Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews Laura Elizabeth from Client Portal about the launch of her WordPress plugin and getting to $4K monthly revenue.
Items mentioned in this episode:
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.
Laura: And I’m Laura.
Rob: We’re here to share our experiences to help you avoid the same mistakes that we’ve made. Laura Elizabeth, it’s wonderful to have you on the show. Thanks for joining.
Laura: Thank you, wonderful to be here.
Rob: I wanna give folks a little bit of background as we dive into your story. For those of you who are listening, Laura is a designer, a writer, a speaker, and a cross stitch addict. What exactly is cross stitch?
Laura: It’s sewing. It’s where you saw in little crosses and you make it beautiful.
Rob: Yes, I’ve seen that.
Laura: It’s very therapeutic. It’s very fun.
Rob: When Laura is not teaching developers how to design, she has a site called Design Academy, it’s a course that’s coming out soon, designacademy.io, or working on her client management product which we’re gonna dive into pretty deep today. It’s a WordPress plugin called Client Portal. You can find her writing, speaking, or watching Star Trek. Which Star Trek? There’s five of them.
Laura: Voyager or Next Generation, usually.
Rob: There you go, perfect.
One of the reasons I wanted to have you on is because a year ago, you were consulting full time and over the last year, you’ve launched Client Portal, that’s client-portal.io, if folks wanna check it out. It’s a WordPress plugin that helps freelancers and agencies interact with their clients and manage their projects. You launched that, it’s now doing about $4000 in monthly revenue. You were telling me before we started recording that it basically, almost single-handedly, has changed the value that you are able to bring to clients and it has allowed you to charge a lot more money and take on fewer projects. Can you talk a little bit more about that?
Laura: Yes. This is something that I really wasn’t expecting. I launched my first product which was Client Portal. It was really only ever meant to be a side project that I was doing. It quite quickly actually became my full time gig. What ended up happening was I was sharing all this stuff about Client Portal. I was sharing how I was doing my email course, how I was getting really good conversion rates and all this stuff. It made my design work, my freelance consulting work, much more valuable. Suddenly, people were far more willing to pay me a lot more money to do consulting work.
What was really good is I could then start actually picking and choosing what projects would I be working on. I went from having sometimes five to seven projects on any one time, having five to seven projects is actually why I ended up making Client Portal, to only taking on about two or three in the last year. I’ve only been taking them on because they were particularly fun to work on or something like that. I really wasn’t expecting how much valuable making a product and selling a product is going to make me as a consultant.
Rob: That makes a lot of sense. I think there’s two facets to that too. One is you start to develop almost a personal brand or it’s people associate – they see a product, they see that it’s successful, they see that it’s well designed. Then they find out that they can hire you to help them with a product, this is a no brainer. It’s a portfolio that speaks for itself. I think that the second aspect to that is you talked about you were doing this in public. You were talking about it on Twitter, you were talking about your process, and you said that a number of opportunities have come out of that, of people kinda coming out of the woodwork. You wanna tell us about, you mentioned a joint venture that you have done recently.
Laura: That’s really been, I’d say, probably the biggest thing I’ve learned this year, is the importance of really building in the open, sharing things in public, and it’s something that I still don’t actually feel very comfortable doing because when I post things on Twitter, I post things on Facebook saying, “Hey, look at what I’m working on.” It feels a little bit one-sided, “look at me” type of thing. I’m a little bit uncomfortable doing that but it’s actually been, probably, one of the best things that I’ve done for my business.
To give you an example, I was recently building the UI for an app called Write Message. I was posting everyday in the Write Message Facebook Group screens that I’ve been designing. I’d post things about the features that were happening and just sharing previews to its customers about what’s coming, and I got an email from Robert Williams who runs Workshop saying, “Hey, I’ve been following what you’ve been doing in the Facebook group. I really like the designs for Write Message, by the way, how’s Client Portal going for you?” We started this email exchange and we actually ended up doing a joint program where I did my client onboarding email course to his list and we sort of split the revenue 50-50 when we did the pitch, and we’ve actually got a webinar for January where we’re gonna do it again, launch to his list of about 10,000 freelancers.
Robert was someone I’ve had on my radar to reach out to because I thought his audience would benefit from Client Portal. I had no idea that he even knew who I was. Me just sharing the design that I was doing for Write Message, which is completely separate to Client Portal, ended up actually him coming to me and starting the conversation about pitching and launching to his list. That was a really cool thing that happened from just sharing things, building things in the open, and just talking about what I’m doing even though it makes me a little bit uncomfortable.
Rob: I think, a lot of us as creatives, and I include designers, I include a lot of entrepreneurs, and obviously developers in that. I think we’re introverted and/or don’t wanna be showy, don’t wanna feel braggy. I’ve often felt that way as well. I totally sympathize with that. But I think breaking through that a bit and getting stuff out there, that’s one of the hard things about shipping your first product. If you take us back to building Client Portal, and then the day or the week you launched it, what was that experience like? How did that feel emotionally, and then what was the ride like?
Laura: It was a bit of a whirlwind. Client Portal was something that I made for myself, like I mentioned, I had a lot of client projects on at one time, and I really wanted something to help keep those in sync and just somewhere that clients could go to see where we’re at with the project and seal the deliverables without having to email me, and me having to find the files and send them to them.
It was something I made for myself, just a really simple dashboard. I went to Double Your Freelancing conference and I was doing a talk on how to work remotely with clients. I very, very briefly mentioned that I made this little dashboard for myself. What happened was after the conference, Brennan, the organizer, went around the room and said, “What’s the number one takeaway from this conference? What’s the number one thing you wanna go back and implement?” Over 50% of people said, “Laura’s Client Portal was a eureka moment for me. This is exactly what I need in my business.”
I have never intended to sell Client Portal and that was really what made me think, “Okay, maybe I should sell this thing.” It took quite a long time for me to get the courage to do it. I had a lot of fears, which I imagine most people have, what if no one buys? Or what if, worse, people buy, and then they say, “This is rubbish. I want a refund.” I’m publicly humiliated. I was really worried that was gonna happen. I was like, “Why would someone pay money for this little thing that I made?” What I did was, I already had an audience of developers, and a lot of them were freelancers anyway. That was for Design Academy which, I think, we’ll talk about in a while which is a course for teaching developers how to design. Brennan said he will launch, if I made Client Portal into a product by, I think, Black Friday, he’d include it in his Black Friday deal. I literally had a week to make this into something that I could sell.
Where Client Portal was, at that time, it wasn’t too sellable. It was literally just an HTML template. It wasn’t a WordPress plugin, and I’m not a developer, there’s no way I could have made that happen without hiring someone. What I did was I tidied up the HTML template a little bit, I created some documentation, I put up a really, I’d say kind of bad but just a really amateur looking landing page. I had that done in just a few days. This was my validation to see whether this product would actually sell.
I launched it to my list. Brennan launched it with his Black Friday deals. Over the course of three days, it made just under $10,000 which was insane.
Rob: That’s what I was gonna say. Didn’t that blow your mind when you saw that?
Laura: It was crazy. I was thinking if I make three sales, I’m gonna be happy. I just couldn’t believe it. I was still nervous, I was still thinking what if people used the product and they don’t like it? But really, I wasn’t selling the product as it was. I was saying you can buy the HTML template now, I’ve put together documentation on how you can use it, but what I’m gonna do is over these next few days is I’m gonna open up sales and I’m gonna close them again and I’m gonna use the revenue to pay for the development of the WordPress plugin. You’re essentially just pre-ordering a WordPress plugin.
That’s basically how I ended up launching Client Portal. It was a pretty wild ride. I do often think back and wonder whether if I haven’t had the opportunity of Brennan saying, “I’ll include this in my Black Friday deal if you can get this done by Friday,” whether I would have talked myself out of ever selling it. That thought kind of scares me a little bit because then I would not be here right now. I’m very, very happy with how it’s going.
Rob: It literally changed the path of your professional career. It leveled you up from freelancing to products which I imagine is something you’d wanna get into for a long time. There’s so much to be said from that story. I imagine that when you were first asked to speak at Double Your Freelancing, did you have some second thoughts and thought to yourself imposter syndrome, what do I have to teach people, I really don’t wanna get up there, and I’m scared, but you decided to do it anyway?
Laura: Yeah, I did. It was kind of interesting. I was very unstrategic when I first started putting myself out there. Like I said, I was freelancing and it seemed like every successful person I saw was doing something, they were writing a lot, they had a blog, they were doing guest posts, they were going on podcasts, they were speaking at conferences. I kinda thought, “Oh, I should probably do that too.” I’m not quite sure why but I feel like this is gonna come in handy in the future.
I started doing that. I started writing on Medium and I was sharing the stuff I was writing on Medium. An editor from Site Point saw my writing and said, “Hey, I really like your writing style. Do you wanna guest post on Site Point?” I was like, “Yeah, sure.” I guest posted on Site Point. Then, somebody from a conference saw my guest post on Site Point and said, “Hey, do you wanna speak at our conference? I really liked your guest post here.” I said, “Sure.” I spoke at that conference and it just kind of snowballed from there. Suddenly, people were coming to me and asking if I wanted to speak at these different conferences. But I really had no reason other than it just felt like something that I should be doing for me doing that.
It all sounds quite accidental and in a way, it was. But what I think is really interesting is, and what I’m actually really happy about is that I was putting myself out there and not necessarily knowing exactly why I was doing it but I was just testing things. I was just wanting to see what could possibly happen and what could possibly come of it. Just by doing all of these experiments, I was speaking at Brennan’s conference talking to freelancers, I had nothing to sell. I didn’t know I had anything to sell to freelancers at that point. I didn’t even know Client Portal was gonna be a product. But I did it anyway.
Then, something came out of that so I’m really glad that I didn’t wait until I had something to sell before testing the waters with these different mediums because I think that’s probably one of the really big reasons, probably, the biggest reason that Client Portal took off so quickly. I say took off, I know $4000 a month might not be what a lot of people would aim for, and may aim a lot higher. But for me, it was really life changing. I really credit that to just putting myself out there early rather than waiting until I have something to sell.
Rob: Yup. There’s a lot of lessons from your journey. You were willing to kind of get over the fear and put yourself out there and do things in public. You said yes to every opportunity that came up, it sounds like. That’s something some people aren’t willing to do. It’s hard to do at first because you’re scared and then each opportunity just lead to the next thing, and the next thing, and this whole bizarre series of events that again, have essentially changed your professional career. I don’t know if it goes too far to say it’s changed your life, but I imagine that your life looks a lot different today than it did 12 months ago.
Laura: Yeah, it definitely does. Having the freedom to be able to work. When I was a freelancer, I could always when I wanted to technically. But I did have people checking in with me, people who needed things by a certain date. My life’s a lot less time-restricted now. I feel like I’ve got a little better work-life balance. I can do things that I really enjoy like cross stitch, Star Trek in the middle of the day if I want to, not that I do that very often. But I can which is really nice.
Rob: Look at independence or freedom on three axis. There is mobility or location, there is income, being able to make more money, not necessarily just based on more hours worked, and then there is time which means during the day or like you’re saying, you have the flexibility of time. When I first became a consultant, I thought I would have all three of those. As it turns out, I had income and mobility. But the time thing really bothered me. The clients wanted to be able to talk during the day. It was always like, “No, I actually, I need this time to be a creative.” Totally hear you. I think that’s something that a lot of folks trying to get into products actually seek.
Laura: Yeah, it definitely works. One thing for me is I found that for some reasons, I work really well on weekends. I don’t know if it’s because my email isn’t going all the time or Twitter’s a bit quiet. I work so well on weekends and during the week, I don’t work very well at all. I usually take off Tuesday or Wednesday or something like that.
Back when I was doing client work, I really couldn’t do that because I’d be having to check my email every hour or so to see if they needed anything. Similar to you, I didn’t feel like I had as much freedom as I thought I would when I was doing consulting. That’s really the big draw to products for me.
Rob: Yep. Another lesson I feel like we can take away from your experience there is that Brennan giving you that deadline really forced your hand and kind of forced you to ship something which I think a lot of us resist. There’s this resistance to shipping because of all the fears of failure and all that stuff. But you shipped something, and you were creative with it. You couldn’t get a WordPress plugin built in seven days and so you just pre-sold it which I think is a genius move. To give folks an idea of the pricing of Client Portal, it’s a WordPress plugin, it’s $199 for a single site license and then it’s $399 for unlimited sites.
After the Black Friday stuff, what did the next couple of months look like? How long did it take you to find a developer to get it developed? When you delivered it, what was the reception like? Take us through the timeline a little bit.
Laura: After I launched it, it was a little bit underwhelming. The launch went really good and I thought, “This is it. I’m in products. This is amazing. I can fire all my clients.” Not that I would really want to do that. But I thought I’ve done that. What really happened was after the launch, I started looking for a developer. I found a fantastic developer who’s still working for me and for Client Portal today. I just found her by going into different Slack groups. I can talk a little bit about the process of hiring a developer if you’re interested but what really happened was I got the plugin developed, I was sending it to existing customers. My focus was really on existing customers because these people have paid me money. They didn’t know who I was and I was really grateful.
I wanted to make sure they had a product that was good as quickly as possible. But then I sort of opened the doors to selling Client Portal again. Because I didn’t have that urgency, because, I didn’t have ‘this is closing in three days’ and the price is never gonna be as good as it is right now because essentially you’re putting your faith in me making this WordPress plugin. Sales just didn’t happen. Nothing happened for quite a while. I was working on freelance projects and I wasn’t doing much for Client Portal. I knew there was opportunity.
I really needed to think about, “Okay, what do I do now?” What I ended up doing was I decided that I wanted to start putting myself out there again. I decided that I needed to start going on podcasts. I needed to talk about things like freelancing and just talk about remote working like I was doing at the conference because the conference talk that I did ends up being quite a good pitch for Client Portal. I thought, “Okay, I need to do that.” But I don’t wanna just sell them Client Portal. I need something else so I created an email course, it was a five-day email course on how to onboard your clients. I put a lot of effort into it because I see a lot of people making email courses and I‘ve taken a lot of them. Often, they feel a little bit rushed. I really wanted my email course to be valuable whether they actually bought Client Portal or not, so I put a lot of effort into that.
When I launched Client Portal with the Black Friday deals, what worked really well was having that urgency. I wanted to put that urgency in my email course. What happens is every Tuesday, I essentially have a sale for Client Portal. Anyone who’s in my email course on Tuesday, once they’ve finished the email course, I’ll open up a window saying, “Okay, from Tuesday until Thursday, you can get a 30% discount for Client Portal.” I do that and that kind of gets me back the urgency and it means that my goal then is to get people into that email course.
I tested this email course a lot. I’ve got it to the stage where it converts really well. I posted a tweet about it a while ago, I can’t remember the exact numbers but it’s got a really high conversion rate. What I realized was, “Okay, now I need to get people into the email course.” What I do is I go on podcasts, I’m trying to speak at conferences but actually, I’m typically leaning more towards podcasts just so I don’t have to travel as much, talk about freelancing and then I say, “Hey, if you wanna know more about my process, I have this email course, you go to clientexperiencecourse, I think, .com and then you sign up there to the email course,” and then you get pitched on Client Portal.
That’s worked really well for me. That’s probably been a really good thing that I’ve done to keep that urgency that I got from the initial launch. It means that I don’t feel like I’m constantly selling. The only thing I’m selling is getting people into a free email course which I don’t feel too bad about because I am confident that the email course is helpful.
Rob: Right. That’s a good way to do it, it’s to put your best foot forward. Basically, you’ve created a course that some people might sell as a tripwire course. You put so much time into it and have built this thing that when someone takes it, they’re blown away by the quality of it. You were correct with the URL, clientexperiencecourse.com, it’s aimed at agencies and freelancers, for organizing their client projects and a process for interacting with the clients.
Laura: Yeah, exactly.
Rob: It sounds like you have so many of the building blocks of what makes a product person successful. You obviously have the design background. Your design on all of your sites, lauraelizabeth.co, designacademy.io, and Client Portal, really, really sharp designs and just really, really well put. Copywriting is really good. Now, you’re modelling the entrepreneurs that have come before you that one of the things that so many of us say is, email, email, email, and you see the value of building that email list. To have something that’s repeatable like that that you have created, by repeatable, I mean, you’ve kind of started to build the flywheel. As long as you can get people on the course, they’re gonna buy Client Portal, and if you have other stuff that’s then related to that such as Design Academy, I know it won’t be relevant for your entire audience because it’s really aimed at developers, but then you have all these related products. You have this whole ecosystem that you can really offer a ton of value and more value than people are paying but it becomes kind of a system. You’re not just floating out on your own trying to run Google AdWords to some page somewhere. You have credibility and you offer value upfront and then you show that you offer stuff that’s such high-quality that for people who need what you’re selling, it’s a no-brainer.
Laura: Yeah, exactly. I think the ecosystem thing is a really good point. That’s pretty much where I’m taking it next. I’m trying to figure out how I can make everything that I’m doing, I’ve got things in a lot of different places. I still have my consulting and I have my Design Academy, I have Client Portal. I’m kind of working out how I can make this into something that I can cross sell between different people.
For Design Academy, I think around 30% of my Design Academy audience are freelancers, it would be relevant to them. Most of them are in-house designers so Client Portal wouldn’t necessarily be relevant to them. But me knowing that 30% of my Design Academy audience are freelancers, it means that I can cross sell Client Portal to them. Now, I don’t have all these systems in place yet but that’s sort of the next step where I’m taking it, to try and figure out how I can link everything so it’s not as sporadic as it feels right now.
Rob: Sure. Another lesson that I’m taking out of this conversation is something that I screwed up in the early days, 2005 to 2008 as I was building and acquiring products. It’s a mistake you are not making, and you are building products that have shared audiences. At one point, I had ten websites and products, and web services, and really almost none of them shared the same audience. It was designers, people getting married, there was a wedding site, and I’m trying to think what’s the other one, people interested in bonsai trees.
Laura: Duck boats.
Rob: Yeah, duck boats. It was random stuff. You’ve built stuff with overlap so you can build that ecosystem. I like your headline at designacademy.io, it says, ‘Design principles for developers taught in a non-pretentious, non-bullshitty way.’ Did you come up with that?
Laura: Yes. It’s based on a frustration, it’s actually a frustration that I had and I know a lot of developers share. When I was learning how to design, I really struggled and took me so many years to get to a level where I thought I was half-decent. I found all design teaching to just be so unhelpful but so pretentious. It all sounded really good but putting it into practice was just virtually impossible. It sort of came out of my frustration of that. Most of my freelancing clients were developers who had this issue where they wanted to, I was working on a project with developers and they always had side projects going on.
One thing I’ve learned about developers is they’re very creative in that they always have tools that they’re building and they always have stuff that they’re doing. Where they really feel held back is their ability to design. They really love good design but they don’t necessarily wanna become a designer. But they want enough knowledge to just make it so they can create their side projects and have them look decent and maybe sell them, and maybe once they’ve been selling for a while, they can then reinvest some of that money into actually hiring a designer.
Really the goal of Design Academy is just to teach developers enough design knowledge to be dangerous without turning them into a designer.
Rob: Very nice. Laura, you mentioned that you actually have a discount code for our audience if folks want to get a discount on Client Portal?
Laura: Yes. If anyone’s interested in checking out Client Portal, you can use the discount code ‘startups’ and get 30% off which is the same discount as I do in my email course.
Rob: Sounds good. That’s client-portal.io. Laura, I’d like to switch it up and do something we’ve never done before here on Startups For The Rest Of Us, a lightning round of bizarre questions. You could do it?
Laura: I’ll give it my best shot.
Rob: It’s gonna be awesome. Alright. These are quick answer questions. First one. What is something that is really popular now but in five years, everyone will look back on and be embarrassed by?
Laura: Chatbots.
Rob: Chatbots. If animals could talk, which would be the rudest?
Laura: Flamingos.
Rob: In 40 years, what will people be nostalgic for?
Laura: Oh, I don’t know. People are nostalgic about television right now, live TV. I don’t know. Mouses. Mice, the plural to the mouse.
Rob: You don’t mean the little animals, you mean the computer?
Laura: I hope not. Yes, I do.
Rob: Last one. What’s the most ridiculous fact you know?
Laura: I was looking at interesting facts the other day. Can I Google it? I don’t know. I suck at lightning rounds.
Rob: No, I pulled really hard questions. That’s the fun part.
Laura: I have one on the tip of my tongue. I was literally on Reddit last night and I remember seeing something about something that was really – I was on ‘Today, I learned,’ that Reddit thread, and they have a gazillion things.
Rob: I figured, knowing you, having hung out with you a few times, I figured you would have something, I don’t know, some weird thing about pixel kerning, or what is it, font kerning or something like that.
Laura: Yeah, possibly.
Rob: Anyways.
Laura: Possibly. But, I’ll think of a bunch and then I’m just gonna be emailing you which, perhaps, for the next year.
Rob: Oh yeah, that’s great. This was definitely a curve ball so I appreciate you participating in the lightning round there.
Laura: No problem.
Rob: That wraps us up for the interview. If folks want to keep up with what you’re doing, is it Twitter, Dribble, what’s the best you think?
Laura: I’d say Twitter, it’s twitter.com/laurium. It’s where I’m most active.
Rob: Sounds great. I expect I’ll see you at another MicroConf here soon?
Laura: Yup, we’re going to Vegas. The Growth one, I think. I’m looking forward to that.
Rob: Very cool.
Laura: If you have 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 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 370 | Our Predictions for 2018
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike revisit their predictions from 2017 and score how they did. They also make new predictions for 2018.
Items mentioned in this episode:
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 was reflecting on the past couple of months and I feel like I’m coming out of kind of a rough patch. If you go over and listen to Zen Founder which I believe came out last Friday, Sherrie and I talked through some personal stuff that is going on, you already know about this, I talked a little bit about it at MicroConf Europe.
I realized that kind of stuff like, you can become the frog in a pot of boiling water, where just slowly you descend into stress and chaos and, as I’ve come out of that, I was just looking back and thinking how thankful I am for so many things right now, and how, I guess, thankful I am that I am not where I was a month ago. Coming out of dark times, it was both personal stuff and even at work — I don’t know.
You hit a certain point, some months, some weeks are just hard and it’s hard to wanna show up everyday, and it’s hard to deal with whatever it is. The cues haven’t backed up for a while but there’s just stress building a software company, and running a big team, and hiring people. I don’t know. Other than that, that’s what’s been going on with me. I was just thinking about it today I’m like I really feel positive and excited and I’m like really happy right now and it’s such a contrast to what I was feeling even three or four short weeks ago, and part of that was getting away. Was going to Europe, even running MicroConf Europe wasn’t stressful. It was super. I had a great time there, I was there with my kids, and Sherrie joined us. When I came back, the reentry week was tough. But aside from that, I feel like things are on the upswing. Hopefully, heading into the end of the year and beginning the next, it can continue to feel that way.
Mike: I have to laugh at myself every time I hear that analogy of the frog and the pot of boiling water because I’ve used it myself but if you look into it, that’s actually not true. If you put a frog in a pot of hot water and you slowly turn up the temperature, it will jump out. It’s not that it doesn’t realize it, but it’s a great analogy because it makes sense to everybody.
I think that’s kind of, I’ll say, par for the course, like everybody goes through that on occasion. It sucks to be there. The contrast between where you hopefully end up eventually is quite striking I’ll say. It’s nice to be able to kind of move past that.
Rob: I think move past it and then be better equipped to recognize it early and deal with it as best you can because these are always going to happen. Whether it’s one week every couple of months, whether it’s one month every couple of quarters. You’re just gonna have these down times. If it’s high-stress time, like you’re negotiating the sale of your company, or you’re in a super high growth, or there’s a competitor that’s pissing you off and trolling you, this can be constant for months. It’s trying to figure out how do I go on this journey and deal with hard things and not let it poison the rest of my life, or negatively impact the rest of my relationships, and just go and have fun?
Mike: That can be hard, especially if your income is tied so much to your business and your business is the cause of your stress. There’s almost no getting away from it at that point. It’s not like its a 9:00 to 5:00 job where you can just go and clock in and at the end of the day you can just walk away and all the problems are not yours to deal with it. It intrudes on your life to some extent.
Rob: Absolutely. This relates back to the listener question we had last week, where he says, “My emotions are tied to my business. How do I get away from that?” And our answer was kinda like, “Well, you do the best you can but it’ll probably always will be.” That’s my short answer to that. How about you, what’s going on?
Mike: My oldest is playing basketball right now and they had to do a fundraiser. It was interesting because as part of the fundraiser, they’re basically just standing outside the store and asking people for donations. I took him aside at one point, after he kind of gotten the hang of it and basically asking people for money, and I was like, “Here, let me teach you the art of the upsell here.” Kind of worked with him for a couple of minutes and I was, unfortunately, not paying attention because I was working with one of the other kids at the time when he actually did it but he upsold some woman on a hug to get some extra money for a donation.
Rob: That’s cool. That’s awesome. Bravo!
Mike: I was told by the coach, she’s like, “He did it flawlessly.” Perfect execution and everything. He listened. Followed all the advice and everything, and he only did it three times. It wasn’t like we were there for an hour and a half, and he didn’t do it all the time. He only did it three times but everytime it worked. It was really good.
Rob: Like father, like son. I’ve seen you.
Mike: I sold lots of hugs…
Rob: I know you did. “Buy this software product and I will give you a hug.” Cool.
For me, I also had this interesting experience in the past week, I often talk about we’re always hiring because the app is growing quickly so the team’s growing slowly which is good, that’s how we like to do it. We found a candidate who came highly recommended and we met with him and he was the right fit, good personality and everything. But as we move forward in the actual kind of hiring and negotiation process, it quickly became apparent that yellow flags started creeping out and there were little things. He’s asking for more money than he should get because he was transitioning careers, transitioning from this role to that role. He’s asking for the same salary that he had at this other thing that had five years of experience in and is basically coming entry-level junior for us.
Then, he wanted a title that was actually quite a bit above, that implied he had years of experience and he actually has three months or something. That’s a really interesting one. Then there were two more things but it just kept unfolding. He went from being this amazing candidate to being, I use the word I’m disenchanted as these things keep coming. To his credit, he has two other companies that are interested in him so he’s probably gonna wind up getting everything he asked for and that’s great. But it showed me, there was particularly the specific way he handled a few things showed me that he was, it wasn’t just a negotiation, there was a bit of high-maintenance, demanding or entitlement I think is probably the right word. It struck me that that alone is a deal breaker, even though he checked all the other boxes. He’s either a “hell yes” or he’s “no.” He quickly became not a “hell yes” as these things unfolded.
Mike: Yeah, that’s kind of disappointing. I guess I’d say the process isn’t complete yet or I don’t know fully whether you kind of went through and offered him the job or passed that point. It’s easier or better to find those things out in advance as opposed to after they’ve started working or even a week or two down the road. Sometimes, you don’t find out for six months but those problems can come up at any time.
I remember somebody who I had interviewed at Pedestal Software and there was another team that had actually interviewed him and they’re like, “We think he knows his stuff but we’re not sure. Can you come help us out?” I went in and basically grilled him on all this UNIX stuff because the other team didn’t have as much experience with it. I grilled him, I remember going back to the management team and I was just like he knows his stuff but he is kind of a jerk. you don’t want to hire him. That was the bottom line and they’re like, “Okay, let’s hire him.” I’m like, “Wait a second, he’s gonna be a pain the in ass to work with.” And he was, it sucked.
Rob: I’ve had that happen before. At high growth startups where they’re like, “Does he have technical chops?” “Yes, but I don’t want to work with him” “That’s okay, we can manage that.” They didn’t put me with him but the engineers who worked with him didn’t like it at all. I was like, “This is interesting.” This is 14 years ago. I remember being like, “I don’t think this whole funded thing is for me,” because if that’s what we’re doing, I’m not gonna like my job here.
Mike: Right.
Rob: In my opinion, you need to like the people who you work with because you spend too much of your life at your job so whether you’re hiring them yourself or they’re just people, if you work at a big company and other people are hiring, if you don’t like your coworkers, I think you need to get out of there.
What are we talking about today?
Mike: Today, we are gonna be going through our predictions for 2018. To kick us off, we probably should take a look back at our 2017 predictions and see how we did before we start making other wild ass guesses.
Rob: Indeed. And that’s just what these are, wild ass guesses. Every December, and we’ve done this for many years, I’d say five or six at this point, I went back and listened to a few of our old predictions and it’s pretty funny. Pretty funny how the world changes. Keep in mind that when we can, we make predictions in the startups space or in the tech space but these are not limited to just startups. We like to have fun with this episode. It’s more about entertainment than it is about these are areas to start a business in.
Next week or in the next couple weeks, we’re gonna be doing our goals episode where it is truly your and my goals that we set for 2017. We’ll review those and then we’ll look ahead at our goals for 2018. Those will be obviously, there’s some personal ones but there’s also startup business specific ones. But, for these, you know, again, there are some tech related and then others that are just kind of fun ones to think about, talk about.
Mike: With that in mind, let’s dive right in. My first prediction for 2017 was that health insurance rates are going to become a much bigger issue for self funded companies and I would say, what are we doing with our scale of like is it 1-100 or 0-1 or 50/50?
Rob: One to five?
Mike: One to five, I guess.
Rob: Yeah. Five is like “nailed it” and then one is “completely missed.”
Mike: Alright, one to five then. I would say on this one, I got a five.
Rob: In the US, specifically.
Mike: Right.
Rob: Because the US’ healthcare system is so messed-up, especially for small companies. Well, just for everybody, it’s messed up.
Mike: Yup. I’ve been hearing people over the past three or four months where at the beginning of the year it wasn’t so bad, I don’t think, and then as the year has kind of progressed, as people start to renew their insurance, I’m hearing people say that in some cases it’s double or triple what the rates were previously, the previous year. It’s kind of gotten out of control. I don’t know what people are doing about it. I’m glad that I renewed back in April, but at the same time, I’m going to have to renew next April and I’m kind of afraid of what is going to end up happening.
Rob: Yeah, I agree. I’m happy. It sounds weird to say I’m happy that I’m working for someone else, that I don’t have to deal with this. Essentially, Drip/Leadpages handles this for me now. I don’t have to administer it. They, like a typical employer with good funds, they cover most of the expense. I know it’s gotta be super expensive for them to maintain that. My first prediction for 2017 was there will be another high-profile acquisition in the bootstrapped space. My idea was that it wasn’t going to be someone that sold their app for 3-4X multiple of net profit but that it was gonna be another kind of Drip-esque acquisition where someone that we know in the MicroConf spaces that acquired by a big startup.
Mike: How did you do?
Rob: As far as I know, this is a one. I don’t know of an… Do you know of anybody in our space that got acquired?
Mike: I know of some but nothing at that level.
Rob: Yeah. Maybe a two or something. I was on the lower end of being right. I had the impression that, or I was thinking that there would be a kind of a bare acquisition in that but it really did not happen.
Mike: If I remember correctly, you did say on the episode last year that you didn’t have any inside knowledge, it’s just what you thought was going to happen.
Rob: Yep, that’s right.
Mike: My second prediction was that the SaaS bar is going to continue to be hard to reach which is obviously very generic but I kind of couched it by saying that startups are gonna start offering a service as a first base approach followed by implementing the SaaS once they figure out the process in order to be able to offer those services at scale.
Rob: It’s the product as consulting first and then turning into SaaS. I think when you said this prediction, I said, “Isn’t this already happening?” This was Brian Casel’s talk in October of 2106, was about productize service moving to SaaS.
Mike: Craig Hewitt went on this road with Castos as well. The idea there is to really make it easier for people to host their own podcast and they do a lot of this stuff internally with PodcastMotor where they do all the editing and everything else but they basically turned that productized service into more of a SaaS product and offer additional things which is more of a self serve model then the productized services which is done for you. I would say those two are the things that I would say come to mind, but I don’t see too many others. I probably have to give myself a two, possibly a three, but I wouldn’t say that this was as accurate as I thought it would have been.
Rob: I’m sure more people are doing it. I know Brain Casel has his productized course and I’m sure he knows other people doing it through that but you and I just haven’t necessarily heard about them or been around them.
My second prediction for 2017 was that start up crowdfunding will fizzle out. Lower end startups will use it but the best startups will continue to use their networks, AngelList, and that kind of stuff. I’m going to give myself a four on this because I don’t know if it fizzled out as much, it just has not really taken hold very well. It just hasn’t had the impact that I thought it would of people being able to buy small chunks of equity on accredited investor, non-accredited investors being able to buy small chunks of equity. I thought that it would have this big kick early on and then like I sad fizzle out. It kind of didn’t. I think that there have been several platforms that have launched to facilitate it. It’s kinda shoulder-shrug right now, like wait and see. Mostly if I removed the fizzle out, I was probably a five. “Crowdfunding won’t really do much,” if I had phrased it that way, it would be much more accurate. Was that your sense as well or you think I’m misreading it?
Mike: I feel like that there was an initial inclination that was going to happen, that people were going to do it a lot. Non-accredited investors were gonna be able to throw money in and start funding these companies. I don’t think that the types of businesses that were maybe brought before them were attractive enough for them to say, “Yes, I’m gonna throw my money in.”
Rob: Cool. That makes sense.
