Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer the question of whether to build or buy. Just because as a developer you know you can build it doesn’t mean that’s the best option. The guys do a gap analysis on building versus buying software.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about how to answer the question of whether to build or to buy. This is Startups For The Rest Of Us Episode 355. 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 experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: Things are pretty good. Feels like a summer is turning into fall and I’m ready for another summer before winter starts.
Mike: Is it like the post-vacation vacation?
Rob: A little bit like that, yeah. We actually got a pretty cool email from [Tom Lagris 00:00:48] and the subject is How To Survive With Health Coverage In A Startup. He says, “Love the show, listen to every episode on my commute.” He lives in Melbourne, Australia. He said he wanted to comment on our discussion from Episode 352 around health care, and I’ll read from his email.
He says, “An option which people do is to move abroad to start their startup. Obviously, this depends on family situation, if you need local networks of people for discovery, etc. But a SaaS business can be started from anywhere, and in fact, many countries actually offer funding to entrepreneurs to go their first six months to build stuff. For example, [00:01:19]. If you pick a country with free or baseline healthcare like the UK, Australia, or New Zealand, then you have solved the healthcare problem. Using Stripe Atlas or similar still allows you to have a Delaware/US entity. That would be an idea for future episodes, best countries to go for six months to a year to build your SaaS product. Cheers.”
Good advice. I think if I was 20 years younger I would totally consider doing that.
Mike: Yeah, that reminds me of Tropical MBA episode I heard a while back, Episode 365, where they talked about Estonian e-residency and all the different things that go into it. Just reminds me of that and the idea of being location independent because that’s really what the Tropical MBA is based on. It was really interesting hearing from the Director of Estonia’s e-residency program and how they’ve positioned it to allow people to establish that e-residency and then work from anywhere in the world and just basically use that as their financial center.
If you’re interested in that, we’ll link that up in the show notes but I’ve definitely recommended that for people. If you’re interested in looking into going abroad and getting an idea of what one country’s solution to that particular problem is, there’s a lot of different places that are starting to offer very similar things.
Rob: Yeah, I certainly think it’s not for everyone. I think that depends on your personality and that depends on if that type of thing is interesting.
When I was younger—I enjoy travel now more than I used to. Frankly, when I was in my 20s, which is when I probably would’ve done this, before I got married or before I had kids, I kinda wanted to be here to start the company. I think it depends on really what your goals are and your personality and that kind of stuff.
How about you, what’s going on?
Mike: We got another email from Steven Johnson who said, “Hi Rob and Mike, I wanted to say thank you. I love the community and the podcast. A year ago, I was doing around $5,000 a month and I started listening to your podcast, made some change to my business based on what I heard. Since April, I’ve been averaging about $15,000 a month.” Steven writes us from Glacier Peaks Studios. That’s great to hear, Steven. Really appreciate that email.
Rob: Yeah, that’s awesome. This is one of the big reasons, when we get emails like this, this is why we do the show and this is why we do the conference and this is why we talk about this stuff and share the knowledge we’ve learned. It’s to help other people, to build the community and have us all have the rising tide lift all the boats.
Mike: Aside from that, the other thing I’ve got going on is just banging away at support issues and getting customers on-boarded into Bluetick. My launch went reasonably well for what my expectations were, and things are moving forward at a fairly fast pace at the moment, just making changes to the app and making it easier for people to self on-board and guide them through the on-boarding process, identifying where the bottlenecks are and hopefully get them solved.
Rob: Doing support and on-boarding, do you have any time to write code?
Mike: For the on-boarding, it’s a lot of code that’s in the app to recognize certain conditions. When those things come up, that’s most of the code I’m working on, just making it so that it can identify what the next steps are for the person, and then say hey, this is what you need to do to make things easier to find in the app. For example, if a mailbox starts to fail, or if they haven’t even set one up, pop up a message when they first log in. It says hey, this is what you need to do, so that they know exactly what they need to do and they don’t have to go to a personalized on-boarding session or anything like that.
Rob: Yeah, that makes a lot of sense. The nice part is as you do this, you should receive fewer questions, you should see more people getting further into the app. We used to have a dashboard where we had three or four steps that people needed to do to get set up with Drip. Next to each account we had, it was like checkboxes. I could just flip to see all new trials and I could see who hadn’t checked the boxes. We started basically measuring progress on an aggregate basis of what percentage of current trials have installed the Javascript, have activated a campaign, have activated a form or whatever. I forgot what the four steps were, I think another one was a workflow.
We definitely saw noticeable progress to a point, and then it just stopped improving. You peak out, that’s when it told us we’ve done a pretty good job with our on-boarding, it could probably be improved but we kept adding stuff in it and it wasn’t really doing it. Hopefully, you will get to that point soon. Then, you can stop. You can stop worrying about it for now and get back to building features and doing whatever else it is that you need to do.
Mike: Yeah, that was one of the first things I did, built a dashboard. It has almost, kind of what you just described. I used numbers to indicate whether or not they’ve done it or not, then it’s just color coded at the boxes in a basic table. Anyone who’s logged in or who’s creating an account or subscription, I could see whether they’ve done this step. For example, they added a mailbox, yes or no. It’s color coded if they have; it’s red if they haven’t, and it’s green if they have. Then it tells me the number that they’ve created.
I can see how far they are along and how heavy of a user they are as well, but I don’t have anything that gives me statistics or overtime what the percentage or conversion rate or anything like that is on those. That’s something I probably have to add in at some point. Yeah, that’s the basic stuff that I’ve been doing right now.
Rob: Sounds good. What are we talking about today?
Mike: Today, we’re going to be answering a question that came from [Christopher Yarl 00:06:29]. He had a question about whether to buy something off the shelf or to build it.
He says, “Hi Mike and Rob, thanks for the great podcast. I’m currently planning my next step for my business which is a small SaaS app. My question is this, one of the components that I need is a JavaScript library with some specific drag and drop capabilities on the frontend. There’s one commercial alternative out there but it’s pretty expensive and buying it would consume a lot of my available resources. I’m also hesitant because chances are that only supports about 50% of the functionality that I need, which will leave me with very little funds. I’ll still have to do extensive programming on my own in a library that I’m not familiar with. What would you do in a case like this and why?”
I thought what we’d do today is walk through the general steps that you would go through and the questions that you would ask if you’re in a situation like this where you’re trying to figure out whether or not you should buy this library even if it’s very expensive, because I’ve been in situations before where I have this library or this piece of functionality that I want or need, and the library for it is expensive. It could be a couple thousand dollars, and it might not get you as far as you want or need to be.
The fact of the matter is you’re going to have to learn all the stuff that goes with it, and it may not be worth it. The question is do you dump a couple thousand dollars on something, or even if it’s a couple hundred if your budget is much smaller, do you do that and then try and figure out afterwards or there are other ways around this particular type of problem?
One of the dangers that we have as developers is that we know that we can build almost anything given enough time. The fundamental question here is how do you determine when it’s better to build something versus buy it? It applies to things like software libraries, components, infrastructure, entire software packages for example. You really need to do some sort of a gap analysis between whether or not you build versus buy. But in order to do that, you have to have questions that you’re going to ask to help establish what that gap looks like.
Rob: Yeah, I do think there are times. I think in most instances, if you’re thinking about build versus buy, hopefully you’ve already thought through this seriously. You’ve already thought, “Do we actually need to get this going?” You spent time evaluating it.
But I do think it is an interesting thought experiment to sit down and think are there alternatives to this, to doing it the way that you want right from the start. I think about in Drip, we have workflows which are visual marketing funnels. We didn’t build those from the start, we built basic automation rules to start with which were basically there’s a trigger on the left, there’s an action on the right, there’s dropdown lists to select what you want to do. We didn’t invest the five months of time or whatever many thousands of dollars. I’m sure if a library even existed to do that kind of stuff, it would’ve been expensive.
We didn’t do that because we were able to get by for I guess a year, a year and a half, with just basic automation rules. That’s something to think about, it’s not going to be in all cases, in some cases you absolutely need to get the dragon drop or to get the best thing for the job in order to make the app work. If not, it’s always good to think about alternatives.
Mike: Next step when you’re doing your gap analysis is to try and figure out what the critical features are that you need, versus the ones that are nice to have. Rob just described what the process they did with Drip was where they didn’t build those workflows, the visual workflows upfront, they just built these little rules that you could chain together and they all ran independently with much more of a manual process, I’ll say, to put them together, but it worked. That’s really what helped people in the early days and helped the business get to a point where it was making money.
If it’s not directly in the path of getting the business to making revenue, then you can probably avoid it. You can probably get away with not doing it. I think another piece that comes into answering this question is how far along are you in the business? If you’re not making any money at all, these types of questions make a lot more of a difference than when you’re making $10,000, $20,000 a month because then you’ve got money to play with, you’ve got revenue that’s coming in, and you can pay for things. Versus when you still don’t have any money and you’re not real sure whether or not that bet is going to pay off.
I think that’s the fundamental place that Christopher is coming from, he doesn’t have a lot of money to dump into this because it’s not making anything yet.
Rob: Yeah, which is a tough sell for me. In his situation specfically, given that he’s going to spend almost all his money and then still have to write a bunch of code which is only going to get him halfway there, I would either not buy it and build it, which I have a tough time saying. If there’s something that can save you months of development time, it’s almost always worth buying.
The second option is I would consider saving up longer, get more money in the bank so that it doesn’t kill all of your savings. But it’s tough. Early on in your entrepreneurial career, you’re going to have more time than money. Then later on, you should have more money than time, and you’re going to swap at some point. It sounds like Christopher is still early in his career. If you do have more time than money, you can hammer this out and you can work these long nights and weekends, or even during the day, he doesn’t mention that he has a job.
I would honestly probably, if I were in his shoes and I was thinking about this, I think the money is probably going to serve him better somewhere else. It’s a tough call but that’s probably what I would lean towards, just hammering it out, which again I hate to say because as developers we always want to build it. “Oh, I can build it better, I can build it cheaper than that person.” You’re going to way underestimate how long it’s going to take you.
Mike: But I think the third option, which is kind of an implicit one, is can you just avoid either one? Can you just not buy it and not build it at all? Can you get away without it and completely, for the time being—not to say you’ll do it forever, but can you push off or delay the decision until much further in the future? I think in a lot of cases, there are definitely ways to do that which will help you move the product much further forward than you otherwise would if you sat down and spent all the time working out through the library and building stuff.
It really depends on where that component or that library has to reside in your code base and what it does for you. But there’s a lot of situations where you don’t even have to do it at all and you can just avoid it entirely for the time being.
Rob: Sure, that makes sense. I think in the context of this episode, we should assume that, obviously, you’ve evaluated that and you’ve decided that you do need it. We should expect, if Christian was asking that question, obviously if he can avoid buying it then he should or avoid building or buying then he should. We should probably assume that he really can’t, that it’s the core of his app. Let’s just assume it’s the one feature that is going to be in his app, this drag and drop thing.
With that in mind, the next to tie in to each other, on the next things to think about, one is when do you need these features available in the timeline of your app? What would be the timeline to develop them, to build them from scratch versus to buy them. Is putting the money down, does it save you enough time that it makes it obviously worthwhile? Does it save you two months or three months and you have other competitors around, or two or three months is a vital component to your success.
I think about something like LeadPages acquiring Drip. During the acquisition process, one thing that Clay, the CEO of LeadPages, had said was this is going to give us a two-year jump in this space. They could obviously have built their own ESP, they have software developers, they have product people, they had funding to do it. But he said the reason we’re paying this money for your company is to really leap frog us. That time that it’s going to save us is a big deal for a company that’s trying to get somewhere very quickly.
If you’re listening to this podcast, the odds are pretty low that you’re in that boat. But this idea of when do you need features available and how long will it take to build them, I think, is the next thing to think about.
Mike: Next on the list is do you have the runway available to develop those features if it takes twice as long as you think it’s going to, if that’s all you work on. By all you work on, I mean nothing else gets done during that time. Can you coast until those things are done?
This really goes back to the fact that most of us are inherently terrible at estimating timelines, especially when they get too far out. It’s easy to say okay, this is going to take me a couple of hours, or even on a longer project to say three or four weeks, yeah, we can get this done. Once you get out to something that’s three to six months, there’s so much involved and all the things that need to go in it that it’s going to be really difficult for you to identify in advance all the little gotchas and edge cases that you’re going to run into that need to be dealt with.
For you to replicate a lot of things in a very complex library is going to be difficult and it’s probably going to take you twice as long as you think it will. That’s not just because we’re bad at estimating, it’s also because we’re inherently overoptimistic as developers over what sorts of problems we’re going to come into and our ability to resolve them in a timely fashion because we’re going to get pulled in a lot of different directions. It’s difficult to dedicate all of your time to just those things.
Doubling the amount of time that you think that it’s going to take is probably a reasonable, if not overly conservative thing. You might even want to quadruple it.
Rob: Yeah, I think that’s the key there. Double or quadruple. It just does wind up taking a lot of time. Often times, because we don’t think of edge cases, once you get into something you realize oh if I don’t do that, then it’s going to break, this is confusing for the user so we have to add this whole other series of screens or something like that. I agree. This is a tough one. It’s so easy to be optimistic and estimate one month or two months to build something and have it easily take four months to actually get it into production. There’s a difference between packing out some code and actually having fully unit tested, high code quality, maintainable performance, all these things can easily take you another month or two. It’s something that we don’t really think about.
Another thing to consider is can you resell what you think you could build? What you’re building, is it related to the existing product or would you need to target an entirely new audience? Obviously, if it’s a new audience, you don’t even want to think about launching a second product. It is interesting to think that if you were to build the library, would anyone else out there buy it? Again, I’m guessing the answer is going to be no, that it’s not worth it for the distraction. It’s definitely an interesting thought experiment, I think.
Mike: I think ideas like this come up a lot when we’re developing things just because we look at that and say it’s been really valuable to me, maybe I can make some money from this and sell this component to other people and build a business around that as well as this other thing. Really, you’re just splitting your focus. In most cases, it’s not going to work out, unless you’ve built out an API or a library yourself that is usable in a general case scenario and you have the time to dedicate to it. Chances are really good that you probably don’t have the time to dedicate to it because it’s a lot more time consuming to build a second business at the same time as the first. It’s honestly not going to work out very well in most cases. Can’t think of an example of where I’ve seen somebody develop two different products at the same time and sell them to different audiences.
Rob: Yeah, you’re just stretched too thin, especially when you’re a solo founder.
The next thing to think about is what commercial or open source options are available? Are they cost effective in meeting your timeline? Because buying something can be expensive. If it doesn’t get you all the way there, then there’s still that whole lot of struggle of adding onto it. And then open sourced can frequently—ah, I shouldn’t say frequently. It can be more trouble than it’s worth if you get something that is not maintained going forward, you get a project, essentially, that gets abandoned or that has already been abandoned, or maybe you get it and you spend a week tying into the API and then you realize that it’s buggy or it doesn’t do what you need to do. This part is harder than it seems. It’s relatively infrequent that I think you’ll find a perfect match off the shelf that you can buy that’s going to solve all your problems right away.
Mike: That’s totally true, but I don’t necessarily think that you need to solve all your problems right away. Really in the early days, we are just trying to solve the problems for the customers and there’s a lot of things you can get away without doing. If you can just curve off a tiny little slice of the thing that you’re trying to implement that is in the path to revenue for your customers, then you can find an alternative that isn’t nearly as good as what you want.
Yes it’s a suboptimal solution, but if you integrate it in such a way that you’re only using those pieces that you desperately need to get something working that people are going to pay for, then it gives you the ability to go back to it in the future and buy something that is more expensive or has more features and is an alternative to the one that you’re originally looking at. Maybe that’s the optimal thing that you should buy, but are there solutions out there that are a lot less expensive or can get you to where you need to be that are an alternative to what the optimal solution is for the time being?
Along with that, is the technology or the component that you’re looking at, is going to provide you with any sort of a competitive advantage? That competitive advantage can be either speed, efficiency, productivity. All three of those things can be either for you or for your customers. If you can put something into your app that is going to make your customers more productive or more efficient at what they’re doing, then they can get into your app, do their job, and get out. It will provide more value to them because of those things. They’re able to do those jobs faster than they would if they were in a different app.
Again, those things apply to you as well. If you are able to develop something faster or be more efficient about the resources you’re using, maybe it’s AWS resources or servers or backend storage, if the component allows you to do those things at a lower cost and is able to improve your bottom line because you’re not spending as much money doing hosting for example, all of those are things that you should take into account when you’re trying to determine whether or not to build or buy it.
Rob: Here’s another thing I’ll throw out. With Drip nowadays, in almost all cases, we would choose to buy it just because we’re at the point having the funding of LeadPages. It would be pretty extreme that I would want to take developer time away from building features or scaling the app to go build something. Not even build but think about an example, continuous integration.
We pay hundreds of dollars a month to Circle CI, to handle continuous integration, but there are free open sourced CI servers that we could download, put on a [Easy 2 00:20:44] instance or multiple, scale that computing power up and down, but we’d have to maintain it and that needs someone to learn how to use it and it would be a switching cost. When you look at it as a few hundred bucks a month and you think about not only how much does a developer make but how much you’re losing, the opportunity cost of a developer, a dev ops person, not improving the app, it’s a bit deal.
That’s the other thing. All of this rotates around how fast do you need to move and how fast do you want to move. And then how much money do you have?
Mike: Coupled with that, you said that you’re paying a lot of money for Circle CI. There’s also a question of what is the maintenance cost of keeping things up to date? Are there things that are going to be changing that are outside of your control, or do they handle it for you as part of the updates? That could be protocols that are changing on the internet.
If you got a networking library for example, a lot of times it makes more sense to use something off the shelf than to build your own because there’s so many different edge cases and exceptions that you can run into that you’re just simply not going to think of or consider when you’re trying to build your own. It’s just too complicated to keep up to date with all the different things that are going on.
Rob: Finally, I think the question you should probably ask anytime you’re building a future, considering spending time or money on something is can the scope of what you need be reduced in any form or fashion? Going back to the first principles and rethinking do you actually need to build or buy what it is that you’re thinking about, or is there an alternative or is there a way to reduce that scope?
Mike: Hopefully, a lot of these questions that we’ve surfaced and the topics that we’ve talked about resonate with you in a way that helps you determine whether or not you should build or buy something. Really, you just need to go through the list of things and say what is the most important thing to you right now and are there things that can be pushed off? The final thing is do you even need to make this choice right now?
Rob: That wraps us up for the day. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 354 | The Art of Product with Guests Derrick Reimer and Ben Orenstein
Show Notes
In this episode of Startups For The Rest Of Us, Rob talks with Derrick Reimer and Ben Orenstein about the art of product. They cover Ben’s transition from full time work to working solo. Derrick talks about the changes to his life after the Drip acquisition.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For The Rest Of Us, I talk to Derrick Reimer and Ben Orenstein about the art of product. This is Startups For The Rest Of Us Episode 354.
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, and Mike is out this week so I’ll be talking with Derrick Reimer and Ben Orenstein. We’re all here to share our experiences to help you avoid the same mistakes we’ve made.
This week, I’m very excited to invite Derrick and Ben on the show. If you haven’t heard of them, they co-host a podcast called The Art of Product. You might recognize Derrick’s name because he is the co-founder of Drip and he has been on this show a couple of times in the past. Ben Orenstein spoke at MicroConf starter this year and he’s maybe best known for hosting the Giant Robot’s podcast as well as being a prolific Ruby On Rails developer. He recently left ThoughtBot to go out on his own.
Without further ado, let’s dive right into the interview. Derrick, Ben, thank you so much for taking the time to join me today.
Derrick: Thanks for having us.
Ben: Absolutely.
Rob: Ben, before I even intro you, I want to start with a story. I cut you off before the interview started and you said, “Hey, I went to the emergency room this weekend.” I said really, what happened? What was your next sentence?
Ben: Have you ever heard of Acroyoga?
Rob: That is the best lead-in to an emergency room trip I’ve ever heard. Walk us through that, Ben, what happened?
Ben: Acroyoga, I guess it’s short for acrobatic yoga. The basic gist is it’s a partner practice. You’re doing a lot of lifts and things of that nature. On Friday night, I was sitting, basically. My partner was laying on the ground with his legs at 90 degrees, an L, and I was sitting on his feet and leaning backwards in a back bend. It turns out that this guy was basically too small to base me, that’s what he was doing was called. He just wasn’t quite strong enough to support my weight. The first time we tried it, I fell off to the side harmlessly. “Aw, that didn’t quite work. Let’s try that again?” He was like okay, we can try it again.
We really should’ve stopped at that point realizing he just wasn’t quite strong enough to do it, but we went for it anyway. The second time, he collapsed and ended up dumping me more or less back onto my head, backwards.
Rob: Ouch. Concrete?
Ben: No, we trained in this Aikido studio. They’re used to throwing people. There are mats which is good. But I ended up basically doing a back somersault over my head with a degree of mobility requirement that I don’t have. I heard all of the vertebrae in my neck pop and felt this intense strain on all the muscles that run from my neck down my back.
I rolled out of it and then came up and was like okay, I can feel my fingers, I can feel my toes, okay that’s good. Nothing’s tingling, I don’t see any spots, I don’t think I have a broken neck. But all that tissue and muscular tear on the side of my neck was basically on fire. I couldn’t turn my head to the left, I couldn’t look up or down, I could only keep my head perfectly straight.
I tried to walk it off for a few minutes and then I was like no, I’m going to go to the hospital. I did. They put me in a cervical collar and were like we’re going to CT scan your neck and hopefully there’s no bone damage. Fortunately, it turns out there was none. Just soft tissue stuff, which is great, because it will heal fairly quickly. I was definitely worried there would be bone problems or worse, spinal problems of some kind. Got off pretty easy, it turns out.
Rob: Yeah, cause that stuff hangs around forever. Anybody I know who’s had even these minor back injuries, it’s just decades of dealing with it. Well, that’s good news, man. Glad you’re okay.
Ben: Thank you.
Derrick: Do you regularly do Acroyoga?
Ben: I regularly do it over the last two weeks. I have fallen in love with it over the last handful of days. It’s super fun, except for the crashing on my head, I feel way more mobile and strong in interesting ways. I’m totally digging it.
Derrick: That’s cool. Do you think you’ll go back once you’re healed?
Ben: For sure. I learned some lessons, I got off kind of easy and learned some lessons along the way. Should’ve absolutely had a [00:04:35], should not have had someone who I outweigh by 50 pounds trying to support me, should’ve realized when it failed the first time that we should’ve either stopped or gotten a [00:04:42]. There were a lot of warning signs that I just brushed by that now I think will set off much stronger warning bells in my head.
Rob: Indeed.
I want to take a step back and give a little introduction of both of you guys. Derrick, my co-founder of Drip and now VP of Engineering for Drip at LeadPages, lives here in Minneapolis. Derrick, you’ve been on the podcast twice before, is that right?
Derrick: Yeah, I think so.
Rob: Yeah, a couple times. You talked about the code tree sale and then I don’t remember what we talked about the other time. Folks should be relatively familiar with you.
And then Ben Orenstein, formerly of the Giant Robots podcast, and now you’re out on your own, independent, and you actually were a speaker at MicroConf Starter Edition this year. We’ve all known each other for a few years now.
The reason why I had to bring you guys on is a couple things. One, because you’ve launched a new podcast, it’s called The Art Of Product. I think that anyone listening to Startups For The Rest Of Us who is thinking about building software products and going the SaaS route should take a listen to The Art Of Product. You guys are what, maybe 8 or 10 episodes in?
Ben: Yeah, about 10.
Rob: You guys have a good vibe. It’s conversational, you’re both developers. I almost said Rails developers but I know you’re not dabbling in Elm and Elixir and other things. Maybe you’ve always dabbled in those. I just think that for folks who want to hear an even more technical look at starting software companies and a technical look at building software, because both of you have done it now for a decade or more. The Art Of Product is a podcast for them to check out.
Have you guys been enjoying the first 10 episodes, has it been fun?
Derrick: Yeah, I’ve been having fun with it. I’m still surprised sometimes that people actually enjoy listening to us just talk about what we’re working on. But I know that personally, that’s one of my favorite formats when I listen to a podcast, just hearing what people in the industry are up to and the day to day things that they’re struggling through or having triumph over. It’s been fun to just keep chronicling our story and hearing positive feedback from folks on Twitter and stuff, it’s a good shipping, I think.
Ben: I would second that. I think the radio has gotten a little more interesting lately since I quit my job and went independent. Now, Derrick is working on a large, successful SaaS company and I’m working on a small product business. We have two interesting angles on making money online.
Rob: That’s cool. How would you summarize the podcast in a couple sentences?
Ben: It’s two dudes talking. A brand new, groundbreaking format that no one has tried before.
Rob: Right. But it works because both of you have personality, and you’re both doing interesting things which really helps. Not just in work, it’s like Ben, you’re in a barbershop quartet and you’re doing Acroyoga and occasionally falling on your head. Derrick is traveling, he’s always working on side projects, he has his blog. There’s a lot of stuff going on and I think that’s always—interesting people make interesting radio, that’s how I think about it.
Ben: I think one strength that we bring to the table is that Derrick and I both do a pretty good job of not filtering too much. We’ve had episodes where one or both of us had been really struggling or feeling really down and we don’t sugarcoat that, we don’t shy away from it. I quit my job about two months ago, I think it’s episode two or something and you can tell I’m reeling, basically. I was expecting it to be hard but it ended up being much more shocking than I anticipated. I’m super, super down. I’m not talking about what’s freaking me out and why I’m scared and what’s harder than I thought it would be.
I think we both do a pretty decent job of putting that out there because I think it’s good to have that kind of stuff exposed. I think it’s useful for some people to hear that and to understand what it’s like to try scary things and to realize that hey, if I’m having these feelings, I’m not the only person doing it. I’m not the only person that experiences things like this.
Derrick: Yeah, we joke that sometimes it just turns into a therapy session. I think a big part of that is trying to debunk the imposter syndrome that a lot of people experience. Even people who are “successful” or have been doing what they do for a long time still kind of go through the same struggles that you’re going through if you’re even newer to the industry or something. We’re always trying to be authentic and genuine. To me, I start having a lot more fun once I started breaking down those walls and just trying to put it all out there every week.
Rob: I think that authenticity comes across too. Until you guys aren’t too… you may have outlines but I guess the pretty loose, you don’t edit much inside the episode, you just talk and what comes out goes to tape. Is that accurate? That’s just my guess.
Ben: Yep, that’s pretty much on.
Rob: That’s cool, awesome. For folks who are familiar with the Giant Robots Smashing Into Other Giant Robots, is that the correct title of the previous podcast?
Derrick: That is, yes.
Rob: Okay, it’s long, so I just forget if it’s smashing or banging or something. Ben, you were the host of that for what, hundreds of episodes, right?
Ben: Yeah, I used to work at a company called ThoughtBot and we had that podcast launched about four years ago, I think. I was the host through that whole run, something like 210 episodes, somewhere around there. Around maybe 20 or 30 episodes ago, I brought Derrick on as a co-host. Other people had been co-host or I had done interview formats in the past, but the most recent incarnation was Derrick and I doing what we do now on Art Of Product.
Rob: Alright, cool. That actually leads into talking about the transition. You mentioned that you worked for ThoughtBot for the last several years, I think it’s a bulk of your professional career. You’ve just recently transitioned away from that full time work to being independent. You’re working on a product right now and have ideas for other stuff. Talk a little bit about that transition, what inspired it, how it’s gone, some of the pitfalls but also the fun stuff that’s happened.
Ben: Yeah, I was at ThoughtBot for six years. I was working on ThoughtBot’s SaaS apps. I had started one of them, it was called UpCase and I had ended up managing another one of them called Farm Keep. That was really an awesome experience. I had started off just as a consultant there writing Ruby, and then eventually ended up more on the business side which is exactly where I wanted my career to go.
I’d fallen a little bit out of love with programming at that time. I wanted sort of a new field and a new challenge rather than trying to continue leveling up my programming skills. Getting to start those businesses and run those businesses was perfect for me.
After a handful of years at that, it started to get a little too same-y. I’ve always, my whole life, thrived when I am pushing myself into different situations, especially with this deep learning curve. That’s when I’m happiest, when my pace of improvement is noticeable and I’m getting better at something all the time. I felt like I had run a lot of the experience and knowledge out of what I could do at ThoughtBot. I felt like I need to make some sort of change.
Honestly, I didn’t know fully what I wanted to do when I left, but I knew it was about time to try it. I talked to a bunch of people first, you included, Rob, and just said, “Hey, here’s roughly what I’m thinking, here’s my financial situation, here’s my background, here’s what I might work on. Am I crazy?” Pretty much everyone said no, you’re not crazy, this seems pretty reasonable. I decided to go for it.
After spending some time thinking about what my first effort might be, I decided to build a course. I ended up after my time at ThoughtBot with a lot of Ruby On Rails knowledge in particular about how to write good Rails apps. The first thing I’m working on is a course called Refactoring Rails which is targeted at people that have been working on a Rails app for maybe a couple years and started to see the pace of development slow down. This pretty much always happens, it’s almost impossible to not slow down. But there are a number of specific, tactical things you can do, changes you can make to your app, and features you can use or not use that will help make that slow down minimal.
My days mostly right now are cranking out videos. I plan out a video, and then record it, and edit it, and send it out to my list, and repeat.
Rob: So you’ve gone from hosting a podcast and writing code and marketing SaaS apps to recording videos and pushing them out. Is the work as fulfilling, is it more fulfilling, what is that?
Ben: I would say it’s not quite as fulfilling. I do miss programming, and there is a little bit of programming. The videos I’m recording are actually me writing code live and showing how I would refactor things. There is a coding component to it. I’m finding myself more and more missing that deep work of focusing on a programming problem for a whole day and just having the time race by. I find it harder to get into flow when I’m doing tasks like editing video or planning out a video. I think the results of this course might be that I want to get back into some sort of programming things.
Rob: Yeah, I could see that. Derrick, you and I talk frequently enough about the importance of allowing our developers on the Drip team to get into that deep workflow state. That’s something that I know you talk about the dopamine rush for you has always been pushing features into production, but I also know that part of your job that you have loved the most is being able to put the headphones on, sip the latte, and get into the deep zone and get a lot of code cranked out.
Derrick: Yeah, I think that’s the creative muscle that you’re getting to exercise. When you’re a developer, that’s like your natural form of creative expression. It’s hard to not have that as a certain element of your day to day. I don’t think it has to be 100% of it, but I feel like for me, it would always have to be a percentage I feel like, for me to feel like I’m exercising that muscle.
Rob: That makes sense. Do you feel like—maybe not the last couple weeks, because I know that you’re out of town last week, I was out of town a week before. I’m sure there’s a lot of stuff going on. Over the past three to four months as our team has grown up to when we were acquired a year ago we were at 3 engineers and I think we’re at 10 at this point. You have a lot more managerial roles, technical lead roles. Your role has expanded, I’ll put it that way. Do you feel like over the past three or four months, you’ve still been able to have moments where you do get in flow?
Derrick: There’s been moments for sure. It’s been less than it used to be, definitely. I will also say that I get a lot of satisfaction off of working with one of the team members, pair programming, I’m talking about that a fair amount on Art Of Product. It’s like being one of the developer and we’re working through a hard problem, and even if I’m not writing a lot of code there, I’m just doing more of the thinking, the thought process of solving a problem. That also tends to give me the same rush.
Just watching some team members be successful at balancing between the designers and the JavaScript engineers and seeing that whole machine work and knowing that I can push things in the right direction at various points to keep people unblocked. That definitely gives me some of that satisfaction as well. It’s a different kind of satisfaction, I think, and it’s hard to compare it to that true flow state.
Rob: Yeah, I totally agree. I had to make that transition as well several years ago because I basically stopped writing production code the day you locked me out of the repo.
Derrick: Oh yeah.
Rob: Code chains that I tried to make that Derrick rejected. I still miss it. I don’t regret the decision that I made to transition away from coding full time, but I absolutely miss those so many days when you can just, as Ben said, the day goes so fast because you’ll look up and you haven’t eaten lunch and you’re four hours past the time.
Anyways, transitioning back, Ben, off on a tangent a little bit. You were talking about your transition and that the work itself is a little less fulfilling right now. How has it been, I know one of the concerns you have that you voiced on The Art Of Product was that you were concerned you’d be isolated or feel isolated because you are an extrovert and you get motivated by being around people and being on a team. Do you find that you did feel isolated, and then how have you combated that?
Ben: Yeah, I definitely felt it. That was one of the things that came up in those early days. I was expecting that part to be hard because I know I’m an extrovert, but it was even harder than I thought it would be. The good news is I found some coping strategies that worked pretty well for me.
I quickly got a coworking space. Going to a place where other people are working and I can just chat with people even while I’m filling up my water makes a pretty big difference. It’s little things, it’s small interactions. I wouldn’t say I have any deep, new friendships at the co-working space. It’s just those little things like someone to grab lunch with, someone to get coffee with, someone to say hi to that really just energizes me in a deep way.
That helped. I wouldn’t say I’ve solved it by any means. When I’m recording video and editing it, I need to do that in a quiet space that has to be away from everybody else. Even when I’m planning out an episode, it’s a lot of deep work of writing and focus.
The co-working space has kind of worked as a hack. At the end of the day, no one’s on my team, it’s just me doing this effort and I’m the only one paying attention to it in a certain way. I wouldn’t say I’ve solved it, I think I’m still very much a team person. I like working on stuff with people. I’ve gotten some of that social interaction squared away and that’s helping, but I still feel at times a bit of a yearning for other people to care about what I’m doing and to be doing things with a group.
Rob: I think that’s a good point.
Derrick, you and I have talked. In the past, I know at one point you were a single founder and wanted to be the solo-preneur and run a small lifestyle business. After we started working together, we found the partnership to work so well. Then, we grew a team and we enjoyed working with our original team and now obviously the folks we’ve hired. How has your thinking changed, or has it changed on that whole running a company on your own versus more of what Ben’s talking about which is getting energy from the team? In future efforts, assuming you move on at some point to do another project, do you think that you’ll want to be solo or do you think you’ll want to have a team around you?
Derrick: That’s really interesting. I think it definitely has morphed my thinking about it. I feel like four or five years ago, I was all about how much can I do as one solo person, how many hats can I wear in the most strategic way so that I’m just captain of my own destiny, one person going solo. My feelings about that are definitely changed. Our collaboration with Drip, with working with the core team. It’s fun to grow the team and see the full actualization of Drip at a larger scale, but I still look fondly back at the days where it was a core team of five or six of us sitting in an office together.
That was really, I feel like, the sweet spot of working with a small enough team where you can all be in a room together, you can all bat around ideas. You have a lot of people on the team who are cross functional. Anna in customer success is doing a call, and then throws an idea across the room, and the developers are both sitting there and we kind of hash stuff out and get on a white board. Those kind of interactions are gold. It’s hard to imagine not at least having a small team like that with a future endeavor at some point. It may start out solo but yeah, I couldn’t imagine trying to wear all the hats and do everything on my own.
Rob: I think back to when I was working full time for the people. It’s funny because Ben’s insight into himself of needing other people around him obviously shows that, Ben, you know yourself pretty well. When I was leaving full time work, I was the exact opposite in the sense that I knew I didn’t want to be around people. The thing that I looked forward to most was going and working in my bedroom and never talking to anyone. I’m an introvert, it shows difference of personalities that even two software developers can have.
I think you don’t necessary fit the mold of the software developer who wants to go to their basement and code, you seem to really straddle multiple worlds, I think, with the extrovert and the personality and the ability to speak very well from stage as well as also having mad code shops.
