Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike take some listener questions about hiring VA’s, struggling with engineering, and bootstrapping versus raising funding.
Items mentioned in this episode:
- Gofccyourself
- Dear FCC
- Fearless Salary Negotiation
- Virtual Staff Finder
- Upwork
- Scaling SaaS
- Meet Edgar
Transcript
Rob: In this episode of Startups For the Rest of Us, Mike and I discussed hiring VAs, struggling with engineering, bootstrapping versus raising funding, and more listener questions. This is Startups For the Rest of Us episode 340.
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 have a website for you. It is called gofccyourself.com.
Rob: Really, I’m clicking on it right now. That sounds dubious. Is this safe for work, as they say?
Mike: It is safe for work. This is actually created by the Last Week Tonight show with John Oliver. The idea behind them putting together this website was that there’s some pending discussions inside the FCC about whether to deregulate certain parts of the internet specifically as it relates to internet service providers. It allows them to essentially self police themselves in a way that they decide whether or not what they’re doing is morally correct and net neutral, which is obviously not a good thing for net neutrality in general.
The FCC has made it very difficult to get to the page where you can actually leave comments in support or against this particular piece of decision making in the process. John Oliver and his team put together this website. It’s essentially just a redirect that takes you directly to the place where you can fill out the form and leave a comment.
If you’re interested in contributing your voice to that net neutrality legislation, then go over to gofccyourself.com. I’ve already done it. It does take a few minutes. I thought it would take two minutes so I’m hesitant to say that because it took me like 10 but I think that it’s well worth putting your voice into for them to hear it.
Rob: It looks like there’s another URL, dearfcc.org.
Mike: It’s the same type of thing except that, I believe, it sends a physical letter as opposed to just commenting directly on the FCC’s website.
Rob: Got it, very cool. Hey, we had a comment on last week’s episode. I thought it was a pretty thoughtful comment. I appreciate it. It was from a guy named [00:02:17]. He said, “Hey, first time commentary. Congrats Mike on reaching your MRR milestone. What makes it more impressive is you did it in spite of all the armchair criticism. All the more power to you.” I didn’t even read that part. That’s funny. He said, “I did want to say that hearing Rob talk about hiring an in house nanny and how everyone should get hired help was a little bit perhaps insensitive. Not sure if that’s right word but Mike’s response pretty much sums it up. Similar to a guy who could afford to fly first class and tells everyone they can’t imagine flying economy again and that everyone should fly first class.”
I appreciated his comment. A couple of things, first of all, I felt like the first class analogy was a little, maybe didn’t translate to what I was saying because flying first class is like 5 times, 10 times more than normal flights and the only value is comfort and perhaps snobbery whereas I was genuinely saying outsourcing stuff. It’s not about having a live in nanny. It’s about not mowing your lawn. That’s really what I was talking about.
I had switched topics by this point to if you’re a founder and you’re still mowing your lawn, and you’re pressed for time, and you don’t have time to spend with your kids or work in your company, and you’re still mowing your lawn, or shoveling you snow, or cleaning your own house, that’s not a money decision at that point if you’ve got any type of success.
I used to pay $55 every 2 or 3 weeks for a house cleaner. Most of us can swing that. None of this is stuff that I started doing after I sold my company. I started hiring small amounts of outsourcing over 10 years ago when I was literally making just a normal salary gig but I was trying to do stuff on the side. I wanted to clarify that and also say I apologize if I came off insensitive. Did you feel like I did?
Mike: I don’t think so. I actually thought it was kinda funny when you said I’m not advocating outsourcing your parenting of your kids and I was like, “Why not?” Isn’t that the point?
Rob: Mike’s like, “I am advocating outsourcing raising your kids.”
Mike: I was like, “When did we decide to go against that idea?”
Rob: Totally.
Mike: I could definitely see what you decide could be misconstrued. I don’t think that that was your intent. As you said, the conversation had shifted from one topic to another in the middle of it.
Rob: Right. I don’t think everyone by any stretch should have some type of live in nanny. Sherry and I have been talking about that for five or six years. We haven’t been able to do it. We just didn’t have the house that it worked for back in Fresno. It really doesn’t have anything to do with suddenly having more money. I’m not advocating everyone should get a live in nanny. It’s game changing for us but that’s a personal choice.
The part that I am saying entrepreneurs and founders should do if you’re strapped for time, and all of us are, is that you should be outsourcing more of your day to day groundwork. That’s a decision you’re going to have to make early on. It’s like hiring a VA, I’m going to pound that drum forever, but if you’re still answering your own email support and you’re more than about 3 or 4 months into your product, you’re making a bad choice.
You can try to tell me it’s not a bad choice but I’m going to tell you over and over based on my experience and the experience of everyone who I’ve told this to, who haven’t hired someone says, “Oh my God, why didn’t I do this years ago,” that you should be doing it. It’s a different thing but hopefully that clears it up and is a little more helpful who think I’m some type of pretentious d-bag.
Mike: Monster.
Rob: I’ve always tried to be on this side of that argument.
Mike: I do think that there are certain cases to be made where you don’t outsource that stuff. For example, like mowing the lawn. I find that sort of therapeutic because I listen to my headphones and podcast and stuff like that while I do it. That’s a regularly scheduled thing that comes up versus something like snowblowing the driveway and taking care of that where you’re much less in control of the weather and those things pop up and it needs to be taken care of. That is easier to make that decision on than something like mowing the lawn where it’s predictable, I’ll say.
Rob: Yeah. If you’re saying it’s relaxing for you, that actually is a good argument for it. I would say alright then, that’s not a bad choice. I actually cook quite a bit because cooking is not a chore to me. It’s actually something that I enjoy. I do outsource part of it. A lot of the prep, I use Hello Fresh or Blue Apron so I’m not going out shopping. It’s more expensive for sure but it saves me time.
Cooking itself, the act is similar to what you’re saying. I typically have a glass of wine and I have podcast playing and so it is actually relaxing. That’s a good point too to bring up. It’s only if this is something that’s detracting from your life.
Mike: I think that’s the point. If there are certain things that you can outsource because they are detracting from your life or they’re inconvenient, that was really I think the point that you were trying to make with the nanny. There are times where it’s inconvenient to drop what you’re doing to do something like picking up the kids at a specific time. You don’t have to be the one that does that. Again, that’s very different than being the person that are parenting your kids. Those are just two very, very different things. I think the distinction got muddled in a conversation, that’s all.
I just want to bring up a comment that we got. This one came from Josh Doody. Josh gave an attendee talk at MicroConf. One of the things that he talked about in his attendee talk was about SEO. This relates back to episode 338. He just said, “Hi, I just listened to episode 338. Summary of the Moz case study on ranking number one for competitive head terms. Really good stuff. I heard a couple of things that I’m going to try to keep improving the SEO on fearlesssalarynegotiation.com. I added the episode link in the case study that linked my MicroConf summary page. I think my talk in some of the links on that page could help people get started with SEO. My talk was a one on one level talk where I would say the Moz case study is 201 plus.”
He gives a website URL. It’s joshdoody.com/microconf. We’ll link that up in the show notes. Anyone who wants to go take a look at that, it’s a really good overview of what his talk was and it is some practical strategies if you’re not quite to the level of where that Moz episode that we did and all the different things that they did for SEO. If you’re not quite there yet, head over to this link. Again, it will be on the show notes. It gives a lot of the basic tactics and stuff that you can use to help your website rank in the search engines.
Last before we get started. I did not know this but apparently, for the past two or three years, there has been a Viking combat training facility here in my hometown.
Rob: Do they teach you to fight with the axes?
Mike: I think that they put stuff over the ends of them. I saw them training one day out in a parking lot. They have these giant bo staffs, they almost look like giant erasers or q tips or something like that. They are like padded on ends and they look like they’re ready to beat the snot out of each other in the parking lot.
Rob: That’s awesome. Your town is not that big so it’s kind of odd that you wouldn’t have known that.
Mike: I know. That was the part that struck me as odd. It’s literally called the Viking combat training center.
Rob: That’s fun. Last time we were in Italy, my son and I did gladiator training in Rome. It was like a one or two hour little adventure where we had foam swords and you wore the helmet. The stuff is bulky and heavy. It was super fun to learn kind of the different approaches to combat though.
Mike: What’s on the agenda for today?
Rob: Today, we are answering listener questions, trying to play catch up. I think we have one voice mail and a few written questions. Our first question is from Richard Gorbet. He says, “Hey Rob and Mike, love the podcast. Only one I have to auto download when a new one appears. A couple of years ago, there was a lot of chat about virtual assistants. Is it worth a new topic in one episode as I suspect the dynamics may have changed. I’m thinking from a help desk perspective but many, many uses for a VA. It’s come to my thoughts as my latest ideas about MVP in the next few weeks. Thanks.”
What do you think about this? I don’t know that it’s so much different than the previous thoughts we’ve had. Maybe the specifics of hiring have changed slightly but I think we talked about 15 ways to use a virtual assistant. I think all of that is still the same. That stuff hasn’t changed. What do you think?
Mike: I would agree. I think the specifics of how to go out and find somebody and vet somebody to do those things has definitely changed over the years but I don’t think that the types of stuff that you would have them do is going to change all that much. It’s probably going to be more of an evergreen topic to be honest. It’s just there’s always ways to save yourself time.
The one thing that I think that might change over time is that as the level of skills of people that are available at a certain hourly rate, that dynamic shifts over time. You might be able to find people who are more qualified to do things that are probably further along than what you would think that a typical VA would be capable of. Again, that’s going to be shifting the global economy in terms of who is available at what hourly rate and stuff like that. It’s not really a dramatic shift in what you would have them do. It’s just a matter of what people are skilled at, at a particular hourly rate.
Rob: I actually think the hiring process, at least the one I outlined most recently was through oDesk. That’s still where I would go today. I would use that or I would use Chris Ducker’s service, virtualstafffinder.com. It’s Virtual Staff Finder, that’s the URL. If I recall it was like $300 or $400 to pay them and they basically vet a bunch of candidates and then they give you the top three. They guarantee them, that if they don’t work out in the first whatever days, they’ll replace them and stuff.
If you have the funds, I would do that if you’re in a hurry. If you have less funds and more time, then the oDesk approach that we’ve outlined, I guess it’s Upwork now, the Upwork approach that we’ve outlined in the past is what I would go back to at this point. Thanks for the question.
Our next one is an anonymous question that he actually sent to me directly. He say, “Hi Rob, I’m in the process of creating a B2B SaaS app for universities but I’m struggling with the engineering of the application. What resources such as books, tutorials would you recommend for developing a SaaS app on the web? I’m a huge fan of the podcast and of your book. Thanks for all your help.” What do you think, Mike?
Mike: It’s funny, as I’ve been developing Bluetick, I‘ve come across various topics where this type of thing would be very highly relevant. I’ve looked around and depending on what you’re doing, it can be very difficult to find this type of stuff. It kind of actually spoke the idea of writing the technical side of developing a SaaS application, a book that basically covers that topic. The problem obviously, I just don’t have the time to do that kind of thing.
There’s also just a wide variety of topics that as a SaaS founder, you may run into them and you may not. It depends on the type of SaaS that you’re building and how data intensive it is, how much search you have to do, if you have to do data indexing. A lot of times, you can get away with just very basic stuff and then when it breaks, then you fix it.
I think it’s very easy to go down the path of trying to engineer something to work for the largest case that you could possibly envision your app doing and then get into it and realize that you’re not going to hit that for six months, or a year, or three years. You’ve over engineered the early stage stuff. There are certainly things in Bluetick where we’ve had to rewrite them two, three, there’s sections of the code where I’ve rewritten it four or five times just because the backend stuff has scaled to that point.
Had I sat down and just designed it on day one to try and reach that scale, it would have taken me so much longer to get something out there. I think you really have to just weigh what it is that you’re trying to accomplish and what those short term goals are which your primary ones should be get something working in front of people versus how do I make this thing survive in the long term.
Unfortunately, that’s something that’s sort of diametrically opposed to each other. You don’t want to have to rewrite code more than once or twice if you don’t have to but at the same time, in order to take those shortcuts, you almost need to build those sections of code as prototypes just to get to where you need to be and get that revenue in the door.
In terms of looking around and trying to find specific resources, I’ll be honest, I looked around and I could not find very many. There’s all the generic stuff on how do I build an application or how do I use this particular type of technology, and those are great and helpful but they don’t give you a much broader picture of how do I handle authentication or how do I handle permissions inside of a system.
There are different areas you can go into like claim space authorization and all these different things. At the end of the day, you got to pick what is right for your application and what is going to get you as far along as possible with the least amount of effort.
Rob: The hard part of this is if you get into like how should I do authentication, it’s going to depend from language to language. You should use the built in .NET stuff for .NET but in Rails, you should use the built in Rails stuff. You almost have to go one level higher and talk about concept.
I agree with you. I don’t know of a single good book or tutorial course about really the high level engineering side that’s not language specific. I went to Google and typed in how to build a SaaS application. There’s actually some decent stuff. There’s a good conversation on Quora. There’s a good article on Glenn Stovall’s blog. He’s a MicroConf attendee. He talks about all the technology he would use and it’s like 19 apps in a row. He made the list. Thanks Glenn. I haven’t even noticed that. That’s kind of funny.
That’s where I would start. Again, I don’t know of any tomes, any books, any dead tree of things that are out there. It’s much more going to be about blogs, article here and there. I do know that there are people out there like Derrick, my co founder, has a blog called Scaling SaaS. It’s at scalingsaas.com. He talks about challenges that he’s run into and how he’s fixed them but it’s not a step by step tutorial or a really deep dive into engineering a SaaS app. Perhaps, there is a gap in the market here that someone would be interested in filling.
Or if you have heard of some good resources for stuff like this, feel free to write in questions at Startups for the Rest of Us and we’ll be happy to mention them in a future episode.