Mike: My third prediction was that more small scale entrepreneurial meetups are going to be starting around the world, and that the entrepreneurship for small-scale businesses is going to pick up steam. I probably don’t have a lot of data to back this up. I would say that I’d give myself a four out of five on this. I heard recently that FemtoConf over in Germany just recently sold out. Congratulations to those guys.
Rob: Wait, what?
Mike: Did you not hear that?
Rob: Oh, sold out. That was interesting. I took sold out as not selling all their tickets but selling the conference to someone else. I was like, “What?!”
Mike: Oh, no. No.
Rob: Did you hear that shock in my voice? Okay, sorry. Keep going.
Mike: No. Sold out as in sold all of their tickets. I feel like that’s going to become not really the model but more prevalent over time as people, like start these really small meetups and then grow it. I think last year’s FemtoConf was only about 10 or 15 people and then they went from 10 or 15 to I think around 30 this year. I just think that there’s gonna be a trend in that where you get these really small meetups that start out tiny and then they start to grow just because of the audience that they build and they’re growing off their success as opposed to trying to build something where they get like 100, 200, or 500 people to it the very first year that they start. It’s really just stair stepping their way up.
Rob: Congrats to you guys. My third prediction for 2017 was that there would be a 20% or more correction in the US stock market. On a scale of one to five, I give myself a zero. Have you heard this expression, “I’ve predicted five of the last two bear markets.” That’s essentially what I’ve done here. I think like all of us, things seem overvalued, but everyone’s been saying this. I know someone who pulled all their money out of the stock market in 2013 or 2014 and they have missed tremendous amounts of gains. Timing the market is so, so hard. We all think we can and it’s always a little bit later, you can’t quite outlast the market in terms of the irrationality of it going up or going down. I would probably say this will happen in 2018 but I’m not going to cheat and use that prediction again. I was dead wrong.
Mike: I thought you were going to say the 20% market correction was going to be upwards instead of downwards. I thought you were gonna…
Rob: I should have. It corrected from it’s low. It corrected upwards. My fourth and final prediction for 2017 was that the first consumer purchase package would be legally delivered with a man drone somewhere in the world and I believe, if I recall, that I made this prediction it was late November, early December, and it was within a couple of weeks that this happened. It was even before 2017. Is that your memory?
Mike: I think that’s correct. I think that happened before the year started. I think we were debating about whether or not you got credit for it because it was not in 2017.
Rob: I would give myself a five on this one even though maybe technically it should have happened two weeks later for it to be in 2017. We should call this our predictions from between right now and the end of the following year.
Mike: You’re just trying to get credit for that one.
Rob: Alright, let’s dive into our predictions between now and the end of 2018.
Mike: What’s your first prediction, Rob?
Rob: Hey, wait! I didn’t even type this one. Let me read this one. Rob will buy a bunker in the Swiss Alps, establish a micronation with his 11-year old son as the benevolent dictator. How did this show up in our outline, Mike?
Mike: I don’t know, I have no idea.
Rob: I think that’s a really good prediction.
Mike: Must have been the elves.
Rob: Messing with my predictions. That was a joke prediction. Please don’t hold me to it. What’s your first one?
Mike: Mine is there’s going to be an economic downturn. I think that it’s probably going to be, I don’t wanna say that it’s gonna be major. But I think that it’s gonna be substantial enough that people will notice. It’s not gonna be like 2008 where the entire economy crashed but I do think that there is going to be that, you kind of called it for last year, the 20% stock market correction, I feel like that’s gonna be this year. I think that it’s going to be driven kind of by a lot of the factors around healthcare, at least in the United States, and various policies that are kind of going into effect. I don’t see like a sustained economy is going to be moving forward this coming year. There is bad stuff on the horizon.
Rob: I want to get more specific with this because when I think of the phrase “economic downturn,” I think of the economy as multiple factors. You could say is that a stock market correction, is that a recession which implies a lack of growth of businesses which don’t necessarily, it often causes a stock market correction, but the two can be non-correlated. That typically also leads to unemployment. And then there’s the housing market which I see as a separate thing.
There’s three or four different things; unemployment, GEP growth, stock market, and housing. In 2008-2009, they all plummeted, but in 2000, the housing market took a little hit but it wasn’t that bad. What do you mean when you say economic downturn? Let’s define it and then let’s update, so we know next year, whether you are accurate. If it’s any one of those four, it’s a pretty broad prediction. But if you’re saying its like three out of four or something…
Mike: I think it’s going to be a couple of them. One, I think there’s going to be a lot of small services businesses that end up going out of business partly because of regulation but partly because they’re just not going to be able to make ends meet. They’ve got other things to adhere to in terms of tax laws, health insurance, and things like that. I think that’s going to have a pretty big impact on them, along with all the legislation tied to the healthcare industry. I think that’s going to have a pretty bad impact on them as well, just in general, you will see a lot of small-services companies end up going out of business.
Then that’s going to lead to unemployment which impacts a lot of other things. I don’t think that the housing market is really gonna go down very much. It probably will stay relatively the same. It’s certainly is not going to be a big growth area. Then what was the last one that you said? Oh, the stock market. I think that it will level off a little bit but I don’t think that it’s going to go down.
Rob: I’ve updated your prediction with a few bullets that kind of captures that so when we come back next year, we can measure it correctly.
Mike: What’s your next prediction?
Rob: My first prediction, the Swiss Alps bunker one, is not going to come true. I think 2018 will be the year of non-institutional startup funding. I think this has already begun. We’ve seen more and more angel investments coming out. The more I get involved with this, the more I realize the power of money that comes from angels, rather than going the traditional institutional route. Jason Calacanis’ book, Angel which came out a few months ago, it was really good. I think some people will probably dive into it from there.
Crowdfunding, this is maybe my opposite of my prediction for 2017, but I do think that crowdfunding will continue to build some steam. The ICOs are a bit dubious as to whether they’ll stick around. But I know that’s a big push right now, people are trying to fund startups using ICOs. Through those three avenues, I think it’s gonna be easier, and even more prevalent, and become a more common thing for people to invest in early stage startups. I think it will become easier as a startup to raise non-institutional funding. This is kind of tied to fund strapping a little bit. It will be easier to fund strap because of that. Fund strapping being raising a small round of funding without the intention of the implied series A, of having to then go to institutional money in 18 months but to actually become profitable with that initial round.
Mike: My next prediction kind of revolves around in app purchases. One thing that I’ve heard talk off is about legislating that. Mainly because when Star Wars Battlefront 2 came out, there was complains about how much the game costs, and then the fact that inside the game, you could go in and you could purchase basically, a loot crate and you had a chance to get certain items but you are not guaranteed to get something specific. The rationale people were putting forward is well, that’s actually gambling because you’re buying a chance to get something that may or may not be valuable and it is being presented in such a way that that fits the definition of gambling.
I don’t think that we’re going to see legislation around this. I think that there’s a lot of talk about it. The companies that are behind these types of games are smart enough to be able to avoid that kind of stuff because they’ve got the legal teams to both defend them and point them in the right direction and say, “You should or shouldn’t be doing this. Here’s what we can get you out of and here’s what we can’t.” I don’t think that there’s going to be any actual legislation around it but I do think that you’re going to see gaming companies come to better definitions and I would say be a little bit more careful about how they’re putting those offerings together for those in app purchases.
Rob: My second prediction for the year is that artificial intelligence/machine learning will continue to be marketed as the next big thing in terms of enterprise SaaS and even small and medium size SaaS and software, but once again, it will not deliver in 2018. By not deliver, what I mean is it’s being touted before it can really provide value for most people and most businesses.
One of the big issues is especially with machine learning, you need such large datasets to actually train the algorithms. I see these SMB tools saying, “We’ll use our machine learning to help you do…” That’s over promising and I think it’s gonna burn people out on it. I’ve already had conversations with a guy who used to run a big ecommerce store and he’s like, “We’ve been sold artificial intelligence for 15 years and it’s still not as smart as me sitting down and whatever, building out a funnel or a campaign.”
I think there’s danger of it becoming a complete marketing fad. I do think that eventually, this stuff’s gonna work and it’s gonna be genius. There’s examples of it. We use what I call artificial intelligence to detect spammers when they come into Drip based on behaviors. We have all these signals we look at and we auto-flag and our accuracy is really high. We’ve developed that algorithm over the last several years and I know that there are other startups that do this internally. This stuff can work. There’s just certain approaches that you need to take to it. We have stuff that we’re already thinking about inside Drip like, “How could we automate this? How could we make this smarter?” People have been saying it for many years, it’s not there yet, and some people will actually do some intelligent things this year. Hopefully, we will release something, but it’s not going to be the promise of everything’s done for you, and you just sit back and press one button and all your marketing is essentially automated, which is what so many of people in the mar-tech space are claiming.
Mike: I think that’s a difference in the bounds of the problem too. For example, detecting that somebody is coming in and going to be sending spam, or is a fake account that signed up, and their intent is to do that. There are certain patterns that you can recognize very easily because there’s only so many things that you can do or that can be done in the app. You can do time-ins around when one request happens versus when another. It makes it easier to scour that and kind of detect whether or not somebody’s doing that. Versus in an ecommerce, how do you predict whether somebody’s gonna come back and buy something else, or how do you predict the best thing to upsell them to. That’s a lot more of an open-ended problem with no real bounds versus, “Is this person going to be a spammer? Yes or No?” Does that make sense?
Rob: Yup, totally does.
Mike: I think that the two things are very different. I totally agree that enterprise companies are being sold to this type of stuff and it just doesn’t work.
Rob: Yep. How about you? What is your last prediction?
Mike: My last prediction is actually about Uber and it is that Uber is not going to regain the ground that they have lost. Lyft is a lot smaller than they are, but I think that because of all of the, I’ll say, political fallout and loss of goodwill towards them – not that they probably had a ton of it to begin with, but I think that they have really lost a lot of the leverage points that they probably had. They’re going to have to work harder to do the same things that they were able to do last year, and the year before. Just because of the fall out from the allegations of misconduct and all of the internal stories that have come out of how badly they’re treating people. I just don’t think that they’re going to recover as well as they probably think that they are. Like I said, the big problem is it’s going to take them a lot more effort to do the same things that they were able to do last year with substantially less effort.
Rob: When you say not regain the ground they’ve lost, do you mean in the valuation? Because, as of this writing or as of this recording, their valuation is like 30% lower based on a round that they have to raise from SoftBank. I think Uber’s burning $1 billion a month. It’s a lot of money. Is that much money?
Mike: I don’t know.
Rob: It’s a lot of money. Yeah. They’re in a place of having to raise capital and with this kind of tarnish on them, and they’ve lost their CEO, SoftBank offered them 30% less than the previous round. Are you thinking that in terms of evaluation or you’re thinking in terms of market share? I know we don’t know their market share for sure but there are estimates and such and they have taken a big time hit with people deleting their app altogether.
Mike: Yeah, that’s more what I’m thinking. Market share, because we don’t have the actual numbers, it’s gonna be a little bit difficult to, I’ll say, measure that in a year. When I say that they’re not going to regain the ground they’ve lost, as in the people who have deleted their app will probably not reinstall it unless they have no other option. I don’t think that they’re going to win those people back even if the company changes its tune and goes out of its way, I’ll say, to overhaul their culture. I don’t think that they’re going to win those people back which will have an impact on their market share and their ability to grow as a company.
Rob: Sounds good. My third prediction is that there will be an enormous crash in Bitcoin’s valuation. Right now it’s on a huge rise, but long term I am still bullish.
Mike: Wait, didn’t it crash three days ago?
Rob: It crashes every few days but it comes back. I’m saying more of, I don’t wanna say sustained crash, but if you look back over its history a couple years ago, it built up into the 400, 500, 600 range and it crashed and it was down for a year, just fumbling around. Maybe even more, it might have been 18, 24 months. It’s kind of bumping around and around a few hundred and then there’s this more recent rise. I’m a person, I’m long Bitcoin. I own several Cryptocurrencies and not in small quantity either. It’s not like I bought one. I’m kind of keeping my eye on it and it’s tough, this is similar to my prediction of the stock market correction.
I think the way Bitcoin is going up right now is like no mania that we’ve ever seen, the volatility is just crazy. I do think that the next 12 months, that is likely to end. I of all people would be ecstatic if it didn’t, if it kept going up, doubling, tripling. Bitcoin has had a 2100% return in the last year. That’s kind of tough not only to sustain but even sustain the current valuation. With that said, long term, even as I sell some of the Bitcoin as it gets really high and my assets get way out of allocation, or out of the percentages that I like. I’m certainly not exiting those positions at all because I think I’m long Bitcoin and I’m long cryptocurrencies in general.
As you look out 5 and 10 years, it’s kind of like being here at the advent of the personal computer, the advent of the internet, the advent of smartphones. Bitcoin and crypto in general is this movement and long-term is going to stick around even after a crash. If we think about the 2000 Dotcom crash, there was all this hype around it from ‘94 from the IPO of Netscape, ‘94-’95, all the way to 2000, and then everything crashed, and people said, “Boy, Dotcom, those internet sites, they’ll never amount to anything.” Now, here we are. The biggest companies in the world essentially either came out of that or have something to do with that. If you had just been long the whole time, you’d have to wait through that decade-long trough, essentially, when it all bottom-dropped out of it. I guess I see there could be a similar frenzy around Bitcoin and other Cryptocurrencies, where there will be a big crash, but long term it will be a viable store value or a way to move money around.
Mike: I think the volatility of it is kind of a big turn off to me. I saw a tweet earlier today from somebody who said, “I bought a USB cable from Newegg with some Bitcoin ones. Feel free to ask me sometime and I’ll show you a $3500 USB cable.”
Rob: So funny. That’s the thing, I don’t think Bitcoin is a currency. I think cryptocurrency is a misnomer and I view it much more as a store value in a way to get money out of a situation… I view it more as gold. I wouldn’t go buy bread with gold. I wouldn’t go buy USB cable with gold and I won’t do it with Bitcoin either. I do believe it’s a great way if your currency is going crazy and this happens every several months to just get money out of my currency because the government won’t allow me to exchange it for US dollars, that’s much more stable, and I don’t want to see this hyperinflation. People are dumping their money into Bitcoin or into other cryptos. It’s a great way to, I shouldn’t say great, but it is a way people are using to not lose all the value of their money during this currency crisis.
And then you look at when Brexit happened and there was this uncertainty. When there is economic uncertainty, obviously, there’s a lot of volatility in Bitcoin. It’s been lucky enough to keep going up. It’s a way that if you had a hundred thousand dollars in the bank, or I should say a hundred thousand Argentinian pesos or whatever, hyperinflation hits and it’s 100% a weak inflation, you can’t go buy $100,000 worth of gold because everybody goes and buys it and they’re trying to get stable assets. But you can go buy $100,000, in theory, of Bitcoin quickly. That’s been one of the ways that people have seen these big rises.
Mike: Do you think that long term digital currencies will replace gold as the asset to go put your money in for stability?
Rob: No. I think they will both co-exist because gold has just been around too long, it does have a small amount of value in manufacturing, some amount of value in jewelry, but more than that, it’s just that we’ve all agreed that it’s worth something. I don’t think any time soon everyone’s gonna agree that it’s not and agree that crypto is. I don’t think that it’s realistic but I do see that it’s just another asset to hold. That’s how I did asset allocation or I do asset allocation. That’s how I have money in all of these things, all amounts divided between them, although my cryptocurrency is no longer a small amount. I kind of laugh because it’s a good problem to have when it goes up, but it also completely jacks your plans when you’re like, “Oh, I don’t actually want to own. I don’t want that much of my networth to be tied up in something that’s this volatile.”
With that, my fourth and final prediction is that cryptocurrencies will be regulated by several large governments. There’s already been statements from the US government about what Bitcoin is but there is no SEC oversight of Bitcoin exchanges. There’s a bunch of regulation that could be in place. I don’t know that it will happen in the US government, I know it’s happening in smaller governments. I think that this will be the year where government really starts stepping up and putting legislation or more regulation in place to get involved with cryptocurrency and get out ahead of it to make sure that for whatever reason, they pass regulation, they’ll be doing that. They probably would have done it this year but large governments move slowly and I think they’re all waiting to see what happens. I don’t think that it’s going away anytime soon, this will be the year that things will really ramp up.
Mike: I wonder if any of that legislation is gonna be based around security standards. Banks have security standards that they have to comply to. There’s been no shortage of stories of these cryptocurrency sites that have gotten hacked and they lose millions or tens of millions of dollars. I can totally see some government agency coming out and saying, “Hey, in order to be able to trade in whatever the digital currency is, you have to follow certain security standards in order to be able to do it.” I think it’s gonna take them a few years in order to be able to nail down exactly what those are. They’ll sit in their committee for like a year or two at least before they get to any sort of concrete implementation guidelines.
Rob: When they’re first announced, it might be a big negative hit to Bitcoin and the crypto valuations, “Oh no, government’s gonna get involved.” Then long term, it could feasibly make it more stable or it could make it less likely to get stolen from marketplaces. It’s hard to predict what it will do. I think there will be mixed reaction to it.
Mike: Yeah. It depends on whether they legislate it or decide to back it as they do bank transactions. Because with banks, it’s federally insured versus Bitcoin it’s not. If it’s a digital currency and it all gets stolen, it’s the government going to step in and say, “We will back this up to $250,000,” or whatever, but my suspicion is no, they’re not going to go down that path.
Rob: That wraps us up for today. 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 369 | Staying Motivated, Improving Onboarding and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listeners questions. Some of the topics include dealing with contractors, improving conversion from trials to paid, and time management.
Items mentioned in this episode:
But before we dive into the intro, Mike, I have a question for you.
Mike: Oh, boy!
Rob: Why doesn’t McDonald’s sell hotdogs?
Mike: They have, actually.
Rob: Really?
Mike; They’ve done a bunch of experiments with selling hotdogs. I think I’ve seen them in Texas but I’ve also seen them in other places where it’s certain times of the year. They’ll just test it out to see whether it’s going to work or not. It’s usually just like a limited edition item. But they have tried it, I know that. And now you know.
Rob: 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 built your first product or you’re just thinking about it. I’m Rob.
Mike: I’m Mike.
Rob: Really?
Mike: I had something on my throat.
Rob: What happened with your throat? We’re here to share our experiences to help you avoid the same mistakes we’ve made. Oh, this is a good week for the intro.
Mike: Perfect, yes.
Rob: I realized something because I was flying to and from Europe and I downloaded just some older episodes, in the 200s, I just wanted to check out what we were talking about back then. The intro was different. It was like building software products or something, instead of building, launching, and growing. I think I like our new one. For a long time, it was just developers building software products, and now it’s developers, designers, and entrepreneurs. For sure our audience has expanded over the years. It was just kinda funny to hear it and for it to trick something, click something in my brain and I’m like, “Ugh, that’s not the intro.”
Mike: Yeah, definitely. Things have changed over time but it is interesting sometimes going back and reviewing things that you remember from a long time ago. It definitely is a different tone or connotation with it. Actually, Benedikt mentioned something about the fact that he was thinking about MicroConf Europe and how over time, his view of the conference has changed but also, he has changed as a person after several years of coming to MicroConf just based on the things that he’s learned, the things he has done. Although the conference, in many ways, stayed the same, he has changed and evolved.
Rob: Yeah, that makes a lot of sense. Thanks for bringing him on, by the way. It was a bummer week. You and I couldn’t discuss MicroConf Europe but I felt that you guys did a really good job of covering the topics.
Mike: Yeah, we ran a little bit out of time at the end there. We didn’t get the chance to cover end of the attendee talks which all of them were I thought were fantastic, but it would have been nice to have a little bit more time to dive into those.
Rob: Sure. That’s my updates for the week, I guess for the past few weeks, because I haven’t been on the show for a bit due to the travel. Really was going to Lisbon and I really enjoyed getting to know Lisbon. It’s a very livable city, obviously a lot more relaxed than Barcelona. There’s not as much there in terms of museums and sites to see but we really enjoyed it. We got a great little Airbnb. I was there with my kids and a nanny and we were just hanging out doing some travel. It was a lot of fun. Then, I did MicroConf Europe obviously, then met Sherrie in Rome the following week. We all hung out there for an additional week.
I just got back in town about six or seven days ago. It’s good be back in the States but travel’s always fun. It expands your mind. I found myself being way more creative and seeing things with new eyes. This is my second time back to Rome, really the whole family’s second back to Rome. It was neat to see our kids seeing the Colosseum, seeing these museums, and these sites, and remembering and talking about the last time we were there.
Since they were older, it was so much easier. I think it was three or four years ago we took them, the youngest was three or four years old and I just remembered it was hard and it was tiring, this trip was not that. It was so much more. They’re really good at travel now because they’ve done it a few times. Even on the long flights and the time change, it was a seven or eight hour time difference, they just handle it now. It was a really good trip. It was a really relaxing two weeks and I didn’t know if it would be, you’re travelling with two kids, and a nanny, and sometimes the wife, and sometimes not. There were multiple plane flights, there was a six-hour layover in Canada and we were all off time and we got tired at times but overall, it was such a worthwhile thing to do.
Mike: Awesome! Our kids today are much better traveller these days than they used to be but we still don’t travel too much, I don’t think. We went to my sister’s house for Thanksgiving, and that’s a five-hour drive or so but it’s not too bad. We spent about three days there and drove back.
Rob: How about you? What’s been going on?
Mike: Well, my wife got me a scotch whiskey advent calendar for Christmas.
Rob: Oh, man! Best gift ever!
Mike: Yeah, so that starts tomorrow, which I’m very excited about.
Rob: An advent calendar for those who don’t know, it starts in December 1st and there’s a little door that you open each day and it’s supposed to count you towards Christmas. The original advent calendar were pieces of a nativity scene which is the birth of Jesus. You open it and you built the scene over the course of the month. But now, there are lego advent calendars, chocolate advent calendars, and I had not heard of a scotch one but that is gonna be awesome. Every morning, you’re gonna open up and drink scotch with breakfast, is that the idea?
Mike: I was gonna wait until the evening. But, the others…
Rob: Probably…
Mike: There’s 24 different ones in here.
Rob: Oh man, that’s gonna be good. Are they like the little airplane bottles?
Mike: They are like little 50 milliliter, or actually, I think 30 milliliter drams. It’s about a shot or so. It’s just a regular size but you know, there’s 24 of them in here and I saw the list of them and a lot of them are things that I’ve never tried before. It will be really interesting to try some of them.
Rob: For sure. 30 milliliters, Mike. That’s a third of a shot for me.
Mike: Well, I know. It depends on your hands.
Rob: Cool. Today, we are gonna be answering a slew of listener questions. We actually have four listener questions left over from MicroConf Europe. They’re not listener questions, they’re attendee questions.
You and I did a Q&A session at Europe and we asked folks for questions in advance and we ran out of time to answer them all. Maybe we’ll start with those and then go into our store of questions.
The first question is from Mark and he says “Rob, have you thought about integrating Drip with CRM platforms? Something like Salesforce, MS Dynamics, other more enterprise things. Often, a simple UI is missing the error.” We have discussed it. We do integrate with Pipedrive, with Close.io, we have a basic web-to-lead with Salesforce where a new subscriber comes in and you can just push them into Salesforce. I think we have Insightly as well, so we do have some CRM integrations.
There’s a couple things to this question. One is what do you mean by an integration? Do you just mean when they hit a certain lead score, you can push them into your CRM? Because we already do that with several systems. But if you mean a full two-way integration where it’s syncing up the data and tags and all this stuff, that kind of stuff is extremely, extremely complicated. The Salesforce alone would probably be about nine months of business development and partnership and development work. A huge amount of effort. That is one reason why I have not done it.
Another reason is our core market is not people with sales teams. That’s a whole other problem that other tools solve. We focus on people who are driving digital commerce, it’s like ecommerce, people who are selling things online, or if you take credit card online, we definitely work with SaaS apps and ecommerce sites and info marketers. Once you have a sales team, it’s less in our core competency and it’s not something that we really wanna double down on or spend the time on at this point.
Mike: One of the reasons this type of question comes up is because once you put your product out there and people start using it, they’re going to use it in ways that you didn’t necessarily envision, and you make changes to accommodate what seem like reasonable requests, but they start down a path of allowing people to do things that the product wasn’t necessarily designed to do from the very beginning. You just didn’t have the vision in it for it. To give you a prime example of that, which is in Drip, you’ve got the lifetime value that you can assign to somebody and that’s built right in. I wouldn’t say it’s front and center, but it is right there, kind of a standard option. That translates back to a CRM where you say, “Oh, what’s the lifetime value of these particular people?” It starts people down that path. It leads to questions like this, like how do you do the full two-way sync integration between Drip and whatever CRM that you have.
I think you have a great answer for it which is really trying to focus on what the things are that you do best and leave the other things to somebody else because you don’t want to try to be everything to everyone.
Rob: Yep, you have to focus.
Our next question is from Johannes and he says, “Hey, at the breakfast this morning, we discussed driving traffic either through side projects, and that was part of what Alex Yumashev had talked about which is kind of engineering as marketing. It’s building a tool that you launch on a weekend that does something; a website creator, an SEO creator, and then use that to drive leads, or through blog posts on subjects close to your product but not mainly about your product. Questions came up about how to convert these visitors into paying customers. What is you experience there and do you have any good advice?”
What do you think, Mike?
Mike: I wouldn’t say that I have any specific experience with taking side projects like that and trying to drive traffic. For context, because not everybody was there to listen to Alex’s attendee talk, but he talked about how he had built a number of side projects and then through those side projects had linked back to his main business website, and ended up getting traffic to his main website and converting those people into paying customers down the road, just by virtually the fact that he’s doing a lot of stuff in the open source community and people can browse that and they end up back in his website.
You have to treat is as something like a landing page or a lead generation mechanism as well. If people are there for a particular project, and that is in some way related to your primary product or set of products, then you have to think about how would you get them to basically buy into the commercial offering that you have. Is it related? Is the side project something that is tangential? Is it like a limited form of your main product? There’s a lot of variability there based on what the side product actually is versus what your main business does. Thinking about those things, and then using it as more or less like a landing page or launching area where you get those people over to your site, and whether it’s a specific landing page you have, maybe giving them additional resources on your website, get them on your mailing list. That’s really an entry point into your sales funnel is what you’re looking for. That’s probably the best approach for that. What do you think, Rob?
Rob: Yes, it’s all about if you’re driving people, his question is specifically if you’re getting people to these blog posts or getting them to the side project, how do you then convert them to paid? It’s all about email. It’s all about getting their email address, typically these side project things ask for an email upfront before they can use it, or you give them some results, and if they enter their email they get the rest of it then they’re on your list. There’s the WP Engine website speedgrader, there was the HubSpot website grader which I think was like SEO stuff that Dharmesh built, you had to enter emails for those. It was a nurture, education, and then it gets you through to become interested in using the product ultimately.
Mike: Right. I was actually thinking of it from a standpoint of you have a project on GitHub and it’s an open source offering versus what you had just mentioned, most of what Alex’s talk was about. The online tools that are free, engineering is marketing at that point, and you are absolutely right. You need to get that email address.
Rob: Our next question is from Paul and he says, “As a founder, I found my emotions get entangled in the success of my business. Any advice for emotionally distancing yourself from your business so you can make decisions more rationally?”
It’s obviously a longer answer but my short answer is go to zenfounder.com, listen to the podcast, click Contact Us link and talk to Sherrie Walling. That’s my quasi-joking answer but it’s actually a learned skill and someone who’s good at it can teach you. What do you think, Mike?
Mike: I agree with you that it is a skill. I have a hard time buying into the idea that there’s one set of things that you can do and those set of things are gonna work for everyone. Just based on who we are, our backgrounds, what sorts of things we’re interested in, and how involved we are mentally in our business and whether or not you are able to shut that off easily is gonna greatly impact the things that will work for you and what won’t.
It’s just like exercise for example. Some people have a really easy time getting up and going to the gym, other people don’t. Same thing with going to sleep at night or a variety of other things, whether it’s weight loss or what have you. There are different things that are going to work for each person, and there’s probably a lot of experimentation that you’re gonna have to do to figure out what those things are that work for you. You can get ideas from other people but that doesn’t mean that everything you hear is gonna work for you or is gonna work as well for you as it did for them.
Rob: This is really hard. This is the age old question and it’s one that I think every founder probably struggles with. I know that I did and I still do. I never quite was able to completely conquer this. I don’t think anybody has. That’s part of being about a good founder is that you care a lot. I used to joke, well half-joke, when my apps are unstable, I’m unstable and say things like my happiness is based on my MRR growth and while that isn’t totally true, it was…
Mike: There’s a lot of truth there.
Rob: There’s a little more truth than I would care to admit. I do think it’s learning, it’s becoming self-aware, or being able to gauge when you are really stressed out and then asking why. I’ll tell you what I do. What I’ve learned is that when I’m stressed out or when I’m angry or when I’m frustrated, I stop and I say, “Why do I feel this way? Is it something real or is it something that is fake, that is manufactured?” Someone said something stupid on Twitter that pissed me off, or someone is attacking this, or someone said something negative about my product and it hurt my feelings, and then I say, “That is a very real thing, but do I need to still be thinking about that now or is it time to let that go?” This all sounds very simple but this is how I cope with it and then I will totally be done, I’m gonna be done with that thing and I’m gonna make myself feel better. It’s actively thinking why do I have this stressed out feeling?
Also, a lot of people swear by it, I don’t do it but I did do meditation when the acquisition talks were going on because I probably have never been that stressed in my entire life. I would sit in the parking lot and I would meditate for four or five minutes each morning. It’s just listening to your breath and being aware of what’s going on with you rather than having your mind race about other things. That would help me get centered going into the day. I know that a lot of people swear by that. There’s a lot of different skills.
Deep breaths is something else I’ll do. I’ll sit there for 30 seconds and take three or four deep breaths if I wanna calm myself down in the moment. These are all small things that I do when I’m actively stressed. Trying to disconnect to yourself from the business as the original asker was asking is you don’t want it to trainwreck you when things go sideways, but it should impact you in some way. You care about that a lot, it’s kind of like losing a game that you’re really interested in. You’re playing soccer, or you’re playing chess or whatever and you’re really into it and then you lose the game. You should be a good sport about it but I personally believe that you should be pissed off too because I’m a competitor. You’re playing the game to win, that’s why I play games. If things are not going great in your startup, that you should feel a little stressed out, but it’s finding the balance of not feeling so stressed out that it just dictates your day-to-day mood based on your MRR growth or whatever.
Mike: That is probably the more common issue is being too invested in the outcome versus the journey along the way, as you’ve mentioned, that ties a lot back to the financial aspects of it. It’s really hard to disconnect yourself from it when things are not going well or not as well as you would like, really.
Rob: Last question from MicroConf Europe and then we’ll get into some other questions, is from Alex. He said, “Do you have any advice on time management as a solo founder? Is it better to dedicate to specific skills, like marketing, for example?”
Mike: Going back to my comments about the fact that different things for managing your emotions are going to work differently for different people. The same kind of advice generally applies here as well. Doing stuff on individual days is gonna work for some people, just doing time blocks, for example, is gonna work for other people. I do think that there are certain types of tasks that you need to do that timeboxing within a day is not necessarily going to work as well. For example, programming tasks or anything where you really need to get into deep focus and be able to spend a fair amount of time in order to make good progress on it, those are things that you can’t spread throughout the day. You really need to be able to schedule those things better. That’s the fundamental piece of time management is being able to figure out when you’re going to be effective at certain things and when your decision-making skills are just totally shot and you really need to flip over to something else.
Rob, we’ve talked about this in terms of managing your glucose levels throughout the day. It seems like an optimization but being cognisant of when you are better at certain things that other times of the day is extremely important.
Rob: Yeah, we’ve covered this on the podcast and we’ve had guests. We talked about the timeboxing approach that some people use, there’s a couple of guys at my work that do that, they swear by it. I have to done it when I’m derailed. I do it as a short term fix to get me back on track if I’m unmotivated or I’m struggling to figure out what to do.
Personally, time management for me is about priority management. If I know what I should be working on and then what I should be working on next and I don’t have to evaluate that every time I finish a task, I’m highly efficient. What derails me is if I finish something and I look around, and I go through my email, then I go to Trello, I wind up going to Amazon or Twitter and then I look around and I don’t know what the hell I’m supposed to be doing and that’s where I lose, that’s where I mismanage my time, is if I don’t have these clear-cut priorities. Like you said, if I do have the clear-cut priorities and it’s the morning hours when I happen to be most productive between let’s say, 8:00AM and noon or 9:00AM and 1:00PM, then that’s it, that’s where I’m killing it. I try to push all of my meetings to afternoons, I try to push all of my calls to one day per week because those are distracting and interruptive for me and it doesn’t allow me to do deep work.
Alex’s question is is it better to dedicate specific days to specific skills like marketing for example. I think if that works best for you, then you should do it. I don’t think I ever did that. I don’t think I’ve ever blocked stuff off like that, like a whole day just for marketing then a whole day to just do development, but it was because when I have, let’s say I have this Trello board of 20 tasks, one was to whatever, go in and fix the forgot password thing that broke, and then the next one is to go start a Facebook Ad campaign. For me, that’s not a hard context switch if I finished one and then I move on to Facebook. I didn’t feel like I had to stuff all the marketing stuff on one day, it was just about which priority it needed to be. If I was switching back and forth between tasks when they’re undone, then there’s the big switching cause. But if I’m actually finishing and moving onto the next thing, I don’t feel like I need to separate the disciplines to different days, personally. But your mileage may vary for yourself.
