of a lot of these things that we’ve already talked about.
Rob: Invoices are something that will be a pain for you, if you have customers in the European Union. Because in the US, you don’t need to give every customer an invoice and they’re able to write stuff off. But in EU, they need an invoice with a bunch of specific stuff on it in order to be able to write it off.
What we did early on is just made a simple Ruby on Rails template, and it’s an invoice. You just click it right from your billing page in Drip and it spits out all the info that you need. The first few times I was doing it manually in a Word doc, and it gets old really quick, especially if you’re gonna have to do that every month. Something you’d wanna think about once it starts becoming a pain but don’t prematurely optimize that one.
Mike: Then, the last thing to think about when you’re looking at a billing system is whether or not you’re going to have multiple products. Are those products gonna be tied to specific subscription plans? For example, if you have three-tier subscription plan, and you can buy this particular add-on or service, but it’s only available if you buy the third tier. Those things have implications on your backend design, and how you account for it in not just the billing engine, but also in your reporting as well.
These are things that can be difficult. They can be hard to figure out how are you going to put those in but it is something to consider because you may get to a point or a situation where you realize that your product itself is probably something that could stand alone. But it may do better as a productized service offering where you have this add-on service, or there could be other add-on services that you discover later on, and say, “Hey, I could make an extra $500, or $1000 per customer that I sign up,” or maybe you have an onboarding fee, or a consulting fee, or something like that that you add in there.
They could be potential revenue generating opportunities, but it impacts how you implement and design everything. Those are things that are worth considering. But I wouldn’t say, as Rob said earlier, don’t premature optimize for those things. But just be aware that they do exist, and there are other opportunities there.
Rob: Lastly, you’ll wanna think about reporting. How are you going to see which payments are failing? How are you gonna see how many new trials you have, how much money you’ve made each day, how much money you’ve made each month? Are you gonna build out extensive reports, or are you just gonna have a raw sequel query in the early days?
If you’re a developer, that’s what I would do. But you gotta think about that as your team grows. As you start getting other people on board, you will need to build some type of dashboard if you don’t have one from your billing system provider, or something like a Baremetrics that can just link right into your Stripe subscriptions.
There’s pros and cons to both of these. I think if you have the ability to just use a third party, do that because building these things is such a pain. But you do get more control when you build them and overtime you can extend it. You can do exactly what you want with it, again, since we didn’t use Stripe subscriptions, we did build our own dashboards. We have some pretty killer stuff inside Drip that’s abled, that’s predictive, and then there’s also historical.
I can tell this by looking at a few numbers kind of where we are in the month at any given time. You will definitely wanna have some kind of nice reporting with the SaaS app, because your metrics are really the lifeblood of the company.
Mike: There’s advantages to integrating with these third party subscription management software companies, but at the same time, you don’t necessarily wanna go down that road early on if you can’t afford it. That’s just the tradeoff that you need to make. It’s like the classic. Do you build it or do you buy it? We kind of talked a lot about the different things to be careful of if you’re building it. If you don’t wanna go down that road, then, buying something off-the-shelf is also an option.
Rob: Well, Mike, I’m off to go eat a sandwich. If you have a question for us, call our voicemail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s 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 377 | Staying Sane While Starting Up With Dr. Sherry Walling
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Show Notes
In this episode of Startups For The Rest Of Us, Rob talks with Dr. Sherry Walling about staying sane while starting up. Sherry talks about her work with the founder community as a clinical psychologist. How to deal with stresses and fears while growing a business and the importance and power of retreats.
Items mentioned in this episode:
- ZenFounder
- The Zen Founder Guide to Founder Retreats
- SherryWalling.com
- The Entrepreneur’s Guide to Keeping Your S**t Together
Rob: In this episode of Startups for The Rest of Us, Dr. Sherry Walling and I discuss staying sane while starting up. This is Startups for The Rest of Us Episode 377.
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. Im Rob.
Sherry: Hi, I’m not Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, not Mike?
Sherry: Well, I’ve been compulsively checking for the mail. I keep going down and pushing the snow out of the way so I can open the front door to see if the package has arrived that has what I hope is the final proof for my new book. But we had 11 inches of snow so the whole infrastructure of the city is slow going and I’m not sure that the delivery will get here today.
Rob: Traffic is not great today. There’s just a lot of stuff. All the schools are closed. All three of our kids are home today, and I feel your urgency. You’ve run through a few proofs. It’s the cover. Is the cover having some struggles with the printer?
Sherry: The cover’s having some trouble and part of it has been sort of the designer not understanding which template to use but also not asking but me also not making sure. There have been some communication lapses and then the first round of the proof came the week before Christmas and so we were bogged down with the holiday as well. So it’s just sort of a slow process to get that final hurdle of the final, perfect, most beautiful version of the book printed.
Rob: I can feel you there. In case someone is completely lost, you are Dr. Sherry Walling. You and I have been married for going on 18 years. You and I host a podcast called ZenFounder. You are @ZenFounder on Twitter. You recently completed a book with a little help from me. I’m the with on the book. I’m the second author. The book is called The Entrepreneur’s Guide to Keeping Your Shit Together, How to Run Your Business Without Letting It Run You. I’m pretty stoked about the book. Are you stoked? Are you excited?
Sherry: I am excited and I also feel some trepidation. I think it’s like founders [inaudible 00:02:31] You’re gonna launch something, it’s like you’re putting a little bit of yourself out there in the world. In this case, it feels like it’s a lot of myself. It’s 50,000 words from yours truly. It’s a lot about how I think about life as a founder and I’m super excited to put it out there. It’s been a lot of hard work. But I’m also totally scared that people will hate it or they won’t care.
Rob: The indifference would be not good. You’re packaging a heck of a lot of expertise into the book. You have a PhD in Psychology. You have also been married to me, a serial founder, for like I said going on 18 years. You’re an entrepreneur yourself having essentially launched ZenTribes. You’ve launched essentially a consultant practice. You have actually a really good ebook that’s gotten pretty reviews on retreats, how to take founder retreats. We’ll actually talk about that a little later on the episode. But you’re getting yourself out there in a way that I don’t think you or I would have expected even 10 or 15 years ago. There’s been a shift in you since maybe the last 5-7 years.
Sherry: I set out when I began my career as an academic. Life as an academic has a lot of conference presentation and writing but it’s just on a much smaller scale. In the opinion of most academic communities, what it means to cultivate expertise is 15 years in the trenches and lots and lots of papers. I’ve ended up shifting and now I’m working in the founder space and I still now have 15 years of expertise in lots and lots of podcasts, maybe not papers. I’ve begun to be someone who has wanted to get information and helpful tips to a much wider audience, not just the academic community, which of course has meant lots of hustle and lots of hard work to try to package a message in a way that’s most helpful and most accessible to people who need it.
Rob: That’s the thing in the startup or the founders space. I have, over the years, seen a few people come out of the woodwork, who are being the CEO/Coach or the Founder/Coach but they don’t have the credentials and in a lot of cases don’t have the experience that you do.
I remember maybe four or five years ago you were saying, “I want to go location-dependent with my work.” I remember us having this kind of conversation like “Should you dive deeper into yoga? Do you want to do more of that or do you want to dive deeper into serving founders?” It was a deliberate decision and we started ZenFounder and quickly become obvious how much of a dearth of really knowledgeable people there are in terms of staying sane and staying happy and keeping relationships healthy and not struggling with anxiety or depression or at least fighting through it, figuring out how to work with it.
There are so few people in our world. This is both the venture funded world, it is the bootstrapped world, and it’s also the broader entrepreneurial world. Let’s say you’re not doing a startup, there seems to be a real, definite need for folks, someone like you with your expertise. There aren’t any around. Every time you speak in a conference, it seems like people are saying, “Wow, what a breath of fresh air, not a lot of people are talking about this.”
Sherry: I think there are lots of helpful sources of information from lots of different places. One of the things that I try to do is to pair years of science based education and even my years working as a researcher with the on-the-ground experience. And I think being married to you is worth two PhDs on Entrepreneurial Science.
But I think much of this conversation began when Aaron Swartz committed suicide. And then shortly thereafter, I felt like we heard very often about founders who had taken their own lives or whose lives have just got totally derailed. I look at those kinds of instances or something that is potentially preventable, not 100% of the time, not perfectly. I certainly don’t know, I don’t have all the answers to try to keep someone alive when they don’t want to be alive.
I think there’s a lot of information in the psychological literature, especially in the clinical psychological literature, that can be super helpful to help people manage stressful lives and optimize their performance which is what most of us are trying to do. I think sometimes people hear clinical psychologists and they think like, “I don’t need a doctor,” or “I don’t need to see a therapist.” If we reverse engineer what we know about what breaks people down, what causes mental illness, if we do that backwards, often we can learn a lot about what helps people be really well. I think that’s what we try to accomplish with ZenFounder; get the information out there that can prevent problems before they start.
Rob: I think in addition to that, I see you as keeping people at the top of their game. Stress and all the stuff we’re talking about, all the negatives because there’s so much that comes with being a founder that just is thrown at you constantly, it can and will negatively impact your performance, and your throughput, and your ability to think clearly, and your ability to make really sharp and quick decisions.
I see you helping people, whether it’s one-on-one, whether it’s through your ZenTribes, whether it’s through the book or through the podcast, keeping people on top of their mental games so that they can perform because a founder’s job is not sitting on the sidelines and hanging out. It’s like you’re in the middle of the field, you’re the quarterback and everybody’s relying on you. If you’re stressed, you’re hungry, you’re tired, you’re not sleeping well, you’re sick, whatever, it negatively impacts everything including your bottom line and long-term, your health.
That’s where every founder or aspiring founder needs to be thinking about this topic, about how to stay sane, and how to stay mentally well and healthy and strong while you’re starting up. Even if you’re just an early [inaudible 0:08:41], if you’re doing it nights and weekends, you’re gonna get less sleep. You need to start thinking about how am I gonna counteract that? How am I not gonna burn myself out? How am I not gonna push myself too far? That’s where the message coming from you is so critical. I think a lot of people hand wave it away. Some of the founders go, “I don’t need that,” or, “I’m not sick,” or, “I don’t have depression,” or, “I don’t have anxiety.” That’s not the point. It’s just being more productive and being on top of your game and really not letting yourself burn out.
Sherry: I think I’m a reasonable speaker. I definitely have things like [inaudible 00:09:12]. I’m always astounded when I start talking about things like sleep or things like communication with your spouse. When I give a conference presentation on some of the basic parts of life, the room is pretty transfixed. People are really hungry to figure out how to help their lives go more smoothly, not only to optimize their performance, which of course is a high goal for many founders, but I think to make life enjoyable even in the midst of doing hard things.
Rob: We’ve talked about your background. Folks who want to learn more about you can go to www.zenfounder.com. We’ve talked about why this is an important topic for pretty much everyone listening to the podcast and why folks should be thinking about this from day one.
When you’re just getting started, there’s gonna be tough times. When you start to have success, there’s gonna be stress. The more success you have, the more stress I felt I had. There’s so much writing on you. You get a company to 10 people, now they’re relying on you. The dollar swings are way bigger. You have a great month versus a bad month. It used to be a couple of thousand dollars, it can be 40-50 grand difference. And suddenly it’s like “Whoa! The stakes just became very high!” Hopefully, folks listening to this have been taking notes if they haven’t been thinking about this yet.
I wanna touch on two topics today and have you talk through them a little bit. These are both out of the book. We’re gonna talk about self-knowledge and I wanna touch on retreat. You started going on retreats and I was really intrigued by them. I went on my first retreat years ago and I came back and raped about it on the podcast. And then it kind of spread through our circles. And there was no one, absolutely no one, talking about founder retreats before we did. I feel a certain pride that we were able to bring that into the space because it’s just a novel and helpful thing. Everyone who goes on one comes back to me and says, “Oh my gosh, it completely blew my mind!” I wanna be able to make sure that we do touch on that.
Let’s dive in a little bit to this idea of knowing yourself or self-knowledge. In the book, you talk about some different extremes. You talk about chaos versus rigidity, introversion versus extroversion, fixed mindset versus growth mindset. I know each of those is a concept all to its own. Maybe kick us off with why is it so critical to know yourself, and then talk through maybe one or two of those concepts.
Sherry: The premise of the conversation about self-knowledge is very practically helps you plan around your relative weaknesses and maximize your relative strengths. If you’re thinking about starting a business or you’re knee-deep in the process already, if you can have moments when you sort of catch yourself and ask, “What am I good at in this scenario? Where’s my sweet spot?” And then also be able to tell the truth about like “Oh, I’m really not good at this part of this problem or at this part of my business.”
That’s really what we’re talking about when we’re talking about self-knowledge; the ability to think about your own process in real time. When you can do that, when you are someone who can self-reflect pretty well, it means that you have the option or the opportunity to be able to plan around things that you’re not good at. If you know that you are not particularly good at public speaking or you’re not particularly good at marketing or there are pieces of what’s required of you that you’re not strong in, you can invest the time and energy to really learn how to counteract those weaknesses or you can hire help or you can do something about it. But when you go in blind and you’re not paying attention, that’s when you risk sacrificing potentially good outcomes when you risk sacrificing the success of what you’re working on because you haven’t taken the time to stop and think “Oh wait, actually I suck at networking. I need to get better at that or I need some help.”
Rob: So is this a lot about strengths and blind spots?
Sherry: It is, to some extent. Each of the topics that we talk about in that chapter are different continuums.
Chaos versus rigidity is an interesting one. I picked this up from a woman named Filipa Perry who is a therapist in the UK. She talks about how we can organize our conceptualization of mental health along that continuum. You can break at either polarities. If you are hyperchaotic or very chaotic, then you might be somebody who really has trouble following through. Perhaps you are really able to think outside the box and move quickly, but you aren’t that great at communicating what you are thinking to people who are working with you and for you.
Chaos at the outer edges can become very problematic, but if you move in towards the middle of the continuum, there are some real strengths there that are important to know about yourself.
The other side of that continuum is rigidity. Under extreme stress, some of us tend to be very rigid. We need things in a very specific way, a certain way, and we become very anxious when our environment doesn’t align with what we believe we need. That kind of rigidity, on either ends of the spectrum, they look like obsessive-compulsive disorder or an anxiety that is un-wielding or inflexible.
Knowing whether under stress you tend to clamp down and become more rigid or whether you tend to let it all hang out and lose your keys and forget to pick your kids up, and tend toward the chaotic, you can plan around that. Say you are about to launch a new product and you know that you tend to get a little bit chaotic when you are under pressure, you might need to invest a little bit more time in organization, or you might need some extra help, or you might need to think about the things that generally fall through the cracks when you’re under stress and make a plan for them.
Rob: And can it also be not just blind spots that you need to account for, because I think that’s a good point. Sometimes feeling a sense of anxiety or depression and not knowing what it is and finally realizing, “Oh, it’s because I hate this part of the job.” Like unearthing what you love versus what you don’t and being able to then delegate that.
Sherry: Right. It’s always a conversation about strengths and weaknesses. When you realize ” Oh my gosh, this piece of my business totally stresses me out.” Once you have enough money to hire someone, hire someone to do that. Hire someone to do the thing that has the highest emotional pain point because even the most mentally sane person is gonna waste some cycles and spend some anxiety on something that causes a lot of apprehension. If you can have someone do that for you, then that’s gonna save you both the doing of the task as well as the anxiety that goes along with it.
Rob: How about one of the other two dichotomies I mentioned? There was a fixed mindset and growth mindset and introvert and extrovert.
Sherry: I think the same can be true of introversion and extroversion. Those are ways of organizing how we relate to the external environment. If you are introverted, you are pretty attuned to what’s going on inside of your own head. You might be somewhat apprehensive or reticent with a lot of social stimulation. The way that you recharge or refill your emotional bucket, so to speak, is doing things that are either alone or with fairly low-key social stimulation.
Versus an extrovert on the other end of the spectrum who really feeds off of social interaction. That is energizing, they love to be engaged in conversation and maybe animated, outgoing. These are usually the terms that we come to associate with extroversion. Those are both great personalities, right? The strength of an introvert in being able to observe and read a situation, the strength of an introvert in being able to think first and speak later, those are super valuable in the founder world.
But if you need to make that really energetic sales pitch, and that just fairly is not your personality, you have to really gear yourself up. You have to practice extra. You have to have all of your resources about you, whether that’s spending extra time to make a really amazing keynote or whether you bring someone to present with you. Those are the ways that we problem solve around our relative weaknesses.
The thing about knowing yourself isn’t that one way of being is better or worse. It’s that we all are a mixture of skills and abilities and we have to be super honest about what we’re good at and what we’re still growing in.
Rob: I think it has a profound impact on my, I wouldn’t say success as a founder, but it’s more like my ability to become and remain happy as I’ve started these companies and launched all these products. Early on, I remember feeling guilty as I jump job to job every couple of years. My dad told me people are gonna look at your resume, it’s not gonna be a great thing. And then I realized that I don’t like working on the same thing forever. It was just something I learned about myself that I was probably never gonna build a product and keep it around for 10 years. There’s been just a few exceptions in my life.
I think finally understanding that about myself and not feeling guilty and stressed about it when I get 18 months or 24 months into a project and I start really feeling down on it and burned out and all this stuff. As soon as I switch to a new project, I’m just fired up. I know some people who do that every month or two and then you’re never gonna get anything done. But I will see a product to enough success that it makes it worth it and then want to just move on.
Sherry: If you really accept that about yourself, then you would be razor sharp on honing the skills that it takes to get a startup going and then to a certain level where you can just hand it off to somebody else. Hypothetically, you wouldn’t really stress about do I babysit this thing for the next five years. You would just say, “No, this is what I’m good at. This is what I do. I know myself well enough to know that I am not going to retire out of this company.”
Rob: Let’s talk about how you do this. Someone listening to this says, “Okay, I don’t know myself very well.” How do you go about introspecting to the point that you can start identifying things for yourself?
Sherry: I think one of the best ways to do that, to really create space for meta reflection, for thinking about how you’re doing, is to have a practice of going on a retreat once, maybe twice a year, where you satisfy the day-to-day and put down your to-do list, turn off your computer and ignore all notifications and buzzes and beeps and things that often distract your attention. And then, begin to really ask yourself some deeper questions about what have been you successes over the last year; what have been the points in the year that brought you the most joy where you felt you’re most in your sweet spot. And then you ask the opposite kinds of questions. Where did you feel like your life was being sucked from you? Where were you miserable? Where did you feel like you failed? Begin to really look at those questions as an amalgam and look at what does it tell you about what kinds of moments and experiences you’re drawn to and what kinds of things really seem to not go so well for you?
Rob: You’ve thought and written a lot about this. You wrote the ZenFounder Guide to Founder Retreats which is available on Gumroad. I assume you have a link to it from www.zenfounder.com as well. That’s a 28-page ebook and 2 worksheets. You also wrote a bit about it in the Entrepreneur’s Guide that we’re talking about today. That’s a lot of fun, a lot of content on something. It sounds like just based on that, this is a really crucial piece and something that you believe in quite a bit.
Sherry: Absolutely. It’s not just me. There’s some great research behind the benefit of really disrupting your schedule and stepping aside from your normal context. One thing that’s really important about a retreat is you really should not do it in your office. You need to go to the mountains, you need to go to the coast, you need to go somewhere with different sensory cues, with a different environment so that you can let your mind engage the questions of your life in a different way. That’s helpful to begin to vary the ways that your brain is used, sort of like the well-trodden paths that your brain is used to taking. If you can get out of your normal environment, you create a level of environment to a novelty that lets your brain think in a different way.
Rob: That makes sense. It’s taking two days away from the spouse and the kids or just your everyday life, head somewhere. We used to go to the beach. We had the beach apartment and we go there all the time. But other folks I know would go to the mountains, go to the desert, and really just hold yourself up. If I recall, I didn’t even bring a laptop most times. I had my phone in case there was an emergency and I need to check email or something, but I would bring the black notebook with a pen and just start with those questions. Typically, a bunch of stuff fell out right out of that because it was like, “What do I wanna do this year?” Some years it was like well, it’s a year where I’m either acquiring something, I’m going to build something, I’m going to tool around until I find something, or it was a growth year.
It was like whoa, just a second, you’re at Drip. I know I’m not stopping doing that, so how do I wanna get to where it needs to go? How am I gonna do that? Sometimes, it was more about the business. Sometimes, I would have the personal side of thinking about me. Oftentimes, honestly, it was a combination of both.
Sherry: It’s just time to ask those big questions like how am I doing? Am I happy in this life that I’ve constructed for myself? If not, what do I need to do? Those are not those big existential questions, we can’t do that on a day-to-day. We’re busy driving people and answering email and doing the business of our life. We need to step aside to be able to really have insight into those big questions
Rob: The thing is when I would go on a retreat, most of the first day was towards just leaving everyday life behind. It wasn’t typically until late in that day or maybe it was the next day where I would start to have a little bit of clarity about things because it’s like the rest of life went away and left all this room for deep thought, a state you don’t get into everyday, hectic lives of running businesses.
You obviously go into more depth on that in the book. The book is out in the next couple of weeks, as soon as printing is finalized. You cover a lot of other stuff about understanding where you came from, optimize where you’re going, battling the haters in your head, mastering disruption, getting things done when things aren’t getting done and staying connected.
Folks can go to www.zenfounder.com/book anytime to sign up for the launch list. I think the book’s gonna have impact on a lot of people. We really are selling it as a book. It’s gonna be, what, $25? I don’t know if we have the final price, but it’s gonna be $20-$30 bucks. It’s not gonna be some info product where we have all the whiz-bang and it’s hundreds of dollars, this is something that we want to get out to as many people as possible. It’s gonna be a no-brainer for so many of the founders who struggle with this stuff or potentially will in the future and just need a toolbox or just one more piece of knowledge for people to keep it together while doing this pretty stressful thing.
Sherry: Somebody asked me who the book was for. Obviously, it’s a really good marketing question. It’s for humans. It’s for humans who have jobs and are doing things. Obviously, it is geared towards people who are founding something and running their own business. So many of us are looking for strategies to help manage stress and the challenges of our everyday life.
Rob: Yeah, for sure. That’s www.zenfounder.com/book. You also do one-on-one consulting with founders and entrepreneurs, wanna talk a bit about that?
Sherry: I do. That’s one of the things that I have just found to be so rewarding over the last few years is to be a resource for folks who are trying to do some of this how do I get to know myself, how do I become more self- reflective, how do I answer big questions about my life, how do I make decisions when decisions are hard to make? I’m a sounding board, a sounding board with a lot of experience and trained ears to hear potentially problematic thoughts and to spot blind spots and patterns that are counterproductive. I try to come alongside people and help them be as awesome as they can be in their businesses and in their lives.
Rob: It’s totally confidential and that’s something that you’re very good at so I have no knowledge of who you talk to but I do know that you have co-founder disputes that you moderate, you help folks who forgot how to communicate better with their spouse or their family. You’ve consulted founders on how to deal with either a problem employee or a manager to get through struggles with, that kind of stuff. Folks considering selling their company, they’re getting an offer and they don’t know if it’s the right decision. You’re that sounding board where it’s a little bit about advice, but it’s a lot about getting someone to think what is the right answer for them, or just leading them to the right answer when it’s a hard decision and it’s not super clear and someone really needs to dig deep and to think to think about a lot of factors in order to make the decision
Sherry: It’s a lot about asking the right questions and listening really well.
Rob: Yeah, and it can be super helpful to have someone to just think through decisions now and again. I think that wraps us up for today. Folks who want to get a hold of you, www.zenfounder.com is your home online.
Sherry: It is. If people are interested in my professional background, I also have a presence at www.sherrywallling.com.
Rob: 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. Im Rob.
Sherry: Hi, I’m not Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, not Mike?
Sherry: Well, I’ve been compulsively checking for the mail. I keep going down and pushing the snow out of the way so I can open the front door to see if the package has arrived that has what I hope is the final proof for my new book. But we had 11 inches of snow so the whole infrastructure of the city is slow going and I’m not sure that the delivery will get here today.
Rob: Traffic is not great today. There’s just a lot of stuff. All the schools are closed. All three of our kids are home today, and I feel your urgency. You’ve run through a few proofs. It’s the cover. Is the cover having some struggles with the printer?
Sherry: The cover’s having some trouble and part of it has been sort of the designer not understanding which template to use but also not asking but me also not making sure. There have been some communication lapses and then the first round of the proof came the week before Christmas and so we were bogged down with the holiday as well. So it’s just sort of a slow process to get that final hurdle of the final, perfect, most beautiful version of the book printed.
Rob: I can feel you there. In case someone is completely lost, you are Dr. Sherry Walling. You and I have been married for going on 18 years. You and I host a podcast called ZenFounder. You are @ZenFounder on Twitter. You recently completed a book with a little help from me. I’m the with on the book. I’m the second author. The book is called The Entrepreneur’s Guide to Keeping Your Shit Together, How to Run Your Business Without Letting It Run You. I’m pretty stoked about the book. Are you stoked? Are you excited?
Sherry: I am excited and I also feel some trepidation. I think it’s like founders [inaudible 00:02:31] You’re gonna launch something, it’s like you’re putting a little bit of yourself out there in the world. In this case, it feels like it’s a lot of myself. It’s 50,000 words from yours truly. It’s a lot about how I think about life as a founder and I’m super excited to put it out there. It’s been a lot of hard work. But I’m also totally scared that people will hate it or they won’t care.
Rob: The indifference would be not good. You’re packaging a heck of a lot of expertise into the book. You have a PhD in Psychology. You have also been married to me, a serial founder, for like I said going on 18 years. You’re an entrepreneur yourself having essentially launched ZenTribes. You’ve launched essentially a consultant practice. You have actually a really good ebook that’s gotten pretty reviews on retreats, how to take founder retreats. We’ll actually talk about that a little later on the episode. But you’re getting yourself out there in a way that I don’t think you or I would have expected even 10 or 15 years ago. There’s been a shift in you since maybe the last 5-7 years.
Sherry: I set out when I began my career as an academic. Life as an academic has a lot of conference presentation and writing but it’s just on a much smaller scale. In the opinion of most academic communities, what it means to cultivate expertise is 15 years in the trenches and lots and lots of papers. I’ve ended up shifting and now I’m working in the founder space and I still now have 15 years of expertise in lots and lots of podcasts, maybe not papers. I’ve begun to be someone who has wanted to get information and helpful tips to a much wider audience, not just the academic community, which of course has meant lots of hustle and lots of hard work to try to package a message in a way that’s most helpful and most accessible to people who need it.
Rob: That’s the thing in the startup or the founders space. I have, over the years, seen a few people come out of the woodwork, who are being the CEO/Coach or the Founder/Coach but they don’t have the credentials and in a lot of cases don’t have the experience that you do.
I remember maybe four or five years ago you were saying, “I want to go location-dependent with my work.” I remember us having this kind of conversation like “Should you dive deeper into yoga? Do you want to do more of that or do you want to dive deeper into serving founders?” It was a deliberate decision and we started ZenFounder and quickly become obvious how much of a dearth of really knowledgeable people there are in terms of staying sane and staying happy and keeping relationships healthy and not struggling with anxiety or depression or at least fighting through it, figuring out how to work with it.
There are so few people in our world. This is both the venture funded world, it is the bootstrapped world, and it’s also the broader entrepreneurial world. Let’s say you’re not doing a startup, there seems to be a real, definite need for folks, someone like you with your expertise. There aren’t any around. Every time you speak in a conference, it seems like people are saying, “Wow, what a breath of fresh air, not a lot of people are talking about this.”
Sherry: I think there are lots of helpful sources of information from lots of different places. One of the things that I try to do is to pair years of science based education and even my years working as a researcher with the on-the-ground experience. And I think being married to you is worth two PhDs on Entrepreneurial Science.
But I think much of this conversation began when Aaron Swartz committed suicide. And then shortly thereafter, I felt like we heard very often about founders who had taken their own lives or whose lives have just got totally derailed. I look at those kinds of instances or something that is potentially preventable, not 100% of the time, not perfectly. I certainly don’t know, I don’t have all the answers to try to keep someone alive when they don’t want to be alive.
I think there’s a lot of information in the psychological literature, especially in the clinical psychological literature, that can be super helpful to help people manage stressful lives and optimize their performance which is what most of us are trying to do. I think sometimes people hear clinical psychologists and they think like, “I don’t need a doctor,” or “I don’t need to see a therapist.” If we reverse engineer what we know about what breaks people down, what causes mental illness, if we do that backwards, often we can learn a lot about what helps people be really well. I think that’s what we try to accomplish with ZenFounder; get the information out there that can prevent problems before they start.
Rob: I think in addition to that, I see you as keeping people at the top of their game. Stress and all the stuff we’re talking about, all the negatives because there’s so much that comes with being a founder that just is thrown at you constantly, it can and will negatively impact your performance, and your throughput, and your ability to think clearly, and your ability to make really sharp and quick decisions.
I see you helping people, whether it’s one-on-one, whether it’s through your ZenTribes, whether it’s through the book or through the podcast, keeping people on top of their mental games so that they can perform because a founder’s job is not sitting on the sidelines and hanging out. It’s like you’re in the middle of the field, you’re the quarterback and everybody’s relying on you. If you’re stressed, you’re hungry, you’re tired, you’re not sleeping well, you’re sick, whatever, it negatively impacts everything including your bottom line and long-term, your health.
That’s where every founder or aspiring founder needs to be thinking about this topic, about how to stay sane, and how to stay mentally well and healthy and strong while you’re starting up. Even if you’re just an early [inaudible 0:08:41], if you’re doing it nights and weekends, you’re gonna get less sleep. You need to start thinking about how am I gonna counteract that? How am I not gonna burn myself out? How am I not gonna push myself too far? That’s where the message coming from you is so critical. I think a lot of people hand wave it away. Some of the founders go, “I don’t need that,” or, “I’m not sick,” or, “I don’t have depression,” or, “I don’t have anxiety.” That’s not the point. It’s just being more productive and being on top of your game and really not letting yourself burn out.
Sherry: I think I’m a reasonable speaker. I definitely have things like [inaudible 00:09:12]. I’m always astounded when I start talking about things like sleep or things like communication with your spouse. When I give a conference presentation on some of the basic parts of life, the room is pretty transfixed. People are really hungry to figure out how to help their lives go more smoothly, not only to optimize their performance, which of course is a high goal for many founders, but I think to make life enjoyable even in the midst of doing hard things.
Rob: We’ve talked about your background. Folks who want to learn more about you can go to www.zenfounder.com. We’ve talked about why this is an important topic for pretty much everyone listening to the podcast and why folks should be thinking about this from day one.
When you’re just getting started, there’s gonna be tough times. When you start to have success, there’s gonna be stress. The more success you have, the more stress I felt I had. There’s so much writing on you. You get a company to 10 people, now they’re relying on you. The dollar swings are way bigger. You have a great month versus a bad month. It used to be a couple of thousand dollars, it can be 40-50 grand difference. And suddenly it’s like “Whoa! The stakes just became very high!” Hopefully, folks listening to this have been taking notes if they haven’t been thinking about this yet.
I wanna touch on two topics today and have you talk through them a little bit. These are both out of the book. We’re gonna talk about self-knowledge and I wanna touch on retreat. You started going on retreats and I was really intrigued by them. I went on my first retreat years ago and I came back and raped about it on the podcast. And then it kind of spread through our circles. And there was no one, absolutely no one, talking about founder retreats before we did. I feel a certain pride that we were able to bring that into the space because it’s just a novel and helpful thing. Everyone who goes on one comes back to me and says, “Oh my gosh, it completely blew my mind!” I wanna be able to make sure that we do touch on that.
Let’s dive in a little bit to this idea of knowing yourself or self-knowledge. In the book, you talk about some different extremes. You talk about chaos versus rigidity, introversion versus extroversion, fixed mindset versus growth mindset. I know each of those is a concept all to its own. Maybe kick us off with why is it so critical to know yourself, and then talk through maybe one or two of those concepts.
Sherry: The premise of the conversation about self-knowledge is very practically helps you plan around your relative weaknesses and maximize your relative strengths. If you’re thinking about starting a business or you’re knee-deep in the process already, if you can have moments when you sort of catch yourself and ask, “What am I good at in this scenario? Where’s my sweet spot?” And then also be able to tell the truth about like “Oh, I’m really not good at this part of this problem or at this part of my business.”
That’s really what we’re talking about when we’re talking about self-knowledge; the ability to think about your own process in real time. When you can do that, when you are someone who can self-reflect pretty well, it means that you have the option or the opportunity to be able to plan around things that you’re not good at. If you know that you are not particularly good at public speaking or you’re not particularly good at marketing or there are pieces of what’s required of you that you’re not strong in, you can invest the time and energy to really learn how to counteract those weaknesses or you can hire help or you can do something about it. But when you go in blind and you’re not paying attention, that’s when you risk sacrificing potentially good outcomes when you risk sacrificing the success of what you’re working on because you haven’t taken the time to stop and think “Oh wait, actually I suck at networking. I need to get better at that or I need some help.”
Rob: So is this a lot about strengths and blind spots?
Sherry: It is, to some extent. Each of the topics that we talk about in that chapter are different continuums.
Chaos versus rigidity is an interesting one. I picked this up from a woman named Filipa Perry who is a therapist in the UK. She talks about how we can organize our conceptualization of mental health along that continuum. You can break at either polarities. If you are hyperchaotic or very chaotic, then you might be somebody who really has trouble following through. Perhaps you are really able to think outside the box and move quickly, but you aren’t that great at communicating what you are thinking to people who are working with you and for you.
Chaos at the outer edges can become very problematic, but if you move in towards the middle of the continuum, there are some real strengths there that are important to know about yourself.
The other side of that continuum is rigidity. Under extreme stress, some of us tend to be very rigid. We need things in a very specific way, a certain way, and we become very anxious when our environment doesn’t align with what we believe we need. That kind of rigidity, on either ends of the spectrum, they look like obsessive-compulsive disorder or an anxiety that is un-wielding or inflexible.
Knowing whether under stress you tend to clamp down and become more rigid or whether you tend to let it all hang out and lose your keys and forget to pick your kids up, and tend toward the chaotic, you can plan around that. Say you are about to launch a new product and you know that you tend to get a little bit chaotic when you are under pressure, you might need to invest a little bit more time in organization, or you might need some extra help, or you might need to think about the things that generally fall through the cracks when you’re under stress and make a plan for them.
Rob: And can it also be not just blind spots that you need to account for, because I think that’s a good point. Sometimes feeling a sense of anxiety or depression and not knowing what it is and finally realizing, “Oh, it’s because I hate this part of the job.” Like unearthing what you love versus what you don’t and being able to then delegate that.
Sherry: Right. It’s always a conversation about strengths and weaknesses. When you realize ” Oh my gosh, this piece of my business totally stresses me out.” Once you have enough money to hire someone, hire someone to do that. Hire someone to do the thing that has the highest emotional pain point because even the most mentally sane person is gonna waste some cycles and spend some anxiety on something that causes a lot of apprehension. If you can have someone do that for you, then that’s gonna save you both the doing of the task as well as the anxiety that goes along with it.
Rob: How about one of the other two dichotomies I mentioned? There was a fixed mindset and growth mindset and introvert and extrovert.
Sherry: I think the same can be true of introversion and extroversion. Those are ways of organizing how we relate to the external environment. If you are introverted, you are pretty attuned to what’s going on inside of your own head. You might be somewhat apprehensive or reticent with a lot of social stimulation. The way that you recharge or refill your emotional bucket, so to speak, is doing things that are either alone or with fairly low-key social stimulation.
Versus an extrovert on the other end of the spectrum who really feeds off of social interaction. That is energizing, they love to be engaged in conversation and maybe animated, outgoing. These are usually the terms that we come to associate with extroversion. Those are both great personalities, right? The strength of an introvert in being able to observe and read a situation, the strength of an introvert in being able to think first and speak later, those are super valuable in the founder world.
But if you need to make that really energetic sales pitch, and that just fairly is not your personality, you have to really gear yourself up. You have to practice extra. You have to have all of your resources about you, whether that’s spending extra time to make a really amazing keynote or whether you bring someone to present with you. Those are the ways that we problem solve around our relative weaknesses.
The thing about knowing yourself isn’t that one way of being is better or worse. It’s that we all are a mixture of skills and abilities and we have to be super honest about what we’re good at and what we’re still growing in.
Rob: I think it has a profound impact on my, I wouldn’t say success as a founder, but it’s more like my ability to become and remain happy as I’ve started these companies and launched all these products. Early on, I remember feeling guilty as I jump job to job every couple of years. My dad told me people are gonna look at your resume, it’s not gonna be a great thing. And then I realized that I don’t like working on the same thing forever. It was just something I learned about myself that I was probably never gonna build a product and keep it around for 10 years. There’s been just a few exceptions in my life.
I think finally understanding that about myself and not feeling guilty and stressed about it when I get 18 months or 24 months into a project and I start really feeling down on it and burned out and all this stuff. As soon as I switch to a new project, I’m just fired up. I know some people who do that every month or two and then you’re never gonna get anything done. But I will see a product to enough success that it makes it worth it and then want to just move on.
Sherry: If you really accept that about yourself, then you would be razor sharp on honing the skills that it takes to get a startup going and then to a certain level where you can just hand it off to somebody else. Hypothetically, you wouldn’t really stress about do I babysit this thing for the next five years. You would just say, “No, this is what I’m good at. This is what I do. I know myself well enough to know that I am not going to retire out of this company.”
Rob: Let’s talk about how you do this. Someone listening to this says, “Okay, I don’t know myself very well.” How do you go about introspecting to the point that you can start identifying things for yourself?
Sherry: I think one of the best ways to do that, to really create space for meta reflection, for thinking about how you’re doing, is to have a practice of going on a retreat once, maybe twice a year, where you satisfy the day-to-day and put down your to-do list, turn off your computer and ignore all notifications and buzzes and beeps and things that often distract your attention. And then, begin to really ask yourself some deeper questions about what have been you successes over the last year; what have been the points in the year that brought you the most joy where you felt you’re most in your sweet spot. And then you ask the opposite kinds of questions. Where did you feel like your life was being sucked from you? Where were you miserable? Where did you feel like you failed? Begin to really look at those questions as an amalgam and look at what does it tell you about what kinds of moments and experiences you’re drawn to and what kinds of things really seem to not go so well for you?