Laura: Hi, this is Laura Roeder from Meet Edgar. Hey guys. I was wondering about Rob’s perspective on bootstrapping versus fundraising now that you are operating inside of Leadpages, a funded company. I’m a bootstrapper, I know you guys have been big proponents of bootstrapping over the years. What have you learned being inside of Leadpages about bootstrapped versus funded companies and has it changed your point of view at all about what you might like to do in the future? Thanks.
Rob: This is a really interesting question. The hard part is think about how I run a bootstrap company versus maybe how you run one versus Reuben Gomes versus Josh Pigford. I don’t know if you can say there’s one way to run a bootstrap company and so I can only compare the way I run them with the way that the Leadpages team runs them.
If you think about a funded company in Minneapolis run by Clay Collins and his two co founders, started as a distributed company and then raised funding and grew to 170, 180 employees at this point, it’s probably a different trajectory. They’ve always been profitable. Different trajectory than a funded company in the bay area that maybe B2C, has never been profitable and is hiring a boiler room of bros to make the phone calls.
There are a lot of different ways and thoughts around raising funding and different ways to run a company. I guess I want to couch that in advance by saying it’s only one person’s experience. It’s with basically two companies, comparing them to one another.
The base thing I’ve learned moving to a funded company is that it’s so freeing and amazing to not have to worry about resources, to not have to be concerned with adding a $200 a month server or upgrading the database over to a $2,000 a month box. You know it’s going to fix your problems but you just don’t know if you have the money to do it.
That is gone. I’m not saying money is infinite but compared to the bucket we were in a year ago, before the acquisition, money is essentially as close to that as you can get. Anytime we bring up a problem and we’ll say, “Here’s how to fix it but it’s going to cost this.” The cost is actually the afterthought in the conversation. That’s very freeing and it allows us to operate quickly. We can hire. We can pay market rates. It’s like having the resources, it’s crazy.
Especially because we’re not doing the crazy I’m going to raise $20 million and do the B2C shuffle where we just hire way out ahead of sanity. You hire 20 people before you hit product market fit. We’re not doing that. We’re literally hiring to scale. This is the perfect time at which I would have raised funding if we were going to. It’s a point at which you have product market fit, you’re growing quickly and you’re just pouring money into either scale the marketing or scale the engineering. That’s been cool.
The other thing I’ve learned is that specialization is amazing. The fact that they don’t have people who do support and customer success and marketing, we used to have a Drip when there were five of us. There was one person doing support. To be honest, there’s like eight people doing support for Drip. Marketing is divided into like some people just write blog posts. That’s all they do all day. And then there’s this person and all they do is all the social paid acquisition. There’s this other person and all they do is the search paid acquisition because they have the staff to do that.
Specialization is extremely powerful because you can get so good at stuff. This is when we see these case studies like we talked about last week. It was two weeks ago, about the SEO stuff, the reason those people are so good at that and can write that incredible case study is because that’s all they did. That’s all they did for 90 days straight, was work on that one problem and you can accomplish a lot doing that.
I think another difference and I don’t think it’s not a fun diverse thing but like Drip was an engineering driven culture because I’m an engineer and so is Derrick. Leadpages and marketing is different culture so it’s a different way to look at it, a different way to run a company but that’s not because they’re funded. It’s because they’ve always been that way. Clay, Tracy, and Simon bootstrapped Leadpages to, I don’t even remember what the number was, but it was several million dollars in annual revenue. They kind of are a bootstrapped company that then raised funding.
I think those are some cursory thoughts. I could probably do about a 20 minute rant, not even a rant, just a conversation of me talking about the differences but I think those are probably the most pronounced.
Mike: I think the only thing I’d add to that is that there’s this I’ll say sort of a pervading fallacy that when you start talking to not self proclaimed experts but the people who are leading the masses when it comes to startups, you look at them and your immediate thought is, “Oh, they know what they’re talking about and that’s the way to build a business.”
The reality is that that is true to an extent, however, there are lots of ways to be successful and there’s more than one path to do it. There’s no one true path. There’s no one silver bullet. There’s no one way to do things. There’s lots of ways to do it and be successful. Just because it worked for somebody else, it doesn’t mean it’s always going to work for you and that when you’re looking at those types of examples, that’s one path. There are lots of others that may or may not work for you. It’s about finding what will work for you.
Rob: It’s interesting. There’s always these big things about don’t raise funding because you’ll lose control, or you’re going to make bad decisions because you have too much money, or you’ll feel all this pressure from investors. I’m not the founder or the CEO of Leadpages but I don’t feel like I’ve lost control like we’re being pushed to make bad decisions because we have “too much money,” or that there’s all this pressure from investors. Perhaps the board or the CEO, Clay feels different than that.
It’s not this black and white dichotomy that so many people make it out to be. You and I have never done that. We’ve never been anti funding. We’ve always been anti the dumb B2C startups that have no product trying to raise all this money and go viral. It’s the stupid Silicon Valley stuff.
For 10 years, I’ve been saying there’s a right time and a right place to raise funding. I think it’s post product market fit. You bootstrap to that and then you add the fire to grow the company. Typically, it’s going to be more B2B although if you had a B2C that had hit, I think there’s a good time to raise it as well.
It’s really interesting. There’s a lot more to talk about. Maybe we’ll record an episode in the future and revisit that whole topic.
Mike: Yeah. I think you and I are more anti pipe dream where you have something that you’re putting out there but you’re not charging for it and you don’t have any way of making money. The reason you need funding is in order to increase your reach and get it in front of more people. And then, at some point down the road, you’ll figure out how to make money from it. If you can’t do that very early, then it makes it difficult to build a business out of it.
Rob: Right. We’re anti billing slide decks and asking for permission instead of actually building a company. You should be able to build your company to the point where people want to invest without any funding. It’s very, very rare exceptions. Maybe hardware, although even these days I would say do a kickstarter. Maybe there’s something with incredible computing power, something that you can’t have access to and I would say build something simpler first.
For the most part, most of what we all do, you can bootstrap that to the point where it becomes very interesting to investors.
Mike: I think that about wraps us up for today. If you have a question for us, you can call it into our voicemail number 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com.
Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us 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 339 | Updates on Bluetick, Drip and Other Madness
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike give updates on Blutick and Drip. Mike talks about some progress he’s made as well as his current MRR with Bluetick. Rob gives his update on Drip continuing to scale and fill new positions.
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 updates on Bluetick, Drip and other madness. This is Startups for The Rest of Us episode 339. 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 1st product or you’re just thinking about it, I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made, what’s going on this week Rob?
Rob: Well I’m back to feeling really good about Drip because for the last maybe month, prior to last week, which I talked a little bit about it. We just had you know scaling issues right, it’s like stuff comes up, you don’t know if it’s database, you don’t know if you can add more horsepower to it, code implementation, you know what it is. So, different times of day certain ques would back up and it’s like we’re shipping a lot of features, the team is kind of firing on all cylinders right now and I feel like we’re the most productive we’ve been in ages perhaps ever,
[00:01:00]
Rob: I mean just given that the time size is so much larger, we’re able to just ship stuff faster and yet, like every week was ruined for me because there would be this delay or whatever, this page load is slower, just whatever that like makes me feel like we’re aren’t living up to the promise that we make to our customers, but we turned like a big corner last week with it and I just feel great about everything. So that’s my week.
Mike: Yeah, I know what you’re saying. I think the best analogy, I might have heard this someplace but I kind of feel like I thought of it on my own at 1 point, is like when you’re working on a SaaS app like everything is in motion while you’re working on it, so it’s almost like being a heart surgeon like you have to make sure everything stays up and running while you’re still working on it.
Rob: Totally, that’s right, Reid Hoffman the founder of LinkedIn said building a startup is like jumping out of an airplane and assembling the parachute on the way down right, because you kind of in free fall and you’re burning through cash and the analogy works really well for running a SaaS app and having to do kind of performance improvements, refactors, anything like that that impacts a lot of things and this is where unit testing is such
[00:02:00]
Rob: a nice scaffold right, unit testing is like having good test coverage, it’s kind of like jumping out with the parachutes already half made or maybe the parachute is, I’ll just stop there because that was a really dumb analogy anyway.
Mike: I was going to point out, I wasn’t sure where you were going to go with that.
Rob: You’re like you’re really taking this too far, let’s ditch the parachute thing.
Mike: That’s almost like my analogy against a heart surgeon.
Rob: How about you, what’s going on this week?
Mike: Well minor champagne moment, I’ve recently crossed the 1,000 dollar a month MMR with Bluetick, so things are going in the right direction. Of course, because it’s the beginning of the month you look at the statistics for growth and stuff like that and they’re just tanked at the bottom which because it’s the beginning of the month instead of the end.
Rob: I know you’ve got preorders up front but this is active customers right, these are people that are actually using it and not people who have paid you and are planning to use it.
Mike: Yes, these are people who have paid me and are currently using it.
[00:03:00]
Rob: Sounds good.
Mike: Yeah, most of the people I had who had come in as preorders and then converted over into paying customers, a lot of them I had essentially applied credits to their account to give them credit for that preorder to some extent, mostly to kind of boost them over from being a preorder and kind of having an indefinite beta period over to like being a paid customer and those payments are I think going to be starting to kick in this month but even with all of that it’s still over 1,000 dollars a month and my goal for this month is to double it but we’ll see how that goes.
Rob: Wahoo, a 1,000 bucks a month man.
Mike: Yeah.
Rob: Are you going to Disneyland, are you going to go out and buy a new car?
Mike: No, I had a beer last night, that was about it.
Rob: Nice, that was your champagne moment, was to drink a beer.
Mike: Yeah, champagne, beer, I’m sure somebody’s going to have a coronary over that analogy.
Rob: Nice, do you feel like the pace is picking up in terms of how quickly you’re adding customers?
Mike: It is and that’s both intentional but also as a byproduct of people talking about it because they are
[00:04:00]
Mike: using it and they’re having good experiences so they’re turning around and referring other people to it and saying hey I’ve been using this and it’s been working really well for me, that and coupled with some of my outreach efforts, they’re either going on podcasts or talking to people who are on mail lists. It’s a combination of things but I’m definitely pursuing things a lot more in that regard as well and it’s unfortunately a juggling act too because there are things that come in and people say hey, can it do this or can this be modified, can we add a feature or a function over here that does X, Y or Z and it’s prioritizing those against all of the other things that are going on, it’s really pretty hard.
Rob: Yeah, that’s how it always is right, especially in the early days man, it’s tough. That’s why starting on your own and really being the single founder is such a hard road to go if you’re going to build an app like this that’s not in a small niche market where you can move slow and there’s no competition and you can kind of trudge along but building something like this, where there is competition and you’re going to have to be keeping up, you need to get to the place where you’re keeping up enough revenue to basically hire somebody
[00:05:00]
Rob: soon and essentially, Justin Calcian says hire your cofounders, right that’s what he does now. He doesn’t have cofounders but he hires really early because he races around and he has a little he can back it with and he’s able to give our less equity but he brings people in very early, you don’t see him building something solo or alone because there’s just too much to do when you’re launching something that you want to see grow pretty quickly and it’s in a big market.
Mike: Yeah, I meant there is definitely things that are kind of falling on the floor right now, I mean 1 thing that’s been sitting on my to do list for well over like a couple of months at this point has been working on the sales website and even people who come through the sales funnel when I start talking to them, the biggest chuck of questions that they have is kind of what does this actually do, because the website doesn’t explain it very well and really the website is just 1 page, so there’s not a whole lot of explaining that it can do on that 1 page, it doesn’t provide use cases or examples or screenshots really, I mean there is very little there to go off. Most people are really reliant on what they’ve been told by other people or what they’ve heard about either from me or from other places where I’ve
[00:06:00]
Mike: done like a podcast interview or something like that.
Rob: You know it’s really cool when you say that some of your new customers are coming from other people using like word of mouth was a big driver in the early days of Drip, not as much with hit tail but there was some but if you have that already, like if you have that when you only have low double digit number of customers, that’s a good sign, right it’s a really good sign because as you grow that’s just a snow ball that allows you to continue kind of leveling up and when you add 100 or a1,000 if you still get that same percentage of people, you’ll always be lower as time goes on right but if you can get folks talking about it, it’s a really nice way to be involved in every conversation right, you always want people to say remember how like infusionsoft and Ontraport, it was always just the 2 of them and just by nature of that fact Ontraport which is nowhere near the product that infusionsoft is, you know had all of this growth and then I remember when Drip started to be part of those conversations when they would say of infusionsoft or Drip and I would like see it, I would say it’s
[00:07:00]
Rob: not in every conversation about it, but I would see it in these online forms, these threads and then get thrown out and I remember when that started happening and it was gaming changing because you just become another viable option rather than a tool that no one has heard about.
Mike: Yeah, 1 of the things I do, I think it was 1 of the 1st questions that I ask in the survey when you go to Bluetick’s website and ask for an invitation code, 1 of the questions in there is where did you hear about this, so from that I’m finding out exactly who people heard about the product from, so it’s nice to be able to track it back to people who either placed preorders or are current customers, I even have 1 customer who like has a bunch of customers that he works with and he’s going to start recommending it to them because he’s had such a good experience with it and they wanted to use it internally 1st and things have gone well in that respect, so now they’re turning it around and going back to their customer base and say hey let’s get you on boarded with this so that we can help you more. So, what about you, what else is new?