Thanks again for the questions, guys. I’m glad we were able to get through the last four here on the podcast. Our next question is not actually a question, it is a thanks to us from a Nathan. He says, “Thanks for all the motivation. Thanks for the show, it’s been really motivating to get me started on my journey into the world of startups. I haven’t released a product yet but I’m working on building a public reputation and a mailing list. I just released a plugin for the Craft CMS which I use to run my personal site because I couldn’t find a good way to add events and tag emails to my Drip account for people who filled up my contact form. Releasing something even though I’m not selling it directly feels amazing. Can’t wait to release even more things in the future.” Thanks so much.
Mike: Thanks for that, Nathan! I find it interesting that the first thing you did was integrating it into Drip, especially given the other question about CMSs and you integrating with CMSs from MicroConf.
Rob: That one was CRM actually.
Mike: Okay, yeah, you’re right. You’re right. Sorry
Rob: Different TLA, three-letter-act.
Mike: Yup.
Rob: Alright, our next question is about how to take over duties from your contractor, it’s from John Hollows. He says, “Howdy, I started my SaaS at the time when I didn’t know much about frontend development but I was focused on backend data handling and product decisions. I hired a contractor and it’s been great but it’s become a roadblock to development. I can’t update the frontend without sending him a Slack message and waiting a few days for a reply.” That’s a bummer. He says,” I’ve gotten good enough that now, I can do it for myself. Could you cover how to manage scaling down or letting go a contractor? I foresee requesting things to be more documented, then gradually taking back ownership of different aspects while giving him modular work, like creating a frontend module that handles the new feature. Thanks and keep up the great work.”
What do you think?
Mike: I think this is an interesting one just because a lot of people find themselves in this situation, whether it’s for financially-related reasons or because somebody just isn’t working out. They want to basically take over control or responsibility for the things so they can move faster. This I think is a really common problem if you’re early on and you’ve got money to spare and you’re hiring people and maybe they are not putting the time because you, obviously, don’t have enough money to pay them full time but at the same time, you’re beholden to their schedule. Even if you want to move faster, you can’t necessarily do it. I think that it’s just a very common situation that people find themselves in. The key to this is not to be put in a situation where you have to go back to them afterwards and start asking for documentation and start cleaning things up, and putting things in order so you could transition from one person to another, that person being them and transitioning it back to you. One thing you can do is you can go through yourself and start understanding it.
If you really are gonna take it over, then you have to understand it to begin with. You going through and doing some of that documentation work yourself might be at least a good start but you also want to put together a framework or a process for how the documentation should be put together. What sort of processes need to be put in place or documented so what when you get to a point and after you’ve taken over and you’ve been doing it and you need to shift onto something else, and you need to take this and hand it off, then you’ve got all the documentation put together and you’ve been keeping it up-to-date. If you get everything documented and then you take it over and do stuff for six months or a year but you don’t maintain the documentation, you’re gonna be back exactly where you were when you first took it over.
It’s important that the stuff that you’re putting in place are things that you are going to continue doing as part of the process and you are not opposed to doing them because if you don’t, it’s just gonna fall apart for you later on.
Rob: The way I would approach this, I’m gonna assume you have a good relationship with your contractor. You’re gonna have to judge if you tell the contractor totally honestly upfront, “Hey, I’m gonna look at taking over all the dev work. Could we start by having you create some documentation and have you walk me through the thing to get me up-to-speed, and then I’m slowly gonna take it over, over time, over the next three to six months. And let’s just transition it.” If he can do that, great. Most of the contractors that I’ve worked with have no problems with that.
If you think that the contractors is gonna be a pain in the ass about it then you can take a different tactic and let him or her know that, “Hey, I’m gonna be taking over some of the front end development work. I just find that I have more time and I wanna do some blah blah blah…” You don’t really say that you’re gonna basically be letting him go in six months. You could also say, “We may be thinking of bringing more contractors or other people and I really just want some documentation, could we put together some documentation and then walk me through it.” It’s pretty standard stuff as a contractor, I would totally expect someone to come to me and say this. You’re thinking process here that you’re gonna want some documentation, you’re probably gonna want a walk through, you’re gonna want to slowly take over more, slowly shrink the contractor’s sphere of ownership, and then eventually just take over all the work.
My guess is if the contractor is pretty good, you’re always gonna have some lower priority stuff that can wait a few days. Then there’s the high priority stuff but if the contractor saw it and knows the code-base and has delivered for you, I bet that by the time that you get to a place where you’re doing all the frontend work and you’re doing the, I should say, the high priority stuff that needs to get done quick, that you’re gonna have enough lower priority stuff that still needs to get done that you may want to actually keep the contractor around, whether it’s the amount of hours that they’re doing now or fewer, it’s always good to have another resource to help out with this stuff. There could be a lot of truth in this statement of, “I wanna learn this so that we can share the burden rather than you taking over everything.” I hope that helps. Thanks for the question.
Our next question is from Tim, it’s about improving conversions. He says, “I’ve been tracking signups across the board and about 50% of the people that come onto my pricing page follow through to signup and they use the app. However, the number of converting paying users is very low.” He has a trial obviously, he says, “I’m talking under 1%.” His trial to paid is under 1%, I’m gonna assume with a 50% signup rate of people who visit the pricing page that he is not asking for credit card in advance of the trial. “Can you point me to a resource I can use to take the first step to tackling this problem?”
Instead of pointing him to a resource, Mike, why don’t we just become the resource?
Mike: He has two different products here. One of them is called Article Insights and the other one is SEO Content Machine. I don’t know which one he’s specifically referring to. It’s probably a little bit difficult to drill directly into those. But there’s two approaches that I would take.
One is to take a look at the people who have converted and ask them why they started paying, what was important to them, maybe analyze how long they stick around and see if their lifetime value is extremely low for what you would expect, maybe you expect them to stick around for three months or six months and they’re staying around for a month or two. That’s a warning sign that either they’re signing up for something and they thought that they were getting something else or it’s just really not delivering the value that they thought they were gonna get out of it.
The other thing is you can go and start talking to those people who have signed up but if you put an offer in front of them, for example, after seven days that they could convert into a paid account, ask the people who didn’t why they didn’t or what were the biggest turn offs to them. Whether you ask them to respond to an email or get on a call with them. If you can get on a call with them, great, but I understand that a lot of them are probably not going to. But if you’ve got 99% of them who were not converting into paid then you’ve got a lot of opportunities to get them onto a call. It’s really about understanding what it is that they thought they were signing up for and what value they thought that they were gonna get, what their position is. Are they just kicking the tires, is the reason you have really high sign up rate is because they’re just tire kickers and it’s free so they figured, “What the heck, I’ll throw my email address in there,” or is it that they actually had a business problem that they were trying to solve and that’s the part that you’re really trying to get at is what are the pain points that they’re actually trying to solve and does the product actually deliver those things. Or is it that you think that it does but the reality is that their situation or problem is a little bit more tangential than your product delivers on.
Rob: Yeah, I recommend checking out a talk that I gave back in, I’m guessing it was 2013 at MicroConf. It’s gonna be on Vimeo. It’s called How to 10X in 15 Months, or it might be How I 10Xed in 15 Months. It’s basically the story of acquiring HitTail and then 10x-ing the revenue. Some part of that had a pretty noticeable impact was getting the trial to paid numbers way up. I did that using email sequences, event-based emails that would hit people up if they didn’t get onboarded, and then I’m trying to think, I should have had in-app stuff, I don’t know if I did, but that would have been another one. It’s just about getting people onboarded. I think your approach, Mike, of talking to people has gotta be the first step just to try to assess why are people not doing it. I do think that adding email reminders is going to absolutely have a pretty substantial impact, even before you know why people getting onboarded versus not getting onboarded. I still think email will have an impact if you’re not sending any today. That’s where I would start.
I enjoy these kinds of problems because it’s like you know that you’re a lot lower than you should be and it’s just a puzzle. How do you get that 1% up to 3% or up to 5%. Even 5%-15% for no credit card, it’s somewhere in there. Maybe it’s even 5%-20%. You should be able to substantially increase this and it’s just figuring out where the break is. If you can fix that, this is how you scale a business. This is where you go from trudging along, growing at a $100 or a couple $100 a month to suddenly really, really being able to hockey stick this thing if the numbers are right.
Our last question for the day is from Alex Sommerfeld and he says, “Hey, Mike and Rob. This one if more for Rob. What do you think about the newly-launched Drip service from Kickstarter?” D.rip is the service.
In essence, what’s interesting is it’s not actually a launched product that Kickstarter launched. It was a startup that started after Drip. Drip, basically, we worked on code in 2012, we launched in 2013, and I think it was some time in mid to late 2014 that this company called Drip launched and it was a music social network and it was a startup that raised a bunch of money and they bought the drip.com domain name because I couldn’t afford it, they bought it from a squatter. Once I saw that they owned it, I remember telling Derrick that I’m just counting and counting the months, 15-18 months they’re gonna be out of business because it’s a music social network, the odds of it working are just miniscule. You typically raise funding for 15-18 months of expenses.
Sure enough, sometime in, don’t quote me on this, it was sometime in 2015 they basically went under and I actually contacted their CTO and their CFO, all of the people involved and eventually was talking about trying to buy the domain name but it turned out that Kickstarter had basically just acquired the assets of Drip, of that social network, and some reason either didn’t buy the domain name or I don’t know if they didn’t want to or if it didn’t come with the package, or what happened.
The drip.com at that point got separated from this music social network but Kickstarter acquired the assets and I don’t know what the assets of it, if it was a team of people or if there was any type of software. But in essence, they turned it into a Patreon competitor. That’s what it is. Kickstarter is launching a way to do subscription-giving to support creators.
This name has been around for a long time in bizarre context. The end of the story is my Drip got acquired by LeadPages and we bought the drip.com domain name, maybe four or five months ago. Now, if you go to drip.com, it’s our website, all our email addresses are now using drip.com, I don’t know how I feel about it. It sucks to have two things and the exact same name, you can’t trademark that name drip because it’s too generic. I should’ve tried to do that back in 2014-2015. It is what it is. There’s gonna be some confusion. We have the .com, I feel like that’s a win, it all depends on how given that we are not competitors at all. Drip does seem to just be, that word and phrase, is being used in marketing and it’s being used in juts to mean something that is released over time because that’s what this is. It’s subscription, it’s payments to creators over time versus dripping out email over time. I don’t know, I have strong opinions on it, I’m not terribly offended by it. I wasn’t super happy when they launched three years ago but I’m over it just because they’ve been around, I’ve watched the whole thing play out. You have other thoughts on it?
Mike: It’s interesting that the color schemes and everything else are extremely similar. Drip, where you work is LeadPages, it’s capital D, they’ve got a lowercase D and their I is upside down but other than that, it just looks very similar.
Rob: Yeah, when you think of of drip, you’re gonna tend to use blue, so we both used blue and startup blue is a common thing anyway.
Mike: Yeah, I don’t know. I can foresee there could be a lot of confusion, to be honest, which sucks. As many domain names as there are, there’s only so much you can do.
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 368 | Improving Your SaaS Onboarding Emails
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Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Alli Blum about how she helps convert prospects into long-term customers in SaaS onboarding through email. They talk about the three phases of SaaS onboarding, the marketers perspective, the product approach, and more.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For The Rest Of Us, we’re going to be talking about how to improve your SaaS onboarding emails. This is Startups For The Rest Of Us Episode 368.
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.
Alli: And I’m Alli.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Alli?
Alli: Fantastic. How are you?
Mike: I’m doing great. Welcome to the show. Wanted to introduce you to everybody. I guess that I’d say your background is in copywriting but really, the gist of what you do is you help people convert prospects into long term customers in their SaaS onboarding emails. You’ve worked with a bunch of different high profile companies, I’d say, like KISSmetrics, and CrazyEgg, and MixPanel, and Autopilot. Seems like the plethora of companies that people look up to and are well known. Just want to say great to have you on and we’re going to be talking today about how to improve people’s SaaS onboarding emails.
Alli: Thank you very much. I am so excited to be here. Yeah, I’ve had the opportunity to write for some of those fine publications that you just listed. My background is that I have worked with technology companies from a lot of different places. I knew I wanted to start my own product based company, right now I’m doing service based business. I started looking around the research that you do when you’re just getting started at learning about startups and I saw Startups For The Rest Of Us and I learned about MicroConf. I just thought, oh, I think this is like a thing I want to get near to and learn more about but I was too chicken to actually come close to you. But when I finally started getting the courage, I looked and I wanted to meet people, I looked at who was attending MicroConf. I was just like, I would just email them and say, “Hey, I want to know more about what you’re doing.”
Mike: That’s awesome. It’s nice to see that the MicroConf Community is having an impact on people and we’re always looking for ways to expand that. This past year obviously, we expanded into the Growth Edition and the Starter Edition. If you’re looking for tickets, any of the listeners looking for tickets, you can get on the mailing list over at microconf.com and tickets are going to be publicly available the next couple of weeks. By the time this episode comes out, we’re pretty close to that.
I guess with Alli’s intro in mind, one of the things that we’re going to focus on today is the different techniques that you can use to improve your SaaS onboarding emails because that’s your focus point at the stage of your career, Alli. Wanted to have you on the show and educate our listeners a bit about how they can improve their onboarding emails and what the specific steps that they can take to walk through the process of improving those. Like anything else in your business, it’s an iterative process. You’ll go through it once and then you’ll come back to it and revise and repeat. I think that you have a unique perspective and that you’ve done this for a bunch of different people whereas most people listening to this will probably only have done it for one or two apps, yet you got a much wider range of experience that I think will be really helpful to listeners.
Alli: Cool, yeah. One of the things that I’m excited to talk about is if you’re listening to Startups For The Rest Of Us, you may have just launched, maybe getting ready to launch, you may have been around for a couple of years. Depending on where you are, there’s a little bit of a different approach that you may want to take to make sure that your onboarding is actually doing what you want it to do.
Mike: There are different phases to the onboarding process. Why don’t you talk a little bit about the three different phases where people might fall on the spectrum?
Alli: Excellent. The first phase would be when you have no automation at all. This would be if your app is very new or if your app had more of a consultative sales process before moving into a self signup process. At this point, you may not know too much about what makes people fall in love with your app, you may not even know too much about who the folks are who are coming into your app. This early stage, your goal is to get as much of that information as you can to talk to as many people as you can and really get a feel for why they’re signing up for a trial, why they’re starting to use your app, what are they trying to get out of it and who are they.
You take the same approach at later stages. After you’ve been around for a little while, you may have already started to introduce some automation. You may want to have a welcome email, you may have a couple of emails that go out to tell folks about features they can try during their trial but you may not have a full automation process or a full set of sequences designed to actually turn your trial users into paying customers.
And then once you’re at that stage where you’ve done a lot of hard work, where you’ve got everything automated, everything is triggered by specific events as opposed to time triggers, then you might be getting ready to be at a point where you really want to start optimizing and testing different things out, seeing what you can, seeing if you can get to a point where you’re bringing as much juice out of your trial as you can.
Mike: Those are the three basic phases of the onboarding process where people will probably fall, who are listening to this. You either got no automation, you got some minimal automation, or I’ll say complete automation that’s much more advanced. Everything is done through triggers or events or what have you.
A general process that I think people will go through when they’re looking at implementing these, regardless of which of those three phases you’re currently at, is to look at your current onboarding emails and try to identify the shortest path, they’re trying to get a customer to recognize value and figuring out what steps they need to take. And then for each step, write an email that takes them through the process of achieving that stuff.
We talked a little bit offline, you actually had some rules for this piece of it. We’re just giving a basic process now, I thought it was really interesting that you had three different rules that applied to writing the individual emails. I wanted to go through those real quick.
Alli: Yes. Many times you’ll see, if you sign up for SaaS trials or if you’re sending out emails yourself, you’ll see emails are general, and they’ll say here’s a welcome guide or read some cases studies or don’t you know we have video tutorials? What I don’t like about emails like this is that they actually introduce quite a lot of work for your reader, they have to stop and figure out what they’re doing, why they’re here. That’s why I have these rules for writing. It’s about getting that hidden work out of the way so that people who see your email can just figure out what to do and then do it.
The first one is called the Rule of One, it’s a conversion copywriting rule and it means or it states that you should write your copy for one reader, and you should get them to do one thing. You may send out an email that says here are the six tips you need to do to get started. Instead of that approach, I would recommend saying here’s the one thing you need to do to get started. This is something that a lot of folks may think oh, well if you have more calls to action in there than maybe some of those more likely to click on something for sure, but there’s a lot of data that doesn’t support that claim. I think it’s on marketing props, there’s a study where Whirlpool eliminated all the calls to action from their emails except for one and they saw 42% increase in clickthroughs. Getting rid of everything from your email and just having one clear call to action is rule number one.
Rule number two is to make sure that call to action is measurable. When we say measurable, that means we want someone to be able to know when they’ve done it. If your call to action is for someone to upload a video or to invite a team member, these are concrete actions. When you’ve done it, you know you’ve done it.
What would be a call to action that’s not measurable is something like explore my account. It’s a little bit less well defined, folks come in may not know when they’re done exploring their account, if they’ve even achieved anything. It introduces that work where they have to figure out what to do.
Then the third thing is to make sure that your call to action is something meaningful. Really, that the whole email is meaningful. We want people who are reading our emails to say, okay, yes, I need to do this. Instead of sending an email with a call to action, and we were talking about this offline that says something like submit or login, something that’s pretty boring. No one’s life ever improved because they clicked login. You’re going want to talk about what is going to happen as a result of doing whatever it is the thing that you’re doing.
Instead of login, maybe it’s invite the team member. If you want to take it even one step further, less of a call to action and more of a call to value, you could say, “Cut the time you spend on support tickets in half.” Made that one up off the top of my head, it’s probably not the best example. The reason I shared this is to show that you want to make sure you’re communicating why someone should do what you’re asking them to do. Because people have a zillion emails in their inbox, they’re going to ignore yours unless you give them a reason to do anything about it. Three rules, rule of one, make your call to action measurable and make it meaningful.
Mike: Awesome. I think that applies to not just emails that you’re writing inside your onboarding sequence but you can also generically apply that to marketing copy on your webpage or landing pages. There are lots of things that cross applies too. Again, we’re going back to the basic process for iterating on your email sequences. The first one was identifying that shortest path, second one was for each step writing the email, and then for the third step is to take a look at that. If they don’t take the actions on the follow up to remind them to take, usually this involves some level of events and automation. You’re typically not going to get here without some level of automation whether you’re using Zapier or a timed trigger that you can interject and stop. You’re just not going to be able to keep up with it after 5 or 10 people are involved in your onboarding process.
Then the next step is to measure the results of those emails and make sure that people are moving or progressing through your sales funnel. There’s a lot of different tools you can use, you can implement custom database tables or use tools like MixPanel or KISSmetrics, Intercom, Drift. There’s lots of things that do that but it’s really about making sure that you have the information to go back through and iterate for that process and make it better.
What I want to talk to you today about was that there are different perspectives for improving that process. There are three that you had talked to me about. The first one was the marketer’s perspective. Can you talk a little bit about what the marketer’s perspective is and why people tend to use this?
Alli: When you’re talking about a trial, and then the messaging that you’re doing in a trial, one way that you can think about this and one way that a lot of folks will think about the trial is part of a marketing funnel. You have your content marketing and your outreach marketing and you bring people to your site and then you get them to opt in and sign up for a trial, then they’re in the trial, and then you’re retaining them once they’ve upgraded. It’s one step in this funnel toward keeping long term customers.
If you’re a marketer, you might say okay, if the trial’s not doing what I want it to do, the way that I describe this problem is that I have a leaky funnel. Something is happening in my trial where people are not staying around. If you’re a marketer, you’re going to approach this problem like a marketer. You’re going to say okay, why are my conversion rates so low? Am I getting the wrong people into my trial? Am I not targeting the right people? Is my messaging somehow not what my target prospect wants to hear? Is the problem that my web copy is out of date that my content marketing is wrong, there’s a mismatch between who I’m talking to and who I want in my trial? Marketer’s perspective is about fixing a broken part of your funnel.
Mike: Awesome. In most cases, this assumes that your sales funnel is I’ll say either long enough or you have enough people going through it that it makes sense to look at that and try to find optimizations. If you’ve only got 10 or 20 people going through a month, it’s hard to look for optimizations with lower numbers, just because you can’t really get a good sense of what is statistically significant or not.
The second approach you talked about was the product approach. I think the product approach is probably one that I hear the most about because pretty much everyone is doing it, they’re saying how do I draw attention to the different things. Talk a little bit about the product approach when it comes to the SaaS onboarding funnel.
Alli: Oh my gosh. Me too. I hear this. Every SaaS founder that I talk to, who has a problem with their onboarding, they say, “We have so many features, how do we get more people to try all of our features during the trial?”
Mike: Why do you think that is that they want everybody to try out all the different features?
Alli: I think it’s because many of these SaaS founders who I spoke to, who like I said come from the MicroConf Community, they’re building features that people ask for, they’re building features a lot of times because they have done research and they have figured out that this is a real pain and their feature addresses that pain. They build the feature and the folks that have it, folks that are using the feature are enjoying it, and it makes sense that you would want to solve other people’s pain. Why wouldn’t you want someone to try out everything that they can do in your app. It’s going to make their lives so much better.
I think people approach it from the right place, so to speak, people really want to help. The only problem is that that’s not always, I have found, what people want to do when they come to your app. Even people who are very aware of what they want to do with your product, maybe they know the exact features that they want, they still don’t need to see all the features, at least during trial.
Mike: Yeah. They’re there to use your app because they want to solve their particular problem, not because they want to use every feature, whereas the developer tends to be more focused on, hey, I created this new feature over here, you should come check it out or you should use it. And making assumptions about the reason why some of their customers are falling out of the sales funnel is because they’re not using that feature or making assumptions about what the value is that people are getting out of it versus understanding what the customers really looking for and what would make them successful and what things they actually need to do in order to be successful.
Alli: Exactly. So much of this has a lot to do with who’s coming to your app and what category you’re in, and the stage of awareness that most of your buyers are. I like to think about categories that are really saturated as most of their prospects are likely to be switchers. If you are using, for example, a proposal software as a freelancer and something goes wrong and you don’t like it anymore and you want to switch to another one, you already know basically what you’re looking for and there might be a single feature that you need. But during your trial, you don’t need someone to bombard you and say, did you know we could do payments, did you know we could convert currency, if the only feature that you need is version control. If you are that feature focused buyer, you’ll go figure out or you’ll ask someone if this feature is available a lot of times.
Mike: I think it’s not just about the feature, it’s just about the fact that they are in that mindset of I want something else and I want to find something to solve this specific thing which is the reason I’m switching from somebody else, versus somebody who has searched for a pain point that they had and they are so early on in the buying process that they’re not at the point where they’re not willing to put their credit card down versus somebody who is just like you described, they’re willing to put their credit card down because that new product has that one feature that they really need.
Alli: One of the things that I think is really interesting is that in that level of awareness where people, in copy writing we might call it most aware with a high level of intent, someone is aware of their problem, they’re pain aware, they know that solutions exist, so they’re solution aware, they’re product aware, they know that your product exists, and then they’re most aware. They know your product is where, they know that you are a good candidate for solving their problem.
And then if they’re most aware with intent, that’s the dream buyer. If you have what they’re looking for, then they’re going to find you. But most people aren’t that, we do not have the luxury of being able to write for people who already know that we are the right fit for them. As marketers, copywriters, product managers, SaaS owners of any kind, we have to be ready to help folks along the way and say okay, this is what you are most likely to want to do. We’re going to help you figure out how to use this app to get you where you need to be. That’s when we start to get into that third perspective that we are talking about.
Mike: Which is a customer success approach. I guess the general way to phrase the customer success approach is that you’re looking to identify what the success milestones are for somebody coming onto your product and how can you help enable those for the prospects. I think this is what we’re going to really drill into so that people can get some actionable takeaways for this. The first question that most people are going to have to try and answer is what success milestones could there be? You talked a little bit about this before but can you elaborate on that a little bit? I think it’s probably going to be different for each product.
Alli: It’s totally different for each product. It’s different for each product and it’s different across categories. Mike, are you at a stake yet where you know what your customer’s success milestones are for Bluetick?
Mike: I have some idea of it. I would say I don’t have 100% confirmations but there are certain things that the customer has to do in order to provide value to them. The first one is that they need to connect their mailbox, if they don’t connect their mailbox then obviously they’re not getting any sort of value from the products. The second one is that they need to set up email sequences. If you’re not sending emails, the product doesn’t give any value. And then third one is you have to have contacts loaded into the system to send the emails to. And then the fourth one is obviously you have to actually send the emails.
Really, the most important one is getting them to the point where they send the emails and the value that can be measured is that when they start getting replies from those automated emails that are going out. There’s a way to measure that and then there’s those progressive steps leading up to that which they don’t do any of those then the number at the end is going to be zero. But once they get through those initial set of things, then there’s a way to measure how successful they are as they’re using the product.
Alli: That’s really cool. What I’m curious about, it sounds like the moment where people are most likely to say oh, okay, I need to keep using Bluetick, is the moment when they get that first reply, that second reply to an email that’s been sending out as part of an automation, is that what you’re observing?
Mike: Yeah, that’s it. I have customers who will sign up and then they start sending the emails out. And then after even just a day or two, they start seeing that they’re getting responses and they know that it’s working. If somebody didn’t respond, the system would follow up for them and they don’t have to worry about it. That’s exactly right.
Alli: It’s really awesome that you have that insight because Bluetick is still a very young app. I think one of the things that some apps are naturally predisposed to have these built in success milestones where you have to do a couple of things that are not that difficult in terms of the cognitive load that you bear while you’re doing them. You have to write the emails and that’s pretty tricky. But you have these clear success milestones and the measure of success is also very clear. People who are signing up, setting up their inbox, getting their contacts, sending the sequences, and then getting those replies, that’s a very clear measure and that’s great when you’re able to do that.
Mike: But that’s really a close feedback loop where there’s no real, I don’t want to say no other options but that’s the result of the product itself. I think that it’s much less clear when you have something that does any sort of analytics. I think you and I talked offline a little bit about Wistia and the process that they had gone through to increase their onboarding experience and make sure that people are successful.
If I remember correctly from reading an article, somebody just said that one of the things that they looked at was making sure that people were looking at their analytics inside of Wistia. They’d upload a video and invite a team mate and look at the analytics. Looking at analytics does not necessarily mean you take action on them. It depends on how you view that as to whether or not that’s a real milestone. How much of a milestone is it? If you went to the page and then you clicked away, does that count? Or you have to come back to it several times? I think it’s very subjective at that point. Not everything, I think, falls into a neat bucket like the process that I outlined for Bluetick does.
Alli: I think you’re absolutely right. If only every app had as clear and straightforward a feedback loop as Bluetick, make my job a lot easier.
Mike: What is it that you would recommend if somebody’s in that situation where you’ve got some customers that are coming on board and you might have an idea of what your success milestones could be, but you’re not sure. What are some of the couple of things that you could do right away to try and figure out what those milestones are or whether or not your assumptions about them are correct.
Alli: The first thing that I would recommend, it’s kind of asking yourself a series of questions. The first thing that I would say is okay, do I know who’s using my app and are all the people who use my app using it pretty much the same and what does that look like. That’s the first question. Is everyone here using the app that we have the same, and if not, how are we going to start talking to everyone the right way?
Mike: Would you recommend starting with that as a question of what the size of their business is or are there other things that you can think of that would be better suited for that type of self segmentation or is it just size of business is a great place to start and then dig in from there?
Alli: It depends. It always depends. It depends on what your category is and what those main factors might be. Ideally, you’re in a place where you are starting to have some insight that these differences may exist. You may, for example, notice that 30% of your users just never click invite a team member. They just never do that one action. That’s a very telling piece of information where team size may be a very large variable.
Mike: Going back to what you’re talking about, the product approach where one of the reasons that that may fall down is if you’re trying to get people to use the invite a team member but if they don’t have team members, they’re not going to use that. Of course, writing those onboarding emails, trying to get them to use it is never going to work because they don’t even have team members.
Alli: Yes. I sign up for apps all the time because I want to see what their free trial emails look like. A lot of them are apps that I plan on using. If the first thing they ask me to do is invite a team member, I kind of just assume it’s not for me, it’s not a product for a solopreneur because I don’t have a team member that I need to add. You’re right. The product based approach will frequently say we have our products, let’s make people use it, and the customer success approach would be like okay, who are our customers and how do we make them successful?
Mike: Right. You’re really just personalizing the features that you’re offering them based on the problems that they’re facing and they’re trying to solve. It’s just personalization of your software for them.
Alli: Exactly. Yes.
Mike: Once you’ve gone through the process of self segmenting people a little bit, what’s the next step? How should you go about finding more information about them? Because I think there’s only so many questions you can ask in self segmentation emails before you have to go onto the next step. What would that next step be?
Alli: Yes. The self segmenters are good to start off because they can be automatically triggered and you can keep collecting that data while you’re diving into the harder data which might be lurking in your KISSmetrics account, in that quantitative user behavior based data. What are people actually doing? This is really challenging to make sure that your data collection methods are labelled correctly, set up correctly, but it’s a matter of sifting through a massive amount of data and saying what are people doing right before they sign up for a paid plan? If the question you’re answering is why don’t more people upgrade, then look at what people who have upgraded have done.
One of my favorite places to look is inside your support ticketing software. I love looking at what kinds of question people are asking while they are in their trials. One of my favorite little tip is to look for phrases that follow the phrase, “So that.” So if someone’s asking you a question and they’re saying how do I configure my invoice with an automatic payment link ‘so that’ I can accept international currency, or how do I upload my video in a small file format ‘so that’ I can share it in email.
Then, you’re starting to get some data on why people are coming to your app. What is the real problem that they’re trying to solve? If it’s the video example, you have a video that you need to email to someone, emailing a video is like an impossible task if you do it as a file, how do you help someone who wants to do that, figure out how to do that. One of the things that Wistia does really well is incorporate that into both their email onboarding but also into their in app UX messaging.
Mike: All this stuff, what you just talked about is really ways to be sure that the assumptions that you’re making previously about what the success milestones are are valid. I think that looking through the support emails, specifically after where they say ‘so that I can do whatever,’ that’s fantastic, I’ve never heard that one before.
Alli: When we do review binding as copywriters, you can do it in product development where you go out and you find the pains and the crispy-sticky language, you find what people are looking for and you find out why they want to do it. Getting into the idea of the ‘so that’ is one of my favorite, favorite copy tips because it helps you just get that one level deeper. Because we’re all emotionally human creatures with wants and needs that we don’t always articulate. This is one of the reasons why we look for that ‘so that’ because we don’t want to make any assumptions about what someone is asking us for help with. If someone says I need to be able to do XYZ, you can help them of course and you should, and that’s great. If they also tell you why they want to do it, that’s gold.
Mike: All of this information is intended to help you build out the emails sequences around those success milestones but how do you know when you have enough data to get started? Does it take 5 or 10 data points or do you need 80 or 100? It feels like there’s not really a hard statistical significant number that you can look at because this is all gut feel to some extent?
Alli: That’s a really good question. When you start noticing patterns, when you notice that the folks that you talk to share the same functional role or they have the same need, they tend to do the same things or they have the same questions, that is a point when you are ready to dedicate your time to your onboarding.
Mike: It is really about looking at the patterns and when you start to recognize them and you start hearing the same things over and over again, that’s when you shift modes over to starting to automate things in your emails versus continuously analyze the data that’s coming in, right?
Alli: Yeah. I think never stop looking at the data. The more close relationship that you can have with either that quantitative user data of who does what, stuff that you can put into a graph or a chart, and that qualitative data of what people are saying and when they’re saying it. But the more that you can maintain that relationship with the data, especially during onboarding, the more that you’re going to be able to push those free to paid conversion rates up to a quarter of percent here, a little bit here, and that’s how you start to get to those high rates.
Mike: I think in terms of the pattern recognition, every brain is a different engine and you start to see massive differences between two things. Part of gathering this data allows you to see the differences between what different customers are doing. As soon as you start to recognize, hey, this customer segment over here is much larger than the second one over there, then you start focusing on one versus the other and it makes it easier to make those decisions because you have the numbers in front of you.
Alli: I agree.
Mike: Once you have this qualitative data and you believe those success milestones are, the next step is to coach people around those milestones and steer people towards them. What is the default that people tend towards if they don’t do that? What are the mistakes that people make instead of actively going after those things and intentionally doing them, what’s the default that people do?
Alli: Yes. There are so many mistakes. The default that I see is on the first day, you get a welcome email from the founder and a welcome email that says, “Here is a guide to get setup.” Or, “Here is a list of all of the places you can get support; our blog, our video tutorials, our 7 tips, our 13 minute video.” And while it is great for founders to send out those emails, while it is great to tell your users where they can get support, it is much better to say, “Great! You just signed up. Here is what we need you to do next.” The alternative to sending out emails that show your users what they should be doing while they’re onboarding is really just sending them useless information. It’s the equivalent of an email blast to everyone you know that says, “Hey, we have a thing.” Or, “Here is a new feature, look at it.” It just drives me crazy because these are apps that in many, many cases are very user friendly, in many cases are very helpful, they address a real pain, but these emails come through and they just get in the way and they make it so much more difficult to get started than it needs to be. They just introduce so much work.