Ben: I appreciate that. I’m not sure why that is, I guess I’ve just always enjoyed [00:21:21] skills. Since I enjoyed this deep part of the learning curve, I want to not just get really good at code and then keep getting better at programming, I want to be good at programming and then I want to learn how to speak in front of people and I want to learn how to run a business, and I want to learn how to market.
I think over a long time of doing all this, I’ve put together a handful of skills that you maybe don’t see in one person. I think maybe that’s the exception, people tend to focus on a thing and be like hey, I’m really good at this, I’m going to double down on this. Whereas I’m like hey I’m okay at this, I’d like to pick up a couple more skills that I’m okay at.
Rob: That makes sense. We’re going to do over, under here. I’m going to say ten years and both of you are going to say answer this.
Ten years, will you still be committing code to a production repo that people are using? Or, you can still work on a software company or be running a software company or whatever but ten years over, or under?
Ben: That’s a fascinating question.
Rob: I hate to put you on the spot. I was just thinking out loud. I just think it’s a fascinating thing to think about.
Ben: My guess is I still will be. There’s only been a handful of things that I have found so fascinating that they’ve retained my interest over a super long time. Programming has been one of them. I’d be kind of surprised to see that change. I think we’re at a renaissance of writing code for money and to provide value to businesses and things like that. I feel like this industry is only going to get more interesting. I think if I had to guess, it’s going to hold my interest and I’m going to want to still be making stuff directly.
Rob: So we get an over from Ben. How about you, Derrick?
Derrick: It’s an over for me as well. I feel pretty strongly, and I feel like this is not a hypothesis that I’ve totally tested. I feel like it is possible to still be the captain of a company, CEO as you may call them, and still be a person who contributes code. A traditional trend that you see is people starting out as a developer, writing the code, and then walking away from the code so that they can focus on the rest of the business aspect.
I think that is certainly one path you can take, but I feel like there is a secondary path where it’s like instead of totally giving up the code and focusing on marketing or what that other side of the business, I feel like you can still be a technical CEO founder and ultimately hire or get this through a co-founder, the marketing side of the business. I feel like you can flip that on its head so you don’t have to totally walk away from the code. I’m at least hoping that that’s a model that works because it’s hard to picture myself not actually being involved in code at all, I still can’t picture that that would look like.
Ben: Yeah, I have a quick anecdote that supports that. Six years ago, I went to interview at ThoughtBot and I was supposed to talk to the CEO. He’s like, “I’ll be with you in one second, I just want to get this test passing.” That had such an impact on me. I was like oh, I’m definitely going to work here. That is such a good sign. When the CEO is still doing technical work, he’s still technical but even more importantly, it means he understands what the life of being a developer is still. There’s no disconnect there, and that was awesome.
Also recently, Alex MacCaw who’s the CEO of Clearbit which is a company that I respect like crazy. I reached out to him on Twitter and said, “Hey, are you still writing any code for Clearbit?” He said, “Yeah, I wrote the feature that we’re shipping tomorrow.” It’s totally possible and I think it’s a workable model.
Rob: Mad props. Peter from Teamwork, he’s the co-founder. He still commits code to the repo and they’re over 100 employees now. They do about $15 million ARR or something like that, their SaaS app. I know there are folks out there that are doing that.
Ben: Yeah, so we’re both overs. Does that mean we shouldn’t start a company together, Derrick?
Rob: I think your skill sets may not be complementary, there’s a lot of overlap.
Ben: Rob, what do you think about that? Do you think, if I was like hey, I wanna get really serious about growing a SaaS company, is giving up the code something that I should consider?
Rob: It depends on what you mean by really serious. If you want to build a deck of million ARR SaaS company, I do think it would be something that I would consider. I think it would be the most efficient way to get there, just because coding at a certain point would become a distraction. It’s so hard.
If you’re going to head up a company, you become interrupt driven because you have to drop everything when people Slack you. I just can’t imagine enjoying coding. You can probably still get some code written, I just can’t imagine enjoying that when people are pinging me on Slack because they need an answer or stuff’s going to fall over in the next hour.
Ben: If I wanted to pair up with somebody, I would either be looking for someone technical to head up the technical stuff or the other stuff to head up that side. In your mind, is finding the technical co-founder an easier thing to do than the opposite?
Rob: Boy. I think for you, since you could do either but you enjoy the code more, my opinion would be that you should be able to find someone to do operational stuff. Since you would be so opinionated about the code in a good way if you’re running it, but in a bad way if your co-founder is running that. You could imagine the arguments or the disagreements that emerge from that.
Personally, I think if you do still want to stay in the code, I don’t think that’s a terrible choice if you can find somebody who can be the operations person. Hopefully, I think as Derrick and I found, hopefully someone who may be used to be a developer and doesn’t want to write code anymore and does want to walk away.
I feel like part of the power of Derrick and I’s partnership is that I am technical enough. I wrote production code four or five years ago. We still can have really in depth conversations, especially in the early days when it was just the two of us and he could talk to me about detailed stuff you can’t talk to a non-technical person about. I feel like that might be, just seeing Derrick and I’s model work, that might be the perfect fit for you.
Derrick: Yeah, I think you and I overlap in all the right ways. I care about the business side and I actually want to be involved in the business strategy conversations, but my main focus is the code. LIkewise, you’re predominantly thinking about product and operational type of stuff for the team but we can sit down and hash out like alright, here’s what I’m thinking for this architectural piece. We talk stuff through, and those are usually productive conversations as well. I feel like we both step into each other’s territory but not in a harmful way or clashing way, but just in a very complementary way.
Rob: Yeah, I think we’ve had conversations where if we do wind up, we both have opinions on all the areas of a company or the product. If we wind up disagreeing about something, I will absolutely be like this is a technical decision and it’s yours. I step away and I don’t feel like I have any more insight into it. I feel like I have a lot less insight into it and that Derrick has the ownership and the responsibility of it.
Derrick, we’ve covered Ben’s transition away from full time work to independence. Just about a year ago, I guess it was about 13 months ago, you and I sold Drip to LeadPages. Month or two later, we moved to Minneapolis. What’s new in your life?
Derrick: Obviously, moving is a big step for me. I never lived outside of the town that I was born and raised in. I’ve been taking this as an opportunity to experience something new. I definitely don’t regret the decision. Minneapolis is an awesome city, we’ve been getting to enjoy everything that comes with living in a really world class city, that’s been a great experience. Also, just joining a company of 180 people has been great learning experience too.
Most of my work experience prior to that has been at small companies, so I was at a small family business in college that I worked at part time where it’s just a few of us in an office, and then obviously Drip grew to 10 people. To be part of a large organization is a fascinating experience to observe and see how things operate and see how many of the things that we figured out along the way actually translate well into a large organization. Yeah, it’s been a fun ride.
Rob: What do you think has been the hardest thing about the transition for you personally or professionally?
Derrick: I think the biggest struggle is probably all aspects of scaling the company. The technical side, we’ve been dealing with quite a bit of database issues and queue issues. These are all things that come with the territory of growing the business like this. When you’re acquired and now you suddenly have thousands more trials than you had before, these are all things that are naturally going to happen.
It’s been, I would say, a period of very aggressive learning where you have to be on the ball all the time of looking around the corner for the next scaling challenge. It’s been pretty exhausting, I’ll say. I think I felt that recently, and the vacation I took this last week has helped me. I think I need to do a little more of that because it’s been a pretty intense year of just learning and working through scaling challenges.
Also, growing a team. We now have a development team of ten folks. We’re very picky in our hiring. The hiring process was pretty long to get the team out to where it is today. Just figuring out how to scale myself and de-couple myself from processes where I normally had been previously deeply involved in has been a challenge, but a good challenge. It’s good to see the team start to take responsibility for things that I normally would’ve been squarely on my shoulders.
Rob: Yeah, I would agree. I think that’s been the hardest part. Moving to a 180 person company when we first moved here, coming back to the conversation earlier about introvert versus extrovert, it is interesting that although I am introverted, when I wanted to go solo or go out on my own I didn’t want to work with a bunch of other people. But by that time that we had grown Drip, I really enjoyed working with you guys. I moved here and I was the only one from the Drip team just sitting in the corner on my own and that felt super lonely and isolating. As you one by one started showing up, it was like oh, this feels so much better. It’s good to have the team around.
Mixing things up a little bit. Ben, I wanted to come back to the course you’re working on. You mentioned your video course, is it Refactoring Rails?
Ben: Yes, that’s right.
Rob: I’m sure there’s some folks listening to this episode that want to learn more about it, potentially check out, maybe you could give away a couple of the videos so people could hear about it. Where is that, what URL?
Ben: refactoringrails.io.
Rob: Cool. You’ve been working on that for a couple months? Are you releasing that as you go, or is that a launch day coming up?
Ben: I’ve been releasing samples. I have 4 videos done out of what I expect to be about 10. Making progress, chipping away. Every time I finish one, I send out either the whole thing or part of it to the people that are on the launch list. It’s been dripping out steadily.
Rob: Very cool. refactoringrails.io. You’re using Drip for that launch list, am I right?
Ben: 100%.
Rob: Alright.
Ben: After most of Art Of Product episodes, I get free tech support from Derrick.
Rob: Totally.
Derrick: If you want a main line to the co-founder of Drip, you just got to start with our podcast.
Ben: I have a quick question for you, Rob. Actually, speaking of free tech support, this is actually free marketing support. I believe, by default, when I make a campaign in Drip, it has this option checked so it will only send emails to people in their local timezone at 11:00AM or something like that. I’m not sure if that’s a default but I have it checked on one of my campaigns. Would you call that the best practice? Is that typically going to give good results, or do I need to not worry about that?
Rob: I would say yes, it is the best practice in terms of all the split tests and experiments I’ve done over the years. That’s kind of a default. It depends on what time is on your end. If you’re on the East Coast, you don’t want it to be too early for people on Pacific, so I would tend to go a little later, maybe around 11:00AM, between 10:00AM and noon, probably. Whereas if I’m on Pacific, I might go a little earlier.
But to be honest, if you’re one or two hours or three hours off, you’re going to see very small difference. At our scale, meaning thousands or tens of thousands of people on the list, it kind of doesn’t matter. I wouldn’t be super worried about it. You can, of course, run the split testing in Drip and you can test that out on your audience but I bet you probably either wouldn’t have enough clicks to actually get a statistically significant answer or it would just be so similar if you tried 11:00AM versus 1:00PM or something.
Ben: That’s kind of what I figured. It kind of comes down to almost just my impatience. I’ll finish a thing on Friday at 3:00PM, and I’m like ah, no one’s going to get this until Monday at 11:00AM, I want the feedback faster.
Rob: You can try sending a broadcast right when you get it done Friday at 3:00PM and just do a poor man’s split test. You know your historical, you can look at all your opens and all your click rates, just try it once and see if it tanks.
I know that accidentally one time, this is pre-Drip, I was in Mail Chimp and I scheduled something. Instead of 10:00AM, I scheduled 10:00PM. It was not good. It was buried in people’s inboxes. When they went to delete, it wasn’t near the top as they were working. I remember the open rate being substantially less. I ran a couple other experiments where I sent at an odd time and sometimes it hurts and sometimes it doesn’t matter. I think generally, during the day for a work audience is pretty good.
I ran a job website at one point. It was Sunday. Everyone thinks about applying for jobs on Sundays because they hate their jobs. There would be this big spike in traffic and that’s where these emails would get the most traction.
Ben: Makes sense.
Rob: That’s it, cool. refactoringrails.io. Derrick, you have a blog at scalingsaas.net that you don’t update very often, is that right?
Derrick: I’m going to correct you, scalingsaas.com.
Rob: Oh that’s right, you got the .com.
Derrick: Yes, I wanted to blog more than I actually have which is why podcasting has been a good medium for me. But I do occasionally crank out a post here or there. scalingsaas.com, you can follow me in text there.
Rob: Sounds good. Gentlemen, thanks again for coming on the show. If folks want to hear more from you, they can head over to The Art Of Product podcast.
Ben: Thanks for having us.
Rob: Absolutely, my pleasure. That wraps us up for today.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. You can subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript. Thanks for listening, we’ll see you next time.
Episode 353 | Noah Kagan’s Post-Launch Advice for Bluetick
Show Notes
In this episode of Startups For The Rest Of Us, Mike and Noah Kagan of AppSumo, talk about the evolution of Bluetick. Mike discusses how the idea came about, development, and issues faced along the way. Noah provides some post launch marketing advice and tactics.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For the Rest of Us, I’m going to be talking to Noah Kagan about Bluetick marketing tactics. This is Startups For the Rest of Us, episode 353. 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, you got to say, “And I’m Noah.”
Noah: What’s up, man? I’m Noah.
Mike: We’re here to share experiences to help people who made the same mistakes we’ve made. What’s going on this week, Noah?
Noah: This week, I’m doing marketing. That’s kind of what I’ve been thinking about with our sumo.com business, just who’s the customer, where are they, what kind of plan can we put in place to help reach out to them.
Mike: Awesome.
For the listener who may not be familiar with Noah Kagan, he’s the founder of AppSumo and sumo.com. They offer a variety of free tools for small businesses. You put a little JavaScript snippet on your website and essentially you end up with a suite of tools that helps you build your email list, promote it, get people into your sales funnel, and really just manage a lot of the online marketing that you do. Is that an accurate ballpark assessment of that?
Noah: Yeah. Our whole company’s purpose is we help the small dudes or the little guys become sumos. We have two businesses, one’s AppSumo which is a GroupOn for geeks, and sumo.com which is the tools for people to be able to promote themselves, mostly around growing their mailing list and growing their customer base.
Mike: Awesome. Today, we were going to dive into Bluetick. I just launched it a couple of days ago, I think this episode will go out actually a week or two later. I wanted to talk to you a little bit about it just because you’ve got a knack for all things marketing, to be perfectly honest. You’ve done a lot of different work with some very high profile companies like Mint and Facebook, especially in the early days of those companies.
I wanted to talk to you a little bit about if you were running Bluetick based on where it is today, what would you do and how would you approach things moving forward? Take that not only for my own selfish purposes to use that moving forward, but also to illustrate to the listener what sorts of things are possible and what sorts of things they should be looking at when they’re trying to get their product out the door right after they launch.
Noah: Totally. I don’t know how much you shared with your audience on the podcast, maybe you want to give a little bit of a background for possibly new listeners or to anyone who haven’t heard about Bluetick yet?
Mike: Sure. Bluetick is a warm and cold email follow up tool. The basic idea is that if there are certain points in your sales funnel that you know where you typically have to reach out to somebody more than once to get them to do something, whether that’s to reply or to fill out a form, or to submit information, something along those lines, then you put them into this email sequence. It will email them. If they don’t perform that action, it will email them again. It will keep emailing them again until it either runs out of emails to send or the person does that. You can have them pulled out of the email sequence, put into a different one.
It integrates with Zapier. People use it for integrating into a variety of tools like Asana and various CRMs to help them move people through so that they don’t have to do it manually. Otherwise, you have to copy from spreadsheets and things like that. It’s a pain in the neck to track of how many emails you’ve sent to each person and how far down in the email sequence they are.
Noah: How did it come to where it is today? Were you on the toilet and you’re like, “Hey, I really am tired of doing follow-ups. I need to go build software because I’m a smart developer.” How long did it take? I’m curious more of where the problem and the creation came from.
Mike: You were actually one of the first speakers at MicroConf back in 2011.
Noah: I thought you were going to say I was one of the first speakers to never be invited back, which that is true. I’m still waiting for my invite.
Mike: The hot sauce incident, I think that’s what did it. There was hot sauce 12 ft up in the wall.
Noah: [00:03:49] incident, it will not be talked about.
Mike: There was a no hot sauce rule after that. Disregarding that, when Rob and I were running MicroConf, he typically handles a lot of the speaker side of things and I handle the sponsor side of things. What I found was that when I was emailing sponsors to see if they were interested in sponsoring MicroConf, what would happen is I would send somebody an email and they wouldn’t respond. I would have to send them another one and possibly two or three more.
At some point along the way, they would reply. Usually, these were sometimes warm contacts, sometimes they were cold contacts. In most cases, because my email fell much lower on their priority list, they didn’t necessarily see it as necessary to respond right away. Of course, there’s good intentions there. “Oh, yeah, I’ll get to this. I don’t have time right now because everything else gets in the way.”
I would find myself emailing them two, three times, four times, over the course of a week or two, or three weeks, something like that. I found myself saying the exact same things to them over and over. I had the idea that there could be a piece of software out there that would do this for me.
I know exactly what the second, third, and fourth emails are going to be. The first ones are usually customized, Bluetick allows you to do exactly that. But those followup emails are all heavily driven from a template. They’re pretty much automatic. It’s really just to kind of get a response from somebody and help move the conversation forward.
Noah: So you had the idea, you’ve had these problems with these guys. I’m just curious, these are the things I’m thinking about. How did you go from that to saying, “Alright, I’m gonna build a software around that.”
Mike: I started doing a little bit of validation around it. My thought was oh, I could sell this to other conference planners and event planners. What I did was I looked into it, tried to figure out what a pricing model would look like, and realize that unless you ran a lot of conferences on a very regular basis, then you probably wouldn’t use the software.
Just because the pricing model didn’t really work out in terms of finances for me. If I charged a couple hundred dollars, it’s a little bit of a tougher sell than if I were to charge $50 a month for it. But if I’m only charging $50 a month, how many times are they actually going to pay me? It maybe two or three because they’re doing sponsorships for a couple of months leading up to the conference, and then they don’t need it for the rest of the year.
I tried doing the validation for a while and then I said this just isn’t going to go anywhere. And then fast forward a few years, I kind of came back to it and said well, there’s actually a lot of other situations that this applies to. Following up a consulting services company where they’ve got a proposal out to somebody, or they’re just trying to get the conversation started, or they’re just trying to find the right person to talk to. Those are all situations where this type of tool applies. But initially, I was looking at the wrong type of buyer for it. The right solution, wrong target person.
Noah: Who were you hitting up originally?
Mike: When I was first trying to figure out who to go after, I was looking at event planners and conference coordinators because I knew what that looked like. Right now, what I’m looking more at is services companies, anyone who has a price point that’s probably above $2,000 but less than $10,000. It’s well worth your time and effort to follow up with those people, but a lot of people don’t just because they either feel bad or they don’t want to go through that emotional hassle of sending that second, third, or fourth email.
I’ve got lots of data that shows me if you send that first email, yes you may get a 30%, 40% response rate, but if you send four or five, your response rate can increase dramatically to 70% or 80%.
Noah: That is really interesting. I found the same thing. I’ve used a similar tool. What was shocking for me is 50% of my replies to people came on the second email. It was like oh wow. It’s one of these things where most people I’m sure, Mike, you get a bunch of emails and a lot of people get a bunch of emails. You delete them. If it’s really important, people will follow up. If it’s something that’s important, the data actually really shows that.
Did you go and just build this right away or did you sell a bunch of them and get customers before you made it? How did that go?
Mike: What I did was I created this little explainer video. It was about a minute and a half long. I sent it to a handful of people in my network who I thought would have this particular problem and ask them, “Hey, is this a problem that you have? If so, are you willing to talk to me about it? I think I have a solution that would solve it.”
I got probably about a dozen conversations out of that fairly quickly, out of about 20 to 30 people that I send it to. I had those conversations. That was the initial discussion. I would ask them, “Is this something that you would pay for?” Most of them said yes. Once I got to the point where I had 12 people who said yes I would pay for this, then I sat down and I created balsamic mockups of what the application was going to look like, how it was going to work.
And then I went back to those people a month later and said, “This is what it will be, what do you think?” Then walked them through everything, gave them a “demo” of the product using those mockups. And then I asked them for a credit card, for a pre-payment. People gave me anywhere between a one month to three months pre-payment, I let them choose how much they were going to pay which helps me figure out what the price point was going to be. If that would make sense for me—if it was going to be $5 a month, I didn’t want to deal with it. But if it was $50 or $100, that’s reasonable.
After going through that, I ended up with about 15 or so people that gave me pre-payments, anywhere between one and three months, and anywhere between $40 and $100. I ended up with close to $2,000 worth of pre-payments.
Noah: Dude, go you. That is awesome. I think most people do it backwards. Build, build, build, hopefully someone comes. You’re like let’s see if people buy. I think one thing that’s a good thing for your audience to think about and it’s a good reminder for myself is that you had people already that you could reach out to. Either you had a mailing list or you had some audience or you had some type of network. I think most people do that way too late.
One of my favorite silly examples is people want to eat vegetables so they go like they have a garden. They dig a hole, plant a seed, and then they try to eat the seed the next day. I’m like obviously you have to water it, wait, and nurture it. I think you did a really interesting job where you’ve been doing this over a year so it made it easier for you to go validate this type of business idea. For people out there, go start a mailing list, go start a website, go start joining Facebook groups, go to conferences like MicroConf or whatever that is. It’s just a really good thing.
One thing I’m curious is who are the people that pre-pay? I think that’s amazing. What were they really excited about?
Mike: Most of them were services companies who wanted to get somebody into their sales pipeline or wanted to get somebody to a meeting so that they can have a call and talk to them. The issue that they had was that they would send somebody an email and say, “Hey, can we hop on a call?” The person wouldn’t respond, or they’d send them the link to their Calendly, youcanbook.me, or whatever that they were using. They’d suggest a couple of times and the person wouldn’t do it. Then, they would have to go back and follow up with them.
I built Bluetick in such a way that you can send them that link and it will send and inject data into the query string for that. So that when they click on it, they schedule a time, it closes the loop so that you don’t have to go back and pull the person out of the email sequence, it’s all done automatically for you. It tracks that on the backend so you can check what is your conversion rates and things like that on those emails that you sent, which one was the most effective, and it really just helps automate that whole process so that you don’t have to do anything beyond that first email. You just set it and by the time that person gets to that end of the sequence, the email has done its job.
Noah: You sold $2,000 worth to people, most of them wanted it for sales. What did you do next?
Mike: After that, I sat down and hired a couple of developers to help me build it. Spent about four months or so doing that. Then, probably two or three months after that trying to work through very early issues with customers, trying to figure out is this going to work for you, how does it work in your business, and just trying to get them to use it.
I ended up taking my entire development team that I hired, fired them all because everything behind it was really just not very good. I spent about six months re-architecting a bunch of things. At that point, probably around November this past year, that’s when I added my first customer who started paying on a monthly basis. Since then, I’ve been adding customers over the course of the past six, seven months or so. Right now, it’s sitting at around 20 to 25 active customers, and around $1,100 to $1,200 MRR.
Noah: Hold on, dude. That was crazy. What happened? You’re working with these guys or girls, and then you fired them after?
Mike: Basically. It was a team of three people, and they didn’t know each other. It’s just three independent contractors. I tried to position to them like hey, one of you needs to take the lead and step up and do this particular role and manage stuff. None of them really wanted to do it because it was all off of Upwork, they’ve never worked together before. In terms of management, I was trying to hand that off to them so that I could focus on customer stuff. It fell apart.
I blame myself for it because I didn’t necessarily give them as much guidance in terms of the design and engineering upfront as I probably needed to. My expectations were probably too high for them.
Noah: How would you do that differently? It’s funny, in the past six months as I’ve been doing more personal stuff, I was building some recruiting software. I used actually the Pakistani in the outsourced team that helped me build AppSumo seven years ago. Man, it was a freaking struggle. “Alright, cool, we’ll do those features.” Then they come back with the features and I’m like this is not even close to what I exactly told you guys to do and I showed you what to do.
I’m curious, how would you better communicate, hire a better team, how would you do that next time you build something?
Mike: I think that the design itself really needs to have more details or more screencasts or walk throughs with me explaining things. One of the things that I did was I would give them a document that says, “Hey, this is what it’s supposed to do.” It’s really dry and boring to look at those things. Even if you have things on the screen, it doesn’t necessarily lend itself to everybody on the team doing things in the same way.
If you have three different people who are tasked with building three different areas of the application, you still need somebody to coordinate between them to help understand, “This is the style we’re going to use, this is how we’re going to do paging and sorting,” things like that. There’s a lot of backend stuff that was just an absolute mess. It was implemented completely differently from one page to the next.
From the end user standpoint, the app barely works. It was because of all those issues. There wasn’t enough focus, I’d say, on letting them know about areas where they really need to be concerned about, which were things like you can’t just assume that you’re going to get ten records here, you might get hundreds or thousands of records, or even hundreds of thousands.
The replaces in the app where it just wasn’t scalable in any way, shape, or form and it would fall apart once you started using it. That’s what a lot of the reengineering effort was focused on.
Noah: That’s actually interesting. How much did that cost you to begin with, and then how long did it take once you took it back over to just finish it?
Mike: I’d have to go back and look but I don’t think it was more than probably $15,000 or so to have them work on it, between the three and six months that they worked on it. Most of them were working on it part-time. I don’t think it was more than $15,000.
Noah: Then how much was the new version?
Mike: The reengineered version, I did all that work myself. It took like six months to do it.
Noah: If you could go back, it sounds like ten months plus some of the validation. A year, give or take. What do you think would’ve been an alternative to get it out sooner? If you had to start this all over tomorrow, what would you do?
Mike: I’d probably stub out certain parts of the code base myself so that it’s clear how to do certain things or clear how to manage certain types of problems. There’s typical things you would do in an app like security controls, team accounts, and things like that. You really need to have those types of designs engineered upfront. If you don’t, then you’d have to figure out what to do with them later.
But there’s also that trade-off that you have to think about. Are you going to over engineer upfront to make sure that you get it right, or are you just going to slap something together and put it out there and see if it works and if it resonates with people and then re-do it afterwards so that you don’t figure out later on if you’re making a mistake? I think it depends a lot on how much money you have to spend on it and how much time, versus how quickly do you want to get to market and make the mistakes.
Are you okay with prototyping certain parts of your app, for example? Are you okay with prototyping the whole thing and throwing it away once you’ve validated that the idea’s going to fly? It depends on where in that spectrum you fall.
Noah: Where do you think most people make mistakes around that?
Mike: I’d say that people spend probably too much time building the app as opposed to putting it in front of people.
I had something that was barely functional in front of people in about four months. I realized early on where the problems were, why they weren’t using it, and what sorts of issues they were running into that made them not want to use it. That was helpful in that I got there quick, but at the same time those types of problems took a long time to solve partially because I wasn’t familiar with some of the technologies. Using a stack that I was probably more familiar with would’ve been a little bit better, but I can’t really do anything about it at this point.
Noah: One thing that I’m considering, and then we can get into the marketing plan about how to scale this out, cause I actually use a competitor tool, we could talk about that as well. If you couldn’t have built any software, you’re an engineer so you’re obviously very smart. Engineers are smarter than everyone else. If you couldn’t build a software, how would you have done the software and how would you have just done the service without the software?
I think what people miss a lot of the time, they’re like oh, software as a service, it’s just a SaaS recurring revenue. They don’t know that SaaS means you’re doing a software that’s replacing a service. I think that’s really critical that people just jump to the software. I’m like do the service a few times. In most businesses, you can actually implement ghetto versions of it to see if it’s something valuable for people before you go out and build software.
Mike: Yeah, I think for this, to figure out whether or not that was an idea that would fly, like in terms of the validation piece of it, to see if the process itself works. If you didn’t know that the process worked, then you could probably just create your own email account or ask somebody, “Hey, can you create a mailbox on your domain? I will send the emails for you.” When people get replies, then I will shoot it over to you unless you take over the conversation. You could do that, that would probably be the easiest way.
Noah: Dude, that’s a great idea.
Mike: If you don’t know how to code, if you don’t know how to do anything like that, you basically have to say how can I insert myself in here to do what a computer would do?
Noah: Dude, I love it. I’m just going to repeat it cause it’s so good. You’re like, “Hey, just give me access to your inbox or give me a separate account. I’ll even write the emails,” and you do it for them and then they’re like oh shit, this is working. Then, you could actually go build software.
Mike: Yup. I think that would work if you didn’t know anything about it or if you weren’t technical. I think in my case, I had done some of that early validation because I was doing this exact same process for MicroConf sponsors and I basically just took that process and implemented it as a piece of software. I think it depends on the type of problem you’re going to solve, whether or not that specific solution will work. But I don’t see any reason why if you’re going to build software that solves problem X, you can’t just do it manually until you can program a computer to do it.
Noah: Yeah, that makes a lot of sense. You finally got it built six months later because you took over, you did it yourself. I’m curious for the people who aren’t technical, a lot of MicroConfs and your listeners are, but for the non-technical, how would they find someone to build it? Let’s say they validated it. Where would you go?
Mike: I started out with Upwork. I think that they combined with freelancer.com or something like that, I forget what the other one was. There’s also weworkremotely.com. The issue you find though is that the better developers, you have to pay more money. If you’re operating as a bootstrapped business or running it on the side, then you have this constant challenge or balance that you’re trying to strike between paying somebody to develop something versus either doing stuff yourself or paying somebody who is a lower cost so that you’re not burning through your runway as quickly. Cool?
Noah: Any of those different types of services, does Fiverr have any development?
Mike: Ah, I don’t know. I’ve never looked on there. Maybe they do, but my guess is that it’s probably very certain problems.
Noah: That’s fair. You finally build it and you give it to these people. What do they say? They’ve been waiting for it.
Mike: Depends on where you are in the timeline. After the four to five month mark, I count from January or 2016, because that’s when I broke ground on code. And then in April or May is around when MicroConf was, and right after that I came back and I started putting it in front of people. It really just wasn’t ready.
I had a hard time getting people to use it, I created accounts for them and they just really wouldn’t use it. I spent several months trying to figure out why it was that people weren’t using it, what was it not doing for them. There were just a ton of issues here and there, basically throughout the entire app. A lot of it just needs to be re-architected. It took me six months to get it to the point where I was getting people to start using it and realized now this is at a point where I could actually sell it to people.
I actually took somebody from outside of that core group of people and said, “If you want access to this software, you’re going to get charged on day one.” I was still trying to on-board those people, but I had given carte blanche access to use the software or not until they were getting value out of it, that’s when I would start charging them. There wasn’t any real impetus for them to start using it because it was obviously putting something on their task list, because then they have to start using it.
But then if they start getting value out of it, then I’m going to start charging them. I didn’t really draw the line in the sand for them until probably four or five months ago.
Noah: Interesting. Now you finally got it out, you finally got most of the bugs fixed, let’s jump to the marketing thing. Let’s get to the meaty stuff where a lot of people say, “Hey, how do I get more people to find my product and buy my product and grow my business?” I think the missing part sometimes is do you have something people actually want? Do you ever wonder about that, or think about if this is something people actually wanted?
Mike: For this product, no. I think that’s actually an interesting question, the way you phrase it because I don’t think that most people, when they’re building something, even question whether or not people want it. I don’t think that they do. I don’t think I’ve ever questioned anything that I’ve ever built and said do people actually want this? You don’t know that or even really consider it until after you put it out there, and then people don’t buy it. You’re like, “Oh, do people really want this?” You’re not going to build something that you don’t think people want.
Noah: Yeah, we think that. I don’t think anyone tries to be like, “I can’t wait to build stuff that no one’s ever going to use.” You know what I mean? I generally don’t think that’s the case.
Mike: Exactly. That could just be self-delusion too. It’s not to say that that’s not a possibility, it just means that no, I never really seriously thought that, and I still don’t. But it doesn’t mean it’s not a fair question, objectively, do people care?
Noah: What was your plan to get it out there? This is where we can start going through the marketing plan stuff that we went over in your document.
Mike: There’s different stages that I would say the app needs to get to. There’s the early adopters or beta users, whatever you want to call them. That group of people needed to get on-boarded and start being successful with it. Then there’s this level where I feel like it needed to start getting a critical mass of 20 or 30 people before I can go public with it and start pushing it out to larger numbers of people. That’s where it is today.
Most of the people who are on there now have either been using it for several months or were part of the very early access group, or just heard about it through word of mouth. I’ve actually gotten a lot of referrals from people who have been using the software and then recommended it to somebody else and said, “Oh, you’re having problems with X? I was too. I switched over to Bluetick and those particular problems went away. I found a lot of success in asking specific people for referrals and getting into other people’s networks and leveraging those networks to add more people into Bluetick.
Noah: Referrals, and then did you pick a goal, did you pick a customer? How did you organize that at a high level?
Mike: With the referrals, a lot of them were people that I didn’t know. It wasn’t as if I necessarily had a particular goal in mind, it was just who do you know that has this particular type of problem, and then is Bluetick a good fit for solving that problem for them? Most of it boil down to doing a demo for them, talking to them about their problems, if there were ways to reengineer the software a little bit to fit that particular use case.
I found a couple of use cases that people have hit on, one is podcasters who want to get sponsors for their podcast. It’s funny that that has come up because several years ago, when I was first doing the early validation, I was looking at event coordinators and conferences. They just didn’t happen often enough, but podcasters record every week or every other week. There’s a much higher frequency, and they could actually use the software to do exactly what it was originally going to be for for event coordinators.
Noah: A few other things. It seems like one challenge you’re figuring out is who is the ideal target customer?
Mike: Yup, that’s absolutely true.
Noah: For me, I use Outreach, there’s Mixmax, there’s Boomerang, there’s FollowUp.cc, there’s a good amount of different people doing this. Even with sumo.com and AppSumo, there’s always competitors. I’ve never seen a business where there is not competitors, even people like Tesla. There’s a bunch of other car companies, and guess what, there’s public transportation, there’s biking and Uber. Sometimes, their biggest competitors don’t even realize.
I guess the thing for you and people out there is just not to get discouraged. That’s also advice for myself. There’s always some competitor.
I think that what I’m curious for you is who do you think your customer will end up being? Is it for SMBs that are small sales teams, is it the podcast marketing tool? I do think with the outreach and some of these guys, I think we’re paying $500 a month per person or something pretty crazy and you can’t just sign up for it, you have to have a demo and all this other stuff.
Mike: I have talked to people who have been using Outreach or switched away from Outreach. One of their biggest complaint was the fact that it costs so much per license. I talked to somebody a few weeks ago and they said that there were quoted $150 or $160 a month per person. Bluetick is only $50 a month per person and it does largely the same type of things. I’ve heard from people who have used various competitors that they had problems with them.
What I did early on when I was doing the validation was I focused in on those problems and said how can I avoid Bluetick having any of those problems? I worked really hard on the engineering side of things to make sure that those things don’t happen. For example, being able to add somebody into more than one email sequence at a time and recognize when they’re in one versus the other and pull them out of the correct one for example.
Another one is being able to make sure that the emails are not being missed. If a reply comes in, how do you guarantee that the software does not miss a reply? I do that by synchronizing the entire mailbox, which I don’t know of anyone else who does that. It’s basically brute forcing to make absolutely sure that does not happen. And there’s a few other little things here and there, but those are kind of the main pieces that I focused on because the people I talk to were generally unhappy with other options.
In many ways, I won’t say the target market is this but I feel like a good chunk of my early customers are probably going to come from people who are fed up with other products and are looking for a solution because of specific things that they run into.
Noah: We can go about how I like to think about marketing plans and some of the things I’d recommend for you to do.
How do you know which customer you’re going to finally be like let me hone in on this customer and this pricing?
Mike: That’s a good question. I don’t know what that looks like right now, that’s something I’m still trying to work out. I’ve shied away from honing in specifically on one particular use case or one particular type of customer so far because I don’t feel like I have enough customers who fit a given profile yet to be able to say I’m going to go in this direction.
My concern is really that the tool gets pegged for getting sponsors for podcasters, for example. I don’t want the tool to be pigeon-holed into something like that too early. I don’t know what the best customer looks like. Maybe that’s not even a valid concern, maybe I shouldn’t be worried about that.