Rob: You’ve thought and written a lot about this. You wrote the ZenFounder Guide to Founder Retreats which is available on Gumroad. I assume you have a link to it from www.zenfounder.com as well. That’s a 28-page ebook and 2 worksheets. You also wrote a bit about it in the Entrepreneur’s Guide that we’re talking about today. That’s a lot of fun, a lot of content on something. It sounds like just based on that, this is a really crucial piece and something that you believe in quite a bit.
Sherry: Absolutely. It’s not just me. There’s some great research behind the benefit of really disrupting your schedule and stepping aside from your normal context. One thing that’s really important about a retreat is you really should not do it in your office. You need to go to the mountains, you need to go to the coast, you need to go somewhere with different sensory cues, with a different environment so that you can let your mind engage the questions of your life in a different way. That’s helpful to begin to vary the ways that your brain is used, sort of like the well-trodden paths that your brain is used to taking. If you can get out of your normal environment, you create a level of environment to a novelty that lets your brain think in a different way.
Rob: That makes sense. It’s taking two days away from the spouse and the kids or just your everyday life, head somewhere. We used to go to the beach. We had the beach apartment and we go there all the time. But other folks I know would go to the mountains, go to the desert, and really just hold yourself up. If I recall, I didn’t even bring a laptop most times. I had my phone in case there was an emergency and I need to check email or something, but I would bring the black notebook with a pen and just start with those questions. Typically, a bunch of stuff fell out right out of that because it was like, “What do I wanna do this year?” Some years it was like well, it’s a year where I’m either acquiring something, I’m going to build something, I’m going to tool around until I find something, or it was a growth year.
It was like whoa, just a second, you’re at Drip. I know I’m not stopping doing that, so how do I wanna get to where it needs to go? How am I gonna do that? Sometimes, it was more about the business. Sometimes, I would have the personal side of thinking about me. Oftentimes, honestly, it was a combination of both.
Sherry: It’s just time to ask those big questions like how am I doing? Am I happy in this life that I’ve constructed for myself? If not, what do I need to do? Those are not those big existential questions, we can’t do that on a day-to-day. We’re busy driving people and answering email and doing the business of our life. We need to step aside to be able to really have insight into those big questions
Rob: The thing is when I would go on a retreat, most of the first day was towards just leaving everyday life behind. It wasn’t typically until late in that day or maybe it was the next day where I would start to have a little bit of clarity about things because it’s like the rest of life went away and left all this room for deep thought, a state you don’t get into everyday, hectic lives of running businesses.
You obviously go into more depth on that in the book. The book is out in the next couple of weeks, as soon as printing is finalized. You cover a lot of other stuff about understanding where you came from, optimize where you’re going, battling the haters in your head, mastering disruption, getting things done when things aren’t getting done and staying connected.
Folks can go to www.zenfounder.com/book anytime to sign up for the launch list. I think the book’s gonna have impact on a lot of people. We really are selling it as a book. It’s gonna be, what, $25? I don’t know if we have the final price, but it’s gonna be $20-$30 bucks. It’s not gonna be some info product where we have all the whiz-bang and it’s hundreds of dollars, this is something that we want to get out to as many people as possible. It’s gonna be a no-brainer for so many of the founders who struggle with this stuff or potentially will in the future and just need a toolbox or just one more piece of knowledge for people to keep it together while doing this pretty stressful thing.
Sherry: Somebody asked me who the book was for. Obviously, it’s a really good marketing question. It’s for humans. It’s for humans who have jobs and are doing things. Obviously, it is geared towards people who are founding something and running their own business. So many of us are looking for strategies to help manage stress and the challenges of our everyday life.
Rob: Yeah, for sure. That’s www.zenfounder.com/book. You also do one-on-one consulting with founders and entrepreneurs, wanna talk a bit about that?
Sherry: I do. That’s one of the things that I have just found to be so rewarding over the last few years is to be a resource for folks who are trying to do some of this how do I get to know myself, how do I become more self- reflective, how do I answer big questions about my life, how do I make decisions when decisions are hard to make? I’m a sounding board, a sounding board with a lot of experience and trained ears to hear potentially problematic thoughts and to spot blind spots and patterns that are counterproductive. I try to come alongside people and help them be as awesome as they can be in their businesses and in their lives.
Rob: It’s totally confidential and that’s something that you’re very good at so I have no knowledge of who you talk to but I do know that you have co-founder disputes that you moderate, you help folks who forgot how to communicate better with their spouse or their family. You’ve consulted founders on how to deal with either a problem employee or a manager to get through struggles with, that kind of stuff. Folks considering selling their company, they’re getting an offer and they don’t know if it’s the right decision. You’re that sounding board where it’s a little bit about advice, but it’s a lot about getting someone to think what is the right answer for them, or just leading them to the right answer when it’s a hard decision and it’s not super clear and someone really needs to dig deep and to think to think about a lot of factors in order to make the decision
Sherry: It’s a lot about asking the right questions and listening really well.
Rob: Yeah, and it can be super helpful to have someone to just think through decisions now and again. I think that wraps us up for today. Folks who want to get a hold of you, www.zenfounder.com is your home online.
Sherry: It is. If people are interested in my professional background, I also have a presence at www.sherrywallling.com.
Rob: 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 376 | SaaS Revenue Patterns, Increasing Annual Renewals, 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 SaaS revenue patterns, annual renewals, and choosing a tech stack.
Items mentioned in this episode:
Rob: In this episode of the Startups For The Rest Of Us, Mike and I talk about SaaS revenue patterns, increasing annual renewals and answer more listener questions. This is Startups For The Rest Of Us episode 376.
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: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
Mike: There’s no word this week but next week I will be headed to BIG SNOW Tiny Conf East. Spending a couple of days up there. There’s about a dozen people or so that go up each year and just hang out and hit the slopes every day and then talk business in the evening. That’s definitely a good time, and I’m really looking forward to it. It’s been a while since I’ve been skiing.
Rob: Yeah. You go there every year, you just come away with a lot of motivation and a lot of good ideas. It seems to really, really work for you. I’m glad that you’re able to go back again this year.
Mike: Yeah. I definitely need the time away from my computer, to be honest at this point. I’ve been heads down for the past several months straight. Haven’t really had any time to come up to breathe.
Rob: It’s always good to get away whether it’s to go on a retreat, or to do something like this. I think it’s a good call, man. I actually wish I could go this year. I won’t be able to, obviously, it’s sold out and stuff but I don’t ski, so I would show up to drink hot cocoa, and I don’t know what I’d do, watch movies or something, just snow shoe or something. I do think it’d be a lot of fun to go to one of them. At one point there were three each year, but I don’t know if there’s a Europe one this year, I think it might be just East and West?
Mike: Yes, just East and West this year. I think the Europe one, they couldn’t get enough people committed to going. There was interest but just nobody stepped up and said, “Hey, we’re definitely in.”
Rob: Yeah, that makes sense. Cool. Hey, we got a note from a listener. His name is Francois Lagier. He says, “I just wanted to reach out and say thank you. Rob and Mike, I’m a co-founder of a new SaaS company called cloudforecast.io. I wanted to reach out and say thank you for a few things.” He has a bulleted list of thanks, which is cool to get this detailed stuff.
“First, thank you for all the good content in Startups For The Rest Of Us. I recently started listening to your podcast, and I’ve been searching the archive for any episodes mentioning the word “SaaS”. As a new entrepreneur, I’m learning so much. Second, you mentioned Perfect Audience many times for your retargeting strategy. Both my co-founders and I were part of the early [00:02:35] of Perfect Audience.” Interesting. “And we are very proud of our work there. Thank you for putting a smile on my face every time you mention it.”
I’ve been a fan of Perfect Audience for a long time and Brad, one of the founders, I’ve spoken with him on the phone several times. In fact, I called him, he was one of the founders that I called during the Drip acquisition because he’s gone through an acquisition. I just wanted to get his sense of dos and don’ts and how it went there. I always appreciate being able to talk to him.
And then back to Francois’s email. “Third, I listened to episode 319 a few days ago and Rob literally mentioned the problem we are trying to solve.” He quotes me, and I say, I had a counter reminder every two weeks. It would ping us and it would say, “Check AWS spelling.” “Thank you for confirming that our idea is not completely crazy, since cloudforecast.io is a daily email report that breaks down your forecasted AWS spending by products tags and regions allowing you to understand where your money’s going. Once again, thank you for everything, have a great week.”
Mike: That’s awesome. Thanks, Francos. I really appreciate the email. It’s very interesting looking at the report that he had sent over as well. Just seen the forecast of the cloud computing spend. It’s interesting seeing it broken down like this. I don’t have nearly the expenses that are shown here. I don’t have to worry about it as much, but I can definitely see how large our installations using cloud services would definitely find that appealing.
Rob: Yeah. Thanks for the email, Francois. I really appreciate it. What else is going on with you? What’s the update on Bluetick?
Mike: I’m working on a couple of minor bugs but right now I’m trying to close out the final testing process for deploying the latest release I’ve been working on. I’m hoping that that will go up by the end of today. It’s basically a series of major improvements to test ability, and test coverage, and then overall resilience of the app in different error conditions and performance scalability, etc. The big thing is that it makes it easier and safer for me to make a bunch of updates moving forward just because the increased test coverage makes it obviously less prone to error. When things go wrong, I’ll be able to see them before it hits the production server because there are certain sections of the app that were critical to the entire thing running and being able to send out the emails and recognize when replies came in.
I won’t say that they were completely hacked together, but there was a lot of code in there that handled specific edge cases that needed to be separated out a little bit, I’ll say. Just the refactoring will make it easier to make changes in a way that does not terrify me to do so.
Rob: Yeah, it’s such a luxury. I say it’s a luxury, it’s now a must have. I think I’ve said this before, never again will I run an app that does not have full test coverage. That’s cool. Did that take you a few weeks?
Mike: Yeah, it’s taken me probably four or five weeks at this point. There were a couple places where I thought it was done a few weeks ago and then ran into a couple of issues. I have one entire section of the app completely taken care of and then I didn’t realize that there was implications of the changes that I made over in the job scheduler. I had to basically refactor a lot of that code as well. Of course, once you do that, then you got to go through all the tests. But in doing so, I’ve realized that it made things a lot easier to write a suite of tests. I was able to do that and I basically doubled the number of unit tests that are in the app based on this set of changes.
Rob: That’s cool. Time well spent, I think. It’s one of those trade-offs of you’re trying to move fast so you don’t write the test and then it will eventually come back to bite you. It tends to come back in delayed features later on, or decreased feature velocity because you start pricking things or a lot of bugs, quality, that’s my experience with test is that they had that 20%, 25% upfront. But with Drip, have been able to continue moving at a pace that a lot of apps that are 5 years old are not, it’s because of that. Derek and I have commented many times that having a software company with no technical founders is a tough way to go. I bring this up because I’ve seen several companies do it. Unless you find that contractor or the salary employee number one who is just really hell bent on writing the test, it’s easy to just push that aside and I think it’s still a detriment of a lot of software companies that are trying to do it.
Mike: Yeah. It’s definitely a tough position to be in. I can’t stress, the unit test side of things, it’s always a trade-off because you want to move faster but if you don’t take the time to write those tests and have them in place, then later on you’ll get to a point where things are breaking left and right and you have no choice but to stop and go back and in some way shape or form, put them in place because otherwise, you really can’t make any progress forward. There’s always that balancing act between how quickly you’re moving versus how many tests you’re implementing.
Rob: For sure. Let’s dive into our listener questions today. The first one is about SaaS revenue patterns. It’s from Basil Abbas from clockit.io. And he says, “Hey, Mike and Rob. Huge fan of your show, and I’ve been religiously following it for two years. It has provided ton of value in each episode and helped us launch our SaaS app to $2,500 in MRR in the first year. In year one of the operation, I’ve noticed there are some patterns to how the MRR grows month to month. For example, in the month of January, February, and March, we are growing at roughly 30% or 40% and then we failed to 15% to 20% for the rest of the year. November was a fantastic month with 40% growth until Thanksgiving and now we have 0% growth in December. We also noticed that one week before and after major holidays in the US, our growth flat lines, but it picks up after. In your experience, have you come across such patterns?”
Mike: I think in B2B SaaS, yes. I’ve definitely seen this with Bluetick lately where in December things are more or less flatlined and that was probably due to a combination of things, mostly me stepping away from the marketing but I’ve heard from various other founders that the same kind of thing tends to happen to them as well. Rob, I think you commented on this in the past where you just take December off because it’s not really worth doing anything except preparation for January and February. I have seen things dip in the summer months as well, and then they pick up after the summer.
In terms of B2C stuff, I don’t know. I would imagine in December, you can probably count on some sort of a revenue bump because you’re going into the holiday season, you can get people to buy stuff for either as gifts or gifts for themselves, to be honest. Definitely done that with my book as well. That’s what I’ve seen. Rob, what about you?
Rob: Yeah. I definitely have seen patterns. The pattern you mentioned is odd. He says the first three months of the year, they grew a ton, and then half that rate for the rest of the year. Obviously it’s going to depend on the app. I remember when I had a [00:09:20] jobs, which is a job board, tons of traffic on Sunday evening because everyone was dreading going to work the next day. Or they didn’t have a job and they pissed away a weekend and they were scrambling thinking like, “I really need to gear up in this.” It’s this fascinating pattern of that.
With just straight ahead SaaS, when I think about HitTail and Drip, I remember it was either April and May were always sketchy. I attributed it to being tax time here in the US. December was always a train wreck, flat at best. Sometimes you’d lose customers. Other than that though, all the rest of the months were pretty similar, and I don’t remember there being anything, any kind of summer slowdown. I don’t know. There are definitely some patterns but I think that you want to look once you have two or three years, you can really see more of a recurring pattern to find out. Because some months would just be slower but it wasn’t year to year that it was the same, it’s just randomness. These things can be somewhat random.
Basil had a second question and I’m going to rephrase it slightly because if I read exactly what he says, folks will be confused but he says, could you also touch on if it’s okay to consider a 5% weekly MRR growth rate? Should I think about this as percentage or should I think about it more as like a dollar amount? I think is really what he’s getting at. Because if you think about it, let’s say you’re doing $5,000 MRR and 5% weekly growth rate would you put at $250 each week. Do you think of we wanna grow by percentage each week or we’re going to continue to grow by percentage each week or are we going to grow by $250 each week, so that when you hit $10,000 you’re actually now growing at 2 1/2% a week.
The way I think about this, and there’s a few ways to think about this. I think that what you have in place today will continue to add the dollar amounts. Let’s say you have a bunch of existing traffic from SEO or you’re doing Outbound or you’re doing paid ads or whatever, that is going to continue to give you a dollar amount in general and not a percentage. As your revenue goes up, you’re not going to necessarily see that you’re going to keep up with the percentage growth. If you want to keep growing at 5% week over week, you have to either increase those traffic channels or you have to add new ones to keep it at 5%. If you think about it, if you go to $20,000 or $30,000 growing at 5% week over week is really, really hard whereas if you’re at $2,000, growing 5% is not that much. You’re just adding a small trickle of revenue.
Mike: I was going to point it out. It depends on what you’re total amount is right now, because going from 5 customers to 10 is a lot easier than going from a 1000 customers to 10,000. The amount of time that it takes is going to make a big difference based on how many customers you currently have.
Rob: For sure. I do like to think about it in percentages because it’s more aggressive. But realize if you do just have linear traffic coming in, linear conversion rate all the same, it’s that dollar amount is what’s going to stay. There’s another factor that comes into this, it’s the bigger you get, the more churn hurts. Because you’ll plateau eventually. When you have 1000 or 10,000 customers, a 5% churn rate is a hell of a lot of people that you have to replace. When you only have 20 customers, 5% churn rate is 1 person. You got to think about all this. As you scale, you do come into new problems to continue to grow.
Alright, our next question is about annual renewals and how to encourage more of them. It’s from [Gareth Helsall 00:12:59] from driverguardian.co.uk. He says, “Hope you’re doing well. I get a ton of value from the podcast. Thanks for the output. Our business is not SaaS, but I would love your input. We have an annual product that our members pay for once a year. At the minute we send three renewal email reminders. One month before, one week before, and three days before. We also send a letter that is designed to arrive after the last email. We’re considering sending text messages that go out before the letter as it would save on postage cost if we could get a response. I would appreciate any input or discussion on about what you think, [00:13:33] for renewal should be for a single time annual recurring payments products.” What do you think?
Mike: If anyone who’s not at a computer is not familiar with driverguardian.co.uk. Essentially, looks a lot like AAA here in the US where you get this membership and provide you various discounts for just showing your AAA card, but at the same time, it also give you coverage if you ran out of gas or if your car breaks down or you blow a tire or something along those lines. There you can call AAA and they’ll come and they will help you out. They’ll send you a tow truck, it’s kind of like having insurance to the point that if your car breaks down, they’ll come help you and you don’t have to pay the emergency towing rates at that time whenever that happens.
I have my own AAA membership, and what they do is they just automatically bill me at that point. They have my credit card on file and they don’t even really ask for renewal. It’s just your honest automatic renewal. That works obviously if your credit card is not expired, but even if it is, depending on what company you have that is doing your credit card processing, it may still work after the fact. If for example, Stripe I know in certain situations, if a credit card expires, it will still bill properly even though the credit card itself is expired. That’s something you might want to take a look at.
The other things is AAA does send a letter in the mail that basically says, hey here is all the information. But again, they already bill me for it and I don’t actually have to pay that invoice. It just automatically gets paid anyway. I feel it’s just a reminder that hey, we’re about to bill you for this. I think that sending out those renewal email reminders is helpful, but definitely taking a look at sending them physical letters is probably a good strategy to go after. Just because you’re putting something physical in front of them and if it’s not going to the right place it may very well be returned or it will get forwarded over versus email. Email delivery can be hit and miss, I’ll say. Especially depending on how many emails you’re sending them on a regular basis anyway. That’s the big question I would raise at this point is how many emails are you sending them throughout the course of the year to begin with and do you know that you’re getting into their mailboxes.
Rob: Yeah. I think the approach I would take or I know the approach I would take is what you said with AAA. As a customer, the fact that I set it up once and they notify me, they’re like, “Hey! We’re going to rebill you in a month.” I don’t have to go log in or click any buttons or anything, it’s just done and it’s always there. I would move the whole business model to automatically renew every year and you’re very upfront about this, when they sign up, “Hey. This will renew automatically.” Maybe it’s a checkbox that’s checked by default. “Hey, do you want us to bill you each year?” And some people will uncheck it, and then you have a different thing if that makes you feel more comfortable.
Personally, I would just say this auto renews every year. That’s the point, and you can easily cancel it with one click and we’re going to notify you multiple times before we do it, and then do the parts that you mentioned, which is these three emails but instead of saying, “Hey, renew.” It should say, “Hey, we’re going to bill you and it’s this much. Just click right here if you want to make any changes to this. If you want to opt out, we won’t bill you.” I do love the idea of SMS as well. I think that if postage costs are a killer, then you could send SMS and avoid sending letter altogether.
I think moving towards an opt out model is the way I would go with this and then still notify the people to make sure that they do receive the stuff.
Mike: I did notice on their site they have one of the selling points is that it says “no auto renewal” and it actually puts you in a tough spot because of this side of it. I don’t know whether that’s because specifically laws over in the UK or in Europe that say that you can’t do that or if it’s just something that you guys came up with that you want to pitch to people because you were tired of being auto billed for stuff that you didn’t really want or need.
But really, I view it almost like the donor cards here in the US where it’s statistically proven that if you have a opt out model versus an opt in model, you’re opt out rate is going to be substantially lower than if you reverse it. People will basically just choose the path of least resistance and they’re not going to bother to go through that actual work in order to opt out but the reverse is true as well.
Rob: I would bet that if they pull the “does not auto renew” off the marketing site, there would be almost zero impact to their conversion rate. Unless this is some big competitive advantage and I don’t feel like it is, I think that that shouldn’t impact most things especially if you really want to do it and give people the option.
Obviously, going backwards, if you have 5000 existing customers, you’re going to grandfather them into what you do now. But I would consider, to be honest, adding in this as a feature and emailing everybody and saying, “Hey, we’ve set up this thing for your convenience. By popular request.” I’m sure someone has requested this at some point. Because I use services, when they don’t auto renew me, and I say, why didn’t you bill this? I actually don’t want to have to go in and re-enter my credit card every 6 months or every 12 months. Certainly, someone has requested at some point. Bill it and see how many existing customers you can get on auto renew and go from there. I’ll bet it’ll have an impact on your bottom line for sure.
Alright, our next question is from Ovi Negrean. His company is socialbee.io. It says, “Hey guys. In a recent episode, you talked about how there are not as many productized services that have been turned into SaaS as you thought. As another data point, socialbee.io has also started with a large service component and I wrote why it’s good to start with a service first in Medium,” and we’ll include that link. “I think it’s indeed an under utilized technique they can turn more wanna-preneurs and entrepreneurs.” There we go, Mike, anther data point.
I think I was the one who made that comment and I still think it’s a lot fewer productized services to SaaS have been done as I think perhaps should be done. I still see so many people shooting for the fences. I also think far few people use this stair step approach too. These are both lower risk, more repeatable, higher chance of success. These are approaches that do that for you and I still think that it’s not as popular as it probably should be.
Mike: This is one of my 2017 predictions. We covered this in the Predictions Episode back in episode 370. The comment I had made was that I didn’t have very many data points. I felt like the bar for launching the SaaS was going to continue to become harder to reach but startups who were going to go the route of offering a service as a first based approach followed by implementing SaaS was going to become more prevalent. I didn’t see a lot of data points is really the problem. We really appreciate you sending that in.
Rob: Our next email is from Calvin. It’s about choosing your text stack. He says, “Hey guys, I’m not a software developer, I’m more of a marketer, but my question is this: As a non technical founder, how do you choose what type of code to build your app on?” He’s asking about the text stack. “I’m trying to build a rank tracker.” What do you think, Mike?
Mike: It’s so heavily dependent on what it is that you’re trying to do. It’s hard to just give a general answer for that. You really need to have somebody who has that technical background to be able to make the decisions because depending on what you’re building, certain types of technical decisions can back you into a corner that’s really hard to get out of or the entire thing could end up falling down at some point because it just can’t scale or do the types of things that you need it to do.
A rank tracker is probably one of those things where you need to choose the right technology because if you don’t, it’s not going to scale the way that you need it too and you’re not going to be able to create things in a distributed manner or spread out the jobs and the spidering that needs to go with it on order to be able to do what you need to do.
The other thing to consider especially in this particular case is that if you are scraping websites in order to do any sort of a rank tracker, you have to be a little bit careful because you can get banned from them. I know of at least two people who had to deal with issues where their scraping techniques were noticed and their app was essentially banned from those websites. They looked at it as, oh, you’re basically DDOS-ing our site. It’s like, oh no, I’m spidering it but they don’t see it that way. If your entire business rests on doing that, then it’s significant risk if that vendor or that company decides to take action to prevent you from doing it.
I ran into this 12-15 years ago with McAfee. I was scraping their website using a Perl Script and then they kept changing things around on their websites so it made it difficult to find what the anti-virus definition numbers were. Because that was what I was trying to pull. They kept changing things around and eventually I wrote a script that would pull it down and it would parse it in five different ways and try and get to what the ID was because they just kept changing the HTML and I noticed that they were alternating it between them. I just figured I do that.
This is a hard question to answer just because it depends so heavily on what it is that you’re building.
Rob: I like the points you brought up. I think that building a rank tracker has some dangers to it. I don’t think you shouldn’t do it because of that but know that there are substantial risks. A rank tracker, this is not for search engines you mentioned specifically. It’s a rank tracker for another ecosystem and it’s going to almost always be against the terms of service. If you do it, you’re going to have to do it on the down low like Mike said. It’s going to be a part of your process that A) rank trackers are brutal because anytime the UI changes, it’s going to break everything and so you’re going to have a fire drill. Know that going in. So you’re going to want to developer who doesn’t have a 1-2 week delay to get back to you. You’re going to want someone who’s able to hop on things.
Second thing is you will likely need to get a bunch of cheap servers with different IPs because at any given time, some of them are going to get blacklisted just like you said, Mike. You can’t do this at scale without that. The people I know who have built these had to do these massive server farms and at any given time, all running the same code at any given time like 20% of them were banned and blacklisted and they would cycle them through. That will be an operational thing that you will perpetually have.
Again, I’m not saying don’t do this but to think about that up front. His question is how do you decide on what language to use and the way you do that is you learn about the language and which are good at different things. Like Python and Perl are really good at scraping. I would probably use Python in this case. His question wasn’t what technology should he use but that’s probably what I would do. I would look for a Python Django developer and build your scraper and build your web front and all in Python.
But the broader question is if you’re not building a rank tracker, and you’re building a different type of SaaS, what languages should someone consider? These days, I would say Ruby on Rails, Python Django. Those are probably one of the two, those are common, you’re going to be able to find developers. If you ever wanted to sell, they’re not languages that people shun. When I had HitTail in Classic ASP, someone was asking if they could buy it. As soon as I told them it was in Classic ASP, they said they had no interest in it so that they would have to rewrite the whole thing. We eventually rewrote it on Ruby on Rails and it was much more sellable.
.NET and Java also can be looked at that in the startups space. They’re not as appealing because the .NET and Java developers, they’re more enterprisey and it’s not as easy to find startup developers who are going to be into that. It’s going to be easier with these other ecosystems. Now, there are other languages that are up and coming. I think if you really wanted to get ahead of the curve, there’s Elm, Elixir and Phoenix. I think those are going to perhaps pull some market share in terms of startups being built. Those are going to slowly pull market share from Ruby and or Python. This comes from conversations with Derrick, he’s my co-founder at Drip, and then other developers that I’m hearing talking about these things. People are really excited about them and are looking for jobs in them and they’re not that widely available.
If I was a non technical founder, I don’t think I would branch into that because it is too new still, and I’ll probably go with something more tried and true.
Mike: Yeah. The big question there is are the problems that you are likely to run into things that have been solved before and with bleeding edge products or technologies or text stacks, sometimes you’re just blazing new ground yourself and there is no solutions or resources out there and you basically have to do a lot of research and development to solve particular types of problems versus with established products like Ruby on Rails, it makes it easier for you to find a common solution to a common problem.
Rob: One other stack you could consider is PHP. There are obviously a lot of apps built in that and ones that scale as well, I’m pretty sure Facebook is built in PHP. Obviously, WordPress, which scales pretty well. But it is, in my experience of these three languages I’m recommending actually, PHP is the only one I know and it can be a complete cluster. I think I would seek more towards the Python, Ruby part of things. If PHP well written and well structured is a perfectly acceptable web language but there’s so much of it that is not, it’s easy to hang yourself.
Alright, let’s go to our next email. It’s about corporate structures and trademarks from Dylan DiMartino. He says, “Hey guys, two quick questions I’d like your opinion on. Number one, I have a consulting company incorporated in the state of Louisiana but I want to start a SaaS with it’s own name. Would you suggest simply creating it under the umbrella of my current corp or should I start a separate entity? I notice a lot of the big apps share the same name as their parent company, Uber and Snapchat. Is this standard practice? Is it worth it? Does it make marketing easier?”
I think there are two aspects to that. One is does it matter that the product name and the corporation match from a marketing perspective? And then the second thing I think of course is the liability. Do you lump it in with consulting, then those assets are unprotected. What do you think, Mike?
Mike: This is interesting question to me mainly because I’m going through it right now where I am spending off Bluetick into its own separate corporate entity. Having just recently talked to both my CPA and my attorney, I’m spinning it off into its own separate LLC. The question I’m going through right now is does it really matter whether or not the app itself is the same name as the company and I’ve decided that no, it really does matter because the app is the front end facing. I will be likely going with a company name that is different than the product.
I do that because I don’t think that it makes any difference at all to the end user but couple things you do have to keep in mind is that when you’re putting things into terms and conditions and privacy policy and stuff like that, the company name is what’s going to have to be listed there along with the product name.
The reason I decided against going with product name as the company name is one, there’s already a company out there called Bluetick Incorporated or something like that, Bluetick Outfitters, something along those lines. But bluetick.com and bluetickinc.com are both taken so I didn’t want to run in any sort of trademark infringement problems with that and because it’s a software app and I think that was in the petroleum industry or something like that, it’s different enough that I can call the app that, and it’s not a big deal but calling the company Bluetick would probably be an issue. I’m going to go with something different. I haven’t decided on what yet, I could do that in the next couple of days and then just make sure that you keep in mind all the stuff associated with places where the customer is actually going to see the company name. That’s the big thing to keep in mind. Because you don’t want the company name to be so nonsensical or off the wall that if they read it or happen to glance at it, they don’t look at it and say, “Wait a second, why am I getting this email?” Especially if down the road, the company gets acquired or you sell it or something along those lines.
That leads to the second piece of this which is should you put it underneath your current corporation or spin it off as a separate entity. I decided to spin it off as a separate one just to keep all the books separate so that if later on I do decide to sell it, or if I do any sort of fund raising or anything like that, I want to have the books, at least reasonably decent, from a very early stage as opposed to trying to separate it out much later. I’m past the point where I feel like I needed to do validation because I probably wouldn’t build a product and go incorporate and do all the things that are “necessary” things that you’re supposed to do until after you’ve gotten to the point where you have revenue coming in the door and you know that it’s going to be something that it would be worth spinning it off into its own entity.
Before that you can easily end up in a situation where you get to five to eight customers and then you have to shut it down because it’s just not making enough money. At that point it costs you more to spin up the company and then shut it down than it did for the amount of money that you gather from customers.
Rob: Yeah. I think that’s a good perspective. I think in a perfect world, the corp would match the product name but I don’t think it really matters that much honestly because the only confusion I can imagine is the credit cards. When you get a credit card statement and it’s going to have corp name typically and not the product name, that’s the time where you may get confusion. I’ve seen folks set up their corp.com and all it is is a page that says confused about a charge from us? You probably use one of our apps, and then it has a few of them. I really don’t think it’s that big of a deal from a branding perspective.
One thing to think about is the liability, well, two things, one is liability. If you mix your consulting firm with a product, if one of them were to get sued or something then they are both in the same bucket and there’s no firewall between them. You have to use your judgment as to how big of a concern that is for you. For me, when I had a bunch of products, they were all under the newer group umbrella and that name didn’t match any of the products. That was never an issue for me and I wasn’t concerned about the liability so it’s a bunch of small products that really weren’t likely to have a lawsuit come in. Again, it’s risk tolerance there.
And then the other aspect of it is if you ever want to sell it, if you just sell the technology, that’s one thing but if it ever gets acquired and people really want the financials broken out and if it’s a startup acquisition, strategic, like we did with Drip, they bought all the assets in the company, it would’ve been a disaster. It would’ve been a disaster if Drip was still under the group. I spun it out maybe a year before the acquisition because it was just growing so much that I knew it needed to be its own company. At that point, I started realizing we’re probably between $30,000 and $50,000 MRR. I would hate for liability of Drip or of the group to spill into one another and then there needs to be a firewall.
The process of ripping that out was a pain in the butt. It took several months and I paid a lawyer several thousand dollars to write up all the paperwork and try to make sure everything was transferred. I had to set up separate payroll. The group had to let go all of us, had to fire the employees and then hire them, through Drip. It was pretty crazy. I had two Gusto accounts, two different corporate credit cards, two bank accounts, two stripe accounts, too many things is what it was. But it was the right call. You got to think about that. If you’re just plugging away and starting something you think you’d get to a few grand and hope to eventually sell it, personally, I’ll probably just throw it under the same corporation assuming that you judged the liability and how much risk you’re willing to take on.
Like Mike said, setting up the entire other entity and then never getting the product off the ground, or never getting it past of couple grand in revenue, it is a lot of expense, you don’t think there’s that much expense but there is setting up upfront, if you’re on a state with an annual fee like California charges $800 a year just to have a corporation there and then you need separate software for the books, and then the CPA is going to have to file separate tax return. That’s an extra cost. There’s a lot to think about there, but I do think you’re thinking about it right.
And then his second question was, “Is it worth going through any steps for the legal protection during your early development stages? Specifically a trademark on your app name.” What do you think about that?
Mike: I don’t think so. If you’re not making any money from it, it probably doesn’t make a difference. It’s funny I did recently see this lawsuit of a company called TWiT versus Twitter.
Rob: Yes. TWiT is This Week in Tech, it’s Leo Laporte’s company.
Mike: Yeah, something along those lines. I think that previously they had taken the standpoint oh this is just a couple of techies in the garage building this app on the side for some sort of social things, it’s not a big deal. Now it’s suddenly a big deal.
Rob: TWiT is a podcasting network in essence, video and audio, and they’re located Northern California. Leo Laporte has long time been basically a tech newscaster for decades. He has his network, and maybe 30 shows in there, few dozen employees, and they have a studio up there North of San Francisco. As these guys were coming up, he has the trademark and the stuff for TWiT, and I don’t know if he has Twitter or not but he certainly has things that I think that early on he and Evan Williams had talked. He has some type of written agreement but it’s not super ironclad, and then he definitely had verbal agreements he has talked about on the show before that hey as long as they stay out of streaming audio and video, that we’re in separate areas, but Twitter’s now getting into that.
For Twitter, you know what they’re going to do? They’re going to settle, right? They’ll pay him some money. I think, I don’t know. They’re big enough, they’re a public company. It’s not that they’re doing great but this type of thing is not catastrophic at their scale. These lawsuits are things that you just throw some lawyers on it and then eventually you settle in and you pay someone $5 million or $10 million and it goes away.
Mike: The point is that they got the app to that point without having had all that stuff. And yes, it’s going to cost them, as you said, maybe it’s $5 million or $10 million which sounds like a heck of a lot of money but how much does Twitter pull in in a year. At the end of the day, it’s not really that big a deal to them to have not have that trademark from day one, or have registered it, or have gone with a different one. It’s really just like you’re trying to solve for a problem that you don’t have and you may never have. Because I don’t think that most of us are going to be in a position where we have a business as large as Twitter and are defending against the trademark because we never filed it or we never acquired it very early on in the startup.
Rob: Right. I think I have mixed feelings about this one. Filing a trademark is a couple hundred bucks. It’s not very expensive, it’s not like a patent. Software patents are $15,000-$30,000 if you file one. Whereas a trademark is inexpensive, and it’s fairly easy to do. You can go to LegalZoom or there’s a bunch of services that do this, and it’s pretty straightforward. Now if you do it and you get rejected, then you have to go and justify and do all this stuff.
I’ve only filed for one trademark. Of all the apps and all the stuff that I’ve done, and it was for Drip and I got rejected the first round. I was like, “Oh, good grief.” I don’t know. I wouldn’t say don’t do it, I do think that if you don’t have an app yet, it’s probably jumping the gun. But it isn’t that much time or money to do it. You just got to weigh it out. I don’t know if there’s a right or wrong one here, right or wrong answer.
Mike: I think it depends on how much money you are actually making from it. Because if you haven’t made a dime from it, probably not worth filing the trademark but when you get to the point where you’ve made maybe $1,000 or $2,000, at that point you might consider it once you’ve made $10,000, $20,000, $30,000 maybe really consider it. You can always push it off too because you could file it based on prior usage. There’s that as well. I think with the Twitter issue, Twitter didn’t do it first, it was the TWiT Company. They didn’t file for a trademark until it was a year after Twitter was founded but they had been previously using it. I think that’s why they have that trademark.
Rob: Yeah, you’re probably right. If you haven’t made any money from it, you probably shouldn’t file it but there’s a resonance thing there but I hear you. Cool. I think that wraps us up for the day.
Mike: Yup, I think so too. 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 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: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
Mike: There’s no word this week but next week I will be headed to BIG SNOW Tiny Conf East. Spending a couple of days up there. There’s about a dozen people or so that go up each year and just hang out and hit the slopes every day and then talk business in the evening. That’s definitely a good time, and I’m really looking forward to it. It’s been a while since I’ve been skiing.
Rob: Yeah. You go there every year, you just come away with a lot of motivation and a lot of good ideas. It seems to really, really work for you. I’m glad that you’re able to go back again this year.
Mike: Yeah. I definitely need the time away from my computer, to be honest at this point. I’ve been heads down for the past several months straight. Haven’t really had any time to come up to breathe.
Rob: It’s always good to get away whether it’s to go on a retreat, or to do something like this. I think it’s a good call, man. I actually wish I could go this year. I won’t be able to, obviously, it’s sold out and stuff but I don’t ski, so I would show up to drink hot cocoa, and I don’t know what I’d do, watch movies or something, just snow shoe or something. I do think it’d be a lot of fun to go to one of them. At one point there were three each year, but I don’t know if there’s a Europe one this year, I think it might be just East and West?
Mike: Yes, just East and West this year. I think the Europe one, they couldn’t get enough people committed to going. There was interest but just nobody stepped up and said, “Hey, we’re definitely in.”
Rob: Yeah, that makes sense. Cool. Hey, we got a note from a listener. His name is Francois Lagier. He says, “I just wanted to reach out and say thank you. Rob and Mike, I’m a co-founder of a new SaaS company called cloudforecast.io. I wanted to reach out and say thank you for a few things.” He has a bulleted list of thanks, which is cool to get this detailed stuff.
“First, thank you for all the good content in Startups For The Rest Of Us. I recently started listening to your podcast, and I’ve been searching the archive for any episodes mentioning the word “SaaS”. As a new entrepreneur, I’m learning so much. Second, you mentioned Perfect Audience many times for your retargeting strategy. Both my co-founders and I were part of the early [00:02:35] of Perfect Audience.” Interesting. “And we are very proud of our work there. Thank you for putting a smile on my face every time you mention it.”
I’ve been a fan of Perfect Audience for a long time and Brad, one of the founders, I’ve spoken with him on the phone several times. In fact, I called him, he was one of the founders that I called during the Drip acquisition because he’s gone through an acquisition. I just wanted to get his sense of dos and don’ts and how it went there. I always appreciate being able to talk to him.