Rob: Well, you know as I talk about most weeks most of my updates involve scaling
[00:08:00]
Rob: Drip and hiring people, right. That’s kind of a big focus of mine now, there is some other stuff, I might get into it later depending on how much time we have today but I feel you know we have been pretty consistently, just we’ve had an open job, at least 1 job opening since we got acquired and most times we have either 2 or 3, so we’re constantly, we’re hiring other new front end like IUIUX, new rails folks or new people to help with scaling and I feel like I’m kind of in the groove of hiring at this point, like I’ve gotten pretty good. You know it’s kind of this skill that you go in and out of because when you’re not hiring you forget how to skim through a resume really quick, how to do a quick phone interview, how to do a quick phone interview but we’ve just been doing so many recently that I feel like I’m kind of in the groove of it which I don’t know that I necessarily want to be, hiring people is not an aspiration of mine, like I think we’ve always talked about like my book start small stay small, the small was about head count, not about revenue right. I always want to grow revenue but it’s like I want to keep head count down, but
[00:09:00]
Rob: in this case it’s even just looking ahead as we’re Xing, 2 Xing, 3 Xing every so often it’s pretty frequent that we’re doubling our customer base, we just have to hire a little bit ahead of where we actually are, as well as like I said earlier, being in a competitive space we need to continue delivering features, which as we’ve talked about in the past is harder and harder to do the bigger you get because you spend so much time just maintaining what you already have right, making sure the database is ahead of everybody’s need and the code base and the ques and just all of the stuff that you’re running. So yeah, I guess to summarize we’ve been hiring a lot, I’m hoping we can slow down here pretty soon, we’ve found some really good candidates and I guess it’s getting in the groove of it. I do like doing a bunch of hiring and stopping so that I don’t have to constantly you know being doing it and can kind of focus on other things.
Mike: So, is that going to be the focus of your next book is how to hire people at scale?
Rob: Oh, my gosh seriously. No, it will
[00:10:00]
Rob: definitely not, and like I say it’s super cool when you get a new person on board and you get them up to speed and they start contributing and like Derek and I looked at each other and we’re like we are shipping a lot of features and it’s because there’s all these people you know doing things that used to be either in our lap or we just pull, hey we have a scaling issue so we’d pull 1 developer off of something and now we don’t have too, like we have dedicated people who that’s all they’re doing and I keep saying we’ve hit our stride. I hate to keep using that analogy but it really does feel like we’re getting the right people in the right roles and it’s kind of a good feeling when you do slot somebody in and you see them start shipping things, you’re like man I’m really proud of what we’re putting out even we’re not doing all of the work anymore because you think back when you’re crafting this software or you’re crafting the UI, with Drip that was really all Derek right, it was he and I deciding what to build and me handling everything else but for so long it was all bottle necked by 1 or 2 people’s bandwidth but now with the growing team it’s neat to see that
[00:11:00]
Rob: we’re able to maintain the efficiency and still continue that hiring more people actually means we can push out more software rather than in other companies I worked at where hiring more people actually makes things worse, you know it like slows everybody down.
Mike: Yeah, I definitely hear what you’re saying. Do you find that as you are adding more features that like the individual features that you’re adding tend to be more invasive throughout the entire course of the apps, so it’s not like a little surface thing that you can toggle here or add over there, it’s like you’re adding this feature that needs to be added throughout a large part of the pipeline of the applications?
Rob: You know that doesn’t come up too much to be honest. I think in the early days it did because you’re just trying to get to that point where you built something that people want, but I think these days our product is so much more mature that there are things we add now and again that impact everything but our architecture is really solid, so things are broken out into their own subsystems and such. While there certainly are some that come through for
[00:12:00]
Rob: the most part a lot of these things seem to be more self contained I’ll say, I mean it may impact 5 files or worst case 10 files and you have to go through all of these layers of something and those are the ones that get a little scary right because you’ve got to make sure you have unit test coverage like crazy on that but yeah, I would imagine you’re probably in that boat though right where kind of everything you add it’s like oh gosh I have to go rearchitect this thing in order to do it.
Mike: Yeah, and that’s kind of why I was asking because I find that a lot of the changes that I’m making tend to be stuff that have to be tracked down or tracked all the way through from the front end all the way through the API and then into the service layer and the security layer and then into the database and it gets to be, I don’t want to say frustrating but it takes a lot longer to get some of those things done than I would like especially because of all of the maintenance and ongoing requests or butt fixes and things like that, there are just tweaks and adjustments that kind of invade into that space while I’m trying to get those things done, it’s
[00:13:00]
Mike: just, it’s honestly like the juggling act right now is really pretty hard, so I was just kind of curious of whether or not you still ran into those things, so maybe there’s light at the end of the tunnel for me.
Rob: Yeah, yeah there is but it takes a while. I remember we refactored Drip, like major database refractor probably twice before we got to launch right, so Derek broke ground on code December of 2012 and we really launched to the world in November of 2013 but we had kind of our 1st group of 10, 20 customers coming on as early as June of 2013, so that was 7 months in and I think within that 1st 6 months before we really had people he had to do a massive rip apart of things we just had made decision to couple and they shouldn’t have been coupled and then there was another 1 when we launched, automation right so that was early 2014 as he was building automation that was just painful, it was like 2 months of standing still and then he built automation, once he had it done the automation stuff was actually not so hard to build but it was like we have to rip
[00:14:00]
Rob: separate these 2 database tables and you know as you’re falling down making your parachute and it was gnarly but after that like once we hit there, we’ve had limited need to do that because I think the building blocks got in place and the product was solidified. Now us marking automation and we’re not going to add on shipping cart landing page, affiliate marketing management, you know what whatever else, that would all I think impact some of this other stuff where as you’re still figuring out, like where I would guess at your stage, we were still figuring out I should say, so really trying to figure out should I build this feature, what is this product going to become, what is the vision for the product and is my vision still aligning with what the market is asking for and that makes things very fluid, I think is probably a good word for it.
Mike: Yeah, I’m having the same types of general conversations with most people when it comes to either features that they want implemented, like the road map that I have in my head, it’s obviously different than I originally started out with but over the past several months it really hasn’t changed a lot and most of my time is spent trying to
[00:15:00]
Mike: get those things done, so that’s more of the challenge, it’s not trying to figure out what to do, it’s figuring out what order to do it in and how to get it out as quickly as possible without wrecking things along the way because like you said, there’s that issue where if you go to roll out a new feature or a new piece of the code, if it touches a bunch of different pieces of the application and you don’t have as many unit test around it as you would like than it’s a little scary to hit that deploy button. So most of the time what I do is I deploy it out to my development server and I just try to beat on it a little bit to see like can I break this or is there any obvious things that I might have missed that may not be covered by unit tests because the front of the UI, like there’s very little unit tests are on the front end stuff, like the services and all of the back end stuff, like there is unit tests there but the front end is not tested well but that’s also because I know that the front end is changing a lot, so it’s much harder to put something in place where I’m just going to have to change all of those things anyway.
Rob: Right, and
[00:16:00]
Rob: you know the front end unit testing, which I guess now becomes what integration or system testing, there’s like a different name for it when you’re going all the way from the top down, that’s stuff runs super slow right and I consider it a more advanced method of testing, not a bad thing to have for some critical paths, I think it’s just my opinion, others may disagree with me but it’s like your sign up flow yeah you should probably have, it would be nice to have a nice UI test for that and maybe sending a broadcast in the sense of marketing, I mean it’s your basically fundamental things but A I would not be testing settings pages or like little corners of the apple out that people don’t use and I’ve heard of folks who separate those front end tests that hit that UI into a completely different test sweep because they can take 30 minutes to run or an hour to run, because they are so slow because they have to speed up browser instances and click on things. So, I don’t know, I would say at this point you will be better off annually QA your stuff and then just having unit tests below the surface, that’s probably what I would have. I don’t think I would spend a bunch of time doing UI tests yet. I actually don’t think the UI
[00:17:00]
Rob: testing suites are that still, they’re still not that great.
Mike: Oh, they’re terrible.
Rob: I know, I was using Selenium in 2008 maybe, 2007 to 2009 in there to test on an invoice and it was horrendous and I’ve heard there’s like another layer now built on top of Selenium and I heard it’s still not that great.
Mike: Yeah, I poked around it a little bit but realized that there was just too many things changes to really make any sort of difference and it wasn’t worth going down that road. I mean the API and stuff gets tested and some of the different layers but you know once it’s passed that, I mean the front end of the app, it’s all this massive Java script application because it’s all written in angular so there’s not much there other than the smoke tests in that if I make a change on the front end UI I can be reasonably assured that the APIs and stuff underneath are working but that’s no guarantee that if you click on a button it’s still going to do what it’s supposed to do.
Rob: Sure, and that’s where I think about having code that doesn’t have a bunch of side effects on it or places on it so if you’re working in a
[00:18:00]
Rob: certain part of code you know that you don’t have to go test all of these other things right, that you can test this 1 thing and be fairly confident that you’re not going to break something in the UI and do a cursory test as you deploy it and then just let your customer finds your bugs, no I’m only kidding. That’s like the worst, some of our competitors do that and it has tarnished their reputation.
Mike: Yeah if I can find and fix a bug before the customer ever sees it or knows that it was an issue than that’s the probably ideal scenario but it’s still hard, I mean I’m just constrained on resources and time and speaking of time, things have gotten even worse for me because as of 3 days ago my wife acquired a larger fitness studio here in town, so commence schedule craziness at this point. It’s just her schedule is all over the place and obviously, mine is pretty swamped as it is, so just kind of trying to overlap enough so that we make sure that the kids are taking care of and dinner is ready and all of the other stuff that needs to be taken care of
[00:19:00]
Mike: is done and out of the way is really been super challenging in the past couple of days.
Rob: 2 people running business in the house, that is tough. I can imagine that is really complicated and having flexible schedules sounds great until you realize that like 2 people with flexible schedules is chaos, like Sherry and I have run into that in the past where it’s like I think I have a flexible scheduled but like you said, you actually have kids and you have like some other responsibilities to get kids picked up and get dinner made and this kind of stuff, so I totally get it.
Mike: Plus our youngest was sick yesterday, so it was either yesterday or the day before, 1 of the days this week he ended up staying home from school and then last night he had a fever and we thought he was going to be home again from school today and it turned out he was fine, but it’s hard to juggle all of that stuff and then plus with her new business, I mean it’s a larger business so she’s got multiple contractors that she didn’t have before and there are scheduling issues, and moving to a new space
[00:20:00]
Mike: and new software and all of this other stuff that goes with it, it’s a pretty large learning curve is what it comes down too.
Rob: Yeah, I bet man. Well good for her, big congratulations to the both you I guess for her acquiring that studio, sounds kind of cool. I bet that’s a good move for her to kind of up her game, she’s leveling up, stair stepping up if you will, boom.
Mike: yeah.
Rob: how involved are you in her business?
Mike: You know I help look at the business financials and stuff early on but beyond that stuff and just kind of verifying hey is this a good move to make, I really try to kind of stay out of it. Just kind of point out here’s something that you might run into or here’s something else that could be an issue or just don’t worry about this over here, but just kind of try and stay aways from it. I mean that’s kind of her thing so I’m not trying to get in the way, is really what it comes down too, trying to stay out of the way.
Rob: Yeah, that makes a lot of sense. So, speaking of all of the scheduling madness and how to juggle that, Sherry and I made the decision early in the year actually, we were talking to
[00:21:00]
Rob: someone who said they had an au pair and an au pair is someone who is typically young woman who comes from oversees and wants to come to America and is basically like a live in nanny. So, we were talking to someone who had an au pair and said it was life changing and said it was the best decision ever and so I started noodling on it and we realized that we were both going to MicroConf and I was going to be gone for a week or like 6 days and Sherry was going to be gone for like 4 or 5 and every time we go away for overnights A, it’s expensive, really expensive to hire someone to watch your kids overnight and then there’s always they don’t know your routine and they don’t know your house and there’s just so much to communicate that it’s super stressful. So, we’re just like let’s hire a live in nanny, like let’s see if we can find essentially a local au pair, you know, someone who Sherry was like a young college student would be prefect right, and so we did. So, I interviewed, I don’t even know a dozen people here in Minneapolis and right before MicroConf, like the week before she moved in and she lives in, we have like a basement living suite, it has everything except
[00:22:00]
Rob: for a kitchen right, so it has a full bath or a 3 quarter bath and then it has laundry and a bedroom and then we share the kitchen but it has been game changing man and for exactly the reason you said, it’s like sometimes Sherry and I just are 30 minutes off of where we’re not going to be there and the kids are going to be there or sometimes we need to be in 2 places at once or Sherry goes out of town, she went out of town for like 4 or 5 days to Austin for a yoga, some training in aero yoga and it’s like during that time I could handle the kids but they get on the bus at 9 15 in the morning and so that would put me to work at 9 40 and now it’s like you don’t need to be around that much to watch the kids because they’re both in school but I can leave at 8 30 or whatever and someone is just kind of hanging out with them for 45 minutes, so it has been game changing for us.
Mike: Yeah, I can imagine. I mean that’s something that we’re kind of struggling with right now is just trying to manage schedules and it’s just really so early on, but you know hopefully that will straighten itself out but I would love to have a nanny.
Rob: I know, it’s something to think about long term
[00:23:00]
Rob: man, I mean especially 2 people running businesses right, the idea is your schedules are going to be gnarly and in the long run the business should generate a lot of cash, right. I mean it should turn out more money than you would make with a salaried employee and with those 2 things in mind it’s like all right, then we outsource as much as we can and that’s you know, if you’re still mowing your own lawn or snow blowing your own snow I think that honestly, I think that’s not a good use of our time as entrepreneurs. We moved to Minneapolis and 1 of the 1st things that I did, we already had a lawn service but I was thinking like I’m not shoveling walks and it’s not because I’m above it, I used to do it but now the time versus money trade off is insane. So anyway, that’s kind of my soap box about outsourcing stuff and of course I’m not talking about outsourcing someone raising my children of course, I know that’s probably the joke or what folks are thinking, but it is like outsourcing driving them from school to the house, or outsourcing our live in nanny like the kids go to bed at 8 or 8 30 and so she’s hanging out in her room reading and
[00:24:00]
Rob: Sherry and I are like it’s 8 30, we’re just going to go out for 2 hours and like have a late dinner and have drinks and talk and you don’t have to hire somebody, there’s no clock running where you’re paying somebody 15 bucks an hour while you’re sitting down the street at a restaurant. I think that about wraps us up for the day, if you have a question for us call our voice mail number at 1 888 801 9690. No one ever calls us anymore.
Mike: They don’t love us.