Mike: They’re really just not helpful, is what you’re saying.
Alli: They’re not helpful. It’s like if you show up to a store and someone says, okay, can I help you find anything? You say no thanks, I’m just looking. And then if you show up to a store and someone says hi, would you like to try on our new jeans? But you’re there to buy a vase. They never asked you who you are or what you’re there for, they never made any attempts to help you get started or figure out what you want to do. This isn’t the best analogy.
Mike: I think it’s a great one. Because it’s exactly why I use Amazon.
Alli: Yeah.
Mike: Because I just don’t want to be bothered. I don’t want to go into a store and have them try and sell me some stuff that I just absolutely have no interest in. I think it’s a very great analogy.
Alli: I’m sure there are times when you are looking for something specific that maybe you haven’t bought before or you haven’t been able to track down where you need someone’s help and you’re grateful for their help. But if you walk into the store and they ask you if you want help with something that’s not the thing you came there for, then you just leave or you go some place else.
Mike: I think that’s partly a function of them either having some sort of quota and at that point, their help is about them, it’s not about you. It’s not about what they can do for you, it’s about what can I do to meet our goals or our internal needs or this product needs to be sold. Let me see if I can direct people to it. I think that’s the fundamental issue.
Alli: Yeah. It really, really is because the difference between the product approach and the customer success approach, even though neither of those are strictly a sales approach, the product approach is very self centered, this is what I have to show you. Do you want to come look at it? As opposed to I think this is what is going to help you get through what you’re trying to do here.
Mike: I think there’s a big difference that you can just objectively notice when you sign onto a software product where the onboarding itself is extremely well put together and well thought out, and is helpful versus the ones where it just meanders along, it doesn’t really direct you through to the things that are relevant to you. It’s very clear when you see those two things side by side, but I think when you’re working on your own products, it’s very difficult to be a little bit more objective about that.
Alli: The biggest take aways that I would say, I would hope anyone who’s working on their onboarding walks away from this, how can I learn more about who’s using my app? How can I learn more about why they’re using it? And how can I learn more about what they’re doing that makes them successful.
The approach that you take to do that will depend on where you are in terms of the kind of data you can access. Early on, you may spend more time talking to people, interviewing them, continue to do that as you get more and more data in terms of user behavior and also that support ticket information to really round out your understanding of how people are using your app during the trial.
And then once you’re starting to really notice those patterns, that’s a sign to really dedicate more time to this and start implementing those sequences in your onboarding that get people to really coach them around those success milestones. Instead of taking that product approach of saying okay, let’s look at everything. Really taking that approach of saying how can I help people be successful. What do they need to do first, what do they need to do second, how can I help them do it?
Mike: Awesome. I think that’s a great place to leave off for the listeners. What’s the best place for people to follow up with you or find you after the episode or if they want to ask questions?
Alli: My email address is the best way to reach me. It’s alli@alliblum.com.
Mike: Alli, thanks so much for coming on. I really appreciate having you.
Alli: Thanks for having me, Mike.
Mike: 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 367 | MicroConf Europe 2017 Recap
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Show Notes
In this episode of Startups For The Rest Of Us, Mike and Benedikt Deicke give a recap of MicroConf Europe 2017. They go through the speakers and give you their key takeaways and highlights.
Items mentioned in this episode:
- FemtoConf
- SaaS Guidebook
- Stagecms.com
- Benedikt’s Twitter
- Hidden
- FE International
- Trustshoring
- Balsamiq
- Podcast Motor
- GrowthHackers
- MOO
Transcript
Mike: In this episode of Startups For The Rest Of Us, we’re going to be talking about MicroConf Europe. This is Startups For The Rest Of Us Episode 367.
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.
Benedikt: And I’m Benedikt.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Benedikt?
Benedikt: I’m good. We had a nice time at MicroConf Europe in Lisbon. Weather was definitely nicer than it is back home in Germany so I really enjoyed myself.
Mike: Awesome.
Benedikt: What about you?
Mike: I almost missed my flight home. Actually, I almost missed my flight to MicroConf just because I was running late and I ended up parking in the wrong parking garage, I thought I was going to the international terminal. For whatever reason, the flight to Lisbon didn’t fly out of the international terminal. I don’t know why but it’s just a weird thing that they did with it.
And because of the terminal that I was at, I think it was Terminal C in Boston, there’s no direct way to get to that terminal. You basically just have to walk completely across the parking garage and through the middle of it, and then there’s a place where really it’s only designed for cars to go so I had to walk through that. It was kind of a nightmare getting there. And of course, as I said—
Benedikt: It sounds like it.
Mike: Then I almost missed my flight home. They cancelled my ticket like five minutes before I got to the desk for whatever reason. They had to rebook it and I had to run through the entire airport. Long story short, I’m glad that I actually got home.
Benedikt: You got your fresh air of exercising this week?
Mike: I did. I could probably log that as a short run. They tell you how long it takes to get from one area of the airport to the other. It’s like 12-18 minutes or something like that. I ran the entire way.
Benedikt: That definitely counts as exercise.
Mike: Welcome to the show. You’re on this week in place of Rob because our schedules got all messed up and typically, Rob is on to do this with me for the recap but his travel schedule just got messed up. Maybe we’re just too optimistic for this. We thought we’d be able to get a recording and it turned out we can’t. I wanted to have you on because you were at MicroConf. You’ve been to MicroConf several times in the past. I think it’d be good to get your perspective about this MicroConf in relation to some of the previous ones and just kind of walk through some of the different takeaways of the speakers.
Benedikt: Sure. Let’s get to it.
Mike: To give people a background actually about you a little bit first, you’re the co-founder of FemtoConf and you also have a SaaS Guidebook that you’re working on which teaches people how to build a SaaS which you can find at saasguidebook.com. I think a lot of that is based on your experience building Stage CMS. Is that correct?
Benedikt: True. That’s totally true, and also working with freelancing clients. That’s basically a topic that comes up more than once.
Mike: What else do you have going on these days?
Benedikt: The main thing right now is basically FemtoConf, the conference I’m running together with Christoph Engelhardt, who’s famous for doing MicroConf Europe recaps. Unfortunately, he wasn’t at the conference this year because he got a [00:03:15]. Shout out to him.
Mike: Congratulations, Christoph.
Benedikt: We’re basically doing a smaller version of MicroConf, hence the name, in March. We’re currently in the midst of organizing that. Tickets are on sale.
Mike: There’s only a handful of tickets left, right?
Benedikt: Yeah. That’s basically five or six tickets plus sponsorship tickets. If you don’t get a regular ticket, maybe consider getting a sponsorship ticket. We really appreciate that. That’s my main focus at the moment.
Mike: Awesome. When is that?
Benedikt: First weekend of March. I think it’s March 2-4. It’s in Darmstadt, Germany, very close to Frankfurt airport. There’s actually a bus going there, 30-minute bus ride and you’re right in front of the hotel.
Mike: Cool. I’ll be speaking there. Patrick Campbell from Price Intelligently will be there as well. Then you’ll also have Claire Suellentrop. Who’s the last speaker?
Benedikt: Aleth Gueguen was an attendee last year. She offered to talk about the new privacy law coming up in Europe. I’m both interested and kind of scared about that one. But I’m expecting it to be a great conference.
Mike: Awesome. Let’s talk right in and give people a recap and talk about some of the different takeaways from the different speakers. The first one was Craig Hewitt. He kicked us off. Craig is from Podcast Motor. He talked about the four biggest risks to launching a SaaS application and how to overcome each one.
What I really liked about his talk was at the end, he gave this SaaS risk checklist which basically listed off a bunch of different risk areas where a SaaS or even honestly, like a product in general, might run into. Things like the product market fit, product quality, the team itself, risks associated with making sales, market size, capitalization, and then competition and the business model itself.
I really liked the way he created that story arc where he presented it like these are the risks associated with building a SaaS and then he extrapolated that and gave people a broader sense, like these are all the risks that you are going to run into when running your product or building up your business and they may impact you in different ways based on the decisions that you make.
Benedikt: That was a really interesting talk. I always like Craig’s style of giving talks where he basically has stories and then pulls out lessons learned from that. That’s always quite good.
Mike: He’s in the middle of building out their own SaaS product called Castos which is for podcasters. He’s in the middle of identifying some of these risks and trying to overcome them. It just made a lot of sense for him to talk directly to the audience about that just because as I said, one, he’s in the middle of it, and two, it’s always nice to start off the conference with a story that’s relatable, one that resonates with most people and it gives them kind of a basic understanding of what’s going on in other people’s businesses and be able to relate that back to them.
Honestly, the whole atmosphere of the conference is typically defined by that first talk. I think Craig did a really, really great job with setting the tone for the rest of the conference.
Benedikt: Definitely. I totally agree. Next up was Paul Kenny and he talked about sales tactics for small businesses. His main thing was basically telling everyone to record their sales calls and then afterwards listening to them because when you listen to your own call, you identify parts of your conversation with a potential customer where your future’s hazy or it sounds wrong, then you could basically take down notes and improve on that.
That was his main point. But he also gave a great basic structure on how to do sales calls. That was a five-step process starting with the preparation even before the call, so taking down notes of who you are going to talk to, what businesses they are in, what potential problems they might have, stuff like that.
When you actually call them, he tells you that you should present your credentials, tell your customer or your potential customer who you are, what company you’re calling from, so they get a basic idea. Next, show them that you actually came prepared and why they should talk to you. Also, send them a benefit of what’s in there for them when they actually continue the call with you.
When they agree to continue the conversation, make sure you profile them. Do a lot of open-ended questions, learn a lot about them, what their actual problems are, what different solutions they might be looking at.
One thing I really like was get an idea about their personality, how they would approach buying something and then adjust your strategy of selling to them so that if they’re really careful and have a lot of objections, make sure you basically tackle all of them and give them a feeling of security. You adapt to their style of buying.
After that, when you actually build your case of why your product is the thing they should be buying, use whatever you learned in that first few minutes of talking to them and asking questions to personalize what you’re telling them about your product to their specific use cases and problems so they actually see it. Basically, you have the solution in their mind of what will it be like using your product.
Of course the last thing he really wanted to make a point about is inspiring action. You shouldn’t end your call saying, “Did you like that? Okay, cool. Talk to you some time.” But actually, ask for a sale, ask for a demo or some sort of next action, whatever may apply in the specific sales call you’re doing.
Mike: I think one of the things I noticed was there was kind of a general undertone in his talk that really, what you’re trying to do as a salesperson, we really don’t have very many sales people talk at MicroConf but I think Paul does a really good job at teaching and education people about how to do sales, especially entrepreneurs. The underlying theme there was really to treat the people on the other end of the call like they’re a real person. Just interact with them, show that you actually care about who they are. He pointed out that if you are faking it, it’s very obvious to the other side.
You may not think so, but it is very clear when somebody is just faking interest in the stuff that you’re discussing whether it’s about your kids or a sports game or something along those lines. You have to treat them like a human being. People respond in kind to that sort of thing.
Benedikt: I think you managed that as a side note to basically not think about the call as a sales call but as a call to help the people or the potential customer with the problems they’re having. I think that helps setting your mindset or bringing your mindset into the right direction.
Mike: I think one of the reasons why Paul resonates so well with the audience was just because he’s not, I’ll say, the prototypical salesperson that you would expect. He’s actually a sales coach. He coaches people on how to be better at sales. He spends a lot of time listening to calls and identifying structure of conversations and providing guidance and education to people about how they can do sales better.
I really like the point that he made which is you don’t have to be that extreme extrovert in order to be good at sales. Everybody across the entire spectrum can be good at sales, it’s just a matter of intentional self-improvement. Part of that is going back to your sales calls and listening to them and making sure that you’re looking for places where you can improve. If you’re not doing that, then you’re probably not getting any better at it over time.
Next up, we have Dave Collins. Dave has spoken at a couple of MicroConfs in the past. I think he’s been to eight or nine and he spoke at probably six or seven of them. He talked about how Google is smart in certain ways but extremely dumb in others. It really comes down to the search engine itself and the fact that the vast majority of what they are searching on is based on text. As you start drilling down into longer tail keywords, the text that you need to provide to Google in order to give them better context of what it is that you’re talking about, you need to get better and better at it and kind of walk through some of the different steps that you can take inside the Google search console and how to do some keyword search and how to use different tools to check some of those keywords.
It was a fascinating look at the technical core of what makes Google operate and how it makes some of the decisions that it makes when it’s crawling your website and giving you different rankings. The one thing that I really took away from his talk though was that when you’re building content for your website, you should be making it for people and not for the spiders.
Most people know about SEO in terms of looking at the keyword analysis and keyword stuffing kind of comes to mind which is when you have a keyword that you’re trying to get a page to rank for and you put that keyword into the page a lot in order to get Google to notice that keyword. Humans recognize that and the Google spiders are a little bit dumb when it comes to that but because the human factors there, if somebody comes into your website and they see too much of that, they’re going to say, “Oh, this isn’t for me,” and then they’ll leave and then they’ll go to the next result, and then Google notices that. It’s just fascinating to look at the underlying implementation of how Google does their search engine.
Benedikt: Another thing I really like about his talk was that SEO doesn’t necessarily need fancy tools. What I really liked was this example he had where you basically put in whatever keyword you’re optimizing for and then scroll down on the search results and look at what Google says as suggestions like people also search for this and this. Use that as a resource to find keywords you can optimize for. That was really helpful.
Mike: Our next speaker was Jane Austin. Jane’s the head of design and UX at MOO, moo.com. If you’ve ever ordered business cards, you’ve probably seen them at some of the different entrepreneurial meetups or conferences that you’ve gone to. She runs that design group over at moo.com. Why don’t you tell us a little bit about what her talk was?
Benedikt: Her talk was basically about design thinking in large organizations. I feel like I wasn’t really able to apply all of what she told to my business because I’m just me and maybe a freelancer.
I really like two things about her talk. One was the way they structure their teams. They call it quad-style teams or something like that, basically forming them with product guy who’s doing the productization, shaping the product, and an experienced designer responsible for validating the needs and the value propositions and also doing the actual design work. Then someone from technology who’s actually implementing this stuff and creating a sustainable and scalable product.
Then they had an HR Delivery coach that basically takes care of the team and facilitates the delivery and keeps them happy. That was one thing I really liked, especially when I did consulting, that’s usually a good formula to build a great team that actually is able to deliver in a fast pace.
The other thing I really liked was what she called the 2 ½ Diamond approach. Apparently, the Double Diamond approach is a thing from design thinking. I didn’t really know. But it’s basically a three-step process. First, you are doing ethnographic research. It sounds a little bit similar to what Amy Hoy’s doing with Sales Safari where you basically don’t want to ask questions to your potential customer but just observe them in their natural environment and then figure all the problems they might have.
Then it’s following up to that. You basically start collecting problems that might be worth solving like building up a huge list of things you could possibly do. After you collected those, you basically curate them and define them and narrow down until you settle on one solution you actually want to build. That’s what she calls the Build the Right Thing phase.
After that, after you settled on one thing you want to build, test the Build the Right Thing phase, where you basically start exploring different ways to actually implement whatever you’re doing like doing prototypes and stuff. Once you have a huge list of ways to go, again narrow down on the one thing you want to do and how you want to do it and then as soon as you’re able to ship something small and then build up from there in small increments.
That was the two things I really liked, especially the 2 ½ Diamond approach. I think that’s really also applicable if you’re not like MOO. I think her example was from The Telegraph where she worked on mobile applications, stuff like that. I think that really applies to a small company and some bootstrappers as well.
Mike: I totally agree. If you’re not familiar with the Double Diamond approach, there’s essentially four phases of it but it can really be boiled down into two main stages. The first diamond is really stage one which is making sure that you’re doing the right thing. You discover and define what it is that you’re trying to do.
Stage two is making sure you’re doing things the right way. You’re developing and delivering whatever the solution is. And then the extra half that she had tacked onto it was shipping things in small increments to make sure that you’re closing up that feedback loop so you’re not spending three months, six months on something only to find out that you really weren’t doing the right thing. You may have thought you were, but you’re not.
Getting that external feedback coming into the process sooner rather than later, it makes things move faster and it guides you in the right direction quicker because then you don’t have as many deviations that you need to correct.
Benedikt: Next stop was your talk.
Mike: Yes. My talk was pretty close to what my starter edition talk was in MicroConf Vegas in the spring but I did change things up a little bit just because I knew that the audience was going to be a little bit different. But really, it boiled down to making sure that you are analyzing the data that you’re getting and asking the right questions to make sure that you’re not going in the wrong direction. Questioning the data sources; the thing that I had mentioned several times during the course of my talk was how do you know that you know what you know?
That just is a fancy way of saying how can you be sure that the information that you have is accurate and that you’re going to be basing your future decisions off of that? If it’s wrong, you could be making the wrong decision because you didn’t fully analyze that information to make sure that it’s correct to begin with. If you have faulty assumptions, you’re going to make decisions because of those faulty assumptions.
I also talked quite a bit about the growth of Bluetick and walked through exactly how I went through the validation process, different questions to ask, questions not to ask or to ask in a different way because of different pitfalls that I had run into. I picked probably the biggest one that I have found over the years that is the most helpful to ask is when somebody asks you for a feature and is questioning you whether that’s in a sales scenario or as part of the validation process.
The one thing that I ask them is, “Is that important to you?” Because a lot of times, they will say no and you have just saved yourself several weeks or months of effort building something that they just wanted to know about whether or not it was something you are thinking about or going to support.
Benedikt: That was a good one. I totally wrote that down because I’ve been there and I’ve done that. I really know that this is a helpful thing to do.
Mike: Next up was Peldi. Peldi opened up day two of the conference. He talked about how they scaled engineering at Balsamiq. He had a lot of different tools that he talked about during his talk, things like HackerOne which offers a bug bounty program so you can essentially create a sandbox where you specify how much you’re going to pay for people to identify bugs in your software. And then after a certain predefined time period, then they can come out and publish their findings on that particular bug if you haven’t fixed it by then.
But really, it’s a way to give you the ability to access sort of a hacker network that will look at your product and try to poke holes in it. And then when they find them, they’ll let you know as opposed to just putting your product out there and letting that happen on its own.
I did his suggestion about using this and making it private so that it was invites only because as you said, when you get to a certain scale, as people come in and if they see that you’re listed there publicly, they’re just going to start trying to hack your actual application. Make it private, wait until they come and say something to you and say, “Hey, by the way, did you know about this? This particular bug or vulnerability?” Then, you can invite them to it and cut down on the amount of people trying to hack your application all at once.
Benedikt: I really like that one. Also interesting was the fact they’re mostly using static websites, tools, marketing website and stuff, that was really nice to hear. Another tool that I got out of the talk was Convox which seems like you just put a configuration file into your code repository and it takes care of automating infrastructure setup. That seemed really useful. I really have to check that out sometime soon.
Mike: There’s a bunch of tools that are like that. I’m not familiar with Convox but there’s things like Puppet and Chef that really allow you to automate the underlying stuff behind your infrastructure. As long as everything is going through your source control, you can essentially redeploy your entire environment just using a set of scripts more or less, say the Shaft scripts or Chef scripts that deploy your servers and the applications inside those servers and configure everything where it’s supposed to go but I have not heard of Convox before.
Benedikt: I’m definitely going to check that out. Also, one thing I think you mentioned was don’t rely on unproven companies especially if it’s plumbing for your business. I think the example they had was Stormpath. They were using it for the new Balsamiq cloud setup as the authentication provider and user management. Apparently, they shut down shortly before they wanted to launch. We got lucky on the one but that really hones in the lesson of don’t rely on unproven companies because they might go out of business and be gone with all your user data or whatever it is in your case.
Next up was Mojca Mars. She talked about Facebook Advertising basically using social media as a sales funnel. She had a really good process, and a very actionable process about how to approach that. Basically, she recommends setting up a three-step funnel where you first do Facebook ads, targeting a cold audience that’s ideally based on a lookalike audience you generate by adding the Facebook pixel to your website and it would analyze the traffic going there and the users visiting your website and then extrapolate from there into a much broader audience of people that don’t already know you.
The first step is to advertise to those people and basically just provide some value linked into a blogpost you wrote about an interesting topic that might be related to them, whatever it is, just provide value. Don’t go for the hard sale right at once but show them that you care and that you are an expert in your space or whatever.
After that, they basically get tagged by Facebook using the Facebook Pixel. Then, you can retarget them and use a lead magnet like a checklist, a book, a course, whatever, to get them basically into the next step. Only as a third advertising campaign, actually ask for a sale. She really explained that funnel quite a bit.
Mike: I really liked her talk. I got a lot out of it in terms of the actual sales funnel that would work on Facebook because I’ve tried Facebook ads in the past. I’ll say I’ve had some limited success but it’s not something I’ve spent a lot of time trying to figure out. One of the things that jumped out at me that makes a lot of sense in retrospect but I’ve not really thought too much about it was the fact that trying to push people too far too quickly through your sales funnel is not going to work.
She said that that’s actually one of the more common reasons why Facebook ads fail, it’s that you’re trying to push them through and you expect that it’s going to convert to a sale or directly into a lead right away and that’s not the case. It’s usually that you’re just trying to get them to your website. You’re just trying to get them to interact with the ad in any way, shape or form and then the retargeting efforts after that is really what helps to bring them into the sales funnel.
There’s going to be some level of drop off there between step one and step two but the retargeting is really what does it for you, it kind of filters out the people who are idly interested versus the ones who are actually interested. Those retargeting ads are what will bring them back and move them onto where you’re putting them into your lead funnel and asking them for email addresses, then push them to a point to ask for a sale.
Benedikt: Two other things that stuck with me was she said that video apparently works very well. Apparently it’s good enough to just take your phone and do a quick video. You don’t have to do like a fancy production or something. Just record yourself talking about some valuable topic and use that as the first ad in your funnel.
The other thing was apparently right now, long form posts work a lot better than short ones. When you add some description to the post, make it a long one.
Mike: It wasn’t just to make it a long one, it was give them an explicit reason as to why they should listen to you and the situations that you have run into. When you’re explaining the inside of the advertisement, you say, “Have you ever done this, and it didn’t work?” Or, “Have you tried this and it failed utterly?” As part of the rest of the content, you’re offering a story about the solution that you came across.
That’s why they buy into it. It’s because they see that and they’re able to put themselves in that position to say, “Yeah, that’s me.” That’s when they’ll click on it as opposed to as you said, the really short ones that are much more like an advertisement that you would find on a blogpost or something like that.
Benedikt: It kind of goes back to what Paul Kenny said in his talk like the structure of a sales call, it might actually work as a structure of the Facebook post as well. I kind of have to think about it but it sounds similar.
Mike: The next speaker was Andrus Purde. Andru was the director of marketing at Pipedrive. He helped them scale it up to something like 50,000 customers or something like that. It was some extremely high number. He was with them for a very long time. His talk was called From Hand to Hand Combat to a Bond Villain: The Evolution of a SaaS Marketer.
He talked about the different stages of how they evolved the sales and marketing team for Pipedrive and progressed from the point where stage one was really just hand to hand combat. It was kind of the analogy that they used for their marketing efforts and how they did things.
Stage one was just learning how to do things and then stage two was scaling those things up where they learn how to do Facebook ads or SEO, or content marketing and things like that. They took their toolsets and they scaled them up. By the time they got to stage three, they recognized, “Hey, we need teams behind these different efforts because we’re doubling down and they’re working well but we need more people and more resources behind them.”
Stage four was deploying those tools out in mass to large numbers of people and then being able to scale up those marketing efforts. It was really fascinating to look at how you grow a marketing team from virtually nothing to a full blown marketing team where you have different people in positions and responsibility for different parts of the sales pipeline or the marketing pipeline and how those things feed into one another based on the type of marketing that you’re doing and the different channels.
Benedikt: One thing he had in his slides was the Two Hedgehog Growth Model. I think it’s especially useful early on. He basically told us that you just do two things, get referrals and [00:27:19]. I really like that analogy.
Mike: If you’re not familiar with the Two Hedgehog Model, I’ve seen articles about this over on growthhackers.com. It’s just a way to basically say there are only a few different things that you should be focusing on in order to grow your startup. If you’re trying to do too many things, then it’s going to make things difficult.
If you focus on only two things and do them very well, for example if you’re making sure that your customers are giving you referrals and that people are able to find you for relevant keywords, then you essentially have your priority sorted in terms of being able to establish repeatable sales growth within the business.
But if you start trying to focus on three things or four things, or five things, you become too disjointed and you’re really not going to be able to focus enough on any of them in order to be able to make a difference. A lot of people spin their wheels when they get into those situations just because they’re not doubling down enough on something to make it work.
Benedikt: The last talk on Tuesday was Ed Freyfogle talking about building and serving a global SaaS customer base. He basically told us how they are doing it in their company. I think it’s called OpenCage or something like that. They mostly do geo calling services. What I really liked was that he basically laid out, “Hey, we do this, this, and this.”
I’ve got a lot of things out of it. Especially one thing I liked was how they present themselves on their About page where they basically hide the fact that they are just two people by not saying we’re a small team but just presenting the management team. It was a nice approach to do that.
Also, one technique he presented was to do interviews with people from local communities in different countries. In their case, they’re heavily relying on OpenStreetMap community and just started interviewing people from different countries about their activities and their OpenStreetMap community. That helped them get backlinks and be talked about and stuff like that.
Mike: I think the biggest thing that I took away from Ed’s talk was their focus on the little things, making the user experience better. For example, in certain data sets, they localize the data to where it’s being requested and who’s requesting it as opposed to just having, “Here’s the data,” and you have to interpret it in any way that you feel is appropriate. But the reality is that if you help the customer and present it to them in a way that’s helpful directly to their needs in their situation, then you’re better off.
That’s really just a matter of not just doing the right thing for the customer but going a little bit above and beyond what the customer would probably expect and what they’ll probably get from other vendors. Because their company is called opencagedata.com, it provides geolocation services based on longitude and latitude and tells you what the city and state is.
The specific example that he’d given was in certain countries, the format of the address is going to be different. It might be that you have the address and you have the numeric address and the street name. In other cases, it’s the other way around or in some countries, you may have a couple of different things all on one line. They do what’s necessary to provide all of that information, do all of that work for the customers so that the customer doesn’t have to figure it out for themselves because otherwise, they would.
Then things get weird where if you’re saying city and state, the example he showed was on Twitter, it said Berlin, Berlin. The reason for that is because Berlin is both a city but it’s also a state. It looks weird when you would see something on Twitter that says it was posted in Berlin, Berlin. It’s not natural. But if you look at it, it obviously looks wrong but the computer has no idea. They do the things that need to be done to make it look presentable.
Like I said, it’s the little things, the icing on the cake, that make it just simple and easy to use. Honestly, a bigger example most people would be really familiar with is Stripe. Stripe does those types of things to make your life easier. You don’t notice them until you’ve tried other things and they’re terrible and then you use something like Stripe and you’re like, “Wow. This is actually not a bad experience. It’s quite nice.” And the bar is not that high.
Benedikt: That’s true. I also like the example he had with offering libraries for your API, they’re an API business basically. Offering an API, you can integrate with them. He told us that offering libraries and programming languages is really like a traction channel for them. I don’t remember the name of the program he mentioned. But it apparently is some very niche language that is not widely popular but by just having a library out there makes it a go to choice for geo coding for that particular language. That was really a good trick.
Mike: Benedikt, you’ve been to a couple of MicroConfs in the past, what was your impression of this year as compared to previous years of MicroConf Europe?
Benedikt: I think the conference in general was pretty similar. Of course the location changed which was nice because I always enjoy visiting these cities and walking around the day before, doing some sight-seeing. In part of the hotel, I think I like the one in Barcelona a little bit better but in the end, I’d go to my room and lay in bed and sleep so it doesn’t really matter.
As always, the hallway track was probably the best thing about the conference. It’s always great to meet new people and also catch up with friends from previous years. That’s what I really like about MicroConf, just the community.
Mike: Awesome. I think it’s a recurring theme. We have new attendees this year, it just seemed like person after person kept telling me like, “Hey, this is a fantastic community. I love talking to these people.” It’s great to hear their stories and what they’re working on. Most of the people I have talked to are like, “I can’t wait to come back, it would be awesome to see where other people are at.” And then also be able to share where they had moved their business based on conversations with them and things that they learned in MicroConf that year.
Cool. Before we wrap things up, I do want to say a special thanks to all of our speakers. I really appreciate them taking the time out of their busy schedules to come talk and also to all of our sponsors. We’ll link them up in the shownotes. I think it’s really important to mention every single one of them and say that the conference would not be what it is without both our speakers and our sponsors, not to mention, all the attendees because the attendees are really what make the hallway track.
Rob, myself, and Zander cannot do that, make the entire hallway track without everybody else there. With that, I also want to say thanks to Zander. Zander is the one who’s in charge of all the logistics. I know he doesn’t want to detract from the experience that people are having with a thank you to him. But I think that everybody really appreciates all the hard work that he puts into it and it shows. It’s really a testament, what he does.
Benedikt: Absolutely. Zander’s amazing. Just at the registration where he basically pulls up your nametag even before you reach him, it’s amazing. I don’t know how he can remember all the many names. I’m super impressed by Zander’s work.
Mike: Excellent. Well, thanks for joining me, Benedikt. Like I said, I’ll link up to a couple of different things that you’re working on. If anyone’s interested, go to femtoconf.com. Definitely check that out if you are able to get a ticket at this point. 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 366 | Building an MVP as a Non-Developer, Gaining Traction with Stair-Stepping, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike take a number of listen questions on topics including bootstrapping an MVP as a non-developer, gaining traction with the stair-step approach, and more.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about building an MVP as a non developer, gaining traction with stair stepping and answer more listener questions. This is Startups For The Rest Of Us Episode 366.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. Mike, I have a question for you before we start the episode here. What is the lamest and/or most embarrassing domain name that you have ever purchased?
Mike: Lamest and most embarrassing, I don’t think of any that I got that were embarrassing. I’d say probably the lamest was dotnetforumsoftware, I think it was.
Rob: It was like dotnetforumsoftware.com?
Mike: Yup.
Rob: I don’t remember offhand but I had some when exact match was such a big deal and the dashed exact match was not as good but almost as good, I had some horrendous, like five and six-word dashed dotnets. It’s like business-credit-cards.net or something like that. It was when I was hacking a lot of SEO stuff and just trying to figure out how to rank stuff. Most of those wound up being AdSense sites that made back their initial investment and then not much more because Google updates came along but there’s probably some pretty embarrassing names in the boulevard of broken dreams there.
Mike: Yeah. I can definitely think of a bunch that I don’t remember whether I’ve registered them or not but they were kind of non starters because they were either hard to pronounce or could be very difficult for people to hear it and associate a domain name with it. They were just bad ideas. I think one of them was bitclinic.com or something like that. I don’t think I ever registered that one but there’s a whole list of them that I came up with and they’re just disqualified for a number of different reasons.
Rob: Especially once you start hosting a podcast, or doing public speaking, or going on interviews, you realize how important the pronunciation and the ability to spell something in one way that there’s no ambiguity over which version, if you’re using a homophone or whatever, which version of the word that you’re using.
Mike: Yeah, God forbid you register penisland and try to sell pens because that’s just not going to work out.
Rob: Penisland, did you do that?
Mike: No, I didn’t but I remember reading somebody who did.
Rob: Got it. Cool. What’s going on with you and Bluetick this week?
Mike: I’m still working on that code refactoring that I started on last week or was working on last week and it’s just turned into a nightmare. I was going through a bunch of changes and I made them and then a lot of my unit tests failed and then I had to start digging to figure out why and then realized that there’s some architecture changes that need to be made so there’s code refactoring. I’m like, “Oh, this is way more complicated and way more involved than I thought it would be.” A lot of it is because there’s stuff that’s buried in the code that I learned it all like a while back and then left it out of my brain for a while and it was just brain dumped and I’ve forgotten most of it.
Now, I’ve had to go back and research some of the stuff and say, “Okay, how does this actually work again?” Because like I said, it’s going to be kind of re-factor and re-architect so it just makes it difficult.
Rob: Yeah. This is to give yourself a multi user capability. Is that right? Like folks can have multiple logins and pay per seat?
Mike: Yup.
Rob: Cool. This sounds like something that’s pretty important especially based on our conversation last week. This is nice expansion revenue to get from folks who are using it. You’ve had this request a lot along the way and I know that you’ve avoided building it because you knew there was going to be some complexity around re architecting things.
Mike: Yeah. It wouldn’t be so bad except that a lot of the services layer is all hard coded for the user account. All the database changes and stuff are in place, the services layer is all really tied to either the user or the account at this point so that’s still reasonably good at this point but the problem is that authentication mechanism on the frontend, I’ve got to pass the account information up and down the stack, which if I could kind of separate that out and use it like an object to pass in as opposed to a user ID. It would make things so much simpler and it’s not that simple right now.
Rob: Yeah, it’s a bummer. It’s hard to do something you know you need to do but then it takes longer than you want it to. This is where the founder impatience kicks in of like, “I want to be moving faster but if I rush it, I’m going to cut corners and then I’m going to regret it later.” So how do you deal with that? I know the feeling, man. This is the time to hammer it out as quickly as possible. Drink a lot of caffeine and listen to some death metal.