And then back to Francois’s email. “Third, I listened to episode 319 a few days ago and Rob literally mentioned the problem we are trying to solve.” He quotes me, and I say, I had a counter reminder every two weeks. It would ping us and it would say, “Check AWS spelling.” “Thank you for confirming that our idea is not completely crazy, since cloudforecast.io is a daily email report that breaks down your forecasted AWS spending by products tags and regions allowing you to understand where your money’s going. Once again, thank you for everything, have a great week.”
Mike: That’s awesome. Thanks, Francos. I really appreciate the email. It’s very interesting looking at the report that he had sent over as well. Just seen the forecast of the cloud computing spend. It’s interesting seeing it broken down like this. I don’t have nearly the expenses that are shown here. I don’t have to worry about it as much, but I can definitely see how large our installations using cloud services would definitely find that appealing.
Rob: Yeah. Thanks for the email, Francois. I really appreciate it. What else is going on with you? What’s the update on Bluetick?
Mike: I’m working on a couple of minor bugs but right now I’m trying to close out the final testing process for deploying the latest release I’ve been working on. I’m hoping that that will go up by the end of today. It’s basically a series of major improvements to test ability, and test coverage, and then overall resilience of the app in different error conditions and performance scalability, etc. The big thing is that it makes it easier and safer for me to make a bunch of updates moving forward just because the increased test coverage makes it obviously less prone to error. When things go wrong, I’ll be able to see them before it hits the production server because there are certain sections of the app that were critical to the entire thing running and being able to send out the emails and recognize when replies came in.
I won’t say that they were completely hacked together, but there was a lot of code in there that handled specific edge cases that needed to be separated out a little bit, I’ll say. Just the refactoring will make it easier to make changes in a way that does not terrify me to do so.
Rob: Yeah, it’s such a luxury. I say it’s a luxury, it’s now a must have. I think I’ve said this before, never again will I run an app that does not have full test coverage. That’s cool. Did that take you a few weeks?
Mike: Yeah, it’s taken me probably four or five weeks at this point. There were a couple places where I thought it was done a few weeks ago and then ran into a couple of issues. I have one entire section of the app completely taken care of and then I didn’t realize that there was implications of the changes that I made over in the job scheduler. I had to basically refactor a lot of that code as well. Of course, once you do that, then you got to go through all the tests. But in doing so, I’ve realized that it made things a lot easier to write a suite of tests. I was able to do that and I basically doubled the number of unit tests that are in the app based on this set of changes.
Rob: That’s cool. Time well spent, I think. It’s one of those trade-offs of you’re trying to move fast so you don’t write the test and then it will eventually come back to bite you. It tends to come back in delayed features later on, or decreased feature velocity because you start pricking things or a lot of bugs, quality, that’s my experience with test is that they had that 20%, 25% upfront. But with Drip, have been able to continue moving at a pace that a lot of apps that are 5 years old are not, it’s because of that. Derek and I have commented many times that having a software company with no technical founders is a tough way to go. I bring this up because I’ve seen several companies do it. Unless you find that contractor or the salary employee number one who is just really hell bent on writing the test, it’s easy to just push that aside and I think it’s still a detriment of a lot of software companies that are trying to do it.
Mike: Yeah. It’s definitely a tough position to be in. I can’t stress, the unit test side of things, it’s always a trade-off because you want to move faster but if you don’t take the time to write those tests and have them in place, then later on you’ll get to a point where things are breaking left and right and you have no choice but to stop and go back and in some way shape or form, put them in place because otherwise, you really can’t make any progress forward. There’s always that balancing act between how quickly you’re moving versus how many tests you’re implementing.
Rob: For sure. Let’s dive into our listener questions today. The first one is about SaaS revenue patterns. It’s from Basil Abbas from clockit.io. And he says, “Hey, Mike and Rob. Huge fan of your show, and I’ve been religiously following it for two years. It has provided ton of value in each episode and helped us launch our SaaS app to $2,500 in MRR in the first year. In year one of the operation, I’ve noticed there are some patterns to how the MRR grows month to month. For example, in the month of January, February, and March, we are growing at roughly 30% or 40% and then we failed to 15% to 20% for the rest of the year. November was a fantastic month with 40% growth until Thanksgiving and now we have 0% growth in December. We also noticed that one week before and after major holidays in the US, our growth flat lines, but it picks up after. In your experience, have you come across such patterns?”
Mike: I think in B2B SaaS, yes. I’ve definitely seen this with Bluetick lately where in December things are more or less flatlined and that was probably due to a combination of things, mostly me stepping away from the marketing but I’ve heard from various other founders that the same kind of thing tends to happen to them as well. Rob, I think you commented on this in the past where you just take December off because it’s not really worth doing anything except preparation for January and February. I have seen things dip in the summer months as well, and then they pick up after the summer.
In terms of B2C stuff, I don’t know. I would imagine in December, you can probably count on some sort of a revenue bump because you’re going into the holiday season, you can get people to buy stuff for either as gifts or gifts for themselves, to be honest. Definitely done that with my book as well. That’s what I’ve seen. Rob, what about you?
Rob: Yeah. I definitely have seen patterns. The pattern you mentioned is odd. He says the first three months of the year, they grew a ton, and then half that rate for the rest of the year. Obviously it’s going to depend on the app. I remember when I had a [00:09:20] jobs, which is a job board, tons of traffic on Sunday evening because everyone was dreading going to work the next day. Or they didn’t have a job and they pissed away a weekend and they were scrambling thinking like, “I really need to gear up in this.” It’s this fascinating pattern of that.
With just straight ahead SaaS, when I think about HitTail and Drip, I remember it was either April and May were always sketchy. I attributed it to being tax time here in the US. December was always a train wreck, flat at best. Sometimes you’d lose customers. Other than that though, all the rest of the months were pretty similar, and I don’t remember there being anything, any kind of summer slowdown. I don’t know. There are definitely some patterns but I think that you want to look once you have two or three years, you can really see more of a recurring pattern to find out. Because some months would just be slower but it wasn’t year to year that it was the same, it’s just randomness. These things can be somewhat random.
Basil had a second question and I’m going to rephrase it slightly because if I read exactly what he says, folks will be confused but he says, could you also touch on if it’s okay to consider a 5% weekly MRR growth rate? Should I think about this as percentage or should I think about it more as like a dollar amount? I think is really what he’s getting at. Because if you think about it, let’s say you’re doing $5,000 MRR and 5% weekly growth rate would you put at $250 each week. Do you think of we wanna grow by percentage each week or we’re going to continue to grow by percentage each week or are we going to grow by $250 each week, so that when you hit $10,000 you’re actually now growing at 2 1/2% a week.
The way I think about this, and there’s a few ways to think about this. I think that what you have in place today will continue to add the dollar amounts. Let’s say you have a bunch of existing traffic from SEO or you’re doing Outbound or you’re doing paid ads or whatever, that is going to continue to give you a dollar amount in general and not a percentage. As your revenue goes up, you’re not going to necessarily see that you’re going to keep up with the percentage growth. If you want to keep growing at 5% week over week, you have to either increase those traffic channels or you have to add new ones to keep it at 5%. If you think about it, if you go to $20,000 or $30,000 growing at 5% week over week is really, really hard whereas if you’re at $2,000, growing 5% is not that much. You’re just adding a small trickle of revenue.
Mike: I was going to point it out. It depends on what you’re total amount is right now, because going from 5 customers to 10 is a lot easier than going from a 1000 customers to 10,000. The amount of time that it takes is going to make a big difference based on how many customers you currently have.
Rob: For sure. I do like to think about it in percentages because it’s more aggressive. But realize if you do just have linear traffic coming in, linear conversion rate all the same, it’s that dollar amount is what’s going to stay. There’s another factor that comes into this, it’s the bigger you get, the more churn hurts. Because you’ll plateau eventually. When you have 1000 or 10,000 customers, a 5% churn rate is a hell of a lot of people that you have to replace. When you only have 20 customers, 5% churn rate is 1 person. You got to think about all this. As you scale, you do come into new problems to continue to grow.
Alright, our next question is about annual renewals and how to encourage more of them. It’s from [Gareth Helsall 00:12:59] from driverguardian.co.uk. He says, “Hope you’re doing well. I get a ton of value from the podcast. Thanks for the output. Our business is not SaaS, but I would love your input. We have an annual product that our members pay for once a year. At the minute we send three renewal email reminders. One month before, one week before, and three days before. We also send a letter that is designed to arrive after the last email. We’re considering sending text messages that go out before the letter as it would save on postage cost if we could get a response. I would appreciate any input or discussion on about what you think, [00:13:33] for renewal should be for a single time annual recurring payments products.” What do you think?
Mike: If anyone who’s not at a computer is not familiar with driverguardian.co.uk. Essentially, looks a lot like AAA here in the US where you get this membership and provide you various discounts for just showing your AAA card, but at the same time, it also give you coverage if you ran out of gas or if your car breaks down or you blow a tire or something along those lines. There you can call AAA and they’ll come and they will help you out. They’ll send you a tow truck, it’s kind of like having insurance to the point that if your car breaks down, they’ll come help you and you don’t have to pay the emergency towing rates at that time whenever that happens.
I have my own AAA membership, and what they do is they just automatically bill me at that point. They have my credit card on file and they don’t even really ask for renewal. It’s just your honest automatic renewal. That works obviously if your credit card is not expired, but even if it is, depending on what company you have that is doing your credit card processing, it may still work after the fact. If for example, Stripe I know in certain situations, if a credit card expires, it will still bill properly even though the credit card itself is expired. That’s something you might want to take a look at.
The other things is AAA does send a letter in the mail that basically says, hey here is all the information. But again, they already bill me for it and I don’t actually have to pay that invoice. It just automatically gets paid anyway. I feel it’s just a reminder that hey, we’re about to bill you for this. I think that sending out those renewal email reminders is helpful, but definitely taking a look at sending them physical letters is probably a good strategy to go after. Just because you’re putting something physical in front of them and if it’s not going to the right place it may very well be returned or it will get forwarded over versus email. Email delivery can be hit and miss, I’ll say. Especially depending on how many emails you’re sending them on a regular basis anyway. That’s the big question I would raise at this point is how many emails are you sending them throughout the course of the year to begin with and do you know that you’re getting into their mailboxes.
Rob: Yeah. I think the approach I would take or I know the approach I would take is what you said with AAA. As a customer, the fact that I set it up once and they notify me, they’re like, “Hey! We’re going to rebill you in a month.” I don’t have to go log in or click any buttons or anything, it’s just done and it’s always there. I would move the whole business model to automatically renew every year and you’re very upfront about this, when they sign up, “Hey. This will renew automatically.” Maybe it’s a checkbox that’s checked by default. “Hey, do you want us to bill you each year?” And some people will uncheck it, and then you have a different thing if that makes you feel more comfortable.
Personally, I would just say this auto renews every year. That’s the point, and you can easily cancel it with one click and we’re going to notify you multiple times before we do it, and then do the parts that you mentioned, which is these three emails but instead of saying, “Hey, renew.” It should say, “Hey, we’re going to bill you and it’s this much. Just click right here if you want to make any changes to this. If you want to opt out, we won’t bill you.” I do love the idea of SMS as well. I think that if postage costs are a killer, then you could send SMS and avoid sending letter altogether.
I think moving towards an opt out model is the way I would go with this and then still notify the people to make sure that they do receive the stuff.
Mike: I did notice on their site they have one of the selling points is that it says “no auto renewal” and it actually puts you in a tough spot because of this side of it. I don’t know whether that’s because specifically laws over in the UK or in Europe that say that you can’t do that or if it’s just something that you guys came up with that you want to pitch to people because you were tired of being auto billed for stuff that you didn’t really want or need.
But really, I view it almost like the donor cards here in the US where it’s statistically proven that if you have a opt out model versus an opt in model, you’re opt out rate is going to be substantially lower than if you reverse it. People will basically just choose the path of least resistance and they’re not going to bother to go through that actual work in order to opt out but the reverse is true as well.
Rob: I would bet that if they pull the “does not auto renew” off the marketing site, there would be almost zero impact to their conversion rate. Unless this is some big competitive advantage and I don’t feel like it is, I think that that shouldn’t impact most things especially if you really want to do it and give people the option.
Obviously, going backwards, if you have 5000 existing customers, you’re going to grandfather them into what you do now. But I would consider, to be honest, adding in this as a feature and emailing everybody and saying, “Hey, we’ve set up this thing for your convenience. By popular request.” I’m sure someone has requested this at some point. Because I use services, when they don’t auto renew me, and I say, why didn’t you bill this? I actually don’t want to have to go in and re-enter my credit card every 6 months or every 12 months. Certainly, someone has requested at some point. Bill it and see how many existing customers you can get on auto renew and go from there. I’ll bet it’ll have an impact on your bottom line for sure.
Alright, our next question is from Ovi Negrean. His company is socialbee.io. It says, “Hey guys. In a recent episode, you talked about how there are not as many productized services that have been turned into SaaS as you thought. As another data point, socialbee.io has also started with a large service component and I wrote why it’s good to start with a service first in Medium,” and we’ll include that link. “I think it’s indeed an under utilized technique they can turn more wanna-preneurs and entrepreneurs.” There we go, Mike, anther data point.
I think I was the one who made that comment and I still think it’s a lot fewer productized services to SaaS have been done as I think perhaps should be done. I still see so many people shooting for the fences. I also think far few people use this stair step approach too. These are both lower risk, more repeatable, higher chance of success. These are approaches that do that for you and I still think that it’s not as popular as it probably should be.
Mike: This is one of my 2017 predictions. We covered this in the Predictions Episode back in episode 370. The comment I had made was that I didn’t have very many data points. I felt like the bar for launching the SaaS was going to continue to become harder to reach but startups who were going to go the route of offering a service as a first based approach followed by implementing SaaS was going to become more prevalent. I didn’t see a lot of data points is really the problem. We really appreciate you sending that in.
Rob: Our next email is from Calvin. It’s about choosing your text stack. He says, “Hey guys, I’m not a software developer, I’m more of a marketer, but my question is this: As a non technical founder, how do you choose what type of code to build your app on?” He’s asking about the text stack. “I’m trying to build a rank tracker.” What do you think, Mike?
Mike: It’s so heavily dependent on what it is that you’re trying to do. It’s hard to just give a general answer for that. You really need to have somebody who has that technical background to be able to make the decisions because depending on what you’re building, certain types of technical decisions can back you into a corner that’s really hard to get out of or the entire thing could end up falling down at some point because it just can’t scale or do the types of things that you need it to do.
A rank tracker is probably one of those things where you need to choose the right technology because if you don’t, it’s not going to scale the way that you need it too and you’re not going to be able to create things in a distributed manner or spread out the jobs and the spidering that needs to go with it on order to be able to do what you need to do.
The other thing to consider especially in this particular case is that if you are scraping websites in order to do any sort of a rank tracker, you have to be a little bit careful because you can get banned from them. I know of at least two people who had to deal with issues where their scraping techniques were noticed and their app was essentially banned from those websites. They looked at it as, oh, you’re basically DDOS-ing our site. It’s like, oh no, I’m spidering it but they don’t see it that way. If your entire business rests on doing that, then it’s significant risk if that vendor or that company decides to take action to prevent you from doing it.
I ran into this 12-15 years ago with McAfee. I was scraping their website using a Perl Script and then they kept changing things around on their websites so it made it difficult to find what the anti-virus definition numbers were. Because that was what I was trying to pull. They kept changing things around and eventually I wrote a script that would pull it down and it would parse it in five different ways and try and get to what the ID was because they just kept changing the HTML and I noticed that they were alternating it between them. I just figured I do that.
This is a hard question to answer just because it depends so heavily on what it is that you’re building.
Rob: I like the points you brought up. I think that building a rank tracker has some dangers to it. I don’t think you shouldn’t do it because of that but know that there are substantial risks. A rank tracker, this is not for search engines you mentioned specifically. It’s a rank tracker for another ecosystem and it’s going to almost always be against the terms of service. If you do it, you’re going to have to do it on the down low like Mike said. It’s going to be a part of your process that A) rank trackers are brutal because anytime the UI changes, it’s going to break everything and so you’re going to have a fire drill. Know that going in. So you’re going to want to developer who doesn’t have a 1-2 week delay to get back to you. You’re going to want someone who’s able to hop on things.
Second thing is you will likely need to get a bunch of cheap servers with different IPs because at any given time, some of them are going to get blacklisted just like you said, Mike. You can’t do this at scale without that. The people I know who have built these had to do these massive server farms and at any given time, all running the same code at any given time like 20% of them were banned and blacklisted and they would cycle them through. That will be an operational thing that you will perpetually have.
Again, I’m not saying don’t do this but to think about that up front. His question is how do you decide on what language to use and the way you do that is you learn about the language and which are good at different things. Like Python and Perl are really good at scraping. I would probably use Python in this case. His question wasn’t what technology should he use but that’s probably what I would do. I would look for a Python Django developer and build your scraper and build your web front and all in Python.
But the broader question is if you’re not building a rank tracker, and you’re building a different type of SaaS, what languages should someone consider? These days, I would say Ruby on Rails, Python Django. Those are probably one of the two, those are common, you’re going to be able to find developers. If you ever wanted to sell, they’re not languages that people shun. When I had HitTail in Classic ASP, someone was asking if they could buy it. As soon as I told them it was in Classic ASP, they said they had no interest in it so that they would have to rewrite the whole thing. We eventually rewrote it on Ruby on Rails and it was much more sellable.
.NET and Java also can be looked at that in the startups space. They’re not as appealing because the .NET and Java developers, they’re more enterprisey and it’s not as easy to find startup developers who are going to be into that. It’s going to be easier with these other ecosystems. Now, there are other languages that are up and coming. I think if you really wanted to get ahead of the curve, there’s Elm, Elixir and Phoenix. I think those are going to perhaps pull some market share in terms of startups being built. Those are going to slowly pull market share from Ruby and or Python. This comes from conversations with Derrick, he’s my co-founder at Drip, and then other developers that I’m hearing talking about these things. People are really excited about them and are looking for jobs in them and they’re not that widely available.
If I was a non technical founder, I don’t think I would branch into that because it is too new still, and I’ll probably go with something more tried and true.
Mike: Yeah. The big question there is are the problems that you are likely to run into things that have been solved before and with bleeding edge products or technologies or text stacks, sometimes you’re just blazing new ground yourself and there is no solutions or resources out there and you basically have to do a lot of research and development to solve particular types of problems versus with established products like Ruby on Rails, it makes it easier for you to find a common solution to a common problem.
Rob: One other stack you could consider is PHP. There are obviously a lot of apps built in that and ones that scale as well, I’m pretty sure Facebook is built in PHP. Obviously, WordPress, which scales pretty well. But it is, in my experience of these three languages I’m recommending actually, PHP is the only one I know and it can be a complete cluster. I think I would seek more towards the Python, Ruby part of things. If PHP well written and well structured is a perfectly acceptable web language but there’s so much of it that is not, it’s easy to hang yourself.
Alright, let’s go to our next email. It’s about corporate structures and trademarks from Dylan DiMartino. He says, “Hey guys, two quick questions I’d like your opinion on. Number one, I have a consulting company incorporated in the state of Louisiana but I want to start a SaaS with it’s own name. Would you suggest simply creating it under the umbrella of my current corp or should I start a separate entity? I notice a lot of the big apps share the same name as their parent company, Uber and Snapchat. Is this standard practice? Is it worth it? Does it make marketing easier?”
I think there are two aspects to that. One is does it matter that the product name and the corporation match from a marketing perspective? And then the second thing I think of course is the liability. Do you lump it in with consulting, then those assets are unprotected. What do you think, Mike?
Mike: This is interesting question to me mainly because I’m going through it right now where I am spending off Bluetick into its own separate corporate entity. Having just recently talked to both my CPA and my attorney, I’m spinning it off into its own separate LLC. The question I’m going through right now is does it really matter whether or not the app itself is the same name as the company and I’ve decided that no, it really does matter because the app is the front end facing. I will be likely going with a company name that is different than the product.
I do that because I don’t think that it makes any difference at all to the end user but couple things you do have to keep in mind is that when you’re putting things into terms and conditions and privacy policy and stuff like that, the company name is what’s going to have to be listed there along with the product name.
The reason I decided against going with product name as the company name is one, there’s already a company out there called Bluetick Incorporated or something like that, Bluetick Outfitters, something along those lines. But bluetick.com and bluetickinc.com are both taken so I didn’t want to run in any sort of trademark infringement problems with that and because it’s a software app and I think that was in the petroleum industry or something like that, it’s different enough that I can call the app that, and it’s not a big deal but calling the company Bluetick would probably be an issue. I’m going to go with something different. I haven’t decided on what yet, I could do that in the next couple of days and then just make sure that you keep in mind all the stuff associated with places where the customer is actually going to see the company name. That’s the big thing to keep in mind. Because you don’t want the company name to be so nonsensical or off the wall that if they read it or happen to glance at it, they don’t look at it and say, “Wait a second, why am I getting this email?” Especially if down the road, the company gets acquired or you sell it or something along those lines.
That leads to the second piece of this which is should you put it underneath your current corporation or spin it off as a separate entity. I decided to spin it off as a separate one just to keep all the books separate so that if later on I do decide to sell it, or if I do any sort of fund raising or anything like that, I want to have the books, at least reasonably decent, from a very early stage as opposed to trying to separate it out much later. I’m past the point where I feel like I needed to do validation because I probably wouldn’t build a product and go incorporate and do all the things that are “necessary” things that you’re supposed to do until after you’ve gotten to the point where you have revenue coming in the door and you know that it’s going to be something that it would be worth spinning it off into its own entity.
Before that you can easily end up in a situation where you get to five to eight customers and then you have to shut it down because it’s just not making enough money. At that point it costs you more to spin up the company and then shut it down than it did for the amount of money that you gather from customers.
Rob: Yeah. I think that’s a good perspective. I think in a perfect world, the corp would match the product name but I don’t think it really matters that much honestly because the only confusion I can imagine is the credit cards. When you get a credit card statement and it’s going to have corp name typically and not the product name, that’s the time where you may get confusion. I’ve seen folks set up their corp.com and all it is is a page that says confused about a charge from us? You probably use one of our apps, and then it has a few of them. I really don’t think it’s that big of a deal from a branding perspective.
One thing to think about is the liability, well, two things, one is liability. If you mix your consulting firm with a product, if one of them were to get sued or something then they are both in the same bucket and there’s no firewall between them. You have to use your judgment as to how big of a concern that is for you. For me, when I had a bunch of products, they were all under the newer group umbrella and that name didn’t match any of the products. That was never an issue for me and I wasn’t concerned about the liability so it’s a bunch of small products that really weren’t likely to have a lawsuit come in. Again, it’s risk tolerance there.
And then the other aspect of it is if you ever want to sell it, if you just sell the technology, that’s one thing but if it ever gets acquired and people really want the financials broken out and if it’s a startup acquisition, strategic, like we did with Drip, they bought all the assets in the company, it would’ve been a disaster. It would’ve been a disaster if Drip was still under the group. I spun it out maybe a year before the acquisition because it was just growing so much that I knew it needed to be its own company. At that point, I started realizing we’re probably between $30,000 and $50,000 MRR. I would hate for liability of Drip or of the group to spill into one another and then there needs to be a firewall.
The process of ripping that out was a pain in the butt. It took several months and I paid a lawyer several thousand dollars to write up all the paperwork and try to make sure everything was transferred. I had to set up separate payroll. The group had to let go all of us, had to fire the employees and then hire them, through Drip. It was pretty crazy. I had two Gusto accounts, two different corporate credit cards, two bank accounts, two stripe accounts, too many things is what it was. But it was the right call. You got to think about that. If you’re just plugging away and starting something you think you’d get to a few grand and hope to eventually sell it, personally, I’ll probably just throw it under the same corporation assuming that you judged the liability and how much risk you’re willing to take on.
Like Mike said, setting up the entire other entity and then never getting the product off the ground, or never getting it past of couple grand in revenue, it is a lot of expense, you don’t think there’s that much expense but there is setting up upfront, if you’re on a state with an annual fee like California charges $800 a year just to have a corporation there and then you need separate software for the books, and then the CPA is going to have to file separate tax return. That’s an extra cost. There’s a lot to think about there, but I do think you’re thinking about it right.
And then his second question was, “Is it worth going through any steps for the legal protection during your early development stages? Specifically a trademark on your app name.” What do you think about that?
Mike: I don’t think so. If you’re not making any money from it, it probably doesn’t make a difference. It’s funny I did recently see this lawsuit of a company called TWiT versus Twitter.
Rob: Yes. TWiT is This Week in Tech, it’s Leo Laporte’s company.
Mike: Yeah, something along those lines. I think that previously they had taken the standpoint oh this is just a couple of techies in the garage building this app on the side for some sort of social things, it’s not a big deal. Now it’s suddenly a big deal.
Rob: TWiT is a podcasting network in essence, video and audio, and they’re located Northern California. Leo Laporte has long time been basically a tech newscaster for decades. He has his network, and maybe 30 shows in there, few dozen employees, and they have a studio up there North of San Francisco. As these guys were coming up, he has the trademark and the stuff for TWiT, and I don’t know if he has Twitter or not but he certainly has things that I think that early on he and Evan Williams had talked. He has some type of written agreement but it’s not super ironclad, and then he definitely had verbal agreements he has talked about on the show before that hey as long as they stay out of streaming audio and video, that we’re in separate areas, but Twitter’s now getting into that.
For Twitter, you know what they’re going to do? They’re going to settle, right? They’ll pay him some money. I think, I don’t know. They’re big enough, they’re a public company. It’s not that they’re doing great but this type of thing is not catastrophic at their scale. These lawsuits are things that you just throw some lawyers on it and then eventually you settle in and you pay someone $5 million or $10 million and it goes away.
Mike: The point is that they got the app to that point without having had all that stuff. And yes, it’s going to cost them, as you said, maybe it’s $5 million or $10 million which sounds like a heck of a lot of money but how much does Twitter pull in in a year. At the end of the day, it’s not really that big a deal to them to have not have that trademark from day one, or have registered it, or have gone with a different one. It’s really just like you’re trying to solve for a problem that you don’t have and you may never have. Because I don’t think that most of us are going to be in a position where we have a business as large as Twitter and are defending against the trademark because we never filed it or we never acquired it very early on in the startup.
Rob: Right. I think I have mixed feelings about this one. Filing a trademark is a couple hundred bucks. It’s not very expensive, it’s not like a patent. Software patents are $15,000-$30,000 if you file one. Whereas a trademark is inexpensive, and it’s fairly easy to do. You can go to LegalZoom or there’s a bunch of services that do this, and it’s pretty straightforward. Now if you do it and you get rejected, then you have to go and justify and do all this stuff.
I’ve only filed for one trademark. Of all the apps and all the stuff that I’ve done, and it was for Drip and I got rejected the first round. I was like, “Oh, good grief.” I don’t know. I wouldn’t say don’t do it, I do think that if you don’t have an app yet, it’s probably jumping the gun. But it isn’t that much time or money to do it. You just got to weigh it out. I don’t know if there’s a right or wrong one here, right or wrong answer.
Mike: I think it depends on how much money you are actually making from it. Because if you haven’t made a dime from it, probably not worth filing the trademark but when you get to the point where you’ve made maybe $1,000 or $2,000, at that point you might consider it once you’ve made $10,000, $20,000, $30,000 maybe really consider it. You can always push it off too because you could file it based on prior usage. There’s that as well. I think with the Twitter issue, Twitter didn’t do it first, it was the TWiT Company. They didn’t file for a trademark until it was a year after Twitter was founded but they had been previously using it. I think that’s why they have that trademark.
Rob: Yeah, you’re probably right. If you haven’t made any money from it, you probably shouldn’t file it but there’s a resonance thing there but I hear you. Cool. I think that wraps us up for the day.
Mike: Yup, I think so too. 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 and we’ll see you next time.
Episode 375 | How to Evaluate Per-Seat and Tiered Pricing Models
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to evaluate per-seat and tiered pricing models. They give you their definitions and a list of pros and cons to each model.
Items mentioned in this episode:
Mike: In this episode of Startups for the Rest of Us, Rob and I are gonna be talking about how to evaluate per seat and tiered pricing models. This is Startups for the Rest of Us Episode 375. 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: I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve been. What’s the word this week, Rob?
Rob: Well, my first ever angel investment in 2011 was Jason Cohen’s WPEngine. They just passed $100 million in annual revenue and they secured $250 million investment from company, a private equity firm called Silver Lake and it bought out the series A and B investors. It’s my first exit, as they say.
Mike: Awesome.
Rob: I guess it’s my second exit because Drip and HitTail before that, but you get the idea. My first angel investment that has paid back any money, how about that?
Mike: Well, I’ve got a napkin folding company, if you want to invest in it.
Rob: Really? What’s the value? If it’s low in valuation, I think I could do it.
Mike: I don’t know, that kind of reminds me of the joke I just made. I think that it was Jason Fried who had put out a tweet a while back about selling a small piece of Basecamp to somebody for like a dollar, and he gave him 1/1,000,000 of a percent of the business in exchange for that dollar which may have valued at, I forget what it was, it was like $300 billion or something like that.
Rob: Oh, yeah. Right, right. Yeah, I remember reading that article just about how you reduce the numbers and it doesn’t make any sense when you’re raising a lot of these VC rounds, they’re just stupid, valued at whatever it was, 50 billion or just crazy, crazy numbers. But it doesn’t mean you’re actually worth that.
When I was sitting down to consider raising as Drip was growing and we were kind of bursting at the seams and we needed cash, we were evaluating raising an angel round versus an acquisition because we were being approached pretty regularly by folks who wanted to buy us. One of the struggles I had with raising that round or considering the round is the valuation that you’re gonna raise that right now given our growth rating, given our revenue, is gonna be high, it’s gonna be a lot of money.
In order to then do, in my opinion, to do right by those investors, you have to sell for at least twice that. Getting to a purchase price that’s 2x to 10x what your funding valuation was is hard. I’m gonna make up numbers here, but if you can raise at a $10-million valuation, you can’t sell at a $10 million valuation, you could probably sell for $1 million or $2 million, the actual cash sales prices are substantially less than funding valuations because funding is driven by the market and by FOMO, and by all this stuff, people making bets. Whereas someone putting cash on it, they really do look at more financials, they’re just more picky about things because they’re not making a bet. They are really trying to do something, do right by their business.
All that to say, if you raise at a $5 million or $10 million valuation, but you’re only worth in cash, if you could sell at a million today, you have a hell of a lot of work to get to that $20, $30, $40 million mark and that was a big question in my mind, like again, those are made-up numbers. Those are not the numbers that we had but I kept thinking are we in it for that many years or is it better to take some money off the table?
Mike: Yeah. I think that’s a big challenge not just for you at that time but for anyone who’s considering going down that road because if you do take that money, you’re basically committing yourself to down the road not just selling the business but putting the business in a position where you have to grow to that point in order to be able to get anything out of it. I think in most cases, the investors are going to need to be paid back their money first before you get anything or before you get anything substantial. Even if you sell it, as you said, if you’ve raised it at a $10 million valuation and you sold it, let’s say, for $12 million or whatever, they’re gonna make their money. Even though you sold the business for $12 million or $15 million, you’re probably not gonna make very much at all just because of the way that those numbers work out, which kind of sucks, you built that business, and yes, it was with somebody else’s money, but you just don’t get nearly as much out of it as you probably could’ve if you bootstrapped it. The flip side of the coin is if you didn’t get the money, would you have ever been able to get to that point?
Rob: Right, that’s always a challenge. I think we’ve been clear in the past that we’re not anti-funding, certainly not anti. As someone who is now investing in businesses, I believe that there’s a time and a place and there are rational and good reasons for raising fund. We did an episode on this, probably a hundred episodes ago where we really talked through the difference between Seed Funding and Angel Funding versus Venture Capital, and kind of the pros and cons to that. I think we talked about fund strapping during that time and about companies like Card Hook and Lead Fuse and Term Buster that I’m invested in. They don’t necessarily wanna do the implied series A. They really are raising that round up front to move quicker, but to get to profitability, and then to build an actual business that will either exit someday or will throw off cash in the form of dividends. It is a challenging question.
I think I’ve publicly stated several times that I have no plans to do another one. I don’t plan to do another startup, I just don’t feel like I have it in me at this point. But if in some theoretical world I were to do it, I would probably raise a round. I would either raise a round for myself and self-fund it but with a substantial chunk of money, or I would go to my angel network and the people that I know and get some money into it because it just makes things so much easier if you’re an experienced, knowledgeable founder and you know the path, it can get you there quicker.
Mike: The Bitcoin rage, I think right now the initial coin offering, you could do an initial [walling 0:05:44] offering.
Rob: Oh, my gosh. Oh, my gosh. The ICO stuff is so ridiculous. That’s a whole other show. If you wanna hear about that, go to https://p.nomics.com, that’s Clay Collins’ blog about Cryptocurrency and he has a podcast now, and he’s dived into that stuff. Yeah, there’s some serious insanity going on there. I think the SEC is going to crack down on people offering these – essentially they’re securities, they’re selling securities without vetting the people on the other end, and there are laws against that. I think it’s going to become a mess for some folks.
Mike: Yeah. I’ve seen some crazy things like some companies lately that are publicly traded companies where they have a price on the New York Stock Exchange, or on Nasdaq, or something like that. They come out with a press release or an article that says that they’re going to be creating their own digital currency of some kind, and then suddenly, I think it was Kodak, it was just last week and their stock price went up by 50%. I was like really, are you kidding me? This is Kodak. Yeah, I don’t know. Having spent a long time in Rochester, New York, Kodak goes through a cycle, every three years roughly. It’s Kodak and Xerox. It’s like one year a bunch of people are laid off and then the other company is hiring, and it’s just people bounce back and forth between those two companies like clockwork and it’s ridiculous. But neither one of them either really does anything.
Rob: Cool. Enough about ICOs and Angel Investing. What’s going on for you?
Mike: I had a bunch of customers to Bluetick this week. That’s a good feeling to get back on track and kick things off in the New Year. Right now, I’m dealing mostly with support issues and finalizing the website design I’ve been working on and the email course redesign. I think my biggest challenge right now is troubleshooting large numbers of requests that are coming into my server on occasion, so we’re trying to figure out either what’s going on and why certain things are being throttled. I’m sure it’s a configuration issue at some place, but I just don’t have the logs because it looks like certain things are just not getting through and I don’t see what’s going on, so that came up this morning.
Rob: Dude, if you have a segment.com integration, they have [00:07:50] so many time, accidentally. Someone hooks it up and they don’t respect our rate limits, and we’ve had extensive conversations with them and I’m just shocked that business at large, it’s 429 response that we give back and we say, “This is the rate limit. The next time you can send is in this many minutes.” It’s all in there, Zapier has rate limits and we parse them, we actually respond to them but Segment said they’re working on it, but man they have taken the RAPI down multiple times in the past year.
Mike: I’m the only one who’s like I’m getting API requests coming in and I’ve never really looked at the API limits in the past because before it was just my app and now as I’m starting to integrate into other things, as you said, you’re basically accidentally getting [00:08:33]. I’m seeing the logs, I’m responding to dozens of requests per second, but if something gets dropped, I don’t necessarily see it in those logs. I would just have to go poke around and see like are there other logs that I can go look at on the system itself.
Rob: Yeah. Once you have customers going and you start scaling up, these things take more and more of your time. Before we dive in, I had a couple of books that I want to just circle back on. As I say, I listened to a lot of audio books during the year. I recently finished WTF, What’s The Future and Why It’s Up To Us, and that’s Tim O’Reilly’s book.
I mentioned that I was maybe a third of the way through and was not digging it a few weeks ago. I came at it with a new mindset and I do think it’s a good book, but it didn’t blow me away. He analyzes how the future is gonna be. He looks at certain companies and how they’re operating and he did this back in the 90s. He did in the early 2000s with Web 2.0, and now he’s doing it here. He says, “Certain companies embody what’s going to happen, where the puck is going. He looks at several companies, Uber, and he talks about Amazon, he talks about a few companies that do it. It definitely got better for me towards the end, but not a resounding. It was good. It was just 6 or 7 for me out of 10, but it didn’t blow me away like I thought I would.
Another one is called Make Your Kid a Money Genius Even If You’re Not. I always like books that help me raise my kids better and give me advice about that stuff. Though I liked it, I think it’s worth listening to or reading. My one complaint is that it’s so much focused on teenage, college, and later. Since my kids are 7 and 11, there was a little bit on that topic but it was very, very limited, so I started skipping chapters towards the end about saving for college and all this stuff that I already have done, how to manage your money during college, how to do credit cards, and all that kind of stuff.
Then, the last one is a really interesting book I stumbled on, it’s called Accidental Superpower. This is if you want to feel good about the future of America. Not in like a nationalistic way, but in a, there’s always the thought or the threat of like, “Well, you know, India, and China, and Japan, and everybody, they’re just gonna eat our lunch and all of the jobs are going overseas,” and all that stuff. Read this fascinating book, it’s by a guy with a PhD in Geopolitics.
Geopolitics is how geography shapes the political climate and how it shapes our country and how it develops. It’s just a fascinating look at all the advantages that really North America has as this place that’s separate from Europe, about the navy, about the natural resources. I mean just on and on and on and it keeps going through if you really look at this, at least from his perspective that America’s gonna be fine, that United States is gonna be fine, and that there’s always gonna be challenges, but then it’s not as dire as so many people make it out to be.
Mike: Awesome. While you’re talking about that, it actually reminded me of something else. Do you watch Netflix at all?
Rob: Oh, absolutely.
Mike: Yes. There’s a new series on there called The Toys That Made Us.
Rob: Yes.
Mike: If you haven’t checked this, it’s awesome.
Rob: I have.
Mike: There’s only four episodes for it, so for the listeners, it basically goes back to the 80s and 90s and takes a look at some of the different toys that became huge and really, really popular during that time frame. Obviously, some of them came about before that, but it goes through some of the history of toys like Star Wars, Barbie, He-Man, and GI Joe. Those are the four that they have. I don’t know if they’re gonna do another season or anything like that, but it’s a really fascinating look at the toy industry and how people weren’t marketing these toys, how they were getting them out in front of customers.