Rob: I know, we get like 1 call every 2 months. I tell you what if you want us to answer like go to the top of the queue of questions, just call it in because we get so few of them and they’re fun because you get to hear the person’s voice, you can remain anonymous, you don’t have to say your name or your URL if you don’t want too but it’s kind of nice to get those every now and then. You can also email us questions at questions at startups for the rest of us dot com. Our theme music is an exert from We’re Out of Control by Moot and it’s used under creative comments. Subscribe to us in iTunes by searching for Startups and visit Startups for The Rest of Us dot com for a full transcript of each and every episode.
[00:25:00]
Rob: Although you know what Mike, did you hear that our transcription service again, this is like the 5th 1 we’ve used, they just like disappeared. I know, this happens like probably once a year. I seriously think, we’ll we’ve been doing the podcast for 6 years maybe, 5 or 6.
Mike: Something like that.
Rob: And I literally think we’ve gone through more than a half of dozen of these.
Mike: Are we at 7 now, 7 years?
Rob: Are we? Was it 2010?
Mike: I think so, yeah it was.
Rob: Gosh, dude we are old.
Mike: I know, our podcast is older than most businesses who listen to us.
Rob: Yeah, I know our podcast is older than a lot of children. All right, so anyway transcription service I think Josh, our editor is looking for 1 right now, but it’s just funny how these things just come and go. I guess it’s just such a commodity you know, it’s tough to stand out.
Mike: Well I think that’s the issue with all of them and I think that’s why they come and go because you get the transcriptions and they go for a while and they have a really hard time raising the price because most of them tier their pricing
[00:26:00]
Mike: in terms of how quickly you get it, like oh if you need it in 24 hours this is what it will cost and it’ll be some outrageous number and then it goes down if you don’t need it for like a week or so and that’s the issues is that there’s that race to the bottom in terms of getting it transcribed and I think that most of them just can’t make ends meet and it’s not just because they don’t have enough business but it’s because they’re not able to pay enough for those people and the business just kinds of implodes at some point.
Rob: All right, back to the outro here. Visit Startups for The Rest of Us dot com for a full transcript of each episode. Thank you for listening and we’ll see you next time.
[00:26:36]
Episode 338 | How To Rank #1 for a High-Volume Organic Keyword in Under 3 Months
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to rank number one for a high-volume organic keyword in under 3 months. Based on a case study posted by Moz.com, the guys give their opinions on the eight steps listed in the blog post.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups for the Rest of Us, Mike and I discuss how to rank number 1 for a high volume organic key word in under 3 months. This is Startups for the Rest of Us, episode 338. 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 1st product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re going to share our experience to help you avoid the same mistakes we made. What’s the word this week, sir?
Mike: Well, I’m spending most of my time these days working on support issues and as I on board people more often, what I’m finding more often is that there’s certain usability issues that keep coming up and I have to keep going back and either help people get through them and then go see what it takes to fix them or just kind of implement the work arounds for them. Then on the other side of it is fixing some outright bugs that I found, which were not obvious. Most of them are just little things like
[00:01:00]
Mike: sorting issues or stuff like that that’s just affecting the UI, but it’s going pretty well so far. Kind of exciting I guess.
Rob: Yeah. There’s 2 sides to this, right? It’s like, on the 1 hand, you don’t want to be spending time working on this stuff and trying to work out kinks and improving usability and all that stuff because you just wish it was done. But on the flip side, you know that these are problems that, at scale, are going to be even worse, right? At 50, 100 or 1,000 users, you need to fix them now. There’s that needing to invest the time, but also it feeling really productive, you know? I don’t know. Like you’re ironing out the rough burs, the rough edges of the product and just smoothing it out over time. I think that this is where you want to be, right? You don’t want to be where you were whatever, 6 months ago and you have 0 customers and is there people using it? It’s like, you don’t know what you should be working on technically. You know? You’re kind of flailing around and it’s like, now there’s people using it and it’s probably pretty obvious what you should be fixing at what point in time.
[00:02:00]
Mike: Yeah. As you quoted, like the rough edges. That’s kind of what I’m spending part of my time on and then figuring out how to fix it. It’s 1 thing to know what is busted and where you need to spend your time, but it’s another to figure out how to do it, so that it’s clearer. Obviously, you wouldn’t design a product that you thought was confusing, but at the same time, when other people get in there and use it, they weren’t inside your head when you designed it. They don’t have the same perspective.
Rob: On my end, this actually is a pretty good week for us. We turned the corner on some scaling challenges that we’d been working on for well, I mean we’ve been working on them for years. You know? They just come back every 6 months. You get just enough ahead of them that you scale up again and then they rear their ugly head. Every time we, I don’t know. Maybe it’s 2 to 3 X, the user base, we see stuff again. In the early days like, well just add an index to the database or add more hardware. But you hit a point where you kind of start exceeding the physical bounds of a single database. You know? You’ll
[00:03:00]
Rob: get a quarter or a half terabyte of RAM and disc IOPS through the roof and it’s expensive. You still just, it isn’t making enough of a difference. We’ve had to circle back and we attack it from a bunch of different directions. We’ve re architected some things. We’ve actually piped some new relic stuff that allows us to really see some detailed traces and we’re seeing, you know? There are some query issues, but there’s also code issues that creep in as you write more stuff where you’re doing N plus 1 queries, in essence. So, we’ve just started to see those creep in and as we’ve been pulling them out, we’re seeing these incremental bumps. We’ve pushed like, 3 or 4 developers pushed 7 different performance improvements over the past maybe, there was a week where we did 7. Then this week, we’ve probably done 3 or 4. It just little by little, it is just making the throughput so much higher, so much faster. We’re sending between 2 and 4 times the volume of email right now than we were even 3 or 4 weeks ago. It’s pretty crazy when you think about it that way. It was
[00:04:00]
Rob: a bit of work to get there, but once this stuff started rolling, it really made a big difference.
Mike: Yeah, it’s funny you mention performance improvements and that. I just rolled one out this week where people can go through and they can identify who has sent them emails and who they’ve received emails from and how many of those in each direction. There was a performance issue earlier where it was just a little bit slower than it should have been and it wasn’t returning all results because there were so many. Just pushed out a fix this week where it’s lightning fast now. It’s amazing how much better the experience of the app is just from those little improvements.
Rob: Yeah. It’s super cool. Sometimes it’s noticeable by users and other times it’s not, but you know that even if users aren’t noticing yet that it’s eventually going to catch up with you. It’s nice to get that done. I remember the days where we’d have a customer with 3 or 400,000 emails in their account. They’d do a big send and we’d be like, man we can totally handle this, but as long as another big sender doesn’t send at the same time. Now it’s just common place. I mean, for 3 lists of 3 to
[00:05:00]
Rob: 500,000 to send within minutes of each other. We’ve gotten to the point now where it’s like, we can hammer through that stuff. It really is just like climbing that mountain and doing things that you never think you’re going to have to do. Denormalizing databases, starting to shard things. Right now considering stripping a table out and literally putting it into a different kind of data store. I mean, just crazy stuff you would never architect from the start when you’re building an app. It would be gold plating when you don’t have any users, but when you do hit scale and you have tens of thousands of people using your app, it is necessary.
Mike: Yeah. I was talking to somebody. I think it was Help Scout at Micro Conf and he was asking me about how some of the back end stuff of Blue Tick was done and I didn’t tell him because it just didn’t occur to me, but the back end data store for the mail, I rewrote it 4 times over the course of 8 months just because it needed to go bigger and faster and it just wasn’t doing it at the time.
Rob: Yeah. It’s crazy how the stuff that you need to do in order to make it work from an engineering prospective, you wouldn’t ever want to do because you’re like, I want to have referential integrity on these things. At some point, you realize that
[00:06:00]
Rob: speed trumps that.
Mike: Yeah. We interviewed a [UNKNOWN] architect this week. We have an open position for that right now to just help handle this because we’re trying to build the product and it just really is a completely separate discipline of being able to scale things to this level. One thing he brought up, which I hadn’t heard of, but as soon as he said it, it made sense. He brought up CAP theorem. C A P. C is consistency. A is availability and P is performance and you get to pick 2. He said, in most databases or most apps, you go for C and P and your availability is 99 point whatever percent and it’s fine because if you were to go down for like, an hour, it’s not catastrophic. But if you pick the other 2, it’s just trade offs, but he said at a certain point, once you scale, there’s a bunch of big companies in town, like Target and Best Buy who run these massive e commerce sites and he was saying once you scale one of those sites, you have to give up some consistency. You have to have availability because it’s millions of dollars per hour and you have to have performance because obviously being slow is costing money.
[00:07:00]
Mike: So, you give up consistency and you have to dealing with that. You have to start writing code and you have to start thinking about what happens when it all doesn’t sync up? There isn’t referential integrity in this certain instance and data consistency in the reports are just not going to be exactly matched across everything. It’s pretty fascinating. Today we’re going to talk about how to rank number 1 for high volume organic key word under 3 months and this is based on an article on moz.com, actually on their blog. It’s a case study that Pipe Drive co wrote with Moz and it was the former Director of Content Marketing at Pipe Drive is where the case study took place. This article is detailed. It’s very long. We actually won’t be able to cover in depth every step, but there are 8 steps that they talk about and we, at a minimum will cover the 8 steps and then go into as much detail as we can, given the time constraints. Then you, of course can come to the show notes at startupsfortherestofus.com. This is episode 338 and click on the link if you want to read the entire article. This thing,
[00:08:00]
Mike: I didn’t do a word count, but it’s got to be like 4 or 5,000 words. Pretty cool. The article starts by outlining the 8 steps and we’ll go through those 1 at a time. They talk about how much more difficult SEO has gotten and that SEO these days is much more about content and content marketing, whereas it used to be more about just straight up link building and it was a lot easier to game and Google has done a really good job of essentially closing those loopholes, much to the chagrin of a lot of marketers I know. Let’s dive right in with these 8 steps. They basically said they got a top search engine ranking position, which is a SERP spot. It was a focus of a 3 person team for a better part of 3 months to get this. It’s pretty crazy. They invested a lot of energy in it. Step 1 is to find a good topic, one that has significant key word volume and he goes right into the Google key word planner where he said when they ran the search, they picked a key word with 9,900 searches per month and we’ll go into why that’s enough later on. Now, the key word planner doesn’t even get you that close. It gives
[00:09:00]
Mike: you like, 1 to 10 K range, which is like, horrendously helpful. He said the same key word, how to search volume of 1 point 7 to 2 point 9 K in the Moz key word explorer in case you have a Moz account. They give you tools to help do this kind of stuff to help rank for key words. He looked at a chart that Moz had published and they said that if you ranked 1st for a term, you’re likely to get, it was like 30 or 32 percent of the clicks. If you rank 2nd, it’s about 14 percent and if you’re a 3rd, it’s about 10 percent. They figured that if they can rank 1st for this 9,900 search term, they would get around 3,000 visitors a month for a top position. If they could convert 5 percent into leads, which I’m assuming they are trying to email capture. I’m assuming they’re thinking about that. That would net them 1,800 leads a year, which they said it would justify the time. That’s kind of the 1st part of the 1st step of finding a good topic, is to make sure there’s enough volume that if you rank 1st,
[00:10:00]
Mike: given whatever it is you’re email capturing or trial rate or whatever it is you think you can do that it’s going to be justified time wise and financially.
Rob: I think the thing I take away from this, in selecting the right topic is more about doing the back of the envelope calculations to figure out what you should be going after based on what your return on that is going to be and it’s not so much about a specific raw number that you’re going for in terms of the search volume. It’s more about how many of those people you can convert to leads because if you’re conversion rate is higher than other peoples based on your content, then target search terms that have lower search volume because they’re going to be worth just as much or more to you than they would be to somebody else, assuming that you can convert them better. I kind of like that idea of starting from this side of it and not focus in solely on, what should we focus on for content or what should our ad line be or anything like that? It’s really about what your ROI is going to be on that.
Mike: Continuing with step 1, which was finding a good topic, the 2nd thing they looked at was to pick a winnable topic. This is actually where Moz is really handy. They said for example, if you’re trying for content marketing,
[00:11:00]
Mike: the 1st page is dominated by the Content Marketing Institute and they have a domain authority of 84 and that is very high. It’s a scale of 1 to 100. What they did is they looked at Moz Bar, which is just like a Chrome plug in and you can check domain authority and page authority on the fly. It overlays them in Google. There’s a screen shot of it here in the post. They looked at a bunch of different key words that had search volumes between, I think it was like, at least 3 to 10,000. That’s kind of where they were thinking. They were searching for like, sales management. They were using page authorities in the 30’s and 40’s. Domain authorities, there was 40’s, 70’s, 30’s and 20’s. Given that some of these 20’s and 30’s, they knew that they could kind of get in and then they used Moz key word explorer to look at the actual difficulty versus the potential scores. Then they kind of outlined some loose ranges. You want your opportunity to be above 50 and your potential to be above a certain amount. There’s obviously a bunch of different ways to do this. I have always used Moz for
[00:12:00]
Mike: this kind of stuff. I know there are other tools that do it, but their data is solid and they’ve been around a long time. At this point, they wound up with 4 key words. Sales techniques, sales process, sales management and sales forecast. One of them has 4,400 searches and then it goes up to in the 8’s and 9,000’s and they said any of the above would work for them, but for added impact, they added a 3rd and final filter to help them pick the key word and that is strategic relevance. If you’re going to turn your visitors into leads, they say it’s important to focus on key words that are strategically relevant to your conversion goals, and in their case, sales management is the optimal key word because Pipe Drive is a sales management tool. It described them perfectly. In contrast, sales techniques and sales forecast are key words a salesperson would search for, not a sales leader or a small business owner who would be a decision maker to decide to buy Pipe Drive. It’s pretty in depth here, but it’s something to think about, right? If you see a key word with low difficulty and high search throughput you think you can rank for, it may not actually
[00:13:00]
Mike: be that helpful, right? If it’s not strategically relevant to your business.