Noah: I think you should, and I think that’s where you’re going to win. Winning means just making the business a lot easier. What I’ve been thinking about a lot in the past few weeks is called PPD. Who’s my person, what’s the price for them, and what’s my differentiator? Your PPD, I guess PDP or whatever way you want to organize it, for yourself is this is something that when I was doing marketing at Mint was probably one of the reasons that we did well. It obviously was not just me, there’s a bunch of people that made Mint.
What we did is we targeted people who read personal finance books. It was free. Your price is zero which is good, and then differentiator was it was free, and the people was very exact. It was like if you’re reading a personal finance blog, I want you. If you’re not reading personal finance blogs, I don’t care. The more that you can do that, and even commit to it for three months.
I think what I’ve noticed with marketing is that people don’t want to be very narrow because they’re going to lose out on customers. An example of that was yesterday I was talking to my friend who helps me with design work. He said, “Hey, the most lucrative customers are my web app and mobile app designs, but I get all these other businesses and I want money but I’m not making a bunch, so what do I do? It’s hard to say no to that.” I said great, more you’re saying no, the more it means you’re focused and you have the right customer. But find someone else that you can pass them off to and say hey, this is a great person for all these things you want, I’m this. In reality, he can get better at that skill and he could start charging more.
If you had two today, Mike, I’m curious, if you could only serve one person and you said for the next month, let’s just keep it really short, I’m only going to focus on this person. Who do you think that would be?
Mike: I would probably say the owner of a services company that has less than ten people in it. By ten people, I would say ten people total but probably two or three that are charged with doing the outreach efforts and marketing and sales for that business to help them build the business and build the relationships they need with their customers.
Noah: Let’s go with that, now we’ve got something. We’re doing service people who need more customers. Web design agencies, what’s an example of that?
Mike: Software development, web design. You could go so far as print design. Anyone where there’s a service based component where you typically have to talk to the customer in some way, shape, or form before you can really start working on them. Because of that, you end up with the type of business where you have multiple people involved in the creative process because you’ve got a sales rep or marketing person on the front end and they’re really doing business development, and then they hand off the business or the work to be done to somebody else, and then that person does it but they’re the ones getting compensated or the money is being generated for that consultant company based on their work. It’s not really that sales person upfront.
The price points for them tend to be higher. It may be a couple thousand dollars, maybe $3,000, $4,000, $5,000 a week, but it’s worth it for them to follow up with their customers. That’s really the key point that I found, the price point that they’re selling at has to be high enough for them to justify doing those outreach efforts. We talked about this earlier, the second, third, fourth emails, those are the ones that you also see a fairly high response rate.
If you can get to the point where you have a business if a lead is worth $4,000, $5,000, you only send them one or two emails, it’s probably not enough. You need to get to a point where you get an answer, you don’t want to send an email into a blackhole and just assume that they’re not interested. You have to follow up until you get an answer one way or the other, even if it’s no, you don’t care, you just want to know if that lead is dead.
Noah: You have that, and then what’s next? What’s next for you with that? I think sometimes when people ask for advice, this is why I tend to never give advice, is because we all have our own plans. You already have some kind of plan that you already want to do. I think when people are giving advice, just try to understand what people’s plans already are and see if you can assist that, that’s why I asked that before I tell you to go do all this stuff.
Mike: Yeah, I think the biggest question in my mind is how do I get in front of those people? It doesn’t even necessarily need to be at scale either. It’s how do I get in front of those people so that I can capture enough of their attention and enough of their interest to get the conversation going when they don’t know who I am, when they don’t know what Bluetick is or what it can do for them. Maybe they’re familiar with cold or warm emailing software and CRMs and sales funnels and things like that, but they aren’t necessarily looking specifically for these types of tools.
Noah: I am curious. How come you’re not targeting… MicroConf has how many people on their mailing list and you have so many on your mailing list. How many people are on that mailing list?
Mike: I’d say between them probably 8,000, 10,000, something like that.
Noah: Just out of curiosity, how come you didn’t focus on serving those people? Or tailoring this more to them?
Mike: I won’t say that I haven’t. Bluetick is my business, and then there’s also the Micropreneur Academy which under that umbrella you have the podcast and MicroConf and Founder Cafe. We don’t really mix email lists. I would say I wouldn’t necessarily feel comfortable going out and trying to do a sales blast or anything like that to them, just because that’s not what they were there for, it’s not what they signed up for.
It’s different if I talk to somebody at MicroConf where they come up to me and ask me questions about Bluetick because they’ve heard about it and they’re interested in it. I have no problems doing that, especially when they’re coming to me. “Oh yes, I know this person, I feel like I can trust them. They’re going to do the right thing for me.” That’s not an issue, it’s that going outbound to that audience, to those particular mailing lists is too head-putted.
Noah: That’s just one feedback, and then we can go through marketing plans. We’ll do a marketing plan in 15 minutes or less, it’s like dominoes. I think most people with marketing, and this is something that I think why sometimes my marketing is done well is that I do go to the people I already know first. I try to serve them first.
What I mean by that is I don’t know, and maybe you do and I’m totally off-base. I don’t know how many people you have that are already running software development firms, and maybe it’s a lot. The easier thing you already have for sure is you have a bunch of people who already like you, who probably have businesses or know someone who has a business that I would try to tap my close network first before I even try to think of my secondary or fourth networks I have no clue of.
Mike: No, that’s a good point. I just have to think of creative ways to do that.
Noah: I don’t even think you have to be creative, dude. Not to be mean about it, but those people already like you. I don’t know if they hate me or like me but for sure they like you. You don’t even have to sell them. Be like, “Hey guys, there’s something I’m launching, you guys are launching things, I’d love to get anybody’s feedback on it or if you guys want to use it, feel free.” You can hook them up if you want, that’s totally on your discretion.
It’s just like when I started AppSumo, I started a business for startups because I love startup software. I like promoting stuff. I had a network of that. I went out to my network on LinkedIn, I went out to all my friends and said, “Hey, can you tweet this?” It just made it really easy cause I tried to help and serve the people I already had access to versus ones I had no clue of.
Mike: That’s a good point.
Noah: Just something to consider. It’s been really interesting talking about this, here’s just a few thoughts about it.
What’s your goal for the year with Bluetick?
Mike: My goal with it, by the end of the year, I kind of classify the end of November as the end of the year because December I don’t think a whole lot is going to get sold. By the end of November, I’d like to hit $10,000 in MRR.
Noah: Okay, that is key. I just want to highlight it for people out there. If you don’t have a goal with a timeline, I just don’t think you can be successful. Someone said this quote, it’s like a boat without a router. You’re just going randomly. Maybe you’ll end up in America, maybe you’ll end up in South America, who knows?
I love that you have a goal. And then to that goal with that timeline, what’s your plan now to hit the $10,000?
Mike: I have a bunch of notes and stuff that I still feel like I need to organize a little bit better, kind of like you said just going without a router. I have a lot of tactics and specific things that I could do kind of written out, probably have a couple of hundred things. I haven’t really organized them to what your PPD, the person price differentiator. I haven’t narrowed down to say these are the people that I’m actually going to go for and these are the tactics that I’m gonna slot in to actually do that.
I have some ideas that have kind of worked in the past few months. One of them is doing influencer outreach and going on podcasts and things like that. I’ve also taught about doing joint webinars, I’ve talked to a few different people who have fairly large audiences themselves and said that they’d be willing to talk about Bluetick and have me on the podcast to talk about cold and warm email strategies, things like that.
Those are the things that I would probably lean more towards right now just because I’m more comfortable with them. I think that there’s also plenty of other things that I either haven’t done before or I’m not comfortable with, or just don’t even know about or haven’t thought about that I could do to increase traffic and add sales and customers.
Noah: Do you mind if I give some suggestions of what I do?
Mike: Absolutely, that’s what you’re here for.
Noah: Do whatever you want, but here’s how I would organize your marketing a little bit tighter. Number one, I think you should just pick a specific customer and then make your website very tailored to them. When I go to bluetick.io, it’s not very clear who it’s for. It’s like, “Hey, everyone should send cold and warm email followup software.” There’s feature driven, demographic driven, and then psychographic driven types of headlines. It’s not speaking to anyone.
For me, if I come to Bluetick, it should be we help service companies make two times more money. Oh, how the hell do you do that? And then that hooks me into what you do.
This is getting there. We send follow up emails so you don’t have to, but what does a followup email actually mean? If you’re talking to your specific audience, let’s say you target podcasters just to get guests, it’s like we help two times you book your guests, or don’t waste so much time booking guests. “Oh yeah, I’m a podcaster, I waste a bunch of time. That’s really painful.”
I think your marketing, the way that I would do it, is think about who your customers are. This is what I do. Either use live chat or just talk to them and ask them how they describe your business. Use a recorder, record it interviewing for the podcast, interview a customer, and take their language. I don’t know how they talk to their friends, but the way they talk to their friends is the way you need to talk to them, or their colleagues. That would be number one.
Number two, with your overall marketing plan, the way I like to do it is I love your goal, $10,000. You need to break that down monthly. What does that mean for August, for September, October, November, December? From each month, you should have how much MRR do I need to be to get my $10,000 by the end of the year? Then within each month, I break out if I need to go from $1,000 to $3,000, I need $2,000 MRR. What are ways I can get that? What I like to do is list out ten different ways, then I make estimations about how much MRR I can get from each activity.
For example with sumo.com, we were trying to double the amount of customers we have in the next six months. I have a list of six different things, it’s content marketing, affiliate marketing, paid marketing, free tools, SEO kind of stuff. I estimate based on some historicals and just guesses, how much I think each one is going to happen. I sort it, and then I pick just three. I don’t think we can do that many things great. I execute on just those three for the month. At the end of the month, I’d say, what did it actually produce versus what I expected?
The beauty of that then is I can cut the one that doesn’t work, keep one or maybe two that do work, and then add in another experiment, the 80-20 rule. What that does is it forces some discipline on accountability. “Wow, this is what it should do if I actually executed correctly,” and help you hit your goal. Does that make sense?
Mike: That makes perfect sense. That’s dead-on accurate. That’s fantastic, to be honest.
Noah: It’s a basic spreadsheet, I don’t use crazy software, it’s totally free, Google Spreadsheets, or illegally download Excel or maybe open source it. Even for you, you could even do one on one. A lot of times I do that in the beginning, just referral.
With sumo.com, when we started it, I just literally went out to people that I knew. If you don’t know a bunch of people, go join MicroConf, go get involved in things if you don’t know people before you need them and before you want to work with them. If you do have people, how can you go one by one and do that? We literally went through every single person on my LinkedIn account.
You know I’ve been doing internet stuff for 15 years, it took me a long time. But at the end of it, it was like oh wow, we have a good amount of people using this now and paying us. It’s one of your tactics, I wouldn’t want to discount even direct selling one by one and say I think I could probably generate $500 from that and then you do it at the end of the month. You’d be like, “I did $300, it was pretty damn good versus other things. I’ll do more of that next month and then less of something else.”
Mike: That point, I could export all my contacts on LinkedIn and just look through them, see who I think would be a good fit, or should just be filtered out entirely and then throw them into Bluetick and just do that personal outreach. I can do that. There’s nothing preventing me, I don’t think.
Noah: I think that’s even more genius. Use your own product, use your own dog food. I think that’s epic, man.
Mike: I actually use that during the course of demos. Previously, up until this week, I had just a little field on the website where you could ask for an invitation code and then they go to the next page, fill out a survey. Anyone who filled out a survey, I’d look at what they said and then plug them into Bluetick and then use Bluetick to get them to a demo. During the demo, I would show them, “Hey, this is how Bluetick got you to this demo.” It works really, really well. We got an 80% response for it.
Noah: Dude, that’s genius, I love that. This is a new method that I’ve been using with my marketing and I’m starting to apply it in other parts of the business, and it’s called Proactive Dashboards. The idea there, Mike, and for people listening is that you create a dashboard for yourself and your team of things you can do on a weekly basis that is fully controllable by you.
What do I mean by that? Mike, can you control if someone responds to your email or not?
Mike: Not directly, no.
Noah: You can’t force somebody to respond to your email. You can be like, “No, do it, I’ll kill you.” I’m going to be like meh, whatever.
Mike: There’s 300 of them.
Noah: Yeah, and then we’ll just filter emails or whatever. Point being is you can’t control them but can you control how many emails you send?
Mike: Yeah, absolutely.
Noah: Completely. I create Proactive Dashboards for my podcast, The Noah Kagan Present one that we were talking about earlier, and then for sumo.com we have a proactive dashboard. For each of these teams, it’s things that we can control that help us hit our goal.
Let’s say your goal is this MRR goal, you have a person doing sales for you or for yourself. It’s like can I send ten emails a week? That’s controllable by you. Each week, we do a green or red, whether we hit our goal. Then, you can have other things. How much ad spend? Did you spend $50 in ads? One of the guys in our team, it’s like hey, did you run two marketing experiments this week? I don’t really care which things they actually do, I just care that they do it or not do it. I want them to take initiative and all that other good stuff.
The point of the proactive dashboard is that it’s kind of this living controllable dashboard that will help you hit your goals. You can adjust it as needed, meaning you’ll probably be doing stuff like we were doing a bunch of Pinterest for a while. It was just doing nothing. After a month, it was said kill Pinterest, what’s working better? Quora. Okay, let’s increase our Quora. We did and we saw Quora go up. This week, we’re experimenting with LinkedIn. I’m seeing a lot more LinkedIn traffic and engagements so we’re experimenting with one post on LinkedIn a week.
Basically, I encourage everyone to think about what are controllable things I can be accountable for or make my team accountable for on a weekly basis that will help me hit my goals?
Mike: That’s awesome. I guess in terms of psychology, what does that do for you? Obviously, you do have control over these things. Is that why this works? Is it a psychological hack that doesn’t put you in a position where you just freeze because you’re not sure what to do?
Noah: Dude, I’ve gone to a bunch of therapy. I know everything.
I think why I like this and why the teams like it is a few different reasons. One, you want to play games you can win. If you’re doing things and your end vanity metrics aren’t working, it’s very demoralizing. But this is something where I can control it completely. I learned this from my friend [davidgrasshopper.com 00:44:07].
One, it’s controllable so you feel like you can actually win. Two, a lot of us like to see that we have streaks. The green and red every week and you start seeing you have green, you’re like okay cool, I’m doing well, I’m getting my stickers.
Three, I do think the fact that you make—I don’t know if this is as much with the psychology of it but the fact that you adjust it. For example, these marketing tests. If we were doing marketing tests and it would never help our goal, we would just cancel it. I think it just makes you a little bit more short term, like alright, am I doing the activities that I can control that are helping me move to where I want to be? So far, it’s been really great. I’m starting to implement it and I’m looking forward to it.
With the Sumo team, the webinar guy, it’s like hey you have to make one YouTube video a week. He’ll start doing it and then it’s like holy crap, that’s actually really driving traffic and customers, now you got two. And then maybe it’s like you have to do a collaboration every other week. Did you do that or not? That’s less control but did you email five people to collaborate with? That’s controllable. I think more ultimately, I have power to choose in this. I think with certain other times, you feel you’re at their mercy of hoping things work out. I don’t really believe in hope, I believe in making sure things work.
Mike: I think I have a blog post or a conference talk some place called hope is not a strategy. I completely ripped that off from Scott Adams.
Noah: I think with marketing, that’s why I always tell people to spreadsheet it. I call it quant-based marketing and I’ve written a bunch about it on OkDork. The ideas, if you need to hit $10,000, map out all the ways you think you would get to $10,000, execute on it, see which ones are right and which ones are wrong, and then keep iterating on it versus I want to be $10,000, I’ll just do a bunch of random shit and hopefully it gets there.
I don’t think if you’re trying to travel somewhere you would just say alright let’s just get on a plane and hope it lands where I want to go.
Mike: Yeah, I can’t imagine that works out for most people.
Noah: It doesn’t. A lot of the time, you’re going to try things, some of it is gonna work, some of it is not going to work. The point is that for sure in business, things aren’t going to work, that’s a guarantee. Knowing that things aren’t going to work, it’s great, but you have to say now that I know that, what things are working so that I can do more of them?
Mike: I think your point earlier about playing games that you know that you can win, I think that’s probably the killer insight that really needs to be a high level takeaway from all this.
Noah: I think that’s great, man. It sounds like overall for your marketing, one, you already got customers and revenue which is further ahead than most other people which is amazing. I would just put a little bit more organization around the PPD. Who’s the person, what’s the price, what’s your differentiator. There are options out there, so who’s your exact person?
And then in your marketing plan, I think it’s just hey, here’s my plan laid out for the year, here’s my things for this month, let me go execute on them. Let me have my weekly dashboard. And then, start iterating from that. You’ll be like holy crap, I hit $10,000 sooner than I thought.
Mike: Awesome, that’s fantastic advice. I know that you’ve got a gig going here soon. Where could people find you if they want to follow up with you?
Noah: If you’re interested in my personal stuff, Noah Kagan Presents podcast or okdork.com, I talk about business stuff that I’m learning from our business which is sumo.com, which is tools to grow your email list. We also have the AppSumo.com which is GroupOn for geeks. Any of that you can find me, I’m pretty darn accessible. If you can’t find me online, I don’t know, something is wrong.
Mike: You’re not looking hard enough I would say.
Noah: I didn’t get enough attention in high school so I’m desperate for it now. I hope to get invited back to MicroConf one day if I can earn that right. There will be no Sriracha, or I might just bring one bottle.
Mike: You take it easy. Thanks for coming on the show, I really appreciate it. If you as a listener 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 352 | Housing Multiple Products Under One Brand, Stair-Stepping, Pricing Tiers, and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike take a number of listener questions including housing multiple products under one brand, stair-stepping, and dealing with pricing tiers.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about housing multiple products into one brand, stair stepping, pricing tiers, and more listener questions. This is Startups for the Rest of Us episode 352.
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. What’s the word this week, Mike?
Mike: I finished up my 21 day video series and I made Bluetick live over bluetick.io. I pushed it out to my mailing list and went from there. That went out on Tuesday and it is now Thursday.
Rob: Indeed, you did. Congratulations, man. This is a big milestone.
Mike: Thank you.
Rob: You’re public. People can go to bluetick.io, sign up for a trial, the whole deal.
Mike: Yup, for the time being. I’m debating whether or not to pull it back now at this point and make people go through a demo.
Rob: Demo only?
Mike: I don’t know. I’m going back and forth on that, to be honest. I have to think about it a little bit more but we’ll see how it goes. I need to think about it and figure out what would be the best strategy, because I know how the demos and stuff go and I also know how the product is portrayed on the website because the website is just not finished yet. It might be best to go in that direction at least for a little while, anyway. I can even do a launch every three or four weeks or something like that.
Rob: It feels to me, at this point, it’s time consuming but it feels like the right choice to still do demos so you can hear. You’ve built something that a small number of people want. You’re edging into some product market fit because you have paying customers and you’re in the low four figures. To get to where that’s 10 or 20 times that number, I think you have more to go, to build some unique features and I think those demos will really help not just close more sales, but will just help with the education and the customer development effort.
Mike: I totally agree with that.
Rob: Sounds good.
Mike: How about you? What’s new with you this week?
Rob: WordCamp Minneapolis is happening starting tomorrow. It’s over the weekend. That will be the weekend before this podcast goes live. I’m actually moderating a panel there with Cory Miller, my wife Sherry, and a guy from OSMI, which is Open Sourcing Mental Illness. It’s about staying sane while starting up or staying sane while being a developer and that kind of stuff. It should be fun here, Friday morning.
On Monday, I fly out to California. It feels kind of a much needed vacation. I’ve been travelling quite a bit but most of it has been work time. When I went to Chicago with my son, I pretty much worked that whole week. I’m actually planning to go to Central Coast, California and really take some time away and do some thinking about what I want to see in my life, both professionally and personally over the next 6 to 12 months.
I won’t have time to do a full retreat by any stretch, but I bet I’ll be able to carve out a few hours here and there. It feels long overdue to just step away from the laptop, get my head clear, and get a little bit of distance from work, both literally and figuratively.
Mike: Cool. Sounds like a good time.
Rob: I hope it is.
Mike: What’s on the agenda for today?
Rob: We have more listener questions. I’m finally getting to where we have, I don’t know, maybe after this episode, we’ll only have maybe half dozen in the queue. That feels good because we get backed up where we have 20, 30 in the queue and I feel like we’re not answering people’s questions in a reasonable amount of time. Cool part today is we do have a couple of voicemails. And as I like to say, if you want to go to the top of the question queue, you can send us an audio file to questions@startupsfortherestofus.com or you can call our voicemail number at 1-888-801-9690.
Let’s dive into the first voicemail.
Jeff: Hey there Mike and Rob. This is Jeff Olsen calling from Saint Paul, Minnesota. A question for you guys. We have two profitable sites, one of them is membership. It’s called Food Blogger Pro, and the other is a food blog called Pinch Of Yum. We’re using some of the profits from those sites to build some software. One is a WordPress plugin. We’re building that [00:04:21]. The other is a SaaS app called [00:04:26] that reads nutrition information for content creators.
Wondering what your suggestion would be for how to structure that as a business. You have multiple businesses, multiple brands, you put this all under one umbrella, multiple LLCs, multiple [00:04:44]. We’d love to hear you talk through how that works, thanks.
Rob: Just to clarify. They have a food blog that would be, I would say it’s a B2C play. It’s amazing recipes and pictures of food. It’s called Pinch of Yum. Then they have a membership website for people who want to become food bloggers, which is cool because they have the proof of concept. They’re not teaching people how to become food bloggers without being food bloggers themselves. That’s a membership website.
And then they have two pieces of software that they’re either building or have built. One is a WordPress plugin. I think that’s for food bloggers. And then they have a SaaS app that does nutrition information. I assume it embeds it on a site or reads it or something like that.
There are four things. They’re all food related but they’re not all B2C. There’s B2C and then there’s B2food blogger. It sounds like maybe two or three of them are. With that background, it sounds like there are really two questions to think about. It’s like there’s corporate structure for LLCs versus one and it sounds like there’s a branding thing, like should they be multiple brands or should they perhaps be all shared under one website. What do you think about all that, Mike?
Mike: I think I’m a little confused about why all of them are starting at the same time or at least it feels that way based on how the question was worded. Do you know…?
Rob: Yeah, I do know more than that. Pinch Of Yum has been around for years and then they started the membership website. That’s been around for a few years but less than the food blog. I think these software things are in the works or maybe the WordPress plugin is done and they’ve kind of done them sequentially. I would of them like I had a blog and then, I would actually have to think about this, but I think what is now FounderCafe but what used to be called Micropreneur Academy came next, then the podcast came and then MicroConf. It’s kind of they were sequentially but there was overlap type of thing. What do you think?
Mike: It’s a tough call. I don’t know as much about each of those individual things. It seems that if there’s both B2C and B2B mixed in, then that makes things difficult and you probably want to separate them a little bit more. But if there’s much more overlap in that and it’s all B2C, then combining them would probably be a better way to go, especially if they’re all kind of in the same niche or a general field or vicinity to each other.
The advantage to separating them completely is that you can cross promote between them and people will probably feel like those are completely different services or things. But I think if it’s a B2C play, then chances are good that they’re probably not going to subscribe to more than one of them if it’s a paid membership or something like that.
I think that there are pros and cons to each of them. I don’t know if there’s a best solution though. Maybe just combining the B2C stuff and then combining the B2B stuff would be the way to go there. In terms of the corporate structure, I don’t know if you really even need to separate them. Not unless you plan on spending one of them off. That’s something you could really do later if you really needed to.
As you start combining them, it’s going to be difficult to disentangle them, especially if you put them all under the same corporate umbrella. The two B2C plays would be difficult to separate if you intertwine them early, and the same with the B2B stuff. The B2B stuff I think would be probably easier to separate but maybe not.
Rob: I am obviously with the caveat that neither you or I are lawyers nor can we give legal advice. I can tell you from the corporate structure perspective what I had done and then where it tripped me up. But I had a single LLC in all my products. He basically has four products. You can call them businesses but really, you manage them like products. You could manage them under a single corporate umbrella. That’s how I did it for years.
Eventually, when Drip did become, it was obvious it was more than a product, it was becoming an entire business and had more employees than the rest of my products combined, that is when I spun that out into its own S Corp. That was a painful process to do. It took several months part time of going through books and setting up new stuff and trying to pull it out.
That was very, very handy that I had done that once we started talking about acquisitions in terms of people acquiring us because once it was spun out, it was so much easier for them to just acquire all the assets of this company, of this corporation, rather than trying to… it would have been a nightmare. I don’t even want to think about how much of a mess that would’ve been.
That would be the first thing I would think. If you really do plan to keep a lifestyle business and you think you will keep these things forever, then you could think about doing the way I had, which was put them all under one LLC. It is the easiest way. If you think you would ever sell one or more of them, then unfortunately, you got to think about breaking them out and having their own Stripe account and each one having their own bank account so that it doesn’t all co mingle. Those are tradeoffs there.
In terms of brand, I agree with Mike. You just think about the audience. It sounds like one is B2C and the rest are actually B2food blogger. It services for food bloggers and software for food bloggers. Then it seems like you have two brands. You have the Pinch Of Yum which is a great brand on its own and has an audience. And then maybe somewhere on there, you have a little thing that’s a food blogger or want to be a food blogger. We also offer this and it leads over to those three things.
They may have their own websites, but I do think there should be kind of a central brand that you come up with that these things are related and you can cross sell them assuming again that it’s the same audience for all three.
Mike: Just to tackle a little bit what Rob said about splitting the business and then possibly selling it later, one thing you could do is a hybrid approach. When you’re doing things in your books, like when you’re hooking things up to a Stripe account for example, you can create different Stripe accounts for each product and then on the back end, inside of Stripe, you can essentially just add different email addresses. It gives you the ability to see and toggle back and forth between them and then send all the transactions and stuff back in your books, and keep them separate in your books so that you can specify a “product line” or a line of business and attribute the expenses and income from each of those things into that product line.
The difficulty comes when you have a single service that you use that spans multiple ones. Let’s say you have a Drip account. You use it for all of them and so it’s one subscription and you pay, I don’t know, $100 or $200 a month and you use it for all four of them. Then you almost have to say, “Well, yes. This goes into this bucket. It’s mutually used by everyone.” If you do sell it later on, you can point directly to those things and separate them out easily when you do go to sell the business. You could even do that in advance of selling it.
If you get to a point where you decide hey, I want to do this, you split everything out, put it all into its own separate LLC or different business, and you’ve got everything already separated. That’s a hybrid approach you could go. That’s actually the kind of hybrid approach that I’ve taken right now just because of all the different things that I have going on. It’s interesting to be able to separate the different products and say this is how much revenue this gets versus how much the expenses are.
Rob: Good question. I appreciate you sending that in. Hope the answer was helpful. Our next question comes from a founder who wanted to stay anonymous. He says, “I’m working for a founder on an idea to automate a process that works in a couple of very lucrative industries. Before I started, there was no product, just an idea and a false start with a development company. I feel like I’m doing the work of a co founder. They’re supplying me industry knowledge, contacts, and funding. I’m running all the discovery, coming up with growth hacking strategies, doing the prototyping, setting the technical and product strategy, and working to build the product with the development company.”
I don’t think Chris is a developer but they’re outsourcing the development. He’s kind of being a product lead. It’s what it sounds like. “I’m due to sign a proper contract of employment with him under a new limited company in a couple of months. My question is what can I expect/demand in the new contract? Is it too much to ask for equity or share options?”
Mike, I feel like there are two questions. Number one is do you feel like he is doing the work of a co founder or more of a product lead? And two, there’s his question. What can he expect or demand?
Mike: From the description that I hear here, it does sound to me a lot like the co founder. I’m a little unclear on the part where he says that they’re supplying the industry knowledge, contacts, and funding avenues. I’m running all the discovery, coming up with growth hacking strategies, doing the prototyping, etc. It sounds to me like that’s almost the division that you would make between two co founders or between an investor and somebody who is building the business.
It seems odd to me there’s this whole industry knowledge, and contacts, and funding avenues. And then separate from that, this person is doing discovery. What kind of discovery is that? Is that like product discovery? Is it customer discovery? It seems a little odd that that has been delegated to him. But it does seem to me like this is much more of a co founder relationship than anything else. I’m not real sure how many people are involved either. Is it one other person? Is it two or three? That’s not real clear from the question either. I think based on that, I would look at that to see how you would approach it.
If things are gumming along where there’s an expectation of a contract, I think it would be a mistake to wait for that contract to appear and then negotiate from there because once it’s down in writing, they’ve already got their expectations written down and what they think is fair and then you’re negotiating from where they’re already at, and it may not even be close to what you’re looking for. I think if you have those discussions early on before they write anything down, then you can probably get much closer to what it is that you’re looking for, whether that’s co founder status or 50% if it’s only one other person or 33% if it’s two other people, etc.
But I would not wait until you get that contract in front of you to start having those discussions because otherwise, you’re going to find yourself probably disappointed just because the expectations weren’t set up front.
Rob: I feel like this is a tough one because I’m not convinced that he’s doing the role of a co founder. I feel like he is a product person. I think the question when I think about a co founder is how hard are you to replace. If you’re working for free and doing a bunch of work, you’re really hard to replace because it’s hard to find people who work for free and who do a good job.
But if you’re getting paid a fair salary for what you’re doing and the expectation thus far has been that you kind of are a contractor or an employee, I think you have to think about how hard would it be to replace you. You and them are the only ones that are going to know this because there’s a lot of details and moving parts with this.
I feel like if you’re more of someone that they could just find someone else to manage this and pay them a salary and they do have the funding to do it, then I think you are much less in a co founder role or at least a very minority co founder. In that case, your percentage drops. I think if you truly are driving the vision and bringing just levels of game that most people would not be capable of bringing, then you could consider yourself, there’s like founding employees. There are phrases like that.
Typically, co founders are people who are putting in money. Most of the co founders will be putting in money as well. It’s not always but there’s a lot more equality between what everybody is doing. Frankly, industry knowledge, contacts, and funding avenues are actually I’m going to say they’re the harder part. Building a great product is not easy but there are a lot of people who can do that. Whereas trying to replace the people with the industry knowledge of a specific industry, the contacts of the specific industry and funding avenues, that is pretty important stuff.
All that to say, I think that if you do feel like you’re truly a co founder, I agree with Mike that you’re going to want to start this conversation early before stuff gets in writing. Yes, I definitely feel in both cases to be honest that you’re entitled or that you should get some type of equity, even if you are someone who they can replace, founding employees often get 1% equity, 2%, 3% equity. It’s a pretty small amount but it’s not totally unheard of if you really are driving the product.
I would even think, depending on how big the business might get eventually, even up to 5%, if you do truly feel like a co founder or consider yourself that, now, we’re talking 10% to 50%. It depends on how many people are involved. That’s kind of the range I would think about. What do you think?
Mike: I actually had missed the part about the paid work. I was operating under the assumption that it was more or less unpaid and part time on the side. I just missed the part where he said he was getting paid for it. I guess I would reverse a little bit but I do agree with you that it sounds to me like he’s pulling a fair amount of the load. He did comment it like I know you said that all the prototyping and the technical stuff and product strategy.
You can put people in to do that stuff, but what’s the discovery that he’s doing? That’s the part that I’m unclear. Is it actual customer discovery? If so, how much industry knowledge and contacts are they actually bringing? That was my question about it. It could go either way. I think there are a lot of subtleties here that we’re just not quite getting.
Rob: I know he wants to stay anonymous because obviously, he wouldn’t want someone to overhear it. He can’t give us all the details but it really does depend on a lot of those details. I think those were general thoughts but wish you the best of luck with that.
Our next question is from David. It’s a question about pricing tiers and dead zones. He says, “Our product Uber rider has a tiered per seat pricing model, where the more seats you purchase, the lower the per seat cost. This leads to dead zones where the price for 40 seats and 50 seats are almost the same if you target 50 as a breakpoint. Is this a bad approach and should a flat per seat price model be adopted to avoid this? We have had some push backs from larger 200 plus seat customers that the pricing was too high. How do you strike a balance here?”
What do you think, Mike?
Mike: This is hard because I’ve looked at specifically this problem before and you’re absolutely right. There are places where it is more cost effective to buy more seats than less, especially if you’re right on those thresholds. What I’ve seen larger companies do in these cases is that they’ll essentially sell you a larger package. Even just for the soul reason that it costs less money and they sell it based on the idea that it gives you overhead.
When you swap people in and out or people leave the company, you don’t have to worry as much about whether or not the license is blocked for x number of days or if you’re transferring it to a new person that you hired in anticipation of someone else leaving. You can just reuse it between them because you’ve got the overhead to play around with.
You can work that into sales discussions. When you start looking at extremely large customers where you mentioned the 200 plus seat customers, I’ve seen pricing for enterprise customers go as low as 10% of the list price. If you’re getting pushed back there, it could be that that’s the problem. They’re expecting a larger discount than you’re providing but at the same time, you also want to be a little bit careful of that because just because somebody is complaining about the price, it doesn’t mean that it’s too high.
If all of them are walking and not buying it, then yeah, that’s probably an issue to look at. But just because they say that it’s too high, it doesn’t mean that it actually is.
Rob: Yeah, it’s funny. I’ve always leaned towards having this flat per seat pricing and then offering discounts to larger customers because larger customers are going to tend to talk to anyways in advance or there’s a point where you just call for pricing and you deal with them. You give them whatever discount you need to land them.
But I have seen more apps that used to have flat per seat pricing move towards tiers, FogBugz is an example. The reason they moved, from what I can see, is they actually wanted to lower the pricing on the low end. You can now get a five seat FogBugz account for $20 a month. That means $4 per seat. As soon as you go to over 5, you need to go to the 10 seat license and that’s $100 so now you’re paying $10 per person. What they want to do is take the air out of the low end and they switching costs are hard in these systems and so they’re actually trying to get people in so that they use the product, get locked in and enjoy using the product hopefully.
And then eventually, way up high, I don’t know, it’s like 250 seats. It starts to drop very slowly and I think that could be a prejudice. If you drop the price slowly enough, then you won’t have dead zones or you could just put it up to a point, have just a few tiers that are flat because that’s how FogBugz is. The 10 is 100. The 20 is 200. The 30 is 300. It’s just pretty much linear. It kind of is like having no discount and then wherever the point where customers feel they deserve a discount or need a discount, you can just do a call us or expect the people to ask about it.
I could go either way. I think in the early days, if I were still trying to get market share, product market fit, all that stuff, I think it’s easier to keep it simple. But once you have more data, more information about usage, you know whether you have lock in or not, you know if the low end is going to be something that you really want to go after, you just get more knowledge about the space, you could actually make your pricing more complex because you have data with which to drive that pricing.
I think trying to guess out of it early on without data is probably a bad move and it’s going to mean you re-do your pricing multiple times. Whereas if you start flat, simple, and just go forward, you can always move to tiers later. I hope that was helpful, David.
Our next question is about health insurance in the US. It’s from Albert. He says, “Hey guys, over the past few months, I’ve grown more and more frustrated by my current 9:00AM to 5:00PM job and more excited about my side project. I’ve been considering quitting my job if I manage earn enough funding to be able to support myself for a year or two, while working on the startup full time. My main concern would be the health insurance situation. If I were to quit my job and give up its benefits, how do you recommend I get health insurance? Should I get personal insurance or are there any services that work with startups and single founders? I’m based in Florida. Thanks.”