In some cases, it was the psychological hacks that they used in order to figure out what was gonna make a toy resonate with people and some of the struggles that they had to overcome in order to get the product out to market. It blew me away. It was awesome watching all four of them.
Rob: I’ve only done the Star Wars one, but definitely, I’d recommend, have the other three in my queue. What are we going to talk about today?
Mike: Today, we’re gonna be talking about how to evaluate per seat and tiered pricing models. This comes up, because yesterday I was talking to an entrepreneur about this exact topic and we also have a listener question in our queue about SaaS pricing models.
The short version of his question is that, on apps and services the post multiple projects, is project-based pricing a thing? What are the pros and cons and why would you not go down on one of these paths? He has a much longer version which I won’t get into but I thought that we could dig into the differences between per seat pricing versus tier pricing, talk a little about the pros and cons of each, and then also point people to a resource over on the cobloom.com website where they have what’s called the Ultimate Guide to SaaS pricing models, Strategies and Psychological Hacks. They dig really into I think about seven or eight different pricing models. Some of them are just variations on others, so instead of per user pricing, for example, there’s a per active user pricing model that you can look on. I thought that that’d be a good place to start our discussion.
Rob: Let’s dive in.
Mike: The first thing to talk about is what exactly is per seat pricing? The basic idea of per seat pricing is pretty straightforward. Each person that is using your software you’re going to charge the customer for. If they have one user, you’re going to charge them for one. If they have 25, you’re going to charge them for 25 users. Typically, each user has a given price for it, maybe it’s $5, maybe it’s $50 a month. But you can also have I’ll say a little bit more complicated model where you have different tiers for the users as well. Let’s say you have one set of features, it’s $5, or different set of features, it’s $10 per user and $15. I think that it gets really, really complicated, at least it has the potential to get really complicated, but at its simplest form, you have per seat pricing as just a set dollar amount per user that’s using the software.
Rob: Yup. Do you remember the rule for, I think we’ve talked about this, the rule for when you should use per seat pricing.
Mike: Yes. You mentioned it a couple of episodes ago, I think.
Rob: Yup.
Mike: If I remember correctly, if somebody is going to see a different set of data or have a different view of what’s going on, then they should have a per seat pricing model versus a tiered pricing model.
Rob: There you go. Two examples is if you’re using a CRM system, then each sales person will obviously see different prospects and different flows and that’s why per seat pricing makes sense there. But if you’re using an email marketing system such as Drip or Mailchimp, typically, you don’t see anything different if you login. Limiting the number of logins or managing by users doesn’t really make sense because people will just share logins if they wanna do it.
I like per seat pricing a lot, but you should only use it when it fits that role, and if it doesn’t fit that role, then avoid it and do one of these other purchases we’re gonna talk about. It feels weird when it’s bolted on. It’s really obvious. It’s something like why are you limiting by this? It doesn’t make any sense.
Mike: Can you give an example of where somebody might try to bolt that on and it doesn’t make sense? Because honestly, it sounds like you’ve got a couple of examples in your head.
Rob: There’s 500 or 600 ESPs that we’ve kind of run across over the years, and I’ve seen ESPs, again, something like a Mailchimp or a Drip have maximum, you can invite users in, up to five users to this tier, and then if you have more than five logins, then you have to jump up to a higher tier. It just doesn’t make sense, your customers are not getting value out of that, they’re getting value out of either how many subscribers they have, how many emails they send, how much money they make, there are other things to base your pricing on that are not a number of logins. Whereas, if you have something like pager duty where it’s monitoring software that pages your DevOps team or a CRM system, the more people you have on there, the more value you’re getting and be the more kind of willingness to pay that you should have. Those are kind of two examples both against and for per user pricing.
Mike: A couple of different cons for the per seat pricing that you already called out was that people will share accounts if there’s no real value associated with having a dedicated log-in for them. I think the other thing, and I’ve personally seen this as well is, if you are charging on a per user basis, it in some ways limits the adoption of that particular product, because then you’re basically forcing the company or the customer to make a decision every time they have either a new employee, or a new contractor come in, do we create a user account for this new person because it’s going to cost us money to do that. By pushing that decision on them, a lot of times the answer’s gonna be, “Well, no, we can get away without it.” Or, they go towards what you had pointed out, they just start sharing logins and it becomes a detriment to you because then you have to just evaluate, are you gonna enforce the logins on a per user basis, or you’re gonna make sure that the only one session is connected at a time, or you’re just gonna ignore that issue?
Rob: Another con to per seat pricing. Again, per seat pricing works, but these are some potential negatives. You do have a potential for increased churn as a result of fewer people in an organization using it if they are trying to save money by not having everyone login. It’s one way that people might churn out of your app.
Mike: If we look at the benefits of the per seat pricing, it’s really easy to understand. It’s x-dollars per user, per month, and there’s really no complicated explanation for it. Another nice side of it is that it does scale with usage, you are not really leaving money on the table if somebody has 5 people signed up, you’re gonna get paid for 5 people, if they have 500, you’re gonna get paid for 500. You don’t have to worry as much about whether you’re leaving the money on the table or you’re selling yourself short inside the app.
Then, the last thing is that when you have a number of users who are using your product, the revenue itself is generally predictable, because you can see, not just that you have that number of users and it’s a month to month subscription of some kind, but also you can see when people are not using the product. If they’re not using it, chances are good that you can forecast a little bit and say, “Well, how long after they stop using it does this particular user or account fall-off, and then we no longer start getting revenue from it?”
Rob: That’s where this variant of per using pricing started to come about, it’s called per active user pricing and we’re not gonna dive totally into this but Slack does this. If you have a team of 50 people, 50 logins into Slack, but five people don’t use it at all during a month, they actually don’t charge you for that. That’s kind of cool way to do it.
Mike: Yeah. That is kind of a cool way to do it, and I think if you’re large enough where you don’t necessarily care whether all of your users are on the system or not, then that’s fine. But I think for a lot of smaller companies, that also creates some pain points around when you like somebody says, “Hey, can you cap on Slack and go take a look at this?” “Oh, I didn’t get that.” Or, “I haven’t logged in.” Then, they log in to check one thing and now you’re getting charged for them, it’s like okay, well, if they didn’t have the login to begin with, then you wouldn’t have to worry about that.
But, I don’t know, I think for smaller businesses, if you’re between one and five people, it can be kind of painful, especially if the price point is more than like $5 a month. $5 a month is not a big deal, but if it’s $50 or $100 a month per user, and suddenly you have two or three people log in extra just to check something, now you’re getting charged for them because they’re considered an active user
Rob: Cool. What’s next?
Mike: The next one to talk about is tiered pricing. I think that if you look back historically, I think it was Hiten Shan with Crazy Egg, they’re the company that I think you can kind of point to as putting together those different tiered pricing models, another one is Basecamp obviously with all of their different pricing tiers that they have. Being able to maximize revenue inside of their apps by offering a tiered pricing model.
The whole concept of the tiered pricing model is that within a given pricing tier, you have access to a certain set of features, and a certain number of users, maybe you have features in between the tiers, or maybe you have the tiers based on number of users, combination of those things, but essentially it allows you to put those things in different pockets, so to speak, and let people self-select which one is the most appealing to them. I think that this is interesting from the standpoint that you can allow the user to select those but the downside is that because you’re allowing them to select it, they could easily select the wrong things or they may have problems deciding because you didn’t put the gates between the different tiers on the thing that is most important to them, so there’s pluses and minuses to this approach.
Rob: Yeah. I would say when I think of tiered pricing like a strict definition, I think of it being based on a single metric or maybe two. An example to come back to ESPs is Mailchimp and Drip charge on the number of subscribers. That’s all the tier. The tiers go up and they go down based on that, and it’s not also based on features because I see feature dating as a separate or a more complex version of tiered pricing. True purest tiered pricing, remember Kissmetrics was based on, I think, it was the number of events in a given a month. Segment used to be based on the number of events, and I think it’s actually different now. They changed it. Zapier was like that. It’s not metered because meter would mean like AWS where you get charged for exactly what you’re using but it’s these tiers up to 100 subscribers and then 1,000, and then 2,000, and then 3,000.
Mike: I think the interesting thing is that if you go over to Basecamp’s website right now, the only pricing that I see listed is it’s $99 a month all inclusive. What used to be when you went to Basecamp and you sign up for their product, you get X number of projects and let’s say it was up to 10 projects and unlimited users, but then you had a limit on the file storage, for example, with limit on the number of active projects that you can have at one time. It’s just $99 a month flat rate as many users as you want, as many projects as you want, and they’ve gotten away from all of the pricing tiers. I think it’s interesting to see the evolution that they’ve gone through for their pricing.
Rob: Yeah, and that’s something that’s really common. If a founder comes to me and says, “Look, I’m just launching, or I have 5, 10, 15 customers, how should I structure my pricing?” My advice would be go as simple as possible to start with and if you’re gonna do per seat, then just do per seat. Don’t do tiers to start with and do $10 per seat, or whatever you’re gonna charge, or if you’re going to meter it, then do your tiers and see what happens.
Get 50 customers going and see what the complaints are, see how the revenue stacks up, see if there’s an opportunity to make it more complicated, but don’t start out with complicated pricing because it’s hard to simplify things. It’s easier to make it more complicated. Easier to add a V2 Pricing that has some differentiators once you have the data. That’s the thing, when you have no data or very limited data, it’s really hard to make choices and you’re likely to make the wrong choice the more complicated you make things. I do think that pricing should evolve overtime. If you look at like I said segment.com, pricing is way different than it used to be. It’s not even based on the same metric it used to be. As you said, Basecamp is different.
Most SaaS apps, if you look five, six years ago, their pricing is probably substantially different than it used to be. Even Mailchimp used to have a fairly linear pricing model, but now if you look at it, it’s a very choppy thing that it’s linear and then it flattens out for several thousands subscribers. Then it goes up linear and then it flattens out. I’m sure that they’re really smart over there at Mailchimp. I’m sure there’s a reason that they did that and it’s probably based on data.
Mike: Yeah. If you look at even at the bottom of Basecamp’s pricing page, it shows how many subscribers or how many customer they’ve had over the years. Back in 2004, it was 45, and then 2006, it was 100,000, and now it’s up to 2.5 million. I would imagine they have a lot of data to be able to back up their justifications for making some of these decisions. It’s not that they really need the money either, so sometimes it could be just that they got no point where they don’t necessarily care about it as much and they just want to attract as many users as they can especially on the higher end because if you’re only charging $100 a month, then it makes it very easy for larger companies to justify it and say, “Oh, let’s jump on this because it’s only $100 a month.” Then you just get it for the entire company.
Rob: Yup, makes sense.
Mike: If you look at a company like Crazy Egg, you go to their pricing page, they still have four different pricing tiers. This is what I was talking about where they will segment based on a couple of different metrics. There are two lower ends plans that’s visits per month, and then active pages, so it’s 25,000 visits and 20 active pages for their standard. Then below that, it’s 10,000 visits and 10 active pages. Depending on which of those two metrics you need to pay attention to, you’re gonna have to choose either basic or standard. If you go over one, you’re probably gonna have to switch over there. Then their plus and pro-plans, there’s also advance features that they use for that as well. Instead of daily reports, you can get hourly reports, and then there’s advanced filtering, mobile heatmaps, etc. You can get more complicated but as Rob pointed out, you have to have the data first. At the beginning, you’re just guessing and throwing things at the wall and seeing what sticks, and sometimes that’s what you have to do, but that helps you get the data.
One thing about tiered pricing that had come up at Microconf, Patrick McKenzie had mentioned this where he was working with the customer and he ended up sending out an email on their behalf to their customer based and had offered them an upgrade. Essentially, he looked across the customers’ customers and said, “How many of these people are close to the limit?” When he found that information, he sent out an email or helped him send out an email that basically said hey, “Hey, you are close to the higher end of your pricing tier, why don’t you upgrade and give yourself a little bit of headroom?” That was a very clear upsell to the customers and that consulting client of his ended up making a, I don’t know exactly how much revenue was from it, but it was sizeable enough that it made a difference and helped them justify bringing him on and moving the business forward.
Rob: Yeah. I always felt like that was an interesting tactic. I’ve never used that. If I got an email like that, I would think to myself, “Aren’t they gonna be auto-upgraded anyways?” But apparently, it works and it’s something that I know Patrick did with his consulting gigs and got the people to upgrade. Looking at this Cobloom article, they have I think six or seven types of pricing models.
One is flat rate pricing and that’s essentially what you said with Basecamp. Most companies, that’s not gonna be what you wanna do. You’re gonna probably wanna do a per seat or do a tiered model that’s based on one metric to start with. Another type is usage based which is pay as you go. Think of this like Amazon AWS or Google Cloud Hosting and Microsoft Azure. This is not something that I’d recommend for bootstrapped startups frankly because hearing winds up being a better way to go, it will make you more revenue and revenue, so critical for you at the time.
Of course, there’s tiered pricing, there’s per user pricing which we talked about. There’s this per active user pricing they have and then they have per feature pricing which can be done totally separately from tiers but I’ve typically seen it as you have tiered pricing based on a certain metric and then you also start sprinkling per feature pricing in there. I think kind of think of who, I know Zapier has done this. They used to have number of event executions per month and then if you wanted to use Drip or Hubspot, then you had to move up to a higher tier even if you had a small amount of events because they figured that if you’re using those tools, that you’re a more sophisticated marketer and you have a bigger budget. That’s one example.
The last one is Freemium, although I see Freemium as working with any of the above. You can have tiered pricing and then just have a forever free plan that is below those. Those are the seven models that they threw out just for completeness.
Mike: Yeah, I forgot who it was who was talking about Freemium and then referred to it more as a distribution model, not necessarily a pricing model.
Rob: Right, yeah. That’s how I feel about it and it’s a marketing approach more than anything else. That’s where my quote is that the Freemium Pricing model’s like a Samurai sword; if you know what you’re doing, you can wield it with great expertise, but if you don’t, you’re likely to cut your arm off. That’s how you see a lot of bootstrapped startups that just launch with Freemium because that’s what the big guys do, and then boom, that goes away, they shot their free plan down. I’ve seen dozens and dozens of companies, including Basecamp used to have a free plan, and they do not.
Mike: Cutting your arm off sounds like a great place to leave off this episode.
Rob: It sure does. 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.
Rob: I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve been. What’s the word this week, Rob?
Rob: Well, my first ever angel investment in 2011 was Jason Cohen’s WPEngine. They just passed $100 million in annual revenue and they secured $250 million investment from company, a private equity firm called Silver Lake and it bought out the series A and B investors. It’s my first exit, as they say.
Mike: Awesome.
Rob: I guess it’s my second exit because Drip and HitTail before that, but you get the idea. My first angel investment that has paid back any money, how about that?
Mike: Well, I’ve got a napkin folding company, if you want to invest in it.
Rob: Really? What’s the value? If it’s low in valuation, I think I could do it.
Mike: I don’t know, that kind of reminds me of the joke I just made. I think that it was Jason Fried who had put out a tweet a while back about selling a small piece of Basecamp to somebody for like a dollar, and he gave him 1/1,000,000 of a percent of the business in exchange for that dollar which may have valued at, I forget what it was, it was like $300 billion or something like that.
Rob: Oh, yeah. Right, right. Yeah, I remember reading that article just about how you reduce the numbers and it doesn’t make any sense when you’re raising a lot of these VC rounds, they’re just stupid, valued at whatever it was, 50 billion or just crazy, crazy numbers. But it doesn’t mean you’re actually worth that.
When I was sitting down to consider raising as Drip was growing and we were kind of bursting at the seams and we needed cash, we were evaluating raising an angel round versus an acquisition because we were being approached pretty regularly by folks who wanted to buy us. One of the struggles I had with raising that round or considering the round is the valuation that you’re gonna raise that right now given our growth rating, given our revenue, is gonna be high, it’s gonna be a lot of money.
In order to then do, in my opinion, to do right by those investors, you have to sell for at least twice that. Getting to a purchase price that’s 2x to 10x what your funding valuation was is hard. I’m gonna make up numbers here, but if you can raise at a $10-million valuation, you can’t sell at a $10 million valuation, you could probably sell for $1 million or $2 million, the actual cash sales prices are substantially less than funding valuations because funding is driven by the market and by FOMO, and by all this stuff, people making bets. Whereas someone putting cash on it, they really do look at more financials, they’re just more picky about things because they’re not making a bet. They are really trying to do something, do right by their business.
All that to say, if you raise at a $5 million or $10 million valuation, but you’re only worth in cash, if you could sell at a million today, you have a hell of a lot of work to get to that $20, $30, $40 million mark and that was a big question in my mind, like again, those are made-up numbers. Those are not the numbers that we had but I kept thinking are we in it for that many years or is it better to take some money off the table?
Mike: Yeah. I think that’s a big challenge not just for you at that time but for anyone who’s considering going down that road because if you do take that money, you’re basically committing yourself to down the road not just selling the business but putting the business in a position where you have to grow to that point in order to be able to get anything out of it. I think in most cases, the investors are going to need to be paid back their money first before you get anything or before you get anything substantial. Even if you sell it, as you said, if you’ve raised it at a $10 million valuation and you sold it, let’s say, for $12 million or whatever, they’re gonna make their money. Even though you sold the business for $12 million or $15 million, you’re probably not gonna make very much at all just because of the way that those numbers work out, which kind of sucks, you built that business, and yes, it was with somebody else’s money, but you just don’t get nearly as much out of it as you probably could’ve if you bootstrapped it. The flip side of the coin is if you didn’t get the money, would you have ever been able to get to that point?
Rob: Right, that’s always a challenge. I think we’ve been clear in the past that we’re not anti-funding, certainly not anti. As someone who is now investing in businesses, I believe that there’s a time and a place and there are rational and good reasons for raising fund. We did an episode on this, probably a hundred episodes ago where we really talked through the difference between Seed Funding and Angel Funding versus Venture Capital, and kind of the pros and cons to that. I think we talked about fund strapping during that time and about companies like Card Hook and Lead Fuse and Term Buster that I’m invested in. They don’t necessarily wanna do the implied series A. They really are raising that round up front to move quicker, but to get to profitability, and then to build an actual business that will either exit someday or will throw off cash in the form of dividends. It is a challenging question.
I think I’ve publicly stated several times that I have no plans to do another one. I don’t plan to do another startup, I just don’t feel like I have it in me at this point. But if in some theoretical world I were to do it, I would probably raise a round. I would either raise a round for myself and self-fund it but with a substantial chunk of money, or I would go to my angel network and the people that I know and get some money into it because it just makes things so much easier if you’re an experienced, knowledgeable founder and you know the path, it can get you there quicker.
Mike: The Bitcoin rage, I think right now the initial coin offering, you could do an initial [walling 0:05:44] offering.
Rob: Oh, my gosh. Oh, my gosh. The ICO stuff is so ridiculous. That’s a whole other show. If you wanna hear about that, go to https://p.nomics.com, that’s Clay Collins’ blog about Cryptocurrency and he has a podcast now, and he’s dived into that stuff. Yeah, there’s some serious insanity going on there. I think the SEC is going to crack down on people offering these – essentially they’re securities, they’re selling securities without vetting the people on the other end, and there are laws against that. I think it’s going to become a mess for some folks.
Mike: Yeah. I’ve seen some crazy things like some companies lately that are publicly traded companies where they have a price on the New York Stock Exchange, or on Nasdaq, or something like that. They come out with a press release or an article that says that they’re going to be creating their own digital currency of some kind, and then suddenly, I think it was Kodak, it was just last week and their stock price went up by 50%. I was like really, are you kidding me? This is Kodak. Yeah, I don’t know. Having spent a long time in Rochester, New York, Kodak goes through a cycle, every three years roughly. It’s Kodak and Xerox. It’s like one year a bunch of people are laid off and then the other company is hiring, and it’s just people bounce back and forth between those two companies like clockwork and it’s ridiculous. But neither one of them either really does anything.
Rob: Cool. Enough about ICOs and Angel Investing. What’s going on for you?
Mike: I had a bunch of customers to Bluetick this week. That’s a good feeling to get back on track and kick things off in the New Year. Right now, I’m dealing mostly with support issues and finalizing the website design I’ve been working on and the email course redesign. I think my biggest challenge right now is troubleshooting large numbers of requests that are coming into my server on occasion, so we’re trying to figure out either what’s going on and why certain things are being throttled. I’m sure it’s a configuration issue at some place, but I just don’t have the logs because it looks like certain things are just not getting through and I don’t see what’s going on, so that came up this morning.
Rob: Dude, if you have a segment.com integration, they have [00:07:50] so many time, accidentally. Someone hooks it up and they don’t respect our rate limits, and we’ve had extensive conversations with them and I’m just shocked that business at large, it’s 429 response that we give back and we say, “This is the rate limit. The next time you can send is in this many minutes.” It’s all in there, Zapier has rate limits and we parse them, we actually respond to them but Segment said they’re working on it, but man they have taken the RAPI down multiple times in the past year.
Mike: I’m the only one who’s like I’m getting API requests coming in and I’ve never really looked at the API limits in the past because before it was just my app and now as I’m starting to integrate into other things, as you said, you’re basically accidentally getting [00:08:33]. I’m seeing the logs, I’m responding to dozens of requests per second, but if something gets dropped, I don’t necessarily see it in those logs. I would just have to go poke around and see like are there other logs that I can go look at on the system itself.
Rob: Yeah. Once you have customers going and you start scaling up, these things take more and more of your time. Before we dive in, I had a couple of books that I want to just circle back on. As I say, I listened to a lot of audio books during the year. I recently finished WTF, What’s The Future and Why It’s Up To Us, and that’s Tim O’Reilly’s book.
I mentioned that I was maybe a third of the way through and was not digging it a few weeks ago. I came at it with a new mindset and I do think it’s a good book, but it didn’t blow me away. He analyzes how the future is gonna be. He looks at certain companies and how they’re operating and he did this back in the 90s. He did in the early 2000s with Web 2.0, and now he’s doing it here. He says, “Certain companies embody what’s going to happen, where the puck is going. He looks at several companies, Uber, and he talks about Amazon, he talks about a few companies that do it. It definitely got better for me towards the end, but not a resounding. It was good. It was just 6 or 7 for me out of 10, but it didn’t blow me away like I thought I would.
Another one is called Make Your Kid a Money Genius Even If You’re Not. I always like books that help me raise my kids better and give me advice about that stuff. Though I liked it, I think it’s worth listening to or reading. My one complaint is that it’s so much focused on teenage, college, and later. Since my kids are 7 and 11, there was a little bit on that topic but it was very, very limited, so I started skipping chapters towards the end about saving for college and all this stuff that I already have done, how to manage your money during college, how to do credit cards, and all that kind of stuff.
Then, the last one is a really interesting book I stumbled on, it’s called Accidental Superpower. This is if you want to feel good about the future of America. Not in like a nationalistic way, but in a, there’s always the thought or the threat of like, “Well, you know, India, and China, and Japan, and everybody, they’re just gonna eat our lunch and all of the jobs are going overseas,” and all that stuff. Read this fascinating book, it’s by a guy with a PhD in Geopolitics.
Geopolitics is how geography shapes the political climate and how it shapes our country and how it develops. It’s just a fascinating look at all the advantages that really North America has as this place that’s separate from Europe, about the navy, about the natural resources. I mean just on and on and on and it keeps going through if you really look at this, at least from his perspective that America’s gonna be fine, that United States is gonna be fine, and that there’s always gonna be challenges, but then it’s not as dire as so many people make it out to be.
Mike: Awesome. While you’re talking about that, it actually reminded me of something else. Do you watch Netflix at all?
Rob: Oh, absolutely.
Mike: Yes. There’s a new series on there called The Toys That Made Us.
Rob: Yes.
Mike: If you haven’t checked this, it’s awesome.
Rob: I have.
Mike: There’s only four episodes for it, so for the listeners, it basically goes back to the 80s and 90s and takes a look at some of the different toys that became huge and really, really popular during that time frame. Obviously, some of them came about before that, but it goes through some of the history of toys like Star Wars, Barbie, He-Man, and GI Joe. Those are the four that they have. I don’t know if they’re gonna do another season or anything like that, but it’s a really fascinating look at the toy industry and how people weren’t marketing these toys, how they were getting them out in front of customers.
In some cases, it was the psychological hacks that they used in order to figure out what was gonna make a toy resonate with people and some of the struggles that they had to overcome in order to get the product out to market. It blew me away. It was awesome watching all four of them.
Rob: I’ve only done the Star Wars one, but definitely, I’d recommend, have the other three in my queue. What are we going to talk about today?
Mike: Today, we’re gonna be talking about how to evaluate per seat and tiered pricing models. This comes up, because yesterday I was talking to an entrepreneur about this exact topic and we also have a listener question in our queue about SaaS pricing models.
The short version of his question is that, on apps and services the post multiple projects, is project-based pricing a thing? What are the pros and cons and why would you not go down on one of these paths? He has a much longer version which I won’t get into but I thought that we could dig into the differences between per seat pricing versus tier pricing, talk a little about the pros and cons of each, and then also point people to a resource over on the cobloom.com website where they have what’s called the Ultimate Guide to SaaS pricing models, Strategies and Psychological Hacks. They dig really into I think about seven or eight different pricing models. Some of them are just variations on others, so instead of per user pricing, for example, there’s a per active user pricing model that you can look on. I thought that that’d be a good place to start our discussion.
Rob: Let’s dive in.
Mike: The first thing to talk about is what exactly is per seat pricing? The basic idea of per seat pricing is pretty straightforward. Each person that is using your software you’re going to charge the customer for. If they have one user, you’re going to charge them for one. If they have 25, you’re going to charge them for 25 users. Typically, each user has a given price for it, maybe it’s $5, maybe it’s $50 a month. But you can also have I’ll say a little bit more complicated model where you have different tiers for the users as well. Let’s say you have one set of features, it’s $5, or different set of features, it’s $10 per user and $15. I think that it gets really, really complicated, at least it has the potential to get really complicated, but at its simplest form, you have per seat pricing as just a set dollar amount per user that’s using the software.
Rob: Yup. Do you remember the rule for, I think we’ve talked about this, the rule for when you should use per seat pricing.
Mike: Yes. You mentioned it a couple of episodes ago, I think.
Rob: Yup.
Mike: If I remember correctly, if somebody is going to see a different set of data or have a different view of what’s going on, then they should have a per seat pricing model versus a tiered pricing model.
Rob: There you go. Two examples is if you’re using a CRM system, then each sales person will obviously see different prospects and different flows and that’s why per seat pricing makes sense there. But if you’re using an email marketing system such as Drip or Mailchimp, typically, you don’t see anything different if you login. Limiting the number of logins or managing by users doesn’t really make sense because people will just share logins if they wanna do it.
I like per seat pricing a lot, but you should only use it when it fits that role, and if it doesn’t fit that role, then avoid it and do one of these other purchases we’re gonna talk about. It feels weird when it’s bolted on. It’s really obvious. It’s something like why are you limiting by this? It doesn’t make any sense.
Mike: Can you give an example of where somebody might try to bolt that on and it doesn’t make sense? Because honestly, it sounds like you’ve got a couple of examples in your head.
Rob: There’s 500 or 600 ESPs that we’ve kind of run across over the years, and I’ve seen ESPs, again, something like a Mailchimp or a Drip have maximum, you can invite users in, up to five users to this tier, and then if you have more than five logins, then you have to jump up to a higher tier. It just doesn’t make sense, your customers are not getting value out of that, they’re getting value out of either how many subscribers they have, how many emails they send, how much money they make, there are other things to base your pricing on that are not a number of logins. Whereas, if you have something like pager duty where it’s monitoring software that pages your DevOps team or a CRM system, the more people you have on there, the more value you’re getting and be the more kind of willingness to pay that you should have. Those are kind of two examples both against and for per user pricing.
Mike: A couple of different cons for the per seat pricing that you already called out was that people will share accounts if there’s no real value associated with having a dedicated log-in for them. I think the other thing, and I’ve personally seen this as well is, if you are charging on a per user basis, it in some ways limits the adoption of that particular product, because then you’re basically forcing the company or the customer to make a decision every time they have either a new employee, or a new contractor come in, do we create a user account for this new person because it’s going to cost us money to do that. By pushing that decision on them, a lot of times the answer’s gonna be, “Well, no, we can get away without it.” Or, they go towards what you had pointed out, they just start sharing logins and it becomes a detriment to you because then you have to just evaluate, are you gonna enforce the logins on a per user basis, or you’re gonna make sure that the only one session is connected at a time, or you’re just gonna ignore that issue?
Rob: Another con to per seat pricing. Again, per seat pricing works, but these are some potential negatives. You do have a potential for increased churn as a result of fewer people in an organization using it if they are trying to save money by not having everyone login. It’s one way that people might churn out of your app.
Mike: If we look at the benefits of the per seat pricing, it’s really easy to understand. It’s x-dollars per user, per month, and there’s really no complicated explanation for it. Another nice side of it is that it does scale with usage, you are not really leaving money on the table if somebody has 5 people signed up, you’re gonna get paid for 5 people, if they have 500, you’re gonna get paid for 500. You don’t have to worry as much about whether you’re leaving the money on the table or you’re selling yourself short inside the app.
Then, the last thing is that when you have a number of users who are using your product, the revenue itself is generally predictable, because you can see, not just that you have that number of users and it’s a month to month subscription of some kind, but also you can see when people are not using the product. If they’re not using it, chances are good that you can forecast a little bit and say, “Well, how long after they stop using it does this particular user or account fall-off, and then we no longer start getting revenue from it?”
Rob: That’s where this variant of per using pricing started to come about, it’s called per active user pricing and we’re not gonna dive totally into this but Slack does this. If you have a team of 50 people, 50 logins into Slack, but five people don’t use it at all during a month, they actually don’t charge you for that. That’s kind of cool way to do it.
Mike: Yeah. That is kind of a cool way to do it, and I think if you’re large enough where you don’t necessarily care whether all of your users are on the system or not, then that’s fine. But I think for a lot of smaller companies, that also creates some pain points around when you like somebody says, “Hey, can you cap on Slack and go take a look at this?” “Oh, I didn’t get that.” Or, “I haven’t logged in.” Then, they log in to check one thing and now you’re getting charged for them, it’s like okay, well, if they didn’t have the login to begin with, then you wouldn’t have to worry about that.
But, I don’t know, I think for smaller businesses, if you’re between one and five people, it can be kind of painful, especially if the price point is more than like $5 a month. $5 a month is not a big deal, but if it’s $50 or $100 a month per user, and suddenly you have two or three people log in extra just to check something, now you’re getting charged for them because they’re considered an active user
Rob: Cool. What’s next?
Mike: The next one to talk about is tiered pricing. I think that if you look back historically, I think it was Hiten Shan with Crazy Egg, they’re the company that I think you can kind of point to as putting together those different tiered pricing models, another one is Basecamp obviously with all of their different pricing tiers that they have. Being able to maximize revenue inside of their apps by offering a tiered pricing model.
The whole concept of the tiered pricing model is that within a given pricing tier, you have access to a certain set of features, and a certain number of users, maybe you have features in between the tiers, or maybe you have the tiers based on number of users, combination of those things, but essentially it allows you to put those things in different pockets, so to speak, and let people self-select which one is the most appealing to them. I think that this is interesting from the standpoint that you can allow the user to select those but the downside is that because you’re allowing them to select it, they could easily select the wrong things or they may have problems deciding because you didn’t put the gates between the different tiers on the thing that is most important to them, so there’s pluses and minuses to this approach.
Rob: Yeah. I would say when I think of tiered pricing like a strict definition, I think of it being based on a single metric or maybe two. An example to come back to ESPs is Mailchimp and Drip charge on the number of subscribers. That’s all the tier. The tiers go up and they go down based on that, and it’s not also based on features because I see feature dating as a separate or a more complex version of tiered pricing. True purest tiered pricing, remember Kissmetrics was based on, I think, it was the number of events in a given a month. Segment used to be based on the number of events, and I think it’s actually different now. They changed it. Zapier was like that. It’s not metered because meter would mean like AWS where you get charged for exactly what you’re using but it’s these tiers up to 100 subscribers and then 1,000, and then 2,000, and then 3,000.
Mike: I think the interesting thing is that if you go over to Basecamp’s website right now, the only pricing that I see listed is it’s $99 a month all inclusive. What used to be when you went to Basecamp and you sign up for their product, you get X number of projects and let’s say it was up to 10 projects and unlimited users, but then you had a limit on the file storage, for example, with limit on the number of active projects that you can have at one time. It’s just $99 a month flat rate as many users as you want, as many projects as you want, and they’ve gotten away from all of the pricing tiers. I think it’s interesting to see the evolution that they’ve gone through for their pricing.
Rob: Yeah, and that’s something that’s really common. If a founder comes to me and says, “Look, I’m just launching, or I have 5, 10, 15 customers, how should I structure my pricing?” My advice would be go as simple as possible to start with and if you’re gonna do per seat, then just do per seat. Don’t do tiers to start with and do $10 per seat, or whatever you’re gonna charge, or if you’re going to meter it, then do your tiers and see what happens.
Get 50 customers going and see what the complaints are, see how the revenue stacks up, see if there’s an opportunity to make it more complicated, but don’t start out with complicated pricing because it’s hard to simplify things. It’s easier to make it more complicated. Easier to add a V2 Pricing that has some differentiators once you have the data. That’s the thing, when you have no data or very limited data, it’s really hard to make choices and you’re likely to make the wrong choice the more complicated you make things. I do think that pricing should evolve overtime. If you look at like I said segment.com, pricing is way different than it used to be. It’s not even based on the same metric it used to be. As you said, Basecamp is different.
Most SaaS apps, if you look five, six years ago, their pricing is probably substantially different than it used to be. Even Mailchimp used to have a fairly linear pricing model, but now if you look at it, it’s a very choppy thing that it’s linear and then it flattens out for several thousands subscribers. Then it goes up linear and then it flattens out. I’m sure that they’re really smart over there at Mailchimp. I’m sure there’s a reason that they did that and it’s probably based on data.
Mike: Yeah. If you look at even at the bottom of Basecamp’s pricing page, it shows how many subscribers or how many customer they’ve had over the years. Back in 2004, it was 45, and then 2006, it was 100,000, and now it’s up to 2.5 million. I would imagine they have a lot of data to be able to back up their justifications for making some of these decisions. It’s not that they really need the money either, so sometimes it could be just that they got no point where they don’t necessarily care about it as much and they just want to attract as many users as they can especially on the higher end because if you’re only charging $100 a month, then it makes it very easy for larger companies to justify it and say, “Oh, let’s jump on this because it’s only $100 a month.” Then you just get it for the entire company.
Rob: Yup, makes sense.
Mike: If you look at a company like Crazy Egg, you go to their pricing page, they still have four different pricing tiers. This is what I was talking about where they will segment based on a couple of different metrics. There are two lower ends plans that’s visits per month, and then active pages, so it’s 25,000 visits and 20 active pages for their standard. Then below that, it’s 10,000 visits and 10 active pages. Depending on which of those two metrics you need to pay attention to, you’re gonna have to choose either basic or standard. If you go over one, you’re probably gonna have to switch over there. Then their plus and pro-plans, there’s also advance features that they use for that as well. Instead of daily reports, you can get hourly reports, and then there’s advanced filtering, mobile heatmaps, etc. You can get more complicated but as Rob pointed out, you have to have the data first. At the beginning, you’re just guessing and throwing things at the wall and seeing what sticks, and sometimes that’s what you have to do, but that helps you get the data.
One thing about tiered pricing that had come up at Microconf, Patrick McKenzie had mentioned this where he was working with the customer and he ended up sending out an email on their behalf to their customer based and had offered them an upgrade. Essentially, he looked across the customers’ customers and said, “How many of these people are close to the limit?” When he found that information, he sent out an email or helped him send out an email that basically said hey, “Hey, you are close to the higher end of your pricing tier, why don’t you upgrade and give yourself a little bit of headroom?” That was a very clear upsell to the customers and that consulting client of his ended up making a, I don’t know exactly how much revenue was from it, but it was sizeable enough that it made a difference and helped them justify bringing him on and moving the business forward.
Rob: Yeah. I always felt like that was an interesting tactic. I’ve never used that. If I got an email like that, I would think to myself, “Aren’t they gonna be auto-upgraded anyways?” But apparently, it works and it’s something that I know Patrick did with his consulting gigs and got the people to upgrade. Looking at this Cobloom article, they have I think six or seven types of pricing models.
One is flat rate pricing and that’s essentially what you said with Basecamp. Most companies, that’s not gonna be what you wanna do. You’re gonna probably wanna do a per seat or do a tiered model that’s based on one metric to start with. Another type is usage based which is pay as you go. Think of this like Amazon AWS or Google Cloud Hosting and Microsoft Azure. This is not something that I’d recommend for bootstrapped startups frankly because hearing winds up being a better way to go, it will make you more revenue and revenue, so critical for you at the time.
Of course, there’s tiered pricing, there’s per user pricing which we talked about. There’s this per active user pricing they have and then they have per feature pricing which can be done totally separately from tiers but I’ve typically seen it as you have tiered pricing based on a certain metric and then you also start sprinkling per feature pricing in there. I think kind of think of who, I know Zapier has done this. They used to have number of event executions per month and then if you wanted to use Drip or Hubspot, then you had to move up to a higher tier even if you had a small amount of events because they figured that if you’re using those tools, that you’re a more sophisticated marketer and you have a bigger budget. That’s one example.
The last one is Freemium, although I see Freemium as working with any of the above. You can have tiered pricing and then just have a forever free plan that is below those. Those are the seven models that they threw out just for completeness.
Mike: Yeah, I forgot who it was who was talking about Freemium and then referred to it more as a distribution model, not necessarily a pricing model.
Rob: Right, yeah. That’s how I feel about it and it’s a marketing approach more than anything else. That’s where my quote is that the Freemium Pricing model’s like a Samurai sword; if you know what you’re doing, you can wield it with great expertise, but if you don’t, you’re likely to cut your arm off. That’s how you see a lot of bootstrapped startups that just launch with Freemium because that’s what the big guys do, and then boom, that goes away, they shot their free plan down. I’ve seen dozens and dozens of companies, including Basecamp used to have a free plan, and they do not.
Mike: Cutting your arm off sounds like a great place to leave off this episode.