Mike: I forgot when it was, it was earlier this week but I was looking at the stuff that I had to do and I’m like, “Man, I really should be switching over to doing the marketing stuff.” And I was like, “I know if I do that, then I’m basically leaving this half done and it’s going to take me longer to get back through it.” As you said, it’s got to be done right the first time. I figured I’d just pile through and made the conscious decision to just continue on it.
Rob: Alright. From my end, since I’m hopping on a plane tomorrow, I don’t have many updates this week. I’ve been wrapping up some loose ends and I’m actually talking about hiring plans for next year and just kind of looking. It’s November now and it’s starting to be time to look ahead and project growth, both revenue and usage growth and stay ahead of scaling. We’re looking at what hiring is going to need to be required in order to do that. That’s been an interesting exercise and one that I have not done so thoroughly in the past.
Our growth has never been this fast now that we’re in this venture funded engine. I have to be a little more deliberate about it because if we wait until we have issues, if I wait until we’re understaffed or if we wait until we start seeing performance problems and it’s too late because it takes months to fix these so I’m trying to think three, four, five months out right now. That’s been, I wouldn’t say fun because I don’t particularly enjoy it but it has been enlightening and I think a necessity if I want to feel relaxed and chill and have a good time next year.
Other than that, we have a lot of five star iTunes reviews. We have 550 reviews in worldwide iTunes repo. Most recent one was on October 9th. It says, “Tons of practical tips and lessons.” It’s from [Honey Maura 00:06:24] in Canada and he says, “I’ve been listening for about four years now and I love what Rob and Mike share each week. I’m hooked. I’ve been following Rob’s stair step approach since launching several premium WordPress plugins first and a few months back launching my first SaaS. Thanks for all you do.” He’s with repurpose.io.
If you haven’t left us a review, you don’t need to leave a full comment. We do appreciate it. Just going into iTunes, Stitcher, Downcast, Overcast, or whatever you use to catch your podcast as it may be, hopping in there and hitting the five star rating would do us a great favor.
Today, we’re going to be answering some listener questions. It’s funny there’s a whole theme going on. A lot of it is like I’ve launched. Now what? It’s kind of the theme of today. Maybe not every single one but there’s three or four here that are asking guidance post launch.
Our first question is from [Yan Wustland 00:07:13]. He says, “Hi Rob and Mike, thanks for the great show. Like everyone else, I have to praise your excellent work with the podcast. I feel I have a classical developer problem. I am a solution looking for a problem. I started with web development and then I continued to the iOS, Android, and Mac development. I like the stair step approach and I’ve been launching single products targeted towards web developers like myself, more specific to the niche of Laravel developers.” He has a link here. It’s eastwest.se/apps.
“So far, I’m selling a couple of licenses per week but it’s nowhere close to paying my bills. I have got a great response from the Laravel community and customers but I feel I have to make a move. Their expectations at Mac app should be cheaper than a WordPress plugin and most of my customers who are developers seem to dislike monthly subscriptions. I have a lot of ideas for new products but all of them are centered around MacOS, which I’m passionate about, where it feels a lot harder to justify recurring subscriptions. Without all the details, what advice would you give?”
He laid out some options and we don’t have to stick to these options but I’ll lay them out here. “Number one, continue with one time products and learn more about marketing. Number two, this is not the right place to be and I should try to come up with another product and then find product market fit. Eventually, the right idea will come up. Number three, bite the apple and try to introduce annual plans in my Mac apps with the risk of making customers angry. To me, all the possibilities are a bit paralyzing. How do I know which is the right one to go for? Again, thanks for the great podcast.” What do you think, Sir?
Mike: I’m looking at the website. One thing that I’ve noticed is that the apps themselves seem like they’re a little bit all over the place. There’s this thing called F-Bar which is for managing Laravel Forge Servers. Another one is git-ftp deploy, which is for ftp deployment and then there’s like a radio player and then plugs of the world, which is your guide to sockets and plugs for iOS. These different apps or utilities are all over the map in terms of what types of problems they solve so it makes it difficult to do the marketing for them because there’s no overlap between them.
I think I might go down the road of looking to see if you could just sell off a couple of these outright to somebody else and have them take them over and then focus the efforts on building a small suite or a tool set of different things that you could sell individually and then have a bundle option. If you really are getting a lot of interest from the Laravel community, then that’s a great option in terms of being able to raise your lifetime value for those customers because then that bundle option’s going to give people the ability to pay you more.
They’ll feel like they’re getting the deal on it because individually, these products might cost $100 but if you give it to them for $70 or something like that, then it’s a better deal for them.
Rob: I want to jump in here. What I’ve noticed in looking through his list of apps is the top two, one is like you said, the Laravel Forge Server and the other one is git-ftp deploy. Those two he charges for. If you click through, one is $15 and the other is $20. Everything below that, which is a radio player and a timer and crush cockroaches, a game, it doesn’t appear like he charges for those. Maybe when you click through to iOS, they’re $1 or $2. But I mean these are definitely really small utilities almost.
One thing I would say just for organization’s sake is on the website, on his apps page, I’d probably have a heading that says tools for developers and then other stuff I’ve built. Because I bet my guess is he’s making a lot more money. He said he’s only selling a couple of licenses a week at $15 to $20, so it’s not that much money. Maybe a low end car payment in a month. He’s probably making the vast majority of his stuff from this top two if he’s making any from the lower ones at all.
I agree with you. I think the folks are starting to focus on people who are willing to pay something. Even if it’s $15, $20 a month, I think that’s probably a decent first step.
Mike: Yeah. I didn’t get that far because I was trying to go through. When I browse, I usually will right click on a link and then go to the next one and right click on it so that I can open things up quickly in different tabs. The way that the website works is if you right click on something, it actually browses to it. There’s no way to open up those links in a different tab so I honestly didn’t get there. It was annoying.
Rob: That makes sense. I guess as I think about this, it seems like when I look at the three options, he laid out basically keep doing what you’re doing and build more products or start doing totally different things, try to launch a SaaS app or something or launch annual plans. It seems to me the third one is the easiest to test, launching an annual plan. If you pushed it out for one or two weeks and everybody’s angry and nobody pays it and sales plummet, or do it for a month. If it doesn’t work, it’s easy to undo this. To go back to people and give them a refund or just say, “We’ve abandoned the annual plans and now you just get it for good just like everyone else does.”
I would try that with one or both of the apps and realizing that you will get some complaints but if suddenly, you see more sales or you feel like you’re going to make money with that in the long term, I don’t think that’s a bad way to go and it’s easy to test.
The real problem there is even if you test that, if you’re only selling a couple of licenses a week, then you’re not going to see any fruit from this for another year until they come up for renewal. Really, you’re not doing anything to grow your revenue in the short term. I think one of the big issues is something that he pointed out is that utilities in the app in any app store, they’re a commodity in essence and you really can’t charge that much for them and so, they have to have wide appeal and you have to sell a lot of them in order to make any type of money at it.
I think it’s a tough space to be in. The other drag about it that’s a trip is selling through the Mac App Store means you have this instant, easy distribution. That’s a good thing. The bad thing is you’re really not learning much about marketing because you’re not building a website, building an email list, nurturing people, running ads or blog, doing content marketing or whatever it is that we want to talk about marketing a product. If you don’t have to do that, you can but you don’t have to do that if you’re in these app stores.
One of the benefits that I found in the stair step approach is you’re not just gaining revenue and you’re not just gaining confidence, you’re not just gaining money, you’re gaining experience doing things with these smaller products. Even the folks who do WordPress and they put them in the repo and then they have an upsell to a free version, they have to learn how to write nurture sequences and how to write good copy and how to build an email list.
There’s other things that they do that I think the app stores, while they’re a good starting point and including Themeforest in there, anything that you post into, that pays you a commission but has all the distribution, it is a nice thing to get started on the side. But to grow that to the point where it supports you is hard because the prices are low and even if you get to the point where it supports and you compile all your hours, you’ve really missed out learning a lot of things that someone who is slogging away, building WordPress plugin or an ad on the Shopify and he’s doing more traditional marketing, I think we’ll learn that.
I don’t have a really strong recommendation here but I do feel like if you can’t market these through other channels, because if you only get one or two a week through the Mac App Store, then obviously there’s just not that many people searching for it in there. Do you go market it elsewhere?
Whatever it is, whatever they purchase, you talk about it in forums or you go on podcasts or whatever, you have a message you’re going to use to promote it, you try to do those to grow sales or do you perhaps get into a space where there’s a little more margin and you can launch products that are at least $50 or $100. Having a lifetime value of $50 or $100 is still a pretty tough gig but definitely it would be a step up from these $15 and $20 sales.
When you’re selling something that’s this cheap, distribution has to pretty much be free. You really need to rank number one or top three in Google or rank high in an app store or in YouTube or in Amazon or in one of these places where people just find you because you just don’t have enough money to really do any type of paid marketing. That’s definitely the challenge here.
One of the things you can think about is you’ve built something that people want or at least there is some sales here and there, you may want to think about doing some of these deal a day sites, they have developer deal a day site. I know you have to cut your prices and it wouldn’t be a sustainable thing but it could be an interesting short term influx of cash that can help motivate you to build that next thing.
I think if I were in your shoes, given what’s going on, I don’t see any easy way to grow these existing products. Nothing jumps out at me aside from doing some of these deal things, which again is a short term thing. Personally, without knowing all the details, I would probably start thinking about a way to launch something else that has just a higher lifetime value, whether that’s a one time or a recurring thing, that just leaves a little more money to do some of these other marketing approach and try your hand at them.
Mike: A couple of things that come to mind is try and pursue an affiliate channel of some kind. There are lots of websites out there that just have dozens and dozens of products or actually, probably tens of thousands of products on them where people can go through and identify what products that they want to push as an affiliate on their own site. It’s hard to get noticed in those so you would probably want to pick and choose different people to approach for that.
If you have a set of customers who keep running into a particular problem that your software works really well to solve, then approach in like the vendor’s, whatever that platform is of that application and trying to get in the door as an affiliate and say, “Hey, bundle this other application, whether it’s your git-ftp deploy or your F-Bar,” that would be a good way to get in front of those people and provide yourself with an additional channel.
Rob: I like that idea. I like that. It could be worth pursuing as well. Find another JV channel, basically, to go through. That’s cool. Thanks for the question, I hope that was helpful.
Our next question is another one from Saphia and he had sent a question a couple of weeks ago. Subject line is we may have built [00:17:04]. He says, “I’m a big fan of the show. I’m still binging my way to the backlog since I discovered it. Thanks for the great advice. I’d like your opinion on something. My co-founder and I, first time founders, have been building a SaaS app for about a year, part time, based on an idea that he had as a business coach. Essentially, the app recreates a process but moves it online. It’s one he’s been successfully charging for offline for a number of years and it solves the problem of lack of clarity and difficulty onboarding new employees in a flat organization.
Our landing page has collected more than 500 emails. The feedback we get on blog and social media is generally super positive. People seem to be very eager to try the product. Now, we have an MVP that we launched with about 10 leads as a free trial for a few weeks. All the feedback is very positive. None of them have yet paid for the product. It’s a flat rate of $99 a month per team. Some have logged a few bugs in quick win features that I’ve deployed in a matter of days. How would you approach this? Should we go down the list of 500 prospects and another 10 leads? Should we focus our attention on the current 10 and get to the core of why they’re not paying? How do we know if we have problem-solution fit and most importantly, if there was a problem in the first place. Could it be that we built a cool looking product that is just nice to have? Am I too impatient? How long does it take to close a sale in the B2B world?”
I’ll let you take this first. At the am I too impatient, it’s like yes, we all are. You can be searching for product market fit for 6, 9, 12 months. This can take a really long time. I would definitely give it a little more time but why don’t you weigh in, Mike, on maybe what you would do next.
Mike: Welcome to the club of impatience. I don’t think that that ever goes away. Nothing will ever go as fast as you want it to or you won’t scale as quickly as you like. In terms of what to do next, if you’ve got a list of 500 people and you’ve only gone through 10 or so, I might look at those 10 a little bit and start asking those people questions. It sounds like maybe either haven’t asked them questions or you’ve asked a couple of people and maybe they didn’t get back to you but you really don’t have enough information right now to go off of.
What I’d be careful of is burning through that entire list of 500 and just trying to on board all of them and get to the point where you’re not getting enough information to make a good decision about what to do next. I think one of the issues that I ran into with Bluetick was that when I was putting people onto the system at first, I didn’t do a very good job of defining what a success card here was and what the next steps were for people and what the timeline was.
I feel like the timeline was probably the most important thing and I was the worst at that. I basically said, “Hey, try this out and let me know when it’s providing value and at that point, then I’ll start charging you.” That absolutely didn’t work. When I turned around and I decided to put a time pressure on it, that’s when people made the decision.
I think part of that was due to the fact that it just took so long to get to that point where, I don’t want to say put my foot down but I drew that line in the sand and said, “Okay, either you’re in or you’re out.” It’s very easy to just let things slide. If you go back to this 10 and you really can’t get answers from them, that’s fine. Just go to the next 10, that’s okay again. You’ve still got 480 more people.
But set clear expectations with them about how the process is going go, how long they’re going to be able to test things for, what you’re going to do if a bug comes up. You can explicitly tell them like, “We will pause the billing, for example, for x number of days.” Or however long it takes us to get that particular issue fixed. If they come to you and there’s a problem, push their trial out by a day or a week or whatever, if that’s how long it takes you. If it’s going to take you six months, obviously, then I would say move on because that’s not going to be beneficial for you and it’s probably not a good fit for them at that point.
But you can essentially iterate through probably 5 to 10 times and you’ll get through 50 to 100 of those people and you’ll find out a lot of information about what is working and what’s resonating with them and what’s not.
Another thing I would do is when you’re going through the on boarding process, don’t let them do it themselves, walk them through it. Get them on board, walk them through signing up with their account, get on a video call with them and watch them do it and watch where they have problems because that’s where you’re going to learn the most from. Having them tell you after the fact is just not going to be very helpful. You want to watch them struggle and watch what they’re doing.
That’s what I did with Bluetick, was watch people sign up for it. Every time they had a problem, I wrote it down. Even if they just looked around on the screen and they weren’t sure where to go next, I wrote it down because that’s a problem. Because when I’m not there to guide somebody or answer a question directly, how are they going to figure it out on their own? If I don’t see that that’s a problem or you don’t see that there’s a problem on that on-boarding area, you’re not going to be able to figure it out especially just by looking at statistics and data from Mixpanel or Kissmetrics or whatever, those things are not going to tell you what’s wrong.
Rob: That was a really good answer. Tell me honestly, did you rehearse that before this episode in front of the mirror?
Mike: No, I did not but I thought about that a lot.
Rob: It was really good. You called out basically handholding and watching people use the app and see where they stumble, you called out digging in with the 10 current ones and not jumping ahead and digging as much as you can into finding out why they’re not paying and setting expectations properly. And then only when you’re convinced that it’s not going to be a fit for them or that you can’t get the answers, then go to the next 10 and then you talk about doing that 5 or 10 more times, which might take months and months.
Remember, I called this the slow launch of Drip where we got our first paying customer in June. There was early access. They weren’t paying yet. But by the end of maybe June or July, I think it was our first payment. We didn’t launch to our big list until November. It took us five months of essentially this exact process of I was letting people in 5 and 10 at a time, looking at where they were succeeding, where they were failing, where they were getting value and doing that. This is the playbook, man. I think you captured it really well.
Sophia, I won’t just say that’s what I would do but that’s what I did and that’s what Mike did. You’re following the path and I think the answer to the question of are you too impatient is yes but we’re all impatient so don’t feel bad about it.
Our next question is from Sameer. He says, “I’m launched but I’m discouraged. What are my next steps?” He says, “I built dcaclab.com for teaching electronics. I feel schools all over the world will love to use it. In fact, some schools already use it but I still am not making enough income to leave my 9:00AM to 5:00PM job. I’ve done everything I can. I’m still pushing forward towards freedom. The most recent thing I’ve done is add a blog to the website so I could start adding content to get more traffic and hopefully more sales. It’s very hard work and I’m working by myself. How would you encourage me to keep going my website? Alexa global ranking is 338,000 and I feel tired. I’m interested in hearing from you on how I can keep strong and not give up.”
What do you think, Mike? Should he keep strong and not give up? I guess it depends on how much progress he’s made, right? It’s like if he has one paying customer and he spent a year, then he probably should give up, maybe.
Mike: It’s hard to answer with the data that we have. I think you have to figure out whether or not you’ve actually got traction. I think we’ve talked about this a little bit in the past but one of the things, and I heard somebody talk about this on a podcast as well, I can’t remember who it was, but they talked about the fact that if you launch a bunch of things, it’s a lot easier to see where the outliers are as opposed to launching let’s say three products and none of them do well. It’s hard for you to see what the outlier is, where things go really, really well and you recognize that.
If I remember correctly, it was somebody who I’d been talking to, Paul Graham, about that where they just didn’t know what success looked like because they didn’t have a very objective opinion. It’s just like, “Oh yes, get as many people as you possibly can onto the system or the platform and grow as quickly as possible.” You’ll know when you’re doing well and you’ll know when you’ve got traction and some success with it.
Unless you get to that point, you really don’t have a good understanding of what that actually looks like. If you don’t have any of those successes, it’s very difficult to be objective about your own situation. That’s how I would look back at the stuff that you have done and talk to other people who have put apps out there and have gotten some level of traction or progress with it and ask them to evaluate the different things that are in your business versus maybe theirs. Even if they’re only a little bit more ahead of you.
Let’s say that they’re making $1,000 a month, they can look at their own statistics and how they got to where they’re at, versus the things that you’re doing now and what you’re getting and let you know where the different problem areas are. There’s not going to be a silver bullet here but it will help point you at least in the right direction.
In terms of the app itself and the direction that I would go to towards trying to get more traffic and more sales, the name itself dcaclab, I get it. It’s direct current alternating current. But if you’re not really into electronics, you’re not going to really understand that. That’s not necessarily the point but the average person may not quite understand the subtleties of the difference between them. If you play with home electronics kits and stuff like that, unless you’re an electrical engineer or have electrical training of some kind, you really don’t completely understand that. It’s not going to come to you like if you’re searching for it on the web like dcac. That’s just not going to come up.
The SEO perspective is probably going to be a little hard. I’m not saying change it. It’s just something to think about. But this screams to me something that you could go to Kickstarter with. People in our age bracket are probably the most likely people to help fund something like this because they want to teach their kids about electronics and how alternating current works and how direct current works and how you can build little pieces of a large robot and experiment with those types of things. It just seems to me like that would be a great channel to go after to try and expand not just the horizon of what the number of people that you can reach but also to get an influx of cash. You could do a heck of a lot more with it.
There’s a lot of information out there on how to do a good Kickstarter and I’m not going to say that it’s easy because I know people who’ve done it and have made lots and lots of money from it or brought in lots of money but you also have to be able to deliver on it. Getting yourself to a certain point where Kickstarter really works well for you, you also have to do a lot of pre marketing in order to essentially accelerate it and pour gas in the fire once you do get it on Kickstarter.
The similar things that come to mind is you could go the route of trying to get into government funded channels like directly into public education, public schools, or even private universities or private schools, but those seem to me like the channel is going to take you a heck of a lot longer in terms of the timeline to develop and I don’t know how much time you have to put into this or even how much energy you have left to do it because it sounds to me like you’re at the end of your rope.
Rob: That’s a thing. Selling directly to schools or universities would be the money fad here in terms of the big contracts. It can make a difference. But it’s like one to two years sales cycles because they budget way out and you gotta convince them it works. I got to be honest. Just looking at the screenshots and I just watched a little video. It’s a pretty sleek tool. It really does look like a circuit board. I think you use it right here on a web browser. It’s interesting here.
It’s one of those tough markets of individuals probably aren’t going to buy it in terms of like, “I wouldn’t buy this for my kids because I might buy a coding class or something. It’s only $42 a year but I just don’t know. They’re not doing enough circuits right now.” You’re just going to get onesie, twosie sales. What you want to do is go after groups like schools, universities, even public, private, all that stuff but that’s just that enterprise sales cycle and so it becomes a challenge.
I like the advice that you laid out. I think that if you have almost no traction, if you literally have a couple hundred dollars in revenue, it might be time to just walk away, sell it on Flippa. You have built something here that has some value but it probably couldn’t sell through a broker if it’s that small. If you have at least say $25,000 a year in revenue, it may have to be profit actually, then you can approach a website or an app broker.
If you really are burned out and just struggling to get past there, that’s not a bad option, then you’ll find that you’ll leave out with a little bit of cash in your pocket and feeling refreshed. That’s something I’ve done a number of times so I know firsthand how that feels to keep an app around longer than it should and feel guilty about it because you’re not committing the time and you feel like you’ve invested a lot of stuff and you have this cause fallacy and you want to keep building it and you don’t know when to stop. I’m not saying that you should stop but you do need to listen to those feelings if you feel like you’ve just been pushing a boulder uphill and you haven’t really made any progress.
I kind of have a question mark in my mind, whether a blog, which is what you mentioned, has an x marketing channel is the right thing. I think if there’s a lot of SEO terms, there’s long tail, people searching for this kind of stuff, then maybe I wouldn’t do it for six months without some type of noticeable ROI. I might do it for a couple of months and of course, the hard part there is you have to need time to build this snowball there.
AdWords isn’t going to work here. Facebook Ads, probably not, given the low lifetime value. There’s not a ton of options aside from the places we’ve talked about before, which are the joint venture deals of is there anyone anywhere who’s bundling these things together. Is there anyone who has an audience that would be interested in this? Like a blog or that you could pay a big 40% affiliate commission to get the nice one time hit. What other free channels are there? Are there forums? Are there discussions? Is there a stock exchange for electronics? I’m almost sure there is. Can you become active in there and you don’t just hit there and pitch your thing, that you answer the questions because you haven’t seen a lot about circuits but you answer questions and then your profile has the links in it.
There are ways to do this. This is not like a high growth market. It’s not something that you’re going to hit a hockey stick by tapping the right thing. It is just going to be a slow build and if you’re interested in it and you still want to push it, then do that. If you’re not, then I would think about launching the next thing because you obviously have some skills to be able to launch this one.
Mike: Something else that came to mind as you were talking was what about building a course around teaching somebody how to use electronics and then bundling a one year subscription of this, or three months, or six months with it. That way, you’re really selling the course but this is kind of an augmentation of that course. That seems like a good idea.
Rob: Yeah. I pay quite a bit of money for my 11-year old who does coding courses. I buy those courses online and then he goes through them and he builds minecraft models and all that stuff. If there is a way to make this interesting, parents are likely to buy things for their kids. That’s an interesting market. It’s not an enterprise sale but it is a way, like you said, they’re going that B2C kind of Kickstarter path, selling the course with this bundled as a Kickstarter or an Indiegogo or something. That may be the best idea we came up with today regarding this business in particular.
Thanks for the question, Sameera. I hope that was helpful.
Our last question for today is about bootstrapping an MVP as a non developer. It’s from Rusty. He says, “I have an idea for a SaaS application. I feel like I have a great in, in an industry that I’m familiar with. However, I’m not confident enough in my abilities as a programmer to actually code a viable product. What’s the most financially viable way for me to get a demonstrable demo of a product up and running without having the personal ability to code it?
Mike: I think the first step is to take it from beyond having a great idea in an industry to talking to people and get in either commitments or actual presales from the people there to give you the confidence that go into that without having a development background and being able to know that you can essentially program your way out of any technical problem that you run into.
It is probably the place to start because if you can get those commitments and have that confidence that people are willing to pay for it and you’re able to find enough of those people, then that’s really the next step. It seems like a clear way to try and figure that out. If you do get that confidence, especially if you have let’s say $20,000 in pre sales, you can take that proof of presales and go to a developer and have a much higher chance of being able to convince your average off the street developer that hey, let me work with this other person or a partner and I’ll either do it for free or do it for a really low rate in exchange for equity or whatever in order to be able to latch onto this business that clearly has some legs to it.
Because what you’ll run into if you go to a developer and say, “Hey, I’ve got this great idea. I’d like you to build it for me.” I can tell you what’s going to happen. They’re going to say, “Haha, no. I don’t think so.” Unless they’re just not any good at it because there’s too many developers who’ve done that too many times and they’ve gotten burned. It just does not work out because the technical side of this is not the problem. The problem is the business side of making sure that you can get in front of enough customers on a repeatable basis. If you can prove that upfront, then you can move on towards actually building the product itself.
But I don’t think that there’s a lot that you need to do in order to even just put something in front of people who you’re talking to. I did Balsamiq mark-ups for Bluetick and that was all I needed in order to get presales. I would recommend having those conversations first and then going to the process of showing them what it might look like and then after that, if you can get them to buy into it, then move on to actually building a prototype until you get to that point where they say, “Yes, I’m willing to pay for it.” Or, “It’s a problem that I have that I need to solve.” It doesn’t matter. You can build all the prototypes you want but you could very well just be building the wrong thing.
Rob: That’s a playbook sort of recap. Have more conversations, have a bunch of one on one conversations. You can go out and you can look in forums and you can look in wherever folks who you’re trying to sell to hangout. If you have any inn in the industry, you already probably know a bunch of people in that industry. Talk to them, describe the idea in as much detail as you can and say, “It’s going to be $100 a month to whatever you think the pricing will be. What do you think?”
If they say yes, then say, “Awesome. I’m going to go build mock ups and I’m going to come back and show you. If I build this product, are you willing to pay that?” And then they’ll say yes or no. Once you get enough people and you really have an idea of what you want to build, like Mike said, make the mock ups. Balsamiq is a great tool. I think today, it’s like sketching and vision but you don’t need to get too fancy with this.
When you come back to them and you say, “Here’s what it is. Here’s what it really does.” They’ll have questions for you. Then you make a decision. If you get a bunch of people ordering and you get the validation, like Mike said, you can go to a developer or if you have savings, you can feel a little more confident that perhaps this thing will work and maybe you go and hire a developer, which is a whole other podcast episode. A lot of challenges there but you can hire someone to build it and essentially hire a cofounder or you could go down a different path.
If it’s a service that can be mocked up and handled by hand like by yourself or by a virtual assistant with minimal software, maybe no software at all like can you mock this thing up, have a fully functional version with Google Forms and Zapier and you copying some kind of a spreadsheet and manually sending emails through Gmail or MailChimp or manually crunching data in Excel spreadsheet, instead of an app actually doing it, then maybe you don’t even need a developer to get to the next step, past the mock-ups.
The next one is, “Okay, now I’m going to do this for you.” I don’t know what your service is so that’s where this part’s hard. But it’s like if you’ve committed that you’re going to bring 20 leads a week to lawyers or to real estate agents, it’s like, yeah you want to build a software to do that ultimately. But now, just get on a phone and generate the leads. Run the AdWords and generate the leads. If you’re going to do SEO analysis on something, then yes, you’ll want a computer to do that eventually. But for now, just do it yourself. Do it manually and develop the algorithm and send them pen and paper in essence. Send them that Excel spreadsheet that is super low tech and see if they’re like, “Oh my gosh, it’s amazing. I’m getting a ton of value out of this.” Or if they’re like, “Yeah, the results really aren’t as interesting as I thought they would be. They don’t necessarily need to, in a lot of cases, actually use a software to get the value that the software will ultimately provide.
That’s kind of your either or. They are depending on the idea. If you can’t do that and that is possible in more and more niches than you think and with more ideas than you think. But if that’s totally not possible, then yeah, you do go down the train of trying to build a prototype/mvp. Those things don’t have to be the same, but in this case, they essentially would be.
Mike: Thanks for the question, Rusty. I think that about wraps us up for today. 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 365 | The Real Impact of Revenue Expansion
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike define revenue expansion, talk about how it differs from revenue growth, why it’s important, and ways to increase it.
Items mentioned in this episode:
- Baremetric Article
- Price Intelligently Article
- Geckoboard.com article
- FemtoConf
- Mixpanel
- Kissmetrics
- Bluetick.io
Transcript
Mike: In this episode of Startups For The Rest Of Us, Rob and I are gonna be talking about revenue expansion opportunities. This is Startups For The Rest Of Us episode 365.
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 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 made. For this week, Rob, tell me the two most recent non mainstream board games you’ve played.
Rob: I played The Legend of Drizzt board game which is this $65 behemoth massive thing with these figures in it. It’s set in the D&D world. Drizzt is a character who’s been in a bunch of books, fantasy books by R.A Salvatore. It is pretty cool. It’s a simplified version of D&D in essence, you don’t have all the rules and the mechanics but it’s a lot quicker because you can play around in an hour.
I back a lot of games on Kickstarter so I could probably name five that are super not mainstream. There’s one called Mint Mint Tin Apocalypse. It was $2 or $3. It is literally a mint tin and then a couple wooden meeples and then some six sided dice. It’s cool because it takes 10 to 15 minutes to play and it takes 5 or 10 minutes to learn. It’s a long term, you’re gonna play all the time. When I know we just have a few minutes, you sit down and you can just hammer it out. It’s fun and it’s super cheap.
Mike: Aside from the board games, what else is new?
Rob: From the time this podcast airs, I will be wheels up to MicroConf Europe two days later. I’m excited to get to Lisbon. We’re gonna have folks speaking like Peldi Guilizzoni from Balsamiq, Andrus Purde who is the former head of marketing for Pipedrive, now has his own company called Outfunnel, we have Craig Hewitt from Podcast Motor, Mike Taber from Bluetick, Mojca Mars, a Facebook ad expert. We have several other speakers. I’m excited to get there and see some folks that we maybe haven’t seen for years as well as meet the new attendees who are coming for the first time.
Mike: On my end, when this podcast comes out, there will be an announcement for the tickets that will be available. I will be speaking at FemtoConf over in Germany in the spring. I believe it is the first week of March, it’s March 2nd to 4th. It’s over the weekend, it’s Friday, Saturday and Sunday. The tickets are actually going live the day that this episode goes out. If you head over to femtoconf.com, I’m told that they should be available, if they’re not it’s not my fault.
Rob: Aside from the fact that we like Christoph and Benedikt, I really like that they have the Drift right on their homepage, femtoconf.com, ladies and gentlemen. What are we talking about today?
Mike: For today’s episode, we are going to be talking about revenue expansion opportunities. I’ve been thinking about this a little bit just because it’s been on my radar for Bluetick to look at different ways that I can either rework the pricing or find other things to expand the revenue opportunities for Bluetick. I started looking into some of the different ways that that could be done but it also gave me the idea for this particular episode. We’re gonna be talking about revenue expansion.
Revenue expansion is different from revenue growth which typically comes from new customers. Expansion revenue is any revenue that is generated in excess of whatever the initial purchase price that the customer agreed to pay. If they signed up for $30 and they’re paying $30 a month, that’s great, that’s considered a new customer. It becomes expansion revenue if they move from a $30 plan to a $50 plan or to a $100 plan or if they add more users or purchase other services or other products that you have.
There’s a bunch of different ways that those types of things factor into it. The bottom line is when you’re defining expansion revenue, it’s really additional revenue that comes from your existing customer base that you would not have gotten otherwise.
Rob: The holy grail of running a SaaS app is having enough expansion revenue that you have net negative churn. I talked about this a few episodes ago. In essence, you always think of churn as lost revenue because of people cancelling. You can get to the point where if people are naturally upgrading to higher tiers as they use your product.
A good example of this is being ESP where as you add more subscribers, you naturally bump up every few months if you’re having any kind of success, you start paying more, that can be more, that amount can be more than the amount of revenue you’re losing because of people cancelling. When you see that effect, it’s called net negative churn. I’ll say it’s rare, it’s becoming more popular, strong word.
I’m seeing and hearing about it more as people catch onto how incredible it can be as a flywheel for growth because having low churn means you can grow at a certain pace. Net negative is super charge, it’s a completely different trajectory. If you’re lucky enough or smart enough, or both, to stumble into a business where people automatically have expansion revenue like ESP, I think web hosting if you do it based on maybe traffic or the number of sites.
I’m trying to think of other areas, Wistia for me. We had a small plan and we just keep adding videos and we’ve gone up. It’s not super often, maybe once or twice a year, we wind up going up. Mixpanel and Kissmetrics, they go based on number of events. As your website ramps up, you naturally go up the scale. I guess Help Scout or any types of support software where it’s a per seat, that’s a big one.
Per seat expansion is a big one because as a company has more success with their product, they are likely to either bring more people in because it’s working. What if they already have employees, they’ll add more seats or they’re likely, if they’re a startup, we went from 2 employees to 8 in the span of about 18 months. We just needed to add more people to all of our systems.
There are opportunities for some natural ways to get expansion revenue and to try to get to that Holy Grail as I’ve said, net negative churn. I hope I didn’t steal your thunder, I was going off the top of my head. Did I totally decimate this outline with that diatribe?
Mike: No, just the first little piece of it. We’ll link up in the show notes a couple of different blog articles specifically about how new recurring revenue is different from expansion revenue which is different from churn revenue and how those can combine to create that negative churn effect. Those blog articles, some of them are from parametric or Price Intelligently and then there’s also another one from geckoboard.com.
You already talked a little bit about why it’s important because it relates to negative churn. The bottom line here with going after revenue expansion is that it helps to offset your existing churn because, as Rob just said, when you’re losing people just on a regular basis, you’re going to lose people on a monthly basis or quarterly basis, whatever it is, that your billing cycle tends to be on. That helps to offset that.