The US, Mike. The only country in the world where people voted for the right to go bankrupt from health insurance issues. It’s kind of catastrophic for entrepreneurs. I think it’s an absolute catastrophe that there are founders, I see this, people talk to me, they don’t want to leave their jobs and be a founder and founders are the people who make a difference in the economy. It’s like the small businesses, people who create jobs. That’s where real job creation happens. What’s the number? It’s like 80% of jobs created last year are in companies like 10 people or smaller. Some insane number like that.
The fact that this many people are concerned about it and rightfully so, because it is expensive, it’s just a real shit storm. I think it’s something that we got to figure out. Anyways, that’s his concern. What do you think about it?
Mike: Like you said, it’s a hard situation. I don’t think that there’s any easy answer. I’ve had conversations with people about this. Depending on where you live, the rates can vary pretty dramatically from one place to the next. I’ve seen things as low $800 a month for a small family of four and then I’ve also seen rates as high as $1,500 to $1,800 for what appears to be the same coverage.
I remember bouncing back and forth between various insurance companies for about four or five years mainly because the same exact plan would rise dramatically in price from one year to the next and then the exact same coverage from a different insurance company would be dramatically lower for no good reason. Like I said, I have my conspiracy theory about what they’re doing and how they’re trying to figure out how much can we charge people. And they just jack up the price until enough people turn out, then they turn around and then they change the price.
Rob: That’s such a conspiracy though because they regulate it. We had the guy write in, you know.
Mike: I know. I know. But it still feels that way. No matter what, you feel like you’re getting screwed by the health insurance companies, that’s just the way it is. Whether it’s happening or not, whether they’re doing a delivery or not, you feel that way. I don’t have any good answers here. I used to use an insurance broker in Massachusetts. You really can’t do that anymore because it’s small potatoes for them and a lot of the larger insurance companies don’t work with the brokers anymore. The small brokers just said, “We’re done. We don’t do that anymore.”
Rob: Isn’t it just when you go on an exchange? That’s what they have now, right? Is it healthcare.gov or whatever in the US?
Mike: You can but you’re not required to.
Rob: I understand but that would be where I would start.
Mike: Yeah.
Rob: That’s probably where I would start looking. As well as, Kaiser is not as cheap as it used to be. I had Kaiser my entire life growing up until I was in my 20’s. There’s always the HMO horse. They’re actually a premium brand now, they’re very expensive. Not very, they are expensive. But I would rather fall back to that. This is just personal, what I used to do when I was in between things that provided health insurance. I would do Kaiser or I would go to these exchanges or even go to, yeah there’s healthcare.gov for the government but there’s like a ehealthinsurance.com and there’s a couple other, I think was it healthcare.net? I’m trying to look for it right now.
It’s basically these places where they will give you quotes. There’s a bunch of people competing. You can at least look up insurance by state, and by this, and by benefit. It’s just a matter of doing some research and then realizing that the premiums are way too high for every plan and that you’re not going to want to use any of them. That’s how it always is for me. And then just picking the least of the evils.
Mike: Something else you can do is talk to a CPA and find out what you can right off and what you can’t because depending on whether you buy an individual plan for yourself as a family, where you’re paying out of pocket, versus buying it through the business, that may make a difference. It might cost you a little bit more but if you can write off more of it or write off the whole thing, then it drops your overall taxes. There are games that you can play there too. Just be aware that there is a big difference between an individual plan which is for you or just your family or whatever versus one that comes and insures your business and the employees in it, which you can be an employee in the business.
And then you also have to be careful about whether or not you’re classified as an employee in the business, based on what the state requirements are and whether or not you have to provide coverage. I think if you’re under 50 employees, you’re kind of exempt from most of those things but you opt in one way or the other.
Rob: Right. What we did with Drip as it started gaining a little momentum and we’re still very small but some people were trying to get their own personal health insurance and it was a lot more expensive and it wasn’t taken by as many doctors. I went to Zenefits. Since we were an S Corp, just got it set up there and was able to get everybody health insurance through Zenefits. It still was quite painful. It seems like it should be easier than it is but these are the options that I would look into.
Our last question for the day is from Mike Fleming. He’s asking about multiple email provider conundrum. He says, “The short version is what’s the best way to combine transactional email, newsletter, and Drip campaigns in terms of subscriber consolidation and cost effectiveness? As a small SaaS owner, I used Postmark for transactional emails and MailChimp for newsletters. I’d love to add Drip campaigns. When I do though, I’ll have two providers. MailChimp and Drip that I have separate silos of user info. There’s a third if you count my apps user accounts. If you combine my newsletter subscription and user accounts, I’m well into Drip’s custom pricing tier, which is cost prohibitive for me at this time. My problem consists of having these email mechanisms while managing the silos and not breaking the bank. What are best practices in this area? Also, thanks for all the great info over the years. Every Sunday, I load my iPod with Startups for the Rest of Us. It’s the first thing I listen to on my Monday morning commute. Thanks.”
I have thoughts on this.
Mike: Really. Do you, now?
Rob: Yeah. Can you imagine why?
Mike: I can imagine why. I would love to hear this. I have a couple of my own but I’m curious to hear what you have to say specifically.
Rob: To me, your apps user accounts, you got to decide what’s the source of truth for your business. If you have a SaaS app, then to me, your database should be the source of truth for all of this stuff and everything else should try to sync up with it but you should always look back at your database. It’s different if I sell my book and I have a blog. For those, Drip is my source of truth. I have no database because they’re not SaaS apps. Your mileage may vary but if you’re a SaaS app, I think your own database is the source of truth.
In which case, Postmark’s transactional so that’s not another source of tags or anything. It’s just a mechanism to get email out. Really, you have your own database and it should sync up with whatever email provider you’re using. You’re using MailChimp right now for newsletters. I would either stay whole hog on MailChimp or whole hog on Drip. I know Drip can do obviously way more automation and more sophisticated, more powerful than MailChimp. If the pricing doesn’t work and you can’t possibly get over there, then I would just hack MailChimp. I know it sucks but hack it until it works.
Once you have the money or realize that the hacking was too much of a pain in the ass, because oftentimes another $50 or $100 a month sounds like a lot until you are maintaining these hacks because you outgrow MailChimp, which is how we get a lot of folks who do come from MailChimp to Drip. They have just outgrown it and they had hack after hack trying to do modern stuff. MailChimp has “automation” but it’s not that good.
As much as I respect MailChimp, I like the founder, Ben Chestnut, when I email him, he emails me back. I respect the hell out of what they’ve done. They have legacy and it’s tough to get around that. Smaller episodes like Drip have been able to, I would say, just do a better job at making it easy to do exactly what you’re trying to do. Drip campaigns, autoresponders, and sophisticated funnels.
That’s the weighing, the balance that I would do. I would not spread my people across both MailChimp and Drip. Again, you could try to sync it up using API, we both have APIs. I just don’t think that’s worth it. I think you have to bite the bullet. You pay extra. Our pricing is actually quite similar to MailChimp so it’s funny that I don’t know exactly how many subscriber you have, maybe there’s a tier where it goes off the rails but it’s usually 20% different or something. It’s not like we’re twice the price or anything.
That’s how I would think about it. Again, your SaaS database, source of truth and then stay with a single provider and go with the one that does the best job. I personally, what do you call it, it wouldn’t be pennywise and pound foolish in the sense of I want to spend five extra hours writing custom code to make MailChimp do something when it’s like how much is five hours worth to me? How many months of extra 20% or 30% could that pay for in a tool that could actually do this out of the box, so to speak. Those are my thoughts. What do you think, Mike?
Mike: I guess my thought really went directly to the number of subscribers he had. I totally agree with what you’re saying about not splitting them up because that was the first thing that I had actually thought of, splitting them up and saying okay, all the newsletter subscribers, you put those on MailChimp and then all your actual users, you put them in Drip. I think that you’re just asking for trouble at that point so I immediately discount it, probably like you did.
My second thought was going to the list itself and the list size and the pricing differences between them. While you were talking, I just pulled them up and plugged in 100,000 subscribers into Drip and into MailChimp. I’m not clear on MailChimp, if it’s 100,000 subscribers, he didn’t say that number but I just pulled the number out of the hat. It’s $475 a month, and then on Drip it’s $779.
The question in my mind becomes there’s two things. One is as you said, how much extra time are you going to spend trying to make it work in MailChimp and my guess is it’s probably more than three or four hours a month. The other thing is with the mailing list of 100,000 subscribers, what could you do that would get you an extra $300 a month out of that mailing list?
It seems like with that many people on it, you should be able to or you should at least be able to call that list down to a bit more of a reasonable size if those people are not active. Get those people off that mailing list if they’re just not opening emails and they’re not engaged in any way, shape, or form. Like they’re not doing you any good, they’re dragging all your stats down and they’re giving you false information.
Rob: I’m glad you compared pricing. I’m showing $649 although I guess that’s annual if you go to Drip annual. You’re right. That is a 70% difference or 60% difference or something. It’s a lot more there. One thing that we have noticed, and this is not marketing speak or anything, we notice when people come over from MailChimp or AWeber or these other list based solutions, if they have 100,000, since you can have duplicates, the same person can be in multiple lists and you would get charged for each of those, we typically see 20% to 30% drops in list size. 100,000 that would go in Drip would only be 70,000 or 80,000. In which case the pricings could run up here. 70,000 is going to be $569. 80,000 is going to be $600 or something.
It brings you down even closer. Again, I’m not saying you should move to Drip or that you’re a fool to stick with MailChimp because they built a solid tool but it depends on what you’re doing and like Mike said, how much extra are you going to get out of a tool that allows you to build sophisticated flows and to do things based on people’s behaviours and what their purchase behaviours and that kind of stuff.
In addition, we have pruning built in. That’s another way to get your list down. It’s just remove everybody who hasn’t opened the last x emails. That’s how people keep list size down. There really isn’t pruning in almost every other email tool. Everyone of our competitors doesn’t have that because it makes them less money but we built that tool to make super one click easy to get people out. Again, that’s another way to reduce that cost.
I think that’s a good question though. I bet other folks have thought about it as well. I appreciate you sending that in.
Mike: With that question, I think we’re running pretty close to out of time. 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 351 | Harnessing the Power of Your Marketing Data
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about harnessing the power of your marketing data. Syncing information between marketing tools is a difficult task and its easy to make mistakes. The guys talk through some ways to make it easier.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For the Rest of Us, Rob and I are going to be talking about harvesting the power of your marketing data. This is Startups For the Rest of Us, episode 351. Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob: I’m Rob.
Mike: We’re here to share experiences to help you avoid the same mistakes we have made. What’s going on this week, Rob?
Rob: Do you ever notice that when you intro the show, you say, “Rob and I are going to be talking about XYZ” and that I say, “Mike and I talk about XYZ”?
Mike: No.
Rob: You haven’t noticed that? Alright. I wonder if anyone else has.
Mike: Why do you think that is?
Rob: I think because you’re actually talking about the conversation we’re about to have because you know that 20 seconds later, we’re going to be talking about this, whereas I’m kind of like putting it up as an intro, as if it was independently recorded – almost like it’s done after the fact. “In this episode, Mike and I talk about blah blah blah.” It’s almost like it’s something that happened in the past.
Mike: Like you’re a time traveler, and you’re doing it in the future.
Rob: Exactly. Anyways.
Mike: Anyways.
Rob: Now that we’ve lost all our listeners, you know what’s up for me? This week – last week, once this episode goes live, Clay Collins stepped down as the Leadpages CEO, and he decided that it was a good time to bring in someone to scale the company. He made specific comments of – which I really respected – like this was his impetus. He initiated it. This wasn’t just him offering flowery language, as some founders get kicked out by their board. They say things like this, but I know the backstory of that guy.
I know the inner workings of what happened, and he said, “Look, I’m really good at growing a company from zero to $10-15 million, and we’re a lot more than that now. We need more process, and we need someone who can really scale this thing up to $50-100 million, so the COO John Tedesco, who I’ve worked with now for a year, in essence, since we’ve been at Leadpages – he is taking over as CEO.”
Clay is really taken some time off. He’s gonna spend more time with his family. The dude is super smart, and he reads a lot of stuff. He’s into investing. I mean, he has enough hobbies to keep him busy, and he won’t be down for long. He’s like one of us, where it’s like you’re just constantly – you have that next thing going. Frankly, I applaud his decision to do this, and I think he’ll have some nice – I hope he’ll have some nice restful time as he steps away from it.
Mike: Honestly, I think that’s really smart and insightful on his part to know really where he fits into the startup process and understanding where he provides the most value and realizing that there’s probably going to be a time, where either he’s not good at it or he doesn’t enjoy it. So it’s better to move things around and put a succession plan in place, so that he can go do the things that he really wants to do or is really good at, versus continuing down that road because you feel pressured to or you feel like you are supposed to do that versus “this is the right thing to do.” I agree with you. I think that that’s totally the best-case scenario – is he makes that decision as opposed to somebody else making it for him.
Rob: Right. And making it for him, like kind of overstaying your welcome, and then people are like, “Um…” They’re bored like, “Um…” Your C-Level Suite is like, “Dude, what’s going on here?” Yeah, I agree. It is genuinely – obviously there’s always uncertainty when this type of thing happens. From my perspective, when I first heard – which is a while ago – I was like, “Alright.” Clay and I worked close together, and I know him. He’s a known quantity. I know how we interact together, so I was a little concerned because they did a national search for replacement. They didn’t just say, “Well, the COO is gonna take over.”
My concern was like, “Who’s that gonna be? Is it gonna be someone that I don’t know that runs a company completely different than Clay did? It’s gonna be this big shakeup that I’m not going to enjoy working with all that stuff,” and then the more I learned and the more I heard they were thinking about going with John, I had an inner sense of relief because he’s a known quantity. I’ve worked with John, so there’s obviously gonna be some changes. I’m sure, John’s gonna run it a different company than Clay did, just because they’re very different people, but I’m really genuinely curious and interested to see what’s coming here in the next couple of months.
Mike: I wouldn’t think it’s unusual for a company to run a national search like that and then end up hiring somebody internally anyway. I would imagine that even if somebody applies internally – if they were planning on doing a search for a CEO anyway, they’re gonna do that just so that they get a lay of the land and see if there’s other things that they’re missing because the last thing you wanna do is promote somebody from within, only to find out that they’re really not a good fit for that particular thing and you feel almost obligated to give them the position, versus if you actually do a full-blown search. You’ll feel a lot better about making the decision – assuming you go internally anyway.
Rob: Totally. It’s almost like a fiduciary duty or could be considered. It’s like we’ve got to protect all the shareholders. Let’s do the right thing, rather than do something that may look like an inside job or an insider – almost like a nepotism thing, although it’s not family, but that kind of stuff.
How about you, man? You are knee-deep in a launch right now.
Mike: Yeah. I sent out my first launch email yesterday and trying to record a video today that I still have not gotten to, and I’m hoping to get to that soon. But I got a few replies for my email that I sent out yesterday, from people who are interested in signing up. I’ve got some other people, who I’ve talked to over the past week or two that they basically just said, “Hey! This is not a good time right now, but in a couple of weeks, let me know” or they’ve got a vacation coming up or they’re gonna be out of the country or what have you.
I’ve got some things that are coming up, but the real impetus is really push hard on the email list this week. I’ve got a series of, I think, four or five emails that have got to go out, and I’ve still gotta write most of them so that’s gonna be the big priority for me over the next several days – is getting those emails written and scheduled, and then making sure that all the signup code is in place, so that people can get in, and they know what to do and have some videos that will walk them through how to do different things. All that stuff. It’s not hard. It’s just time-consuming to be honest.
Rob: Yeah. I know how that goes. How would you describe your mood? Are you excited? Are you stressed out? Are you just wanting to get it over with?
Mike: Real stressed out, to be honest. It’s just because I know all the different things that need to get done. There’s like the short list and then there’s the long list. The short list is the time-consuming stuff that has to be done in a relatively limited time frame, and then there’s the long list of all the things that I would really like to do or should be done or need to get done, but I can push them off theoretically until after the launch date, but I’d rather not, if I could get them in. I just can’t. I don’t have the resources or time or anything to be able to do that. Plus my wife’s out of town this week, which I hadn’t anticipated until after I decided on the launch date, and then I realized, “Oh, she’s out of town from Wednesday morning until Sunday night.”
Rob: Piece of cake.
Mike: Sure.
Rob: These kids are watching themselves, right?
Mike: Right. They’re cooking me dinner and making breakfast, yeah.
Rob: That’s perfect.
Mike: Right.
Rob: Totally not happening.
Mike: Yeah, totally not burning the house down.
Rob: Yeah, that’s pretty much what you’re trying to do. Oh man, I didn’t hear that part.
Mike: Yeah. What’s even worse is on the schedule, it was messed up. I thought she would be back Saturday night, because that’s what the calendar says. She looked at it and realized that on her calendar, it shows that she’s out till Sunday, but her hotel only goes until Saturday. It was like, “Oh, that sucks!” because I really thought – it was two days ago, when I found out that she was not gonna be back until Sunday.
Rob: I’m sorry. That’s not cool. Yeah, [inaudible 0:07:31] when you get this.
Mike: It’s nobody’s fault.
Rob: No. I don’t mean, not cool on Ally’s part. I just mean it’s not cool when that kind of stuff happens, and this is entrepreneurship. This is launching a startup, while you have a real life and you have a family, and this kind of stuff happens. It’s a drag, and it stresses you out, but it would almost be too easy without these wrenches getting thrown into the works.
Mike: Business would be awesome if you didn’t have to worry about customers or money.
Rob: Customers, people, money. Yeah.
Mike: Support issues. Yeah.
Rob: Yeah. Cool, so what are we talking about today? Is it one of the most fascinating topics that we’ve ever talked about on this podcast?
Mike: Absolutely. It’s all about harnessing the power of the marketing data that you have available to you and making sure that the data that you have in each tool is accurate, which doesn’t sound very sexy, but at the same time, it’s very useful. If you don’t have things wired up properly, you can very easily miss things from one tool to the next. Or let’s say that things aren’t getting synced properly between your app and either your marketing software, like your marketing automation software or your email list software. Your billing code, for example, because somebody can sign up for an account, but they may use a different email address – is their generic catchall for all the credit card statements and stuff that they sign up for because they want all of the billing emails to go there. But they don’t want to use that email address to actually sign up for your service, so now you’re going to end up with mismatches between things.
What we’re going to be doing today is talking about how to synchronize some of that information between your prospects, leads, and the contacts and the fact that – of course, generally doing that sucks, but it has to be done. One of the things that I’ve noticed is that inside Drip, for example – I think that Drip does a really good job of this. But they differentiate between tags, events, and custom fields. Since I look to that as the source of authority for those types of things, why don’t you explain a little bit about the differences between them? Because I think you guys are doing a fantastic job of explaining it on your website.
Rob: Thank you. I appreciate that. The reason we do a good job, I think, is that we have been asked that question, especially in the early days, so many times – “What is the difference between these things?” To me, this is the heart of marketing data. In almost any marketing system you go into, you’re gonna see tags and custom fields, for sure, and then we innovated in the marketing automation space, in the email marketing space. We brought in events, so we pulled that over from analytics like Kissmetrics and Mixpanel.
Here’s the simple answer. Tags are basically just a string, like a single word or phrase that you can attach to a person, so you typically use it to segment or bucket groups of subscribers. I might import 10 subscribers, and you just say, “I’m gonna tag them with ‘microconf 2017 attendees’.” That tag is just a piece of text, and it attaches to the record. Then you can later search who has these tags. I only want to send to people with these tags and not these other tags. Tags, I think, are pretty well-known, and they’re common now in marketing automation platforms and in a lot of others likes sales platforms and stuff.
Custom fields are really just name-value pairs. That’s how you think of it. If you use MailChimp, they call them “merge tags.” We call them “custom fields,” but it’s basically like if you want a first name, then the name is “first name” and the value is “Rob.” Or you could have last name or telephone number or address, so there’s just a name-value pair. It’s kind of like having two tags that are linked, but really it’s just name-value.
Events are the thing that – there’s no other marketing automation platform that has events, like Drip does. Again, we borrowed it. We migrated it over from analytics. Events are similar to tags, in that they have a name. There’s a text thing, but they also record a timestamp of when the event happened. You can look at how often it happens, so someone could – you can’t have a tag applied seven times. A tag is applied, or it’s not. It’s applied, or it’s removed, whereas an event – you can say they made a purchase seven times. That actually makes sense in the context.
Events also have a payload, meaning they have a collection, almost like a JSON Blob or a collection of name-value pairs. You think about an event like “Made a purchase,” what type of values do you want attached to that? You probably want a price, may want an item title, a skew – something like that. If the event is “Visited a page on your website,” what’s a metadata you might want to know about that? What was the page? Maybe you already know when it happened? Maybe you know how many times they visited this page. You could attach that all to that single event. They’re kind of like, in my opinion, a better version of tags, although tags still have some use.
I realize that was a long explanation, but I wanna describe it like if you’re a sophisticated marketer, it could have been shorter, but I wanted to make it approachable to lay people – basically a lay person. We have a good KB article on getdrip.com, and we will link that up in the show notes.
Mike: Yeah, I think the big differentiator there is just – with the tags versus events. The tags really give you a single indicator that says, “This person fits this particular profile,” and you can’t apply that tag more than once to somebody versus the event, where it can be – like you said, somebody could make more than one purchase. That’s an event. But the tags in Drip will just by default prevent you from adding a tag to somebody more than once, because it doesn’t make sense in that particular context.
The other thing that struck me was the payload side of it, because an event can have a payload associated with it. It’s really a description of that event and all the different parameters or properties of that event, and that may be important for something down the road.
Rob: Yeah, and the way I think about it is custom fields are – they’re like a description of the person, who the person is, because it’s like first name, last name, and properties about them – maybe have their plan and the price they’re paying you – stuff like that. Tags tend to be the buckets or groupings of people, and then events are things that people do. That’s the plain English version of it.
The reason we’re talking about this and defining these things is that tags, events, and custom fields are really the heart of your marketing data. This is how you have information and the learnings about the people that are on your list, coming to your site, etc. I think we’re gonna dive in now to – there are definitely other things, other data points, but these are probably a big part of what you’re gonna wanna try to be syncing between your marketing tools.
Mike: One thing to kind of point out in terms of those things, like Bluetick has tags and custom fields. One thing that I use custom fields for is tying contacts inside of Bluetick to other applications. You’re not always using, for example, a numeric ID or an email address, depending on which tool you’re using. Some of them will use one or the other, or they’ll even have a hash of some other data value or of the email address, and it’s difficult to match the data from one tool to another unless you have that information included.
I actually use the custom field in Bluetick sometimes to attach it to some other products. For example, a pipedrive deal – I’ll add a pipedrive deal ID in as a custom field. That’s the name of it, and then there’s a value associated with it that says, “Here is ID 123,” for example, that you can use inside of Zapier or other tools to tie the data back and forth, or to be able to map events from one tool to another.
But along those lines, let’s talk about some of the different ways that you can map information from one tool to another. The first one is a manual or custom sync. When you’re doing this, really what you’re trying to do is just export data from one tool into another, and you may either be doing that through the API itself or you may be downloading a spreadsheet or creating a CSV file and uploading it. These things are brittle. That’s the biggest problem with this is that the tools themselves – they require a lot of code or engineering work to take those things and translate them and move the data from one tool to another. It’s really hard to keep up with the changes. That’s really the biggest drawback to this.
That said, it can be the easiest way to get up and running or to get an initial prototype of “Hey, how does this data sync or data transfer work?” but longer term, as you expand what you’re doing, it’s probably not a great strategy to rely on that too much because it is probably not automated. Yeah, you could create a scheduled job or a cron job someplace that runs it on a periodic basis, but that doesn’t necessarily mean that it’s going to be the best way because it is so brittle. It can fall down, and when it does, you may not even know that something went wrong or that it’s not doing what it’s supposed to until much later. Then it’s almost too late.
Rob: Yeah, unless you’re kind of at scale and you’re really gonna monitor it. I’ve written some manual – they’re like cron jobs and stuff that would sync up between systems, and it just seems like every three to six months, something would go pretty badly wrong, and I would have to investigate. I have to stop what I was doing.
It’s like if you have developers – have a team of developers and you’re maintaining a whole system, and this is just one piece of it – that’s cool. But if it’s literally you hacking together a PHP script and putting it in a directory and having it run on a cron, meaning on a schedule-basis, that’s not set-it-and-forget-it. You’re gonna need to send yourself emails when it fails. It may die. A bunch of stuff can happen with it, and so this is not an ideal thing, if you’re just running it on your own and you want a set-and-forget solution.
Mike: I think your point about having something break every three to six months is spot on, from what I’ve seen. I used to export the data from Gumroad into a spreadsheet, and then I would take that and then I had a small script that I wrote that would take that data and then upload it into Infusionsoft. Like you said, every three months, something would change, and then something would break. Then I’d have to spend time on it. It just really was not worth the time and effort. Because they didn’t really support a lot of other ways to get data in and out, it just made things harder and more difficult. It’s hard to deal with a time-consuming time sync.
Rob: The problem is as developers, it’s super easy to build this thing for the first time, and so it’s very appealing to do so. It’s kind of like, “I can just hack up a script here in an hour. There’s an API here. There’s an API here. I pull it out and put it in.” You can. That’s right. It’s not that part though. It’s the maintenance of it that’s the pain.
Mike: The next mechanism that you can look at is using a tool that’s built specifically for syncing data. The tool that come to mind right off are Zapier and If This Then That. I think that mostly what I found is that for individual events, this tends to be something that you turn towards. Zapier obviously has a huge base of applications that they work with. I think they’re up over 800 at this point. Finding an integration between one tool that you’re using and another tool is generally pretty straightforward, but the problem with doing those is that, depending on how complex your sales funnel is or your marketing funnel and what data you need to move from one to another – it’s very easy to miss or realize after the fact that you should have been forwarding this particular data over and you weren’t. Then you have to go set it up, and there’s this line in the sand drawn, so to speak, which is not – before that point, you almost have no data. You can go back and upload it afterwards using a Zapier integration and a spreadsheet or something like that, but it still means that you have to do extra work in order to get it.
I do find it really useful, to be perfectly honest. I have a lot of stuff tied in through Zapier, and it’s supported in Bluetick. So I don’t want to make it sound as if that’s not a viable route, but it can be easy to miss things – is really the point – if you don’t have your marketing funnel mapped out.
Rob: Yeah, I think Zapier’s pretty handy for marketing stuff actually. I know we use it with our own internal stuff and in our own internal marketing communications and getting data in and out. I know we recommend it to customers a lot. It kind of takes the place in the short term of a first-class integration, because we build a lot of integrations. I think we have 40-plus that are direct with Drip and something else, but Zapier gives us another – I don’t even know – hundred maybe, and that’s helpful. Then we can get reports on which are the most common Zaps, and then we can say, “Well, we should build first-class integration with that – with those folks.”
From a business owner’s perspective and you’re running your own startup, I think it’s definitely cool to have that Zapier integration. Then I think as a marketer, it can be a really valuable tool. You’re right. There is that thing of if you miss stuff, and then it’s a fiasco. They do have rate limiting, so if you hit Zapier’s endpoint – if an app hits it more than (I forget what the limit – it’s fairly low) – but if they hit it more than X amount per hour, then those things will just bounce, and so that app has to know to retry, which obviously we do with Drip, but I know there are a lot of other apps that are not doing that. There are pluses and minuses, but overall I give Zapier two thumbs up.
Then you mentioned If This Then That, which I’ve always viewed – I think it’s more of a consumer version of Zapier. If This Then That came first, and I remember some people being like, “Isn’t this just a clone of If This Then That?” It was like, “No. It’s like a B2B version.” They integrated with the apps that we, as entrepreneurs and business owners, wanted [inaudible 0:20:25]. If This Then That’s integrated with Yahoo! Pipes and all this kind of stuff on the internet that isn’t necessarily applicable to businesses. But I haven’t actually used If This Then That. I’ve only used Zapier.
Mike: Yeah. I signed up for If This Then That account a while back, because I was trying to link things between Dropbox folders, and it wasn’t – neither Zapier or If This Then That were able to look into a subfolder and monitor a subfolder that hadn’t yet been created. You can point it to a folder, but if you wanted to monitor it for files in directly that folder, it was fine. But if you wanted to monitor for a folder getting created and then files being added to that folder inside – neither one of them can do it. That’s not their fault. It’s basically Dropbox not being able to offer that.
I found the UI of If This Then That extremely confusing. I signed up for my account. I tried to use it. I probably spent several hours on it, and I’m like, “You know what? I’m done.” I literally deleted my account entirely. I couldn’t deal with it. Because I couldn’t figure out how to do anything. It didn’t seem like it gave you access to a lot of the underlying pieces of how it works. Your description of “it’s aimed at the consumer market,” that makes sense to me now, because I was just like, “How do you even offer a product like this?”
Rob: I think If This Then That has done a lot of integrations with home automations stuff. I think Zapier really has not. That says where they’ve differentiated.
There are other alternatives, of course, to these two, and we’ll link up a core, a thread when someone asks, “What are the alternatives.” There’s a big list there, if you’re interested in looking at more, but for my money, Zapier’s definitely the leader in terms of B2B and marketing data that we’re talking about.
Mike: The next mechanism you can try and use is a product called Segment. You can get this at segment.com. It used to be called Segment.io, but the big draw here is that it allows you to essentially replay some of the events that have happened in some of your different marketing automation tools or your different sales tools, and then pipe them to different places. It’s really good for doing that at scale, and because it gives you the capabilities of really just using one snippet of JavaScript, and you can turn on and off different tools in the application that you’re sending data to. And because it gives you that backlog of things, as soon as you connect it to your account or put it on your website, you then get a full history of all the previous things that have happened and can send them into a new tool.
Let’s say that you decide to move from one tool to another. Tool 2 is gonna be the go-to later on. You can always just turn that new one on and pipe all the previous data into it. I always thought that that was like a really fascinating way of doing things. They used to have a different pricing model as well. They would look at the tools that you were sending data into or pulling data from, and they would charge you more based on what those tools were. Like Salesforce, for example, tends to be an expensive tool, so it ended up being in a higher price tier even if you weren’t using it very much.
Rob: I didn’t realize you could replay old events with Segment.
Mike: I’ve not done it myself. I have seen – there was documentation. Like the last time I looked at it, in terms of how to do that stuff, that was my understanding was you could basically replay things to – basically pipe all your previous data into a second tool.
Let’s say, somebody wanted to switch from AWeber or something like that to Drip. They could take a lot of their old data and pipe it from – they used to go into AWeber – let’s say it’s 30 days or 60 days or whatever – and they say, “Okay. Take this 30 or 60 days’ worth of history and send it into Drip instead and replay it, so that that now in Drip will get all of that information.” I don’t know how far it goes back, but that was the sales pitch for it.
Rob: That’s interesting because I was going to say, “That would be hefty if they were keeping all your data forever.” That’s always the thing I thought they didn’t do, just because of the volume that they would have to absorb.
Mike: Yeah. My suspicion is that they don’t do that forever, but I would imagine that they probably have at least a semi-limited history. Even if it’s a couple of weeks, that couple of weeks could be important to you. If you wanted to just try out a new tool, it gives you a much easier way of doing that because when you sign into a new tool, especially if it’s any level of complexity, you’ve got nothing there, so you don’t really have a good idea of what it can do for you. But if you can prepopulate it with actual, live data from your own systems for the past couple of weeks – you sign up, pipe it all in, and boom! It’s there. You can actually use it and see what it would really do for you.
Rob: Yes. Segment.com is a solid tool. They integrate with a ton of things, and as you said, it’s not for the one-off moving tags and custom fields here and there. It’s an event-based system. It allows you – the original thing was that they allowed you to put the Segment JavaScript on your website, and then you could pipe it anywhere. You could pipe in into Kissmetrics or Mixpanel or (I think) Google Analytics. You can pipe it into Drip, which we integrate with them.
You could pull stuff into and out of HitTail, like they integrated with us back in the day. They actually wrote that integration, but now when you do it, I think you have to write your own – is my recollection. It’s a good tool, and it’s for masses of data. I think that it can be super helpful for getting data into and out of systems, and being able to report on them and not necessarily in Segment, but they integrate with a bunch of analytics and reporting tools.
That’s something – some people will come in. they’ll use Drip, and they’ll say, “I want all this fancy pivot table capabilities and blah blah blah. I want all this stuff.” It’s like, “We’re a marketing automation platform. We’re not a business intelligence platform. We’re not gonna build that into Drip,” but here, we integrate with Segment. We send a ton of data to them, so just hook up your Segment account, then pipe that into one of these BI tools and you’re set. You can do whatever you want. It allows us not to have to build the world into Drip and to be able to put boundaries on things.
Mike: I think using it as a data hub is extremely helpful. The downside of it is, of course, there’s a lot of complexity there, too, so you could easily spend hours, days, or even weeks just evaluating it and seeing if it’s gonna fit into your business and just spending the time learning how to use it. I found that when I first signed up for it a long time ago was that it was a huge time sync to really get up and running with it and understand how the different things worked and how it pipes data from one place to another and how you would do some of that data piping. That said, it is really powerful. You can do a lot with it.
Moving on to the next section. I think one of the key pieces of advice in a situation, where you’re trying to get all the data from one place to another is to settle on a single source of authority. That’s a phrase that I’ve used for years, talking about systems management software and trying to manage large numbers of machines, whether it’s a couple of 100 or 25-100 thousand machines all at once.
It’s very difficult to do that, if you don’t have a single source of authority for that information. Because if data gets out of sync, you need to know what is the master source where this information comes from. Who’s the gatekeeper of this?
Let’s say you got Tool 1 and Tool 2, and Tool 2 doesn’t have a piece of information, is it not supposed to have that information or does it not have it yet? You have no idea by looking at that tool or the other one, unless you’ve already decided which of those two is going to be the master data source.
Rob: Yeah. This is actually an interesting thing happening, with ESPs and marketing automation platforms – is we build Drip – I keep bringing back to Drip because this stuff’s really something we have dealt with a lot – is all this data syncing. This source of authority – I think Brian Dunn calls Drip his source of truth, in terms of the data. Or you could call it the customer database. Some people might call it a CRM, because really it is customer relationship management, but that has now been, in terms been bastardized into sales software.
What you’ll find out is if you do a lot of email marketing, then quickly your email provider (assuming it stores data like clicks and purchases and has your tags and has your events) – it can quickly and easily become your source of authority or your source of truth. That’s something we have been doubling down on as we notice more people doing that.
First it was solopreneurs who said, “Drip is where I keep all the data, and I want to get all the data in there.” Then we started seeing two and three-person companies. Now we have five and ten-person companies. Really interesting to see. We’ve [inaudible 0:28:36] down and started building more stuff to allow people to do that, and so I think if you are gonna do a lot of online marketing, that’s something to think about. It’ll probably be a CRM or a marketing automation platform that’s gonna be this customer database for you.
Mike: I think that actually brings up an interesting point that I run to – is that what is the idea or how do you identify who a person is in your source of authority? Is it gonna be an email address? Is it gonna be some sort of a generated unique identifier or something like that? Because it’s difficult when you get into a situation, where somebody signs up like they put in their credit card. All the billing information goes to that one email address, and then they sign up and they have a user account that is a different email address.
In marketing, the automation software – a lot of them, the email address is kind of that source of authority or that unique identifier for that person, and in the case of billing information, especially if it’s a one-user account, now you have two email addresses. It really is the same person, and it’s hard to differentiate between them sometimes. That’s why some people will go towards using a CRM for that, but again, there’s pluses and minuses in both aspects, whether you’re using a marketing automation tool like Drip or if you’re using a CRM. Both of them are gonna have pros and cons for that type of schema.