Rob: It sure does. 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 374 | Text vs Video, Finding a Mastermind, Joint Ventures, 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. The topics include videos vs text, finding mastermind groups, and trials versus demos.
Items mentioned in this episode:
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about the benefits of using text versus video, how to find a mastermind group, how to start running joint ventures, and more listener questions. This is Startups For The Rest Of Us Episode 374.
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: I’m Mike.
Rob: We’re here to share experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: Not much. Just the end of the year has come and gone. It’s the first week of the new year, I’ve been spending a lot of time lately working on a website redesign for Bluetick, which is about halfway done. Nothing’s live yet but I’ve been working through website design itself, email copy for the automation emails that are being sent out, and then also the website copy. Coming along pretty well. The next week or so is gonna be involved with finalizing and all that stuff, and then implementing it on the website. Once that’s all done, I’ll start doing a much bigger marketing push, I think.
Rob: That’s cool. You’re gearing up for this because you’re live and you’re trying to drive more traffic and want more of it to convert, is that why you’re focusing on this site right now?
Mike: Yes. The main focus on the site right now is because if you come to the site and you’ve never seen the product before, what I’ve heard from people is that it does not give them a good feeling of trust like, “Oh, this is a legit company,” which I totally get. If you go to the site, there’s not a whole lot there, and there’s not detail. It doesn’t even really, I guess, give you the inclination that you should reach out and contact the company or sign up for a trial account or something like that just because you go to a competitor’s website and there’s tons of information there, there’s articles, testimonials, and things like that. It just looks a lot more professional versus the Bluetick website, which to-date, I’ve relied more on word-of-mouth, and people coming in through after hearing me on a podcast or something like that. It’s just not conducive to more of a hands-off sales funnel, I’ll say.
Rob: Right, that makes sense. Yeah. It does feel, when I come to this site, bluetick.io for listeners out there who haven’t been there, it feels like a WordPress theme or like a bootstrap, kind of a basic template. As you said, I think you have good content here but it’s like you said, you don’t have the articles, and the blog, and all this other stuff that other companies that have been around longer might have, so it does seem like just a smaller operation.
Mike: Yeah. Also, it’s not real specific about exactly what it does or how it works for them. It doesn’t answer really any objections. It doesn’t really tell a story or craft one that would have resonate with whoever’s reading it. There’s a lot of things that need to go on to the site right now that are just not there. I’ve known for a long time that that stuff needs to go there, I just haven’t sat down and focused on that stuff because I really haven’t had time yet.
Rob: Well, yeah. It’s a matter of priority. It’s like you’re trying to get the code read, and then you’re trying to get the bugs fixed in, and you’re trying to scale, and then you try to get people onboarded, you gotta email the list, you gotta write this email. At a certain point, this is where I still struggle quite a bit with unsolicited advice. People used to email and be like, “Hey, the Drip website. It would be so much better if you did this.” It’s like, “I know. I know, of all people, I think about this all the time, like 20-hours a day. Yes, even when I’m sleeping.” Your unsolicited advice is actually not helpful. It makes you feel like you’re smart but people would send screenshots and say, “You should change this. Have you thought about organizing?” I said, “Yes. We have. We thought about that and either we didn’t do it very deliberately, we had a good reason for not doing it that you don’t understand because you don’t work in the business 50-hours a week. Or we have thought of it, we just haven’t had time. We haven’t prioritized it yet, and there are more important things.” That’s where I could understand where the marketing side has maybe fallen to the second or third place on your list.
Mike: It wasn’t even second or third. It was like eighth, or tenth, or something like that. My list of things to do is 10 miles long. It’s not even a mile long, it’s 10-miles long at this point. It’s just going back through and trying to figure out, “Okay. What should I really be working on next?” At this point, it’s the website. Once that stuff’s in place and once more of the marketing emails are in place and do a better job of explaining what the product does, and kind of move people through that educational side of things then I think they’d be in a much better position. How about you?
Rob: Last week, as I mentioned, I was in Florida, which was great. It was nice to get away. There was a big, obviously the polar vortex came through in Minneapolis. There were days where the highs were in the negatives, like -3, -4, and it feels like it was -25 or -30 at one point. It’s a pretty nice time to be in Florida, but I made it back, and kind of getting started again at the new year here. Not much to report on the work front just because ships and features in late December, and we’re gearing up for some new stuff now.
One thing that I just want to throw out unrelated to Startups, except for that it is a startup, is the thing that I’ve discovered in the past like 10 days that has just been life changing, it’s Instacart, do you have it where you live?
Mike: I don’t know. I’ve never used it. I’ve heard of it probably at one point.
Rob: I hadn’t either. Yeah. I don’t particularly like grocery shopping. It always takes time and especially I have to try to do with two or three kids tagging along. The fact that we live in a major city now, in Minneapolis, but really enjoyed like having Bite Squad around where I can order food and it’s delivered. But Instacart, it’s a grocery shopping app, and it’s just well-implemented, super easy to use, 1-2 hour delivery windows depending on the time of day and how busy it is. I can do my entire, what would normally be let’s say, a 75-90 minute drive, and in the snow, it’s like super cold, you don’t want to get out of your car because it’s four degrees and you’re lugging a kid with you, and I can do it from my computer in 10 minutes. It’s just freaking game changing. I’m pretty stoked on it now. I’ve only had maybe two or three deliveries so far. I’m having a tough time seeing going back to doing it the old way. It’s not expensive either. We usually did this subscription where it’s $150 for the entire year, and then, you just get unlimited. You don’t pay any delivery fees.
Mike: Got it. Okay.
Rob: Yeah, it’s a trip. If it comes to a place near you, and I don’t just look at it as a convenience, it’s a time thing. To save that time once, maybe twice a week. We eat a lot of fresh foods. I can’t just shop two weeks out. When I was in college, and I bought all macaroni and cheese, and ramen, we could shop for like three months at a time, and it wouldn’t go bad. The fresh stuff, I literally line up at the grocery store at least once a week, and sometimes twice. I just sent an order through for all fresh fruit, and berries, and bananas, and all that stuff. It’ll be here in the next 120 minutes.
Mike: Oh, really. It’s like you order and then it’s there in like two hours.
Rob: Yeah. You can select a time window, you could select the one-hour time window later in the evening or tomorrow, or whatever, or sometimes, depending on how busy it is, and of course middle of the day on what is it, Thursday, it’ll literally be here within two hours when I click Buy Now.
Mike: That’s interesting. We’ve talked about this a little bit, I think. But I used to work at Wegmans Food Markets. We implemented a system like this back in 2000.
Rob: Yup, you had talked about it.
Mike: Yeah. The difference though was that you would drive to the store and pick it up. You put everything in your cart, you shop, and then you specify like, “Oh, I’m gonna come pick it up at such and such time.” You have these like 10 or 15-minute time slots. You can just pick one and you just show up and they’d have everything ready for you. You just show up at the designated time. They’d ask your name, and that was the end of it. They’d load up your car, you don’t even have to get out of your car.
Rob: Yup.
Mike: It’s a little different though. This is also different than, what was it, Webvan.
Rob: Webvan and Peapod. Where it just tanked horrendously.
Mike: Peapod is newer. It was Webvan that ran out of business back in the day.
Rob: But Peapod did then too. I think someone bought the brand. They revitalized it because both of them raised a lot of money around ‘99-2000. But they were trying to warehouse everyday. They were trying to be like Amazon, or like a big grocery store distributor, whereas Instacart is more like Uber where they don’t own anything, yet drivers go shopping, and put the stuff in a cart, and bring it by. They just knock on the door, hand me a few bags, and it’s like, “thank you.”
Mike: It’s much more like a localized services business. More like running errands for you, although the errand is very specific.
Rob: Right.
Mike: Productized service.
Rob: I know. That’s what it is. So far, one of the concerns obviously would be like, “Well, are they gonna pick good produce? Are they gonna pick good if you order salmon? Are they gonna pick the crappy salmon?” So far, I haven’t had any issues. You can tell that they have some type of onboarding, they teach people to get the good stuff. I’m sure if you rate them poorly, like, “Yeah, the fruit was bad,” then there’ll be some issues there. I think that’s another difference is back in the day, I don’t know how much recourse you would have had with someone sending you bad fruit.
Mike: Yeah. That would have been a little difficult. The way Wegmans said it was like, they would actually have the butcher over at the butcher shop like pick up the meats and stuff for you. You knew that the people who were doing it were pretty experienced with what they did.
Rob: Right. Cool. Let’s transition into the episode here. We have several listener questions we’re gonna talk about today, and of course, per usual, our voicemails go to the top of the stack, so let’s kick off our first question. It’s about being pre-product market fit.
Harold: Hi. My name is Harold and I’m a co-founder of StackTome, a SaaS product for ecommerce retention advertisement. There are three product-market fit I’m looking for ways to get warm lead customers. I have couple of questions. When it comes to driving traffic to the site, I was wondering if you have seen educational videos instead of text content among sites like YouTube being successful. I find it more [00:10:03] traffic coming from search, mostly through content, while some content I find useful, I can’t find alternative quick videos explaining the marketing concepts. Also, what would you recommend for getting into mastermind groups [00:10:20] marketers that would be post product-market fit [00:10:24] Thanks for your always honest feedback and sharing your knowledge, I’m always learning something new each time I listen. Cheers.
Mike: I guess, to recap, and Rob, correct me if I’m wrong in my understanding to this, but the two questions that he had were essentially how should you approach developing content for the website to drive traffic? Should you focus on video, or should you focus on text, in order to gain more attention when you’re in pre-product market fit? The second one is, how do you find people to join a mastermind group with, is that right?
Rob: Yup, that’s right. To be clear about the video versus text, he wasn’t asking about conversion, he was asking about trying to drive traffic, will it rank, I think it’s will it rank better in search engines, basically.
Mike: Yeah. My understanding is that Google is still ranking video higher than text. But one thing you have to be a little bit careful of is to make sure that you’re providing some sort of transcript for it. That helps Google index the videos because otherwise, it has no way to know what is the actual content of the video, what are they saying. There are ways to provide that information to Google’s crawlers so that it will show up. The searches, that’s one thing I would definitely do.
The other thing that does come to mind though is that if you’re pre-product market fit, I would actually do outbound stuff. I would try to find and identify people who you think would be good customers and go after them, as opposed to trying to attract them and get them to come to you. Because really, that’s the situation that you want to, I guess, double down on once you know who your ideal customer is. But if you’re not at that point yet, you have to choose from outreach, otherwise you’re kind of throwing spaghetti at the wall and seeing what sticks.
Rob: Yeah. That’d be my sentiment as well. I think you can mess around with the video versus the text thing. I have heard success stories of video working better because it’s not something that everyone does. But you have to get into video, there’s like video site maps, as you said, you want transcripts. May just be better, I don’t even know if you wanna host it on your site at that point, you may just want to have it on YouTube, because YouTube videos rank really well in Google, obviously because Google prefers them over other things.
There’s a whole specialty of learning video SEO and how to rank using video. I would agree with you Mike, I just don’t think that’s necessarily worth diving down that rabbit hole, yet. Because I bet you could kill a month just learning about it and probably two to three months experimenting with it. I think there are more valuable things that you could be doing right now, even outbound stuff like you were saying. I could see running paid acquisition if you have any budget at all because you want instant feedback. You want instant customers or not. Customers or rejections, as they say.
Whereas this video SEO stuff, you’re building for the 3, 6, 9, 12-month timeframe. You wanna get to revenue faster than that. You wanna get to product-market fit faster than that. I would be scratching and clawing at anyone using a app. I just think of SEO and these types of strategies there is it’s just a longer term play. The bad thing to do, but if you limit it on time and budget, which I’m guessing you are, I wouldn’t be focusing on this.
Mike: Yeah. At most, what you just said is about the iteration cycle and being able to adjust quickly versus taking that long term approach which is valid later on. But, right now, it sounds like that’s not the way to go.
Rob: Yup. Then for his second question, it was how to find a mastermind group, and our very own Ken Wallace with mastermindjam.com is kind of our go to recommendation for folks looking to get matched up with fellow masterminders, both in the SaaS space, there are ecommerce entrepreneurs, there’s info marketers, there’s all kinds of stuff. Go to the site, you submit your name and your time zone, and a bit about yourself. I’m sure you categorize yourself in some way like SaaS or info, whatever. Then you get matched up. Ken has written an algorithm, and he also does a lot of manual stuff with it as well. There’s a small fee to getting matched up, but in my opinion, well worth the effort. There’s been a lot of successful groups that have formed out of using Ken’s service.
Mike: What’s next?
Rob: Next question is our second and final voicemail of the episode and then we’ll get to some emails that came in. This one is a question about the moral imperative of business.
Daniel: Hi Mike and Rob. This is Daniel calling in from Charleston, Oregon. Love your podcast, thanks for all the time that you put into it. Keep it up. Definitely in the want-epreneur category, tried a couple of products to myself, haven’t really seen success for me. The challenge is the golden handcuffs consulting business is too good to really make the dive deep in the product. But the question I have for you guys today is around the moral obligation of business and just to be hearing your perspective on income equality, social equality, and kind of the bootstrap startup vision is build a business and sent it to a hyper-competitive space that eventually throws off a bunch of cash. What do you feel is your moral obligation to reinvest that cash back in the community, people around you, your local geographic vicinity, and help address the growing problem of income equality. Thanks so much, bye.
Mike: I think for this question, when you’re talking about bootstrap startup, there’s actually two answers to this question, not just one. There’s an answer that is applicable before you get to the point where your business is making a fair amount of money and throwing off access capital.
There’s the second answer which is after that point. The first one is, I would say, before you get to the point where the business is throwing off that extra money that you can deploy as you see fit to do whatever, above and beyond to paying all the business expenses and paying yourself a reasonable salary and potentially giving you extra money to be able to put away the additional profit from the business at that point.
You don’t have any of that. Before you get to the point where that has happened, you’re not in a position to really do anything. I don’t feel it’s fair to put yourself in a mental state of mind where you feel obligated to do things for other people. Your real focus should be getting the business to that point and until you do, there’s really not a lot else you can do.
I think that if you tried to put other people before you, you’re just gonna run into a problem where everyone is always going to be coming before you. You’re never gonna pay yourself. There’s entire books that are written about this. I think there’s one called Pay Yourself First or something along those lines. That’s the phrase that goes with it. But until you’re there, it is not really justifiable in my opinion to attempt to do those things.
There’s a difference between spending a little bit of time helping people here and there but to make that your main focus is definitely not a route you should go down. Once you’re after that point, then the situation I think changes pretty dramatically. I wouldn’t say that there’s a moral imperative but depending on your own personal judgements and your own personal beliefs, I do feel like it is worthwhile going down that route. There’s actually a lot of benefits for you to, I don’t wanna say share the wealth or anything, but help other people because at one point, you were there where they’re at.
We could probably talk, at great length, about this but that’s the type of people you run into at MicroConf as well. I think that Rob, you probably agree with me on most of that stuff in terms of being able to help other people and the additional benefits that you get from it. It’s not really just about the money at a certain point, as long as your business is providing for you, then you can kind of do whatever you want with the money afterwards especially if you are already putting money aside to save. It feels great to be able to help other people who are further behind you because you were there at one point as well.
Rob: Yeah. I think part of this is a somewhat personal choice and I think part of it is how you view being part of a society in general or a community, maybe a better way to say it. I like the way you framed it, Mike. You can help people without going and volunteering at the local soup kitchen or without volunteering to train people how to learn computers in your local area.
You can help people by educating them on how to start startups. You can start a podcast and give content away for free that helps build this community of bootstrap founders. It helps raise kind of all of our standards of living, all of our quality of life, and it helps create jobs, and all that stuff. This doesn’t really have to come in the form that I think a lot of people think about.
My personal belief, I have always been as generous as I possibly can with my money and with my time. Since I was in college, I’ve given money to charities even when I didn’t have much money. As I started making more money, I still give quite a bit of money away each year. I have always spent a lot of my time helping whether it’s having lunch with an entrepreneur, whether it’s you and I doing the podcast for free for years, whether it’s blogging and giving away knowledge.
Yes, there are outlets, obviously, I wrote a book and I sold that for $20 a copy. You and I do host a conference but the amount of time that we have essentially given to this community far, far, far outweighs the monetary, the per hour cost or whatever that we would make, the wage we would make given all the time we’ve given away, it would not be a wise business decision to do that.
We have done some of it because it’s fun for us and some of it because, I think, you’d agree with me, I truly do enjoy giving back and helping people in the emails that we both get where it’s like, “Boy. There’s something you did,” whether it’s FounderCafe or MicroConf or the podcast, “it has changed my life and here’s how.” I receive dozens of those emails and those have a lot of impact on me. It’s a lot of mental impact. All that to say, I don’t know that I would preach that everyone has to adopt this point of view, but my point of view is that I always wanna be able to give back.
I have invested in a company in Fresno called Bitwise Industries, that is a for-profit but it’s educated thousands of folks in the local Fresno community which has a real wealth disparity. There’s a big digital divide there. They’ve educated thousands of people on how to program and how to use computers. I hired Derek out of Fresno although there wasn’t a digital divide with him. But then we hired three more people, created a bunch of tech jobs. Bitwise itself, I don’t even know how many people it is now. 50, 60 people.
There’s good to be had in a way that everyone wins. I think that’s how I think about it. I so much enjoy more funding a company like Bitwise or doing what we do with MicroConf and FounderCafe and this podcast because I feel like it’s win-win. We’re not just taking money that we earn as entrepreneurs and giving it to somebody. We’re actually starting a sustainable business. That’s what we’ve always wanted to make sure that MicroConf was sustainable, it’s why we brought Xander on so that we could do it year after year. It’s why we’ve really streamlined the podcast production because we wanna be able to continue doing it even when we have other things going on.
I think turning it in, again, I think like an entrepreneur. It’s like a person who turns systems into profit in essence. I want some of that profit to give back to whatever community is, whether it’s the bootstrap startup community, whether it’s the community I live in, but it needs to be a win for me as well in a small way. It doesn’t mean,”Oh, we need to get rich off it.” But I do think that making it into something sustainable, that’s how I’ve always thought about it.
I really like what you said about the kind of the pre-sustainable business. Because when I was scratching and clawing, I was freaked out about money, I was just trying to get whatever it was, Hittail revamped or the real tough financial year I had with Drip. I couldn’t even think about any type of moral imperative of helping other people because I was trying to take care of me and my family.
But once I get past that point, then yes, my mind is freed up. I absolutely give very generously to a lot of things, whether it’s charities or the sustainable businesses that hopefully are kind of doing some good in the world. Thanks for the question, Daniel. I hope that was helpful to hear our thoughts on it.
Our next question is from Stefan Debois from surveyanyplace.com. He says, “Hey Mike and Rob, I listen to your podcast for several years now, not since the beginning, but close to it. I really love it because it has so much actionable stuff. On one of the latest episodes, you guys talked about content marketing at the end of the episode, and I remember Rob saying he would not advice for startups to make it their number one tactic, for example, creating a blog and publishing content. But he would recommend doing something else like joint venturing with players in your field that already have an audience. I assume he’s referring to guest blogging, joint webinars, etcetera.” I’m gonna step out real quick. Two of those, guest blogging and joint webinars, correct. As well as integration marketing which I’ve talked about in the past which is where you integrate and then you both co-promote. Alright, back to his email. “It would be great to dig a bit deeper into this topic such as how exactly would you recommend doing this. If you had to start Drip or another SaaS company right now, how would you apply this given all your learnings? Thanks for your help. Keep up the great work. Stefan.”
Mike: I think one key point to keep in mind is that, as part of his question, he said, “If you had to start Drip or another Saas company right now, how would you apply this given all your learnings?” There is a point at which doing this kind of stuff is too early. You’re not far enough along where it makes sense to go down that road mainly because it’s not gonna make sense for whoever it is that you approach to do a joint webinar or guest blogs.
With guest blogging, you can certainly write articles and as long as they are relevant to the audience of the person that you are guest blogging on their site, and they are receptive to that kind of thing, then sure. You can totally do that. But when it comes to something like a joint webinar, you really can’t do that unless you have something that is tangible and benefit that is going to be given to that person’s audience, whoever it happens to be.
The other thing is what are you offering the owner of that audience? What are they getting out of it? Is it really just educating their people? Are you promoting your products or is it just an educational thing where you’re explaining how to do something or about a particular topic or a technique or something along those lines.
But again, none of this stuff you can do until after you’re at a point where you have a product that is functional and you have people who are onboarded and paying and you kind of know what your ideal audience looks like. Because otherwise, you’re approaching people that their audience may not necessarily overlap with yours.
Those are the things that I will keep in mind when trying to go down this road. Until you’re at that point, none of that stuff applies, you’re just not going to go anywhere.
Rob: Right. The thing to keep in mind is this is where it’s nice to have a nice little email list because if you are gonna do, I’m gonna say mostly stick to joint webinars and integration marketing. If you’re gonna do that and if you have a list of 10,000, 20,000, 30,000 people, for the most part, you’re gonna be able to say, “Look, let’s do a joint webinar. You email your list. I email mine.” Or you do vice-versa where you give a webinar to their audience and they give it to you. You can just trade straight across. You don’t have to mess with affiliate commissions. Just get the benefit of the traffic and so did they.
The same with integration marketing. The bigger the list you have, the better off you are in getting people interested in doing some type of joint promotion with you. If you have 300 people on an email list, it is much, much less likely that someone’s gonna wanna do a joint promotion with you.
With that said, in the early days before you can build up that list, you’re going to want to use affiliate commissions. If you do approach someone to do a joint webinar or to do integration marketing, you can say, “Look, we pay 20%, 30% of affiliate commission and here’s the link.” That’s how you’re gonna get them interested. Because then at that point, they can at least count on some type of revenue stream.
The way I did it back with HitTail, which is 2013-2013, is I looked around in the space and I looked at complimentary products, and so HitTail was a long tail SEO keyword tool. I looked at rank trackers and other keyword tools that didn’t use the same approach that we did. I, at the time, just cold emailed a bunch of them. I remember I made this list of seven or eight SaaS apps that weren’t these big behemoths, I didn’t email SEOMoz or anything.
Once that appeared to be more startupy or bootstrapped or whatever and all of them wrote back and said they wanted to do it. I was overwhelmed by that. I expected to get one out of that. I wasn’t able to do JVs with all of them. I think we were even just doing JV mailings. We were just gonna email each other’s list and kind of recommend a tool. I, of course, tried out any tool recommended, and then they did the same thing. Our lists were about the same size. We did no affiliate commissions at the time.
I’m not saying that’s gonna work in every niche but that’s something that I did. Then with Drip, when we started doing JV webinars, it was much more about relationships. That was in my wheelhouse. I just emailed people who I knew in the MicroConf space, in kind of our community. We did joint webinar I’m pretty sure with Brennan Dunn. I know we did one with Rubin for Bid Sketch. There were several others. But that was a lot easier. It depends on if you have a network in the space or if you’re going cold. But I’ve made either one work. It is something that you can do.
In terms of integrations, we start to build the integration and then create a nice landing page for it and then you email the company and you say, “Hey, can we do co-promotion?” With that, it really is gonna depend on the size. Because Basecamp and Stripe are not gonna co-promote with you. You’ll get lucky to even get listed in their directory at this point. But if you get someone who, it doesn’t have to be a tiny little company, if you get ahold of someone in marketing at even a decent sized startup, they will at least have the question of, “Well, how big is your list?” If you say, “I have 20,000 or 30,000 people on an email list.” It can raise an eyebrow. It can get you a mention. Maybe it’s just a single mention in an email newsletter they send out but they may have 100,000 subscribers. It can get some traffic toward you. That’s how I would think about doing it these days.
Mike: As a general rule, when you’re trying to find people to do these sorts of co-marketing efforts with, try not to go after somebody who has a list that’s more than twice your size or less than half yours. If you stick within that range, whatever that size happens to be, you’re probably gonna have much better results.
Because if somebody is much larger than you, they’re not going to want to do a joint marketing campaign with you unless you know who they are and you have developed a relationship with them. If they’re less than half your size then it’s probably not going to do a lot for you. That’s the thing that I would keep in mind as well when you’re trying to find people.
Rob: That’s a good point. Our last question for today is from Rusty Shackleford and he says, “Can you give me some insights on when to provide a trial versus a demo for apps that rely heavily on user-provided data? I’m developing a medical records SaaS. I’m keenly aware that it’s a waste of time for a prospective client to do a trial of my product when they would need to enter so much of their own data. Most likely, in addition to entering that data into whatever product they’re currently using. Would you suggest providing demos where I lead them through examples versus a trial of my product?”
Mike: I think of this particular case, if you’re dealing medical records and you have the objection or hurdle that somebody needs to overcome to start using your app is that they need to provide the data, I would lean much more heavily on the demos than on trials. I’d push them directly towards a demo whether that’s signing-up directly on the website or getting them onto an email list and then sending them to a sign-up form where they can sign-up for a demo, maybe ask them for information through a survey or something along those lines. Push them through that way. I would not go to trial route.
If you go with the demo route, what you can do is then you can directly address that particular problem during the demo itself and say, “Hey, we understand that in order to get you set-up, this is what you need to do. The next step after this is to decide if you wanna move forward with the product or not, and move to a trial. If so, send us this data and we’ll put it in for you.” Essentially, you’re doing onboarding for them and you eliminate that objection upfront.
You can try pushing that off to them which is really what you’re doing if you send them to a trial without you interacting with them which is going to raise that as an objection and they’re gonna say, “Well, I don’t really wanna do this,” versus if they have other things going on, they’re just not gonna do it is really what the bottomline is. Especially if they have to change whatever their current processes are versus if you talk to them, you have that conversation, get them to buy into the concept and what they can get out of the product after they start using it.
If they buy into that story, they send you that data, you take care of that leg work for them and once that data is in place inside of their app, then it’s ready for them to use. They don’t have to do all of that extra work. It just makes it easier for them to overcome that hurdle. If you don’t have a good import mechanism or good ways to just pipe the data out of other apps, it’s gonna make it really challenging to get people to go from a trial to a paid conversion. Because they’re just not gonna do the work is really the bottomline.
Rob: Yep. In general, I lean towards demos over trials. The problem is it doesn’t scale very well. As you scale up, that’s why you resort to having a trial. But relying on the customer themselves to orient and find their way around inside your app enough to understand the value, whereas you can explain that value in 10-15 minute demo, I bet in the first 5 minutes of your demo you can give more value than someone poking around inside your trial. Aside from the fact that your app sounds not complex, but there’s a lot of kind of onboarding necessary, a lot of work on their part, there’s no way I would consider letting people in for a free trial.
Mike: For some of the medical records, there’s subtle questions that people are gonna have which revolve around trust issues which you’re not gonna be able to really overcome very well with a free trial.
Rob: Right. Then they’re gonna have this account with no data in it. It’s gonna look terrible and you’re gonna have an account full of data that you can demo them. You’re gonna show exactly the value that they’ll receive. In your instance in particular, I’d definitely do demos. In general, when you’re bootstrapping and starting up, all during customer development, I recommend doing demos because you’d get so much more information from them.
If you’re still pre-product market fit, I recommend doing demos because you’re gonna find out why people do or don’t sign-up. They’re going to be more likely to get in touch with you if they decided to cancel or not get onboarded because you already have a relationship with them.
Post-product market fit if you can still do it, I know at certain points it makes sense to go with self-service trial sign-up but the dirty little secret is as much as I don’t like demos, I’d prefer to get in and dig around with an app and try it out, most people want a demo. They would much prefer someone to walk them through an app rather than try to poke around and do it themselves.
We had done a few experiments where we had just trials versus funneling people into demos and we converted the demos into paid accounts. It was like 2X, 2X the rate of just letting people get onboarded themselves even with all the help that we’re giving them via email and apps. You’re gonna convert more. People are gonna get more value out of it.
In general, I think it’s just a better way to go. There are obviously exceptions to this. There are tools like, let’s say, even like HitTail, it was a high-volume, high-return tool. It was an SEO keyword tool and people would come in, try it out here and there, and it was super easy, and at the end, it was a one-click set up. You literally just walk into something and it would pull keywords out.
A demo would be interesting but only for high-value account because some of those accounts are paying $10 a month and at that point, it just doesn’t make sense to do demo. There are exceptions to this but as a rule, I would go demo as the default and then figure out, “Well, is this one of those exceptions where I should really just have a self-service trial available,” or you have both options. That’s what Drip has today. You can still sign-up for trial if you still wanna poke around but there’s a big push of course to get people into demos because of all the reasons that I’ve stated here.
Mike: I think that about wraps us up for today. If you have a question, you can call it in 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. 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: I’m Mike.
Rob: We’re here to share experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: Not much. Just the end of the year has come and gone. It’s the first week of the new year, I’ve been spending a lot of time lately working on a website redesign for Bluetick, which is about halfway done. Nothing’s live yet but I’ve been working through website design itself, email copy for the automation emails that are being sent out, and then also the website copy. Coming along pretty well. The next week or so is gonna be involved with finalizing and all that stuff, and then implementing it on the website. Once that’s all done, I’ll start doing a much bigger marketing push, I think.
Rob: That’s cool. You’re gearing up for this because you’re live and you’re trying to drive more traffic and want more of it to convert, is that why you’re focusing on this site right now?
Mike: Yes. The main focus on the site right now is because if you come to the site and you’ve never seen the product before, what I’ve heard from people is that it does not give them a good feeling of trust like, “Oh, this is a legit company,” which I totally get. If you go to the site, there’s not a whole lot there, and there’s not detail. It doesn’t even really, I guess, give you the inclination that you should reach out and contact the company or sign up for a trial account or something like that just because you go to a competitor’s website and there’s tons of information there, there’s articles, testimonials, and things like that. It just looks a lot more professional versus the Bluetick website, which to-date, I’ve relied more on word-of-mouth, and people coming in through after hearing me on a podcast or something like that. It’s just not conducive to more of a hands-off sales funnel, I’ll say.
Rob: Right, that makes sense. Yeah. It does feel, when I come to this site, bluetick.io for listeners out there who haven’t been there, it feels like a WordPress theme or like a bootstrap, kind of a basic template. As you said, I think you have good content here but it’s like you said, you don’t have the articles, and the blog, and all this other stuff that other companies that have been around longer might have, so it does seem like just a smaller operation.
Mike: Yeah. Also, it’s not real specific about exactly what it does or how it works for them. It doesn’t answer really any objections. It doesn’t really tell a story or craft one that would have resonate with whoever’s reading it. There’s a lot of things that need to go on to the site right now that are just not there. I’ve known for a long time that that stuff needs to go there, I just haven’t sat down and focused on that stuff because I really haven’t had time yet.
Rob: Well, yeah. It’s a matter of priority. It’s like you’re trying to get the code read, and then you’re trying to get the bugs fixed in, and you’re trying to scale, and then you try to get people onboarded, you gotta email the list, you gotta write this email. At a certain point, this is where I still struggle quite a bit with unsolicited advice. People used to email and be like, “Hey, the Drip website. It would be so much better if you did this.” It’s like, “I know. I know, of all people, I think about this all the time, like 20-hours a day. Yes, even when I’m sleeping.” Your unsolicited advice is actually not helpful. It makes you feel like you’re smart but people would send screenshots and say, “You should change this. Have you thought about organizing?” I said, “Yes. We have. We thought about that and either we didn’t do it very deliberately, we had a good reason for not doing it that you don’t understand because you don’t work in the business 50-hours a week. Or we have thought of it, we just haven’t had time. We haven’t prioritized it yet, and there are more important things.” That’s where I could understand where the marketing side has maybe fallen to the second or third place on your list.
Mike: It wasn’t even second or third. It was like eighth, or tenth, or something like that. My list of things to do is 10 miles long. It’s not even a mile long, it’s 10-miles long at this point. It’s just going back through and trying to figure out, “Okay. What should I really be working on next?” At this point, it’s the website. Once that stuff’s in place and once more of the marketing emails are in place and do a better job of explaining what the product does, and kind of move people through that educational side of things then I think they’d be in a much better position. How about you?
Rob: Last week, as I mentioned, I was in Florida, which was great. It was nice to get away. There was a big, obviously the polar vortex came through in Minneapolis. There were days where the highs were in the negatives, like -3, -4, and it feels like it was -25 or -30 at one point. It’s a pretty nice time to be in Florida, but I made it back, and kind of getting started again at the new year here. Not much to report on the work front just because ships and features in late December, and we’re gearing up for some new stuff now.
One thing that I just want to throw out unrelated to Startups, except for that it is a startup, is the thing that I’ve discovered in the past like 10 days that has just been life changing, it’s Instacart, do you have it where you live?
Mike: I don’t know. I’ve never used it. I’ve heard of it probably at one point.
Rob: I hadn’t either. Yeah. I don’t particularly like grocery shopping. It always takes time and especially I have to try to do with two or three kids tagging along. The fact that we live in a major city now, in Minneapolis, but really enjoyed like having Bite Squad around where I can order food and it’s delivered. But Instacart, it’s a grocery shopping app, and it’s just well-implemented, super easy to use, 1-2 hour delivery windows depending on the time of day and how busy it is. I can do my entire, what would normally be let’s say, a 75-90 minute drive, and in the snow, it’s like super cold, you don’t want to get out of your car because it’s four degrees and you’re lugging a kid with you, and I can do it from my computer in 10 minutes. It’s just freaking game changing. I’m pretty stoked on it now. I’ve only had maybe two or three deliveries so far. I’m having a tough time seeing going back to doing it the old way. It’s not expensive either. We usually did this subscription where it’s $150 for the entire year, and then, you just get unlimited. You don’t pay any delivery fees.
Mike: Got it. Okay.
Rob: Yeah, it’s a trip. If it comes to a place near you, and I don’t just look at it as a convenience, it’s a time thing. To save that time once, maybe twice a week. We eat a lot of fresh foods. I can’t just shop two weeks out. When I was in college, and I bought all macaroni and cheese, and ramen, we could shop for like three months at a time, and it wouldn’t go bad. The fresh stuff, I literally line up at the grocery store at least once a week, and sometimes twice. I just sent an order through for all fresh fruit, and berries, and bananas, and all that stuff. It’ll be here in the next 120 minutes.
Mike: Oh, really. It’s like you order and then it’s there in like two hours.
Rob: Yeah. You can select a time window, you could select the one-hour time window later in the evening or tomorrow, or whatever, or sometimes, depending on how busy it is, and of course middle of the day on what is it, Thursday, it’ll literally be here within two hours when I click Buy Now.
Mike: That’s interesting. We’ve talked about this a little bit, I think. But I used to work at Wegmans Food Markets. We implemented a system like this back in 2000.
Rob: Yup, you had talked about it.
Mike: Yeah. The difference though was that you would drive to the store and pick it up. You put everything in your cart, you shop, and then you specify like, “Oh, I’m gonna come pick it up at such and such time.” You have these like 10 or 15-minute time slots. You can just pick one and you just show up and they’d have everything ready for you. You just show up at the designated time. They’d ask your name, and that was the end of it. They’d load up your car, you don’t even have to get out of your car.
Rob: Yup.
Mike: It’s a little different though. This is also different than, what was it, Webvan.
Rob: Webvan and Peapod. Where it just tanked horrendously.
Mike: Peapod is newer. It was Webvan that ran out of business back in the day.
Rob: But Peapod did then too. I think someone bought the brand. They revitalized it because both of them raised a lot of money around ‘99-2000. But they were trying to warehouse everyday. They were trying to be like Amazon, or like a big grocery store distributor, whereas Instacart is more like Uber where they don’t own anything, yet drivers go shopping, and put the stuff in a cart, and bring it by. They just knock on the door, hand me a few bags, and it’s like, “thank you.”
Mike: It’s much more like a localized services business. More like running errands for you, although the errand is very specific.
Rob: Right.
Mike: Productized service.
Rob: I know. That’s what it is. So far, one of the concerns obviously would be like, “Well, are they gonna pick good produce? Are they gonna pick good if you order salmon? Are they gonna pick the crappy salmon?” So far, I haven’t had any issues. You can tell that they have some type of onboarding, they teach people to get the good stuff. I’m sure if you rate them poorly, like, “Yeah, the fruit was bad,” then there’ll be some issues there. I think that’s another difference is back in the day, I don’t know how much recourse you would have had with someone sending you bad fruit.
Mike: Yeah. That would have been a little difficult. The way Wegmans said it was like, they would actually have the butcher over at the butcher shop like pick up the meats and stuff for you. You knew that the people who were doing it were pretty experienced with what they did.
Rob: Right. Cool. Let’s transition into the episode here. We have several listener questions we’re gonna talk about today, and of course, per usual, our voicemails go to the top of the stack, so let’s kick off our first question. It’s about being pre-product market fit.
Harold: Hi. My name is Harold and I’m a co-founder of StackTome, a SaaS product for ecommerce retention advertisement. There are three product-market fit I’m looking for ways to get warm lead customers. I have couple of questions. When it comes to driving traffic to the site, I was wondering if you have seen educational videos instead of text content among sites like YouTube being successful. I find it more [00:10:03] traffic coming from search, mostly through content, while some content I find useful, I can’t find alternative quick videos explaining the marketing concepts. Also, what would you recommend for getting into mastermind groups [00:10:20] marketers that would be post product-market fit [00:10:24] Thanks for your always honest feedback and sharing your knowledge, I’m always learning something new each time I listen. Cheers.
Mike: I guess, to recap, and Rob, correct me if I’m wrong in my understanding to this, but the two questions that he had were essentially how should you approach developing content for the website to drive traffic? Should you focus on video, or should you focus on text, in order to gain more attention when you’re in pre-product market fit? The second one is, how do you find people to join a mastermind group with, is that right?
Rob: Yup, that’s right. To be clear about the video versus text, he wasn’t asking about conversion, he was asking about trying to drive traffic, will it rank, I think it’s will it rank better in search engines, basically.
Mike: Yeah. My understanding is that Google is still ranking video higher than text. But one thing you have to be a little bit careful of is to make sure that you’re providing some sort of transcript for it. That helps Google index the videos because otherwise, it has no way to know what is the actual content of the video, what are they saying. There are ways to provide that information to Google’s crawlers so that it will show up. The searches, that’s one thing I would definitely do.