It’s easier to get more money from your existing customers because presumably you’re keeping them happy, than it is to acquire new customers, it’s typically a lot more expensive to acquire those new customers. We talked about these acronyms like CAC which is cost to acquire a customer, that number tends to be substantially higher for a new customer than it is to get expansion revenue from existing customer where you’re doing some cross sell or upsell or you’re asking them to opt into this other thing.
It’s a lot easier to do those things because you already built that trust. When they’ve never purchased anything from you before, they’re much more reluctant to take that first step because they’re pretty sure that it’s going to take up time. It’s not that it’s not valuable to them but they’ve got other things that they’re doing in addition to paying attention to your product and other things that it can do for them. There’s only so many hours in a day for them to focus on the things that they need to do. That adds one more thing to their plate.
Let’s dive into some of the different ways that you can increase revenue. The first one, Rob alluded to this where some of the examples he came out were Mixpanel or Kissmetrics or hosting providers where as the customer becomes more successful, they use more of your services and by virtue of that, they start paying you more because they’re using more of the resources that you offer. This is essentially increasing their consumption.
There’s another way to look at it, which is to decrease the friction that it requires to use whatever that is as well. Some examples that come to mind are Apple’s iPod or the Fire TV from Amazon. Those things make it a lot easier to download music or to purchase movies or rent movies. Those devices make it a lot easier for you to consume them and to consume them at a faster pace. Those are some examples of that.
If you go over into the physical products world, this occurred to me a while ago, I’m sure somebody has talked about it at some point, if you remember going to McDonalds back in the 90s for example, the straws were insanely small. If you ever went and got a milkshake, it took you forever to drink the milkshake because the straw was so small. You go to McDonalds now, the straws tend to be substantially larger. They’re probably six to eight times the size that they used to be and put through a lot more liquid in there and drink it faster.
That leads you to increasing the rate of consumption, it also leads to larger portion sizes as well. As a consumer, you have to be careful but as a producer of whether it’s content or digital assets or something along those lines, if you can increase the rate that somebody is using your product or services by decreasing the amount of friction, that’s almost the same thing as being able to deliver more.
Rob: Another example that McDonalds was I think a pioneer of, we’ll talk a little bit later but that is cross-sells. When you’d order a burger, what was the famous saying, “Do you want fries with that?” We’re trying to encourage you to do that, and then they had meals. I remember, I’m old enough to remember, when you go to McDonalds and there were no meals. You order a hamburger and then you order french-fries and then you order a drink if you want that.
They started packaging the meals to do exactly this, increase consumption of overall amount of food. You could also call it a cross-sell. This of course can backfire on you, it’s very unlikely to happen to one of us running this small business. Remember that movie Super Size Me, it was a look at how bad McDonalds’ food was. That was the name of it, it was a take on.
You used to pull up to McDonalds and you’d ask for the meal deal, big mac meal deal and they’d say, “Do you wanna supersize that for $0.99?” You’ll get an extra-large drink and an extra-large fries or something like that. That was another way to increase consumption, it was an upsell in essence. A lot of people did that. There were complaints of you’re encouraging people to eat bad food and blah, blah, blah, the politics of it or I guess the morality or ethics of doing that aside, odds are you’re not selling unhealthy food to folks.
You are probably doing something like selling software, selling info products or ebooks. If people use or consume more of them, you can encourage them to do so, then that’s gonna help you increase your bottom line.
Mike: The next one is the very issue on that which is increasing the number of seats that people are using. Not every product is going to have a pricing model that’s going to be able to support this but there are certain cases where a per user model makes a lot of sense. There are ways to incorporate other people unto the team in an environment where there’s your customer or consulting companies that they use, whether they have contractors. Those people may need user accounts.
You do have to be a little careful with this because, as I said, the type of product that you have, you can easily end up in situations where people are just sharing an account and you’re trying to sell a single account for $50 and two accounts for $100 or maybe a slightly reduced price of $90. They won’t go for it because they’ll just decide, “We don’t need that, we’ll just share the account between these people. It’s not that big a deal.”
Just be aware that sometimes it’s an option, sometimes it’s not but there are opportunities to put people into a software package and other ways, other roles inside of it or other responsibilities which give them maybe different options or different features.
Rob: There is actually a really good rule for this on how to decide if your product should be seat based. This is hard and fast, I know lot of time we say, “This is a guideline.” I actually believe that you should not break this one either way. If someone logs into your software with their login, do they see something different than if they login as someone else? A good example of that is Mailchimp or Drip and ESP.
If you and I share an account and we both login with our own logins, we see the same thing, there really isn’t anything different. The only difference is if I were to login as you and do an export, you’ll get notified, you know any exports done but the minimal stuff. If I login to a CRM system or into Bluetick as me versus you, it’s a completely different inbox, completely different list of customers, completely different list of tasks.
The CRM always charges by seat because that’s their upsell and that is the differentiator. It is a minority of products that can charge by seat. Just ask yourself the question, “Does someone/should someone see something different if they login as a different person?” Trello is another example. If I look at my Trello account versus yours, they’re totally different. If we had a business account with seats, you should absolutely charge by seat.
I do see people make the mistake, you mentioned this, of trying to charge by seat when they don’t have the differentiator and then you just get one seat and then save it with everybody because there’s no difference, it doesn’t make sense. It feels to people like you’re being disingenuous if you did do that. I can’t imagine an ESP charging by seat.
There are some marketing automation platforms that charge by seat because they have CRM built into them. Infusionsoft, ActiveCampaign are examples of that. they do have per seat pricing. I’m almost positive if it did not have that CRM view, they would not do per seat stuff.
Mike: The next option for increasing your revenue is to have different upsells. These could either be a higher tier of an existing product or it could be add-ons, it could be additional integrations to give people access to, it could be plugins. There’s a variety of different options that you could give somebody that provide additional functionality on the base level package that you could use as an upsell opportunity.
If you’re using these, you can either have bundle deals on your website where you’ll just say, “Here’s a package deal. It’s $100 for these X things.” Or you can say, “Ala carte, you can get each of these if you want, each of these five but it’s gonna cost you $30 per piece if you’ll buy them individually. Buy them as a bundle, you can get them for $100.” That bundling is also an option for an upsell.
It doesn’t seem like it is but when you start looking at who the types of people are that are buying those things, chances are good that they’re not gonna use all five of them in that particular example. They’re gonna use maybe three or four but the package deal is appealing to them because they have in their head that, “I might use these things down the road.” Even if they don’t use them now, they may have an intent to use them later.
Whether they do or not is immaterial but you can get them to purchase that package deal whether or not they’re gonna use it especially if you position it as a good deal for them.
Rob: This is very different, there’s upsells. It’s different between info products and software. Upsells are very natural and tend to make a lot of sense with information. If someone’s gonna buy a book from you then you upsell them to the videos or you upsell them to a 30-minute console or some interviews you did, that’s pretty natural.
Software can be more of a challenge, it can take more effort. You can always upsell training, really hardcore training. You don’t just want documentation to be upsold, you want that to be free. Something that actually gives someone a mindset view or an architectural overview that they would normally have to pay for, there is that line of you look at pricing of segment.com, their tiers are less based on usage and much more based on the integrations that you use.
I’m sure they know that someone integration with Salesforce tends to have bigger budgets and a lot more value out of segment than someone not doing that. Zapier, I think it’s the same way. There are certain things that are locked behind higher priced paywalls. Drip tends to be that in these apps that integrate with a lot of things because they know if someone is using Drip, they’re probably a more sophisticated marketer, they probably have a larger list, they probably have a bigger budget, that type of stuff and they’re gonna get a lot of value out of these tools.
This takes a lot of thought. The hard part about this is knowing what to lock behind these feature gates and doing it incorrectly is pretty easy. I’ve seen it swing both ways and I do think that if you find one of these other paths where your expansion revenue can be based on number of seats or it can be based on number of subscribers or contacts or it can be based on number of events, there are certain things to fit in, storage size, if your Amazon has three, then go with those.
Probably stay away from trying the feature gate right now, feature gating meaning you can’t get this feature unless you go up a tier, you pass through this gate by paying more money. If you don’t have an obvious way to use one of those obvious numbers that everyone else is using or makes sense for your product, then yes, you do need to seriously start thinking about ways, how do you build tiers when you don’t really have an easy one number like seats or subscribers or contacts to look at?
Mike: That’s actually a really interesting discussion topic just because I think that people look at those features and say, “What should I put in here as a feature gate to create these different pricing tiers?” I remember when Segment used to feature gate based on which integrations you were doing because presumably if you were using Salesforce, you had the money to pay for Salesforce. Clearly, you had money to pay more for a segment license. I think that they’ve shifted their pricing model and you don’t have to do that anymore. When you sign up, they have three tiers.
Rob: I was just saying that they did, I was mistaken. Zapier still does that, Segment used to.
Mike: They used to do that, they don’t do that anymore. I think it’s partially because they got to a point where they were far enough down the road that they had the ability to dedicate somebody to take a hard look at those things and see whether or not they mattered. Having the conversation with the customers to try and find out what the more optimal pricing model was for them.
Rob: They do it now on monthly track users, empty use they call it. It can be dicey, although with Segment that makes sense. How many users are you gonna track in a given month? That’s actually pretty easy to get an idea, you can think of how many either customers or how many website visitors unique in a month. Other times you’ll see like Amazon has pricing like this where it’s number of elastic compute units. What does that even mean? It’s something that is not defined anywhere.
I’ve seen things based on events and it’s like, “I don’t know how many events I’m gonna have in a month. How am I gonna know that?” Kissmetrics and Mixpanel have that problem of trying to define what these things are.
Mike: Even Segment has that problem because the empty use that they advertise, that is for the number of tract users coming to your site, not necessarily the people logging in. It’s not your team. If your website suddenly gets a ton of traffic from Reddit or Slashdot or something like that, you could easily blow through that very quickly depending on the company. You could either end up in a world of trouble with a giant bill or they could say, “We’re gonna turn this off, we’re not gonna allow you access to the rest of this data unless you pay for it.”
Rob: Something that Segment is – I’m looking at not the pricing grid at the top but they have a breakdown of what the differences are between the plan limit levels. Without knowing what their internal data looks like, they both have empty use, that’s monthly tract users, plus they have seats, the lower end only has 1 seat, and the team one has 10 seats. I’ll go back to my question, if I log into Segment as you versus me, do I see something different because as far as I know, you don’t. I actually think that’s probably not a good idea.
They have sources which is how many sources are you going to connect to Segment. The developer panel has two and then all the others have unlimited. Maybe that one is harder to say right or wrong. When you’re first starting out, you don’t have the trust of the market, you don’t have a brand name, you look at people like Segment or Intercom or MailChimp or Drip, we have the luxury of having a brand name and people are actually seeking us out.
We can raise our prices and we can do more complex pricing schemes because people are willing to come and use a tool that they trust and a lot of people are talking about. In the early days, this was with Drip as well as Intercom as well as your tool today, I’m speaking to a listener there, you don’t have the luxury of being able to have super complex pricing because no one’s gonna wanna bother with it because you’re probably struggling to try to get people to come and try it out and try to use it.
I would go extremely simple and I would go for one of these numbers, per seat, per subscriber, per contact or something else that’s very noticeable and easy to figure out until you get to that critical mass. You’re gonna know it by the fact that people are gonna start telling you, “Boy, you should raise your prices, you’re too cheap.” Or you’re gonna look around and say, “I haven’t raised my prices in a year, I need to rethink this.” You should have pretty good flywheel growth by the time you get to that.
Drip is now on its fourth version. We have versioning for pricing. We’re on our fourth version of it in four years. We haven’t done it every year on the dot but we actually did it three times in the first probably year and a half or something and then we really haven’t done any restructuring of pricing since then. Do try to keep it simple in the early days and don’t try to copy companies that are way further along because they have the momentum and the flywheel and the brand and you don’t have that yet. You don’t wanna make this mistake of confusing people.
Mike: Everything that we just talked about is really adjusting your licensing model in order to create more opportunities for upsells using those pricing tiers. Another option that you have that’s available to you is offering some annual plan, whether you offer upfront or you offer it a couple amounts down the road after somebody has started using your product and he’s getting comfortable with it.
Maybe there are certain trigger points where you say, “Let’s offer them an annual plan or a special discount upgrade for three month upgrade. Try this out, the platinum tier for free for 30 days or 90 days.” There are different ways that you can position that and pitch it to people. What you’re trying to do is you’re trying to increase that overall revenue from them so that it decreases the number of times that they’re gonna have to sit down and think about, “Do I really wanna continue paying for this?”
I think Leadpages used to do that really well with their webinars, if you attended a webinar, you could signup for Leadpages account and they would pitch you on a two-year plan. For two years, you are probably not going to go look for another landing page provider because you have this account. Unless it’s not doing what you needed to do, you’re not gonna go look for something else because you’ve already purchased it.
Rob: One of the big benefits of annual plans, especially when you’re starting out is you’re tight on cash. To get someone to pay for 12 months of service in advance, even with a discount, that cash is invaluable. If you can figure out a way to get someone to pay you for that full amount of service and you’re doing any type of paid acquisition, you are gonna be in a great spot. Basically spend a dollar, get $3 or $4 right away. It is a flywheel, it allows you to then acquire more people faster.
It’s pretty incredible, the power of being able to get annual. That’s why you’ll see pretty hefty discounts, 20%, 30%, 40% on annual plans because the cash is just so important to startups in their early days.
Mike: We mentioned this next one several times throughout the episode, it would be cross-sells. If you have other products that you have to offer, cross selling them after somebody has purchased the first product if there’s another one that relates to it or integrates with it, if there are signatures that you can identify with the customer that would indicate that they would probably be a good fit for this other product that you have, then there’s obviously ways that you would wanna interject yourself into a conversation with them to put them in an email campaign or have somebody call them and say, “Would you possibly be interested in taking a look at this over here because we think that this would help your business as well based on what you’re doing and what we’ve seen other customers get in terms of benefits and the similarities between the customers.” That’s another one.
I’m gonna move on from that. The next one is services and customizations. I think this one is a key piece that most software people overlook because we’re trying to build software companies. Our natural inclination is to build a software and sell people software, but the reality is sometimes people need a little extra help, whether that’s onboarding assistance or they need you to do something for them whether it’s a productized service.
There’s lots of different pieces to your application, it’s not just signing up for and plugging in a credit card. There’s usually a lot of other things that the customer is gonna have to do in order to get the value out of that particular product. Because you have all the insights and the backend knowledge and the main expertise for that particular product, you can do those things a lot more efficiently than the customer can.
You can create a service that is going to use your product on their behalf to achieve whatever the goal is and now you’re able to do a lot more because you can dig into the guts of it. If something is not gonna work the way it’s written, you can find ways around it, you can import things directly into the database if you need to and then make the software do it so that you can deliver on that service that you’ve promised them.
They’re more likely to purchase those services because it provides a lot more value to them by having it as more of a done for you service rather than they signup and it’s self-service because that’s most of what SaaS applications are, most of them are self-service versus a productized service where you’re hiring somebody to do something or deliver some sort of value or output. That’s what you’re paying them for, you’re paying them for the output. With SaaS, you’re paying them for the license to use that tool for the duration of them paying for it but they still have to do the work.
Rob: I think there are two aspects to this. You said services, it’s like the productized service. There’s a second aspect which is customization. It’s going to be like if someone came to us, actually we’ve used this with DotNetInvoice all the time. It was downloadable software you run into your own server, it was like self-hosted Fresh Books, a simpler version of that. People would buy it and say, “I don’t want this this thing added,” more like yeah, we’re not gonna build that feature, we’ll pay you to add it.
At first it was like, we’ll charge you $150 an hour and then we moved up to $200 an hour because we just really didn’t wanna them. It made some money but it was a hassle. Consulting, if you wanna be in that business, go do it, it’s lucrative in the short term but if you wanna build something long term, it’s hard to mix those kinds of businesses because they’re two different businesses, serving clients, offering deadlines, doing the contracts.
What if they’re not happy with it, what if they request changes, that’s a type of business. Building your own software product is another type. You’re not gonna move forward full steam on your software product if you’re busy doing a bunch of consulting gigs. The problem is the consulting gigs are like the quick hit, it’s like the crack cocaine where you get the $5000 or the $10,000 because someone wants you to do something.
Of course you’re gonna run off and do that but that revenue isn’t worth nearly as much because it’s dollars for hours. You’re not spending that time marketing your product and building features that other people will use. Even the market itself speaks, if you were to go raise venture funding or you were to try to sell your company even through a broker or you were to go public or whatever, any type of valuation, software recurring revenue is gonna be 3X to 7X your revenue multiple.
Consulting revenue tends to be in the 1X, maybe 2X if you’re lucky. It is a third to a fourth as valuable on the open market because it’s just how these things work. I think you have to be really careful about taking the quick hit or the quick dollar because it is gonna slow you down. If you’re super desperate and you really need the cash, there’s times when it’s not an absolute rule, there’s times when you might need to do this but I advise founders against doing this if it all possible.
Mike: The last item on our list for revenue expansion opportunities is to have an affiliate offer. This could be in the form of a direct product that you are offering that is a third party product that you are getting a commission from or it could be a referral. If you have a good relationship with a provider and there’s a subset of customers that you know need something that you’re probably not going to do it but you have a good relationship with somebody who does provide that service or that type of product, then you could setup an affiliate relationship with them where you will refer customers over to them where you’ll get some commission or kickback or finder fees, something along those lines for referring them over.
You could also do this for free, I know that there are people out there who like those types of things and they’ll just say, “Here’s some free business because I know that you’re gonna take care of them and I don’t really want anything from it.” Those opportunities are available as well, you can probably find people who will do the same thing for you. I think it’s much more common to have some sort of an affiliate relationship setup so that there is a specific dollar amount tied to it or percentage. It makes it easier for you to quantify how much work and effort it’s going to take you.
Rob: If you have other ideas for revenue expansion that you feel like we missed in today’s episode, feel free to come to startupsfortherestofus.com, Episode 365. Post a comment or email us at questions@startupsfortherestofus.com. That wraps us up for the day. You can also call our voicemail at 888-801-9690. Our theme music is an excerpt from We’re Outta Control, it’s 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 364 | Plateauing at $1k MRR, When to Spend on SaaS apps, and More Listener Questions
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Show Notes
In this episode of Startsup For The Rest Of Us, Rob and Mike take a number of listener questions. They give their insight on a some topics including when to spend money on helpdesk software, what to do when you’ve plateaued MRR at $1k, and how to promote a blog post.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about plateauing at 1k MRR, when to spend on SaaS apps and more listener questions. I also asked Mike a question right at the start that I haven’t prepped him for.
Mike: Damn you.
Rob: Mike, what is the most interesting book you’ve read lately?
Mike: The one that I read recently was one that you talked about on the podcast, it was Masters of Doom.
Rob: What do you think?
Mike: I thought it was really interesting. The story and the dynamics between the two Johns was very personal between them, obviously. The implosion of the John Romero’s company afterwards, after they blew all that money that had come in and basically bankrupted the company. That was interesting but not necessarily unsurprising.
Rob: They were kids, essentially, starting a company and making millions of dollars. They bought Lamborghinis and Ferraris, just the total stereotypical, 20 something with too much money.
Mike: But that was with their money that they got from Doom. John Romero had spent ungodly amounts of money on building the company and an office space in downtown, I think Dallas or Austin, or something like that.
Rob: Where he raised $10 or $20 million to start the new gaming company after they split.
Mike: What was it? $20 or $30, $40 million or something like that and then $100 million of guaranteed money coming if they actually just published the games. That’s my most interesting book recently.
Rob: 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 made. What’s the word this week, sir?
Mike: I decided to let you back on the podcast after the date fiasco. Did you hear that?
Rob: No, I haven’t heard it yet. The MicroConf saved the date that I sent three weeks ago was wrong but did you tell anyone what I was reading? I was reading stuff you typed in the doc.
Mike: I didn’t.
Rob: You typed it.
Mike: I know. I absolutely did not say that to anybody.
Rob: That’s where it comes out now, I said the wrong date. I did hear you say that at the beginning of the next episode. I was like, “That sucks, how do we do that?”
Mike: It was totally my calendar but you’re the one who said it, not me.
Rob: I know, it will forever go down. I wonder if I can get Josh to go back and edit that episode.
Mike: He probably could but people have already listened to it.
Rob: I know. The correct date for MicroConf in Vegas next year, Growth will be April 29th through May 1st, Starter Edition will be at May 1st through 3rd. Mark your calendars, tickets will be coming out in the next couple weeks.
Mike: I corrected my calendar already.
Rob: What else is going on?
Mike: My wife, Ali, who I’ve talked about a little bit before, she took over another fitness studio here in town. It’s been about six months or so. There is an article that literally came out today where she was voted the best athletic club in the annual reader’s choice survey that went out maybe last month but it came in and she was selected. I just wanna say congratulations to her.
Rob: That’s super cool. You have a little article, you’re gonna link it up in the show notes?
Mike: Sure.
Rob: Awesome. For me, two random things. One is have you heard of the eero routers?
Mike: I think I’ve seen something about them but I haven’t really looked at them at all.
Rob: If you have the first world problem of having a house so big that you can’t get Wifi in your kitchen, then these eero can get it at any part of your house. These eero routers are ridiculous. You buy them in a three pack, they’re not cheap, I think it was $300 to $400 on Amazon. They basically mesh network with one another. They don’t use Wifi to go through the walls, they use mesh network at a different frequency that can go through walls a lot easier and you put them around your house.
This house at Minneapolis has a basement and then two stories and the house is wide, it’s longer than a lot of houses. When we first setup just the NETGEAR router, you couldn’t get Wifi, you can get in that one room and then it was blocked everywhere else. With these three eero routers, it is ridiculously fast even way, way down on the basement which is three layers and layers of concrete and all the stuff. It’s crazy how good these things works.
Again, not cheap. NETGEAR router that I was using was $80 and this was, like I said, $300 or $400 but it permanently solved this problem. I used to have extenders, they underscore EXT network, it’s just junk. They’ve had these for years, obviously, for commercial use like in office spaces and such, college campuses. The first consumer ones came out within the last one to two years.
Eero, they keep updating their operating system and I have nothing but good things to say about these guys, they’re not sponsoring the podcast although they probably should. That’s the deal. Do you have any dead spots in your house or does your NETGEAR capture everything?
Mike: No. I cheated and I have a power drill. I drill holes through walls and run Cat 6 cable.
Rob: It seems like something you would do, Mike. I think you would build your own servers and run Cat6 cable through things. We’re on a rental. Who knows how long we’ll be here.
Mike: That’s what the security deposit is for.
Rob: I’m gonna run cable. Even at our house in Fresno, it was a super single story but super long and I could never get Wifi in the living room because the router was over in the office. They would’ve fixed it there as well. I guess that’s it.
Mike: I do have Wifi here. I think I have three different Wifi routers in my house in each general area, there is either wired or wireless depending on where you’re at. Of course, to screw my neighbors who ask if they could borrow my Wifi, create one called FBI van 42 or something like that.
Rob: If they could borrow your Wifi, wow.
Mike: I know, I was like, “No.”
Rob: There’s no chance that’s happening. My other tidbit is I wanna run through a couple of books that I’ve listened to recently and really enjoyed. I still think I keep coming back to my top three, these are not ones I’ve listened recently but I think my top two or three audiobooks of all time are Masters of Doom, like I said and you listened to that, and then Hatching Twitter is another one and then The Snowball with Warren Buffett. Those are all good.
Some other ones I’ve listened to recently that I hold in high regard, one called American Kingpin by Nick Bilton who’s the same guy who did Hatching Twitter. It’s about Silk Road, the bitcoin marketplace that sold drugs. It’s about the guy who started it and it’s very, very well-written, very compelling just like Hatching Twitter. I didn’t really have much interest in the story, to be honest, I really didn’t care about Silk Road, I didn’t think I was going to care but he makes you care by the time you read two chapters, very interesting.
I listened to Angel by Jason Calacanis. Whether you’re an angel investor or not, it’s pretty fascinating to hear inside his world. It’s a good balance of boots on the ground stories, advice for angels, advice for founders who may someday raise money, how to run a good company. Calacanis is such a smart dude and has so much experience with the stuff that he almost can’t help but learn something from this even if you’re not gonna be an angel investor or seek angel investment.
Another one is Tom Petty, The Biography. Oddly enough I was listening to this couple months ago and then Tom Petty just passed away within the last month, that was coincidental. I have always been a fan of Tom Petty, I didn’t know his story. To be honest, the first at least third of the book is really boring and I almost skipped out of it but I started skipping chapters and I got to the point where they did start taking off and it was fascinating from there, the actual rise of them instead of all the years of him growing and stuff. That part didn’t resonate.
Lastly, there’s a new book called From a Certain Point of View, that’s new on audible. It is basically Star Wars episode four, it’s the story of all the surrounding characters. They got 40 different writers and then 40 different voice actors to do these little short stories about. It might be about a stormtrooper who is off camera or it’s about a jawa who sabotaged something. It’s about when R2 tries to sabotage the red droid. It’s noncanon but it’s cool if you’re a geeky Star Wars fan and I enjoyed listening to it.
My 11-year old listens to and I’m listening to it and then we compare notes. It’s like, “Did you understand that one?” We talk about it. That’s been fun. Have you listened to any of those or read them?
Mike: I saw the From a Certain Point of View had come out and I keep seeing it in different places but I hadn’t read it or really looked into it, I didn’t know the story behind it.
Rob: It’s interesting if you’re a Star Wars geek because they make references to things. Unless you’ve seen Star Wars several times, you’re not gonna get it, it’s not gonna be interesting.
Mike: Cool.
Rob: Today we’re answering listener questions, we still have good a number coming in. I wanna keep up with that. The first question is about plateauing at 1k MRR. It’s a follow up to a question that Matt [00:09:05] had asked a few months ago. It was regarding portfoliolounge.com. He said, “Thanks for your reply in an earlier episode. I’ve since listened to most of your past podcasts and realized that funding is not necessarily what I should be looking for. I wanted to clarify and say that portfoliolounge.com has had about 30,000 free members and upgraded subscription options average about $10 per month, sadly the site has plateaued at around 1k MRR. I’d love to get your advice, see what you think about the site and potentially how to grow it.”
What I wanted to talk about today, I wanna bat a few ideas around. A lot of sites, a lot of people find themselves in this situation. You launch an app, it grows to 1k MRR and then it plateaus. It’s like what do you do at that point? How do you attack the plateau? We could also separately maybe talk about the free plan. Whether we think you should do that moving forward, whether we think perhaps it was a mistake or that kind of stuff. You have initial thoughts to kick this off?
Mike: Average of $10 per month, it sounds to me like that’s really targeted at the consumer side of the market. I would love to see if maybe there’s a possibility of going after businesses who needs some sort of an online portfolio, like a photographer. There’s a photographer that we use every year here in Lister who takes pictures with Santa Clause, for example. He has this whole website where you can go out and you can pick the photos and things like that.
I wonder if targeting photographers like that or running a small business would be a better proposition than targeting end users or the consumer market because obviously those people are not gonna be willing to pay very much money on a monthly basis for very long.
Rob: I think this does target more photographers, to be honest. If you think of photographers, they’re really prosumers, if you wanna know the truth, they’re not even SMBs like Beta SMBs. A lot of them do it as a hobby and a lot of them do it on weekends and they make a few hundred bucks a weekend or something. I think they’re that in between.
There are so many portfolio sites, that’s what this site does, pretty basic. The headline is create a portfolio website quickly and beautifully. You think of it as a core space for just portfolio sites and it’s highly focused on that but a lot of other sites do exactly this functionality.
Mike: It’s really more a matter of overcoming the competition especially if those other sites are offering it for free.
Rob: Yeah. I don’t know if they offer the exact same thing for free. Certainly he has a free plan and then has the $10 month upsell which probably gets you to something else. I think the questions to think about is, is your offering pretty much exactly what a bunch of other places have like SmugMug or whatever. If it is, you either need to be differentiated as a product in a way that people care about or you need to have, essentially, a traffic or a lead source that no one else really has access to or that you are at the top of like Google Search Result or you’re way better at paid ads and you’re really getting a better traffic for that, this won’t work for the paid ads with the free plan and the $10 a month.
If you don’t have one of those two in this type of business, you’re done, you’re never gonna get above a grand plateau or two grand. There’s gonna be some very small number of people who just picked you because they found you first but other than that, you either have to be differentiated or have to really own that traffic source like that number one Google Search Result.
Mike: I wonder if there’s another option here which would be to use this as your traffic source and then have something else that you’re upselling. If hosting the portfolio is very much a commodity and there are other sites out there that are doing it for free and you’re trying to charge for it, that’s gonna be a tough road obviously with $1000 MRR, that’s the position that he’s in.
If you have something else that is something that you could sell whether it’s an ebook or some upsell on top of what you have now, I’m not saying go back and retract the pricing and everything but if there are other products that you’re upselling people to, you build your portfolio and then we can educate you on how to grow the traffic or advertising or things like that.
There are other things, I think, that you can do here other than charging directly for posting the portfolio especially if that’s the commodity. Is there some other product that you can have that you can put in there?
Rob: I think that’s a totally reasonable idea. I think another thing to think about is 30,000 free people have checked it out, I’m sure they’re not active, I’m sure it’s a small percentage. You have, essentially, 100 paying customers at $10 a month to your thousand, that’s a third of a percent of all of your free users have ever paid you any money or at least your current customers, I guess I should say.
That’s a problem because that number is too low, the number should be between 1% and 3%. I would look at that and think, “Is there a way that I can get more free users to upgrade or is the free plan just a mistake or a failed experiment.” I would consider if you’re not already sending emails to get people to upgrade, if you’re not already helping them get whatever it is to get them to the paid tier or convince them that it’s worth their value, then obviously that would be where I would start because that number is too low.
It either means that you’re not taking the right steps to get them to upgrade or they’re just never gonna upgrade and the free plan is a waste of time. You need to figure that out. If the free plan is a waste of time, then I would shut it down immediately and I would grandfather people for now and then I would start a free trial instead and do it basically the same way where you have maybe 14 days or 7 days or whatever.
You have time pressure for people to get in and get setup. That helps them actually get value for the product. I think you’ll convert potentially more people in the short term. When I acquired HitTail, there was a free plan and there were some users using a lot of resources that were on this free plan. I did wind up shooting that down. It was a hard decision but the site was bleeding money because of that.
I did get some people to convert from the free plan, it was not a huge number but it did really have a lot of resources from the app and it allowed me to get some revenue, it was 500 or 1000 of MRR in the early days of that, actually maybe a little more than 1000 which sounds like chump change at this point but it was actually a move that I think was worth that I got some pushback. I did grandfather some people in who had been fans of the site and really good JV partners or that one guy who had taught an SEO class in Italy and he’d always mentioned HitTail in the class.
If someone complains and they’re not disrespectful and they have a good reason, yes, you can keep them in but to have 30,000 open free accounts on your platform, if you are gonna shut that thing down long term, it just doesn’t make a ton of sense.
Mike: To add onto that a little bit, go back to the point that you said, what does it take to upgrade people. You can look at the number of images that people are uploading and the pieces of content and try and see how many people are above that threshold and what the average number of images that people upload is. I look at the subscription options and says upload as many as a thousand items, how many do people upload on average? Is it 50, 100, 500, could you tweak that number and drop it down?
As Rob said, are there trigger points that you can use to say, “You’re getting close to this, would you like to upgrade?” Look at those and see if you can play with those numbers a little bit to try and get people more towards that edge where they have to make a decision one way or the other.
Rob: I think that’s a good point. Lastly, I’ll reiterate, if you don’t have some type of feature or positioning differentiation from other platforms on the market, or you don’t have some marketing advantage where you’re getting leads that aren’t comparing you to other people, example, you are the number one search result in Google for some nice term, then long term, this business is not gonna grow, it’s gonna plateau somewhere, it’s probably gonna plateau very low. That’s something that I would keep in mind.
Our next question is about when to spend money on helpdesk softwares specifically. Actually, I think it opens up almost a thought of when do you start spending money on external SaaS apps when you’re starting your own business. This is from Saphia, she says, “I discovered the show a few weeks ago and I cannot stop binging. It’s such a good resource for first time founder like me. What is your take on helpdesk software cost and how early we should put them in place? We’ve launched our SaaS MVP a few weeks ago as a free trial and our prospects are rightly providing feedback and feature request by email which makes me crazy as the only developer in our company. I wanna subscribe to Intercom or Zendesk or Groove but my co-founder disagrees because of the cost and things, we should just do with email for now. What is the right way to do with feature request at an early stage?”
I will throw one other support software in there and that’s Help Scout. We use them at Drip. They work really well for us and they’re quite cheap. I think all these things are $10 or $15 a seat. With that couched Mike, it sounds like he has a couple questions. One is been on helpdesk and then there’s how do you handle feature requests at an early stage.
Mike: These are three different things that you can dive into. In terms of looking specifically at a helpdesk, one other thing that I’d throw out there is an option is Teamwork Desk. If you go over to teamwork.com/startups, they have a startup program where you can get everything that they have for free for an entire year. It’s not that their product is all that expensive anyway, you can get on the ground floor at $5 a month but you can get it for free if you’re just getting off the ground. That’s an option as well.
In terms of when you should start putting things in place, I think that’s more of a general question. I would say that when it becomes painful, if you get to a point where whatever problem you’re trying to solve is taking too much of your time and effort and it’s cutting into your time and resources to do other things, then you really need to bite the bullet and start paying for it.