The last thing to talk about is how do you keep some of these data paths straight? I think there’s pretty basic guidelines about how to track the information flow from one tool to another, but the basic – you can start it out with is just a pen and paper. That’s easy to get started with, when you’re just trying to build out and map what your sales and marketing funnels look like, because you can just really quickly draw something out. But as it gets more complicated, you’re probably gonna have to graduate more towards a tool or a document or a spreadsheet that is going to allow you to put a lot more information in there.
Something that I found useful is to implement some sort of a workflow in either a desktop or a cloud-based workflow tool. There’s a bunch of them that I’ve tried. I’ve tried things like Gliffy. I’ve tried Draw.io. I’ve tried Moqups. I’ve tried doing things in Drip’s workflow tool as well, and that works great so long as you are operating within the confines of Drip. Once you start to go out of that and do things that are not involved directly with Drip, it sort of falls apart a little bit. That’s not a knock on Drip specifically.
Rob: Sure. Just the reality of it – yeah.
Mike: Yes. It’s just the reality of it. That’s not what it was for. The one I’ve actually settled on is a product called Lucidchart. Fairly inexpensive. It’s like $8 or $9 a month for one of their more advanced accounts, but you can get it for $5 a month on the lower end.
Rob: I’ve heard of it. I haven’t used it, but I’ve heard some people speak highly of it.
Mike: Yeah, it’s really good for being able to map out what a workflow looks like, in terms of how people enter your marketing funnel and how they go into another one. Then you can also have a bunch of different things wired together, so you can zoom in on one specific piece of it. Then you can just encompass it and say, “Okay, this is how people get onto our mailing lists,” and that’s like the whole workflow. Then once they’re there, you have a different diagram and document that describes how they move through the sales funnel itself or the onboarding funnel. Each one of those could be a completely different document. You just link back and forth between them.
Rob: I think that wraps us up for the day. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by MoOt. It’s used under creative commons. Subscribe to us in iTunes by searching for Startups and visit our website for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 350 | Launching Books, Compensation for a Side Project, Starting with A Lot of Runway, and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions including launching books, compensation for a side project, and starting a product with a lot of runway.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about launching books, compensation for a side project, starting a SaaS app with a lot of runway and more listener questions. This is Startups For The Rest Of Us episode 350. 350 episodes, Mike.
Mike: Wow. It didn’t even occur to me that this was 350.
Rob: It’s crazy. That’s almost seven years because we tend to release one a week.
Mike: I think it’s more than seven years. Because we started in 2010, didn’t we?
Rob: Yes, you’re right. It was late March of 2010.
Mike: So this is eight years?
Rob: No, because it’s 2017. It’s July 2017.
Mike: Oh yeah, you’re right.
Rob: I was trying to divide 350 by 52 and it’s only like 6.7, but you’re right. I don’t know how the numbering worked out. It’s weird.
Mike: I think it’s because there was a time for six months or so where we were going every other week for a while. That’s why it doesn’t quite work out.
Rob: Really? That wasn’t at the start, was it in the middle?
Mike: Yeah. It was probably a year into it or six months into it, something like that.
Rob: Okay, we dropped down because we had hundreds of listeners and it was like why are we doing this every week? Was that why we did it?
Mike: No. I think it was because we were trying to figure out whether or not it would impact growth and we had other things going on. We were just trying to figure out, “Okay, does it really matter?” And then, we went back and looked at the stats and said, “Hey, publishing once a week actually makes a huge difference.”
Rob: That’s right and we also, I remember early on, we had a tough time coming up with content every week. Remember we got like 20 something episodes in and we’re like, “Alright, that’s all we have to say. We’re done.”
Mike: We had no idea what we were going to talk about next. Of course, we were also a lot more careful about what we were doing, now we just shoot from the hips. It’s like yeah, whatever.
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: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: I’m hoping that I can get through this entire podcast episode without touching the mute button and then touching my face or mouth in any way, shape, or form because our cat started chewing on stuff including cables and chewed through a couple of cables so I’m like, “I don’t want it chewing through my headphones.” So I sprayed them and you run into at least three situations over the past few weeks, used my headphones, where I touched it and then I wipe my mouth or something like that. And let me tell you that anti-cat chewing on stuff tastes god awful. It’s the worst thing in the world and it doesn’t come off your hands.
Rob: Oh, I bet. There was something called Bitter Orange or Bitter Apple that my mom used to use because we had several dogs for that kind of stuff and I got it on my mouth once, it was horrendous. And yeah, your soap doesn’t take it off. That’s the point. It’s really, really hard to get off. You’ve been working on a video series here. What are you? Seven or eight days into this?
Mike: The ninth one got published this morning so the 10th will go out tomorrow. I’m doing an ask me anything for that one. By the time this airs, that’ll be over.
Rob: Cool. It’s the 21 days before your SaaS launch. If people head to singlefounder.com, they can sign up to hear more about it. I’ve watched every one of the videos although many of them at 1.7 or 1.8 speed, I’ll admit, but it’s been cool to follow along. I’m glad you’re doing this.
Mike: Cool. I’m publishing a new blogpost today probably that’s basically just going to open it up. Previously, I just had it available for the people on my mailing list but I’ve got enough comments and feedback and stuff that I think it might be beneficial to put it out there so that even if you’re not on the mailing list, if you just want to head over to the site and click on the videos and stuff, you can watch or barrel through them if you want to catch up. Yeah, I’ll be doing that today.
Rob: One thing you do that I had a question about is in every episode, you hold a bottle of whiskey and you talk a little bit about it for 30 seconds then you take a sip of it and then you go into what you did that day but I was trying to do loose math. I’m not that great at math, Mike, but if you’re doing 21 days and you hold up a different whiskey bottle, do you actually have 21 bottles of whiskey?
Mike: Do you want the honest answer to that question?
Rob: The honest answer, Mike.
Mike: There’s technicalities here. I probably have closer to 30 or 35, but in all fairness, somebody came over and dropped off a 12 pack of nips of Fireball at one point. If you include that, it’s a little higher than it should be.
Rob: I don’t count Fireball as whiskey, I’m sorry.
Mike: I don’t either. I was really torn about whether I’m even going to show Fireball. I think I might put several whiskeys together and be like this one’s terrible, and then drink it.
Rob: I thought it was funny. One of the best parts is you did Crown one day and then the next day you did the maple flavored or something and then you were like, “Ugh! This is god awful.” Like the look on your face was hilarious. I think you offended some people with that comment.
Mike: I don’t care. I’m sorry but it is a very fake maple taste. There are Maple whiskeys out there that you can get that actually have maple syrup in them but they tend to be classified more as a liquor than as whiskey just because of the content which there is technicalities there, I get it, but there’s another one called Sortilege, I’m not sure exactly how to pronounce it but that’s a liquor and it’s got whiskey and real maple syrup in it. It’s actually quite good. But the Maple Crown Royal is just awful.
I actually had somebody’s comment to me like thanks for turning me away from that because they were going to try it. In terms of full bottles of whiskey, I have 18 or 19 full sized bottles.
Rob: You’re going to have to run out last couple of days?
Mike: Yeah. Sometime between now and next week, I’ll probably go out and pick up a couple of extra bottles just so I’m not repeating some things.
Rob: That’s interesting because I drink a lot of whiskey but at any given time, I have maybe two or three bottle in the house and then as I finish, I’ll buy something else but I don’t have a big place where I could store that much, I don’t think.
Mike: Got it. I was born in Japan and my mother brought over all these Japanese hand carved furniture from Japan and she gave me the bar that they had so I have that fully stocked with all these different whiskeys. I used to just collect them but I got to the point, probably six months ago, I’m like, why am I collecting these? Why am I not just drinking these? I’ve been digging into them a little bit.
Rob: Now that we’ve lost all of our listeners, I think there’s three people left listening, they’re like, “When are these guys going to start talking about startups for the love of God.” For the last week on my end, I’ve been doing some hiring, more interviewing. We’ve been interviewing constantly pretty much since the acquisition but we hire slowly. We’re extremely picky about skill set and about personality and culture fit and a lot of elements so we hire a lot slower than most SaaS teams or most startup teams do.
We have just stumbled on two or three really good candidates in the past few weeks. It’s nice to grow the team slowly and a lot of people get on board and productive. I don’t know if I said it on the podcast but we’ve had several weeks of the highest feature velocity in terms of shipping new features. The last month or two is probably the highest in Drip’s history.
That’s just gut feel, I don’t have absolutely numbers on it but it’s like we’ve shipped a ton of a new stuff and that’s partially because we’re, in my opinion, actually growing the team slowly and I want people get up to speed so that when you’re constantly adding people, you’re detracting from that people who should be being productive because they have to train everybody and get them up to speed and everything. Looking ahead, I guess I’m just optimistic and enjoying. This is when it’s fun, it’s when you’re getting a lot done.
Mike: I’m surprised that Drip being acquired by Leadpages and Leadpages is a funded company. I’m just surprised that culture is there of hire slowly to make sure that you’re getting the right people as opposed to I think most people when they picture a Silicon Valley startup, it’s like, “Oh, just hire whoever you can possibly get your hands on to get them in there because you need bodies to generate code to put it out the door.”
I do think that it’s a much better approach but there’s a tradeoff there in which you’re going to have to move slower and release less features over a certain time frame because you just don’t have the people. At the same time it’s like, you’re releasing good features and they’re quality so you don’t have to go back and incur a lot of technical debt because those people are coming up to speed at the right pace, so to speak.
Rob: To their credit, Leadpages has let us make that decision and has basically said, “As long as Drip keeps growing and you’re scaling and you’re doing all the right things, like you have been in the past,” Drip’s four and a half years old based on when we broke around on code and it’s probably about three years old from when we launched, and they say, “as long as you keep doing what you’re doing, you can grow as fast or as slow as you want.” They let us drive that, us being Derek and I.
Again, it’s to their credit. They haven’t forced any type of hiring culture on us. Leadpages itself grew rather quickly. I think they hired 100 people in 2016. They hired a lot of people that year. They did do exactly what you’re talking about, the high growth funded startup approach but they haven’t forced that on us.
Something else too is we haven’t had to hire that many because I’m only talking about product and engineering, I’m not talking about support, sales, marketing, finance, HR or any of that because there was already that infrastructure. We have a team of I think 12 full time support people working on Drip right now and I really hired one, it was Andy who’s been with us essentially since the start and since pre-acquisition but I didn’t have to hire those 11 people. It is a bit of apples and oranges because Leadpages had to grow an entire organization and I only have to grow the product engineering org.
Mike: Yeah. That’s true. I have seen cases where a new company will come in and they’ll acquire a smaller company and then a lot of the administrative marketing or sales team ends up leaving just because the bigger company already has those things in place and the smaller company basically gets gutted and they move everybody or let them go because they don’t need those roles filled anymore, it’s overhead. They’ve already got those things in place.
You are definitely in a different position but like I said, it’s nice to be in a position where you can just make the right decisions because they’re the right decision as opposed to being told like hey, you have to do this because there’s money to spend or something like that.
Rob: I agree. The other thing that has been nice with this funding, basically “being funded,” is that we are hiring fewer people but since we are so picky, they tend to be really good and thus, they tend to be really expensive. They tend to make a lot of money where they’re at and they’re worth that and it was something that couldn’t have afforded when we were bootstrapped. I’m pretty much across the board all the salaries that we make and that we’re hiring the people at. They’re worth it, it’s market rate. I just couldn’t afford to do that when we were bootstrapped in Fresno. How about you, what’s going on before we dive into some questions?
Mike: Not much else, really. I’m adding a couple of more customers to Bluetick on the way to my launch. I talk a lot more about that probably in my video series. I’ll leave it there just in case anybody’s interested. I think the plan is to try and add as many customers before the launch as I possibly can. I’ve done a couple of private demos for people here and there. It’s just interesting showing certain screens or how to do certain things and it’s like the light bulb moment, they’re just like, “I want it. That’s enough, I don’t need to see the rest of it.” It’s actually difficult to shut up at that point because it’s like they’ve already said, “Here, take my money.” And you’re like, “Oh no, but you see this, see that, over here.”
Rob: That’s really cool, man. Really good to hear. Alright, we’re going to answer some listener questions today, they continue to come in. We’ve got a couple of voicemails but first, I’m going to kick off with an email from Dan Miller, and he says, “You inspired me to write a book.” He says, “I’m Dan Miller from Canberra, Australia. I’ve been listening to Startups For The Rest Of Us for about two years and my wife, Christy, and I also listen to Rob and Sherry’s podcast, ZenFounder. About a year ago, I decided to take the first steps to move out of full time software consulting. My long term idea is to start a SaaS but when I heard you guys talking about the stairstep approach, I realized that going straight from consulting to SaaS was probably too far of a leap so I decided to turn a bunch of development notes I had taken into a book and this is about on the MEAN stack.”
Mean is MongoDB, Express.js, AngularJS and Node.js, just a technology stack you can use to build apps. He’s built a lot of apps, kept a lot of notes and so he launched a book, it’s called Lean MEAN Web App Machine. Says it’s going to be available soon in print from Amazon and a PDF from Gumroad. His website is miller.productions, that’s not miller.productions.com. I think productions is actually the TLD. So it’s miller.productions and he says, “Thanks again for all your work and creations over the years, you guys really have inspired me. Keep it up. I look forward to following your progress and learning more from you.”
Mike: I do think one thing we probably haven’t emphasized enough about your stair step approach, Rob, is the fact that it’s not even just the experience level involved in building a SaaS but it’s also the resources that you need and the length of time that it takes to get something workable and viable out the door.
I spent six months after I got the initial version done just trying to get it to a point where people would look at it and say yes. Even though I gave you a pre-order and paid for it, I’m still not necessarily comfortable moving forward because the product just really wasn’t there yet and it took a long time to get there. I underestimated how long it would take to get through that process and I think that it’s very easy to do that.
Rob: Right, and lose motivation and you questioning whether you’re going to find customers eventually and you don’t have the runway. There are so many things that stair stepping takes care of and it’s not just actual skill set and money but it’s confidence. It’s just confidence that you’re going to make it happen because you have before on a smaller scale.
Mike: Yeah. I think in my situation it was more just the runway and the timeline and everything that went with it, not so much the confidence. With the pre-orders and stuff I had the confidence, it’s just the product wasn’t there yet. It’s like, “Oh, this sucks.” But getting through that second wave, I’ll say, or that second iteration on the product was extremely helpful. It was a lot longer than I expected it to be.
Rob: He also said he gave us a shout out in the acknowledgment section of his book so that’s cool. He did give a discount code, if you’re interested in buying this. First 50 listeners that purchase the PDF copy can enter offer code startups at the checkout. Thanks for writing, Dan. I appreciate it.
Mike: Thanks, Dan. I think our listeners will really appreciate that.
Rob: Next, we’re going to a voicemail question from Cory Moss.
Cory: Hey, Mike and Rob. This is Cory Moss. I have a side project I’ve been working on for a couple of years and I’ve grown it to about $800 a month. For a big code upgrade coming up, a developer friend of mine is joining my team of just me. He’s expressed ongoing interest so he might be around for a few weeks or he might be around for the life of the product. Given that there are no shares to split, how would you guys offer him compensation? Like I said, it’s a side project, it’s not a company. There are no salaries, there are no titles. I’m not working on it full time and I probably won’t be for a long time and it’s a side project so there’s a little risk. These are really the things that one user has to figure out equity. How would you recommend that I compensate myself for the time that I put in versus how do I make sure he feels compensated even if he only ends up helping me out for a couple of weeks? Thanks for everything you do. I appreciate it.
Mike: Cory, it’s an interesting situation just because of the fact that it’s a small product and I think what strikes me, there’s a few different pieces that I plucked out of this. The first one was that you’ve been running this for a while, a couple of years now and it’s at $800 a month so it sounds to me like the growth is not there yet. It doesn’t mean that it won’t come but it doesn’t sound like it’s on a hockey stick trajectory where you can count on revenue from this upgrade being large enough to sustain both of you full time.
The other thing you need to consider is is this person really interested in coming on as a business partner? Is the product itself capable of supporting either salaries or dividends for both of you and can you afford to just pay him outright? Those are all kind of considerations that you need to think about. But I think that because of the situation you’re in, I would probably lean towards at the very least talking to him and just establishing an initial compensation to see how things work out.
I think that that does a couple of different things for you because if you just jump right into a partnership or relationship of any kind like that, then you can very easily have issues down the road where you find out that you don’t work very well together. Bringing him in on a consulting basis or I don’t want to call it partnership basis but to assist with the certain pieces of it, then it gets you through that and it gets you some familiarity with how you each work and whether or not you’re going to work well together. I would just pay for that outright with the understanding that yes, we can talk about that other stuff down the road but right now, let’s just see how this works out first.
You could also, depending on what the actual profit margin is, you could potentially pay for that out of profits down the road especially if you don’t have the money to pay him upfront right now. If you could work something out, say, “This is how much it’s making, $800, I’ll give you $400 or $600 every month for the next x months until your time is paid off.” That’s another way to approach it. Essentially, you are using, I’ll say worker financing, to get the work done and still be able to pay for it. Because otherwise, you got to front the money and that might be difficult based on what situation you’re in.
But I would try a short term approach where you just do some consulting work together a little bit, feel things out, see if it works out. If it doesn’t, that’s the end of it and you’re good. If it does, then you can discuss where to go next and whether or not the business has an opportunity to succeed both of you putting time and effort into it. And then you can figure out what does that look like. In terms of valuation of what your time is worth and how much you’ve put into it, I would probably look to see how much is it currently worth today and you can guess about how much time and effort you’ve put into it but it may very well put the product completely out of reach of somebody buying into it.
The other mechanism obviously is you could say, “Okay, we’ll buy it in a lower amount and then we both work x number of hours or you put in x number of hours in addition to what I’m putting in, to make up the difference. At that point they’re putting sweat equity into it and at some point, they’re vested at 50% or 25%, whatever the split between you two is. Those are the kinds of things that come to mind but Rob, what are your thoughts on this?
Rob: This is a tough one. Sometimes, handshake deals, honestly, can be a way to go if it’s someone like a long term friend and you really do trust the person. What I mean by that is, Chris said there’s no stock to split. He probably owns it personally, it’s not an entity on its own and it probably goes straight to his schedule C income on his tax returns so there’s nothing to give out. But I question if starting a LLC or even going so far as to formalize a partnership, I don’t know if that’s worth the effort given how little revenue it makes and how slow it’s growing.
I guess that’s where I would use my judgment. For example, if suddenly I had a side project and it was doing similar amounts of money and someone wanted to explore this opportunity, I do think that there would be a certain number of weeks or months where it would make sense to do the trial like you said and then if things work out and things do start growing, then you formalize it. That is something we did with DotNetInvoice. It was never really its own business entity but in the US, you can do something called just a partnership agreement. I think you can file that with the state, I don’t even remember but you basically sign a partnership agreement and there’s not stock but you can do an equity split.
You can just say I own 90%, you own 10% or whatever. And again, you have to ask yourself then, what if he only sticks around six months, is it worth the 5% or the 10% or whatever number you’re giving him. Because you can do restricted stuff and I don’t know how this is getting far beyond my understanding of technically, if it took you to court, is there a way to restrict partnership ownership, I don’t know. I’ve heard of restricted shares and stuff like that.
With DotNetInvoice, with Jeremy, the guy who I partnered on it with, he came along later as very much similar to this and it was doing $2,000 a month or something, we just signed an agreement and we view this legally binding between us but frankly, I don’t know how it would have gone over in court. We just didn’t expect that to happen and we were good friends and we’d worked together for a decade doing consulting.
It was a handshake deal that we put in writing and both signed and then he basically got more and more equity over the course of a year as he contributed more. He, in essence, did vest when that was the idea of it. I’m not saying you should or shouldn’t do that, to be frank. It was just how we handled it because we had that relationship and it worked out. I owned DotNetInvoice for several years and then since then, when I divested myself of everything as Drip got bigger, I actually gave the product to him, my ownership half. We just dissolved the partnership and now he owns it.
There’s a lot there and this is a complicated topic. I’m glad you called in and I hope that’s helpful, Cory. As we said last episode, people who send voicemails, you tend to go straight to the top of the cue. Cory just called in in the past couple of weeks.
Our next question is from Juka and he says, “You pointed out that it might be a bad idea to expand your product into a new feature area because you probably won’t be best of breed in both.”
I think he’s referring to me talking about how we’ve kept Drip focused on email marketing, marketing automation and we haven’t attached all these other apps to it. We haven’t built a shopping cart or landing pages or affiliate management like some of our competitors have done. Continuing with this email, he says, “Since that’s what he’s planning to do. I’d like to get into more detail on this. For example, using two separate best of breed products will most likely be more expensive than one product that does both things. Wouldn’t people appreciate the lower total price and the tighter integration as well? Personally, I’m starting out with time tracking and planning to add invoicing and accounting and later on maybe even stuff like payroll, CRM, etc. I don’t have much of a vision for my product besides that it’s meant to help people deal with stuff related to running a business. But I also want to make it very good. I think I’m headed towards having best of breed time tracking and I think I can implement the other stuff well too. What’s your take on this?”
Mike: I think when you’re looking at this specific situation, the thing to keep in mind is whether or not the features that you’re adding, could they stand as a completely separate products on their own or is it something that really needs to be integrated into the product that you currently have?
There are certainly products that go out there in the marketplace and over time as people make more requests, they expand their footprint and they get more functionality and then they cost more and they tend to move up and away from the customer base that they originally started with. There’s nothing fundamentally wrong with that but you do have to recognize that as you add more features and become much less of a point solution and become more of a, I don’t really want to call it a platform, but a one stop shop for accomplishing all things within a particular silo, then you start to eliminate yourself from contention for consideration via certain segment of the population because they’re not interested in all those other things. They need one or two pieces of it but not the whole thing.
You could make it modular and say buy this or buy that and do ala carte sort of thing but then things get really, really messy so I probably wouldn’t recommend that. I don’t think that having two best of breed products and making them work really well together is a bad strategy. It does pose some marketing challenges though because how do you present that in such a way that it is obvious to people that you can either buy this or but that or you can get this suite of products that lumps them together. That’s probably a better approach.
That way, you silo it all underneath a corporate umbrella where everybody is coming to you for solving problems in this particular niche and if you need the CRM, you get this. If you need the invoice and accounting, you get this piece over here and by the way, you can lump them together and instead of paying $50 for each of them, you can pay $75.
That’s similar to the strategy that Intercom has gone with a lot of their products. They have four different products right now and you can buy them individually or you can buy them in a bundle and it costs you less money to buy them all as a bundle. But otherwise, you get them individually. For you as a consumer, the benefit of that is in theory, the company behind it is all working on the same code base or on the same teams and they have much better access to the code behind it and the teams and can do a much tighter integration that works better than if you were to tie things together using Zapier or custom webhooks or anything like that.
I don’t know if it’s the worst thing in the world to go in that direction but there are people out there who are just looking for a point solution. You have to be cognisant of that facts because that may be all that they want.
Rob: I think if you are in a vertical market, meaning you have time tracking for hair stylists, or for electricians, or for designers, whatever, like a really niched down market, I actually think you could add these other things and be okay, you still will not have multiple best of breeds because you cannot out compete teams who are totally focused on just that space or just that one app.
You can build a good product. It’s keeping up with all the feature requests and the changing environment. You got to think about people who have teams of 10 or 20 engineers and if they’re just focused on time tracking, they are going to out feature you and they’re very likely going to out innovate you and if you have time tracking, you were saying the CRM and whatever else, you’re going to get smoked. You will not have best of breed products in all of those spaces.
Again, unless you’re in that vertical where you really have niched down and then you may have it within that space again, the hairstylers’ space and the designer’s space is a tough one because there’s a lot of people doing it for that. That’s why I’m not saying like designers, developers, or freelancers because there are so many time tracking apps there. So if you’ve picked a vertical, then maybe I would perhaps consider building out an entire business suite. But if you have a horse on a product that you’re going to service everyone, I would say that there is zero chance of that happening.
With that said, if you have zero customers right now and you aren’t already dealing with support and adding features and all that stuff, then you need to launch before you start building anything or building anything further. If you believe you have a best of breed time tracking app, then take it to market and see what happens. I don’t believe that adding on another piece is going to help but you will know once you have 500 customers or 1,000 customers. You’ll know exactly what people are asking for and you’ll know what can potentially retain more customers or broaden your market. That’s my take on it. I hope that’s helpful.
Our last question for the day comes from Tom and he says, “I’ve been wanting to do a SaaS startup for the last few years but I run a consulting firm. Not in the same situation as a lot of other people, I have been a software engineer for over 10 years and my custom software consulting business does several million dollars a year. I have been able to put myself in a good spot financially.” He says he has runway of six to seven years. He says, “If you did have the cash to go full time with a runway of six or seven years, would you recommend going after a larger SaaS business even though you do not want to raise funding? Is a super long runway and a lot of determination enough or are you still going to need to raise several million dollars in VC to tackle something that’s either saturated or creating a somewhat new market?”
Mike: I think that springs an interesting question about the potential for having too much runway. The reason I say too much runway is that if you try to build something and you don’t have enough runway, obviously, you’re going to fail because you run out of runway, you can’t get the product out the door in the time that you have.
But if you have too much, you run into the opposite problem where your motivations to finish things or to get it out in the market as soon as you possibly can so that you can learn things is going to be impacted and you run the risk of waiting too long to launch and packing so many things in there that really doesn’t matter to the customers.
I think that that’s something that you need to keep in mind when you’re looking at this. I would probably cut that down and put it into chunks and say cap it on certain things. Let’s say 18 months or something like that for a particular idea that you’re going to pursue. If it doesn’t start to get any sort of traction, then you kill it and move on to another one. I think that’s a good approach because you do have the runway to be able to make those types of decisions and chop it up but being able get the traction within a certain amount of time is going to be critically important for this.
I do think you got plenty of runway to try a SaaS, even if it’s your first time out because you have enough runway to fail several times along the way or find several ideas that you start and make same false steps and it doesn’t ultimately impact negatively. There’s no negative repercussions for going down this road and failing or having it not work out. Or even just break even. That’s not exactly the situation you’re looking for.
But again, you have to keep in mind that that’s going to be a hard thing to deal with and you will have to think about it because you can easily get to a point where you’re like, “Oh, screw it. I don’t want to deal with this customer support issue. I’m just going to shut the whole thing down because I don’t like what these people are saying.”
Rob: Yeah. You’re in a great spot admittedly, right? Not doing it on the side is just a better way to go. Because it’s not as stressful as trying to hack nights and weekends. I’d been there and I wouldn’t do that again if I had the means. When I’m think of having six or seven years of runway, I’m just going to throw out a number, I’m imagining you have $600,000 in the bank, maybe it’s $400,000 but it’s probably a substantial sum of money.
The question to ask yourself is how much of that are you willing to spend and feel okay about? Because if it really does take you two or three years to get there, you might chew through hundreds or thousands of dollars, will you be okay with that? Some people are okay, it’s risk capital or whatever and they’re willing to put it in and other people, it would drive them nuts to be drawing their savings down like that.
The other question I would throw out is do you plan to do this solo because it’s going to take a lot longer or do you plan to hire a couple of people to help you? Because when I look back at how we grew Drip which is basically, I was in a smaller position as Tom, I didn’t have enough money in the back but HitTail was throwing off enough cash that we basically funded Drip using HitTail. By the time we broke even, I was out somewhere between $150,000 and $200,000. Not just because of my expenses but because I hired people to help us.
If you want to move faster and you think about hiring people, you may not have six or seven years of runway. I’m just going to take this $200,000, set that aside and then the rest of it I’m not going to touch at all. That’s my personal money that I’m not willing to get into and then use that $200,000 kind of as your own little angel round. And put that in the bank, the company bank account in essence, that you start and draw off that as you hire, as you pay for hosting expenses. There’s just going to be other expenses, it’s not just your living expenses, unfortunately. Especially if you’re trying to go into a bigger or more crowded space. That’s my initial thoughts on the money part.
Then there’s the question of if you have never launched a SaaS app and you want to launch into a place where it’s crowded and there’s VC funding and there is all kinds of chaos, basically red water, they call it. Personally, I would not have had the skills to do it until I had done several of my software products, until I had done HitTail. That set me up to do Drip. It gave me the skills and the confidence and the experience and all the things that I talk about with stair stepping.
I guess you have to judge for yourself, I would try not to be overly optimistic that just having six years and determination are going to mean that you can compete in a big space. I don’t think you need the VC money either though, like Tom said in his email, but I do think you need a skillset and some experience and the confidence that you can do it, otherwise you may get six or nine months in, get discouraged and bail because you’re wasting money or you may get two years in and since you’re just learning so much at once because all of the moving parts of SaaS, not just the tech, right? It’s the marketing, the sales and the customer’s success, and the support. All that stuff, trying to learn all that at once, it’s going to be a big learning curve.
Those are my thoughts. I think that you got to do some soul searching and know yourself on this one.
Mike: One thing that came to mind as you were talking about all that was that if you have this much of a runway, you could also consider just buying an app that somebody else doesn’t want to work on anymore, that is already making $10,000 or $20,000 a month and then using your runway to grow that. That takes a lot of the risk out of finding the market and finding customers and it allows you to put yourself in a position where you’ve got money in the bank that you can use to help scale the business. And as long as you can find something that would have the type of trajectory you would like it to have, it just needs some funding and money behind it, you’ve got that to bring to bear. That might be an option as well.
Rob: Yeah. I was totally going to say that. I’m glad you brought that up. That’s actually what I would do. That’s what I did multiple times. You can gain experience that way and it can be lucrative and you do have to put some money out upfront. As soon as I hit the point with consulting where I had a bit more money than I had time, that’s when I started saying how can I spend less time but still get to the same end?
I think some of the best decisions I’ve made in my entrepreneurial career were acquiring DotNetInvoice, acquiring HitTail, acquiring a couple of the other products I did because I learned so much and it gave me the means to basically change my life and then to fund future red water market stuff like Drip. I think that’s a real avenue I would explore myself.
Mike: Tom, I hope that was helpful and thanks for the question.
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Episode 349 | Things to Consider When Building Your Launch Plan
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about things to consider when building your launch plan, both from a preparation and execution stand point.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about elements to consider when building a launch plan. This is Startups For The Rest Of Us episode 349.
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: 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: Not much, I’m just getting back into the swing of things. As I talked about last week, I was working remote from Chicago at a cello camp for my oldest. Back in Minneapolis this weekend after spending a day and hanging out over the weekend in the Wisconsin Dells, which I’ve never heard of, but when we drove through it, I saw a bunch of resorts there and so I wound up taking my son to a big water slide and stuff on the way back, kind of as a high five for slogging through a week’s worth of cello camp. It feels good, it’s always good.
I like traveling but I like that feeling of getting home, getting settled, having my stuff where it is, my external monitor. There’s just a certain piece that comes about returning back home. The cool part is I tend to be more productive because it’s kind of like my home is a new place because I haven’t been there for a while.
Mike: I hate travelling and trying to get any work done on the road, I just can’t do it. It’s more because of the access to the external monitors and having everything set up the way that I like it and need it to be. I hear what you’re saying about coming back to your home base and getting re familiarized with where you’re at and having to re energize a little bit but I just can’t work on the road, that’s just me.
Rob: What’s interesting is I’m very productive on the road, not in long stretches, I can’t just sit and work for eight hours, but I find that if I sit down for an hour here and an hour there, I get two or three hours worth of work done because it’s hyper focus and I’m just hammering through stuff. Although I don’t have my setup, I feel like I don’t get distracted, no one interrupts me. I feel like there’s a good balance. Last week in Chicago in the dorms, I was hammering on stuff.
I really felt like I got a lot of productive thinking done. That’s the kind of stuff that’s harder to do in the office because you’re just in the day to day slog of things. I do feel like having a good mix for me is probably the optimal approach.
Mike: You just said dorms, was it like in a college campus?
Rob: Yeah, it was on a college campus.
Mike: You’re partying the entire time and living up your college years.
Rob: Partying with a bunch of 10 year olds. I had my 10 year old there. It was fun. I do enjoy that, the college vibe. Obviously, it’s a middle summer, there were no college kids around. I enjoy the feel of campuses, I really enjoyed my college years and so to wake up and be in the dorms and then go to the dining hall. We brought scooters and just the scoot around campus was pretty relaxing and it was a fun time to spend with one kid.
We have two kids. When you’re with them all the time, it’s they like they fight amongst each other and you get frustrated with them but when you pair it down and you do an extended period of time with just one child, it’s like, “Whoa, I’m so jealous of people who were smart enough to stop after one.”
Mike: It’s funny. I had talked to a guy who had, I think he had five or six kids. We were asking him over lunch one day like, “What is the difference between having one kid, two kids, three kids, etcetera?” He’s like, “If you have one kid, it’s really not a big deal. It’s obviously like a shock because you’re going from zero to one, it changes a lot of things but it’s not really any different. Having two kids is like having three because sometimes you have one or the other and then when they’re together, they fight. It’s like having three.”
He’s like, “Three is no big deal, four, you have to buy a bigger car, five is not a big deal and then six you have to buy a bigger house.” It was interesting to hear him map out what the progression was, I’m like, “Nope, stopping at two.”
Rob: Anyways, we’ve gone off on a tangent here. What’s been going on with you before we dive into today’s topic?
Mike: I’m working on my Bluetick launch plan. I’ve realized that my notes were all over the place at the moment, just in various notebooks or different apps and things like that. I got to consolidate them into one specific launch plan and focus on the things that I really need to do and that I’m going to do versus the things that I would like to do because I can’t do everything on that launch plan within the three weeks that I have.
But one of thing I am going to do that’s kind of an offshoot of this is putting together a short video series called 21 Days Behind the Scenes of a SaaS Launch with a subtitle of with whisky to drown the sorrows, because I know that there’s things that I’m going to want to do that I’m just not going to be able to. I’m going to basically record a three to five minute video at the end of each day and document the daily successes and failures leading up to the launch. I’m just going to talk about the highs and lows and put them out there and see if resonates with people and if people enjoy it.
Rob: That sounds super cool. Actually, it reminds me a little bit of what Derek and I did with the Drip startups stories podcast where we just had nine months of audio and I edit it down to a couple hours but this is like more focused and intense and just about the launch. I like this idea.
Are you considering turning it into audio as well because that’d be cool, whether you drip it out as a podcast and an RSS feed people could subscribe to or you just slapped it all into one big audio file and let people download it. I think that could be interesting because I don’t know that I, personally, will watch this much video but I absolutely would listen to the audio.
Mike: I hadn’t actually thought about putting it together in a bunch of mp3s or a single mp3 and aggregating all of the audio together but that’s a really good idea, I’ll probably do that at some point. Obviously, I won’t do it on a daily or whatever. I’ll just have somebody go back through the whole thing afterwards.
Rob: Something that might be interesting if it really was one audio file, would be just to push it out on this feed so listeners could just get it as an app. We just make it other half episode or just an unnumbered episode, people could hear it. We could also do that with the Drip Series that Derek and I recorded, it’s like 90 minutes worth of audio but throwing it into RSS feed, people don’t have to listen to it if they don’t want to, it could be interesting. I can’t believe I never thought of that before now.
Mike: That would be cool. I listened to that as well and I thought it was really interesting to hear. The difference, I think, between what you did versus what I’m doing, I’m doing it more because when I heard yours, I was like, “That’s an awesome idea. I should do that.” I just never did it because I don’t really have anybody else to talk to about some of the behind the scenes stuff and I’m not going to record people on my mastermind group or anything like that.
I was like, “Well, I’ll just hold off.” But then the idea came to me to do a video series of behind the scenes and literally just like the 21 days leading up to it. All of this is like three to five minutes each day and encompassing like, “Hey, how did things go today? What’s up on deck next? How did things go?” I think that would be really interesting for people to hear.