The other thing that does come to mind though is that if you’re pre-product market fit, I would actually do outbound stuff. I would try to find and identify people who you think would be good customers and go after them, as opposed to trying to attract them and get them to come to you. Because really, that’s the situation that you want to, I guess, double down on once you know who your ideal customer is. But if you’re not at that point yet, you have to choose from outreach, otherwise you’re kind of throwing spaghetti at the wall and seeing what sticks.
Rob: Yeah. That’d be my sentiment as well. I think you can mess around with the video versus the text thing. I have heard success stories of video working better because it’s not something that everyone does. But you have to get into video, there’s like video site maps, as you said, you want transcripts. May just be better, I don’t even know if you wanna host it on your site at that point, you may just want to have it on YouTube, because YouTube videos rank really well in Google, obviously because Google prefers them over other things.
There’s a whole specialty of learning video SEO and how to rank using video. I would agree with you Mike, I just don’t think that’s necessarily worth diving down that rabbit hole, yet. Because I bet you could kill a month just learning about it and probably two to three months experimenting with it. I think there are more valuable things that you could be doing right now, even outbound stuff like you were saying. I could see running paid acquisition if you have any budget at all because you want instant feedback. You want instant customers or not. Customers or rejections, as they say.
Whereas this video SEO stuff, you’re building for the 3, 6, 9, 12-month timeframe. You wanna get to revenue faster than that. You wanna get to product-market fit faster than that. I would be scratching and clawing at anyone using a app. I just think of SEO and these types of strategies there is it’s just a longer term play. The bad thing to do, but if you limit it on time and budget, which I’m guessing you are, I wouldn’t be focusing on this.
Mike: Yeah. At most, what you just said is about the iteration cycle and being able to adjust quickly versus taking that long term approach which is valid later on. But, right now, it sounds like that’s not the way to go.
Rob: Yup. Then for his second question, it was how to find a mastermind group, and our very own Ken Wallace with mastermindjam.com is kind of our go to recommendation for folks looking to get matched up with fellow masterminders, both in the SaaS space, there are ecommerce entrepreneurs, there’s info marketers, there’s all kinds of stuff. Go to the site, you submit your name and your time zone, and a bit about yourself. I’m sure you categorize yourself in some way like SaaS or info, whatever. Then you get matched up. Ken has written an algorithm, and he also does a lot of manual stuff with it as well. There’s a small fee to getting matched up, but in my opinion, well worth the effort. There’s been a lot of successful groups that have formed out of using Ken’s service.
Mike: What’s next?
Rob: Next question is our second and final voicemail of the episode and then we’ll get to some emails that came in. This one is a question about the moral imperative of business.
Daniel: Hi Mike and Rob. This is Daniel calling in from Charleston, Oregon. Love your podcast, thanks for all the time that you put into it. Keep it up. Definitely in the want-epreneur category, tried a couple of products to myself, haven’t really seen success for me. The challenge is the golden handcuffs consulting business is too good to really make the dive deep in the product. But the question I have for you guys today is around the moral obligation of business and just to be hearing your perspective on income equality, social equality, and kind of the bootstrap startup vision is build a business and sent it to a hyper-competitive space that eventually throws off a bunch of cash. What do you feel is your moral obligation to reinvest that cash back in the community, people around you, your local geographic vicinity, and help address the growing problem of income equality. Thanks so much, bye.
Mike: I think for this question, when you’re talking about bootstrap startup, there’s actually two answers to this question, not just one. There’s an answer that is applicable before you get to the point where your business is making a fair amount of money and throwing off access capital.
There’s the second answer which is after that point. The first one is, I would say, before you get to the point where the business is throwing off that extra money that you can deploy as you see fit to do whatever, above and beyond to paying all the business expenses and paying yourself a reasonable salary and potentially giving you extra money to be able to put away the additional profit from the business at that point.
You don’t have any of that. Before you get to the point where that has happened, you’re not in a position to really do anything. I don’t feel it’s fair to put yourself in a mental state of mind where you feel obligated to do things for other people. Your real focus should be getting the business to that point and until you do, there’s really not a lot else you can do.
I think that if you tried to put other people before you, you’re just gonna run into a problem where everyone is always going to be coming before you. You’re never gonna pay yourself. There’s entire books that are written about this. I think there’s one called Pay Yourself First or something along those lines. That’s the phrase that goes with it. But until you’re there, it is not really justifiable in my opinion to attempt to do those things.
There’s a difference between spending a little bit of time helping people here and there but to make that your main focus is definitely not a route you should go down. Once you’re after that point, then the situation I think changes pretty dramatically. I wouldn’t say that there’s a moral imperative but depending on your own personal judgements and your own personal beliefs, I do feel like it is worthwhile going down that route. There’s actually a lot of benefits for you to, I don’t wanna say share the wealth or anything, but help other people because at one point, you were there where they’re at.
We could probably talk, at great length, about this but that’s the type of people you run into at MicroConf as well. I think that Rob, you probably agree with me on most of that stuff in terms of being able to help other people and the additional benefits that you get from it. It’s not really just about the money at a certain point, as long as your business is providing for you, then you can kind of do whatever you want with the money afterwards especially if you are already putting money aside to save. It feels great to be able to help other people who are further behind you because you were there at one point as well.
Rob: Yeah. I think part of this is a somewhat personal choice and I think part of it is how you view being part of a society in general or a community, maybe a better way to say it. I like the way you framed it, Mike. You can help people without going and volunteering at the local soup kitchen or without volunteering to train people how to learn computers in your local area.
You can help people by educating them on how to start startups. You can start a podcast and give content away for free that helps build this community of bootstrap founders. It helps raise kind of all of our standards of living, all of our quality of life, and it helps create jobs, and all that stuff. This doesn’t really have to come in the form that I think a lot of people think about.
My personal belief, I have always been as generous as I possibly can with my money and with my time. Since I was in college, I’ve given money to charities even when I didn’t have much money. As I started making more money, I still give quite a bit of money away each year. I have always spent a lot of my time helping whether it’s having lunch with an entrepreneur, whether it’s you and I doing the podcast for free for years, whether it’s blogging and giving away knowledge.
Yes, there are outlets, obviously, I wrote a book and I sold that for $20 a copy. You and I do host a conference but the amount of time that we have essentially given to this community far, far, far outweighs the monetary, the per hour cost or whatever that we would make, the wage we would make given all the time we’ve given away, it would not be a wise business decision to do that.
We have done some of it because it’s fun for us and some of it because, I think, you’d agree with me, I truly do enjoy giving back and helping people in the emails that we both get where it’s like, “Boy. There’s something you did,” whether it’s FounderCafe or MicroConf or the podcast, “it has changed my life and here’s how.” I receive dozens of those emails and those have a lot of impact on me. It’s a lot of mental impact. All that to say, I don’t know that I would preach that everyone has to adopt this point of view, but my point of view is that I always wanna be able to give back.
I have invested in a company in Fresno called Bitwise Industries, that is a for-profit but it’s educated thousands of folks in the local Fresno community which has a real wealth disparity. There’s a big digital divide there. They’ve educated thousands of people on how to program and how to use computers. I hired Derek out of Fresno although there wasn’t a digital divide with him. But then we hired three more people, created a bunch of tech jobs. Bitwise itself, I don’t even know how many people it is now. 50, 60 people.
There’s good to be had in a way that everyone wins. I think that’s how I think about it. I so much enjoy more funding a company like Bitwise or doing what we do with MicroConf and FounderCafe and this podcast because I feel like it’s win-win. We’re not just taking money that we earn as entrepreneurs and giving it to somebody. We’re actually starting a sustainable business. That’s what we’ve always wanted to make sure that MicroConf was sustainable, it’s why we brought Xander on so that we could do it year after year. It’s why we’ve really streamlined the podcast production because we wanna be able to continue doing it even when we have other things going on.
I think turning it in, again, I think like an entrepreneur. It’s like a person who turns systems into profit in essence. I want some of that profit to give back to whatever community is, whether it’s the bootstrap startup community, whether it’s the community I live in, but it needs to be a win for me as well in a small way. It doesn’t mean,”Oh, we need to get rich off it.” But I do think that making it into something sustainable, that’s how I’ve always thought about it.
I really like what you said about the kind of the pre-sustainable business. Because when I was scratching and clawing, I was freaked out about money, I was just trying to get whatever it was, Hittail revamped or the real tough financial year I had with Drip. I couldn’t even think about any type of moral imperative of helping other people because I was trying to take care of me and my family.
But once I get past that point, then yes, my mind is freed up. I absolutely give very generously to a lot of things, whether it’s charities or the sustainable businesses that hopefully are kind of doing some good in the world. Thanks for the question, Daniel. I hope that was helpful to hear our thoughts on it.
Our next question is from Stefan Debois from surveyanyplace.com. He says, “Hey Mike and Rob, I listen to your podcast for several years now, not since the beginning, but close to it. I really love it because it has so much actionable stuff. On one of the latest episodes, you guys talked about content marketing at the end of the episode, and I remember Rob saying he would not advice for startups to make it their number one tactic, for example, creating a blog and publishing content. But he would recommend doing something else like joint venturing with players in your field that already have an audience. I assume he’s referring to guest blogging, joint webinars, etcetera.” I’m gonna step out real quick. Two of those, guest blogging and joint webinars, correct. As well as integration marketing which I’ve talked about in the past which is where you integrate and then you both co-promote. Alright, back to his email. “It would be great to dig a bit deeper into this topic such as how exactly would you recommend doing this. If you had to start Drip or another SaaS company right now, how would you apply this given all your learnings? Thanks for your help. Keep up the great work. Stefan.”
Mike: I think one key point to keep in mind is that, as part of his question, he said, “If you had to start Drip or another Saas company right now, how would you apply this given all your learnings?” There is a point at which doing this kind of stuff is too early. You’re not far enough along where it makes sense to go down that road mainly because it’s not gonna make sense for whoever it is that you approach to do a joint webinar or guest blogs.
With guest blogging, you can certainly write articles and as long as they are relevant to the audience of the person that you are guest blogging on their site, and they are receptive to that kind of thing, then sure. You can totally do that. But when it comes to something like a joint webinar, you really can’t do that unless you have something that is tangible and benefit that is going to be given to that person’s audience, whoever it happens to be.
The other thing is what are you offering the owner of that audience? What are they getting out of it? Is it really just educating their people? Are you promoting your products or is it just an educational thing where you’re explaining how to do something or about a particular topic or a technique or something along those lines.
But again, none of this stuff you can do until after you’re at a point where you have a product that is functional and you have people who are onboarded and paying and you kind of know what your ideal audience looks like. Because otherwise, you’re approaching people that their audience may not necessarily overlap with yours.
Those are the things that I will keep in mind when trying to go down this road. Until you’re at that point, none of that stuff applies, you’re just not going to go anywhere.
Rob: Right. The thing to keep in mind is this is where it’s nice to have a nice little email list because if you are gonna do, I’m gonna say mostly stick to joint webinars and integration marketing. If you’re gonna do that and if you have a list of 10,000, 20,000, 30,000 people, for the most part, you’re gonna be able to say, “Look, let’s do a joint webinar. You email your list. I email mine.” Or you do vice-versa where you give a webinar to their audience and they give it to you. You can just trade straight across. You don’t have to mess with affiliate commissions. Just get the benefit of the traffic and so did they.
The same with integration marketing. The bigger the list you have, the better off you are in getting people interested in doing some type of joint promotion with you. If you have 300 people on an email list, it is much, much less likely that someone’s gonna wanna do a joint promotion with you.
With that said, in the early days before you can build up that list, you’re going to want to use affiliate commissions. If you do approach someone to do a joint webinar or to do integration marketing, you can say, “Look, we pay 20%, 30% of affiliate commission and here’s the link.” That’s how you’re gonna get them interested. Because then at that point, they can at least count on some type of revenue stream.
The way I did it back with HitTail, which is 2013-2013, is I looked around in the space and I looked at complimentary products, and so HitTail was a long tail SEO keyword tool. I looked at rank trackers and other keyword tools that didn’t use the same approach that we did. I, at the time, just cold emailed a bunch of them. I remember I made this list of seven or eight SaaS apps that weren’t these big behemoths, I didn’t email SEOMoz or anything.
Once that appeared to be more startupy or bootstrapped or whatever and all of them wrote back and said they wanted to do it. I was overwhelmed by that. I expected to get one out of that. I wasn’t able to do JVs with all of them. I think we were even just doing JV mailings. We were just gonna email each other’s list and kind of recommend a tool. I, of course, tried out any tool recommended, and then they did the same thing. Our lists were about the same size. We did no affiliate commissions at the time.
I’m not saying that’s gonna work in every niche but that’s something that I did. Then with Drip, when we started doing JV webinars, it was much more about relationships. That was in my wheelhouse. I just emailed people who I knew in the MicroConf space, in kind of our community. We did joint webinar I’m pretty sure with Brennan Dunn. I know we did one with Rubin for Bid Sketch. There were several others. But that was a lot easier. It depends on if you have a network in the space or if you’re going cold. But I’ve made either one work. It is something that you can do.
In terms of integrations, we start to build the integration and then create a nice landing page for it and then you email the company and you say, “Hey, can we do co-promotion?” With that, it really is gonna depend on the size. Because Basecamp and Stripe are not gonna co-promote with you. You’ll get lucky to even get listed in their directory at this point. But if you get someone who, it doesn’t have to be a tiny little company, if you get ahold of someone in marketing at even a decent sized startup, they will at least have the question of, “Well, how big is your list?” If you say, “I have 20,000 or 30,000 people on an email list.” It can raise an eyebrow. It can get you a mention. Maybe it’s just a single mention in an email newsletter they send out but they may have 100,000 subscribers. It can get some traffic toward you. That’s how I would think about doing it these days.
Mike: As a general rule, when you’re trying to find people to do these sorts of co-marketing efforts with, try not to go after somebody who has a list that’s more than twice your size or less than half yours. If you stick within that range, whatever that size happens to be, you’re probably gonna have much better results.
Because if somebody is much larger than you, they’re not going to want to do a joint marketing campaign with you unless you know who they are and you have developed a relationship with them. If they’re less than half your size then it’s probably not going to do a lot for you. That’s the thing that I would keep in mind as well when you’re trying to find people.
Rob: That’s a good point. Our last question for today is from Rusty Shackleford and he says, “Can you give me some insights on when to provide a trial versus a demo for apps that rely heavily on user-provided data? I’m developing a medical records SaaS. I’m keenly aware that it’s a waste of time for a prospective client to do a trial of my product when they would need to enter so much of their own data. Most likely, in addition to entering that data into whatever product they’re currently using. Would you suggest providing demos where I lead them through examples versus a trial of my product?”
Mike: I think of this particular case, if you’re dealing medical records and you have the objection or hurdle that somebody needs to overcome to start using your app is that they need to provide the data, I would lean much more heavily on the demos than on trials. I’d push them directly towards a demo whether that’s signing-up directly on the website or getting them onto an email list and then sending them to a sign-up form where they can sign-up for a demo, maybe ask them for information through a survey or something along those lines. Push them through that way. I would not go to trial route.
If you go with the demo route, what you can do is then you can directly address that particular problem during the demo itself and say, “Hey, we understand that in order to get you set-up, this is what you need to do. The next step after this is to decide if you wanna move forward with the product or not, and move to a trial. If so, send us this data and we’ll put it in for you.” Essentially, you’re doing onboarding for them and you eliminate that objection upfront.
You can try pushing that off to them which is really what you’re doing if you send them to a trial without you interacting with them which is going to raise that as an objection and they’re gonna say, “Well, I don’t really wanna do this,” versus if they have other things going on, they’re just not gonna do it is really what the bottomline is. Especially if they have to change whatever their current processes are versus if you talk to them, you have that conversation, get them to buy into the concept and what they can get out of the product after they start using it.
If they buy into that story, they send you that data, you take care of that leg work for them and once that data is in place inside of their app, then it’s ready for them to use. They don’t have to do all of that extra work. It just makes it easier for them to overcome that hurdle. If you don’t have a good import mechanism or good ways to just pipe the data out of other apps, it’s gonna make it really challenging to get people to go from a trial to a paid conversion. Because they’re just not gonna do the work is really the bottomline.
Rob: Yep. In general, I lean towards demos over trials. The problem is it doesn’t scale very well. As you scale up, that’s why you resort to having a trial. But relying on the customer themselves to orient and find their way around inside your app enough to understand the value, whereas you can explain that value in 10-15 minute demo, I bet in the first 5 minutes of your demo you can give more value than someone poking around inside your trial. Aside from the fact that your app sounds not complex, but there’s a lot of kind of onboarding necessary, a lot of work on their part, there’s no way I would consider letting people in for a free trial.
Mike: For some of the medical records, there’s subtle questions that people are gonna have which revolve around trust issues which you’re not gonna be able to really overcome very well with a free trial.
Rob: Right. Then they’re gonna have this account with no data in it. It’s gonna look terrible and you’re gonna have an account full of data that you can demo them. You’re gonna show exactly the value that they’ll receive. In your instance in particular, I’d definitely do demos. In general, when you’re bootstrapping and starting up, all during customer development, I recommend doing demos because you’d get so much more information from them.
If you’re still pre-product market fit, I recommend doing demos because you’re gonna find out why people do or don’t sign-up. They’re going to be more likely to get in touch with you if they decided to cancel or not get onboarded because you already have a relationship with them.
Post-product market fit if you can still do it, I know at certain points it makes sense to go with self-service trial sign-up but the dirty little secret is as much as I don’t like demos, I’d prefer to get in and dig around with an app and try it out, most people want a demo. They would much prefer someone to walk them through an app rather than try to poke around and do it themselves.
We had done a few experiments where we had just trials versus funneling people into demos and we converted the demos into paid accounts. It was like 2X, 2X the rate of just letting people get onboarded themselves even with all the help that we’re giving them via email and apps. You’re gonna convert more. People are gonna get more value out of it.
In general, I think it’s just a better way to go. There are obviously exceptions to this. There are tools like, let’s say, even like HitTail, it was a high-volume, high-return tool. It was an SEO keyword tool and people would come in, try it out here and there, and it was super easy, and at the end, it was a one-click set up. You literally just walk into something and it would pull keywords out.
A demo would be interesting but only for high-value account because some of those accounts are paying $10 a month and at that point, it just doesn’t make sense to do demo. There are exceptions to this but as a rule, I would go demo as the default and then figure out, “Well, is this one of those exceptions where I should really just have a self-service trial available,” or you have both options. That’s what Drip has today. You can still sign-up for trial if you still wanna poke around but there’s a big push of course to get people into demos because of all the reasons that I’ve stated here.
Mike: I think that about wraps us up for today. If you have a question, you can call it in 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 373 | How to Craft Your Homepage with Lianna Patch
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Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Lianna Patch, a conversion copywriter about how to write copy for your homepage. Some of the topics include the basic process for crafting a homepage, how much time to spend on copy, and common mistakes.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest of Us, I’m gonna be talking to Lianna Patch about how to craft your homepage. This is Startups For The Rest of Us Episode 373. 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.
Lianna: I’m Lianna.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Lianna?
Lianna: I am doing fabulously. Enjoying lots of chocolate and probably too much wine with my family for Christmas. How about you?
Mike: I did not realize there was a ‘too much wine’ level.
Lianna: I actually tweeted about this this morning because I was sitting with my laptop at the kitchen table and I said, “Oh I have to record a quick video.” My dad grabbed an open box of wine and was like, “Well, just in case you need a prop.” I was like, “Oh, either my branding is really good or I should seek therapy.”
Mike: Well, who knows. I’m not sure which side of the fence to fall on right there. I think that’s a dangerous area that we’ll just kind of avoid at the moment.
Lianna: Let’s do it.
Mike: For the listeners who are not familiar with Lianna, Lianna Patch is a conversion copywriter and also an improv comedian who helps businesses inject humor and personality into their messaging. She is the founder of punchlinecopy.com. She also runs snapcopy.co. She’s worked with companies like Copy Hackers and Autopilot. She also spoke at Unbounce, their Call To Action Conference last year. She’s gonna be speaking at MicroConf Growth Edition this year. Just wanted to say welcome to the show, Liana. Is there anything that I missed in there?
Lianna: No, it sounds really cool when you say stuff like that about me. I might just get you to record all my intros.
Mike: Thanks. The reason that I wanted to have you on the show today was to talk a little bit about crafting copy on homepages. This is kind of directly relevant to the stuff that I’m working on with Bluetick. But, I also think that you have a very unique insight on a lot of this stuff. I wanted to dive right into that and put in front of you the very first question that probably comes to mind which is what’s the first thing somebody should do when they’re kind of preparing to build the first version of their homepage or even if they’re just doing a website redesign? What should they keep in mind when they’re doing that?
Lianna: The first thing to keep in mind is what you need your homepage to do. We have this idea of homepages as the place where your visitors land. There’s no slash, there’s no landing page after the URL. It has to appeal to probably multiple different types of visitors that you’re gonna get. It has to get them to the place on your site that more specifically addresses their needs as quickly and effectively and clearly as possible.
When you’re starting to either build a homepage from scratch or redesign your current messaging, you have to start with your visitors. Who are they? Are they all the same kind of target person or are there different types of visitors? If you run an ecommerce store, maybe you have different shopper demographics. If you’re a software startup founder, maybe you have different buckets of users coming from different industries who want to use different features.
You have to start with knowing about that audience and knowing how they describe what they’re looking for and you also, on the flip side, have to know what your unique value proposition is. I can talk a little more about that. I know I just sort of went on for a little while.
Mike: Sure. Why don’t we dive into some of those things because, I think, the one thing that’s probably most confusing for people is honing in on the message that you should give to people when they show up. Because, a lot of times, people don’t necessarily know exactly who’s coming to their page or they’re trying to use it as a landing page. If you’ve got a very early product, you don’t have a lot of content. One of the issues is trying to figure out what do I put on that homepage? Who am I talking to?
Lianna: Right. The very first thing any homepage needs is that top message, probably above the “fold” on the page. The value proposition where you very clearly explain what your product or service does. If you have competitors, why you’re different than your competitors so that people know exactly where you stand and why they should choose you. It’s not a place to be saying, “Welcome to our site.” Because that’s sort of a waste of that real estate.
It’s more of a place to say, “This is X product for Y type of person who wants to solve Z problem.” You can be very specific and speak to what problem your product or service is gonna solve for that reader. They know immediately why they’re reading it.
Mike: When you’re crafting that unique value proposition, it sounds to me like – is there a formula that you can follow for, it’s not even a call to action, but the headline there like, “It’s X for so and so.” “Airbnb for this people,” or, “Stripe for this other group of people.” Obviously, you don’t wanna use exactly that and you probably don’t wanna put either competitors or other companies in there but is there a formula or something along those lines that you can use to illustrate it to people?
Lianne: That’s a really good one and a straightforward one. The insert what you do for insert who you serve and then you have sort of an optional place in the formula at the end for insert problem solved or pain alleviated. A payment solution for solo freelancers who wanna spend fewer hours doing accounting. You’re doing some of this work with Bluetick honing on how to message that differentiation because there’s some people who do some of what you do and you do some of what they don’t do. Sometimes, when you’re working on this research you can get those insights from your customers or from your prospects as they describe to you what they’re looking for. You can just swipe that language right from them if you do that research.
Mike: What are some of the other ways that you can gather research? If somebody’s early on in a product and they don’t necessarily have a lot of data from those people, are there other sources that they can go to like other websites that they can try and either buy information outright? I’ve heard people saying if you’re doing sales on Amazon, for example, obviously going through and reading what the reviews are, on Amazon is a great way to do it because you can look at competitor’s products. You’d see the exact language that people are using. But, if you’re very early on, you don’t necessarily have that. Are there other ways to gather that information?
Lianne: Great! Yeah, there are. Like you said, Amazon review mining is great even if you don’t have a product with reviews. If there are products who you know you’d be competing with, you can go through those reviews and see what people are saying and sort of start noticing if there are any patterns in the types of problems that people are having or what they’re looking for. Same thing goes for G2, for software products, G2 crowd is a good place to go through competitor reviews and also your own reviews.
If you don’t have an audience at all, you wanna interview people who you think would be your audience. Good way to do that is, there’s no way around it, just getting them on the phone if you can for 10 minutes, or better yet a video call, asking them some questions about their pain around whatever problem you’re trying to solve because they may not know that they have pain or they may not know that it is a pain that might just seem like an annoyance to them. You have to get them to talk about this problem in multiple different ways until you find a way where you could hear the emotion in their voice and you know you’ve hit on a problem and then you listen to the words they’re using.
Talking to who you think your prospects are is a great way to both a, validate your business idea if you’re just starting up, and b, understanding how to message that so they understand what you do.
Mike: After you’ve gotten the, I’ll say just the headline in place, is there a structure that you should follow for the rest of your homepage or should you focus more on the broad strokes view of what the website is? Because I think, there’s a couple of different directions you can go there. You can have a single page for your homepage that kind of does everything or you can split your website up into a bunch of different pages and then link back and forth between some of them.
One of the classic example is just having a call to action right in that hero area or the headline where they click a button and it’s ‘Take A Tour’, then there’s also things like testimonials. You explain a little bit more about what the product does or maybe you take them over to a survey or trying to get them on a mailing list. Is there a general structure that people should follow or is it really just much more dependent on how much content you have to put in and how much time and effort you have?
Lianna: I think the thing that it depends on most is how many different user types you’re gonna have visiting. If you have a single type of user, your homepage is basically a landing page. It can have one focus which every landing page should, just one single call to action. But if you have multiple types of users, and you’re gonna have dedicated landing pages for each of those users, then you need to help people find where they’re going as quickly as possible.
If I have three types of visitors and I know from doing research that 60% of my visitors are looking for apples, and 30% are looking for strawberries, and only 10% are looking for grapes, I might focus 60% of my page on apples, and make sure that the messaging, especially close to the top where most people will be scrolling, is apples, and then supplement that a little bit down the page with strawberries, and then, wherever the grape people end up, there’s a little bit of messaging for them. But we’re appealing to either the largest group of customers or the highest value. Maybe people spend more on apples than they spend on strawberries or grapes.
I don’t know why I went with fruits for this analogy but no one’s buying fruit on the internet. But that’s one way to do it. Splitting it up by the number of customers in each group. You can also segment or structure your page depending on the different products that you have and their popularity or what you wanna sell. If you want Product B to be more popular than Product A, you might position it higher up the page or spend more time explaining Product B to give it a little more chance to shine. But basically, if you have more than one focus on the homepage, it’ll behoove you to get people where they’re going, where you can give them more information about that specific thing that you offer versus giving them all the info on the homepage.
That’s one thing that I see people do a lot. They say, “Okay, we have this whole website. We have five pages and we need a link to every single page in some section on the home page.” You scroll down and you can get to the about page from the homepage. You can get to case studies. You can get to contact. You might not need all of those things on there especially if you have a top nav which you probably do.
If you’re not sure how to structure the page, this is something I often recommend, just put a little pop-up poll on the page and I always recommend Hotjar. It’s called a website poll. If it seems like someone is staying on the page or they’re scrolling up and down, and they’re looking for something, you can time this to appear after 30 seconds or so and just ask what brought you here today or what are you looking for on this page or is there something missing. Then, especially if you have lots of traffic, you’ll start to get a sense of what people are looking for and they’ll tell you how to structure that page.
Mike: One of the things that you mentioned there is the idea of focusing the content, the messaging there on what the majority of the traffic that comes to your site is. If it’s for apples as you pointed out, that’s 60% for apples, then put 60% of the content aimed at people who are there for apples. Is there a danger associated with that where the reason that you end up with that traffic is because you’ve got so much content there versus if you were to switch it, let’s say, gear it for oranges, for example, isn’t it possible – how would you find out that isn’t the reason that people are coming?
Lianna: Yeah, I think it can be sort of a self-fulfilling prophecy. If we position ourselves as being the place to go for apples (also, maybe oranges, strawberries, and grapes) then you can start to think that your whole customer base is apples. There are ways to, throughout the page, indicate that, “Hey, if you’re here for strawberries or grapes or whatever, we have stuff for you too.” You just sort of subjugate that messaging throughout. You don’t have to ignore those people but people do read so if you make sure to appeal to them maybe in a less visual or less obvious way, they’ll find those pieces and they’ll go where they need to go.
Mike: We talked a little bit about the basic structure of the site itself and a little bit about the page. When you’re focusing on the messaging specifically for the homepage, is there a guideline for how much time you’re spending creating the initial copy for it? Obviously, there’s a difference between when you’re redesigning the page or you’re just changing small sections of it but if you’re building something let’s say from scratch, how much time should you be spending on that? Could you measure it in hours? Could you you measure it in days? What sorts of rules of thumb could people use as developers? Because obviously, most of our audience is developers, it is not something they’re gonna have a lot of experience with. What should they think of in terms of building that?
Lianna: I think if you’re thinking about how much time to spend, spend the bulk of your time on the research, making sure that you have the right messages down. When you actually go to craft the copy, you should be able to pull from the research, and use the same phrases that you’ve heard from your customers or your prospects. Some parts of the copy will write themselves. When you’re reading through the page, you already have the structure, and you have a few spots filled in with the messages from your research.
You’re looking to write a copy that creates a flow down the page. You don’t have to psych yourself out about it. It doesn’t matter if you’re not a copywriter. As long as you are writing for your audience, and for your reader, and you’re writing in language that is centered around them, second person voice, ‘you are here because this is what we can do for you’, that kind of thing, you don’t have to spend weeks on it.
I think there’s no hard and fast rule about how much time “should take” but when it feels done, it’s probably done. What I like to do is when I get to a place where a draft feels done, I put it aside for a day or two, and I come back to it and read it again. Because if you stare at something, especially if you try to just bang it all out in one day, you can’t see either mistakes or areas for improvement that you’d be able to see with a quick look a day or two later. However much time you spend on the homepage copy, just give yourself a day or two, and then look at it again later, and you’ll fix a few last things.
Mike: Part of it is about inserting these artificial delays in between. It’s not about spend X number of hours on it. It’s spend some time on it and then make sure that you insert some artificial delay and then come back to it so that you get the fresh point of view after having some time off.
Lianna: Yeah. Because your brain is gonna be chewing on those things especially if you’ve gone through the research and you’re thinking about how your readers are gonna be interpreting this page. You might have a brain wave like, “Oh, actually, this headline isn’t the best way to explain this part of the product. Instead, we should say it like this.” Sometimes, you just need a little bit of cognitive processing time.
Mike: When you’re looking through these, whether it’s the initial walkthrough or you go through the process of revisiting them, what are some of the most common mistakes that you see people making on either the copy itself for the homepage or the design itself?
Lianna: Yeah. We’ve actually touched on a couple of these. The first, I would say, and I can’t believe this is still a thing, where you get to the site and the homepage says, “Welcome to blank.” You’re just like, “What? I know that I’m here. I clicked on a link or I typed in the URL to get here. I did this on purpose.” That’s a waste of space. That’s the opportunity where you have to grab your reader and say,”Here’s exactly what you’re here for.” That’s a huge missed opportunity.
The other mistake we touched on was trying to cram everything in the kitchen sink onto the page thinking that you have to have a link to every other page on your site on the homepage just in case. Instead, you should focus on probably the top three or top four most popular areas of your site, and let people who are more determined to dig do that digging in the top nav with some smaller subjugated messaging.
In terms of design mistakes from a conversion perspective, stock photos are the thing that I see just killing trust all over the place. I know it’s not easy to get real photos especially if you’re a startup and you have a small marketing budget but if you can, invest in less obvious stock photos or even avoid them altogether and take your own photos with an iPhone. That’ll go such a long way toward building trust.
Mike: I like the idea of using “less obvious stock photos”.
Lianna: Yeah. There are lots of sites out there that are geared toward that. Death to the Stock Photo’s one of them. Unsplash is around. They’re all free but if you’re going to Getty images and picking that photo of people in business suits standing around a conference table staring at an empty legal pad, then that’s just immediately gonna tell your reader that you’re not a real company, you can’t be trusted.
Mike: You did mention the idea of having three or four different main links that you focus on to take people to other pages, should those be things that you focus on in terms of trying to allow the people to self-select or are you trying to give them a story and lead them through? Because there’s a difference between trying to lead them through your website versus allowing them to self-select what things they’re the most interested in.
Lianna: Yeah, I tend to not wanna lead anybody on a journey. I want them to get where they’re going as fast as possible. The idea of self-selecting is a really good one for the homepage. We haven’t specifically talked about that, but you could say,”If you know that you have these three customer types, X, Y and Z or apples, strawberries, and oranges or grapes.” Whatever we said, you could even make it very explicit and say, “I’m a person who’s looking for oranges or I am person X or I am person Z.” Allow them to click a button that says, “Yes, this is me.” Then you take them straight to that landing page.
The copy around that section can give a little bit more information about what they’ll find when they go that landing page. But having that phrasing especially in the first person voice, the, “This is me. Yes, this is it.” Allows them to mentally confirm, “Okay, yes. I’m identifying with this and this is where I need to go.”
Mike: That’s kind of what we did with the MicroConf website where you browse the microconf.com and right there, right at the top it says, “World’s biggest conference for the world’s smallest self-funded software companies.” Then you’ve got an option. There’s two buttons there. One says, “click here for growth edition” and the other one says, “click here for starter edition.” That’s kind of the tactic we took with that because we really want people to kind of self-select in between those two groups. It’s a very definitive line between them. It’s not as if there’s a lot of overlap between them, I’d say.
Lianna: Yeah and I like this because obviously, your UVP is very clear. It’s a conference for the world’s smallest self-funded software companies. Then right away, you give people who know what they need the choice to learn more. If they don’t know, they can just keep scrolling and immediately they have ‘which MicroConf should I attend’ answered for them.
Mike: Are there other ways that you can think of to provide some sort of a self-selection option for people? Because I think you do wanna at least provide some ability for them to say, “Hey, I’m in this particular group.” I think most products have more than one group of people who would use them. Whether it’s sales executives and developers, for example, or I guess, there’s probably a very little overlap there. If it’s a project management software or time tracking or there’s lots of different pieces of software where related groups use them. Whether it’s founders or small agencies. How do you go about figuring out how to present that?
Lianna: You can describe, like you were just saying, by job role. If you know some of the major types of job roles that your users are, like software developers, sales executives. You can also allow them to self-select by pain, “My biggest challenge is publishing something every week,” “My biggest challenge is following up with my leads,” or “My biggest challenge is eating a popsicle.”
I’m not coming up with good comparisons right now but those are the two flip sides of the same coin. They’re saying either I am this type of person or I have this type of problem. You either segment them by role or by problem that they’re having which will obviously connect to a page that tells them more about how you’re gonna solve that specific problem for them, no matter what role they’re in. Does that make sense?
Mike: Yeah, it totally does. I think that’s a good example of one type of call to action. What you can focus on is allowing people to self-select but I think there’s a lot of other ones that come to mind that people will, I’ll say, try to slam all into the same page. For example, there’s things like putting people on email lists or getting people to take a tour or click here to sign-up or to start a free trial. How do you decide which ones you should focus on, specifically for the home page?
Lianna: If you have, for instance, a content offer that you geared to be applicable to multiple different types of visitors or users like an email series, then you can offer that to everybody. It depends on where in their stages of awareness most of your visitors are. Whether you’re gonna get them to sign up or take a tour.
If the visitors that are coming to your homepage don’t really know that they’re having an issue, they’re not really sure what you do yet or that you have competitors or why they should pick you, getting them to sign up for a live one-on-one demo is gonna be a really tough sell because there’s so much education that you have to do there. You can’t really do that on the homepage. Versus asking them to get on your email list or offering them something quick and free like a one page PDF is a much lower risk CTA.
You might say, “Get on my list and I’ll send you five emails to improve your sales process,” which might sound familiar to you, Mike. It just depends on where the bulk of those visitors are in their “customer journey” which is a phrase that I hate to use but is applicable here.
Mike: For the homepage, should you be focusing much more on things that are, I’ll say, less of a commitment for the person, especially if you have a very small website. You only have maybe two or three pages tops. Shouldn’t you be focusing more on the things that move people as far along as possible, as quickly as possible, or do you really need to have those extra pages that explain a lot more about what the product does?
Lianna: It just depends on whether that visitor’s gonna be ready to sign up to hear from you or to schedule something with you or whether they need more information first. That’s something that you can only know by watching your quantitative metric, so your Google Analytics to see where people are falling off the page or when your pop-up comes up, everyone leaves. But, in general, if you have more information to give, even if it’s just a two-page site, you’re better off asking them to visit that next page that more specifically meets their needs, and then asking them to take that next step. Whether it’s joining your list or scheduling a demo or whatever it is than doing it right from the homepage.
Mike: Got it. Because I’ve seen people that have a button right on the page that says, “Click here to sign-up.” I’ve seen that as a recommendation throughout the years. It almost seems like that’s too much too quickly even if you only have a two-page website. It’s really hard to get somebody to visit your webpage and then immediately say, “Oh, yes. This is for me,” and they click, and they go to sign-up. Because they wanna see more about it. They wanna get that level of trust and I don’t feel like it’s there yet with the homepage.
Lianna: It really depends. If you have your users super segmented or you’ve honed in on your targeting and you know exactly who’s coming to your site and you’ve built this, whatever it is, this piece of content or this email series, just for them, they might be ready to sign-up. But if you have a ton of different types of traffic coming and they’re “colder”, they need more education, explanation, you might wanna wait a little bit longer before you ask them for something.
Mike: If somebody’s on your mailing list, you send them a link that says, “Hey, click here to buy such and such.” They’re clicking on that link, they go over to that web page, and it’s not even your homepage at that point. It’s a landing page that is kind of designed with that particular person in mind, in that stage of the buying process versus with a homepage anybody could be visiting and you don’t have as much information about them even if you have done all the measurement and stuff. There’s still a lot of other people who could come there. If it’s the first time that they’re seeing it, they just don’t have that level of trust. It’s kind of what I was saying about you can’t jump that far that quickly I think on the homepage.
Lianne: Yeah, the other thing that we haven’t touched on yet but which I hope has sort of become clear is that you don’t wanna write your homepage for everybody in the world. Ideally, you should know pretty much who your visitors will be or who you want them to be, and then write for those people. You’re not trying to get every single person on your email list. You’re trying to get Mike and Rob and Lianna. Because we’re all interested in software development and that’s kind of your niche.