Rob: I like the fact that they point out in the article that you’re looking for a competitive score of under 50 and a potential or opportunity score of above 50. I don’t know if that side of it is so important to me or at least it wasn’t when I started out, but knowing that under a score of 50 for difficulty is a lot easier to rank for and it is possible to get it than going over that. I mean, even trying for things that are in the 50’s or 60’s, those can be very, very difficult to get, especially if you’re going against certain types of companies, trying to rank against them for those terms can be really, really hard, but anything below 50 is not actually all that difficult to do, especially if you are kind of limited in the amount of time that you can spend on it in your budget, those things are definitely attainable for the average person.
Mike: Step 2 is to write a bad ass piece of content. That’s the words they use in the article. Theirs is broken up into multiple parts. The 1st is extremely thorough research of the
[00:14:00]
Mike: existing ones that rank in the top and they kind of look through them and figured out what works, what doesn’t, what are they like both from a reader’s perspective and with an SEO eye in mind? When the pages had way too many headlines, it was over key word stuffed, basically. Then they looked for anomalies and 1 thing that caught their eye was 2 of the top 10 results were dedicated to the key word sales manager, so they realized all right, we know that we’re going to want to talk about at least sales managers in our article. Then this was 1 I hadn’t seen before. I went all the way down to the bottom of the SERPs and there’s a related searches thing that Google puts there. They looked through for those terms and they realized we probably want to include some of these in there. Part 2 of this, of writing the piece of content is the actual content creation. They say you don’t need to be a subject matter expert, but if you do a lot of research, you can put something together and they go through some steps on how to write, I don’t think it’s super relevant here, but it’s like, don’t multitask and work alone and put on some play lists and such.
[00:15:00]
Mike: Personally, I like Spotify’s Deep Focus. They have a different one. Then they talk about going through and adding images and adding headers, subsections and all that. That really caps out step 2. As I said, they go into more detail, but it’s almost like its own little article on just how to write a decent piece of content.
Rob: Yeah. The 1 piece that I took away from this is paying attention to the part at the bottom where it says, searches related to, in this case, it was sales management and you can use those for kind of off shoots. If you want to create dedicated pages for each of those. In this case, they’ve got objectives of sales management and sales management PDFs. Those are the types of things you could target as a secondary page with a different article and trying to drive related traffic to those pages as well. I think that’s a perfectly vital strategy, especially when it comes to things like where people are searching for PDFs and you can give them a PDF of, like a template or something like that. Lots of people have used that strategy where it’s like they drive people to that page
[00:16:00]
Rob: using SEO because they’re specifically looking for something that they can download. You give it to them in exchange for an email address and that’s one way to drive up the level of your email list.
Mike: Step 3 is to optimize on page SEO and engagement metrics. This is the steps they took to optimize the on page SEO. Number 1 is to fix the title. They wanted traffic from people searching for words related to sales management, such as sales management definition, sales management process, sales management strategies, sales management resources and so, their headline, their title and their H1 tag is Sales Management Definition, Process, Strategies and Resources. So, they covered them all right there in the headline. It says Google is now smart enough to know that a single article can cover multiple related key words. The common [UNKNOWN] to the list, they said should work for them.
Rob: I wonder how long it is before Google realizes that people are key word stuffing into headlines now.
Mike: I know. Well, it’s interesting because if that’s all you’re doing, it’s not going to work. You know? It’s all this other stuff they did that then propels that to work. You know?
[00:17:00]
Mike: It’s writing this massive piece of content, spending months doing all this optimization. So, part 2 of that is to fix section headings. One example is instead of writing Sales Management Definition as a header, they actually wrote the header as, it’s a sub heading, but it is, So, What is Sales Management, question mark. It’s an actual question a reader might ask. 1, it makes the article easier and better to read, but 2, it’s a natural question, which makes it more likely to rank for voice searches and for Google’s answer. This is good stuff. They also peppered related key words in the headers throughout the article. Later on, they realize they key word stuffed, basically. They actually go back and roll this back a bit. Then the 3rd step was to improve content engagement, like they have colons and line breaks and internal links and outgoing links. They just make things kind of easier to skim and easier to read. The 4th thing, I had heard this as kind of a rumor that this might exist in the Google algorithm, is to shorten the URL. There’s this graph they include where the longer your URL,
[00:18:00]
Mike: the less likely you are to rank for number 1. It’s fascinating. They have these really long blog URLs. They just shorten this way down. They essentially just have sales dash management, aside from the date in the URL. Then they improve the key word density. Obviously including the key word in the 1st hundred words of your content is kind of a well known thing, but then they talk about going through it and adding a glossary at the bottom, so they can include a few more key words. They do point out how important it is to make these as organic as possible because otherwise, it looks and feels like key word stuffing and Google and users are pretty smart about this stuff. They said, as a result of the on page key word optimization that their traffic went up and they have a screen shot of 19,000 page views. As they say, we over optimize key word density in the beginning, which slightly hurt rankings, but once we stopped this, we changed things around and saw an immediate improvement. We’ll get to that in a step or 2 later. They don’t show that 19,000 page views, they don’t show what the time frame is on that, but they did indicate
[00:19:00]
Mike: that this definitely had a positive impact on the post.
Rob: You know, I do wonder if adding, what is blank and adding in the key word is something that Google specifically looks for. The reason I think that is, or at least I kind of have an inkling of that is when I was doing Audit Shark, I had a bunch of pages that said, what is blank. So, for example, what is compliance management and if you would look around for compliance just in general, then that’s a very difficult thing to rank for just because there is all these different compliance institutions and it’s government regulations and it’s really difficult to rank against those, but if you go out and search for, what is compliance management, Audit Shark’s website actually ranks higher than the fdic.gov website for, what is compliance management system.
Mike: That’s crazy. Should you sell that? You should sell it to the FDIC. Hey guys. I have this site that ranks above you.
Rob: Right. But I wonder if that is something that specifically Google looks for. What is blank and whatever that key word is.
[00:20:00]
Mike: Yep. Totally. I would totally imagine that’s part of it, I think. More and more of these voice searches are happening in the Google answer stuff. I think it’s become more common for people to search like that as it has worked better. So, step 4 is to build internal links to the article and that means linking to this article from other articles that you have. It talks about how Google bot discovers your content by crawling your links and it also tells Google that this page is important if a lot of your pages link to it. You don’t want to just put a link in a header or footer. You actually want to link from individual pages in your site and kind of pick the right key words to link through. You look for high traffic. You look for high page authority and then they have a kind of site colon search you can do on your own website to find these key words that you want to use that appear in your other posts. You can link them out. This gives you just that basis of page authority on this new article.
[00:21:00]
Mike: Step 5 is stepping out and finding external link targets, meaning external links that will target you.
Rob: So, just to kind of clarify what Robert said, this is a little bit different than putting a footer on your website and having pages that you basically put a site map in place. This is specifically looking through your site where you refer to these terms whether it’s in your blog posts or in different articles or white paper pages, point those back to the page that you’re trying to rank for. It’s very slightly different, but it kind of achieves the same thing. It gets those internal links back and forth inside of your website.
Mike: And as I said, step 5 is finding external websites to link to this new article and they outline using open site explorer, which is a Moz thing, I think. They allow you to crawl the top 10 search results for this term and look at those back links. They dug through a few pages of that, built up a list of a few hundred prospect websites they thought might link to it and it’s a very raw list. Then they
[00:22:00]
Mike: only look at domain authority above 30. They eliminated sites that are free hosts, like BlogSpot and wordpress.com and put it in an Excel file. Then they go through finding the email addresses for people on these sites. They used Email Hunter, which is at hunter.io and they did their outreach. They don’t go through specifically what text they use or whatever. This is kind of a slog, right? It’s called outreach and I’m sure that most people, because I get these emails and I just delete them. But I think if you have a compelling case, apparently whether it’s the Pipe Drive name or whether it’s their approach, they said they just outreached like crazy. They used tools like, you could use one of these tools like Mix Max or Lead IQ or Tout, Perspectify. I suppose you could use Blue Tick as well. DO you allow outreach like this?
Rob: Yeah, it is because it’s going out through your own email server, so you could use that. I was actually going to recommend Links Spy, which is linksspy.com from Christoph Engelhard, who has [UNKNOWN] several times and been our scribe on a number of occasions and taken copious notes.
[00:23:00]
Rob: So, I would probably point to that instead.
Mike: Instead of open site explorer, right? Because Links Spy views your competitor’s back links.
Rob: Yes, it does. You could use it in conjunction with it as well, but Link Spy also has the built in capabilities to reach out to people who have those other sites, so you could use it to do that outreach step.
Mike: Yep. I’m glad you pointed that out. I remember him building that in. I think he has like, boiler plate templates and everything to make it super simple.
Rob: Yep. All the templates and stuff are there already.
Mike: Awesome. This whole outreach step, I’m actually going to skip. I’m going to say you can look at it if you like or you should just go use linksspy.com. That’s links with an S at the end, and then another S for spy. Step 7 of 8 is, they say be prepared to guest post. Guest posting and then when you guest post, you can link back to, within the content of your guest post you can link back to this article. I was doing a ton of guest posting with the aid of the growth marketer, Zack that I’d hired at Drip and it was doing stuff for us. It was sending traffic.
[00:24:00]
Mike: Traffic that converted. It was also building up some SEO juice in our blog and guest posting is most certainly not dead. I know at one point, Google said they were going to start penalizing guest posters, but high quality posts on high quality domains, we have never seen any negative repercussions from all of that.
Rob: Yeah. I’m not sure how they would really find out, other than a manual review that it was done by somebody else. It just seems kind of crazy. I mean, don’t get me wrong. Google has got some really smart people that are way smarter than I am.
Mike: Nice.
Rob: Yeah. I don’t know how you would do that at scale.
Mike: I think it’s like byline stuff, right? You can say, this post was written by blah or this was a guest article, this was a guest post. There tends to be certain phrases that are used. They use machine learning. They’re like, translating languages to hundreds of crazy, exotic other languages. I feel like this is a pretty solvable problem using technology like that.
[00:25:00]
Rob: All right. Well, let’s leave our idiocy in the dust and go on to step 8.
Mike: Totally. The 8th and final step is something I’d never heard of. They say fine tuning content with TF IDF. TF dash IDF, and it is Term Frequency dash Inverse Document Frequency. I won’t really go into what that means here, but basically it’s a way to analyze a document to figure out, what are the important terms based on how many times they’re used and in what context. They just simply counted up the number of times that sales management occurred in their article. They said it occurred 48 times and their article was 2,500 words and they thought that was just way too much. They hypothesized that they were actually being, not penalized, but they weren’t ranking as high as they should because they looked like they were key word stuffing. They backed it off to 20 and they replaced it with terms that have high lexical relevance to sales management, but were not the exact phrase, sales management. They said that it
[00:26:00]
Mike: bumped them up. Their organic page views went from 0 when they started, to over 5,000 in just over 8 months. So, they ranked number 1 for the term in 3, I guess based on the headline of the article and then got these 5,000 recurring page views in 8 months.
Rob: I think if you’re trying to be objective about this, it’s a little difficult to take every single piece of this at face value when it walks through and says this is what we did and this is exactly what happened because there’s so many factors that come into play. Over the course of 8 months, there’s a lot of different things that can happen. Even though they backed off the number of times that sales management came in to the article at a certain time and yes, the search volume went up after that, but it is hard to say that’s exactly why because if you look at the graph that they show, it went up for 2 months and then it went down. Then it kind of meandered a little bit and then it went back up. You know? Over that time period, lots of different things can happen and a lot of them are just
[00:27:00]
Rob: completely out of your control. You don’t have any control over the rest of the internet. It’s hard to say definitively like, hey we did X and Y happened, but there’s certainly correlations that you can make between them to say this is the general direction that we wanted things to go. These are the things we did and yes, it went that way. But you can’t put a velocity on those things or a hard metric on every single one of these things.
Mike: Yeah. I mean, that’s SEO. That’s been organic SEO since it became a thing. It’s gotten a lot harder over time. It used to be easier to gain, but you’re right. There is no way to know that this specific change actually did this or was it just coincidentally just something else? You know? So much of it is correlation and if you do it enough times and you can say I’m confident that it’s causation until Google does their next update. But yeah, you’re never going to know for sure, which is tough. That said, there are these best practices. I mean, there’s a lot of things in this article as I read through that I thought yes, that’s what I would do. That’s what I would do. Then there were a bunch of things that were, I kind of called them out. I was like,
[00:28:00]
Mike: I hadn’t heard this, but this must be kind of a newer thing. I haven’t been knee deep in SEO for, I mean it was 2 or 3 years ago. I was doing it for Drip. It was a couple years before that, I did it for Hit Tail and I tend to do it in little bursts of, I get up to speed and do it, make a bunch of decisions and then kind of move away and work on the product, but people like this who are literally doing it full time, they’re going to always have, doing so many experiments that they’re going to be kind of at the bleeding edge of these tactics. I think there’s something to be said here, like yeah. You could game Google and you could try to get a piece of crap article up to the top of the results, but it’s like, I’ve always felt like we should all be trying to make the internet a better place. Even when I have used SEO and I’ve optimized to get there, I always thought my content was amazing. Like, it was really high quality content. I would either write it myself or pay a lot of money to have a good writer do it. I feel like if you’re trying to push crap to the top of the results, don’t bother. Don’t do it. It actually makes us all, it makes the results crappy, right?
[00:29:00]
Mike: Then it makes the internet a worse place to be. I guess that’s kind of my recommendation. There’s certain people that say you shouldn’t do SEO at all because it just pollutes the internet and I believe that you can do SEO, but in an ethical and high quality way.
Rob: Yeah. That’s not really any different than how some people view marketing. I don’t want to do marketing because it feels sleazy or I don’t want to do sales because it feels scummy and SEO is exactly the same way. I mean, you kind of have to do some level of marketing in order to get your product out there. There’s wrong ways to do it and there’s right ways to do it. This article outlines a mechanism that works so long as you have content that is appropriate to be promoted. That’s it. I think we’ll wrap it up today. If you have a question for us, you can call it into our voicemail number at 1 888 801 9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt of 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 and we’ll see you next time.