Rob: If people want to follow to that, where do they go?
Mike: At the moment, I don’t have a landing page or anything like that setup for it but I’m going to be putting one up.
Rob: Boo! Boo!
Mike: I just thought of it yesterday, come on, give me a break.
Rob: Are you going to put it at singlefounder.com or do you have a domain or anything we can give people because you realize this is going to go live next week and you’ll already have started this.
Mike: I’m probably going to do it from singlefounder.com at the moment. People can go there, there’ll be a blog post on it and then they can go signup directly from there specifically for that. I’m going to send something out to my mailing list and say, “Hey, if you want to listen to this, you can listen to it but it’ll be separate.”
Rob: Let’s both plan, once you have that landing page or blog post up, you and I obviously will tweet it out. Anyone listening to this, if this sounds cool, seriously, go there and subscribe and tweet it out, let’s try to give Mike some love on this and build a little bit of Twitter buzz around this because I think this is a pretty cool little adventure you’re going on.
Mike: That leads us into today’s episode which, as I said before, these are things to consider when building your launch plan. It’s interesting, I went back through some of our older episodes and in episode 121, we had seven catastrophically common launch mistakes. Do you want to go through one real quick first?
Rob: Yeah, for sure. The seven mistakes we had, obviously you can go back and listen to it in its entirety, but mistake number one was not putting up a landing page before you start coding, number two is not tracking key metrics from the start, number three is saying people are finding you through “word of mouth” which really means I don’t know how people are finding us, mistake number four is running an open beta, mistake number five is launching with a single launch email when you should have between two and six, probably, mistake number six was having a free plan unless you really know what you’re doing and mistake number seven was not growing fast enough because you need to grow fast enough to keep yourself interested or you will abandon it.
Mike: Today’s list is a little bit different than that. These are more longer term things that you need to think about way in advance when you get to the point of building a software product and launching it. What we’re going to go over today is more about the short term things where you have a limited time window of whether it’s a month or two months, it’s an arbitrarily selected time period but in my case, I’ve got three weeks. The idea is to walk through the things that you should be considering when you’re putting together that launch plan.
The first one is to have a written plan. I think that this one sounds obvious but the idea here is to have a written checklist for you to work through so that you don’t have to stop at any point and think, “What should I do next?” Everything is all written out and you’ve already decided on that stuff. You don’t have to make any more decisions at that point. Your past self has already made those decisions.
Presumably, you trust your past self to make those decisions. At that point, you’re just iterating through all of the different things you’ve already decided that need to be done. By virtue of that, it’s going to make you more productive because you don’t have to stop and think about those things.
Rob: I used to not do written plans and I would try to keep it in my head. I would have scrolls here and a notebook and stuff there, just flailing around. When I was doing smaller launches with smaller products, it didn’t really matter because I only had a couple tactics. Once I started leveling up, especially into, I think it was HitTail where I made a big turning point, that’s when I started the Google Doc, it’s the marketing game plan, I think it’s what I called, HitTail marketing game plan. I basically just copied that over to start Drip and it becomes a long list of bullets.
I think now, I look back at Drip which I haven’t used for years but it was 12, 13 pages of pretty detailed, structured thoughts, it wasn’t just random stuff. But it was so helpful as we were going and we could just execute in line. That was the overarching marketing approach of like these are things we should try. But actually, for the launch itself, there is one subsection, I was like, “Do this on this day, do this on that day. Just in line, get these people on board to help promote, email a list here with these five email sequence.”
I really did think it through which sounds like it could be boring or whatever to think all that through but it’s like the timing is so critical and if you forget something until the day before that you should’ve done a week before, you can’t go back and redo it. I really think more folks should have written plans when they’re coming into a launch like this.
Mike: What you just said about the timing of different things is just super important because you can’t go back in time and do something that you forgot about. As long as you’re writing these things down, then at least they’re in front of you and you can think about, “Well, this is supposed to happen a week before but is there anything that leads up to that?” You do some backward planning at that point to determine if there are previous things that you should be doing or that you need to do in order to get to that point.
A lot of times, they’re just like these little things, you need to set up this webpage or you need to design this landing page over here. There are lots of little things that could easily slip through the cracks and you don’t want them to. The reason for that is because they lead to the next one which is being selective about what you do.
The first one on that list is decide what not do during that time because you don’t want to decide to do something or try to do something that is just not going to get done. If you do that, then what happens is it pushes your time back and it introduces these artificial delays.
If you’re already working towards let’s say 21 days or 30 days, if something delays your launch sequence or the plans that you have by let’s say 3 days or 4 days, then you have to decide what to cut out because it’s going to be hard to push back your launch date if you have a lot of other things that are already in place, that are going live on a specific day whether you’ve arranged with podcasters to put out specific episode on specific days or PR releases, things like that. You need to be careful about what those timelines look like.
The third one is to leverage your strengths. Rob, I think you did an entire talk about this at MicroConf one year, but most of this boils down to who you know, who knows you, and your relationships with different influencers. You need to know what your strengths are in terms of not just the product development but talking to people about your product. If you’re the founder of the product, you have a good idea of exactly what it does and how it can be used and who it’s going to be a good fit for.
It would be very difficult to bring somebody in the last minute to help you with those types of things unless there is no additional information that they’re going to need in order to be able to implement their piece of the project or their piece of the launch. If it’s completely standalone, they could do that, that’s great. But you’re going to have to be the person who’s the point person on a lot of that stuff. You need to be able to use your strengths to accomplish some of those goals.
If there are things where you fall short, you may need to bring in that extra help and just be aware of the places where you’re probably going to spend a lot of extra time as opposed to somebody who you just hired to do a very specific thing and hand it off to them and say, “I need you to this and this is everything that needs to be done with it.” And let them go so that it saves you time in the long run.
Rob: This is where cultivating a network, or an audience, or some pretty epic skills really come in handy and these are the things that you only build out over time. Who you know, who knows you, those are the things that you’re not going to solve that in the next 21 days, you need to attend conferences, or been blogging and met other bloggers, or had a podcast and have an audience.
That’s something that takes so long to build but this is where you start calling in favors, and this is where you start talking to your audience about it, and this is where you start really making a few withdrawals from that trust bank account or the relationship bank account that you’ve built up over the years by offering advice, helping people, and giving stuff away for free. This is one of those times where you’re going to start calling back some of those favors and some of the value you’ve given into the world.
Mike: Essentially, that’s capitalizing on that social capital that you’ve cultivated, as you said.
Rob: Exactly.
Mike: The fourth one on this list is relentless execution. Rob, you’ve mentioned this phrase a bunch of different times either on this podcast, or on ZenFounder, or in some of your MicroConf talks. I really like this phrase of relentless execution but you have to make the most of the time that you do have to put into the work that you’re doing. If you’re launching something else aside, you probably only have a couple of hours a day or even a limited time period per week to be working on this launch and you need to maximize the productivity for the time that you are working.
If you focus on that productivity, if you’re making sure that, “Hey, I need to be productive during this two hour stretch that I have.” Don’t let anything interrupt you and make sure that you don’t get distracted by things that are essentially meaningless. The font, for example, on a webpage is off, it’s not really that big a deal, there are probably much bigger things that you need to worry about. Just blog it as an item to come back to and then move on, it’s not on your launch list, go ahead and do something else.
Not everything is going to need to be perfect and it is worth taking those things, just setting them aside and walking away even if it bugs you. I would have a hard time with that. I do have a hard time with those types of things because I look at something and I’m a little OCD and I’m like. “Hey, this just sucks. I can’t deal with that.” But you have to be able to put those aside. If you write them on a list that says, “Hey, I am going to come back to this.” It makes that process of walking away from those things a little bit easier.
Rob: Yeah. During this three-week period, specifically this is where you have to really bring your A game and you need to remove the distractions. This is where I would probably go on a complete social media fast aside from what’s needed to promote your launch, I wouldn’t be reading the news, I wouldn’t be checking Twitter during the day, I would be getting that epic playlist together or perhaps this single song that I would loop for three weeks straight and have that general dose of caffeine every morning, every afternoon. This is where you need to bring everything you have because you have to execute on this and it can have such a huge impact on how the app gets started and the motivation.
If you have a good launch, you’re so motivated to continue. If your launch tanks, it’s tough, it’s tough to pick yourself back up after month and months of preparation for this point. This is where you need to relentlessly execute, as we’re saying.
Mike: The next one is to be a little bit mindful of how you’re presenting your products to people. This is more of a features versus benefits type of idea which we talked about in the past on this podcast. But you need to demonstrate how it benefits users versus how good the product is and what it does. You want to focus on what the users are going to get out of it and how well it’s going to help them do their job and make their lives easier versus these are all the different things that you can do with the product. They can do this, they can do that, etcetera, all those things don’t matter, what really matters is what they’re going to get out of it.
Again, this is something we talked quite a bit about so I don’t want to beat a dead horse, but it is important to think about that when you are putting together this list that says, “Oh we need to create this webpage or that webpage.” If it doesn’t fall into this bracket and allows you to present it in such a way that it’s going to resonate with people, then I would just skip it and move on because those are the things that are brand awareness that aren’t really going to help you, specifically during a launch.
Rob: The next thing to think about is to balance your long term and your short term goals because if you think about it, you can have a big initial splash that leads to waves of signups which tends to be good. Now, realize that that may clear out your pipeline for a while so your second and third months could potentially fall off, I guess, from there. Also, make sure that you have things like your tracking pixels and your analytics in place and you’re going to want to test and verify these.
If you want retargeting pixel from Facebook or from Perfect Audience, if you want certainly Google Analytics, whether you use Kissmetrics or Mixpanel, you want this stuff in place before you start driving traffic because you really want to know how they’re finding you, who’s signing up, who’s getting the most value and who’s sticking around.
Mike: Along with that, you really want to make sure that there is a stopping point where if somebody is not quite ready to buy, at least you have mechanisms for capturing their email address so that you can follow up with them later. If they’re not totally on board right now when you’re doing your product launch, at least have mechanisms to get their email address so that you can put them into an email series, either that’s a short term email course or a longer term follow ups, something along those lines.
If nothing else, you want to be able to at least get their email address. Tracking pixels do help to be able to bring people back but it’s not quite as good as getting an email addresses so that you can send them direct emails later on.
The last one for preparation is to accept critical feedback but be mindful of the trolls. Not everybody is going to be supportive or is even worth listening to. There are going to be some people who are not supportive or dismissive of what it is that you’re working on and you can just walk away from those. You can either listen to them or read them or whatever, have the conversation with them and nod your head and say yes, okay, I’ll think about it and then walk away and just let it go because some people are going to have things to say that are absolutely not worth listening to.
There’s going to be others that you are going to look at and say yes, this is important stuff but is it important right now? You don’t feel the need to act on every single piece of critical feedback. I heard a podcast episode from, I think it was Craig Hewitt and Dave Rodenbaugh a couple of weeks ago on Rouge Startups where they were talking about Craig was going through his launch and Dave have commented that as a strategy for support, you can’t listen to everything that somebody says and implement all of it. It’s really only going to get you about 30% of the way.
That’s so true. What it will do is it will eat away your time when you’re doing the launch and even shortly afterwards. You can’t just listen to everybody and do everything that they want, you have to be selective about it and filter out the things that are going to be important to large numbers of people and take the things that are not and set them aside and then come back to them later and decide whether or not you’re going to do anything with them or you’re just going to let them sit there.
Rob: It’s always tough to balance this when you only have a few data points and somebody complains about your pricing, it’s always something you doubted early on. Once you have hundreds or thousands of data points, you just learn what kind of noise and what the concensus is.
It is definitely hard early on to take feedback and figure out which is most valuable and which you should listen to. It’s just something you got to be mindful of. It’s kind of a learned skill but it also goes away with time. As the older the product gets, the more mature it gets. You just learn where it is. This is a hard one especially for folks who are just getting started.
Mike: That walks us through a lot of the preparation for a product launch. We’re going to talk a little bit now about specifically some of the execution. The first thing that you want to do is you want to look at how to prime the pumps, there’s a bunch of different ways that you can prime the pumps for your launch. The first one is an email list. What you want to do is you want to plan out when you’re going to send the emails, who you’re going to send them to and what you’re going to say in each of those emails.
I think it’s really helpful to print out a copy of the calendar and write on it and say, “I’m going to send out an email to this list on this date and it’s going to say X, Y, or Z.” You don’t have to write out the entire email at that point, you’re really just trying to build an outline of it and work backwards from the times that you want to send those emails.
In episode 121, mistake number 5 was launching with a single launch email, I have at least 2, possibly up to 4. That advice absolutely applies here. You want to plan out the number of emails that you’re going to send, when you’re going to send them, and what the headline is. That’s the place I would probably spend the most time, is on that headline to make sure it gets opened because if those emails are not getting opened, then the contents of the email are almost immaterial at that point.
But planning out when those emails are going to send and then setting everything up so that they are sent at that time automatically in the background whether they’re using Drip or anything else that’s out there. You want to make sure that those emails are going out when they’re supposed to go out because you can’t send them retroactively after the date has already passed.
Rob: Yup. Email launch, that’s the big deal. We’ve talked a lot about that in the past and that’s the thing you’re going to want to focus on a lot. Another thing to think about is when you start your podcast tour. If you haven’t heard of this, this is something I stumbled upon after revamping HitTail and I went on this big tour of all these appropriate podcast. I measured the impact each of them gave me as I went along and I went all these in a MicroConf talk.
The fun part about podcast tours is you’re able to reach a lot of folks through audio which means they tend to be a little more engaged than when reading a blog post. It’s such a small amount of time because you show up for 30 minutes to have a conversation and then a couple weeks later, you show up on someone’s podcast and you reach 5,000, 10,000 people. The thing you’re thinking about here is when should you do this, who to reach out to and how long it’s going to take for that episode to go live. Because if you record a bunch now, some podcaster booked out a few months. Other podcasters record and go live a few days later.
This is where you got to start thinking about there’s a whole bunch to learn about this. We don’t have time to go into how you plan all this but it’s something to consider if you’re up for getting on some podcast, I think that this is something that didn’t really exist. 10 years ago there were a few podcast here and there but there wasn’t nearly the audience for this kind of stuff as there is today.
Mike: The next one is to look where you can promote your launch to things like Product Hunt, or BetaList, or Hacker News. You have to be a little bit sensitive about some of the different communities that are out there because some of them are very accepting of people coming in and say, “Hey, I’ve got a product launch going on.” Some of them are not. It also depends a lot on how you go into those or how involved you have been in those communities in the past. A lot of this has to do with social capital at that point but some of them, it doesn’t matter really matter.
With Product Hunt, you don’t necessarily have to have a large following or a voice in the community, it’s a lot easier to just post with something like Hacker News or Reddit. You have to be a lot more sensitive about that. They are not very receptive to external people who are not members of the community and never really contributed, just coming in and trying to market themselves. Be a little bit sensitive to that but other ones that come up, you could go in and you could try to pitch TechCrunch, or Master Ball, or various tech blogs.
If you know influencers then you can reach out to them, and ask to either do a guest post, or appear on their blog, or if they have a video series or something like that, there are ways to get in front of their audience as well. That’s really the point here, you’re trying to leverage other people’s audiences in order to help bring about awareness of your product.
Anything where you’re getting onto an email list or mentions on blogs. Even if you’re not directly on a podcast, for example, at least if you can get a mention, that’s going to be helpful, you’re going to get some traffic from those assuming that it’s the right target market for that.
Rob: This is also stuff that you have to prep in advance. If you have relationships with these folks, whether it’s the Big Tech Blogs or whether it’s someone who composed the product for you. It’s so much better to not just hit these things cold and then have some type of plan that you’ve worked out in advance. There’s a bunch of blog posts and resources online. If you Google how to do a product launch or how to pitch TechCrunch for your startup launch, you can read through these and get a gist of what works.
These are crap shoots. If you’re relying on either of these for you launch, it’s a really bad sign because you can do it and either get 0 signups or you can get 1,000 signups. Even if you get 1,000 signups, a lot of people are just checking out what’s going on, they’re not actually looking for the apps.
It’s that method that TechCrunch launched, getting linked to from TechCrunch is not going to make your startup, it’s going to send some traffic to you from a bunch of people who like to try out a lot of different apps and your churn is going to likely be very, very high.
That’s not a reason not to do them, this will give you an incremental bump and they’re worth doing if they work but these are the exciting, fun things that when you do them it’s accelerating. I think they’re worth doing and they can definitely make you some money but these should not be the pillar of your launch approach, the email list. Emailing the launch list really is that pillar.
Another interesting approach, and it’s one that I’ve only seen done a few times, but it’s to launch at an in person event like at a conference. I spoke at LES Conf five years ago maybe. Brennan Dunn launched Planscope at that conference and I think Intercom spoke there. I don’t think they launched at LES conf but it was very close to the time that they launched. I just thought it’s an interesting idea if you can time it for that and you can get either a little stage time.
I don’t know if Brennan’s sponsored or if Steven Alan just gave him stage time but he had five minutes where he just stood up and he said, “Hey, I’m launching. Here is my background. I have this app, check it out.” It was for freelancers, obviously. There were bunch of freelancers there.
It’s an interesting idea and I think I’ve seen some folks launch at MicroConf as well. They either tried to attendee talk where they’re able to talk to through their process or mention their app in some say. Obviously, this is not giving you an audience of 10,000 people but since it’s in person, people can come up and talk to you and I actually think there’s a lot of value if you can swing this.
Mike: The big downside to something like that, I think there’s two. One is there’s only so much of you to go around and the audience is going to be much smaller than you would get. The big benefit of that is you get that in person, in depth conversation with somebody that you wouldn’t get if they just hit your webpage or they read an article someplace else and then came to your site. They don’t get to ask questions and you don’t get to ask questions, either. That’s the big thing that I’ve noticed in doing a lot of in person demos.
Right now, for example, with Bluetick, you still can’t sign up for it unless you talk directly to me. I’ve done that very intentionally so that when I’m talking to somebody, if I ask somebody a question, I get to hear them pause, I get to hear not just the words that they say but how they say them. That stuff is very, very important when you’re trying to figure out what is important to them and what’s not. If you get a question that says, “Hey, can I do this?” You can ask them, “Is that important to you?” “No, I was just asking.”
It’s very good to be able to differentiate between those two types of questions and you can do that in an in person situation. It’s just much harder to do that if you get that type of question through an email.
The last one is to put together some explainer videos. I think that this is important just because sometimes it’s really difficult to rely on your sales copy. You may have a group of people who you have treated as beta customers, you’ve talked to them, you’ve on boarded them and you’ve heard what they have to say but sometimes, presenting that in such a way that an anonymous person who comes to your website and sees it for the first time is not necessarily going to understand it as well as if you had that in person conversation with them.
An explainer video can be a really good way to enhance the sales copy that you have and inform people about what the product is going to do for them and how it’s going to work and answer some of the questions and overcome some of the objections that they have, in a way that your text and copy is not going to be able to. I think that relying on those explainer videos as sort of a crutch can really help you especially if some of your sales copy is a little bit deficient or it’s not quite where it needs to be.
I find that a lot of the sales copy is really helpful from an SEO perspective. When somebody comes to your website and doesn’t have any preconceived notions about what something is but the video is really, really helpful. You can show your app and it helps give them that little bit of extra trust as well because they see the app, they see exactly what the state it’s in. It gives them an idea of what it is that they’re buying into versus if you send somebody an email without the screenshots even.
A video is better than screenshots because you can show them this how it works and this is what it will do for you versus telling them what it’ll do and maybe giving them a screenshot. It’s just more in depth and more engaging.
Rob: I have a blog post that we will link up in the show notes called How I Created 4 Startup Explainer Videos for $11. It talks you through the process that I used to create some low fidelity and just crappy bootstrapped explainer videos that we had on the homepage of the Drip website for a couple years, actually.
I do think that there’s a lot of value in explainer videos as well especially if you can execute pretty well on them and they don’t feel cheap and they do show the benefits. Like you said, there’s always a balance to video versus text, some people like to skim but if you create 60 second explainer video, it can have a lot of impact, a lot more than just a wall of text.
Mike: Yeah. I have an explainer video for Bluetick that I did when the product is a different name, and at a different URL and unfortunately, that name is used inside the explainer video so I have to redo the entire video.
Rob: That’s a bummer.
Mike: I did really well with the video and it worked well to explain what it did. It’s just the old name is plastered all over it.
Rob: I think that wraps us up for the day. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com.
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Episode 348 | Finding Product/Market Fit, Organizing Notes for Maximum Effect, Growing from $100k to $1M, and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions. The topics include finding product/market fit, organizing notes for maximum effect, and growing from $100k to $1M.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about finding product market fit, organizing notes for maximum effect, growing from $100,000 of ARR to $1 million and more listener questions. This is Startups for the Rest of Us episode 348.
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: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike: As I said on the last episode, I kind of finished up almost the tech stuff that I’ve been working on and started switching over to working on the website marketing stuff and currently targeting a public launch date of August 1st. I’m kind of greasing the wheels of the marketing pipeline at the moment and doing everything that can possibly be done in the amount of time that I have.
Rob: Very nice. It’s about three and a half weeks from now.
Mike: Yeah, above three and a half weeks from when this episode goes live.
Rob: From whenever we record.
Mike: Yeah, whatever. Something along those lines.
Rob: It’s a few weeks. You must feel pretty good about it then. You must be pretty close to getting things out the door.
Mike: I do. There’s still a few things that need to be taken care of between now and then so I’ve realized that as I’m putting together the website itself to do some price turning, that there are certain things that need to be in place that are not there yet just so that I can charge different amounts based on different things. Maybe they’ll be there. Maybe they won’t when it goes live but if I need to toggle stuff on the backend, or do certain things, or just give people stuff that they normally shouldn’t have access to for the time being, then that’s probably not a big deal. I’m just finding those little edge cases here and there and reworking some things as necessary to make that happen.
One thing that I’ve realized over the past couple of weeks is that I added a customer, I think a week or two ago, and they had this massive mailbox that went back for years and years and had like almost 750,000 emails in their mailbox. The system generally held up pretty well. I’m pretty pleased with how that stuff is going right now.
Rob: That’s exciting. It’s nice to have some confidence going into a launch like this. You didn’t just up and build a product and have no one use it, not know if they get value, not know all the bugs that you have because you inevitably will until people use it. No app survives first contact with the real customer without having bugs.
You’ve taken this slow launch approach of trickling people in, getting your 20, 25 early customers in. That is obviously a more conservative way of doing it than the Silicon Valley pay $500,000 for some massive launch party. I realized that’s a strong argument. A lot of people don’t do that.
But even if you have a lot of funding, you want to move really fast that you staff up, and you build quickly, and then you just do this big splash launch. You’re like, “Alright, product hunt, man. Product hunt’s going to do it.” But then, if you product hunt and you haven’t already had 20, 30, 40 people touch this app, you just don’t know what’s going to happen.
As engineers, we know all the pitfalls and ways things can go wrong. While this is a slower, more calculated and more conservative way of doing it, this is obviously the approach that we espouse on the show. It’s that more careful, calculated, repeatable way to do it. It’s how I’ve launched a bunch of apps and how you’re launching Bluetick here.
Mike: I think the interesting thing is I’m looking at the app now and I see places where clearly things will start to break or slow down just because of performance and depending on what it is, sometimes, I just look at it and say, “I’m going to let this go.” Versus other times where like, and this mainly has to do with data sorting, paging, and making sure that you’re not returning too many things on the browser.
Those are few places where I’ve looked at and just said, “It can handle it. It’s not great. It’s not awesome user experience, but it works, so for the time being, I can just push it off and I’ll fix it later especially if customers start to run into it or it becomes a big deal. But it works, it’s not going to fall over. I’m not going to stop everything and put it on hold for another month or two to fix those things. I may as well just push it out there.”
Rob: You’re always going to have some part of your app that feels that way. There’s always a page or two that you’re embarrassed about, that you’re concerned it’s going to break, that’s too slow for large accounts. That will never stop.
Mike: I have a single-page application.
Rob: Oh Mike. Listeners can’t see me putting my head into my palm. For me, I’m actually working from Chicago this week. I’m with my son. We’re at his cello camp. We used to go to Oregon for this but now that we live in Minneapolis, it makes sense to come to Chicago. To be honest, it brings back memories, I was at the Oregon cello camp last year. I was signing life changing Drip acquisition documents on my iPhone with my finger from inside the halls of a music building on a small college campus that no one’s ever heard of in Central Oregon. It was just this.
I remember feeling overwhelmed and I couldn’t think straight. We’ve been talking about this for a year and doing negotiations for six months and then I keep thinking to myself shouldn’t I be calm, cool, and collected like at my home office with my laptop but no, I was running in and out. I dropped the kid off at cello, a lesson or a group thing, and then I ran outside and then I read on my phone, oh my gosh, this piece fell through. I’d get a thing to sign to override this and to sign over. It was exhilarating. It was also super stressful. But being here reminds me of that because it is the one year anniversary of the Drip acquisition just a couple of days ago.
Mike: Today, now you can sit there without the dirty looks from the other parents.
Rob: I know. That’s right. It’s Suzuki method of teaching cello and strings and so the parents were supposed to heavily participate and I actually had to talk to a couple of the teachers and I said, “Look, I have something going on right now. I’m in the process. My company’s being acquired. I need you to cut me some slack for a couple of days here.” That was fun.
Let’s kick off today’s episode with a voicemail question. Note to the listeners. If you want to get your question to the top of the stack, send a voicemail because we don’t get very many of them and it’s always cool to hear people’s actual voice. It’s just a better experience for everyone. It feels like The Collin Show. With that said, someone sent us a voicemail with a question for you, Mike, about Bluetick.
Andrew: Hi Mike and Rob, this is Andrew calling from Australia. Mike, I’ve got a question for you in relation to Bluetick. You talk a lot about product market fit. Have you found with Bluetick that you’ve had a general type of customer or have you found already that Bluetick has started to be suited for either a particular industry vertical, a particular customer type in terms of size of the company, or to some other characteristic in terms of the groupings of your customers? Love the show and hope to hear you guys answer this question on air. Thanks. Bye.
Mike: From the customers that I’m working with right now, they fall into a certain set of categories. I’m not saying that these categories of people, the customer profile that I currently have for the people that I’m working with right now is the long term ultimate customer base, I guess, of Bluetick. It’s just what I found so far and what seems to be successful.
They fall into a couple of different buckets. The first one is startup founders who are trying to validate an idea and most of them are trying to do cold outreach and get in front of customers or try and reach out to people that they think would be a good fit for their software. They plug people into Bluetick and it does essentially cold outbound outreach for those people and try to get those conversations started. That’s one group.
A second group is podcasters, to be honest. People who are running podcasts and are trying to get sponsorships for their podcast are using Bluetick to do that outreach to people they think would be a good fit and then start those conversations and then enter into the individual emails back and forth to try and get them to buy into a sponsorship for those podcasts.
A third category is small businesses who have an inbound lead funnel. Most of these are services based businesses where somebody will fill out a form on their website and the customer is approaching them and then they need to fill that request and probably ask for more information or try and get them to the next step. But what they’re finding is that a lot of people will fill out a form on their website or request information and then go dark or go silent.
What Bluetick does at that point is that because it’s a warm contact, it will help bring them back to the table. Very similar to Rob, you guys in Drip have this feature where you can send out a broadcast email and then several days later you can reschedule that same email to go out with a different headline if the person doesn’t open it. Bluetick, because of the way that it works, after the first attempt, if it doesn’t receive a response from the person, it will try again and again and again.
Those additional steps in the email sequence tend to aggregate together and give you a much higher response rate than if you just sent out one email, waited and if they didn’t respond, then you kind of walked away from the conversation. That’s the profile that I’m currently finding success with and people are comparing other products to Bluetick. There’s a lot of different cold outbound tools out there or tools that will remind you, “Hey, you sent an email to this person and they didn’t respond.” But Bluetick aggregates those things together, not just their features, but also the fact that it’s got a mini CRM built into it and helps you give a bigger picture of the whole thing.
That’s where I’m at right now. I don’t know if that completely answers the question but there’s a few different buckets that they fall into and I haven’t found one specifically that is better or substantially worse than the other.
Rob: Yeah, that’s cool. I go back and forth on this. As an entrepreneur, early on in your entrepreneurial journey, it’s like I stuck to apps that really had a tight vertical niche and I feel like that is a good way to keep things simple, you know where to find them. I like that approach. However, there are tools that in order to grow to a reasonable size, they’re in such a competitive space that I guess it could be argued that you could say that Bluetick is advanced follow up in sales for podcasters. You could start out that way and then expand. Land and expand is what it’s called and then go horizontal.
I think it’s too early to decide that right now. Podcasters may be too small of a niche, although it is growing.
Mike: It’s interesting that you say that that’s a small niche. I agree with you that it is but they talk to each other a lot. I get a lot of referral in that. I think that’s partly why I’m getting traction there. It’s because they talk to each other and they’re saying, “How do I solve this problem of getting sponsors for my podcast?” And then they say, “Hey, use this tool. It’s really helpful.”
Rob: That’s the thing. I say it’s a small niche but small is in quotes. If you would’ve build this to let’s say it tops out $30,000, $40,000, $50,000 a month, which I think there are enough podcasters to do that for sure. That’s small compared to a multimillion dollar app or some Silicon Valley exit. But that’s a heck of a lifestyle business if you want to keep it that way.
If you own the niche and you’re the name in doing and then you add things in that that really help podcasters find sponsorships, and then you could even branch out into, well, conferences need sponsorships. That’s the whole reason you built Bluetick, originally, was to help with getting sponsorships from MicroConf.
There are other things you could easily translate into so we’re definitely getting, I’m getting ahead of you on this or ahead of ourselves and I don’t think we need to make this decision or the distinction yet but I do think it’s an interesting conversation that you probably have or should have going in the back of your mind of do I need to go vertical because there’s so much competition. Because you have to be different somehow. You don’t just want to be one of many apps that’s doing the same thing.
You either want to go vertical with it and build the best one for that group of people or you want to have a feature or two that really make you stand out where they say, “Well how are you different with the five other apps that do this?” And you can say, “Well, it’s this and that and this is the approach we take. It’s the light way to CRM.” Or whatever it is that you’ve built in that’s different, that you at least have a talking point and aren’t just a commodity.
Thank you for the question. I like that one. I appreciate it. Our next question is from Aaron Cordova. He’s asking about notebook organization. He says, “How do you organize your notes? I’ve recently started note taking with an iPad Pro and a pencil. Do you have a page per day? Do you organize by topics?”
I used to use my notebooks both for longer term notes and thinking and things I was thinking through and I use it for to-dos. I tried so many to-do apps over the years and I finally switched to Trello. I can’t go back now because Trello keeps it on the cloud, have a record that never goes away. I can never lose it. I can access it from all my devices. I really like to-dos being in an app somewhere and Trello is finally the one that broke me with that.
Now, my notes are really just in a black, a Moleskine notebook and I do not do a page a day because I don’t write in my notebook everyday. I still use Evernote for some work things. I use Trello for to-do lists and I use my notebook when I am on an airplane, when I’m deep thinking, when I’m trying to hash through a problem because paper and pen is just I think so much better with that than sitting in front of a computer because there’s no distraction.
If I were to flip through my notebook, I definitely date my pages and I put a topic at the top. If I’m going to be thinking through one problem, or taking action notes from a book that I’m listening to, or trying to think of what else I’ve written on my notebook recently, I tend to put things in there I want to say for a long time. If I know that it’s just super scratch brainstorm-y stuff or it’s, I don’t even know, like a grocery list or something that I know I’m not going to care about in a month, then I don’t put it in my notebook. My notebooks, I keep them pretty much forever. I have notebooks going back ten years and I do flip through them and I have some fascinating insights that when I look back and think, “Man, your view of the world was so different back then.” Or maybe the world was genuinely so different. Just the founder community and the entrepreneurial community and my aspirations for it.
All that to say, I don’t organize by topics because I just flip to the next page, I put a date, and then I flip through. This means that I don’t particularly have a great organizational system. When I remember, “Oh, I remember Derek and I talked about this and I noted that down.” I have to think in my head. I bet that was about six months ago. And then I do, I flip through the notebook and I find the page.
While it’s not the most efficient way to get there, what I really like about it is the serendipity. Typically, when I’m flipping through that notebook, I’m reviewing like six, eight months worth of thoughts that I have forgotten about. Actually, the act of looking through them often will remind me of like, “Oh yeah, there was this feature we were totally going to build.” Or “Oh yeah, we never implemented that one thing.” Or “I never got back to that person.” It’s like all this stuff that isn’t urgent and doesn’t keep coming back on the radar, but it was a really good idea four, five months ago.
For me, my notebook is more of a time capsule. It’s for deep thinking and thought process. That was actually why I don’t like Evernote for it, because Evernote, I know it’s great if you want to search or any of these note taking apps. Great, if you want to search and you know what you’re looking for, but if you just want to kick back with a cold beer in one hand and a notebook on the other and you just want to flip through and read things almost like a dead tree or paperback book, that’s the experience that I relish and that’s what I love about my notebooks.
That was more information you probably ever want to hear about it and maybe a unique use case. I’m curious to hear what your take is on this.
Mike: I’ve tried Evernote and Trello. I still have my Evernote account. I just don’t ever use it and there’s things in there that I don’t go back and find or look at. The problem I found with both Evernote and Trello is that if I’m using it for any sort of to-do list or task management or anything like that, I end up with so many things in there that it just really falls apart. It’s too general purpose.
What I tend to do is it’s broken down based on what it is that I’m doing. Usually, what I’ll do is I’ll either start with index cards for a set of daily tasks that I need to do and get through and I can just mark them off as I’m getting through them. Occasionally, what will happen is that something will stay on an index card for too long and it will end up on the next day’s index card or the next week’s. If things end up there for too long, what I do is I essentially end up promoting it to some other place.
Sometimes, I’ll have a notebook where I will write down short term notes about something I’m working on, whether it’s really complicated or has a lot of things that I need to keep track of and I’ll write them down on paper. But at some point, like you’ve marked off a bunch of stuff and then you end up with 5 to 10 pages worth of stuff but half the pages are all crossed off, it doesn’t really make sense anymore and you can’t move them around.
At that point, I start moving things over into tools. For anything that is a bug or feature related, it tends to end up in FogBugz. Most of my general purpose tasks, or if it’s a marketing task, or related to a specific project, it usually ends up in my teamwork account. If it’s some sort of a thing that needs to go on a shared list that I use for home stuff, I use something called AnyList. I have a paid account that I share with my wife because it’s a family account so we’ll put our grocery list and things like that on it. It works really, really well for that.
Outside of that, I will also use Google Docs for taking long form notes about a particular problem that I’m working on where I don’t want to write it down if it’s not just a really quick thing or if I need to think about a lot of stuff, I’ll put it in Google Docs.
And then for mental brain dumps at the end of each day or at the end of each week, I have a journaling app that I have a subscription to called Penzu. That system works really well for me because each of those tools tend to be focused on a particular type of problem that it’s solving and it has the tools and the features and all the things that go with it that allow me to keep things organized within that context. Once I start crossing the borders between different context, the tools tend to fall apart. You can use FogBugz for marketing tasks but you don’t really necessarily want to be paying for a FogBugz account to give some contractor or somebody who is not going to touch any of your development stuff. Giving them a FogBugz account is kind of pointless so it’s easier to put that stuff in the teamwork.
I have a tendency to feel like this type of problem, it’s going to be different for everybody. That’s why there’s so many different to-do list apps and note taking apps because everybody works differently and you ultimately settle on something that works for you. The other 99 apps that you tried didn’t ultimately work out. I feel like this is a very context sensitive problem in terms of the type of person you are.