It’s okay to be more specific and that’s where clearly stating your value proposition right at the top of the page. As soon as people arrive, this is what we are, this is who we serve, and this will benefit you if you are this. That becomes so important. Because that tells people right away when they land a page, “Oh okay. This is for me or this isn’t for me.” You only want the people who say, “Okay, this is for me.”
Mike: What are your thoughts on using video on the homepage? Where there’s a short demo of a walkthrough, or just the founder of the company standing there and talking about of what the product is or video of the founder themselves talking to the person about the problems they’re trying to solve?
Lianna: I love video pretty much anywhere because there are just some people who don’t like to read, that doesn’t mean they’re gonna be bad customers or bad visitors, they just don’t wanna read. If you have content on the page that you wanna get across but you know some people would rather watch a video, put that in the video.
If you are a single founder or a smaller company, that’s a great way to humanize yourself. Just say, “There’s a real person behind this site. We’re not using stock photos and more than that, we are here talking directly to you explaining exactly what we do and how we can help you.” Video’s always a plus. I’m trying to think of a situation of which it wouldn’t be, maybe if you’re crematorially, don’t make a video. That would be terrible, sick burn.
In terms of where in the page it should be, we often see them in the hero section of the top, again because it’s a chance to say, “Real quick, here’s what we do. Click to find out.” Sometimes, see them toward the bottom too because if someone had scrolled that far, they might be looking for more information. A video might just be the thing to tip them into taking action, whether that action is signing up for the list or scheduling a demo or clicking through to the next page they need to see, that can be the last little nudge they need.
Mike: One question that comes to mind for me is how do you know when something is good enough? When you’ve got, I guess, the basic structure in place or some basic headlines or outlines of what the subtitles and stuff would be. How do you know that which you have is going to be good enough to be put out there or should you just kind of throw it out there and see what sticks and start taking measurements and stuff?
Because the trouble I think that a lot of people find themselves in is especially when they’re launching a product, they don’t enough traffic to really do any sort of really analysis like AB testing, “Oh, we had this before and now we’ve got this.” If you go from 500 visitors to 600 in a month, it’s almost meaningless. What do you there? How do you know that it’s good enough to put out there and that you shouldn’t keep iterating on it?
Lianne: Before you publish anything, you should be going through it from a structure perspective, that’s the first editing level, and this is actually the start. This is the substance of my talk at CTA Conf this year. Go through it on the structure level to make sure it’s hitting all the points your readers need to hear. Go through it on a paragraph level to make sure that the copy itself is easy to read and parse, you want it skimmable, you don’t want giant chunks of copy.
There’s a lot of formatting you can do to make things more easy to read which cuts down obviously on cognitive load for your readers. Then when you get to the line level, you’re looking to cut out anything that isn’t doing a job. Every sentence’s job is to lead to the next job. You wanna cut out anything that seems fluffy, anything that you know is just kind of in there for you because you wanted it or it’s a darling. You have to clear your darlings, as we always say.
Then you’re looking for what my good friend, Amy Harrison, calls umbrella terms. That’s where you had a bunch of super specific descriptors and you squeeze them into one. You end up with some adjectives like cutting-edge or first class or world’s best and when you think about it, they don’t actually mean anything. If you notice any of those cliché phrases sneaking into your copy, you wanna replace those with more specific, more accurate, and descriptive adjectives that give people a sense of what you do or who you are.
That’s the kind of last defense on a line level and that’s kind of what I do when it comes to punching up copy with humor. If you want, we can talk a little bit about why humor works in copy and where it should be used and that kind of thing.
Mike: Yeah, I’d love to. It’s definitely an area that I think allows people to be a little bit more expressive on their websites just because you get to inject your own personality without making the person who’s reading the copy feel like it’s a corporation. Because most people listening to this are probably running small businesses. You want at least some level of personality to come through, but at the same time you don’t wanna overdo it in such a way that it seems like such a small company that how could they possibly trust you.
Lianna: Right, yeah. There’s definitely a balance to strike. But I think, erring on side of being human, and having a personality, and being warmer does build that trust much more than trying to come off as a bigger company, and then people see through you which makes it seem like you’re posturing, and you’re kind of fake.
When it comes to deciding where to strike that balance, you want to ask yourself again how you want your reader to feel because it’s always about them. You wanna ask what’s the sense of humor of my business or my brand? Are we witty? Are we highbrow witty or are we sort of goofy and silly? Are we borderline absurd or offensive or crass? Probably, it’s none of those, because you don’t wanna offend people but different companies have different personalities. You have to figure out what feels right and natural to you. That would be your jumping off point for working in humor to your copy.
When it comes to actually doing that on a sentence level, one of my favorite things to do is use humor for comparisons. A lot of times, we lose specificity on the line level, so we’ll see a piece of copy that says, “This is the worst feeling in the world.” That’s kind of specific. People can sort of mentally apply that to themselves and know what that feels like, but that’s a chance to insert humor and specificity which is a key tenet of high converting copy, being specific. Instead of the worst feeling in the world, you might say, “It feels like showing up to school on picture day with no pants and spaghetti sauce all over your face.” Or something much more specific, and weird, and out there, and absurd.
You get that little jolt of surprise when someone gets to the end of the sentence and sees that descriptor. It keeps them interested. Hopefully, it makes them laugh a little bit and it gives them a much more concrete image to grab onto than just saying, “It’s the worst feeling in the world.”
Mike: Yeah. Giving them a concrete image is kind of what I was thinking. I was thinking giving them a visual thing to kind of key-off as opposed to like, “the worst feeling in the world” that’s going to be different for each person. But everybody can kind of visualize what showing up to picture day with no pants and spaghetti on your face is gonna be like.
Lianna: I don’t know why I grabbed those two. I think just because my niece was eating spaghetti earlier today and I was like, “Wow, you are a mess.” Obviously that’s the place to dig into your research again. Because if you know what the worst feeling in the world feels like to your specific customer base, then use that as an image. Play on that.
Mike: I think that kind of goes back to your previous guidance about figuring out how to evaluate the copy at a line level and get rid of some of those filler words like saying actually or really bad or takes a long time and things like that. You can get rid of those and use that specific example.
Lianna: Be a little bit hyperbolic, like you said, takes a long time. How about something like ‘takes a million years’. Obviously, it doesn’t take a million years, but it’s the casual cadence that we tend to use in our conversations. People tend to exaggerate. When website copy does that too, it flips that switch of, “Oh, a real person wrote this who understands my problems.”
Mike: Awesome. We’re kind of running a little bit short on time here but is there anything that you wanted to add or leave the listeners with?
Lianna: The only thing I would say is that if you are now taking a critical look at your homepage copy, and you’re thinking, “I could be more specific with my value proposition where we explain who we are or I could be more specific in getting people to self-select in each call to action,” then you’re probably right. Take a look and see if there’s anything you can change and give it a try because you might be pleasantly surprised by the results.
Mike: Awesome. Well, if people have questions for you, what’s the best way for them to follow up with you?
Lianna: They can find me on Twitter, @punchlinecopy. I am relentlessly on Twitter. It’s kind of bad.
Mike: I assume that’s probably the one and only best place to find you.
Lianna: It’s a pretty good place to find me. I’m at my website. I’m on Facebook, sort of, but Twitter is the best place for sure.
Mike: Got it. Okay, great. Thanks for coming on the show, Lianna. I really appreciate it.
Lianna: Thanks for having me, Mike. This is super fun.
Mike: If you have a question for us, you can call 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.
Lianna: I’m Lianna.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Lianna?
Lianna: I am doing fabulously. Enjoying lots of chocolate and probably too much wine with my family for Christmas. How about you?
Mike: I did not realize there was a ‘too much wine’ level.
Lianna: I actually tweeted about this this morning because I was sitting with my laptop at the kitchen table and I said, “Oh I have to record a quick video.” My dad grabbed an open box of wine and was like, “Well, just in case you need a prop.” I was like, “Oh, either my branding is really good or I should seek therapy.”
Mike: Well, who knows. I’m not sure which side of the fence to fall on right there. I think that’s a dangerous area that we’ll just kind of avoid at the moment.
Lianna: Let’s do it.
Mike: For the listeners who are not familiar with Lianna, Lianna Patch is a conversion copywriter and also an improv comedian who helps businesses inject humor and personality into their messaging. She is the founder of punchlinecopy.com. She also runs snapcopy.co. She’s worked with companies like Copy Hackers and Autopilot. She also spoke at Unbounce, their Call To Action Conference last year. She’s gonna be speaking at MicroConf Growth Edition this year. Just wanted to say welcome to the show, Liana. Is there anything that I missed in there?
Lianna: No, it sounds really cool when you say stuff like that about me. I might just get you to record all my intros.
Mike: Thanks. The reason that I wanted to have you on the show today was to talk a little bit about crafting copy on homepages. This is kind of directly relevant to the stuff that I’m working on with Bluetick. But, I also think that you have a very unique insight on a lot of this stuff. I wanted to dive right into that and put in front of you the very first question that probably comes to mind which is what’s the first thing somebody should do when they’re kind of preparing to build the first version of their homepage or even if they’re just doing a website redesign? What should they keep in mind when they’re doing that?
Lianna: The first thing to keep in mind is what you need your homepage to do. We have this idea of homepages as the place where your visitors land. There’s no slash, there’s no landing page after the URL. It has to appeal to probably multiple different types of visitors that you’re gonna get. It has to get them to the place on your site that more specifically addresses their needs as quickly and effectively and clearly as possible.
When you’re starting to either build a homepage from scratch or redesign your current messaging, you have to start with your visitors. Who are they? Are they all the same kind of target person or are there different types of visitors? If you run an ecommerce store, maybe you have different shopper demographics. If you’re a software startup founder, maybe you have different buckets of users coming from different industries who want to use different features.
You have to start with knowing about that audience and knowing how they describe what they’re looking for and you also, on the flip side, have to know what your unique value proposition is. I can talk a little more about that. I know I just sort of went on for a little while.
Mike: Sure. Why don’t we dive into some of those things because, I think, the one thing that’s probably most confusing for people is honing in on the message that you should give to people when they show up. Because, a lot of times, people don’t necessarily know exactly who’s coming to their page or they’re trying to use it as a landing page. If you’ve got a very early product, you don’t have a lot of content. One of the issues is trying to figure out what do I put on that homepage? Who am I talking to?
Lianna: Right. The very first thing any homepage needs is that top message, probably above the “fold” on the page. The value proposition where you very clearly explain what your product or service does. If you have competitors, why you’re different than your competitors so that people know exactly where you stand and why they should choose you. It’s not a place to be saying, “Welcome to our site.” Because that’s sort of a waste of that real estate.
It’s more of a place to say, “This is X product for Y type of person who wants to solve Z problem.” You can be very specific and speak to what problem your product or service is gonna solve for that reader. They know immediately why they’re reading it.
Mike: When you’re crafting that unique value proposition, it sounds to me like – is there a formula that you can follow for, it’s not even a call to action, but the headline there like, “It’s X for so and so.” “Airbnb for this people,” or, “Stripe for this other group of people.” Obviously, you don’t wanna use exactly that and you probably don’t wanna put either competitors or other companies in there but is there a formula or something along those lines that you can use to illustrate it to people?
Lianne: That’s a really good one and a straightforward one. The insert what you do for insert who you serve and then you have sort of an optional place in the formula at the end for insert problem solved or pain alleviated. A payment solution for solo freelancers who wanna spend fewer hours doing accounting. You’re doing some of this work with Bluetick honing on how to message that differentiation because there’s some people who do some of what you do and you do some of what they don’t do. Sometimes, when you’re working on this research you can get those insights from your customers or from your prospects as they describe to you what they’re looking for. You can just swipe that language right from them if you do that research.
Mike: What are some of the other ways that you can gather research? If somebody’s early on in a product and they don’t necessarily have a lot of data from those people, are there other sources that they can go to like other websites that they can try and either buy information outright? I’ve heard people saying if you’re doing sales on Amazon, for example, obviously going through and reading what the reviews are, on Amazon is a great way to do it because you can look at competitor’s products. You’d see the exact language that people are using. But, if you’re very early on, you don’t necessarily have that. Are there other ways to gather that information?
Lianne: Great! Yeah, there are. Like you said, Amazon review mining is great even if you don’t have a product with reviews. If there are products who you know you’d be competing with, you can go through those reviews and see what people are saying and sort of start noticing if there are any patterns in the types of problems that people are having or what they’re looking for. Same thing goes for G2, for software products, G2 crowd is a good place to go through competitor reviews and also your own reviews.
If you don’t have an audience at all, you wanna interview people who you think would be your audience. Good way to do that is, there’s no way around it, just getting them on the phone if you can for 10 minutes, or better yet a video call, asking them some questions about their pain around whatever problem you’re trying to solve because they may not know that they have pain or they may not know that it is a pain that might just seem like an annoyance to them. You have to get them to talk about this problem in multiple different ways until you find a way where you could hear the emotion in their voice and you know you’ve hit on a problem and then you listen to the words they’re using.
Talking to who you think your prospects are is a great way to both a, validate your business idea if you’re just starting up, and b, understanding how to message that so they understand what you do.
Mike: After you’ve gotten the, I’ll say just the headline in place, is there a structure that you should follow for the rest of your homepage or should you focus more on the broad strokes view of what the website is? Because I think, there’s a couple of different directions you can go there. You can have a single page for your homepage that kind of does everything or you can split your website up into a bunch of different pages and then link back and forth between some of them.
One of the classic example is just having a call to action right in that hero area or the headline where they click a button and it’s ‘Take A Tour’, then there’s also things like testimonials. You explain a little bit more about what the product does or maybe you take them over to a survey or trying to get them on a mailing list. Is there a general structure that people should follow or is it really just much more dependent on how much content you have to put in and how much time and effort you have?
Lianna: I think the thing that it depends on most is how many different user types you’re gonna have visiting. If you have a single type of user, your homepage is basically a landing page. It can have one focus which every landing page should, just one single call to action. But if you have multiple types of users, and you’re gonna have dedicated landing pages for each of those users, then you need to help people find where they’re going as quickly as possible.
If I have three types of visitors and I know from doing research that 60% of my visitors are looking for apples, and 30% are looking for strawberries, and only 10% are looking for grapes, I might focus 60% of my page on apples, and make sure that the messaging, especially close to the top where most people will be scrolling, is apples, and then supplement that a little bit down the page with strawberries, and then, wherever the grape people end up, there’s a little bit of messaging for them. But we’re appealing to either the largest group of customers or the highest value. Maybe people spend more on apples than they spend on strawberries or grapes.
I don’t know why I went with fruits for this analogy but no one’s buying fruit on the internet. But that’s one way to do it. Splitting it up by the number of customers in each group. You can also segment or structure your page depending on the different products that you have and their popularity or what you wanna sell. If you want Product B to be more popular than Product A, you might position it higher up the page or spend more time explaining Product B to give it a little more chance to shine. But basically, if you have more than one focus on the homepage, it’ll behoove you to get people where they’re going, where you can give them more information about that specific thing that you offer versus giving them all the info on the homepage.
That’s one thing that I see people do a lot. They say, “Okay, we have this whole website. We have five pages and we need a link to every single page in some section on the home page.” You scroll down and you can get to the about page from the homepage. You can get to case studies. You can get to contact. You might not need all of those things on there especially if you have a top nav which you probably do.
If you’re not sure how to structure the page, this is something I often recommend, just put a little pop-up poll on the page and I always recommend Hotjar. It’s called a website poll. If it seems like someone is staying on the page or they’re scrolling up and down, and they’re looking for something, you can time this to appear after 30 seconds or so and just ask what brought you here today or what are you looking for on this page or is there something missing. Then, especially if you have lots of traffic, you’ll start to get a sense of what people are looking for and they’ll tell you how to structure that page.
Mike: One of the things that you mentioned there is the idea of focusing the content, the messaging there on what the majority of the traffic that comes to your site is. If it’s for apples as you pointed out, that’s 60% for apples, then put 60% of the content aimed at people who are there for apples. Is there a danger associated with that where the reason that you end up with that traffic is because you’ve got so much content there versus if you were to switch it, let’s say, gear it for oranges, for example, isn’t it possible – how would you find out that isn’t the reason that people are coming?
Lianna: Yeah, I think it can be sort of a self-fulfilling prophecy. If we position ourselves as being the place to go for apples (also, maybe oranges, strawberries, and grapes) then you can start to think that your whole customer base is apples. There are ways to, throughout the page, indicate that, “Hey, if you’re here for strawberries or grapes or whatever, we have stuff for you too.” You just sort of subjugate that messaging throughout. You don’t have to ignore those people but people do read so if you make sure to appeal to them maybe in a less visual or less obvious way, they’ll find those pieces and they’ll go where they need to go.
Mike: We talked a little bit about the basic structure of the site itself and a little bit about the page. When you’re focusing on the messaging specifically for the homepage, is there a guideline for how much time you’re spending creating the initial copy for it? Obviously, there’s a difference between when you’re redesigning the page or you’re just changing small sections of it but if you’re building something let’s say from scratch, how much time should you be spending on that? Could you measure it in hours? Could you you measure it in days? What sorts of rules of thumb could people use as developers? Because obviously, most of our audience is developers, it is not something they’re gonna have a lot of experience with. What should they think of in terms of building that?
Lianna: I think if you’re thinking about how much time to spend, spend the bulk of your time on the research, making sure that you have the right messages down. When you actually go to craft the copy, you should be able to pull from the research, and use the same phrases that you’ve heard from your customers or your prospects. Some parts of the copy will write themselves. When you’re reading through the page, you already have the structure, and you have a few spots filled in with the messages from your research.
You’re looking to write a copy that creates a flow down the page. You don’t have to psych yourself out about it. It doesn’t matter if you’re not a copywriter. As long as you are writing for your audience, and for your reader, and you’re writing in language that is centered around them, second person voice, ‘you are here because this is what we can do for you’, that kind of thing, you don’t have to spend weeks on it.
I think there’s no hard and fast rule about how much time “should take” but when it feels done, it’s probably done. What I like to do is when I get to a place where a draft feels done, I put it aside for a day or two, and I come back to it and read it again. Because if you stare at something, especially if you try to just bang it all out in one day, you can’t see either mistakes or areas for improvement that you’d be able to see with a quick look a day or two later. However much time you spend on the homepage copy, just give yourself a day or two, and then look at it again later, and you’ll fix a few last things.
Mike: Part of it is about inserting these artificial delays in between. It’s not about spend X number of hours on it. It’s spend some time on it and then make sure that you insert some artificial delay and then come back to it so that you get the fresh point of view after having some time off.
Lianna: Yeah. Because your brain is gonna be chewing on those things especially if you’ve gone through the research and you’re thinking about how your readers are gonna be interpreting this page. You might have a brain wave like, “Oh, actually, this headline isn’t the best way to explain this part of the product. Instead, we should say it like this.” Sometimes, you just need a little bit of cognitive processing time.
Mike: When you’re looking through these, whether it’s the initial walkthrough or you go through the process of revisiting them, what are some of the most common mistakes that you see people making on either the copy itself for the homepage or the design itself?
Lianna: Yeah. We’ve actually touched on a couple of these. The first, I would say, and I can’t believe this is still a thing, where you get to the site and the homepage says, “Welcome to blank.” You’re just like, “What? I know that I’m here. I clicked on a link or I typed in the URL to get here. I did this on purpose.” That’s a waste of space. That’s the opportunity where you have to grab your reader and say,”Here’s exactly what you’re here for.” That’s a huge missed opportunity.
The other mistake we touched on was trying to cram everything in the kitchen sink onto the page thinking that you have to have a link to every other page on your site on the homepage just in case. Instead, you should focus on probably the top three or top four most popular areas of your site, and let people who are more determined to dig do that digging in the top nav with some smaller subjugated messaging.
In terms of design mistakes from a conversion perspective, stock photos are the thing that I see just killing trust all over the place. I know it’s not easy to get real photos especially if you’re a startup and you have a small marketing budget but if you can, invest in less obvious stock photos or even avoid them altogether and take your own photos with an iPhone. That’ll go such a long way toward building trust.
Mike: I like the idea of using “less obvious stock photos”.
Lianna: Yeah. There are lots of sites out there that are geared toward that. Death to the Stock Photo’s one of them. Unsplash is around. They’re all free but if you’re going to Getty images and picking that photo of people in business suits standing around a conference table staring at an empty legal pad, then that’s just immediately gonna tell your reader that you’re not a real company, you can’t be trusted.
Mike: You did mention the idea of having three or four different main links that you focus on to take people to other pages, should those be things that you focus on in terms of trying to allow the people to self-select or are you trying to give them a story and lead them through? Because there’s a difference between trying to lead them through your website versus allowing them to self-select what things they’re the most interested in.
Lianna: Yeah, I tend to not wanna lead anybody on a journey. I want them to get where they’re going as fast as possible. The idea of self-selecting is a really good one for the homepage. We haven’t specifically talked about that, but you could say,”If you know that you have these three customer types, X, Y and Z or apples, strawberries, and oranges or grapes.” Whatever we said, you could even make it very explicit and say, “I’m a person who’s looking for oranges or I am person X or I am person Z.” Allow them to click a button that says, “Yes, this is me.” Then you take them straight to that landing page.
The copy around that section can give a little bit more information about what they’ll find when they go that landing page. But having that phrasing especially in the first person voice, the, “This is me. Yes, this is it.” Allows them to mentally confirm, “Okay, yes. I’m identifying with this and this is where I need to go.”
Mike: That’s kind of what we did with the MicroConf website where you browse the microconf.com and right there, right at the top it says, “World’s biggest conference for the world’s smallest self-funded software companies.” Then you’ve got an option. There’s two buttons there. One says, “click here for growth edition” and the other one says, “click here for starter edition.” That’s kind of the tactic we took with that because we really want people to kind of self-select in between those two groups. It’s a very definitive line between them. It’s not as if there’s a lot of overlap between them, I’d say.
Lianna: Yeah and I like this because obviously, your UVP is very clear. It’s a conference for the world’s smallest self-funded software companies. Then right away, you give people who know what they need the choice to learn more. If they don’t know, they can just keep scrolling and immediately they have ‘which MicroConf should I attend’ answered for them.
Mike: Are there other ways that you can think of to provide some sort of a self-selection option for people? Because I think you do wanna at least provide some ability for them to say, “Hey, I’m in this particular group.” I think most products have more than one group of people who would use them. Whether it’s sales executives and developers, for example, or I guess, there’s probably a very little overlap there. If it’s a project management software or time tracking or there’s lots of different pieces of software where related groups use them. Whether it’s founders or small agencies. How do you go about figuring out how to present that?
Lianna: You can describe, like you were just saying, by job role. If you know some of the major types of job roles that your users are, like software developers, sales executives. You can also allow them to self-select by pain, “My biggest challenge is publishing something every week,” “My biggest challenge is following up with my leads,” or “My biggest challenge is eating a popsicle.”
I’m not coming up with good comparisons right now but those are the two flip sides of the same coin. They’re saying either I am this type of person or I have this type of problem. You either segment them by role or by problem that they’re having which will obviously connect to a page that tells them more about how you’re gonna solve that specific problem for them, no matter what role they’re in. Does that make sense?
Mike: Yeah, it totally does. I think that’s a good example of one type of call to action. What you can focus on is allowing people to self-select but I think there’s a lot of other ones that come to mind that people will, I’ll say, try to slam all into the same page. For example, there’s things like putting people on email lists or getting people to take a tour or click here to sign-up or to start a free trial. How do you decide which ones you should focus on, specifically for the home page?
Lianna: If you have, for instance, a content offer that you geared to be applicable to multiple different types of visitors or users like an email series, then you can offer that to everybody. It depends on where in their stages of awareness most of your visitors are. Whether you’re gonna get them to sign up or take a tour.
If the visitors that are coming to your homepage don’t really know that they’re having an issue, they’re not really sure what you do yet or that you have competitors or why they should pick you, getting them to sign up for a live one-on-one demo is gonna be a really tough sell because there’s so much education that you have to do there. You can’t really do that on the homepage. Versus asking them to get on your email list or offering them something quick and free like a one page PDF is a much lower risk CTA.
You might say, “Get on my list and I’ll send you five emails to improve your sales process,” which might sound familiar to you, Mike. It just depends on where the bulk of those visitors are in their “customer journey” which is a phrase that I hate to use but is applicable here.
Mike: For the homepage, should you be focusing much more on things that are, I’ll say, less of a commitment for the person, especially if you have a very small website. You only have maybe two or three pages tops. Shouldn’t you be focusing more on the things that move people as far along as possible, as quickly as possible, or do you really need to have those extra pages that explain a lot more about what the product does?
Lianna: It just depends on whether that visitor’s gonna be ready to sign up to hear from you or to schedule something with you or whether they need more information first. That’s something that you can only know by watching your quantitative metric, so your Google Analytics to see where people are falling off the page or when your pop-up comes up, everyone leaves. But, in general, if you have more information to give, even if it’s just a two-page site, you’re better off asking them to visit that next page that more specifically meets their needs, and then asking them to take that next step. Whether it’s joining your list or scheduling a demo or whatever it is than doing it right from the homepage.
Mike: Got it. Because I’ve seen people that have a button right on the page that says, “Click here to sign-up.” I’ve seen that as a recommendation throughout the years. It almost seems like that’s too much too quickly even if you only have a two-page website. It’s really hard to get somebody to visit your webpage and then immediately say, “Oh, yes. This is for me,” and they click, and they go to sign-up. Because they wanna see more about it. They wanna get that level of trust and I don’t feel like it’s there yet with the homepage.
Lianna: It really depends. If you have your users super segmented or you’ve honed in on your targeting and you know exactly who’s coming to your site and you’ve built this, whatever it is, this piece of content or this email series, just for them, they might be ready to sign-up. But if you have a ton of different types of traffic coming and they’re “colder”, they need more education, explanation, you might wanna wait a little bit longer before you ask them for something.
Mike: If somebody’s on your mailing list, you send them a link that says, “Hey, click here to buy such and such.” They’re clicking on that link, they go over to that web page, and it’s not even your homepage at that point. It’s a landing page that is kind of designed with that particular person in mind, in that stage of the buying process versus with a homepage anybody could be visiting and you don’t have as much information about them even if you have done all the measurement and stuff. There’s still a lot of other people who could come there. If it’s the first time that they’re seeing it, they just don’t have that level of trust. It’s kind of what I was saying about you can’t jump that far that quickly I think on the homepage.
Lianne: Yeah, the other thing that we haven’t touched on yet but which I hope has sort of become clear is that you don’t wanna write your homepage for everybody in the world. Ideally, you should know pretty much who your visitors will be or who you want them to be, and then write for those people. You’re not trying to get every single person on your email list. You’re trying to get Mike and Rob and Lianna. Because we’re all interested in software development and that’s kind of your niche.
It’s okay to be more specific and that’s where clearly stating your value proposition right at the top of the page. As soon as people arrive, this is what we are, this is who we serve, and this will benefit you if you are this. That becomes so important. Because that tells people right away when they land a page, “Oh okay. This is for me or this isn’t for me.” You only want the people who say, “Okay, this is for me.”
Mike: What are your thoughts on using video on the homepage? Where there’s a short demo of a walkthrough, or just the founder of the company standing there and talking about of what the product is or video of the founder themselves talking to the person about the problems they’re trying to solve?
Lianna: I love video pretty much anywhere because there are just some people who don’t like to read, that doesn’t mean they’re gonna be bad customers or bad visitors, they just don’t wanna read. If you have content on the page that you wanna get across but you know some people would rather watch a video, put that in the video.
If you are a single founder or a smaller company, that’s a great way to humanize yourself. Just say, “There’s a real person behind this site. We’re not using stock photos and more than that, we are here talking directly to you explaining exactly what we do and how we can help you.” Video’s always a plus. I’m trying to think of a situation of which it wouldn’t be, maybe if you’re crematorially, don’t make a video. That would be terrible, sick burn.
In terms of where in the page it should be, we often see them in the hero section of the top, again because it’s a chance to say, “Real quick, here’s what we do. Click to find out.” Sometimes, see them toward the bottom too because if someone had scrolled that far, they might be looking for more information. A video might just be the thing to tip them into taking action, whether that action is signing up for the list or scheduling a demo or clicking through to the next page they need to see, that can be the last little nudge they need.
Mike: One question that comes to mind for me is how do you know when something is good enough? When you’ve got, I guess, the basic structure in place or some basic headlines or outlines of what the subtitles and stuff would be. How do you know that which you have is going to be good enough to be put out there or should you just kind of throw it out there and see what sticks and start taking measurements and stuff?
Because the trouble I think that a lot of people find themselves in is especially when they’re launching a product, they don’t enough traffic to really do any sort of really analysis like AB testing, “Oh, we had this before and now we’ve got this.” If you go from 500 visitors to 600 in a month, it’s almost meaningless. What do you there? How do you know that it’s good enough to put out there and that you shouldn’t keep iterating on it?
Lianne: Before you publish anything, you should be going through it from a structure perspective, that’s the first editing level, and this is actually the start. This is the substance of my talk at CTA Conf this year. Go through it on the structure level to make sure it’s hitting all the points your readers need to hear. Go through it on a paragraph level to make sure that the copy itself is easy to read and parse, you want it skimmable, you don’t want giant chunks of copy.
There’s a lot of formatting you can do to make things more easy to read which cuts down obviously on cognitive load for your readers. Then when you get to the line level, you’re looking to cut out anything that isn’t doing a job. Every sentence’s job is to lead to the next job. You wanna cut out anything that seems fluffy, anything that you know is just kind of in there for you because you wanted it or it’s a darling. You have to clear your darlings, as we always say.
Then you’re looking for what my good friend, Amy Harrison, calls umbrella terms. That’s where you had a bunch of super specific descriptors and you squeeze them into one. You end up with some adjectives like cutting-edge or first class or world’s best and when you think about it, they don’t actually mean anything. If you notice any of those cliché phrases sneaking into your copy, you wanna replace those with more specific, more accurate, and descriptive adjectives that give people a sense of what you do or who you are.
That’s the kind of last defense on a line level and that’s kind of what I do when it comes to punching up copy with humor. If you want, we can talk a little bit about why humor works in copy and where it should be used and that kind of thing.
Mike: Yeah, I’d love to. It’s definitely an area that I think allows people to be a little bit more expressive on their websites just because you get to inject your own personality without making the person who’s reading the copy feel like it’s a corporation. Because most people listening to this are probably running small businesses. You want at least some level of personality to come through, but at the same time you don’t wanna overdo it in such a way that it seems like such a small company that how could they possibly trust you.
Lianna: Right, yeah. There’s definitely a balance to strike. But I think, erring on side of being human, and having a personality, and being warmer does build that trust much more than trying to come off as a bigger company, and then people see through you which makes it seem like you’re posturing, and you’re kind of fake.
When it comes to deciding where to strike that balance, you want to ask yourself again how you want your reader to feel because it’s always about them. You wanna ask what’s the sense of humor of my business or my brand? Are we witty? Are we highbrow witty or are we sort of goofy and silly? Are we borderline absurd or offensive or crass? Probably, it’s none of those, because you don’t wanna offend people but different companies have different personalities. You have to figure out what feels right and natural to you. That would be your jumping off point for working in humor to your copy.
When it comes to actually doing that on a sentence level, one of my favorite things to do is use humor for comparisons. A lot of times, we lose specificity on the line level, so we’ll see a piece of copy that says, “This is the worst feeling in the world.” That’s kind of specific. People can sort of mentally apply that to themselves and know what that feels like, but that’s a chance to insert humor and specificity which is a key tenet of high converting copy, being specific. Instead of the worst feeling in the world, you might say, “It feels like showing up to school on picture day with no pants and spaghetti sauce all over your face.” Or something much more specific, and weird, and out there, and absurd.
You get that little jolt of surprise when someone gets to the end of the sentence and sees that descriptor. It keeps them interested. Hopefully, it makes them laugh a little bit and it gives them a much more concrete image to grab onto than just saying, “It’s the worst feeling in the world.”
Mike: Yeah. Giving them a concrete image is kind of what I was thinking. I was thinking giving them a visual thing to kind of key-off as opposed to like, “the worst feeling in the world” that’s going to be different for each person. But everybody can kind of visualize what showing up to picture day with no pants and spaghetti on your face is gonna be like.
Lianna: I don’t know why I grabbed those two. I think just because my niece was eating spaghetti earlier today and I was like, “Wow, you are a mess.” Obviously that’s the place to dig into your research again. Because if you know what the worst feeling in the world feels like to your specific customer base, then use that as an image. Play on that.
Mike: I think that kind of goes back to your previous guidance about figuring out how to evaluate the copy at a line level and get rid of some of those filler words like saying actually or really bad or takes a long time and things like that. You can get rid of those and use that specific example.
Lianna: Be a little bit hyperbolic, like you said, takes a long time. How about something like ‘takes a million years’. Obviously, it doesn’t take a million years, but it’s the casual cadence that we tend to use in our conversations. People tend to exaggerate. When website copy does that too, it flips that switch of, “Oh, a real person wrote this who understands my problems.”
Mike: Awesome. We’re kind of running a little bit short on time here but is there anything that you wanted to add or leave the listeners with?
Lianna: The only thing I would say is that if you are now taking a critical look at your homepage copy, and you’re thinking, “I could be more specific with my value proposition where we explain who we are or I could be more specific in getting people to self-select in each call to action,” then you’re probably right. Take a look and see if there’s anything you can change and give it a try because you might be pleasantly surprised by the results.
Mike: Awesome. Well, if people have questions for you, what’s the best way for them to follow up with you?
Lianna: They can find me on Twitter, @punchlinecopy. I am relentlessly on Twitter. It’s kind of bad.
Mike: I assume that’s probably the one and only best place to find you.
Lianna: It’s a pretty good place to find me. I’m at my website. I’m on Facebook, sort of, but Twitter is the best place for sure.
Mike: Got it. Okay, great. Thanks for coming on the show, Lianna. I really appreciate it.
Lianna: Thanks for having me, Mike. This is super fun.
Mike: If you have a question for us, you can call 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 372 | Our Goals for 2018
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike do their annual goals episode. They revisit goals from 2017 and rate how they did as well as look ahead at goals for 2018.
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 our goals for 2018. This is Startups For The Rest Of Us Episode 372. 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: 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: Well, when this episode airs, I will be with my family in sunny Florida. We’re planning to hit Legoland and spend a few days at the beach. It’s gonna be a nice time to kind of warm up a bit. It’s supposed to be highs in the single digits here in Minneapolis during that week, so it’s nice to get out away from it, get warm. We actually enjoy Legoland a lot, not just our kids, but I don’t know if you’ve been there, but I enjoy it even as an adult.
Mike: Yeah, I haven’t been to Legoland. We’ve gone to Florida a couple of times for Disney World but I haven’t gone to Legoland yet.
Rob: Yeah, I like it more than the Disney stuff. Less hectic, it’s a little bit less expensive and it’s more building things rather than kind of idolizing characters. I mean there are characters in it but they’re so much about creating things and being constructive. I think that resonates with me as a maker and with our kids as well. Like I said, it’s lower key, there are some rides in there and there’s stuff to do but it’s not like volumed turned up to 11 like I feel – a lot less crowded – I feel Disney is.
Mike: Yeah. The other thing I found with Disney is, like you said, it’s very crowded but also getting to everything is just rather difficult. You kind of have to hone in on the things that you want to do and you’re gonna end up waiting for pretty much anything anyways.
Rob: Right. The park’s so big. The parks are separated. On and on, we had never been to Disney World. We went last year, and I was kinda like, “Yeah, I don’t know if we’re gonna come back. That may be the last time.” Disneyland is fine, it’s a lot smaller but it’s still crowded, and you have the long lines. Legoland, to me, is much more calming and relaxing experience. How about you? What’s going on?
Mike: Well, over the last 20 days, because we’re recording it’s the 21st of December right now, but I’ve had 20 Scotch Whiskeys for my advent calendar. So far, the Glenfarclas and the Peat’s Beast have been the best ones so far, but there’s several other runner ups that are pretty good, been a lot of fun. Interesting so far. There’s some of them that I actually really did not like but most of them I would say, are middle of the road and then there’s a couple that I really liked, and then there’s a couple that I really just did not like.
Rob: That’s super cool. You wake up every morning and have that with your cereal?
Mike: I put it in my cereal.
Rob: That’s awesome, yeah.
Mike: No, I usually have it at the end of the day.
Rob: Yeah, that makes sense. Other update for me, I’m listening to the book by Tim O’Reilly. It’s called WTF?: What’s the Future and Why It’s Up to Us. I’m kinda struggling with it. I thought it would blow my mind and so far, I feel mired in kind of theory or just academic thought and I’m hoping that it picks up because I like Tim O’Reilly. I like his writing, he’s a futurist, he sees things before they happen. He’s the guy that named Web 2.0 because he saw what the movement that was happening. I know there’s good stuff in here but I’m about maybe a fifth of the way, maybe 15%, 20% of the way through the book. I’m kinda struggling with it so I’m hoping it gets better because I really wanna make it through. I don’t wanna quit the book.
Mike: Are you listening to the audio book?
Rob: I am, yep.
Mike: I’m surprised that the audiobook is not as, I’ll say, riveting. I mean, business books are not riveting to begin with. But it’s interesting that even the audio book, you think that the pace will be pretty good and it’s not, it sounds like.
Rob: I’m 1.5, no, I think, I’m actually 2X it too. I think a small part of it could be that I was listening to it while I was shoveling, moving some snow out of the driveway. I don’t know. I was paying attention to it but maybe not enough. It’s one of those things where I’m questioning just cause I know how sharp Tim O’Reilly is and how much of his writings have…. Kinda like is it me or is it this book, is the question I’ve been asking. I’ll try to remember to update folks once I’m all done with kind of a final verdict.
Mike: Got it. The only other thing that’s going on for me at the moment is I’m working on a scholarship program for MicroConf Starter Edition. If you’re listening to this and you’re interested in becoming a sponsor for a scholarship ticket or if your company’s interested in just sponsoring MicroConf, drop me an email sponsors@microconf.com and we’ll talk about it. I’m just kinda hacking things together this year. But trying to put something together in place that we’ll be able to kind of reuse moving forward and make things better year over year.