[00:30:05]
Episode 337 | Hacking (Customer) Acquisition with Sean Ellis
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Sean Ellis, CEO at GrowthHackers, about hacking customer acquisition. Sean defines his coined term “growth hacker” and talks about some topics in his upcoming book that draws from experiences from past products/companies he’s worked on including Dropbox, Eventbrite, Lookout, LogMeIn, and Uproar.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups for the Rest of Us I’m going to be talking to Sean Ellis about hacking customer acquisition, this is Startups for the Rest of Us episode 337. 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 1st product or you’re just thinking about it, I’m Mike.
Sean: And I’m Sean.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made. How are you doing this week Sean?
Sean: I’m doing great Mike, how are you doing?
Mike: Good, I haven’t talked to you in a while.
Sean: Yeah, it has been a while.
Mike: I think the last time we were in a room in person it was back in MycroConf in 2001, is that correct?
Sean: Yeah, I think that’s correct and when in Vegas you don’t really remember too many conversations that you have because there’s so much stuff going on.
Mike: Do you remember the hot sauce incident?
Sean: I don’t.
Mike: Oh okay, Sean’s hot sauce flew from the stage, okay we’ll skip over that. So, I wanted to have you on the show to talk about a
[00:01:00]
Mike: new book that you’re coming out with and it’s called Hacking Growth, which I think it comes out pretty soon. This episode goes life on the 25th and it’s right about that time, right?
Sean: That is the day that it comes out, perfect.
Mike: Yes, so fortuitous Tuesday I guess we’ll call that. So, to give the listeners an intro to you though, you were the Growth Marketing executive at DropBox, Eventbrite, Lookout, LogMeIn, Uproar and you were like 1 of the 1st people hired in a marketing capacity each of those companies, is that correct if I remember correctly?
Sean: That is correct, Eventbrite would be the only 1 where there was actually somebody already going marketing when I got there but all of the others it was primarily engineers and I came in and started thinking about how to grow those businesses.
Mike: Got it and then you were also the founder of Qualaroo which you sold off last year, if I remember correctly, right?
Sean: That’s right. Yeah, we sold that February, March of last year and ha d a good run for a few years but really wanted to focus our efforts on Growth Hackers.
Mike: And that’s where you’re the CEO at today, it’s Growth Hackers dot com, there’s a fairly large community there and then you
[00:02:00]
Mike: also, coined the term Growth Hacker back in 2010.
Sean: Yeah, that was for better for worse, some people love it and some people hate it but I guess the good news there is that very few people ignore it, it’s evoking emotion.
Mike Yes, it does and I have heard mixed feelings on that, so I guess straight from the source, how do you find Growth Hacker, like what does it mean to you and how do you explain it to people?
Sean: Yes, so for me it’s about rapid experimentation across all of the growth levers. So, it’s really those growth levers sit across the customer journey where to contrast that against just marketing, marketing is generally externally focused. So, it’s looking only at acquisition and marketing is about just anything that’s important for driving growth in the business, you’re experimenting in those areas and the fact is that most of the really powerful levers actually sit in the product team’s area and so that’s what I think 1 of the big things that differentiates compared to marketing.
Mike: So, if I understand that correctly, you’re really
[00:03:00]
Mike: looking at Growth Hacking as a mechanism for taking all of the things that you’re currently doing and optimizing them or making them better, is that a fair assessment versus something like marketing where you’re doing content emails, searching engine optimization and that kind of stuff, is that correct?
Sean: Yeah, well there is optimization is definitely an important part of Growth Hacking but discovery is also important, so it’s taking everything from discovering new channels which would normally fit into marketing, so that part is still I believe really important for growth and a Growth Hacker should be doing those things but you should also be experimenting with what is that 1st user experience in the product, what should that look like, how do you get them to a really valuable experience with the product, how do you drive continued engagement, what are your different monetization levers for driving revenue growth. So, it’s really looking about what are all of the different levers that you can pull to drive growth of both customers and revenue in the business.
Mike: Okay, so with that in mind what are some of the most common misconceptions that people have about
[00:04:00]
Mike: Growth Hacking?
Sean: I think probably the biggest 1 is just that there’s these magic silver bullet kind of growth hacks that you just go and pick a silver bullet of growth hackers, so that would be 1 or another would be that you kind of, it’s about trickery, it’s about coming up with ways to trick users to find up for products and sometimes it’s just described as really clever marketing. I think all of those really miss the mark. What I was going for when I coined the terms was, I was looking at Dropbox where I was getting all of these resumes in with people having a kind of traditional marketing backgrounds or even online marketing backgrounds and they were so focused on everything a marketer could do or should do and I knew from my own experience that there was a smaller set of things that really impacted growth and then there were a lot of things that were just ignored by marketers or marketers didn’t have the access to them, they just didn’t have the right sort of influence in the organization that are also really important, so I was really trying to carve out a description
[00:05:00]
Sean: of what is really important for driving growth in business based on my own experience and when I looked at companies like Facebook and LinkedIn that were also growing quickly, what were they doing differently and how can we kind of make a description of a role that is more aligned with what really matters for driving growth in a company.
Mike: So, it’s really about for those high value multipliers so to speak, right?
Sean: Right and you can chaste that where I had a lot of startup CEOs at the time that were reaching out to me and saying hey can you maybe come and help us get some awareness in our company and you know I think that’s kind of the 1 big misconception of a lot of people in the startup world that’s like oh if people only knew if we could just some awareness we’d be killing it but the average person sees 3,000 advertisements a day. Nobody with a little start up salary is going to be able to get any meaningful awareness off of just running a few advertisements and having people see them, you build growth
[00:06:00]
Sean: through experiences and through a return on investment where you’re actually tracking your ability to convert, generate revenue and that was another big part of it, was marketers were kind of thinking like the CEOS and CEOs who were hiring marketers were looking for those types of marketers and you know in both cases they were really disappointed with the results most of the time, so you had this really high turnover with startups among marketers who were trying to take a traditional marketing play book to growing a business, a startup and just not very effective.
Mike: So, is that the core audience for this book, is it people who are coming in from a marketing position or would it be useful to developer slash CEO or just at like an engineer inside the company?
Sean: So, I think the reality of how growth works, whether people want it to kind of cohort it this way or not, it’s the collection of kind of all of the things that people are doing in product, which includes the engineers, which includes sales people,
[00:07:00]
Sean: which includes marketers and really they should be obsessed around that kind of journey that the customer takes to becoming a valuable customer of the business and so everybody who participates in that growth or in that value creation process should be interested in this book and CEOs in particular should be interested because how do you coordinate those efforts across a group and we’ve really distilled that down to a process where you can effectively manage growth across the really powerful growth levers to expand customers and revenue in a business.
Mike: I did notice when looking through the book that you did have sections in there where it was really aimed at people who were trying to implement it and some of your comments around that were specifically that you really need to have that executive level or management buy in order to make this stuff happen. Talk a little bit about that because I’ve seen things in larger companies where to get anything done almost requires CEO approval but is that the same thing in smaller companies as well??
Sean: Well so yeah, the bigger the company gets
[00:08:00]
Sean: or the older a company gets the more set in their ways they are and they’re not going to be able to kind of break down some of those functional silos that are just kind of historically how companies have been built without the CEO really playing a big role in that and so I think that’s what’s prevented a lot of bigger companies really embracing growth hacking as an effective way to growing their business. It’s really powerful so I think overtime they will make the transition to more of a cross functional full customer journey and work all of the levers of growth but in the short term it’s really what holds it back is basically a lack of kind of buy in necessarily from the CEO and then there’s a lot of things that you can do once you have that to make it effective and that’s a lot of what we cover in the book.
Mike: So, I guess to start with the outline of the book, you’ve got it broken down into 2 parts, the 1st part is the method of implementing it so it’s more or less a process and it talks about building the growth teams, determining what your type of product is, whether it’s a must have product
[00:09:00]
Mike: or something else and identifying the different growth levers in the business and then it talks about testing it and then in the 2nd half of the book you refer to it as the growth hacking play book where you talk about hacking customer acquisition, activation, retention, monetization and then bringing all of that collectively together to help create a cycle. Could you talk just briefly about what you mean about having that cycle in place and how that all ties itself together?
Sean: Yeah, so what you see in really effective growth organizations and growth companies is that they end up really building a rhythm around growth where they understand sort of how growth works within the business, what are the key drivers of growth within the business and they manage those and continue to optimize them but as a team they’re constantly figuring out new ways to enhance growth, so it’s basically analyzing the situation, prioritizing all of these ideas that they can generate to improve that situation and then running those tests and through the tests they learn and so continuing
[00:10:00]
Sean: to just run this process that helps them learn new, more effective ways to drive growth in the business is ultimately the outcome that everyone should be shooting for and what we’ve gone through in the book is how to really get all of the pieces in place to where you can get into that really high testing tempo rhythm as a team that’s a common element that you see across all of the really fast growing companies.
Mike: So that’s really like a systemization of growth hacking, so that you put all of these different pieces in place and then you just repeat them as quickly as possible, right?
Sean: Exactly and you’re just accelerating that fly wheel of growth and that comes from a deep understating of how growth is working and through testing you’re just keep learning new, more effective way to drive growth and you also learn what doesn’t work through the testing because not everything is going to be successful when you’re testing it but every test that you run you get smarter about what it takes to grow your business.
Mike: Could you talk a little bit more about the types of things that fail and 1 of the things that I’ve heard from people or their criticizing of the whole
[00:11:00]
Mike: concept of growth hacking is that they’re like oh there is not silver bullet, you know you can’t just growth hack your way out of anything, it doesn’t work that way and I think to some extent the critics are right when you phrase it in that particular way but I also think it’s important to realize not everything is going to succeed or there’s going to be situations where you don’t have a clear understanding of whether something is even working, if it’s moving the needle for you. Can you talk briefly about those types of situations and how do you recognize those?
Sean: Well so the 1st part that we really cover in the book that’s a critical prerequisite for growth is making sure that you have value in the 1st place, so if growth hacking doesn’t work or if you get kind of fleeting spikes of growth and then it comes crashing down it’s usually because the finish line for the customer is not a worthy finish line and there’s no reason to sticking around and keep using the product and if you can’t retain users it’s very hard to grow a user base, you’re basically just replacing customers month after month and in a SaaS
[00:12:00]
Sean: business you really see the pain of that, other businesses it might be less clear. So that’s the starting point, it’s just making sure that you have a product that’s a must have for users and then once you understand that, it’s about breaking down that path that gets people to that spot of becoming a must have user and then figuring out ways to improve the journey from consideration all the way to saying gosh I can’t life without this product. So, when you talk about silver bullets and hacks along the way, we definitely are not recommending that, here’s 6 things to do that are going to work every single time. I think there are certain principles that help govern what’s going to work and what’s not going to work. So, like if you read [UNKNOWN] there is some really good kind of examples of just human behavior but the individual programs and experiments that you run, you don’t know if they’re going to work until you run them and so you need a really good process for prioritizing which ones you’re going to
[00:13:00]
Sean: run and be focused on the area of your growth engine that should have the most focus because you have the most opportunity for improvement.
Mike: That makes a lot of sense, so the thing that I really wanted to drill into with you on this episode was the idea of hacking customer acquisition and you and I talked before on the podcast about identifying something that our listeners are probably not going to hear in other places. So, in digging into the hacking customer acquisition, 1 of the examples you threw out was Dropbox, that was kind of the 1st example that I came across in that section and the commentary in there was that there were initial cost of acquisition was around 400 dollars but they were only making about 100 per user each year, so clearly, they need to find some other acquisition strategy to make that type of business work. Can you talk a little bit about that process of identifying what was going to work for them, because you were there very early on in the process for Dropbox, so it’s not as if you weren’t directly involved in this, it’s not as if it’s a historical look from an external source?
[00:14:00]
Mike: I mean you were right there.
Sean: Right and that’s one of the great things about the book is we do bring in a lot of examples from other companies and you know talking with other growth leaders but a lot of it is based on my own experience and what I’ve done specifically in these companies to drive growth and Dropbox in particular, what we wanted to do with Dropbox was kind of explore the edges of possibilities around different channels and so we did do some exploration in basically the Google ad words, kind of paid search marketing just to see what the economics look like there and we quickly saw that the economics were not good in that area but at the same time we saw that there were all of these other great opportunities for growing the business and the 1 that was working literally, so I started the week that Dropbox launched at Tech Crunch, kind of the equivalent of Tech Crunch Disrupt, I think it was Tech Crunch 50th at that time but they launched the product, they got some good momentum, they had a pretty good user base during the beta but this was when it 1st became available to
[00:15:00]
Sean: the public and what I saw was there was a lot of passion for the product in that early user base and so that was 1 of the 1st things we did, was how can we tap into that passion to grow the customers and really trying to just break down how is growth happening already and what 1 of the thing we did was we found that growth was coming through a number of channels, so like if somebody wanted to share a file inside Dropbox, that was pretty effective. Somebody would share a file, the person on the receiving end would click on a link to get the file and they would be able to lightly experience Dropbox, so there was a small flow of people coming in from there, there were people coming in from shared folders and then there was just a lot of natural word of mouth was well and so it really started with trying to understand what the motivations were behind those people, ultimately people who love the product and were sharing just through word of mouth about the product, trying to understand those people and then kind of connecting the dots. How do we
[00:16:00]
Sean: get someone who discovers through a file share to actually, eventually understand the 360 view of what Dropbox could do for them and then end up loving Dropbox. So a lot of it was documenting initially and then really capturing what was our data around each of those on boarding flows and then a lot of surveying I think I probably had feedback from you know hundreds of people every single day through different surveys I was running, just to figure out what were the motivations and ultimately perceptions that people had throughout their journey, depending on each of these paths and then that informed our ability to prioritize where should we experiment 1st to try and increase those flows. So not just increase people coming in through those flows but how those people actually convert and become those active users on the product.
Mike: So, what were some of the leading indicators that you used to determine that you wanted to hack the acquisition process versus like activation or
[00:17:00]
Mike: retention or monetization, because I mean you said you experimented with the acquisition through paid ads and clearly it wasn’t going to work but what was it that pointed you in the direction of acquisition versus those other channels?