Rob: Yup. And the process you use and how you want to handle it. I agree. Thanks for the question, Aaron. I hope that was helpful. Our next couple of questions are from John. He says, “Hi Mike and Rob. I’ve been listening to your podcast for about a year and I get bummed when Stitcher doesn’t have your podcast ready to listen to every Tuesday before I ride to work. I have a couple of questions. First is what are your thoughts on pay what you want pricing? I’ve created a software called Breakneck Install which is a downloadable application that helps developers quickly create an installer for their application.
There are giants in the market and my product can’t compete with them. I don’t feel like I could charge near what they do which is more than $500 per license. I thought of trying to pay what you want model. One of the benefits I see is not having to worry about licensing issues such as maintaining and creating backend infrastructure to deal with licensing. My fear is that I try this and then decide to go a traditional pricing model which may make future customers unhappy. Do you have any thoughts on this?”
Mike: I think for a product like this where you’re trying to build an installer, it almost feels to me like what you’re going to run into is the market is going to be split between these people who are just starting out and they’re trying to build a product but they don’t have any money so you’re not going to get them to donate money to your cause.
It’s not going to be a viable source of income. If it’s something that you want to do because you have the money laying around and you want to put your effort into something like this, then that’s fine but I wouldn’t look at pay what you want pricing for something like that to really be able to make a dent in your bottom line and be able to let you go full time on it. I just don’t think that it’s going to happen.
There are also a lot of open source alternatives out there that would make something like this difficult. You’re absolutely right when it comes to installers, most of them tend to be very expensive and what you’ll find is that the people who don’t have the money will go for the free open source versions. And even if you give them a paid option that is a pay whatever you want, it seems to me like you’re probably not going to get very much money from that. They’re not necessarily going to be willing to pay software maintenance and things like that.
You’re going to spend a lot more time fixing bugs and addressing individual issues than you are trying to build the product where if you were just selling it to smaller businesses that had revenue and the capabilities to pay $500 to $1,000 per license, you’d be able to make a business out of it.
Rob: I have mixed feelings about this. I’ve never done it so I can’t speak from experience. I can only speak from the experience of entrepreneurs who I’ve seen done it and who I’ve talked to. It can work but you need a really large install base. You need a lot of people downloading so you can’t just say I have a few hundred downloads a month and expect that you’re going to be able to do pay as you go and make any kind of money from it.
The problem is that if you do pay as you go and someone pays you $10, how much support do you now owe them? If they start asking for feature requests, if there are bugs that they discovered, if they’re demanding, if stuff goes sideways, it becomes a challenge. I can see a lot of problems with this and my gut is that it’s not going to work unless you are getting, I don’t know what the number is, but it’s thousands and thousands of downloads per month, because a bunch of people are going to pay you nothing, and then a few are going to pay you a small amount.
When podcasters try this, when other small, downloadable WordPress plugins or whatever try it, they don’t tend to get a lot of money. I don’t know that I agree with your fear that if you were to have pay as you go for now, that you can’t undo that later without making future customers unhappy. I think what I would say is I’d rather call it a beta, or an early access, or put some moniker on it and I would say, “It’s pay as you go while it’s an early access.” Even if you already released it and it’s not an early access anymore, that’s what I would do so that if you decide that you don’t want to go pay as you go anymore, that it just doesn’t work out financially, you can always undo that and it’s a pretty easy thing.
I’ve seen apps go from free to paid before. If you grandfather people who already have it, I don’t really know what complaint future potential customers could have other than, “Oh, I should’ve downloaded it last month instead of waiting till now.” There’s a time where I tripled the pricing of DotNetInvoice from $100 to $300, and a couple of people emailed me and said, “Hey, I was in the process of thinking about buying it. Can I still get it for $95, or $98, or whatever it was?” I gave it to them. It was like two or three people.
One I later regretted, he actually turned out to be the worst customer, the first toxic customers that we had but that’s beside the point. I don’t know. It’s easy enough to try. I see your point. I think if you have something that can’t compete in the marketplace like going freemium or pay as you go is often not the right answer. The right answer is make something that can compete in the market place. Have a differentiator or just set a cheaper price.
If this thing really does do a good chunk of what developers need, they can only get it for $500 elsewhere, then what about charging $99 or $199. You don’t necessarily want to be the low price leader but is there a space in the market. You think about Infusionsoft, Eloqua, all these really expensive marketing automations and Drip came in at the beginning, a lighter weight product that was easier to use and less expensive. I do think that there’s an angle that could be added there as well.
Mike: I think the lower price point is definitely an angle that you can go at because there are certainly ways that you could charge a couple of hundred dollars for an installer. I do like your idea about letting people know, “Hey, this is pay as you go for the time being.” And then make it a point that it is something that you can undo later and move to some other one. Just be upfront and clear to people like, “Hey, this is the pricing for now and it’s going to change. We just don’t know what it is yet.”
Rob: Our next question is about growing from $100,000 of ARR to $1 million. This is from Pawel Brzeminski. He says, “Hi Rob and Mike. I’ve been listening to the podcast for years. I really respect what you’ve done and that you’re sharing all this knowledge with the rest of us. I found your podcast immensely helpful in launching my own SaaS app, which is called Snap Projections. How do you think about growing a self fronted SaaS past $100,000 ARR? So that’s about $8,000 or $9,000 a month. What do you specifically pay attention to in terms of marketing, sales, operations, hiring? Any specific tips on growing in a vertical niche versus horizontal? What would you do differently right now?” It says more of a question for Rob but it would be interesting Mike’s take as well. “Anything specific to watch out for?” His background on them is that they have two people on board, more than 120 clients/customers, relatively low churn, and they’re operating in a niche of financial services applicable to Canada only.
Mike: I’ll be honest. I don’t know how qualified I am to actually answer this question so Rob, why don’t you throw some things out there and maybe there’s something I can think of, I’ll just piggyback on it.
Rob: For sure. It’s a really broad question but I appreciate it. It’s almost like what are the things to watch out for because they’ve already had a decent amount of success obviously to get to even that $8,000, $9,000, or $10,000 mark. It’s like what’s the difference to get to seven figures or what has to change between then and now?
What my experience with this is that it’s going to depend on how big the market is that you are in. I’d bring up Drip because that’s the most recent thing I’ve done. We were in a position where we were in such a large space that we didn’t have to change anything in terms of our market. We didn’t have to go from vertical to horizontal or do any of that because there were enough people who wanted it that we needed to do it. We needed to execute on marketing and hiring in essence. Keeping developers going to build features but really, the product, once we had product-market fit, has always been really solid.
I think that’s the first question to ask. If you really are in a niche of financial services in Canada only, it’s like is the market even big enough to get you to a million or are you going to have to either go into another vertical or go more horizontal and serve a lot of vertical niches or just not even be vertical at all. That’s one thing to think about.
I think you can definitely get to seven figures with a very small number of employees or contractors, somewhere between 5 and 10. I think one thing to watch out for is hiring too quickly or trying to hire ahead of revenue because you want to get there faster. It’s a lesson that I learned. It doesn’t necessarily, especially hiring developers, it doesn’t necessarily make that revenue move faster. If you’re already at that $10,000 point, I always would try to look at what is my bottleneck? Why are we not growing faster? Is it because our product needs more features or is it because we’re not marketing or selling enough?
My next hire would be either a developer, or it would be a marketer, or a salesperson, or we’d start doing demos, or whatever. When we were in that $10,000 to $20,000 MRR range, maybe we just hit $25,000, that was when I realized that not having someone who could talk to people on the phone and essentially do customer success/sales, that was a limiting factor for us and that’s when we brought Anna on. That was a game changer for us. That was a bottleneck for us in that $20,000 to $30,000 range.
You may be there but then again, you may be that salesperson and that’s not a limiting factor and it’s more of your market’s too small and your development team is moving too slow or whatever and they need more help. That’s the thing I think that you need to think about at every point is whether you’re at $10,000 or you’re at $50,000, what is your limiting factor? What’s going to double your growth next month or add 50% of your growth to next month because you want growth. The bigger you get, you have to accelerate growth.
When you’re at $10,000, growing at $1,000 a month is actually a victory. At the time you get $20,000, $30,000, you want to start growing at $5,000 a month so you need to think differently about how am I going to 5x growth between those two points. That often means you’re either growing wider, building features faster or dumping more money in the marketing or getting into paid ads, finding a new channel, because that can be a big piece of it. You may just need more people on the top of the funnel. That may be a thing or you may need to close more people that are in the funnel.
That’s why I use all those rules of thumb that we’ve talked about in the past. If you’re already converting 40% to 60% of your trials to paid and you’re asking for credit card up front, then that’s fine. I would push that aside for now and I wouldn’t try to improve my on boarding and I would say, “How can we just get more people to the top of this funnel?” But if your churn is 10% per month, well then, “How are we going to cut churn by making a product better and by retaining more people?”
It’s looking at each of these things and just bouncing from one to the next and you improve one and then you put more people in top of the funnel and you realize, “Oh, now this other thing is broken.” And you just hop from thing to thing. That’s kind of a brain dump of how I thought about it but I hope that gives us some things to chew on.
Mike: I like everything that you just said there. It boils down to recognizing where the bottlenecks are going to be. One thing that comes to mind is you mentioned something about limiting yourself to just Canada for example, because that’s where the company is based right now and those are the people that they’re targeting. But does the customer profile need to change? Are you targeting one type of customer and you need to move to a different type of customer?
Let’s say small financial planning companies versus individual financial planners. Does your customer profile need to change in order to be able to get more revenue per customer in a way that’s going to help the business grow or are you going to max out? Again, that’s just a limiting factor. Not necessarily through geographical border but the customer base that you currently have and that you’re going after.
That all boils down to the same thing. Is there that limiting factor that you’re going to need to overcome? Whether it’s that or whether as you said, the bottlenecks in the marketing funnel, customer acquisition, all that stuff. It’s finding those bottlenecks.
Rob: Thanks for the question Pawel and apologies that it took us so long to answer it. He actually sent that to us last October. Our last question of the day comes from Matt Sencenbaugh. He says, “Hey Rob and Mike, I’m launching a SaaS app on April 1st,” sorry, Matt. It was a couple of months ago, “with two customers who have already signed on. My question boils down to what legal documents do I need at launch? Terms and service, privacy policy, sales agreement, etc? Do you guys have any recommendations for getting the required documents in a cost effective manner? Finally, just doing a sole proprietor affect this legal question at all?”
I will start off by prefacing that neither Mike nor I are lawyers, nor do we play them on TV so our advice is based on experience. It should not be considered legal advice. You should consult with an attorney to get real, legal advice. I have a quick answer to this one. I could say when we launched Drip and when I re-did HitTail and when I’ve done my other apps, terms and service, and privacy policy are the only two things that I really have and I use as a free plug for these guys, they used to advertise on This Week In Startups but it’s Snapterms, snapterm.com. I think it was $600 for privacy policy and terms. Those are not going to be the best. If you were to pay for a lawyer to do it from scratch, it might be $1,000 or $2,000 but they will work with you more to get tighter buttoned up language. But if you’re launching with two customers, it’s just how much time and money do you want to spend on this.
Mike: There’s a ton of privacy policy and terms of service generator tools out there. There’s even some that are licensed under Creative Commons and you can use any one of those. I think our general guidance, not necessarily, as Rob said, legal or financial advice on this particular thing is what we’ve seen people do is find something that seems reasonable for the time being and then once you get to a point where you can afford it and you have something to protect, then you go the route of having something custom built and custom designed for your situation. None of the tools out there that either generate these things for you or even the ones that you find on a website like Snapterms and you download something that is reasonably customized for you, they’re not going to encompass every single scenario.
Every lawyer, even my lawyer has done this before. He will look at legal agreements and he will take things from different legal agreements that he’s seen based on how they’ve been used in the past. If one of his customers got screwed over by a particular piece of legal jargon, he will sometimes take that and put it into his legal agreements to make sure that his customers and clients don’t get the short end of the stick when it comes to interpreting the documents that he’s put together.
Based on how experienced your attorney is, they’re going to have a wider wealth of knowledge, the longer they’ve been in business and the more agreements that they’ve seen and they’re going to be able to use those to craft the one for you. Maybe you get two or three different lawyers from different firms involved, it seems like it would be overkill but it’s always an option. I’m sure that larger businesses tend to have legal teams so that they can get that kind of experience and breadth and put together something that covers them from every possible angle.
Rob: The part about it’s a sole proprietorship has that impact. It just means that you have more exposure and more liability. I don’t know that it’s risk tolerance. Like we always say, you just have to figure out if you’re concerned about there being liability on your shoulders or in these early days, if you feel like you could get sued for something because the way to remove liability or to push it off is to form an LLC or an S Corp and then have really tight terms of service and privacy policy and all that stuff. Air tight, as they say.
That’s the way to ultimately get rid of it all. It costs a lot of money and it’s again, for me and my experiences, not something that I spend a lot of time or money thinking about in the early days of an app because there is less exposure at the time but you have to evaluate it for yourself.
Mike: An interesting hack for this to find out how much exposure you have is to go to an insurance company and ask them for a quote for liability insurance and find out how much that quote is and then use that to decide whether or not you need to go out and get something crafted from an attorney to help cover you. That seems to me like a pretty good way to get an independent gauge of how risky what you’re doing is.
For example, back when I was doing enterprise level consulting, we would be given admin access at the domain level on somebody’s network and some of these companies were like Johnson & Johnson, Pfizer, NASDAQ, those types of companies. Our insurance rates were outrageous. They were like $500 to $1,000 a month for insurance. It was only two or three of us. That was absurd but my wife’s got insurance for her business and it’s only, I forget, like $100 a month or something like that. It’s ridiculously low.
Depending on what you’re doing and how much risk and exposure you have, the insurance company will charge you more. Just getting a price quote from them would be a good way get an independent verification of how much risk there is without you having to sit down and do a ton of work on it. You’re going to have to provide them with paperwork and documentation and they’ll have an auditor review it but you could use that to help out.
Rob: Yup and if you’re going to do that and get a quote, I would recommend a company that I worked with before. They just made the process really easy. It’s foundershield.com. They themselves are a startup. It’s kind of just an insurance broker but they operate, like, I’m guessing they have some funding because they operate like you would want a startup to operate rather than some stodgy old business insurance company.
Mike: Matt, hope that helps. I think that’s probably the place to wrap it up for the day.
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Episode 347 | How to Recover From Coding for Months Without Talking to Customers
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to recover from coding for months without talking to customers. Based on some questions a listener sent in, the guys give advice to the classic problem of spending all your time developing and not enough time talking with customers.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For the Rest of Us, Rob and I are going to be talking about how to recover from coding for months without talking to customers. This is Startups For the Rest of Us episode 347.
Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: Well, I am back from Sweden. I had a great time attending and speaking at Brennan Dunn’s Double Your Freelancing Conference in Europe. He said it was going to be the last DYF conference he throws and then he’s going to only do small retreats after this so it was cool to meet up with him and his crew.
And then I spent a couple of days with Sherry in Stockholm. We had left the kids at home and we had a great time seeing the sights, painting the town red, and I got a good amount of work done. It’s crazy when you’re in a new environment. I was basically taking the days off, “vacation days,” but there was still stuff going on back here, back in the office so a couple of hours a day, 90 minutes or so, I could just hammer out a ton of email and Slack replies.
I had some really good ideas because I had the headspace to think about stuff so I noted them down and I’m starting to put those in the queue right now. It was actually a productive, I wouldn’t even say it goes far as to say as it was a workation, it was more like a light vacation with a bit of work sprinkled in. That’s, to be honest, my ideal thing because I think when I don’t work for like a week, I feel disconnected and I get bored just travelling and being in places without having something to occupy my mind.
Mike: I’d imagine that’s a lot like retirement as well. I’m not one who just likes to take extended vacations just for exactly that reason. I find myself getting bored.
Rob: Yup. I think that’s where having hobbies, like I do investing, which is fun, but I can only do so much of that in a day and think about it for so long before I need to do the next thing. After the conference was done, we would go see one sight and then we’d go to lunch and then Sherry and I would come back in the afternoon which is when this time zone was waking up and Sherry had a few calls and she was still doing quite a bit of consulting and stuff. It was good. It was a nice mix. I really enjoy that stuff.
I also enjoy getting away for retreats. Like we’ve talked about in the past, taking a full two, three days but seven complete days for me without thinking at all about the things I’m most passionate about, which is a lot of what I work on, is always a hard stretch.
Mike: Cool. On my end, I finally got the two step sign up process for Bluetick all squared away. There’s definitely edge cases in there that I just said, “Look, I’ll deal with this later.” Instead of making the whole thing bulletproof, I made it basically just work. I know that there’s going to be cases where something is going to come up and somebody goes to sign up and it’s going to break. I’m just going to have to figure it out at that point because I don’t really have the time to try and capture every single edge case.
Right now, it’s just going to show some generic messages if it goes sideways and certain ways that I just don’t know about because I don’t know all the different ways that Stripe for example, could say, “Hey, this card isn’t going to work.” I got that all squared away and finally got started working on the marketing and sales websites. I got the price and page all set and I’m working on the tour. I got to create a couple of videos to add in there, probably put one on the home page then work on flushing all the rest of the tour and figuring out whether I want to do just one page for the tour or I want to divide it up into several of them based on what different situations people are in.
I’ve got a bunch of different notes that I’ve aggregated from various customer discussions that I’ve had and different things that they’ve either keyed on or asked about during demos and putting those into specific places in the tour and try to essentially walk somebody through the decision making process for it.
Rob: Good for you, man. That’s exciting. I know it took a lot longer than you wanted to but it’s got to feel good to have that behind you and be able to pull the next thing off the list.
Mike: It is. The thing I don’t like about doing the stuff on the tour side of things is that it’s a completely blank slate and I’m not a designer. I’m sitting there, going through and trying to figure out how should the page be laid out and what should I say in certain areas and how should one thing lead into another. For whatever reason, it’s really hard for me to do that. I can conceptualize what I need to say but doing the layout for it, that’s the part I’m having a hard time.
Rob: Yeah, that is hard. I haven’t done that in years. When I used to do it, I wasn’t very good at it. It’s such detailed work. It’s tough. That’s what you got to do when you’re scrapping being bootstrapped and you’re counting the days until you can hire someone else. Get a contractor, even if it’s a contractor, get somebody because they’re so much faster at it and the end product will look better too.
Mike: Plus it’s all in WordPress. There’s only so much that I can do in WordPress. I’m just going to make do with what I’ve got and then after that, just look for a designer at some point down the road, when I actually have the funds for it.
Rob: For me, my other point of update is we’ve had some recent questions on the podcast about books, or resources to learn how to build a SaaS app and someone had pointed out the PHP spark framework, which I think is pretty cool.
There’s another one in the works now. It’s Marcus Wein. He’s in Austria and he’s working on a SaaS guide book for Ruby on Rails. I actually met him at Brennan’s conference. We talked about stuff and then he cooked up this idea and put up a landing page while we were there. I thought that was cool. He’s getting to work on that book and the URL for that is saasrailsbook.com.
If you’re interested in the fundamentals of how to build a SaaS app and are willing to either learn Rails to do it or you already know Rails and you want to just learn how a guy who’s built dozens and dozens of them would architect it and then all the things that he would think about, go ahead to saasrailsbook.com.
What are we chatting about today?
Mike: Today, we’re going to be diving into a problem that a listener had sent in to us. His name is Zac and he has a product called neverlate.io. He started working on it. He spent about three months working on it and has a basic MVP all set up but he fully admits that he made this classic mistake where he spent several months in his basement working on it and has come out of it and now he’s ready to try and find customers but he has no customers to go to or to show it to because he spent all that time working on the product itself rather than doing any customer development.
He’s tried a couple of different things to generate some traffic. He’s tried some AdWords. He’s talked to a few different people but really, he’s at ground zero at this point and he’s wondering, “What do I do here? What do I do to try and move this forward and make it work?”
Rob: The URL again is neverlate.io. It is an appointment reminder service. Right now, it is very horizontal. It doesn’t say appointment reminders for XYZ niche. It’s just a broad appointment calendar plus it can send automated text messages. I guess that’s it. It doesn’t look like it makes phone calls either. Anyways, I’m just looking at the home page. Obviously, I haven’t used the app, just trying to give the listener an idea of the business. It starts at $29 a month for up to 200 appointments a month and it has a $50, an $80, and a $500 tier.
Mike: This reminds me a lot of Patrick McKenzie’s appointment reminder app. Maybe, that’s where the idea came from. But to give a little bit more details on this, I’ve gone back and forth with him just to ask a couple more detailed questions. When he came back, he basically told me the product is functional but he doesn’t have a customer list. He doesn’t have a channel where he can start to do customer development. As you said, the bottom price point is $29 a month.
In terms of his target market, he’s a little bit unclear on where to go with that. He knows certain ones that he’s probably going to skip so he’s inclined to skip massage therapists, for example, because he doesn’t think that they’re going to be willing to pay more than like $10 a month. And then in terms of sign ups, he’s gotten some from AdWords. He spent about $50 or so in AdWords and he is getting people to sign up for trials but it’s not a lot and obviously AdWords can get very expensive.
In terms of lifetime value, he really doesn’t know yet. He’s thinking maybe a year or so of service so around $350 for lifetime value of a customer. His base question is really just what do I do at this point? Should I spend more money on AdWords? Should I do something else? What are my options and what are your recommendations about where to go with this?
Rob: We have an outline here but to kick us off, you’re in a real tough place because you basically have no customers, no list, and you have a me too product. There’s nothing that differentiates this product that I can see from, I won’t say a slew of others but I bet if I search, I can find a half dozen apps that do exactly what this does. Definitely back against the wall at the present.
Mike: I think that’s probably a situation that a handful of listeners have found themselves in over the years, probably more than a small handful, where you’ve built something and you get to a point where like, “Okay, yeah, I’m ready to take this to people and show it to them because I’m no longer embarrassed about what it is or what it looks like.” But you haven’t gotten far enough down the customer development road to figure out who it is you’re going to talk to.
I think in this case, your first priority is to prove, one way or another, whether or not this idea is going to be viable for you to execute on. I’ll put “prove” in air quotes because you’re really never going to be 100% sure that it’s going to work but you can get an idea of it. You can start looking down the road and you start doing that customer development and try and figure out does this look like it has legs or am I just wasting my time and money to try and to get this to work?
Along that lines, I think the first thing to do is really set a time line. For something like this, it seems like a six months time line is probably an appropriate timeline to set for this. Especially if you’re working on the side, if you are working on it full time, probably less since you have a fully functional MVP, take that time line, set it aside, and say, “Okay, I’m going to do X things during this time.” And set goals for that entire time line.
The first goal that I was thinking you would set up for six months, months one and two should really just be focused on trying to get a certain number of customer discussions, whether that’s five per month of five per week. Really, you can set your own pace and schedule at that. But you’re trying to figure out can I reach these people? How do I reach them? Once you start having those discussions with them, you learn more about who they are, what they do, how much time they spend in different areas, especially trying to solve this particular problem, whether it’s something that they’re willing to pay for.
Once you have that information, you ask yourself, how much are they willing to pay? Obviously, you ask them as well. But you want to find out, are they willing to pay for it, how much, and listen to the language that they’re using. Really, these first two months are just spent doing these customer discussions. Yes, if you can get them to a trial or on to a paid account, that’s great, but that’s not your goal here. Your focus should be getting a certain number of customer discussions because that’s going to give you an idea of how easy or difficult it is to continue doing that down the road.
Rob: Right. If you can’t get into these customer discussions, which are really about learning, as you’ve just said, rather than trying to build revenue, if you can’t find anyone who’s willing to talk to you, that’s a very, very bad sign. It’s a sign that you’ve built something that people just don’t care about, don’t need, don’t want, which is going to be something you could very well run into with any product that you launch. At that point, you have to decide am I willing to essentially continue to add things to this that actually make it unique so that I’m the only app that does this in this way, or to pick a niche and niche down.
Like you said, you don’t want to do massage therapist and I don’t blame you. Is there a group? Is it medical or dental because they have HIPPA so they’re really expensive and so they’re the $500 a month and up and you offer only HIPPA compliant so it’s important reminder for medical and dentist office. There’s probably some others in that. This is where you have to do this research. This is not the time to run Facebook ads to a landing page and see who converts and play it that way. This is an app where appointments are brick and mortar type of things. I can’t think of an online audience like designers, or photographers, or developers, or entrepreneurs, there’s certain audiences that are just online a lot.
Appointment reminder, if you can figure out a way to target an online audience, great, but if not, then you have to go through these much more manual steps. I don’t really see an angle here where you’re just going to rent some Facebook ads and convert people to trial and split test your way out of this. For the whole six months, you’re going to be learning that these first two months are going to be critical. They’re going to, like Mike said, tell you whether or not you should continue.
Mike: Along with that, in these first two months, you’re trying to figure out who that target audience is. I think early on, Zac had said he was probably going to skip massage therapists. Maybe there’s some data he already has to indicate that they’re not willing to pay for that. That’s fine. But are there other professions or other verticals that you can target and try to have those discussions with them and see if that’s going to work, see if that’s an initial traction channel that you can start to establish.
If it is, great. You can move on to the next steps in months three, and four, and five, and six that we’re going to lay out. Your focus at this point is trying to figure out who those people are and if you can establish a recurring channel of them to have those discussions with. If you can’t, then maybe it’s time to pivot to a different channel, a different vertical, or can the whole thing.
I probably wouldn’t can it after trying to find one vertical. If you go to massage therapists and they say, “No, we’re just not interested.” Okay, great. Go to dentists and then maybe pivot over to a solo practitioner doctor’s offices, for example, or plastic surgeons, or something along those lines. Each of those could be a one to two month effort but you’re trying to figure out is there a place where you can get customers on a recurring basis, at least in the early days?
If you go through several of those iterations and you still can’t find them, then that’s the point where you need to re evaluate your position and decide whether or not to just cut your losses and move on.
Rob: For months three and four, assuming that months one and two are successful and you figure out a niche or a group that you’re going to target, months three and four, your KPI is the number of paying customers after you’ve had a direct discussion. This is very, very much not scalable but what you’re trying to do is to learn objections. You’re trying to overcome them via discussions. You’re trying to close deals. It’s still learning but you’re trying to start making the rubber meet the road and actually get some revenue.
What you might find is that you get through three and four and you can’t get enough paying customers to make it worth your while and you have to go back and repeat months one and two and find a new group to target.
Mike: The whole point of this particular piece of it, I don’t know if some paying customers is like the sole thing that you should focus on. Getting them into the app and getting them active and using the app, that’s probably a much more important first step. Obviously, you want to keep them as paying customers and get them to convert from any sort of free trial that you put them in into a paying customer. But even if they don’t, you’re still going to learn from that. The focus is really finding a certain number of people that you can put into it.
Again, you can set those numbers yourself. You can base it on how many conversations you’re actually having because obviously, if you only have 5 conversations a week, you’re not going to get 10 customers a week. That’s simply not going to happen. From that, you can back that off and put people into the app and learn those objections. You can overcome them by talking to them. A lot of times, people will have a question that if they’re on your website and they have a question in their mind, it draws doubts for them. They will not sign up because of that.
When you ask them, “Hey, would you like to sign up for an account right now?” They’ll say yes or no. If they say no, you can ask, “Well, why not? What’s stopping you? What is it that’s holding you back here?” Those are the things that you want to write down. Every single question that somebody asks, you want to write that question down. That way, you can go back to that and over time, you’ll get a base of let’s say 20, 30, 50 people you’ve talked to. Start aggregating the number of questions that they ask and which questions they ask. You can identify which of the questions were most prevalent, which ones the most people had and use that in your marketing copy once you get to months five and six, which is where you are trying to land the paying customers or on board people without having those direct discussions.
Rob: That’s month five and six. It’s moving out of the I’m talking to everyone, I’m doing demos for everyone, and I might able to start getting people to overcome their objections and sign up for a trial just purely based on a marketing website.
Take these timelines with a grain of salt here. We heard from Jordan Gal last week and he was giving demos for six months, eight months. It wasn’t just the two months we have here or I guess we have four months. One and two, finding the audience and three to four is overcoming objections, and five and six is moving towards the more automated way. Their journey took longer. They have a more complex product, probably harder to explain, harder to demo. Appointment reminders tend to be fairly, I think it’s pretty easily understood by the prospect so perhaps you’d have an easier time or perhaps you’ll have a tougher time getting to five and six because again, your product isn’t differentiated from others that they could find with a Google search.
That’s the idea here. This third step, this third piece is trying to move towards having more automated things in flow and maybe you don’t remove demos altogether, maybe you figure out you have people self select that if they’re in the lower pricing tiers, then they sign right up and if they’re going to pay you three figures a month, it’s probably worth having a conversation with that person. You have a contact that’s linked. Even if you show your pricing, you still have some type of thing, how many appointments per month and immediately, you get a paying customer and have an idea that it’s worth reaching out to them with a calendar link, trying to set up a conversation.
Mike: With each of these sets of two months, months one and two is really about trying to get a certain number of customer discussions going and then month three and four are putting people into the app through those direct discussions and then five and six is getting those customers onboarded without having those direct sales discussions. That’s really just a logical progression. As Rob pointed out, your timeline may vary quite a lot. It could be closer to a year or it could be closer to two months. It depends on how complicated your app is, how far along it is, how many people you’re able to have those conversations with early on, how quickly you get traction, and it also depends a lot on what your schedule is.
If you’re working on it full time, you’re going to be able to move faster. If you’re working on it on nights and weekends, you’re probably not going to be able to schedule 25 calls during the week. It’s just not going to happen because you have a full time job and you’ve got other responsibilities. During the work week, it’s going to be very difficult for you.
But all of this is really just establishing this logical progression so that you can determine whether or not this idea that you have or the product and the MVP that you put together is going to go anywhere so that you’re not wasting too much time trying to make something work that’s simply not going to for you.
I think that’s another key distinction that we’ve made on this podcast before, which is that even though something could be a great idea and it is reasonably well executed, it may not be the right idea for you. If it’s not something you’re passionate about or you don’t want to do or you’re just not interested in it, you’re not going to do it as well as if it was something that you were extremely interested in and extremely motivated to do. You’re going to push things off and not be as motivated to move people forward in the sales funnel and do the website, coding, and everything else.
It’s going to be harder for you. Maybe it’s just not the right fit. Maybe some other product would be a better fit. Again, these are all things that you need to evaluate as you’re going through this process.
Rob: We call that in the biz, product founder fit. As you said, is the product a good fit for you, for your personality, for what you want to do for the customers you want to work with, for the features you want to build. It’s a bit of an amorphous concept and it’s hard to know upfront but what’s nice is that Zac said, right off the bat, “I don’t think I want to work with massage therapists.” That’s like, alright, good. It’s a good thing to know that. Don’t go after that market because you’re probably going to find out that you’re not, even if you found success, you’re not going to enjoy it. You’re not going to stick with it for the long term.
Mike: I think that’s an interesting side conversation. Even if that would work, do you want to do it? I think in some cases, the answer to that is probably not. There’s certainly groups of people that I would probably not want to work with or probably would not enjoy and everybody has their own either biases or people that they know in certain industries, they’re like, “I just don’t want to deal with any of that stuff.”
Again, it may work out. It’s just like marketing tactics. There may be some things that you’re really comfortable doing and the next person may not be comfortable with that at all.
Rob: Yeah, there was an app I almost acquired. I’m trying to think. It may have been after HitTail, or I still owned it but it had grown to where I thought it was going to grow and I was looking at other avenues before Drip. I looked at acquiring a bunch of different apps. One of them was going to put me marketing to and having a customer base of designers UX and usability folks. I had no reach into that market. Obviously, I have an understanding of what they do but I am not in that target market.
It was Ruben Gamez from Bidsketch who asked me, “You’re doing a market pivot by going from an SEO tool, which is at least marketing technology, into something that goes after a completely different audience, is that something that you want to do for the next three, four, five years?” Frankly, I have no qualms with working with designers and UX people, I think it would have been an interesting adventure but it would’ve been a huge learning experience for me.
I thought, “If I do this, I’m going to have an uphill battle to learn a whole new space and to learn what are all the sites where people hang out? Where are the blogs? I already know this from MarTech. That is one of the reasons that I wound up doing Drip. Because it’s not the same as an SEO keyword tool but it is another marketing SaaS and I already knew so much about the space because of my heavy involvement in evaluation of tools from my own personal use. It was just a different thing.
I think I still would’ve been successful. It probably would’ve taken longer had I done that. I would educate myself about a market, make myself a name in that market, which I really, really don’t have. And so, it’s just something to think about as you go through your ideas.
Mike: I think one of the last questions that Zac came up with was should I spend more money on AdWords or should I just abandon that and go do something else? I think, Rob, you’re probably in agreement with me on this one. But AdWords is probably not the way you want to go, especially if you don’t have a lot of money to throw into this because you’re going to spend money trying to learn. It’s not that spending money to learn is a bad thing but you’re going to probably spend much more money than you would if you had some customer discussions first and you waited until month three or four to start pumping up the sales funnel a little bit.
After you’ve gotten some of the terminology a little bit, you’ve narrowed down the market a little bit, if you’re just throwing money out there to try and figure out where the market is, it’s going to be very expensive to do that.
Rob: Yeah. The tough part is since the audience is brick and mortar, it’s going to be expensive and hard to find them. There are tools where everybody’s online and they’re always signing up for new things. You can do the curiosity play and get them to sign up and you have a low price point and you could test an idea with ads landing pages in more broader scope stuff if you had the money to do it. I don’t see an avenue to do that here. Just by nature of the potential audiences that we can come up with, I think you’re right.
I’m in agreement that AdWords is probably not where you’re going to get a bunch of learning at this point. Maybe you could run AdWords just enough to get that trickle of calls that you want. And again, it’s going to be expensive to get that trickle going. But if you have no other avenues, yeah, maybe AdWords or Facebook ads, or some type of paid acquisition, but if you can pay $10, $20 to find someone to get on the phone with you, who has some inbound interest, that’s interesting but you know you could just as easily do some cold outbound email or cold phone calls and perhaps get the same result with less money but more time.
Mike: That’s really what this is all about. It’s striking that balance between how much money you have available and how much time you have available. If you have more time than money, don’t do paid ads. Have those customer discussions, learn who it is that you need to target. If you have a lot more money than time, spend on AdWords and learn who but it’s going to be dramatically more expensive without having those customer discussions to guide you.
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Episode 346 | Lessons Learned from Requiring Demos for New Customers
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Jordan Gal, Cofounder of CartHook, about his lessons learned from doing demos for customers. Jordan gives a background on CartHook as well as the journey from one-on-one demos to the possibilities of scaling the sales process.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of Startups for the Rest of Us, I’m going to be talking to Jordan Gal of CartHook about lessons learnt from requiring demos for new customers. 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.
Jordan [00:24]: And I’m Jordan.
Mike [00:25]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week Jordan?
Jordan [00:29]: I’m doing well. I just want to be able to say the word ‘episode’ like Rob does, like super fast episode. I’m doing well. You caught me at a busy, hectic, fun kind of week and I’m excited to talk about this. This is the topic of conversation internally for us also.
Mike [00:45]: I just want to give the listeners a brief introduction to you. You are the co-founder of CartHook. You’ve also spoken at Micro Conf; you are the co-host of the Bootstrapped Web. What else am I missing? There’s got to be other things
Jordan [00:57]: It’s mostly dad and sleeping. I’ve got three kids under five years old plus all the business stuff.
Mike [01:03]: So more dad and less sleeping is what you’re saying?