Rob: I think handling support in the early, early days via a single shared Gmail account is not out of the question, it’s not terrible. I think you’re gonna wanna get out of it quickly but I think it’s feasible if you’re super cash strapped. However, look at a product like FogBugz that is $20 a month for I think four or five seats. In my opinion, it’s not the caliber of Help Scout or of Groove. Zendesk, to be honest, I’m not a huge fan of but it’s just the conversion tool. Those are about $15 a seat so they are a little more expensive.
It depends on how big your team is. If there are five of you and it’s $75 a month, and you really are cash strapped, there’s a point where that money could be used for something else. I think that handling feature requests specifically, handling them via email but then you need an issue tracker. Even if you are handling it in a Gmail thing, you should still be using GitHub issues or you should be using Jira, just anything like that. You can move stuff from email into those trackers as you move them around. You don’t have to manage them in email, that’s crazy.
Mike: I definitely wouldn’t manage them. I use Teamwork Desk for my frontend support. Whenever something comes in where I’m gonna essentially decide to promote it to something on the road map or if it’s a bug, I tend to close them out and them move them over into FogBugz which is what I use for bug tracking for Bluetick because you don’t wanna leave those tickets open for an extended period of time because it’s not helpful to them and it’s not helpful to you.
They’re basically sitting there and it’s not about the cost of the space, it’s about the fact that they are sitting there as another line item that later on you’re gonna have to go in and close out. Just tell them, “We’ve logged this, it’s in our bug tracker. We’ll get it fixed.” Then close it out and move on because you don’t wanna have to track in two places really what the issue is.
Rob: To give everyone context, DotNetInvoice, I did all support straight out at Gmail. When I get a business partner with that, we shared the Gmail account for a few months and then it became a pain in the butt so we moved to FogBugz. I was in FogBugz for years and then when we launched Drip, I believe, we moved everything into Help Scout which I liked a lot. When we got acquired, Leadpages was already using Zendesk and eventually we consolidated in Zendesk.
Like I said, I’m not a big fan of Zendesk, it’s pretty clunky and hard to use but that’s the progression I’ve made. Again, some of those are less expensive than others. I do think that if it’s working and you can manage and you guys are super cash strapped, then you can make things work but that would be an early bootstrap situation that I would look to get out of as quickly as possible. Thanks for your question, Saphia. I hope that was helpful.
The next question is about EU legislation insanity is the subject line of the email, it’s from Juka from close2design.com. He says, “Hi guys, are you aware of this?” It’s a link to a Business Insider article, the title is 75% of Cloud Apps Are Not Ready For New EU Data Protection Rules. Juka continues, he says, “It seems they’re threatening businesses with Megacorp level fines for some vague “noncompliance” but they’re imposing their rules on small companies too, of course. Does that seem like they’re trying to kill small businesses? That seems like potentially an anti-business move. What is your take?”
Mike: This is interesting because Juka sent over a link to the Business Insider story that was talking about this. I looked into it a little bit, you can make all arguments or judgments you want about politicians and their ability to interpret how things are going to impact small businesses especially when it comes to anything that’s technology related.
The bottomline on this particular article is that if you look at the study that came out for this, it’s by a company called Netscope. If you go over to Netscope’s website, they are trying to sell people on a solution to this particular problem. It’s almost like they self-commissioned this study so that when a CEO of a company, they’re having a discussion with this person and saying, “You need to pay attention to this law.” He’s like, “Why do I need to pay attention to this?” “Here’s the study that you can look at as a reference and here are all the problems that you could possibly run into.”
It’s basically this giant marketing collateral piece that they put together solely to scare those CEOs and executives into purchasing their products and services. I don’t see this much different than some of the security vendors, they’re really trying to sell based on this position of making people fear what is going on or what can potentially happen and saying, “We have a solution to this particular problem.”
I don’t know is it something that most small businesses are probably going to need to pay too much attention to and the whole thing is trying to consolidate different laws from all of different member states of the EU and they’re trying to consolidate it. Instead of having to follow 28 different sets of rules, you only follow one. I do understand that there’s the contention about the level of the fines but you have to go back to them and see how serious are they about enforcing those things and what is their stance and why is it?
Sometimes, government entities will really look the other way when you show that you’re trying to do the right thing and you just screw it up. There are times where they’ll nail you to the wall and you have to interpret, is this the type of entity that will nail you to the wall or they’re just gonna let things go because you’re a certain size and you just didn’t know any better.
Rob: I wonder if the category that it’s in Business Insider called BI Intelligence, all of them are these reports from companies. I can’t find any evidence that they’re sponsored, they’re sponsoring the BI articles themselves, the Business Insider articles but I would not be surprised if that were the case. As we talked about a few episodes ago, there used to be safe harbor and then you changed it years ago, two and a half years ago, and then they’re now changing it again. This thing is such a fiasco and very hard to keep up with for someone that’s not just mired in it.
Having spent myself several thousand dollars on legal fees just to have contracts drawn up, I think it’s just a big pain in the butt. It’s not something that I have personally, beyond just having just that contract written up spent a ton of time dealing with or investigating.
Our next question is about how to promote a blog post. She says, “Dear Rob and Mike, how did you promote your blog post in the early days of your SaaS? I’m interested in channels and methods.”
I think I would almost caution something. There is value in having a blog for SaaS app but these days, given how noisy so many spaces are, unless you’re speaking out from the blog in a way that is unique or that you’re saying something different. It’s probably not the first marketing approach you have to do these days because so many people have followed the content marketing playbook, the playbooks of Kissmetrics or Bidsketch or Groove. There’s been people who’ve executed it really well and to great effect. Because of that, it just gotten harder and harder.
If you’re just cranking out thousand word blog post on some topics, it’s really probably wasted effort. I think you could get more customers elsewhere. With that said, if you have really unique content and you understand the game as it stands today and if you notice now what Kissmetrics is doing or if you notice now what Groove or Intercom, there are several that do content marketing really well. It’s these very, very long authority posts.
Instead of doing a post everyday or three posts a week, it’s one every week, one every two weeks but they’re really long and in depth and they’re trying to be an authoritative or definitive view. Sometimes they’re broken up into multiple pages, sometimes it’s all in one page. It’s almost like an ebook that’s published as a blog post. Google has the tides of turn and Google seems to like this thing more. As you build up equity more overtime, that’s how you’re gonna do it.
With that in mind, it’s a lower volume but higher quality play. There are number of channels to try to get traction, it’s depending on your topic. You look at something like you get on Hacker News, if you write something really interesting that everybody is gonna be interested there, then of course you can promote it. Product Hunt, there’s a section for this kind of stuff. Medium is still a decent source.
We experimented on Drip with going Medium first or Medium was the source and then we republished on our blog post and then we did the other way, we tried a bunch of different stuff. That works also, we never got enough of a following on Medium to justify it. I really wanted the SEOJuice over on our blog but Medium and Twitter, obviously places where people are talking about things and those are ways that you can get some eyeballs to come.
Facebook, unfortunately, as I roll my eyes, Facebook and LinkedIn, both of those have obviously ways to get stories out and then you can promote them for a small amount of money. This is stuff you have to experiment with, you’re gonna know your niche. If you’re at least a little bit B2C or B to prosumer. I’ve seen people use this to great effect on Facebook, seen people use it to great effect on LinkedIn when they’re more of the B to enterprise or B to midmarket.
There’s a couple things, it’s not about just having this cookie cutter thing where every time you publish, you’re gonna submit to 26 different things and hope one of them catches. That’s not gonna work very well because you’re either gonna get banned, you’re just not gonna get tractions, it’s gonna be a waste of time. You really have to sit down and think about a unique piece of content and think about it as a one off project.
Think about what are the best things of all the potential promotional areas I just mentioned as well as there are certainly more, I bet, if you search Google for how to promote a blog post in 2017, there are gonna be more ideas that I did not just throw out. It’s applying the few that you think are really gonna work but really digging into them. If you think it’s gonna be Product Hunt, for example, then I would spend two or three hours figuring out how do you do this on Product Hunt.
I wouldn’t just submit it and hope for the best. There are ways to improve your chances of that being successful and I don’t know them off the top of my head. We had some success with Product Hunt when I was still running marketing for Drip but I’m not an expert but someone out there is. That’s, I think, how you have to think about it these days, really being more focused, just spending more time than you would like probably.
I’m not so sure that blogging is necessarily the way I would go if I had a SaaS app these days and I was just getting started but it does certainly depend on your niche and where you’re going.
Mike: I think I would ask why you’re trying to use blogging because you talked about this a lot, Rob. What’s the purpose of that? Are you actually going to be getting customers from that? Are you going to be heard over the noise? Are you gonna be able to sustain the effort that it takes to continue publishing that new content? I get that there’s this weird relationship between the number of web pages that you have and your search engine rankings and your ability to draw traffic to your site but is that going to be what’s going to do it for your business? Is that the channel that you need or are there other ways to get people to your website, whether it’s speaking towards and getting backlinks from those or publishing on other people’s blogs, for example. That’s a great one.
If you can get published on somebody else’s blog and they’ve already got a built in audience, then you don’t have to build your audience and you can get the back links from them. It’s more sporadic but at the same time you don’t have to do all that upfront work to build your own audience immediately.
Rob: I think that’s a really good point. I think guest posting, JV partnerships, podcast tours, I think these are all things that will likely have more of an impact than just starting your own blog.
Mike: I think that wraps us up for today. 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 363 | Building Outbound Sales Processes
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Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Justin Gilchrist, co-founder of Optimum Feedback, about building outbound sales processes. He gives some tactics, talks about how to get started and challenges you’ll face with outbound sales.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For The Rest Of Us, I’m going to be talking to Justin Gilchrist about building outbound sales processes. This is Startups For The Rest Of Us episode 363.
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 of it. I’m Mike.
Justin: And I’m Justin.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Justin?
Justin: I am pretty good, apart from a minor injury in the middle of the night last night. But, yeah, I’m good other ways. Thanks, Mike. Thanks for having me on.
Mike: Ah, I’m glad you can make it. Part of the reason I’m having you here is because a couple of weeks ago, Rob made this announcement for MicroConf’s Save The Date. Unfortunately it was wrong so I kicked him off for the week. That’s his punishment. He’s actually at Convert this week so he couldn’t make it. But the Save The Date correction is that MicroConf is actually April 29th to May 1st and then May 1st to 3rd for the Growth Addition and then Startups For The Rest Of Us. It’s not April 23rd to 26th. Scratch that from a couple of weeks ago.
We’re back to you, Justin. If you’re not familiar with Justin, Justin’s a UK based co-founder of Optimum Feedback, it’s a platform designed to help us increase the number of customers that they have and increase customer loyalty. He was also a former co-founder of a company called Centurica. It was acquired in 2015 and he’s also the author of Digitally Wed, which is a handbook to help you come to terms with buying online businesses and what to look for, what to avoid. He also invests in some companies, and one of the reasons that I’m having Justin on today is because one of the companies that he had invested in previously had a sales process problem. That’s really the focus of today’s episode. I wanted to walk through that process that you came up with and talk to the listeners through what you did to solve those problems and how you came to that. That sounds like an accurate assessment of what we’re doing today and any details that I left out?
Justin: Yeah, that was pretty accurate, Mike. That’s pretty bang on.
Mike: Okay. I guess lay out the scenario for us. What problem were you trying to solve in this business? Obviously it was a sales related problem but why was it important and what was the goal of the processes that you were trying to implement?
Justin: Sure. To give you some background first on why we’re trying to do that, this is a company which I bought 12 years ago now. It started out as a relatively small company and grew quite organically with no external funding over the years. It’s a company, I don’t know if any of the guys listening out there have read the book Small Giants, but one of the companies I really like to think of as a Small Giant is a really good culture here. The people who work here love working here and it’s a great team and we really put out a market beating, market leading service. This is a company that’s now at around 30 employees, it’s a company involved in B2B services around food and the logistics of food. Helping mostly blue chip companies organize how their people get fit, we’re providing a lot of the back end services for that.
In this industry, it’s a very mature industry, and in this industry things have always been done a very traditional way, including sales. The typical way you’re selling B2B is you hire a bunch of tele canvassers or telemarketing people, which now everyone’s calling them SDRs, which sounds a hell of a lot sexier. It’s telemarketing when we started. You got them basically just to dial a cold list until someone said, “Yes, I’ll be interested.” They would then book an appointment for sales rep, the sales rep would go and close or maybe not close and that would affect you to be as sophisticated as your sales cycle would get.
The problem was that we started with that as a strategy, as we started to grow and add more outbound telemarketing reps. This strategy started to mean that we were churning through leads really quickly because they weren’t getting multiple touches, it also didn’t work well with where technology has gone now, where everything is multi channel, where you’ll have a lead that you’ll maybe initially speak to via the phone, you’ll send them an email, they will go into your website, a retargeting cue will be set, they’ll visit you again, they’ll get remarketed in social media or in Facebook for example, they may get an SMS, and the old way of doing things, it doesn’t bring all of these things into holistic strategy for converting that lead into clients. Those were the problems that we’re really trying to solve.
Mike: To frame that for the listeners a little bit, the initial problem that you had was trying to reach out to these people and really establish a repeatable sales channel for the business, but the problem that you are running into was that overtime the way of getting people through your sales funnel was really changing and you had to modify your sales process to meet those changes in the way that people had modified their business and the way that they expected to be treated and marketed to, I guess. Is that an accurate way of rephrasing that?
Justin: Yes, pretty accurate. As I’ve said, things have changed. Over the last 10 years, things have changed drastically in the amount ways to market to a person in B2B. Social was around 10 years ago, but it wasn’t great for doing B2B, now what Facebook is doing makes it almost as essential as Google PPC was 5 or 10 years ago if you want to do B2B. Really the problem we had is we had these independent silos marketing to people but no real cohesion between them, and part of the problem with that is we were not converting at the rates we should have been converting, we were often losing leads in that process who would maybe be called once and never called again. We just needed a way to really bring that all together, but ultimately just get a better ROI on outbound.
Mike: Got it. Really, things had worked for a while and then, obviously, the world changed around you and then the existing process that you had in place was no longer working and it needed to be tweaked or improved and given this overhaul. I guess to dig into that piece, what was the process that you ultimately came up with? You initially talked about how you were really just going through these leads that you had and phone numbers people call and then if they were interested, great, schedule a meeting, take them into the next step, if not, then they got dumped on the floor. How did that change into what you ultimately came up with? How did you come up with that and what sorts of things did you try to reach whatever that conclusion was?
Justin: One thing I have to say is I’m from both sides of the track in my passion and what I work on day in day out is SaaS, but I also understand sort of dodgy, all the old school offline businesses as well. It sounds ridiculous saying that this is the way things were done. But still, to this day, in the majority of more mature conventional business, the sales process really is telemarketers working in their own silo. If you’re from the world of SaaS, if you’re familiar with things like predictable revenue and how outbound SaaS efforts are usually set up, then it seems like it’s a really obvious thing, but it wasn’t that obvious to us because we’ve been doing things for so long the same way of doing them.
The process that we ultimately came out with really was solving the problem that we’d have leads that we would either purchase or cold leads that would come in. These leads would get contacted or they would get targeted one way or the other, but if that wasn’t a yes straight away, a lot of these leads would be lost in the system and I’m sure most people know that you need to have multiple touches with people over time in order for them to convert. By our estimation, we were converting probably 25% to 30% of all the people we could have possibly converted but a lot of these leads were being forgotten about because there wasn’t a scalable or repeatable system for maintaining contact with these leads and grading them over time. The process that we ultimately came up with was more of a campaign approach. It was a campaign that included multiple phone calls, multiple emails, but also other things like direct mail or retargeting through Facebook, or in some cases, SMS.
Mike: What was it that ultimately led you to incorporating all of these different things? I think if you’re running your business in a certain way for a long time, you get out of touch with a lot of these other marketing channels happen to be and in this particular case, you’re really combining a bunch of different channels together. You talked a little bit about the cold calling aspects, the direct mail outreach, SMS messages, what was it that lead you to believe that this particular combination of things was going to make a difference for you or was it just you did a couple of tests or were you talking to other people about some of the different sales processes for related businesses. What lead you to this approach?
Justin: It was SaaS. We don’t realize how fortunate we are working in an industry that is always trying out and testing things this whole idea of the lean or the agile way of doing things is not necessarily the standard way of doing things in other companies. We get used to or almost desensitized from the fact that we are often bleeding edge with marketing practices and with the technology that we use. When you take those same marketing practices and those same technologies and apply them to companies and industries where it’s not so common, it really does give you an edge.
Mike: I know a SaaS company that does exactly this. They have physical books that they send out, and they also have postcards that they will send to people as physical mailers and it’s a SaaS application but, because their audience likes things offline, they’re kind of older, more engrained in their ways and not likely to change how they typically do business, by using those techniques and getting in front of them, I mean, that’s really all you’re doing with email marketing, or Facebook ads or anything like that, you’re just trying to get in front of people, using those physical mailers is another way to get in front people. It’s really not any different except for the fact that it costs more money to send a postcard or giant envelope in the mail and your iteration cycle is a lot lower, it’s harder to do that, you can’t run those tests in a week. You have to take a couple of months in order to do it. How did you go about dealing with some of those challenges?
Justin: A lot of this was prompted by the fact that we needed to grow, we needed to scale, so we’re going from 6 outbound reps to 15, but that’s where we want to be. The first decision was in that we have to find the way of making the process a lot more stable and a lot more sustainable in order to grow. I think you ultimately have two decisions when you have an existing process, you can either make the existing process a lot more efficient, so we could have looked at how much are we losing from initial confirmation call to meeting from people, maybe sling or rearranging the meetings, how much we’re losing in the meeting stage, what things could we do there to tighten up those numbers in that funnel, or we could just look at adding more volume. If we throw more volume in, then we’re going to get more out at the end even if the efficiency stays the same or the conversion rate stays the same.
To this day, I can’t say I know what the right answer was, but for us, we had a lot of leads and a lot of leads that were becoming old that we needed to get through. The priority first really was increasing that volume of leads going through. That meant hiring more outbound SDRs, but it also meant having a better process which I can get into the nuts and bolts about what the actual process is but it meant having a better process for each leads that we call and having a clear strategy and knowing what the outcome for that lead in particular was.
Mike: I think what I find really interesting is kind of a side step here to talking to how it is that you’ve mapped that out, because I’ve looked at a bunch of different tools mapping these things out and what you tend to find is that there are different parts of that process that tend to run in parallel to some extent. For example, if you send out postcards or something to mail, that may take a couple of weeks to get there and you don’t know whether or not it got though. At least with email marketing, a lot of times you can see whether or not somebody opened it or there’s a campaign and there is multiple touch points along that entire way. But when there’s hand off, like somebody get something in the mail, and they are expected to call you, for example, or just because there’s a phone number on it. How do you tie those different pieces together and that’s more of a technical challenge, but the other side of it is how do you map these out? Do you get a giant sheet of graph paper and draw things out or do it with a bunch of notecards, or is there a software tool that you can use? Because I think this is where people start to get confused about how do I put this stuff together and how do I create this, for lack of a better way to put it, like a workflow that I can translate into having software that fulfils all these different needs.
Justin: It’s pretty cool that you mentioned mapping out because the mapping out part really was the part that was the most important for us because it’s wider than just mapping things out for an operational side but it actually goes back to recruiting and cost saving. To give you an example, we have different campaigns, and one campaign might be a lapse lead campaign, for leads that have been in the database for six months, we previously got somewhere with them but not all the way that technically then allows leads. We may have a lapse client campaign, we may have a cold lead campaign, we map put every one of these campaigns up front and by mapping out, I mean we look at what actions do we want to take first of all.
To give you an example with the lapse leads, we’ll schedule a call for days era, so the minute one of our prospectors goes in, sees this, decides this is going to be good fit for that campaign, they will manually hit the button to our campaign software. The first thing we do is we schedule a call, two days after that call we’ll have an email, and that email will go out from a different person, it’s our system but it obviously comes out as person and that generally tries to achieve the same objective of the call, which is touching base, finding out if their details are correct and if they’re still in the market for whatever the services that we’re offering are.
We’ll then have another email pre scheduled for three or four days after that, but bear in mind these emails get cancelled if the call gets completed first, but this whole idea of mapping things out is not just mapping out what goes out, it’s mapping out every outcome from a call. Whenever our SDRs get on the phone and they make a call, our system will show them a list of options when they come off that call based on what happened.
It can be as simple as, “Did you speak to the contact?” Yes or no. If they didn’t speak to the contact, they’ll ask them if they left a voicemail, if they didn’t leave a voicemail, it’ll schedule that call to come back for 30 minutes later. If they did leave a voicemail, it’ll schedule it to come back for the next day. If they did speak to a person, and the person is maybe not ready yet, or there’s another decision maker that wasn’t there, it will make different decisions based on that too. The idea is that we’re trying to cut down the amount of thinking reps have to do, one to reduce human error but two, and most importantly, to make the job a lot more systematized so we can get the same results or the same good results from every rep we hire without having to hire specific kinds of people who just know how to do that. That has the ripple effect of making our recruitment a lot easier because we don’t have to necessarily recruit people who are superstar SDRs in their own rights, but it makes trainees easier because we’ve got less situations or circumstances that we have to role play with people and indicate people about that long term it means we’re saving money because we’re hiring less, we’ve got less churn and these guys are going out and they’re doing a better job from day one.
Mike: The way you phrase it is it makes it sound like it’s somebody coming from the world of technology or developer background would have an advantage in putting this together because really, it’s just a series of if else statements where you’re checking for certain conditions and if the SDR actually talks to somebody, then do this, and if they didn’t, talk to them, or if they left a message, do these other things. That seems the way that it plays out, but how do you go about mapping these things out so you know what to do, because there’s a difference between planning and designing it versus implementing it because the implementation, I feel like that’s once you know what needs to be done, implementing is, I’ll say, much more trivial because then you can just go out and find the tools or plug things into it, but figuring out what needs to be done and where and what the decision points, to me, seems like the hard part.
Again, it goes back to how did you do that piece. I would default to graph paper, but I don’t have graph paper that’s large enough for stuff like that. It just seems like then you’re almost going to like tools, like Lucidchart is one that I’ve come across that allows you to put things on a screen and lay out like a decision tree. I think Gliffy does it as well. Did you look at any things like that? Or was it just you working on this, did you have a team working on it? I have like a billion questions here.
Justin: No. I’m laughing because we started out using Balsamiq, which is like a markup tool we use for wireframing. There was three of us working on it. The reason we were using Balsamiq is it’s easier to collaborate. Balsamiq is a brilliant product but what worked better for us in the end is we bought three white boards and set them up in each of our offices and literally just spent time mapping out one process at a time, mapping out on this giant white board. I think the white board is about 4 meters wide and so we could get everything on there. Once we had it on the whiteboard, we then probably add post it notes for things that needed to be done at the various stages. For example, if we had day one call scheduled, email scheduled, we’ll have a post it note on the call and email and then someone would then write the script for the call and the script or the email. Within all of those, we then take the post it notes off when those items were done.
I’m giving you the most low tech solution to this as possible. But there’s something about pen and paper when I’m planning out. If I don’t know the answers, I always prefer to do things on pen and paper. When I do know the answers, that’s when I like to use software because it’s easier for me to put it in and share it with the world. But I think sometimes, just having a whiteboard or pen and paper because you’re going to cross out a lot of things or you’re going to look at a lot of things and think, actually this doesn’t makes sense or we can tighten this process up. I think I’m pretty tool agnostic and I don’t think the tool is the most important part, I think getting it documented and getting it down is the most important thing. That advice goes for any kind of marketing automation. If you’re about to use InfusionSoft or Ontraport, before you’ve even considered buying the software, you really should have your marketing process mapped out at least on paper to begin with. We started using a combination of different tools like those on the call side, we used Woodpecker for emails and SalesLoft for the calls. They’re both great tools for getting a call cadence going in there. But in the end, we ended up building our own solution in house because it was just easier to bring everything on the one roof and have all the information in one system.
Mike: The reason I dived into that piece of it, how you mapped it out and how you designed it and what things to try, you said initially Balsamiq and then you switched over and just used these massive white boards. That scenario where I’ve run into challenges in the past and talking to other people, and that tends to be a big hang up. I’ve tried using Balsamiq before as well. I love Balsamiq but for that particular thing, it doesn’t work well and I haven’t really found a good tool that does work well for that. Really, you change things so often that most of the time, when you’re using those tools to lay out a workflow, it’s more challenging to make the changes than it would be if you just had some graph paper or whiteboard and just erase things, move things around. That’s the part that is a challenge to deal with, but I think once you get past the point where you’ve got everything, then it makes sense to take that and implement it in something like Lucidchart or Balsamiq where you can lay it out and then print it and say this what our process looks like because this is more a finalized version of it. When you’re just prototyping, I’ll say, the software actually tends to get in the way, I think.
Justin: Sure. I think the most important thing is getting started. The problem with softwares is – I always get this wrong when I say it – analysis paralysis or paralysis analysis. It creates this fear because people trying to get to the optimum solution, they’re trying to have everything in place before they take on this big overwhelming task. But actually we found that the day we started mapping things out is the day we are able to consistently get people to do the right actions rather than leaving it up to their discretion. Because when you leave things up to people’s discretion, it doesn’t always go the way that you want it to go.
Mike: I couldn’t agree more. That’s a fantastic point. The software just getting in the way and then try to make sure that people are all on the same page. Something else that jumped out at me was try a couple of different tools and ultimately, you would’ve ended up building your own. What was it that made you make that decision because building software, especially since this is not really a tech company, that’s not your core function is to write software for a company that serves lunches and dinners to other companies, that’s not what you do. But what made you make that decision because that is a big leap from, okay, we’re doing our services business over here and that’s how we’re making money to, okay, let’s build this piece of software as an in house tool to help us reach more customers and sell more into our channel. To me, that seems like a huge leap. What went into that decision making process?
Justin: Yeah, it is. In hindsight, if you ask me would I have done it again, I would have but only just. It was marginal whether it was wise to build this out ourselves. Now I’m a fan of using everything off the shelf but I’m also a fan of using technology. As a company, we won Online Business of the Year last year, which is ironic because no one here sees this company as an online business. But from day one, partly because of my influence and my background, we’ve always invested heavily in technology and that has been one of our USBs, that has been one of our main advantages. We’re probably one of the only smallest services company doing what we do that use things like Slack and GitHub for non-coding things and intercom on a regular basis because that’s just what we’re used to using these in SaaS or technology startups.
I think sometimes being a developer is a bit of a gift and a curse because you tend to build things when you shouldn’t because you can. I think knowing when not to build and when just to get something off the shelf is equally as important as building the perfect piece of software, but in this case because we’ve started from day one with our own custom management system, we almost have everything under one roof with the exception of maybe the accounting package, everything that we have is in this system. There’s actually a huge advantage for us in being able to have everything new in terms of campaigns and marketing and all the information on these leads in one place rather than having to use APIs to cobble something together and then have to have a dashboard to see what’s going on.
Mike: All that you just said makes a lot of sense. It’s sometimes cobbling tools together is actually harder than having just one tool that does everything. Even if it’s not a best of breed technology where it does everything at the top level. Sometimes, just having one thing that does everything that you need adequately is more than enough and it’s actually more helpful than trying to deal with data being passed between one tool and another or hey, why didn’t this get there or was this delayed or is there an error of some kind. Sometimes those web hooks just don’t work.
Justin: Sorry to cut in, Mike. Just to add one thing which I think’s pretty important as well is the whole kind of buy and build. I’d say. In hindsight, it always makes sense to build if what you’re doing or what you’re building for is what you’re defining is one of you core expertise or central to your business. That’s why it’s really important to know what business you’re in. We worked out we are in the service business as opposed to product business or specific services that we deliver, and part of that is technology. It’s about facilitating what we do through technology and that is something that’s really central to this particular business. That’s why we’ll invest probably heavier in technology than other businesses of our size. That’s because that’s our business model. I think if you’re a SaaS company and you are all about the product then it doesn’t make sense to build third party tools to help you sell that product and it sounds ridiculous because you’d think every SaaS company’s about the product but they’re not.
Someone like HubSpot. In the early days, I see them more being about the distribution of the product, they were a very, very efficient sales machine. If sales is what you do, or sales is what you want to do and you need things that you can’t easily get off the shelf, then I think it makes sense to build because that’s your core expertise and then you can really develop a specialism in there that allows you to recruit quicker, train quicker and ultimately get the products out to market quicker than you can using off the shelf stuff.
Mike: You touched on this very briefly but do you also have included in the software that you built entire life cycle management for the customers? Do you have order processes and stuff in there? Or is it really just managing your sales process and then at that point it cuts off and then there’s some other system that you built or something off the shelf that you’re using to do the day to day servicing of the customers?
Justin: No. We have everything under one roof. I think that’s been one of our main competitive advantages for a while. Everything is connected into the same system, the system that customers see on the front end of the mobile apps that even dispatch people, drivers use, everything is connected into the same system. That helps massively. It’s a huge investment that you have to make because the time investment and a maintenance investment but it just gives you that little edge over your competition when they’re using off the shelf software and there are things that they can’t do but you can that are really specific to the customers that you serve but make a difference that add to that overall customer experience.
Mike: That makes a lot of sense. I guess for the listener who is thinking about this, what is it that you would recommend to get started, if you’re a solo founder running a business, where would you start looking either for resources or in a way to implement this in your own business to do some sort of an outbound sales process? Because I think that most people running, for example, a SaaS business, when you’re starting out, I’ve done this with Bluetick for example, a lot of it has to do without reaching those very early days because you need to reach out to people because I have no idea who you are, you don’t really have the time for tweaking marketing campaigns and it takes too long to get one, just get them started up, but it also takes a while to optimize them to the point that you can make any sort of return on your investment. In the early days, you’re really just trying to get in front of people who you think are going to be a good fit, so you do a lot of outbound stuff. What is it that you would recommend for people to get started with that?
Justin: Especially if you’re a solo founder, or there’s only one or two of you, in the early days, the outbounds that you do isn’t sales, it’s customer development. The first probably 50 clients that you get on board. If you see it as sales, it’s going to be a wholly inefficient process because your customer acquisition is going to be through the roof because of all the time that you put into getting those clients and then making the little tweaks or changes, or even having meetings to decide whether you should change your product roadmap based on what all these clients are telling you. But I think in the early days, it’s more about customer development because it doesn’t need to be as efficient, it doesn’t need to scale as much because you’re actually getting something from all the people you speak to, whether they sign up or not and it’s crucially what helps you shape the products and make the products a little bit better than your competition. I think when we initially started doing this, we originally outsourced. Those reps we get from telemarketing agencies here in the UK and we generally paid a day rate of around £120 £150 a day which is about $170, and that would get us a full day of calling that gets around 80, 90 dials, 34 connects and then we’d know from that we’d usually get 3 or 4 appointments. That was pretty scalable because we could keep scaling up.
I’d probably recommend that anyone who is thinking of doing this but doesn’t know what their numbers are yet, try that out first of all. Find a small agency that can do this just so you can get up and going, just you can get an idea of what you’re numbers are and should be.
Personally, I agree with the common advice that it should always be the founder that does the first set of calls and you should do in order to get an idea of what your script is and what objections people are coming up with, and where you want to go. But at some point, you have to face the reality that you’re probably not going to have time to do this as much as you should do to get those over next 10 or the next 20 customers on board and that’s the point where it’s probably a good idea to outsource one, just to get data, but two, just to get the ball rolling. I think sometimes, doing something, although it’s not you, and although it’s never going to be done as well as if you were doing it, it’s better than not doing anything at all because you’re busy with the million and one other product related things or customer support related things because there’s just one or there’s just two of you.
Mike: One thing to point out there in what you said is there’s a distinction between customer development and sales. I think in this particular context, I’m using them interchangeably because you’re right, those early days really are about customer development and you’re spending way more time on any given customer than you would otherwise, especially in the future because it’s not worth the time to spend with them. But, at the same time, you need those early people and it’s almost like a lost leader, you have to spend that time in order to learn so it’s not that you are getting a negative ROI on those customers, it’s really you’re spending the time and money to learn what needs to be done in the future, not how do I make this a repeatable process that is going to scale to infinity and optimize it. Your goal is not optimization, your goal is just have those conversations and learn from it, and that’s what you’re paying for. That’s the time and money investment. The money that you get from them is almost meaningless. Obviously, any sort of revenue helps but you need to know the stuff that goes into it in order to be able to do anything with that information. You can’t operate in a black box.
Justin: I think the pretty important thing to realize as well is that the [00:30:44] book comes into play where 80% of your results are going to come from 20% of all of the things that you try. With us in the past, we found that something new comes along, we will give it a try. Sometimes our execution is poor, sometimes our execution is great and I’m sure that affects the end result, but time after time we found that outbound for B2B is what works out. Outbound as in outbound dials, outbound getting sales people out to that person, that’s what works. We’re seeing better results with things like Facebook marketing, we’ve always had results from PPC, but you’ll generally try a lot of things and a few of them will work. I think it’s a case of from the early days, if you’re just getting started, be prepared to try maybe three or four things in the first instance but then instantly double down on the first thing where you get a little glimmer of hope where you see that working, because it’s all too easy to spread your time and your budget and your attention across multiple channels. But the chances are one of those is going to work for you better than the others, and it’s best that when you experiment, you really double down and put the time and attention into that one that does work.