Sean: So we really didn’t just focus on 1, we were optimizing across the full path but the starting point was just figuring out how are they discovering this product and depending on the path that they came in, understanding what were their motivations on that path and it just seemed like the good opportunity initially was what could we do to, so in a sense you actually could say that we were more focused on activation for those channels initially and then as we improved that activation, then we started to think how can we get people to share more files, how can we get people to do more folder sharing and ultimately we built in a incentivized referral program so that people even started to just do natural word of mouth more often but we built
[00:18:00]
Sean: kind of incentives across each of these paths that were already happening and that really helped to accelerate them.
Mike: So, you just talked about how you had done like a lot of surveys and you had hundreds of them coming in everyday that you were looking at and trying to parse through. What was it that you were trying to find with those surveys?
Sean: So 1st thing I’m generally trying to figure out is intent, so like intent is this really powerful force for a marketer to work with and marketers have their own agenda. They’re like love me for this, but the other person is like in strong momentum looking for something specifically and so it became really important to understand what that intent was and then we were also trying to figure out at which point did they realize that they wanted the product more, it was more than just wanting the file that somebody had shared with them, but they wanted the product for sharing files and so really trying to understand what that transition point was and kind of crowd sourcing it with people who were making that
[00:19:00]
Sean: discovery on their own and the more that we understood those people, that gave us a clear picture of what was happening. So, 1 of the things that we kind of experimented with early on was very quickly, depending on whatever their intent was, telling them about all of the benefits that they could get from Dropbox and when you think about it, like probably the biggest barrier to the adoptions of a technical product is complexity. That’s probably more of a barrier than even price and so just like giving them a list of all the things they could do with it was actually causing a lower conversion rate than when we really kept it focused around what their intent was and trying to convert their intent 1st and then ultimately give them more of a 360 degree view of the product once they were more locked on than what their initial intent was.
Mike: Is it something that you would generally recommend for most business, especially when they’re starting out because it seems like to me the place most people start out when they’re launching a new product is there focused on the features page
[00:20:00]
Mike: and everyone is like no, no, no you don’t want to do that, you want to pitch the benefits and of course from there’s it’s like okay well now instead of the benefits what is it that the people are actually trying to accomplish.
Sean: Yeah, so again it’s this idea of test, test, test, experiment, experiment, experiment. That’s what you see kind of through this whole process, so initially what I’m trying to do in a company is like kind of get out of my own head and just get enough people coming through the funnel so that I can try to figure out who is going to stumble in to what the product does that’s really valuable to them and get outside of those assumptions because I think it’s really hard to guess that ahead of time. You can have a bit of a vision as you build the product but a lot of the most successful products end up being valuable for unintended reasons, we definitely saw that at LogMeIn for example. So, the best benefit that I had with DropBox was through the beta, the team had done such a good job to build the flow of traffic coming in there that I didn’t have to focus on building the initial flow, I could right out of the gate
[00:21:00]
Sean: focus on understanding the flow. So the place where I actually start, like at the heart of things is I find that people who absolutely love the product, and I’m able to uncover that by just asking existing users on the product that are using it pretty regularly how they would feel if they couldn’t use the product anymore and I’m trying to hone in on the ones that they would say they would be very disappointed without the product and when they say that, that tells me like they’ve discovered something so valuable that they’re not going to churn and they’re telling me that they consider this a must have, if they would be very disappointed without it and so understanding that, that’s going to be the key to basically being able to build an overall benefit or promise of what the product will do for people that sets the expectation on what the product is truly great for and I think that’s 1 of the mistakes that a lot of marketers make, is that they initially kind of build that promise just on their own guy or own the founders vision
[00:22:00]
Sean: or whatever it might be but if it’s a promise that’s not aligned with what the product is truly great at delving it’s going to attract the wrong type of people who aren’t viscerally passionate about the product. So, start with understanding what that must have experience is, figure out the benefit that reflects that experience and then working externally to get hat into the message to set the right expectations goes a long way in just building a more passionate customer base and it starts to inform those customer acquisitions efforts as well.
Mike: So, when you’re trying to I guess hone in on what that compelling message is, is that the place where most people should be focusing their efforts early on?
Sean: So, it really depends, like I said I had the luxury at Dropbox of already having a decent flow of customers, so early on for most companies it’s that the initial efforts are how do I actually get any kind of flow of customers into the product and so that can be a really manual process. I wouldn’t obsess over ROI at that point, I think that’s another mistake that
[00:23:00]
Sean: people make in the very early days is they’re trying to tweak the economics of that customer acquisition, I would essentially say this is my learning budget originally and sometimes you don’t even have to spend anything at all, you can get more through just manually going out and recruiting users but it’s not about trying to find that big scalable challenge that’s going to pay, you know give you a great return on investment. Early on you’re just trying to convince some people to come in and experience the product or you can figure out if you have something that’s worth them sticking around on and then if you don’t you have to hit the reset button in the business and kind of go back to square 1 where you’re working on product market fit, but assuming that you do have that. Then what I would do from there is then to start to optimize that 1st user experience just enough so that by the time that you’re focused in trying to get the economics right in some channels that you don’t have something that it’s like it’s just
[00:24:00]
Sean: so, convoluted to get started with a product that you’re going in and you’re trying to do those ting with both hands tied behind your back and your odds are stacked against you. So, you want to get the basic kind of low handing fruit out of your on boarding funnel so that by the time you’re starting to do some channel testing where you’re actually trying to find that scalable way of trying to find customers it has a fighting chance of working.
Mike: Yeah and I think that’s sometimes pretty difficult to go through that process and realize how I spent all of this time building this product and working on it and it’s really not making any money and I would like to get to that point quickly and the solution is not necessarily a ton of traffic at it because if it’s not, when it converts everybody’s going to fall out and you’re just kind of spending a lot of money and a lot of effort for not good reason.
Sean: Right, so you go from this kind of period of when you’re trying to get product market fit, that’s a super patient process, so until you’ve created something that people care about, that’s where you just kind of blasting a little bit of traffic at it and those people don’t seem to care and
[00:25:00]
Sean: and then you’re sending more, you make some iterations, you send more but once you get that signal that it works, you do start to get some more urgency once you get the signal that somebody considers this product a must have, then you do have some urgency about pretty quickly trying to run some experiments through your funnel to figure out where it’s broken and so things like user testing dot com can be super valuable at this time of just giving someone a task of trying to come in and sign up and use your product for the 1st time and being able to watch videos of them coming in, super insightful. You can make a lot of really easy usability fixes there and then over time you want to start to AB test kind of different paths to go in there, but that requires a lot more traffic so some of it’s going to be more the usability testing to get those initial lists and then once you go out and you start to build traffic and you actually have volume coming into the funnel, that’s where it’s a little bit of a back and forth between the acquisition and activation, so if you’re really having a hard time with your acquisition
[00:26:00]
Sean: channels, maybe you need to work a bit more on the efficiency of your conversion and your funnel and then go back and then work the challenges again but it’s a little bit of back and forth but you usually at that point you’re back and forth between activation and acquisition.
Mike: So, if I were to ask you what sorts of examples of acquisition hacks that you’ve seen or that you’ve used before or that you found to be extremely helpful in the early stages of the business, like what sorts of things would fall into that category and I realize that these things are probably not going to be able to apply across the board to every type if business but I think there are probably some common ones that I think most people could start out with. So, let’s kind of break it down and say look okay if you’re just starting out what sorts of things would you try 1st?
Sean: So, the 1st question I would ask in any business is there active intent for this product? Do people know this category exists and they’re looking for solutions or am I doing something that’s really innovative that kind of nobody knows it exists? In that case, you’re not going to get any benefit from like going to
[00:27:00]
Sean: Google and starting to buy some search keywords for example just because no one even knows to search for it. So that would be the highest level, is just are there people looking for this type of solution or are they’re not? If there are, usually a good place to start is trying to kind of tap into that existing intent, if there’s not then you need to get into demand generation mode and it gets a little harder on the demand generation mode what’s, again, very category dependent as you were saying. It’s going to be different for companies but like in the marking technology space a lot of times a good place to start in that case, if a demand generation of people aren’t looking for it would be with constant marketing where you’re really writing your vision about how this enhances the life of a marketer or whatever it might be, but if there’s kind of some education where you have to set the context for your product then content marketing can be pretty effective but you can’t expect that you
[00:28:00]
Sean: can just write that content and people are going to stumble upon it so then you still need to market that content, so it’s this idea of you ultimately need to start to stack some of these things on top of each other, so probably the staying with the kind of frame work part that I was talking about initially. Initially you’re really trying to get that birds eye view on what types of channels might be useful for this business and there are so many choices that you need a pretty good process for figuring out where am I even going to start with this. 1 mistake that I do see with a lot of people is that they kind of try to test all of them and most of these channels are too hard to figure out if you’re just testing it like, oh I’m going to spend 15 minutes to try and figure out this channel and oh I’m going to run 1 ad in there but that didn’t work, I’ll move on. You really want to narrow it down to 1 or 2 that you really think will be effective, work that for a while, if it’s not then you have your back up channel and then your back up channel after that
[00:29:00]
Sean: you are kind of working across to, just ultimately your goal is to find 1 single source of customer acquisition that’s going to work for you and ultimately scale.
Mike: So, when you say work that for a while, kind of what is your mental benchmark for how long you should be spending on that or how much effort you should put in, because I think most of the people listening to this are probably not in a position where they can spend 40 hours a week on something. So, let’s say you’re spending 10 hours a week on it, like how long should you be running some of these experiments?
Sean: So, if it’s search, you can generally figure out if it’s going to work for you pretty quickly, if you feel like you’ve got a better mouse trap in a category where people are already searching or maybe not even a better mouse trap but just an additional mouse trap, if they’re searching for it then that means that they don’t necessarily a great solution and so like for example at LogMeIn, search was a great lever for us. So, we had a competitor go to my PC at the time that was spending hundreds of millions of dollars essentially promoting
[00:30:00]
Sean: their solution that was a pretty expensive solution and so we were able to basically draft off of that, spend that they had and we had a premium solution that was half of the price and then we actually even had a free version that could soak up some of that demand that they were creating that their high price wasn’t able to absorb. So, let’s say they had a 10 percent conversion rate to a purchase on their sign ups, that meant 90 percent of the people were interested in the category, they just the value proposition wasn’t strong enough and so there was a lot of search volume around remote access to your computer, you can control your computer from anywhere, so just being able to buy those keywords, we were able to get some good initial traction doing that. At Dropbox, it was a lot harder, like we did try to test some of the keywords as we talked about, like maybe well Dropbox is kind of like Backup but when we went and tried to buy the Backup keywords you’ve got these big enterprise backup solutions that we’re paying
[00:31:00]
Mike: a lot of money to generate a click and they had a high enough price point on their product where they could actually do that in a cost effective way. So, a premium Dropbox product just really couldn’t compete on those keywords. So that’s kind of that initial part is you just, I think in the case of search you can generally figure it out pretty quickly. Facebook is a channel that tends to work for a lot of companies, mostly because if you think of Facebook there’s like 1,000 or more targeting combinations that might work for your business. So, people in this city that are this age, that are this gender, that like this product, that generally if you test enough combinations you’re going to find something that works but even knowing how to test those combinations requires some familiarly with the platform itself, there’s a lot of kind of complexities and tricks within Facebook to really kind of make things work for you. So, your question
[00:32:00]
Sean: of they don’t have 40 hours to invest in figuring it out, then they’re going to be competing against people who do have 40 hours a week to figure it out, so that’s going to kind of be the trade off there.
Mike: Right but it sounds to me like your general strategy in those cases is just to drive enough traffic and enough eyeballs so that you can get the conversations going so that you can ask people questions and start honing in on that message and then from there, that’s like your optimization strategy is figuring out what the message to those people is, what will actually resonate and then that allows you to drive your cost of acquisition costs lower because you’re able to be more targeted.
Sean: Exactly, so you’re just looking for signals early on, my gosh for every dollar we spend on this channel in this pretty narrow targeting we’re generating 90 cents back on that dollar, like that’s pretty close. We haven’t done a lot of optimization of the landing page or maybe even the ad in there and you know if you see that kind of signal
[00:33:00]
Sean: that might be a channel to keep working, where gosh I’ve invested 150 dollars into this channel over here and we don’t have a single person who’s signed up for our product or even visited our website, like you could have such low signal at that point it doesn’t make sense to keep investing but that’s part of the balancing act that you’re playing is that if you don’t figure this out you’re going to fail. If you don’t figure out how to acquire, convert and monetize customers you’re going to fail and so it is a high stakes game that you’re playing in figuring these things out but you have to be pretty driven and experimental in getting the formula right.
Mike: So, when you’re experimenting the different things to try, how do you decide which ones to go after 1st, like what’s a prioritization strategy that people can use?
Sean: I think 1st thing you want to do is list out all the channels that you think could be potentially useful for you and we have a couple of good templates in the in the book for helping you
[00:34:00]
Sean: pick channels and prioritize them but basically the main thing that’s in the template that we have in there for this is essentially look at the channel across a number of criteria, so cost, targeting, control, so like is it something that you have to do weeks of advance, like looking at the control did you kind of weeks of advance and planning and once it started you can’t stop it or tweak it, that would be a low control channel. A high control channel would be something like Facebook or AdWords where you can hit the pause button, make a change, restart it, hit the pause button, you can do that over time. Similar to the control would be your input time, so if you wanted to test television it could take months to produce a television ad that you would have to put on the television, so that would be a really high input time where even if you were going to test a banner somewhere it’s still is a pretty high input time to design a banner that kind of that looks good enough that somebody might click on it versus if you’re going to do a Google ad, you can literally
[00:35:00]
Sean: write a Google ad in 5 minutes or even a Facebook ad that’s pretty easy to pick an image and build a Facebook ad in just a few minutes, so that would be a really low input time and that’s important. Then output time would be how long until I know that, that channel shows some promise. So how long does it take to start to read the potential of that channel and then the final criteria would be scale, so if this thing works is it something I can continue to invest in and scale a lot, like radio would be an example that if you can get radio working in 1 market, there’s a gazillion radio markets and there’s a gazillion radio stations and so you could really make that work effectively if you could get it working but you’re going to miss some of the control and maybe the targeting pieces that we talk about on these other criteria.