Jordan [01:05]: Yeah and I’ve gone into the bad habit of staying up late working because I do demos all day. I have four demos today and that squeezes out the ability to get work done so I end up doing it at night, which isn’t sustainable but it’s working right now.
Mike [01:18]: I did one this morning, so I know how you’re feeling about that. Before we get into this, I think that we should probably start at the beginning with CartHook and why don’t you give the listeners a brief background on exactly what CartHook is and what it does so that as we get into this discussion about whether or not you should evaluate whether or not you’re going to require demos for new customers or not that people have at least a background to work from.
Jordan [01:43]: Sure. I’ll give the very quick history and what led us to where we are now and how that fits into demos. We started the company with a cart abandonment product for e-commerce stores. What that means is we capture the email address of visitors to the checkout page on the e-commerce store that’s using our product and then once we capture that email address of the customer, if they don’t complete the purchase within 60 minutes, we then consider it abandoned and we start sending them a three part email campaign designed to bring them back to the e-commerce store to finish the purchase. A lot of us have received these types of emails in the past. What we do is enable small medium merchants to do it. That’s where the company started off. We worked on that for about a year, maybe a little more, and then we uncovered an idea for another product that we decided to tackle and the product that we’ve been working on is a check-out product and what it does is it replaces the check-out process of Shopify stores. Shopify is an amazing platform but their checkout process is very rigid and you can’t customize it and so forth. What we do is give a customizable, one page checkout and it also enables something called post-purchase up sales which are very hot in the e-commerce industry right now. That’s what we’re doing and the way we led into demos is because a new product, you don’t know what the on-boarding should look like, you need feedback, you want to talk to as many people as possible. That’s how we got into the demo thing to begin with for the new product.
Mike [03:11]: Got it. Just for the listeners’ background, Shopify is essentially an e-commerce platform where people can sell their stuff and I’ll use that phrase very broadly. But there’s a bunch of different platforms out there where people can basically create an online store and Shopify is one of the platforms that people can use. You’ve really focused specifically on this platform.
Jordan [03:31]: Yes, they’re super hot in this space. They just IPOed; they have an amazing developer eco-system. They have become the default choice for merchants selling physical products online. That’s where we play.
Mike [03:46]: Okay. Let’s dive into a little bit around the idea of these demos. Previously with CartHook, you just had one product before and were you requiring a demo for that or no?
Jordan [03:56]: No. We had a demo page so if someone didn’t want to sign up on their own, they could request a demo and we would get that pretty rarely; either people who really wanted to be hands on and ask questions or larger companies that were used to that process. But 95% of our sign-ups just came through self-serve sign-up, on-boarding, that sort of thing.
Mike [04:18]: Okay.
Jordan [04:18]: That was for the original product. The new product, what really happened, we worked on this product for a while with a lot of early users and then we opened up sign-ups and we got flooded. We had like 100 sign-ups in 10 days and we were not ready for it and totally messed it up and most of them left because the product wasn’t ready and we weren’t ready, the on-boarding wasn’t there so we said, “How do we slow down the rate of sign-ups while also getting a better feel for what our customers want, what we’re doing right, what we’re doing wrong?” We said we are going to do two things; we’re going to raise the price and we were going to require demos. It definitely slowed things down. The interesting thing is the other effects it had like it didn’t change demand very much. That’s how we got into-we used one on one demos specifically as a mechanism to slow things down and to learn more.
Mike [05:14]: That seems a little counter intuitive, where you would want to slow things down. You think of startup like, Oh they want to move as quickly as possible but you’re going in the opposite direction and I think it might be beneficial to explore exactly why that is. You’re talking about things, exploring, you’re going sideways and people leaving. What sort of things-I don’t want to point out specific people or anything like that. But really what types of things go sideways when you have too many people coming in?
Jordan [05:39]: It’s just the nature of our product that we had to learn about. It’s a fact we had to face. This product that we took on is [?] and not simple and we have a team. Then it was four people. Now it’s five. We bit off a lot. What that meant is that the product was going to take a while. You’re always like, “Oh, yeah, you’ll have an MVP up in three months,” and it’s not usually three months and this is a complex product. We just had to face the fact that it was going to take longer to get the product to a place where we could take on a lot of sign-ups successfully. We didn’t want to ruin our reputation. We didn’t want just let people in, the product wouldn’t be ready and they would just leave. It’s hard to get a second chance with people. We just thought strategically, okay, we don’t really have a choice. I’d love to go as fast as possible. I’m the one guy in the marketing side and everyone else is on the tech side. It has caused a lot of frustrations in terms of, “Guys, we need to go faster,” but it’s almost like they had to pull me into the tech side and educate me a little bit about what was happening and once I learned more about it, I understood, “Okay, this is not the time to rush; this is the time to be patient,” which was painful but it was necessary.
Mike [06:55]: It’s really about slowing down the number of people that are coming in more or less because you don’t want to burn the relationships of those people and leave a bad taste in their mouths when they sign up and maybe something doesn’t work or it doesn’t do everything that they want because down the road your hope is eventually you would get them as a customer. But if you don’t have the features in place that they really desperately need right now, they’re just never going to convert because then they’ll look at your product in a negative life basically forever. You only have that one chance.
Jordan [07:21]: Right and it goes against everything that I want or would give advice on. It’s just that the nature of the product is that so many things have to be perfect. It’s not like this core feature that we offer works. The other things, not so much but people still get value out of it. To get value out of a checkout product, so many things have to be perfect because if you mess anything up on a checkout page, people don’t convert and we’re going up against Shopify’s checkout page. Their alternative is to do nothing and Shopify is this $5 billion behemoth and their checkout page is amazing. We have to compete with that. It was just going to take a while to get page-load perfect, Facebook tracking perfect, credit card perfect, PayPal perfect. If you mess any of those things up, the person wasn’t going to get the core value. We had to deal with that fact.
Mike [08:10]: All those things you just mentioned, those are technical aspects of the product itself. What about the sale and marketing side of things? If you build in a product yourself, one of the things that come to mind is that if you are a developer, you look at the techs [?] and you say, “Hey, I just want to work on these stuff because I know how to do that,” and it makes it easier for you to do it. There’s this whole other world to you as a developer that all the marketing and sales stuff, you’ve got no idea. A lot of people will put it off and I’ve certainly succumbed to that as well in the past. The reality is that when you get into that position, there is a lot to do on both sides of it and if you’re just one person, it’s hard to juggle both of those. But you’ve already got a team in place. You’ve got four or five people there and you’re apparently having trouble dealing with stuff on the tech side, not because the team isn’t good. It’s just there’s so much stuff to do that needs to be perfect. On the marketing side, that is also the case in many respects. You’ve got all these things that need to be prefect in terms of your learning page, contact marketing, SCO, there’s all these stuff that goes with it that makes that difficult as well. If you have a really tiny team, if it’s only one or two people, juggling both of those at the same time, it just makes it astronomically difficult.
Jordan [09:21]: It’s been difficult.
Mike [09:22]: Okay.
Jordan [09:24]: Yap, you’re 100% right. Again a lot of these, if I look back objectively, a lot of these is going against what I would think is the right thing. It’s just that we’re just making the best decisions given the information that we have. It’s been a team effort for months of I get a demo, I get a customer, I pass it off, I learn a lot, I take that knowledge, I transfer it over to the tech team, they work with the customer, then they give me feedback. It’s been this knowledge transfer back and forth but the raw material for that process is users but not too many, right? If we had 10 sign-ups a day, it would be a mess. We wouldn’t learn nearly as much. We would just be dealing and putting out fires. But if you passing out one new sign-up a day, all of a sudden it’s more manageable and you learn a lot more. We also learn about who the right customers were for us. We’ve had one customer that just has done really well the whole time. That gives us this north star of like, all right, they are getting amazing value out of the product. They’re making a lot more money. They keep spending more on ads. They keep making more money. Their business is growing, they’re hiring and we are like, “We know we can do it.” That’s the thing that kept us going when we were like, “Jesus, this maybe just too hard.” The demo is the initial part of the process. It’s like, “Okay, talk to someone, figure it out and then put them into the tech side,” and then we learn back and forth from one another.
Mike [10:53]: That learning process actually helps you short circuit a lot of the other problems that you might run into where, with sales and marketing, sometimes you put a learning page out there or even just the homepage of your site, you’re not sure which of the benefits that you should highlight because you haven’t talked to enough people. You start guessing then you’re shooting in the dark and this short circuits that whole problem because you’re talking to those people, you’re making notes, you’re getting more direct contact with these people and you’re getting the marketing lingo in their terms that they would use versus the things that you know because you’ve researched the problem extensively and you have your own terminology for it. By gathering that stuff, you are helping to not have to shoot in the dark and not make guesses and then wait two, four even twelve weeks to see if it made any difference in the number of sign-ups and trials coming in.
Jordan [11:44]: Yeah. It got to the point where we didn’t update our marketing site on purpose. Our marketing site talked about version one of the product where it didn’t even work inside the Shopify store. It only worked as a bridge between your learning page and your Shopify store. If that sounds confusing, you’re not alone. It was impossible to describe accurately. We had our marketing site talk about that version, the first version of the product that only worked with the learning page. We didn’t even change the marketing site till about two months after we had started working directly inside the Shopify store because we knew just stating that was going to drive demand so much higher that we just avoided it. We just said, “No, we’re getting a few demos a day. We don’t need more. Let’s just leave it alone.” I would never recommend that to someone. It sounds ridiculous. Here’s another sin to admit to. We don’t really do any marketing or advertising. It’s literally a build-it-and-they-will-come scenario only in this situation I’m 100% convinced it’s right because the demand for the product is so high. We’re not even doing content. We just don’t talk. We say nothing. Just word of mouth out there and a few Facebook posts and that sort of thing is enough to drive a few demos a day and we just left it like that, up until a week ago.
Mike [13:05]: If you’re getting enough to keep you busy and move things along at the right pace, it’s perfectly okay to do that. When you make a mistake of saying, “If I make the product perfect, everything will work out,” but you don’t also have the accompanying number of sign-ups, I think that’s when people get into trouble.
Jordan [13:24]: Right. If you’re not talking to anyone and you’re guessing that you have the perfect product, that’s dangerous. If you’re talking to 15, 20 people every single week and they’re telling you, “Wow, this is exactly what I’ve been looking for,” then it gives you the confidence to say, “All right, let’s just get this right and then when we make the big reveal, it will work.”
Mike [13:42]: Right. I just want to make that clear to the listener that building the perfect product is not the solution if you don’t also have the accompanying number of people that are coming through your sales funnel. If you have that mentality and your sales funnel is empty and you’re not talking to anybody, then that’s the problem. It’s not about the product being perfect. It won’t matter. You need to talk to people. You need to have that marketing stuff in place. Going back to the marketing side of things a little bit, you said that you really don’t talk about a lot of things on the website, at least some of the advance features and the other stuff around the new product, how do you go about qualifying people in advance of the demo? I think there’s a certain amount of information that you need to gather from people and you don’t want to just give a demo to anybody. That’s a mistake because you’re going to end up with those people who give you an email address and you’ve got nothing to go on and you have no idea whether you’re just completely wasting your time or not. What sorts of things do you guys do?
Jordan [14:35]: At first I was happy to talk to anyone. If you read something about the product and you want to talk about it, let’s talk. As things progressed, you start to see that as, “Okay, this is a complete waste of time so let’s start adding a little bit.” On our site, if you go to carthook.com/checkout, you go to the pricing section and it has a few tiers and each tier has the same call to action. It’s just ‘schedule a demo’. When you click on that, you go over to carthook.com/demo. That’s just a really simple form that asks you for a few pieces of information; name, email, phone number is optional, your website address and then we’re just real straightforward. Our pricing is based on revenue and so this form is based on revenue. It just says, “What is your monthly revenue.” We just ask people how much you make. How seriously should I take this meeting? It’s real straightforward because we have two products; we ask which product are you interested in, the funnel product or the cart abandonment product? Almost everyone says funnel of both. That’s what starts off our process. We haven’t wired up into Slack. When we see something come in and it’s the highest here is over 100K a month, that’s just exciting. When it’s under 10K, we just look at it and say, “Okay, opportunity to talk to someone but not as exciting.” The one lesson I have learnt is that, that is far from perfect. Some of our biggest customers came in and identified themselves as less than 10K because the site was new, technically less that 10K but these people are very experienced with big budgets. It’s a little dangerous but we don’t do a survey or form. What we really wanted to do with this was slow things down but not put up too much friction. It’s just a form, you fill that form out, I get an email. After you fill the form out, the page changes and you can see a calendar link to grab a time on my calendar. If you don’t grab it there, then I’ll go to the email that comes in and I have a save-reply and I say, “Hey, nice to meet you. Here’s my calendar link, grab a time.” That’s how we start the process.
Mike [16:37]: It’s interesting that you use the monthly revenue as the qualifier for that. You’re probably much further along than I am just because you’ve got the two different products that you’re working with but I actually look for a lot more information than you do. I’ve got like a full blown form where when somebody comes to the Blue Tick website, they can enter in their email address for early access and it’s all I had asked them for initially. Once they do that, it takes them to a survey page that says, “Hey, great. Now we’d like some more information from you,” and ask where they heard about it, what do they find most appealing, how do they think it would help them, their top questions. I ask them to describe what their current follow-up process is because one of the things that I want to make sure is do they have one in place right now because if they don’t, I’m going to be doing way too much hand-holding and I’m going to be educating them. If you go to the mass market with a product, then, sure, educating people on how to do that is fine but what I’m really looking for is those people who are well qualified, who are going to essentially be more self-sufficient. Do you find that there are certain types of questions that you’re asked during a demo that help you narrow down whether or not somebody is well qualified for your product that would be very difficult to ask on a form?
Jordan [17:49]: I think it depends on your goal. If you only want to talk to people who are well qualified, I would use a form. In our case, we don’t want to only talk to a very specific segment. We just wanted to slow it down. We just wanted to put a barrier in place as opposed to you put up a higher barrier. You’re saying, “No, I really only want to talk to you if you’re right for me,” which sounds like the right approach when the product is earlier on. For us, it’s a little later on the product but we just wanted to slow it down. You can play with how much you ask how much time commitment you’re asking. Not only are you getting the information from that form but the person who filled out your form spent 10 to 15 minutes on that form. They’re motivated. When you have a conversation with them, it’s in that context, “All right, this is a real opportunity.” For us we didn’t want that. We wanted higher numbers but slow. What I do is I save those questions for the actual demo. After someone schedules something on [?] does its thing. It sends out a reminder on the day before and an hour before. In addition to that what I found works is if I go in and manually send them an email 15 minutes before. I just look at my calendar for the day, I set my iPhone and I set alarms for 15 minutes before each appointment a, so that I don’t forget and b it tells me, “Hey, send that email.” I go to Gmail, just super manual because you can tell that it’s manual. I have a ‘save-reply’ so it takes me 10 seconds to do. It says, “Hey, look forward to speaking with you in about 15 minutes. Here is the link to join the call.” After you do that, you can also join the audio,” because good lord did I have trouble the first week or two of like, “No, no, no click on the freaking phone button or call in the number.” Yeah, you have to be good at anticipating that. One of the tricky things is the way you see it-for me I use ‘join me’ which I like a lot-the way you see the ‘join me’ experience is different from the way your customers. You need to test that out yourself to make sure you know what it looks like on their end so you can actually be like, “You know that field where it says ‘your name’? Type in your name and hit knock the button that says ‘knock’ and I will let you in.” I have that in the email.
Mike [19:56]: This is really about identifying what those friction points all along through that is. That’s an entire sales funnel anyway. Getting people to your website getting them through the process of paying you, signing up, on-boarded, demos and all that stuff, there’s all these little touch points or friction points that, as you said, with your checkout products, if everything is not perfect or at least the five or six things are not perfect, then they’re going to leave, churn out or not going to end up paying you. This is the exact same thing though. There’s all these little things like ‘click on the knock button’. That’s not something that’s obvious but after you do it several times, going through this process with the demo, you see those things and you say, “How can I knock out that barrier? How can I eliminate that so that people don’t run into it or when they do, they know what to do? ”
Jordan [20:43]: I had some funny experiences. We love Zoom. We use Zoom internally for our daily standup calls. Our team is fully distributed in New York, Slovenia, here in Portland. We use Zoom and I love it. People are like, “I use Zoom for Demos.” I said, “Cool, I’m dropping ‘join me’ and use Zoom because I love it.” I had the most awkward week of my life because I couldn’t get-Zoom had this bug where you couldn’t disable video from coming on automatically. I have a demo and I send someone to Zoom link and all of a sudden, their camera were turned on and they weren’t expecting it. These days, not everyone works in office. You’re in your house with your cat on your lap and the video comes on and the initial touch point of the demo with me was you be like, “Oh__ my camera.” Oh, excuse me. That was a paid for experience. I had to go back to ‘join me’. I found that, that email 15 minutes before makes the show-up rate go through the roof. When we start the demo, I started off with one question that’s probably my biggest lesson learnt of the entire demo process was to open up the right question at first. That question I’ll give it verbatim, “Before we jump into the product and features and all that, why don’t you tell me about what you’re trying to accomplish and why you decided to spend half an hour of your time with me today.”
Mike [22:03]: That’s awesome.
Jordan [22:04]: Give that because I found that I would start going into the products. We have two main features. You can build two types of funnel and they’re for two different types of customer. I would just start showing them and I would just not know what they were actually trying to do. When I ask that question, first it just gets the conversation rolling more in a consultative way or like you’re talking about your business with another business owner. I’m not like a sales person that’s giving you a demo of a product I’m trying to sell you. It laid that context down to begin with. And then it told me how to tell the presentation, which main feature should I talk about first? How patient or impatient is this person on the phone? How fast are they talking? It gives you an idea of how to handle the conversation to begin with.
Mike [22:53]: I love the way that you phrase that question. It’s much better than the direction that I go so I will totally steal that.
Jordan [22:58]: It’s almost self- deprecating.
Mike [22:59]: It is, yes.
Jordan [23:00]: Like, “All the product features,” whatever, whatever. What about you? What are you trying to accomplish?
Mike [23:05]: Right. That also gives you an idea of what sorts of things you can go through in the demo and completely leave out because they were irrelevant. You can cut out 10, 15, 20 minutes out of a demo if you don’t have to go over a bunch of things that are just unrelated to what they’re doing. The other question I like to ask when I’m doing a demo is what other things have you tried? What that does is it gives you an idea of the pain points that they’ve had using other products and why those things didn’t work out and you can talk specifically to, “Well, you won’t have that problem because we do this,” or, “This is how we address that. Oh, you said you had that product? This is what we ‘do and this is how you would get around it or avoid that type of situation.
Jordan [23:43]: Yeah, I think that’s great. That sometimes comes up as a result of that initial question but it would be good to address. I think we don’t –I don’t do this much because I know there aren’t alternatives. There’s one alternative. I almost just focus on how will you drive in traffic? Where are you pushing traffic to? What kind of advertising you’re using and that sort of thing. People just tell me. They tell you exactly why like what’s the main feature that caused them to contact you. I’m interested in on click up sales. They just say that and you’re like, “Okay, this person is interested in this feature or someone else will say, “I just want my checkout page to look like the rest of my site and it’s like, “Okay, design focus person.” This just helps you do things right and focus on the right things.
Mike [24:29]: Something that you mentioned earlier was about the fact that if somebody does not sign up for a meeting with you right away after they have gone through and submitted the request for demo, you reach out to them. It’s interesting that you mention that because I automated that piece of it so in my sales funnel when they go through, they enter in the survey, I have it sent out to Google Spreadsheet, where I look it and basically decide whether it’s qualified or unqualified. There’s a drop-down column that I can use, just tag it as qualified or unqualified. If it’s qualified, then what it will do is it will populate it into Blue Tick. It will make some tag adjustments inside Drip and do some other things and it will invite them to a demo using a custom calendar link and it injects using [?] string variables. That gets sent through Blue Tick and if they do not sign up for a calendar link within a certain timeframe, it automatically sends them another one and it will send several follow-ups. It’s interesting to see that most of the people that end up coming to the demo don’t respond necessarily to that first email that gets sent that says, “Hey, you didn’t fill out the survey,” or, “You didn’t sign up for this yet, are you still interested?” It usually takes the second or the third. It’s interesting to notice that those reminders help. You were talking about sending an email 15 minutes in advance of the meeting. Those are the types of things that really help move people forward. You don’t think of them as a business owner initially but those reminders or those touch points help. What other places have you found that that’s true as well?
Jordan [25:56]: What’s been really helpful and I keep manual still and look, a lot of these is you look at the ideal and then you say, “Should we go for that ideal and spend the time to achieve that ideal in terms of process?” For us we are so jammed on the product side that I just tell the guys, “Don’t worry about making this process perfect. We’re not going to do demos this way forever. Just keep it ghetto and yeah, we’re losing some people but it’s better off.” Even you can acknowledge what it should be and what it isn’t, there’s a difference. That difference is acceptable depending on the situation. One of the things that I do manually that’s a touch point in the process that way is the most important touch point. We require demo, we also hide the registration link. You can’t sign up for our product unless you-some people find it somehow.
Mike [26:44]: There’s always people who do that.
Jordan [26:46]: Always, amazing. Those people churn out and like, “I told you, man.” You come in, you start asking questions and like, “We would have talked about this on the demo.” What I do, at the end of the conversation, is we have a talk about pricing. We make sure we’re on the same page so there aren’t any weird surprised because our product isn’t cheap and then I say, “Okay, what I’m going to do when we hang up is I’m going to send you an email with the registration link.” Depending on the way the meeting goes, if the person is super excited, I’m like, “Awesome, sign up, I’ll get you the email right now. I’ll look for it, pin me on intercom once you’re inside the app. Let’s do this.” If it’s less certain, regardless of how uncertain it is. I just say, I’m going to send you the email with the registration link so you have it in your inbox for whenever you’re ready and then when we hang up I go and I have another saved reply that says, “So great to meet you today, really excited to get you started. Here’s the link to register, let me know if there’s any help that we can give you in getting set up.” Again, it’s another manual email touch point after the conversation that’s tailored if we had a really good conversation, if they are a big potential customer, I will change that email up a little bit to address the specific conversation that we had. It’s another touch point after the demo instead of just hoping that they sign up. It’s, “Here’s the link, something personal, super manual,” and I make sure not to reply to the chain of emails we had before that; totally new, subject line is ‘CartHook Sign up link’. That way if they are ever searching for it in their inbox three weeks from now, it’s easier to find.
Mike [28:17]: One of the things that I think is a real advantage of doing that is it allows you to essentially ask for the sale right there on the call and get a solid yes or no and then be able to have a conversation about that. Before we go into that a little bit, I do want to ask you a question because you aid you had a discussion about pricing with them but don’t you list the pricing on your website?
Jordan [28:38]: We do but to assume that everyone looks at it, things about it, internalizes it and brings it into the conversation, I found is a bad assumption. I used to think that but then they kept being like, “All right, so how much is it?” And then I would say, “Okay, so clearly you didn’t look that hard,” and I would get pushback. Yeah, it needs to be part of the conversation. I know, technically, you’re supposed to do it as early as possible. I think in our current stage, if I hired a salesperson to take over for me, I would probably tell them to ask that question earlier on. The way I’ve done it is to focus on the product and get a lot of feedback on it and assume that they looked at the pricing and at the end confirm. I know I’m doing it ideally but I try to make sure it’s injected to the conversation and a lot of that comes from that initial form that they fill out showing how much they make. If I see over 100K a month, I know I’m going to have explain our pricing because our pricing is 300 bucks a months for up to 50K, 500 bucks a month for up to 100K and then over 100K is custom pricing. I know already in the back of my head that’ I’m ready for that conversation.
Mike [29:48]: It’s interesting that- you and I have taken different approaches on this, where you list your pricing there but if you go to Blue Tick’s website, it won’t tell you what the pricing is. You have to ask. That’s one of the questions that when people fill out my survey, that’s one of the, I’ll say, the tops five questions that people are asking; how much does it cost? We get into that conversation and it’s not really a big deal or anything but you do have to have that conversation. I think you’re right about the fact that some people just don’t look at the pricing. They see the product and they sign up for it or they end up in your sales funnel because of something else and you don’t realize that they may never have even hit your website or they just landed on that demo page and that was it. That’s’ their only interaction with it.
Jordan [30:29]: Yeah, it depends on the situation. We wanted to make sure we did give the pricing. That was part of our qualifier. If we didn’t have the pricing, I don’t know what would happen. If we could get more form people or a lot of people who self-select out of the process just don’t request a demo because they think it’s too expensive.
Mike [30:49]: It depends a lot on your own pricing. Your pricing is significantly higher than mine is but mine is also per user. It could obviously swing the other way. If you had 50 or 100 people that you wanted to put on there. There is a generalization that people will make about a product based on the pricing itself and whether they feel like they fit into that or they can afford it. I look at $300 to $500 a month and I’m like, “I’m not paying for that for a shopping cart.”
Jordan [31:16]: That has been a healthy challenge. When someone asks you that on the phone, it forces you into this position of, “I need to justify this properly.” If you’re full of it, it’s going to sound like you’re full of it. You have to believe that your pricing is right. We have only one competitor that does the same thing we do and they are $37 a month. We get the awkward question of, “So I just- I’m not saying anything bad about your software but just help me understand why you’re 10 to 20 times more expensive.”
Mike [31:49]: I’d go with the analogy of have you ever bought something at Walmart and then bough something similar-like a blender at Walmart and then bought a blender at any other distributor ever?
Jordan [31:49]: Right. You need a really good response to that and being forced to do that while on the phone while someone is looking at your screen, it forced a good answer to come out.
Mike [32:10]: How does the on-boarding come into play because there’s obviously an on-boarding discussion that you have to have to have with people. If people are willing to sign up or want to sign up right at that point, obviously you’re sending them the links and stuff. What about on-boarding? Do you talk about on-boarding sessions with them? How do you pitch that to them? Is that an up-sell or is that included as part of the cost?
Jordan [32:31]: At the end of the conversation, along with the sense I say about when we hang up the phone, I’m going to send you the registration link, the next sense that comes out is, “If you look at my screen right now, that little thing on the bottom right hand corner, that’s intercom chat. That’s where you can talk to us. That goes to me and the tech team. If you ever need anything, we’re right there for you. That’s how you’ll get the quickest response.” That puts people at ease a little and then the difficult lesson I had to learn was I need to hand off. I’m doing three or four demos a day and what would happen is those users, I would follow them into the on-boarding. Once they got into the app, they had the relationship with me. They say, “Hey, Jordan I need help on X.” I needed to stop doing that because I want getting any work done besides doing demos and talking to people on intercom. I had to be like, “Sign up and Ben out CTO will be here for you. Our tech team will be able to help you. I’m always here for you if you need anything.” There was a hand off of the baton of once you go into this product, I’m not your man. That had a very interesting effect actually. What it did is it created this social status thing where they were like, “Oh, that’s the founder I like can’t talk to him. He’s like out of reach. We did the demo but he’s too important for me to ask these support questions,” which is not true but you kind of want it to be true in their minds.
Mike [33:54]: You want to be able to redirect the work efforts or the task that they’re giving you because somebody’s got to deal with them.
Jordan [34:01]: Right. You have to make sure not to put down the tech site. I would always say our CTO, Ben. I’m positioning him like, “This is someone serious that you can talk to as a business owner also. Don’t treat this person as some random technical support that works for sales for us and some call center. No, no, no, you’re lucky to work with our team and we’re going to take good care of you,” which goes along with the higher pricing promise.
Mike [34:31]: Inside of Blue Tick there’s a link where people can click on it, literally says ‘support’ on it and then it takes them over to the helpdesk. It’s hosted helpdesk and there’s a place where they can submit something and all the tickets come directly to me but it almost doesn’t matter. I’d rather than go there-
Jordan [34:46]: It’s a process.
Mike [34:47]: Yeah, it’s all about process. I cover that as part of the demo because as you said, people want to feel comfortable that they’re being taken care of. I tell them, “Look, don’t hit me up on Skype, don’t send me directly an email. Send it to support@bluetick.io. You’ll get taken care of.
Jordan [35:02]: I like that. I’m going to take that because people hit me up on Facebook, Slack, Skype, Email, all over the place. I like that.
Mike [35:11]: I think there is a couple of different ways you can position that. One is that, for example Skype, I am almost never on Skype. The only time I’m on Skype is if I’m there to make a call and record podcasts. There might, very well, be a week between calls if somebody tries to hit me up on Skype. If it’s a support request, this could be a few days or it could easily be a few days. I’ve had several situations where that happens and I’m like, “You’ve got to email me like add support here,” and then I’ll get you taken care of.
Jordan [35:38]: That’s a good lesson for that.
Mike [35:39]: It is.
Jordan [35:40]: It’s tricky. Facebook is a full-blown sales channel. My Facebook Messenger is a full-blown sales channel.
Mike [35:47]: The other thing that It allows you to do is to use that as essentially a repository for information for when you bring on new people to help out with support and then they get to see what kinds of things have been asked before, whether or not it make sense to make a helpdesk article out of stuff. There’s a lot of advantages to that but making sure that they know where to go to get help is also an important part of that demo process.
Jordan [36:10]: Yeah, I like that. I’m going to regret that a lot because we have so much in intercom and intercom search is horrific. It’s just terrible. When we hire someone for customer support that we’re talking about doing in the next few weeks, they’ll have everything there but it will be impossible to find. It will be a lot more painful.
Mike [36:29]: That almost sounds like a product on its own, like intercom search but I think you’ll get run out of business at some point.
Jordan [36:36]: Yeah, eventually we’ll get it right.
Mike [36:39]: We’ve talked a lot about some of the different advantages of going with a sales model where you’re forcing people through a demo first. Is there a point where you have in mind right now, where in the future you’re going to switch over or do you know that at some point in the future you’re going to go in the direction of, “Look, let’s kind of stop these one to one demos,” or is there a hybrid approach that you’re thinking of where people who are well qualified, above a certain point, you’ll do demos for them but below that, you want it to be more self-serve? How do you envision that working out for you in the future? What sorts of data points have you pulled in to make those decisions?
Jordan [37:14]: That is the single, hottest topic of conversation internally in our Slack. What do we do to transition out of one on one demos? What we have found is that there is no one way to do it. You can be as creative as you want. We’ve come up with a hundred different ways to do it. There is going from requiring a demo to completely self-serve. That’s like going all the way. Between where we are right now and doing that, there’s this huge range of creative solutions. I’ll tell you some of the things that we’re considering. We thought about A, just experimenting with opening up completely, not requiring a demo. We always require a credit card but not requiring a demo and just letting people in and then doing that and at the same time me taking the time that I’m spending on demos right now and spend it on creating on-boarding videos, documentation, helpdesk stuff, knowledge stuff. That’s one way to do it. We talked about allowing for sign-up but then as soon as you log in, you get a welcome screen with effectively a 10 to 15 minute demo of the product. We’ve talked about doing that and requiring the person watches it before they can go forward. We’ve talked about letting people sign up. Having more on-boarding videos but not letting them launch. Taking the bottleneck and moving it from the signup process to the launch process. Our product requires one line of code added to their Shopify Store. In the process, they give us access to their Shopify Store, we go in and we add one line of code. We looking at them and say, “Maybe that’s actually an opportunity to slow things down, if and when we want.” Maybe we just let people sign up, let them on-board, let them set up but don’t let the launch and have them do launch appointments instead of demo appointments. Someone on our team can do a quick 15 minute call, “Hey, is the checklist, looks like you’re good. Do you have any questions before you go? Let me take a look at your account. You’re good to go, cool.” We’re still only launching [?] three a day instead of just 10 people a day signing up and just asking a million questions and not knowing what to do and launching before they’re ready and so forth. We’ve also considered keeping the demo requirement but doing a one-to-many approach. We’ve talked about daily webinars, which would still be more efficient than doing four individual appointments a day. We’ve talked about a weekly webinar on Wednesdays. This isn’t like a webinar to sell a product. It’s really like a demo webinar, it’s, “Here is the product,” for 20 minutes and then another half hour of Q and A. We’ve also talked about doing that but doing it recorded. We’ve talked about putting it in between so when you sign up, you just put your email address in there you can watch a recording and then you can have a learning page using called [?] pages. You could have the video and then only have the button pop-up to register after X number of minutes. I could do a 10 minute video and the button doesn’t show up to actually register until X number of minutes. It’s like-
Mike [40:17]: That seems really sneaky.
Jordan [40:20]: It’s like okay, take the email upfront but there is no right way. We can do whatever we want and what we always say, internally, is, it’s all reversible. What’s the worse that happens? We just go back to demos. What’s the worst? It’s time to open up and see what happens. If it’s an absolute mess, we go back to doing one on one demos.
Mike [40:39]: It’s interesting the way that you put that in terms of moving where you’re putting that bottleneck or that artificial throttle line to make sure that people are doing the right things. Initially or at least right now, you’ve got that bottleneck right in front of where they can sign up. They can’t sign up unless they go through the demo. You’ve talked a lot about moving that further in so they can sign up but they can’t really use it. There’s other ways that you can think about that as well, in terms of if you allow people to sign up without a credit card, for example, but as soon as they go to do something where it’s going to create value for them, that’s when you require a credit card. That’s another place that you could presumably put a bottleneck.
Jordan [41:18]:-which is exactly what we do with our other product.
Mike [41:22]: But I think all that boils down to what is it that you’re trying to do and why. It has to be whatever makes sense for your product and customers and making sure that you’re not putting negative stress on the business in certain ways, whether it’s on the servers that are running or on your support staff or you as a founder trying to answer those support calls or on the sales demo process. There’s lots of things that go into that. It’s interesting the way that you put that in terms of all the different decisions that you have ahead of you to figure out like where is the next best place to try this?
Jordan [41:57]: Yeah, we’ve probably run ourselves a little crazy for about a week on it. Now it’s just-now every time I get a new demo request, I just say, “Time I should be working on something else.”
Mike [42:09]: We can probably do an entire episode on the pros and cons of having the bottlenecks in different places but I think we’re a little short on time at this point. Any parting words for the listeners?
Jordan [42:20]: The only thing I’d say as a parting is to ignore what other people tell you to do. There’s this unbelievably impactful tweet I saw recently and all it was ‘stop telling me what to do’. If you read all these headlines and blog posts it’s like, “Do this for this action, then you get this result and like-,” all these advice but in reality, you don’t have to take any of it. You just do whatever is right for your situation. There’s no such things as, “I’m doing it wrong just because I’m not doing it the way [?] does it.” It sounds a little stupid for us to slow down, people signing up for 300 bucks a month but that’s what makes sense for us. My parting words would be just do whatever is right for you, not what you think you’re supposed to be doing given your industry or space or whatever.
Mike [43:08]: Excellent advice there. If people want to follow up with you after the podcast, where can they find you?
Jordan [43:13]: I’m on Twitter @Jordangal and Jordan@carthook.com, if you want to email me and hopefully see you at Micro Conf in a few weeks, depending on when this episode gets published. I’m looking forward to Micro Conf.
Mike [43:25]: And you’re also based out of Portland, Oregon, right?
Jordan [43:28]: I am, Portland, Oregon. There’s a good, strong, contingent here of web businesses here, a lot of people that go to Micro Conf. Yes, it’s a strong community, really cool people. Everyone’s supper open to get in-touch with everyone. If you are in the Portland area, definitely get in touch.
Mike [43:43]: Excellent. Well, Jordan, thanks a lot for coming on and if you have a question for us you can call it into our voicemail number at 1-8-8-8-8-0-1-9-6-9-0 or you can e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Out of Control’ by MoOt, used under creative comments. Subscribe to us on 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.