Mike: You’d also mentioned the possibility of outsourcing this. What sorts of things should you avoid or at least be cautious of or mindful of when you are trying to outsource this? I think there’s the two different buckets that you pointed out. Like if you’re very early on, the founder should really be doing this. But at some point, the founder really needs to take a step back because there are other areas of the business that you need to pay attention to, you can’t always be focused on that customer development because there’s engineering or support or various other things that need to happen. But in terms of the sales processes itself or the outbound process and outsourcing it, what sorts of things should people be cognizant of when they’re looking specifically at that?
Justin: I think one of the key things to realize is there’s a difference between knowing that you should be doing something and actually doing it. I’ve fallen into this trap plenty of times where I know I set myself a goal of maybe 20 or 30 calls a day, either for customer development or for sales. But if you’re not getting around to doing that one because you maybe procrastinating because you hate the idea of telemarketing. Telemarketing is for the wrong person, it can be so destroying. You get a lot of rejection, you feel like this is a waste of my time, I should be coding, or I should be designing. If you’re not getting the job done, I think at some point, you have to be realistic and face the fact that this thing is terrifying, it does need to be done by someone. I think in that case, even if it’s not you, it’s better to have someone doing this but you do really need to have a grip on the process from the really, really early days because you need to be able to tweak that script on the fly. You need to know what are the pain points that you are trying to get people or hook people with in order to get a response from them, you need to have an idea of what your script looks like.
Before we start telemarketing, we always send them our self telemarketing guide which is one, it’s kind of our script but more importantly it’s an explanation of each point in that script and why we’ve put that in there and it’s simply for that fact that everybody has their own different style of sales and we don’t want people to read from a sheet of paper, but they do need a script because there are certain pieces of information we need to get from each call. We give people the objective of each call, what we’re trying to do, we tell them, “Look, these are things that is necessary to get from this call in terms of information and these are things that if you have rapport, or if you’re able to get it, get them as a bonus, but don’t worry too much about it because we’ll get these on later contacts with that person. And this is the main objective of the main goal of the call.” I’ve been able to put that together, requires you to hit the ground and work from the front lines for a bit and have enough experience to know what you want from that agency.
Mike: Yeah. I think having goal for each call is an extremely valuable piece of advice just because it’s very easy to get on a call where you’re trying to talk somebody about whatever it is that you’re developing, you’re in that customer development phase and run an idea by somebody or float some mockups in front of them and say, “Hey, what do you think about this?” Having that goal of the call in mind in advance of having the call really helps you dig into it and get to the heart of the matter rather than just having this open ended thing where at the end of the call, you’re lost and you really don’t know what to say because you didn’t have a goal in mind to start with. That’s a huge piece of information.
Justin: I speak to a ton of people who have a SaaS company that just started up and they try outbound so they’ll get a list, a small list of maybe 50 people, and they’ll start calling for that list. Typically what happens is they have their own responsibilities, they have life getting in the way and they have things throughout the day to do. They’ll probably get maybe two, three hours in the day where they start calling but because they hate it or because they’re not used to it… I think if we spoke to 10 founders, I’d say 8 hate the idea of call telemarketing and that’s probably why they’re not doing that as a job or profession, but because you’ve got this anxiety about it, that hour or 2 hours that you spend calling, it feels like a lifetime. What will usually happen with the other distractions that come in, you make 15, 20 calls. You then force yourself to do that again, like a second day and you make 15, 20 calls, you haven’t perfected your script, you’ve just started, you’ve done no kind of tweaking, testing, testing different messages and then as a result, you get no result, and a lot of people get disheartened and give up and they’re like, “You know what, we’ve tried outbound and it doesn’t work for us.” If you got 40 clicks from a PPC ad or a Facebook ad you didn’t convert, you think nothing of it, you just think I need more traffic, obviously.
But it’s exactly the same with calls, you do need to make a significant volume of calls, especially if you’ve not tested your script or your message or your approach out yet and it really is in the early days about churning through in getting data, knowing that you’re probably not going to convert that efficiently but you need to do it in order to work out what your messaging is. I always advise using cold email in the first instance as a way of breaking through that resistance to testing and finding out what the message is. If you’re hesitant about making phone calls, find 1000 people that fit your target criteria and over days, do 100 emails a day, or maybe batch 50 emails a day. See the responses you get and tweak your emails until you start hearing the message that works and then go on to making a few phone calls with that same messaging.
Mike: One recommendation I’d have in that situation is that either during the call itself, or immediately after each call, write down all the notes or stuff associated with that. If you have the flexibility or the leeway or relationship with people to make the notes on the call, that’s great, otherwise, recoding them is a good option as well, because then you can always go back to them, maybe even have those audio calls transcribed so you can go back to them later. I’ve got 75, 100 pages worth of notes just from calls that I did early on with Bluetick and I can always go back to each one of those calls and say what is it that we talked about and where are the important pieces that I took away from that conversation and use that to tweak future conversations, or I can hand that entire file to a copywriter and say, “Hey, these are all my notes on all the different calls and this is what people told me that were important.” It allows you to have that base of information to move forward with because if you don’t capture it at the time, you’re probably going to forget 90% of it. Which is terrible because then you can’t even transmit it to somebody else.
Justin: For sure. When we train new reps, we actually tell people not to make notes on the call. Every bit of a darling software now should record. We have our own dialler in the CRM that we built and it just uses Twilio and then grab the recording. But the reason why we tell people not to make notes, because we find that the minute people make notes, unless they’ve got this weird brainman likeability, they can do one thing well. If they’re taking notes at the time, they’re probably thinking about the notes they’re making and they’re not listening to the person on the other end of the phone, and one of the key things if you’re going to get a result is to be able to listen and take the little subtle keys that the points when people maybe switch off when you said a certain thing or the point when people get excited or you’ve got them on a hook when you’ve said something else. It’s really important to listen and to try and find that person’s pain or that person’s problem, and I think being fully present on that call and being able to do that, you tend to see a better result so we get our reps to listen to the recordings and then transcribe the recordings themselves later, to think there’s something important in there, but we generally tell them not to write stuff down while they’re on the call.
Mike: Justin, all of this has been fantastic information, really appreciate you coming on. I think that’s about time to wrap us up. Where can people find you if they want to learn more? On Twitter, email, website, what do you got?
Justin: Sure. You can catch me on Twitter. Twitter.com/flipfilter, which is an old name I’ve had for ages and like many people want to change but it’s been with me for too long, so I can’t. You can also find me at exitplan.co/digitallywed or you can catch me at optimumfeedback.com.
Mike: Again, thanks for coming on. 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 362 | Calculating Lifetime Value (Not as Boring as it Sounds)
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about calculating lifetime value. They discuss how its done with one time versus recurring revenue and funded versus bootstrapped payback time.
Items mentioned in this episode:
Transcript
Rob: In this episode of the Startups For The Rest Of Us, Mike and I dive deep into the riveting conversation topic of calculating lifetime value. Seriously, it’s pretty interesting. This is Startups For The Rest Of Us Episode 362.
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. I want to kick today’s episode off with a question, Mike. What movie would be greatly improved if it was made into a musical?
Mike: If it was made into a musical. Hmm, that’s a tough one. My guess would be the old, black and white Frankenstein.
Rob: Okay. Yeah, I guess it wasn’t a musical but it was turned into a comedy by, what is his name?
Mike: Mel Brooks.
Rob: Yes! Young Frankenstein, is that what it’s called? But yeah, I could see them doing a musical as well.
Mike: Yep, definitely. Mel Brooks is on a couple of others that I think he turned into musicals as well.
Rob: I agree. There’s a lot of completely random questions that catch you off guard right at the start of the show.
Mike: I know. You come up with these things that are just totally off the wall and you don’t even run by me first.
Rob: It’s your new favorite thing.
Mike: My new favorite thing.
Rob: Other than answering ridiculous questions at the top of the show, what’s going on with you?
Mike: I wanted to give a quick shout out here to Tyler Tringas. We’ll link this up in the show notes, but he has a blog article that he posted talking about how he sold his bootstrap SaaS business from somebody that he met at MicroConf. Just wanted to say great job to Tyler and mention it so that people can go over and read the whole story. It’s a really lengthy article on it and where the product started, it’s called Store Mapper. It allows people to embed a map of their stores on their websites, sound like a pretty straight forward thing but he couldn’t find anything out there that did something for his customers so he built it. Fast forward a couple of years and he was able to sell it. I just want to say congratulations.
Rob: Yeah, congrats, man. I read the post, it was really in depth and really interesting and it’s posted over there on indiehackers.com.
Mike: I also wanted to read a quick listener email to us. This is from Zoren, he says, “Love the show, great tips. We’re busting our ass trying to grow [00:02:28] right now, and your show’s been great insight. Keep up the good work and maybe one day we’ll be on your show to tell everyone our story.” Really appreciate that, Zoren.
Rob: Yeah, thanks. For me this week, we actually launched a pretty big feature that took a while. It actually didn’t take that too long to build, it’s a long time to get approved and it’s an integration with Facebook custom audiences in Drip. It means that you can, in essence, have a native action right there in Drip, so that if someone’s at a certain point in the workflow or you can even just have a global automation rule that says when this happens, when anything happens, if it a tag’s applied to this person or if the lead’s core goes above something or they start checking out and they never complete their purchase, then you can just put them into a Facebook custom audience and you can then assess and retarget them when they’re on Facebook and then if they do buy, then you can pull them out of that audience.
It’s a pretty sophisticated, powerful feature, even though it was not that hard to build, but there’s a lot of possibilities to this and there are some use cases that are going live on drip.com right now. It’s a really impactful feature that took a month from the time we were code complete, about a month in order to actually get approval from Facebook because they want you to really have tested it out and you have to jump through some hoops and everything, which are warranted, I will admit. That’s been the habub this week.
Mike: That’s interesting. I’m on the other side of the spectrum with Google where I talked last week about how I was finishing up the [OWAF 00:03:59] authentication for Google to get mailboxes integrated into Bluetick. Because of the level of access that I’m asking for inside of people’s mailboxes, they have to basically fill out this form and they’re like you have to justify why you want this or why you need this level of access, I’m like, oh great. I went through and they’re like oh, it will take a minimum of three to seven days in order to get it approved, and of course I went through the process and I was like, oh, this is going to suck. Three hours after I submitted it, they said, sure, you’re good to go.
Rob: Oh, that’s cool. Good for them then, for keeping that queue short. You totally understand why they do that, right?
Mike: Oh, totally, definitely. That wasn’t the issue. The issue is I didn’t look to see that that was what I was going to need to do. I don’t know, I think the part of it might have just been the stuff that I was asking for and why and the documentation that I had to send in. I was pretty detailed in what I was requesting and why it needed to be done. Though I suppose it paid off.
Rob: Yeah, that makes sense. The other thing for me is the iTunes reviews, we now have 544 worldwide reviews in iTunes. Our most recent one that comes from Honey Mora from Canada and his subject line is: Ton of practical tips and lessons. He says, “I’ve been a listener for about four years now. I love what Rob and Mike share each week, I’m hooked. I’ve been following Rob’s Stewardship Approach since launching several premium WordPress plugins first and a few months back launching my first SaaS. Thank you for all you guys do.” He’s at repurpose.io.
Thanks for that review, Honey. We would appreciate if you’ve never given us a review, hop into Stitcher, Downcast, Overcast, whatever it is you use, or iTunes and click that five star button. You don’t even need an entire review or shout out or anything like that. Just clicking that five star helps keep us motivated, it helps us rise to the top of the rankings, helps us get more listeners, and the more listeners we have, the more we can do at the show, frankly, and it motivates us to keep putting out episodes.
Mike: The only other thing I have is I am speaking at the Cold Email Success Summit next week. We’ll link that up in the show notes but it’s not really quite an online conference but it’s an online summit where you can go and there are 20 different speakers that they’ve pulled from the world of email marketing to talk about various topics and give their insights and discuss what’s working and what’s not and give you actionable tips and things that you can do to help with your email marketing reference.
Rob: That’s cool. We’ll include a link in the show notes to that.
Mike: Awesome. What are we talking about this week?
Rob: This week, I outlined an entire episode around a single listener question from Andrea [00:06:28]. If you have a question that you think could make an interesting or even just a topic suggestion that you think could make an interesting episode for us, you can email that to us at questions@startupsfortherestofus.com or feel free to call it into our voicemail line at 888-801-9690.
Andrea says, “Hey there, thanks for an amazing podcast. I have a question for you. A few times in the show, you’ve talked about customer lifetime value and how important it is for knowing how much to spend on user acquisition. That makes a lot of sense, but how do you calculate your CLV (Customer Lifetime Value)? I’ve seen some examples on how other people calculate it, it would be interesting to hear your perspective on how to do it for SaaS. Thanks.”
And just one quick note, I am going to use LTV for lifetime value. He calls it CLV, some people call it CLV, some people call it LTV, it doesn’t matter what you call it, it is the total amount of revenue that you are going to get on average from each of your customers. The reason that this is helpful to know is it can dictate the whole slew of things. The higher it gets in general, the healthier your business is, the more you can spend to acquire customers, and even the more you can spend to support them, to create educational material for them, more you can spend on feature development. This value grows and your customer count grows, those are the two things that multiply by each other.
If you make about having 500 customers with a total lifetime value of $100, that’s only $50,000. That’s the lifetime value of all those customers that they’re going to pay you the entire time that they are customers of yours. Now if they are a one time customer, you get that all upfront, meaning one time purchase. If it’s a recurring purchase, you will get that overtime but that’s not a ton of money to hire people, pay for server hosting, pay for whatever other – there are a ton of expenses; pay yourself, run ads, do all the stuff you need to do. Whereas if you take the same $500 customers and you just multiply that by 10, let’s say a reasonable lifetime value of $1,000, now we’re talking about $500,000. It’s a whole different ball game of how you can treat your customers.
We’re going to dive in today, we’re going to talk quickly about how to calculate it, and I have just a very simple and very streamlined way to do it. There are different ways to do it, there is more specific, in detail, and advance ways to do it, but especially for a podcast, we don’t want us just reading off a bunch of equations. We can link out to some more advanced stuff, there are some great stuff from Tom Tungus, there’s someone who dives into this really deep and they have five different formulas and it’s the simple one and then they add another thing and then you have the cost of goods sold and then you add this, and the that. It gets super complicated by the end, but for now, we will just dive at a more of an entry level but then I really want to talk, we are going to get in deep into some rules of thumb that I have for payback time on advertising and then run through a couple of examples that are very close to real world apps just so you can get a better sense of why all this matters.
To kick us off, if you think about having a one time purchase business, like a WordPress plugin, or even DotNetInvoice, which is an old product of mine versus a recurring business, there’s a big difference on how you calculate lifetime value. We aren’t going to spend a ton of time on one time purchases, it’s obvious if you are going to do a really simplified version of calculating it, you’re just going to look at your purchase price. To be honest, if you have multiple purchase prices, let’s say you have a $50, $100, $150, and again, these are one time sales, you should know at this point what you breakdown has been historically. You should be able to go back pretty easily, do an export out of Stripe and just basically, you want the average of all the purchases that people have made and that’s what I would start with.
As you get more advanced, you might have upsells, you might have cross sells, maybe there’s an annual payment that comes once a year, there’s all that stuff that you can add in later but this is a five second estimate of what people will pay you on a one time basis. An example, DotNetInvoice is a one time sale downloadable invoicing software, the purchase price was $329, and then we had a bunch of different add ons and we could do the math, it was 20% of people who bought DotNetInvoice bought one of the add ons and the average price of the add ons was $99, you can do that math and then 20% times the 99 is another $29, so it actually raises the lifetime value up to $349, give or take. What you’ll notice with that example is if I had just said DotNetInvoice is $329, and that’s the number I’m going to go with right off the cuff just so I would have it, it’s actually pretty close to the ultimate value.
That’s something I want you to think about is, ultimately, you’ll want to get down to the dollar because once you’re paying for ads and you’re running big time marketing spend, it does matter. But in the early days, when you’re just trying to get a sanity check on things or just trying to get an idea of how much someone is worth starting with one time sale, starting with the purchase price, that’s a fine way to do it especially if you’re prelaunch because you’re not going to have all the numbers that I just threw out right of who’s going to purchase what of which tier, just make a judgment call. If you’re one purchase price, use that. If you have three tiers, I would take the average of the bottom two. An example of the $50, $100, $150, I would take the average of the $50 and $100 and I would obviously say I have $75. That’s the lifetime value I would have going into a one time purchase business. Next we’ll dive into how to calculate it for recurring.
Mike: I think the analogy I might try to draw between calculating the lifetime value and how it relates to your business is that when you’re looking at this, you would think that calculating lifetime value is really straight forward and easy as okay, how much money you’re going to make per customer, but once you start digging into the details as Rob illustrated, if you get into things like cross sells and upsells, those things start to change what your lifetime value actually looks like. It’s very easy when it’s just a flat number and it’s one time payment but anything else, let’s say that you’re paying affiliates, that eats into whatever that margin is. If you’re doing cross sells, or upsells, maybe it adds 20% to the revenue but only for 50% of the customers, then it starts to get complicated.
It’s almost like the very simplistic analogy is okay, this is how you calculate gravity but depending on how close you are to center of gravity or how far away you are, there’s all these other little things that come into play. Then there’s air friction and lots of other stuff. It starts to get more complicated, and there are other things that you can add in that may make a difference or you may decide to gloss over them just based on what it is that you’re trying to get at and why you’re trying to get at that number. If it’s try to maintain profitability or optimize your profitability, you might dig in and say yes, these things actually matter to the calculation. In other cases you may just say, I don’t care, I just need a back of the envelope number so that I know kind of what I’m shooting for. It really depends on where you are in the process of trying to figure out how much money each customer is making you.
Rob: Let’s flip over to recurring which is what we’ll focus on for the rest of the episode. Obviously this works with SaaS, but also works for membership sites, something where someone pays you on a recurring basis. This can be used for quarterly or annual or whatever. We’re going to look at monthly because it makes the most sense for what we’re talking about.
To calculate lifetime value, the simplest formula is to take your average monthly revenue per user, per customer and you divide it by your churn percentage. If your average revenue per customer per month is $30 and you have a 10% monthly churn rate, then you’d have $30 over 0.1 and that means your lifetime value is $300. It’s not complicated, it’s just hard to explain on a podcast but basically your average customer lifetime, how many months they stick with you is one divided by churn. Again, it would be 1 over 0.1, so that would give you 10, and then your lifetime value is your average monthly revenue per user which is also called ARPU (Average Revenue Per User). ARPU times the amount of moths they stick around times the lifetime. The amount of months they stick around is 10 and the ARPU in this case is 30. 30 times 10 is 300.
Again, the simple way to do it, we don’t really need to derive it here like I’ve just done but it’s basically your average monthly revenue per user divided by your churn percentage. There is a more advanced way to do it, we’ll link over to profit wealth. We want to get down to the penny and how all these things come into it. But what’s interesting is you think about HitTail where an earlier SaaS app I had, had pricing tiers that were 10, 20, 40 and 80 and then it went up from there if you got really big. If I would to look at a SaaS app that had pricing tiers of 10, 20, 40 and 80, this is actually similar to what HitTail had. Those were the pricing tiers for that. You could take a reasonable guess. Typically, when I’m looking at a SaaS app, if I’m going to guess what the average revenue per user is, it tends to be one from the bottom. In this case 10, 20, 40, 80, I would from an outside perspective say it’s probably around $20. Maybe it’s $22, maybe it’s $25, something without expansion revenue specifically.
Expansion revenue is like what Drip or people as the ad subscribers goes up quickly, the costs. But in an app like HitTail or app where people choose a tier and stay on it, it’s going to tend to be somewhere on the lower end. If your average monthly revenue per user is $20, you can see how driving churn down drives this lifetime value up. If your churn is 10%, which is quite high, you only have $200 total from the lifetime. But if you cut that in half down to 5%, then you’re looking at to having $400 that you’re essentially grossing from that customer over their lifetime.
Mike: The thing to keep in mind with that churn rate is that as that churn rate goes up, it dramatically starts to affect the lifetime value. If you think about it strictly from a percentage, I think it was 5% churn is the example that I’ve used in a MicroConf talk in the past where if you have 5% churn, then on a year over year basis, you’re churning over 60% of your customer base and it actually gets a lot worse than that because it is 5% per month, not necessarily the total of the entire time because you have to calculate it at each point where somebody could potentially churn out of the application. That 5%, great number to have but you really want it over 5% over the course of the year, not 5% per month. You can get in trouble if your churn rate starts to climb and you end up churning over most of your customers on a yearly basis. That’s a really bad position to be in.
Rob: And I’ll just throw in this little tid bit here, this isn’t even in the outline but it’s interesting, you can get to the point where you have net negative churn, your churn is actually negative because your existing customers are expanding. It’s called expansion revenue like I just talked about. In a business where it is based on something that is constantly growing, let’s say imagine Amazon EC2, Amazon S3.
Mike: I think Stripe would be a good example.
Rob: Stripe’s a good example. Yup.
Mike: Stripe takes a percentage of the purchase price for their customers but as those customers grow and they sell more, Stripe grows their own revenue because of that.
Rob: Right. If they have a bunch of people signing up and some are churning but the ones who are there are growing 10% per month each, just as an example, you can imagine that their churn is negative and that’s crazy multiplier, crazy multiplier on lifetime value.
Why are we even thinking about lifetime value, why do you care? The big deal is lifetime value gives you an idea of what you can spend to support and to build the product and they acquire, but there’s even more interesting aspect that we can drill into and it’s not directly lifetime value but it’s based around payback time, payback duration.
Let’s say that there’s this common mistake of beginning startup founders, thinking that they can take their entire lifetime value and they can spend that to acquire a customer. If you had $500 LTV, I could go out and spend $500 to acquire that customer. That is far from the truth. There are three major reasons why that is, first one is that you’re going to have expenses, you’re going to be paying employees, you’re going to be paying yourself, you’re going to have hosting, you’re going to have Stripe cost, payment processing, there are a ton of expenses that are out there. When you are small you can get those small, but especially as you get big, your expenses will become a larger and larger percentage of that lifetime value. That’s the first thing to keep in mind. That’s where if you want to do the exhaustive LTV calculation where it’s net LTV, you can start deducting out expenses on a per customer basis, just takes a lot longer. When you’re small, it isn’t such a big factor, I wouldn’t necessarily do that earlier on.
Second thing is you don’t want to spend $500 to acquire a customer who’s going to bring you $500 because you want to make some type of profit, you want to have a business that actually generates some type of money that you put in your pocket. The third one is that you are likely to run out of cash. Imagine if you have a really long customer lifetime, people just stick around forever. Let’s say they stick around for 50 months and you get $10 a month from them. The lifetime value would be $500. But if you spend $500 to acquire them, or even if you spend $300 or $400, you don’t get payback for 30-40 months and unless you have a massive pile of cash, you are going to get killed. Frankly, you’re going to go out of business, it’s what’s going to happen, you’re going to run out of cash.
There is this whole concept of payback duration or payback time that doesn’t go all the way up to the LTV, it only goes for certain number of months to the point where you have enough cash to cover it and basically enough comfort to cover it. So Mike, you want to talk a little bit about these rules of thumb that I’ve used over the years for a funded company’s payback time and bootstrapped company payback time.
Mike: Yeah. The difference between them is striking because with a funded company, they have money to burn because they’ve gotten money from their investors and the whole purpose of that money is to not just find the customer but to also leverage the channels that are going to get them more customers. Not necessarily as concerned about profit. They can burn through the money that they are getting and it doesn’t matter as much to them, they’re really trying to spend that money in order to identify the channel that’s going to get them the most customers as quick as possible and then they’re going to use that to start optimizing what the revenue is. Sometimes they don’t even do that, sometimes they don’t care about revenue at that stage at all, they’re really just looking to get users.
If they are looking for a return on their investment though, they’re typically looking at something less than a year because they have the money to burn and they have the money to invest in those channels and the purpose is to get that money in the door overtime so that when the year comes up, then they have the money back in the bank. As Rob had given the example, $10 a month over the course of 50 months, let’s say that it’s $100 a month over the course of 12 months. They want to get that return within a year.
With a bootstrap company, you really can’t do that. Most people do not have the runway in order to be able to make that happen. This is where people are really looking to get that payback within two, three, four months at the most. If you have more cash in the bank, you can stretch it out to six or seven but if you don’t, you really need that payback very quickly, maybe one or two months at the most. This is an area where if you’re selling annual plans, it can make a huge difference in your ability to leverage channels that are going to cost you a lot of money to acquire those customers because if you can sell an annual plan, you get all the money up front, you don’t have to wait for it to come in. Maybe not everybody signs up for an annual plan but if you can get a certain percentage of them to sign up for an annual plan, then that calculates into what your upfront revenue is and what your payback time is on average. It’s not going to say everybody’s going to pay back within this period of time, whether it’s three months or upfront. But you also want to make sure that you have the money in the bank to be able to reinvest in wherever the channel is that you’re finding that’s working.
Rob: Yup. I remember when I first started running ads with HitTail was Facebook ads and my payback time that I was looking for was I think two months or three months because I didn’t have a lot of cash and then I did some deals. I did an AppSumo deal and I got $11,000 in cash from that and then I upped it to a four-month payback. And then I got even better at it, and I realized I wanted to spend more and grow faster so I went to five months and eventually I was at six months payback because I was comfortable with it and I had enough cash coming in from existing customer to cover that. It’s a really interesting thing to see how comfortable you are and how much cash you have in the bank. I would say as a bootstrapped founder like you said, somewhere between two and four months is where most people typically start.
One other thing I wanted to point out is there is there’s this rule of thumb with lifetime value to CAC ratio. CAC is Cost to Acquire the Customer. LTV to CAC ratio, in general is in funded circles but they say it should be about 3:1. Meaning if your LTV is $1,200 that your cost to acquire them should be right about $400. If you go over $400, let’s say you’re at $800, it means you’re spending too much to acquire customers and actually there are funded companies that do this because they’re trying to go after growth and they’re nowhere near profitable. These are the kinds of the companies that I think that a lot of us roll our eyes at because it’s like yes, you’re growing and yes you’re bragging about how you’re killing it but you’re never going to make money until you prove that you could acquire customers for less.
And then in the funded circles, if they say you’re acquiring customer’s, lifetime value is $400 and you’re only spending $100 or $200, then you’re actually missing out on growth. They’re not saying it should be below 3:1, they’re saying it should be at 3:1 or as close as you can get there. Personally, when I’ve done this, I have often not spent 3:1, I have often done below that like 4:1 or 5:1 because the rest is profit. If you are a bootstrap founder, you have to think about that. The less you spend, the slower you will grow but the more profit you will have. You want to balance that, you want to grow really fast, you can obviously have that ratio be even higher.
For the last few minutes of today’s podcast, I wanted to run through a couple examples of some real numbers to wrap your head around what it actually looks like to run ads and to think about payback time. What I’m saying is, as reasonable clickthrough rates and reasonable ads cost at different times, you have to find the right ad network to be able to justify some of these but let’s go back to lower price SaaS, which is $10, $20, $40 and $80 a month with average earn per user at $20 point, churn is 10% a month just to make it simple. Obviously you’d want to get lower than that but it’s easy math, that makes your lifetime value of $200.
Interesting thing, we’re just going to look at two scenarios, back in the day, when I was running Facebook ads, this is 2012, I was getting clicks for $0.30, that is not impossible to do at this point but there are ad networks still today where you could find those. At the time, Facebook was a [00:24:50] ad network and when Google AdWords was [00:24:53], it was cheap clicks that Jason Cohen and talked about getting $0.05 clicks when he first started the SmartBear. You have to go outside these mainstream areas because they are overcrowded with highly funded. It’s where everyone’s playing and so the clicks are more expensive, but if you can find networks or other opportunities for getting inexpensive clicks, be creative with it, that’s where you can get these $0.30, $0.40, $0.50 clicks.
Let’s say we were getting ad clicks at $0.30 piece, let’s say 2% of the people who came to our website converted the trial, that number is high but for a lower priced SaaS app, that’s really curiosity based, it’s possible although we’ll look at the next example as I think is probably a little more realistic these days. 2% conversion to trial and then half of your folks, this is credit card upfront, 50% convert from trial to paid. With that, if you do the math, $0.30, 2%, 50%, it takes you out to $30 to acquire each customer and you would get a payback in 1 1/2 months. You would want to run that all day and all night and you would actually want to pay more per click to drive more traffic faster. I would consider doubling one of those numbers, if you literally were getting 2% conversion rate to trial, that is a pretty hefty rate.
The second example is pretty much the same example, but I doubled the cost from $0.30 to $0.60 and then I cut the conversion to trial in half from 2% to 1%, which I’ll admit is a bit realistic. It’s $0.60 per click and 1% converting to trial and half converting to paid, that gives us a cost to acquire of $120 and that’s a 6 month payback. Realize that if you’re driving 100 customers new customers a month from this ad approach, that’s going to be $12,000 in cash that you’re going to need to do it. It puts into perspective, those are just loose numbers, if you add a higher average revenue per user, not uncommon to have $80 or $100 average revenue per user, then these numbers become very different. You can pay a lot more per click. If you pay a lot more per click, your conversion trial’s probably also going to be lower with a higher price point thing. These things will have to shake out.
But this is the analysis that I have done many times when I’m thinking about are we ready to start running ads and is there a scenario under which this is feasible and then we can reasonably grow a business using ads because every business is not cut out to do pay acquisition.
Mike: I think the most important piece to keep in mind when you’re looking at the numbers and try to figure out whether or not it makes sense to go after a particular advertising network is how quickly you’re going to get that return on your investment back. Because if it is six months, and if it’s costing you $10,000 to pump into that, you’re not going to see that $10,000 that you paid this month until six months out. In order to get yourself to that six month period or get yourself through it, it’s going to cost you $50,000, $60,000 and yes it decreases as you go on because you’re getting more money from the customers in the third month than you were in the first month, but the reality is you need a lot of money to make something like that work. That’s why funded companies can do it and bootstrapped companies really don’t have the ability to. Again, that’s also why the annual plans and getting the money upfront helps so much with being able to grow the business in an advertising space because you get that money and you can spend it, and in fact, almost gives you negative churn as a result of that.
Jason Cohen has talked about that at MicroConf. I think there’s a talk that you can find on the MicroConf website under the videos section from 2013 or so where he talks about exactly that.
Rob: Yeah. To be honest, even though we’ve been talking for more than half an hour, this really is high level introductory. I say introductory and I hope it was easy to understand but I will say that the kind of rules of thumb that I’ve thrown out here are from years and years of experience running this across multiple SaaS apps, many, many small businesses and this is the way that I think about paid acquisition as I’m diving into it. I was trying to think of any networks these days, like ad networks in particular, that would probably have tripleclicks, I think Twitter is one, and I think Instagram is another. I don’t know if Instagram’s up to Facebook cost yet, I know Instagram’s a pain, it’s not necessarily B2B, it’s got to be visual and all that stuff. Those are the two networks I think have a decent reach that could potentially have cheap clicks. I don’t think Facebook does it these days anymore, last time I ran ads, the cheapest I was getting was the $0.60 clicks but a lot of them were mostly between $0.60 and $1, I think it’s even higher than that now.
That is why these businesses like Facebook and Google mint money and why they’re worth so much, why the stock market values them so high because they know that overtime, if they’re successful and if they figure out their ad tech, which is pretty hard to build, if they figure that out, it’s just going to grow overtime and that’s good for them. It’s not necessarily good for the advertisers in the sense of it becomes more and more expensive to run ads.
Mike: I think the one wrench to throw in this entire thing is that even if you’re paying money to get those people to your site, there is the chance that they may not convert right away and they may just end up on your email list and you may need to figure out, okay, it cost me this much to get somebody onto my email list, but later on did they convert into a customer and that’s where you start getting into a really advanced analysis of what your sales funnel looks like. Maybe some people convert, maybe some people never convert or just unsubscribe and they will never become a customer but those are the places where it becomes very difficult to start making some of these calculations because then it’s not as straightforward as I paid $1 for this ad and 1% of the people converted. It’s probably a little bit more than 1% but it’s hard to know overtime, then you end up with problems trying to figure out what your attribution looks like. Attribution is an entirely different world, we could probably spend an entire episode on trying to figure out attribution but it’s complicated to say the least. I’ve talked to a lot of people who said trying to figure out what your attribution looks like is very, very difficult.
Rob: Yup. This is all good points. It’s not necessarily a purchase right off the bat from an ad, especially not from Facebook. They’ve tweaked their algorithms so actually they made that harder. If you look at someone like Brennan Dunn with Double Your Freelancing, he talks about every email subscriber he gets is worth x dollars and I forget what the number is. I imagine he’s been public with it, but it’s something like $10 or $11. He knows that if he runs Facebook ads and can just get someone to opt in, that down the line, if he does all the math, on average, it’s about $10 or $11 based on how much a bunch of people don’t buy and the ones that do buy these many things from him.
It’s interesting, if you can run ads and getting someone on the email list is not that hard, depends on the list, depends on the time and clicks and all the stuff but I’ve done it pretty consistently for between around $1 at the low end up to maybe $5, $6 on the high end. What I was just talking about, it’d be pretty interesting, you could see how you could mint money with the business model that makes money based on people being on an email list.
Mike: I think that sounds like a good place to wrap it up. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you could 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.