Rob: Yeah, because sponsoring a scholarship is a big deal. It makes an impact on someone who typically can’t otherwise afford to go. We’ve had several people do this now to great success. We can get some people coming to MicroConf who, I think, really get a lot of value out of it but are just early enough in their entrepreneurial journey that they otherwise wouldn’t be able to make it.
Mike: Yeah. We’ve been doing scholarships for probably the past four, five years, I think, at this point. But it’s always been on a very small scale. This is kind of a concerted effort to take things to the next level and not just involve the people who approach us or just hand out scholarships on their own but to involve corporate sponsors and kind of expand the reach of the program a little bit more formalized, I don’t know. I think it’ll turn out to be really interesting. It’s just a matter of how is this actually going to work. There’s a lot of logistics to kind of straighten out. I had a lot of good conversations with people and answer some, I’d say, some difficult questions so far. It’s looking good so far.
Rob: Awesome. What are we talking about today?
Mike: Well, today, we’re gonna be going through our goals for 2018 and to kick us off, we should probably talk about our goals that we set back in episode 318 for our 2017, and see how we did on those.
Rob: Right. Every year we like to do our goals episode where we visit the old ones, look ahead at the next year, and then we also do our predictions episode which we did a couple of weeks ago. How about you? What is your first goal for 2017?
Mike: Well, my first one was to log at least 100 days of exercise this year. I would say that – are we giving ourselves points like one out of five or one of out four on these?
Rob: Seems like one to five scale.
Mike: I would say on this one, I’d probably have to give myself about, I’d say I’d go with a three. I logged about 50 days worth of exercise, and if you remember, I had a partial tear on my rotator cuff, basically four months of that, I just really couldn’t go to the gym. Between my back and my shoulder, there was just no way I was gonna be doing anything. Even with that I still got to 50.
Rob: Good for you.
Mike: How about you? What’s your first one?
Rob: My first one was to not start any new projects in 2017. It was to run the three MicroConfs with you, to continue shipping the two podcasts that I do, to continue working on Drip and to just take a break from the chaos that have been my life when I set this goal, the acquisition had only closed five months or later. I was still reeling from that, looking ahead at 2017 as basically like a rest year or recovery year from just the hard work and the stress and the chaos of growing Drip and then through the acquisition.
I had one exception that I indicated was that I would consider being second author on the Zen Founder book which is now launching very soon. If you go to zenfounder.com/book, you’ll see a landing page there, and you can get on the launch list. It’s turned up really well. It’s called The Entrepreneur’s Guide to Keeping Your Shit Together, How To Run Your Business Without Letting It Run You. Sherry did the vast majority of the work but I was involved with writing some copy in it and then contributing a few stories to the book.
I, on this one, give myself a five out of five. That’s not too hard given that part of this was a non-goal that I didn’t want my perpetual restlessness push me into starting something new. But I feel like I did accomplish this just like I set out to do.
Mike: Awesome. My second goal was to make Bluetick profitable including my time. Let’s see here, if I had to give myself a grade on this one, I’d probably give it a two out of five. I definitely did not make it profitable including my time but it is profitable. I feel like there’s at least some level of credit there especially given that it started at basically zero for MRR at the beginning of the year.
Did that public launch back in August to September timeframe, spent the last couple of months working out issue with getting people onboarded and working out various, I’ll say, problems associated with the onboarding process and getting people connected and making it so that they get that value upfront as opposed to much further down the road. I still don’t feel like it’s at a level of like three or four because I just don’t think that I got far enough.
Rob: My second goal was to do one to three angel investments and I give myself a five on this. I was trying to remember exactly how many, but I think, I did three. Yeah, I did three. A couple of them were subsequent, follow-up rounds in existing startups that I’m invested in. Then, there’s at least one new one. I think I kind of accomplished this and it was fun.
I think I don’t have this as a goal for 2018 not because I don’t wanna continue doing investments but I kinda wanna be pretty choosy. I always have been pretty choosy about the businesses that I invest in. I’m kind of just taking them as they show up on the radar. If I hear about them at MicroConf or hear about them on a podcast or someone approaches me. I think it makes a lot of sense for me to do it but I’m not going out seeking. It’s not like some active goal anymore I have.
I think it’s 11 angel investments that I’ve done so it’s not an inconsequential number. I think two or three of those are already out of business which is how it should be. But yeah, I’ve really enjoyed the angel investment and to be honest the best part is that I’m able to live vicariously. I’m still involved in a startup and I can still talk to the founder and I can offer advice. I can be involved in this business but I don’t have to run it day-to-day. That’s been the fun part of it.
Mike: My third goal was to blog publicly at least every two weeks so it’s a total of 26 blog posts. If you recall, I think about three or four months into the year, we’ve gotten together and we kind of pointed out like, “Hey, this is probably not realistic.” Because I haven’t done it so far and it wasn’t something that was really going to make me towards my main goal which was really making Bluetick profitable. We essentially canned that but then in August or September when I did that launch, I did a 21-day video series. That right there is pretty close to having that completed even though I basically canned it several months before. Should I give myself a five on this or are we not just not gonna count it?
Rob: I don’t know. It’s kinda like a ‘not applicable’. Goals changed a few months in. I remember when you first mentioned this I was like, “Really? Are you sure you wanna commit to this?” Then a few months in it was like, “You need to focus on Bluetick. The revenue source.”
My next goal was two days of exercise per week. I definitely accomplished this especially once I learned, through Sherry actually, I learned about the High Intense – Is it High Intensity Interval Training, HIIT? It’s just what I always struggle with is I don’t have a lot of time and I often don’t have the extra time to gear up and run out to the lake and run back because kids are here in the house and I’m watching them. There’s just complexity with me being able to work out. The fact that I can throw on a YouTube video and just get my heart rate way up and be exhausted in 10 or 15 minutes in my own house while my kids are playing legos upstairs, it really changed the game for me.
In addition, I was also riding my bike to and from work three days a week which is five, six miles each way, it’s was a great 22-minute workout each way. Pretty much hit this with flying colors, exceeded it actually, so I give myself a five here. I had many weeks where it was three and four days of exercise per week. I competed for nine years in track, I ran the hurdles, and I competed against people who went to the Olympic trials. We were legit. I trained 30+ hours a week almost year round. Once track ended, I realized that I actually don’t like running.
It was always about the competition. It was the competition and the team that I liked. But I didn’t liked running itself so I struggled to get out there and run even though I used to run a mile warm-up, mile cool down. Then do two miles of intense 400-interval training, just stuff that you would throw up after practice, it was super intense. But exercise is not something that I have ever enjoyed doing in a non-competitive basis. This is probably the first time in a decade or more that I’m actually kinda keeping up with some type of a regimen.
Mike: I guess with that stuff in mind, why don’t we dive in to our 2018 goals? Do you wanna go first?
Rob: For sure. First goal for 2018 is to write a VR program that allows you to roll around on a mattress of Bitcoins. How did this get in here? Are you messing with my list again?
Mike: Maybe a little bit.
Rob: That’s a good one, Mike. I like this.
Mike: I had that idea when I was writing down my goals on our outline. I happened to see some advertisement for some sort of a VR Helmet or VR Goggles or something like that. I was like, “Oh, Bitcoins’ a rage right now. VR is the rage. Why not throw them together?” The part of the advertisement was also the dual-end lightsabers with the VR Helmets.
Rob: I’ll tell you what. This Bitcoin mattress thing, that could make you a thousand-aire overnight.
Mike: Yup. Definitely.
Rob: A thousand-aire idea. My first goal for 2018 may sound odd when I first say it but bear with me on this one. My goal is to be in fewer meetings each week, to get my meeting count to basically under ten hours a week. This is not a symptom of being acquired. It’s a symptom of growing the team, whether I was independent or not, I would be in a lot of conversations. I’m pivotal to a lot of decisions that happen and as the team has grown, I’m called into more and more things to lend my insights, my opinions.
I’m often brought in and I almost feel like a consultant who has knowledge of the space and knowledge of the history of Drip and ‘we wanna run this by you’ and I have another unique insight. Right now I’m in a lot of meetings, don’t enjoy them. I really think back to when we were 5, 8, 10 people, hover at any of those points and we just had so few meetings and I really enjoyed it. Parts of that was to my detriment, to be honest. I think that some of the folks who worked remote, they would’ve preferred to have more kind of Facetime but just the way that we’re running Drip was be heads down and create the product.
I’m working to get some things in place to decrease the number of meetings I’m in right now. I don’t think they’re gonna take hold for a couple of months, part of it is hiring someone. I’ve already hired a senior director of product who started maybe three months ago who’s taken a bunch of responsibilities off my plate. I’m looking to just kind of fire myself from other positions that require me to spend a lot of time in conference rooms.
Mike: On my side, I actually have two carry over for goals that I wanna put on there. First is log in 100 days of exercise this coming year and then, the second one is making Bluetick profitable including my time. Those I definitely wanna carry over. In addition to that, my first goal is to read at least one business book every two weeks. I think this is more of to kind of get back involved in learning things because, I feel like I’ve stagnated to some extent.
I’ve had my head down for so long on various things that I’ve probably kinda lost touch a little bit with a lot of either things other people are exploring and obviously I don’t have the time to do everything myself so I think that just finding time to carve out, to explore ideas from other people would be helpful to me, not just from a personal growth standpoint but also in helping to grow Bluetick.
Rob: That’s interesting if you have some particular topics or a particular topic that you kinda wanna start with, let me know because I have literally this list I went to where I read hundreds of business books in the past 20 years and especially recently I just do a lot of Audible. If you have specific things you’re looking for, I can certainly make recommendations. I suppose you could also ask our listeners here if you have a suggestion of a good business book that you’ve read in the past 12-24 months, maybe send it to us at questions@startupsfortherestofus.com and we may even mention it on the show.
My second goal is three days of exercise per week. It’s just upping the game from last year to the level that I’m at now. Like I said, I think with the fact that it’s pretty convenient for me to do right now, I’m hoping, kind of crossing my fingers, that I’m not cursing myself by upping the goal. I do have a tendency to achieve a goal, and then increase it the next time, and eventually make it too much, more than I wanna commit to or whatever, and then I just say, “Ahh, I’m gonna stop exercise altogether because I’m not achieving it.” My goal’s to not do that.
Mike: My second goal is to hire somebody to take over Bluetick development. The downside of this when I think is that it really is heavily contingent upon making Bluetick profitable including my time. Because, unless I get to that point, it’d be really hard to hire somebody. But I also recognize that doing the development for it is just so incredibly time-consuming, and it’s not just the time itself but it’s the mental energy associated with it because there’s all these little things that you kind of have to keep in your head. When I switch over to do other things, it’s really difficult to focus on them or concentrate on them. Even when I’m able to do that, if I have to go back to the development side of things, I’m really almost starting over again because of all the different things that I had in my head at that time.
I’ve noticed this with a couple of different major pieces that I’ve been working on where I had to go back and kind of relearn how certain things work. I struggle to do that just because sometimes so much has passed between when I stopped working on that piece and when I started working on it again. I think that just having somebody dedicated to working on the development side of things is really gonna help out.
Rob: Just as you make Bluetick profitable, you’re going to make it not profitable again by hiring someone?
Mike: Yeah. That’s kinda what I’m thinking.
Rob: Such is life as a founder. I think getting the development off your plate will be a huge win for you this year. It would allow you to focus on the things that frankly you should be focusing on more. It’s like development is, what’s funny is, we come up as developers, and we wanna build products, and then when you get to the point where you’re building it you’ll realize, “Ha, development is not, a, not the most important thing, and b, it’s not driving revenue the way that so many other things will.” That’s obviously where you find yourself.
Mike: Yeah. That’s really the problem is that there’s so much development work to get done but it doesn’t directly drive revenue. I can definitely see when, different periods of time, where I pull the focus off of marketing and go into development and I could see the revenue growth level off or decline. That’s just what’s going to happen because I can’t do both at the same time because it’s really hard.
Rob: My third and final goal for 2018 is to ship something. I’m not exactly sure what it’s gonna be yet but I’ve been laying low for 18 months like I said. 2017 was supposed to be a rest year to recover and 2017 was not a rest year on the personal side. Number of health issues, and extended family, the chaos with two new kids joining the family a few months ago. You can go listen to zenfounder.com if you want all the details of what went on there.
But it was a very hard year so I don’t actually feel rested yet. I don’t feel like shipping anything now. I plan for the first part of 2018 to hopefully continue to be a restful period because it has now for about four weeks. It’s been pretty calm and I’m starting to feel a little more relaxed and I know that once I do that kind of clear the mind, that I’ll start to think about something that I wanna ship about.
I don’t know if it’s gonna be consistent blog posts, if it’s gonna be a book, if it’s gonna be a new podcast, if it’s gonna be a course of some kind, or a software, or something. I really doubt it’s gonna be software just because I keep saying that Drip was my last one and I still think that’s true. I’m guessing it’s gonna be one of these other things or maybe it’ll take a form that’s completely different, but that’s my goal. Ship something in 2018 aside from the three conferences, the two podcasts, and a bunch of…
Mike: Partridge and a pear tree.
Rob: Exactly.
Mike: Well, you like to fiddle with stuff too. I can definitely see you just diving into stuff to kind of try and figure things out and then suddenly a product kinda springs out of it. I can see that happening too.
Rob: Yup. I can totally see that. I’ve been fiddling with stuff for months. No product ideas yet or no desire but I do feel like that could happen. I also, to be honest, as I’m doing more investments, and asset allocation, and even dealing with collectible stuff like comic books and such. I’m running across websites where I’m like, “Ahh, I should probably just own this website because I could do it so much better.” I would improve this, and this, and that. It’s profitable and there’s a revenue stream I want. It’s pretty old and they’re not maintaining it. That’s where my mind gets going.
It’s like boy, maybe shipping something actually means acquiring and rehabbing something that I’m kind of doing for a hobby/investing. But it’s in a space where I also have a personal interest and it wouldn’t be to acquire it and rehab it to turn it into some huge money-making thing although that would be an element of it, but it would be because I also actually enjoy, like you said, tinkering with things. I would definitely include something like that, buying a little tool on the side and improving it, shipping something because it would be quite a bit of focused effort to get that done.
Mike: Yeah, because it would be easier to acquire something and then either repurpose it or grow it as opposed to building something from scratch. I could definitely see you go down that road instead.
Rob: For sure.
Mike: My last goal for this coming year is to speak at six or more conferences or events this coming year. This is more of a personal growth side of things because I know I enjoy speaking but I also feel like it’s an area where I could do better at and I think that just practicing more is gonna help me do that. Then the other side of it is to help me to focus my communication a little bit better.
There are certain times where I could just be long-winded or over communicate. Some of that is just a matter of me wanting to make sure that somebody else has all the facts but over communication is something of a detriment sometimes just because then it leads into providing facts that are irrelevant or not important to the person that I’m speaking to. I think that doing the additional conference talks will help me to focus in just my ability to hone the message based on who I’m talking to and just writing talks in general helps you to do that.
Rob: Are you gonna cheat and speak at both Starter and Growth and Europe so that three of them are knocked out by your own conferences?
Mike: Well, that’s a good idea.
Rob: Because the hard part is, well, one of the hard parts is just getting noticed and getting on the docket of conferences. Writing the talks is also a lot of effort but you’ve done that enough. That’s cool.
Mike: I only have two scheduled so far at the moment. I hadn’t really thought about kinda cheating that part.
Rob: I know, I know. That’d be pushing it. If you’re out there and you’re interested in Mike speaking at your conference, drop us a line at questions@startupsfortherestofus.com.
I think that’s a pretty cool goal, man. I know that I’ve done this in the past where I’ve spoke a lot in one year and it really does condense your learning and it kinda gets you over the plateau of, I think if you speak once a year or twice a year, you just don’t get enough repetition in a short enough time frame to get better at it, I think this is a good goal if you can swing it.
I would also think about if you wanna become a become a better speaker, there’s a couple of really good books that I’ve read on how to craft talks. One is by Carmine Gallo, I think that’s how you pronounce it, it’s like The Presentation Secrets of Steve Jobs, I’m pretty sure. He kinda talks about how Steve Jobs would craft presentations. Carmine Gallo also wrote Talk Like TED: The 9 Public-Speaking Secrets of the World’s Top Minds, it’s kinda like how to do TED talks. I think I’ve listened to both of those. The other one I would recommend, and I am recommending these because they’re all in Audible and if you’re gonna read or obviously get physical copies of them, and if you’re gonna read 26 books, these may be some good ones that kinda kill two birds with one stone.
The other author I like is Nancy Duarte and the book that I read which may not be in Audible because it’s so visual is called Resonate: Present Visual Stories that Transform Audiences. She also wrote Slide:ology you may have heard of. But I really liked Resonate. It talks a lot about how to craft presentation by telling a story.
Mike: Yeah, those are great recommendations. That’s definitely an area that I’m gonna be doing research into and try to figure how to craft a better message and put together better presentations and things like that. I think you are absolutely dead on about the fact that like if you don’t do it often enough in a year, it’s very easy to kind of lose the experience and develop a little bit of rust, I’ll say.
Rob: Those are our goals for 2018. 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 by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Rob: And I’m Rob.
Mike: 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: Well, when this episode airs, I will be with my family in sunny Florida. We’re planning to hit Legoland and spend a few days at the beach. It’s gonna be a nice time to kind of warm up a bit. It’s supposed to be highs in the single digits here in Minneapolis during that week, so it’s nice to get out away from it, get warm. We actually enjoy Legoland a lot, not just our kids, but I don’t know if you’ve been there, but I enjoy it even as an adult.
Mike: Yeah, I haven’t been to Legoland. We’ve gone to Florida a couple of times for Disney World but I haven’t gone to Legoland yet.
Rob: Yeah, I like it more than the Disney stuff. Less hectic, it’s a little bit less expensive and it’s more building things rather than kind of idolizing characters. I mean there are characters in it but they’re so much about creating things and being constructive. I think that resonates with me as a maker and with our kids as well. Like I said, it’s lower key, there are some rides in there and there’s stuff to do but it’s not like volumed turned up to 11 like I feel – a lot less crowded – I feel Disney is.
Mike: Yeah. The other thing I found with Disney is, like you said, it’s very crowded but also getting to everything is just rather difficult. You kind of have to hone in on the things that you want to do and you’re gonna end up waiting for pretty much anything anyways.
Rob: Right. The park’s so big. The parks are separated. On and on, we had never been to Disney World. We went last year, and I was kinda like, “Yeah, I don’t know if we’re gonna come back. That may be the last time.” Disneyland is fine, it’s a lot smaller but it’s still crowded, and you have the long lines. Legoland, to me, is much more calming and relaxing experience. How about you? What’s going on?
Mike: Well, over the last 20 days, because we’re recording it’s the 21st of December right now, but I’ve had 20 Scotch Whiskeys for my advent calendar. So far, the Glenfarclas and the Peat’s Beast have been the best ones so far, but there’s several other runner ups that are pretty good, been a lot of fun. Interesting so far. There’s some of them that I actually really did not like but most of them I would say, are middle of the road and then there’s a couple that I really liked, and then there’s a couple that I really just did not like.
Rob: That’s super cool. You wake up every morning and have that with your cereal?
Mike: I put it in my cereal.
Rob: That’s awesome, yeah.
Mike: No, I usually have it at the end of the day.
Rob: Yeah, that makes sense. Other update for me, I’m listening to the book by Tim O’Reilly. It’s called WTF?: What’s the Future and Why It’s Up to Us. I’m kinda struggling with it. I thought it would blow my mind and so far, I feel mired in kind of theory or just academic thought and I’m hoping that it picks up because I like Tim O’Reilly. I like his writing, he’s a futurist, he sees things before they happen. He’s the guy that named Web 2.0 because he saw what the movement that was happening. I know there’s good stuff in here but I’m about maybe a fifth of the way, maybe 15%, 20% of the way through the book. I’m kinda struggling with it so I’m hoping it gets better because I really wanna make it through. I don’t wanna quit the book.
Mike: Are you listening to the audio book?
Rob: I am, yep.
Mike: I’m surprised that the audiobook is not as, I’ll say, riveting. I mean, business books are not riveting to begin with. But it’s interesting that even the audio book, you think that the pace will be pretty good and it’s not, it sounds like.
Rob: I’m 1.5, no, I think, I’m actually 2X it too. I think a small part of it could be that I was listening to it while I was shoveling, moving some snow out of the driveway. I don’t know. I was paying attention to it but maybe not enough. It’s one of those things where I’m questioning just cause I know how sharp Tim O’Reilly is and how much of his writings have…. Kinda like is it me or is it this book, is the question I’ve been asking. I’ll try to remember to update folks once I’m all done with kind of a final verdict.
Mike: Got it. The only other thing that’s going on for me at the moment is I’m working on a scholarship program for MicroConf Starter Edition. If you’re listening to this and you’re interested in becoming a sponsor for a scholarship ticket or if your company’s interested in just sponsoring MicroConf, drop me an email sponsors@microconf.com and we’ll talk about it. I’m just kinda hacking things together this year. But trying to put something together in place that we’ll be able to kind of reuse moving forward and make things better year over year.
Rob: Yeah, because sponsoring a scholarship is a big deal. It makes an impact on someone who typically can’t otherwise afford to go. We’ve had several people do this now to great success. We can get some people coming to MicroConf who, I think, really get a lot of value out of it but are just early enough in their entrepreneurial journey that they otherwise wouldn’t be able to make it.
Mike: Yeah. We’ve been doing scholarships for probably the past four, five years, I think, at this point. But it’s always been on a very small scale. This is kind of a concerted effort to take things to the next level and not just involve the people who approach us or just hand out scholarships on their own but to involve corporate sponsors and kind of expand the reach of the program a little bit more formalized, I don’t know. I think it’ll turn out to be really interesting. It’s just a matter of how is this actually going to work. There’s a lot of logistics to kind of straighten out. I had a lot of good conversations with people and answer some, I’d say, some difficult questions so far. It’s looking good so far.
Rob: Awesome. What are we talking about today?
Mike: Well, today, we’re gonna be going through our goals for 2018 and to kick us off, we should probably talk about our goals that we set back in episode 318 for our 2017, and see how we did on those.
Rob: Right. Every year we like to do our goals episode where we visit the old ones, look ahead at the next year, and then we also do our predictions episode which we did a couple of weeks ago. How about you? What is your first goal for 2017?
Mike: Well, my first one was to log at least 100 days of exercise this year. I would say that – are we giving ourselves points like one out of five or one of out four on these?
Rob: Seems like one to five scale.
Mike: I would say on this one, I’d probably have to give myself about, I’d say I’d go with a three. I logged about 50 days worth of exercise, and if you remember, I had a partial tear on my rotator cuff, basically four months of that, I just really couldn’t go to the gym. Between my back and my shoulder, there was just no way I was gonna be doing anything. Even with that I still got to 50.
Rob: Good for you.
Mike: How about you? What’s your first one?
Rob: My first one was to not start any new projects in 2017. It was to run the three MicroConfs with you, to continue shipping the two podcasts that I do, to continue working on Drip and to just take a break from the chaos that have been my life when I set this goal, the acquisition had only closed five months or later. I was still reeling from that, looking ahead at 2017 as basically like a rest year or recovery year from just the hard work and the stress and the chaos of growing Drip and then through the acquisition.
I had one exception that I indicated was that I would consider being second author on the Zen Founder book which is now launching very soon. If you go to zenfounder.com/book, you’ll see a landing page there, and you can get on the launch list. It’s turned up really well. It’s called The Entrepreneur’s Guide to Keeping Your Shit Together, How To Run Your Business Without Letting It Run You. Sherry did the vast majority of the work but I was involved with writing some copy in it and then contributing a few stories to the book.
I, on this one, give myself a five out of five. That’s not too hard given that part of this was a non-goal that I didn’t want my perpetual restlessness push me into starting something new. But I feel like I did accomplish this just like I set out to do.
Mike: Awesome. My second goal was to make Bluetick profitable including my time. Let’s see here, if I had to give myself a grade on this one, I’d probably give it a two out of five. I definitely did not make it profitable including my time but it is profitable. I feel like there’s at least some level of credit there especially given that it started at basically zero for MRR at the beginning of the year.
Did that public launch back in August to September timeframe, spent the last couple of months working out issue with getting people onboarded and working out various, I’ll say, problems associated with the onboarding process and getting people connected and making it so that they get that value upfront as opposed to much further down the road. I still don’t feel like it’s at a level of like three or four because I just don’t think that I got far enough.
Rob: My second goal was to do one to three angel investments and I give myself a five on this. I was trying to remember exactly how many, but I think, I did three. Yeah, I did three. A couple of them were subsequent, follow-up rounds in existing startups that I’m invested in. Then, there’s at least one new one. I think I kind of accomplished this and it was fun.
I think I don’t have this as a goal for 2018 not because I don’t wanna continue doing investments but I kinda wanna be pretty choosy. I always have been pretty choosy about the businesses that I invest in. I’m kind of just taking them as they show up on the radar. If I hear about them at MicroConf or hear about them on a podcast or someone approaches me. I think it makes a lot of sense for me to do it but I’m not going out seeking. It’s not like some active goal anymore I have.
I think it’s 11 angel investments that I’ve done so it’s not an inconsequential number. I think two or three of those are already out of business which is how it should be. But yeah, I’ve really enjoyed the angel investment and to be honest the best part is that I’m able to live vicariously. I’m still involved in a startup and I can still talk to the founder and I can offer advice. I can be involved in this business but I don’t have to run it day-to-day. That’s been the fun part of it.
Mike: My third goal was to blog publicly at least every two weeks so it’s a total of 26 blog posts. If you recall, I think about three or four months into the year, we’ve gotten together and we kind of pointed out like, “Hey, this is probably not realistic.” Because I haven’t done it so far and it wasn’t something that was really going to make me towards my main goal which was really making Bluetick profitable. We essentially canned that but then in August or September when I did that launch, I did a 21-day video series. That right there is pretty close to having that completed even though I basically canned it several months before. Should I give myself a five on this or are we not just not gonna count it?
Rob: I don’t know. It’s kinda like a ‘not applicable’. Goals changed a few months in. I remember when you first mentioned this I was like, “Really? Are you sure you wanna commit to this?” Then a few months in it was like, “You need to focus on Bluetick. The revenue source.”
My next goal was two days of exercise per week. I definitely accomplished this especially once I learned, through Sherry actually, I learned about the High Intense – Is it High Intensity Interval Training, HIIT? It’s just what I always struggle with is I don’t have a lot of time and I often don’t have the extra time to gear up and run out to the lake and run back because kids are here in the house and I’m watching them. There’s just complexity with me being able to work out. The fact that I can throw on a YouTube video and just get my heart rate way up and be exhausted in 10 or 15 minutes in my own house while my kids are playing legos upstairs, it really changed the game for me.
In addition, I was also riding my bike to and from work three days a week which is five, six miles each way, it’s was a great 22-minute workout each way. Pretty much hit this with flying colors, exceeded it actually, so I give myself a five here. I had many weeks where it was three and four days of exercise per week. I competed for nine years in track, I ran the hurdles, and I competed against people who went to the Olympic trials. We were legit. I trained 30+ hours a week almost year round. Once track ended, I realized that I actually don’t like running.
It was always about the competition. It was the competition and the team that I liked. But I didn’t liked running itself so I struggled to get out there and run even though I used to run a mile warm-up, mile cool down. Then do two miles of intense 400-interval training, just stuff that you would throw up after practice, it was super intense. But exercise is not something that I have ever enjoyed doing in a non-competitive basis. This is probably the first time in a decade or more that I’m actually kinda keeping up with some type of a regimen.
Mike: I guess with that stuff in mind, why don’t we dive in to our 2018 goals? Do you wanna go first?
Rob: For sure. First goal for 2018 is to write a VR program that allows you to roll around on a mattress of Bitcoins. How did this get in here? Are you messing with my list again?
Mike: Maybe a little bit.
Rob: That’s a good one, Mike. I like this.
Mike: I had that idea when I was writing down my goals on our outline. I happened to see some advertisement for some sort of a VR Helmet or VR Goggles or something like that. I was like, “Oh, Bitcoins’ a rage right now. VR is the rage. Why not throw them together?” The part of the advertisement was also the dual-end lightsabers with the VR Helmets.
Rob: I’ll tell you what. This Bitcoin mattress thing, that could make you a thousand-aire overnight.
Mike: Yup. Definitely.
Rob: A thousand-aire idea. My first goal for 2018 may sound odd when I first say it but bear with me on this one. My goal is to be in fewer meetings each week, to get my meeting count to basically under ten hours a week. This is not a symptom of being acquired. It’s a symptom of growing the team, whether I was independent or not, I would be in a lot of conversations. I’m pivotal to a lot of decisions that happen and as the team has grown, I’m called into more and more things to lend my insights, my opinions.
I’m often brought in and I almost feel like a consultant who has knowledge of the space and knowledge of the history of Drip and ‘we wanna run this by you’ and I have another unique insight. Right now I’m in a lot of meetings, don’t enjoy them. I really think back to when we were 5, 8, 10 people, hover at any of those points and we just had so few meetings and I really enjoyed it. Parts of that was to my detriment, to be honest. I think that some of the folks who worked remote, they would’ve preferred to have more kind of Facetime but just the way that we’re running Drip was be heads down and create the product.
I’m working to get some things in place to decrease the number of meetings I’m in right now. I don’t think they’re gonna take hold for a couple of months, part of it is hiring someone. I’ve already hired a senior director of product who started maybe three months ago who’s taken a bunch of responsibilities off my plate. I’m looking to just kind of fire myself from other positions that require me to spend a lot of time in conference rooms.
Mike: On my side, I actually have two carry over for goals that I wanna put on there. First is log in 100 days of exercise this coming year and then, the second one is making Bluetick profitable including my time. Those I definitely wanna carry over. In addition to that, my first goal is to read at least one business book every two weeks. I think this is more of to kind of get back involved in learning things because, I feel like I’ve stagnated to some extent.
I’ve had my head down for so long on various things that I’ve probably kinda lost touch a little bit with a lot of either things other people are exploring and obviously I don’t have the time to do everything myself so I think that just finding time to carve out, to explore ideas from other people would be helpful to me, not just from a personal growth standpoint but also in helping to grow Bluetick.
Rob: That’s interesting if you have some particular topics or a particular topic that you kinda wanna start with, let me know because I have literally this list I went to where I read hundreds of business books in the past 20 years and especially recently I just do a lot of Audible. If you have specific things you’re looking for, I can certainly make recommendations. I suppose you could also ask our listeners here if you have a suggestion of a good business book that you’ve read in the past 12-24 months, maybe send it to us at questions@startupsfortherestofus.com and we may even mention it on the show.
My second goal is three days of exercise per week. It’s just upping the game from last year to the level that I’m at now. Like I said, I think with the fact that it’s pretty convenient for me to do right now, I’m hoping, kind of crossing my fingers, that I’m not cursing myself by upping the goal. I do have a tendency to achieve a goal, and then increase it the next time, and eventually make it too much, more than I wanna commit to or whatever, and then I just say, “Ahh, I’m gonna stop exercise altogether because I’m not achieving it.” My goal’s to not do that.
Mike: My second goal is to hire somebody to take over Bluetick development. The downside of this when I think is that it really is heavily contingent upon making Bluetick profitable including my time. Because, unless I get to that point, it’d be really hard to hire somebody. But I also recognize that doing the development for it is just so incredibly time-consuming, and it’s not just the time itself but it’s the mental energy associated with it because there’s all these little things that you kind of have to keep in your head. When I switch over to do other things, it’s really difficult to focus on them or concentrate on them. Even when I’m able to do that, if I have to go back to the development side of things, I’m really almost starting over again because of all the different things that I had in my head at that time.
I’ve noticed this with a couple of different major pieces that I’ve been working on where I had to go back and kind of relearn how certain things work. I struggle to do that just because sometimes so much has passed between when I stopped working on that piece and when I started working on it again. I think that just having somebody dedicated to working on the development side of things is really gonna help out.
Rob: Just as you make Bluetick profitable, you’re going to make it not profitable again by hiring someone?
Mike: Yeah. That’s kinda what I’m thinking.
Rob: Such is life as a founder. I think getting the development off your plate will be a huge win for you this year. It would allow you to focus on the things that frankly you should be focusing on more. It’s like development is, what’s funny is, we come up as developers, and we wanna build products, and then when you get to the point where you’re building it you’ll realize, “Ha, development is not, a, not the most important thing, and b, it’s not driving revenue the way that so many other things will.” That’s obviously where you find yourself.
Mike: Yeah. That’s really the problem is that there’s so much development work to get done but it doesn’t directly drive revenue. I can definitely see when, different periods of time, where I pull the focus off of marketing and go into development and I could see the revenue growth level off or decline. That’s just what’s going to happen because I can’t do both at the same time because it’s really hard.
Rob: My third and final goal for 2018 is to ship something. I’m not exactly sure what it’s gonna be yet but I’ve been laying low for 18 months like I said. 2017 was supposed to be a rest year to recover and 2017 was not a rest year on the personal side. Number of health issues, and extended family, the chaos with two new kids joining the family a few months ago. You can go listen to zenfounder.com if you want all the details of what went on there.
But it was a very hard year so I don’t actually feel rested yet. I don’t feel like shipping anything now. I plan for the first part of 2018 to hopefully continue to be a restful period because it has now for about four weeks. It’s been pretty calm and I’m starting to feel a little more relaxed and I know that once I do that kind of clear the mind, that I’ll start to think about something that I wanna ship about.
I don’t know if it’s gonna be consistent blog posts, if it’s gonna be a book, if it’s gonna be a new podcast, if it’s gonna be a course of some kind, or a software, or something. I really doubt it’s gonna be software just because I keep saying that Drip was my last one and I still think that’s true. I’m guessing it’s gonna be one of these other things or maybe it’ll take a form that’s completely different, but that’s my goal. Ship something in 2018 aside from the three conferences, the two podcasts, and a bunch of…
Mike: Partridge and a pear tree.
Rob: Exactly.
Mike: Well, you like to fiddle with stuff too. I can definitely see you just diving into stuff to kind of try and figure things out and then suddenly a product kinda springs out of it. I can see that happening too.
Rob: Yup. I can totally see that. I’ve been fiddling with stuff for months. No product ideas yet or no desire but I do feel like that could happen. I also, to be honest, as I’m doing more investments, and asset allocation, and even dealing with collectible stuff like comic books and such. I’m running across websites where I’m like, “Ahh, I should probably just own this website because I could do it so much better.” I would improve this, and this, and that. It’s profitable and there’s a revenue stream I want. It’s pretty old and they’re not maintaining it. That’s where my mind gets going.
It’s like boy, maybe shipping something actually means acquiring and rehabbing something that I’m kind of doing for a hobby/investing. But it’s in a space where I also have a personal interest and it wouldn’t be to acquire it and rehab it to turn it into some huge money-making thing although that would be an element of it, but it would be because I also actually enjoy, like you said, tinkering with things. I would definitely include something like that, buying a little tool on the side and improving it, shipping something because it would be quite a bit of focused effort to get that done.
Mike: Yeah, because it would be easier to acquire something and then either repurpose it or grow it as opposed to building something from scratch. I could definitely see you go down that road instead.
Rob: For sure.
Mike: My last goal for this coming year is to speak at six or more conferences or events this coming year. This is more of a personal growth side of things because I know I enjoy speaking but I also feel like it’s an area where I could do better at and I think that just practicing more is gonna help me do that. Then the other side of it is to help me to focus my communication a little bit better.
There are certain times where I could just be long-winded or over communicate. Some of that is just a matter of me wanting to make sure that somebody else has all the facts but over communication is something of a detriment sometimes just because then it leads into providing facts that are irrelevant or not important to the person that I’m speaking to. I think that doing the additional conference talks will help me to focus in just my ability to hone the message based on who I’m talking to and just writing talks in general helps you to do that.
Rob: Are you gonna cheat and speak at both Starter and Growth and Europe so that three of them are knocked out by your own conferences?
Mike: Well, that’s a good idea.
Rob: Because the hard part is, well, one of the hard parts is just getting noticed and getting on the docket of conferences. Writing the talks is also a lot of effort but you’ve done that enough. That’s cool.
Mike: I only have two scheduled so far at the moment. I hadn’t really thought about kinda cheating that part.
Rob: I know, I know. That’d be pushing it. If you’re out there and you’re interested in Mike speaking at your conference, drop us a line at questions@startupsfortherestofus.com.
I think that’s a pretty cool goal, man. I know that I’ve done this in the past where I’ve spoke a lot in one year and it really does condense your learning and it kinda gets you over the plateau of, I think if you speak once a year or twice a year, you just don’t get enough repetition in a short enough time frame to get better at it, I think this is a good goal if you can swing it.
I would also think about if you wanna become a become a better speaker, there’s a couple of really good books that I’ve read on how to craft talks. One is by Carmine Gallo, I think that’s how you pronounce it, it’s like The Presentation Secrets of Steve Jobs, I’m pretty sure. He kinda talks about how Steve Jobs would craft presentations. Carmine Gallo also wrote Talk Like TED: The 9 Public-Speaking Secrets of the World’s Top Minds, it’s kinda like how to do TED talks. I think I’ve listened to both of those. The other one I would recommend, and I am recommending these because they’re all in Audible and if you’re gonna read or obviously get physical copies of them, and if you’re gonna read 26 books, these may be some good ones that kinda kill two birds with one stone.
The other author I like is Nancy Duarte and the book that I read which may not be in Audible because it’s so visual is called Resonate: Present Visual Stories that Transform Audiences. She also wrote Slide:ology you may have heard of. But I really liked Resonate. It talks a lot about how to craft presentation by telling a story.
Mike: Yeah, those are great recommendations. That’s definitely an area that I’m gonna be doing research into and try to figure how to craft a better message and put together better presentations and things like that. I think you are absolutely dead on about the fact that like if you don’t do it often enough in a year, it’s very easy to kind of lose the experience and develop a little bit of rust, I’ll say.
Rob: Those are our goals for 2018. 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 by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