Mike: Won’t using these types of prioritizations kind of drive most people who are in similar places in their business into the same areas?
Sean: IF there’s an opportunity in those areas to generate a positive
[00:36:00]
Sean: return on investment, they’ll be fine. What I would weigh it towards is whether it’s a new emerging platform, what you’re not going to have in those platforms like say Snap Chat been around for a while now but the early days of Snap Chat, you’re not going to be able to just go download 6 articles on great ways to make Snap Chat an effective customer acquisition channel, you’ve got to literally go in there and kind of invent it. So, in that case it’s going to be hard but if you can invent it then you’re going to have a bit of a much less competitive environment in there because other people haven’t figured it out where if you compare that to Facebook, yeah you have massive scale on Facebook, it scores well across each of these but the down side of this is that there are super sophisticated marketers in there that are going to be hard to beat and so that’s again, part of the trade off that you’re making.
Mike: Yeah, I think the 2 things that kind of stand out for me from all of these things that you’ve just kind of touched on is the fact that iteration time alone is almost worth its weight in
[00:37:00]
Mike: gold when you’re trying to figure out what your marketing message is and you’re trying to drive eyeballs to figure out what’s going on and why people are using your product and why they would and what resonates with them and then the 2nd thing is that those emerging platforms, partly because they’re so low cost at that point, people aren’t really tapping into them and I can think of a specific example of somebody who literally doubled their revenue from 1 to 2 or 2 and half million dollars basically overnight on Instagram marketing, it was just insane looking at the graphs, it was just crazy how much.
Sean: That’s awesome, yeah because there’s not that many people that can effectively grow off of Instagram so that it makes sense that if you figure it out you’re going to have a pretty unique opportunity there.
Mike: Right and this was about a year before Instagram had any sort of paid advertising, they’d like figured out their own system and they had all of these spreadsheets. It was really quite interesting.
Sean: I have 1 quick example that really highlights the importance that you just touched on why you need to get your activation right in some of the lower funnel things to make your channel work,
[00:38:00]
Sean: we touch on it in the book but when we 1st were investing in search for log in it worked pretty well, like I mentioned there was a lot of intent for that type of solution and we were able to scale to about 10,000 dollars a month with a positive return on investment but I couldn’t scale beyond that and when I looked at what was outside of my control as a marketer I could see that 90 plus percent of the people who were signing up through my marketing campaigns were never using the product, so if they didn’t use the product they weren’t going to pay us any money was so I wasn’t going to get that return on investment. They’re not going to tell their friends so we’re not going to get any of the organic growth that is really important in companies, so just basically everything that is based on them using the product so I presented that data to my CEO, my CEO said oh my gosh you’re right, we’re going to have a really hard time growing the business if we don’t get this 1st user experience figured out and he put the overall product road map out on pause, put every product person, every engineer
[00:39:00]
Sean: on that 1st user experience to get it right and then within a few months we were able to 10X the number of people who signed up and actually used the product and what that meant from that channel in Google that had scaled to 10,000 dollars to a month now scaled to a million dollars a month, so if you think for like every dollar I was investing on some key words if I’m only getting 90 cents back I would cut them, now I’m getting 9 dollars back on that key word if you just take that increase in conversion rate to usage and assume that follows through to revenue and across all of these channels suddenly search became this massive channel for us and again now that I had people using the product they were going to talk about it, refer the product and because we have a freemium model that’s 1 of the big factors in a freemium model is that people should be spreading the word about this great deal on this free version and so by the time I left LogMeIn a few years later we had about 80 percent of our new
[00:40:00]
Sean: customers were coming in through word of mouth and so you take this million dollar plus a month being spent and that’s only account for a small fraction of the users and everybody else is coming through this word of mouth, so that’s really what we kind of talk about in the end of the book where it’s this fly wheel of a bunch of stuff really going well and that’s the goal that you need to get too but it’s the interdependency of these different growth levers and how they work together to ultimately build a really powerful growth engine.
Mike: Yeah, and I will say like I’ve looked through, I haven’t read the entire book but I’ve looked through a large amount of it and it’s extremely dense, there is a lot of information in here.
Sean: Yeah, my recommendation is somebody not try to read it cover to cover but instead really kind of try to get the big picture of the book, the beginning really kind of gives you a pretty good big picture and then just do deep dives on a few of the chapters, like just really try to like now I’m going to be all about acquisition and then really like absorbs and read that chapter 2 or 3
[00:41:00]
Sean: times and study the graphs and study the other parts and then after that, and put it into practice as you’re reading it, like use it as a kind of study guide as you’re working that part of the business and do the same thing for activation but like the more that you can kind of repeat this, repeat and really drill down into the chapters you’ll actually get a lot of value from the book. Just cover to cover it is so dense that it might be actually hard for a lot of people to read it that way.
Mike: So, I think that’s probably a good place to leave off. Do you have any other closing thoughts for the audience?
Sean: No, probably the biggest 1 that I would just say is again, this is super experimental just be prepared to test a lot and focus on learning from every test whether it works or it doesn’t work in the way that you intended, get smarter about every part of the growth kind of function in the business and if you do that you will figure it out if you’re like dedicated to it and you absorb what you’re learning through each test and just keep working to increase that cycle of testing, then that’s really critical for growing a business.
Mike: Awesome.
[00:42:00]
Mike: Well thank you very much Sean, I really appreciate you coming on today. In the show notes we’ll have a link to the book over on Amazon and it’s called Hacking Growth. If you have a question for us you can call it in on our voice mail number at 1 888 801 9690 or you can email it to us at questions at startups for the rest of us dot com. Our theme music is an exert from We’re Out of Control by Moot and it’s used under creative comments. Subscribe to us in iTunes by searching for Startups and visit Startups for The Rest of Us dot com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
[00:42:28]
Episode 336 | Key Takeaways from MicroConf Vegas 2017
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike reflect back on MicroConf Vegas 2017 and give you their key takeaways from both the starter and growth edition talks.
Items mentioned in this episode:
- MicroConf Recap
- DigitalMarketer
- Rubberstamp.io
- Smart Marketer
- CartHook
- Thoughtbot
- Giant Robots Podcast
- Startup Event Solutions
Transcript
Rob: In this episode of Startups For the Rest of Us, Mike and I talk about our key takeaways from MicroConf Vegas 2017. This is Startups For the Rest of Us Episode 336.
Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: I’m Mike.
Rob: We’re here to share our experiences, to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: I am still dehydrated and hoarse from last week. At the moment, I’m not sure if it’s just from being in Vegas for seven days or if it’s combination of that plus the pollen and stuff that I came back to in New England.
Rob: Yeah. Yeah, it’s crazy, the dehydration ability of Vegas. Right when I landed, I pull out the ChapStick. I was wearing ChapStick the whole time this time so my lips never got super raw. Yeah, I was drinking a ton of water. I didn’t stay up too late any night this time either. That was good. I think that helps.
Mike: Yeah. I tried to avoid that as well but I think there were couple of times where I was in bed sometime after midnight. I don’t think it was several hours late, it’s like one or two except for the very last night. Going to bed early certainly helps.
Rob: Yup. It also helps that we start the conference now at 10:00AM instead of 9:00AM. It’s just that extra hour gives you time to have a good breakfast and wake up slow. I didn’t feel tired at really any day at the conference, which is interesting considering that we basically had four days of back to back conference.
If you’re new to the show or you haven’t heard, we split MicroConf. Normally, we do two days and this time we did two back to back two day conferences. We did growth edition which started with a welcome reception on Sunday evening, and then we did two full days of talks, and then hanging out on Monday and Tuesday. We did starter edition which is for people who aren’t yet making a full time living from their business. That’s the differentiator between starter and growth. If you’re already making a full time then you should come to growth. Starter ran on Wednesday and Thursday. I was in Vegas close to a week by the time we took off.
Mike: You and I haven’t really talked about this. How did you feel about running the two of them back to back?
Rob: I have to admit, the fact that we’ve sold both of them out, heading into it made me think it was probably the right decision, because it really was a gamble. We decided to do this six months ago, realizing that we preselling the conference out too quickly. We didn’t want to grow it. There’s always the struggle of do we just keep raising prices till we just make the conference super big, make it a 400 person conference, 500 person conference. We’re trying to figure out how to do that. We eventually decided to split it up this way.
I was hoping that it would work well but I was, with any new thing, I’m always a little concerned about what could go wrong. Given the fact that we sold both of them out, my expectations were high that we made the right choice.
Once we arrived there, I pretty much heard almost exclusively positive feedback about the split, both from the growth folks and the starter audience. How about you, how did you feel?
Mike: Xander had asked us, it was Tuesday night, how we felt so far and whether or not we were going to be able to do it again. My mindset coming into Tuesday night was just, “Hey, we’re coming up on the halfway point.” It’s not like it was running two conferences back to back. It really felt like one giant conference just spanned four days. I think that from that perspective, it was more about mindset shifts.
I was also cautious about having this idea in my head that, oh yeah, I’ve talked to people here and they’ve said that they thought it was a really great idea because I feel like the people that don’t think it’s a good idea, or are not happy with it, or were uncomfortable with it, are probably not going to tell you basically to your face. Some people will but I feel that’s the stuff that’s going to come out in the reviews afterwards. You’re not going to find out right away. I don’t know, I was a little cautious about it just because I was hearing from people, “Hey, I really like the fact, this split.” Like I said, they’re not going to tell you necessarily, “Hey I really hate this.”
Rob: Yeah. I could totally see that. In the feedback though, in the survey we gave afterwards, people seem to have generally, a positive outlook on it as well. I think it really helped that we’re able to target the talks so well. We’re going to talk through some handful of a growth talks and a handful of the starter talks. Obviously we can’t talk through everything we did. Over the course of 4 days, we had 18 talks, 10 attendee talks, which are the shorter 12 minute talks given by attendees, two Q&A sessions, and two workshops. There’s a lot to pack in there. We obviously can’t cover everything in the span of a single show.
You’ll see as we talk through the topics that the growth ones are definitely more oriented at existing products, trying to scale up, or trying to stay sane while you’re doing it. And then the starter stuff is a lot more focused on these very first steps. That was the goal from the beginning, it was to be able to target the content specifically at the audience so you didn’t have someone coming feeling half the talks weren’t aimed at them.
Mike: Yeah. I think we did a really good job at that, in terms of splitting the content between those two. Going back and looking at the reviews, I think you’re right. As I said, Tuesday, I was cautious about just accepting things at face value but even in the reviews as you said, there’s a lot of good feedback there about how they liked how targeted everything was directly at where they were. Of course, we did see this from some of the reviews. People like, “How I wish there is a little bit more commingling of the two.” There’s always going to be a suggestions of, “Hey let’s do a two track conference or something like that.”
That’s really hard to pull off, especially if you’re trying to manage everything all in the same venue. There’s a lot of logistical stuff there but I think generally what did went over really, really well.
Rob: Yeah. The two track thing has only been success to the few times over the years but it’s tended to be something that we have intentionally, very deliberately avoided. I don’t know, we should probably crack that open again and just talk through and spit ball what it might actually look like to do that, to have a single conference for the starter track and the growth track.
Mike: Right. I figured in the past, all of our thoughts about that particular thing had been geared with the idea of having the entire conference aimed at one audience. And then of course, that’s where you do get in the logistical issues of let’s say, just for raw numbers. You’ve got 100 people coming and let’s say 70 go to one, and then 30 go to the other. If you’re really targeting two different audiences, then the two track conference idea kind of makes more sense. It’s easier to manage those logistics instead. I think you’re right, I think we just revisit it and think about it and see if it would work or see if it’s something we want to try.
Rob: The interesting thing is the cross growth and starter if you include the attendees, the speakers, the sponsors, and then we sold better half tickets where people can bring their significant other to evening events. Across all that, I think there were something like 420-ish attendees across both.
Actually day to day attending, growth was about 230, 235, and starter was around 165 or 170. Definitely healthy numbers but a good size in terms of manageability. I felt I was able to talk to a lot of people and it didn’t feel a sea of people to me.
Mike: Yeah. It’s hard once you get up to those numbers to be able to talk to every single person there but I do feel like I got to talk to it a decent chunk of people. That size is nice because everyone is still approachable. It’s not like I’ve talked to people while we were there and they said that they’ve been to a couple of other conferences where there’s 3000, 4000 people. It’s really hard to I guess maintain and establish relationships with people there but at the size, it’s a lot easier.
Rob: Yeah. Let’s dive in. As I said, we won’t be able to discuss all the talks but we do just want to take some highlights based on feedback that we received in the surveys we sent out at the end.
Russ Henneberry from a Digital Marketer made his first MicroConf appearance. He appeared based on a recommendation from Ruben Gomez, who said this guy is super sharp. He knows what he’s doing. He has a really unique insights on content marketing.
We had him speak on the first day. I instantly started hearing people being blown away. His talk was The Perfect Content Marketing Strategy. He talks a lot about misconceptions that content marketing is blogging. He looked at the seven characteristics of perfect content marketing.
This is a guy who’s been doing this since before it was called content marketing. He knows what he’s doing. Right in the hallway when we left, I heard some people saying, “Boy, that blew my mind. I’m going to change up my content marketing strategy because of it.”
Mike: What I really like was the way he identified specific pieces of the content marketing strategy and called them assets. I heard that from several other people as well, referring to the pieces that you plug in as an asset. We could give us an idea that you can reuse those assets in other places but by what referring to it as an asset and treating it as such, it gives you a more focus clear idea of exactly what you’re going to be doing with that particular asset or that piece of content and gives you the ability to build it in such a way that it’s not templatize but it’s got a specific purpose and that’s what it’s for. It was an interesting way to look at that that I haven’t really seen or heard before.
Rob: By the way there are summaries of all the MicroConf talks. If you go to microconfrecap.com. Thanks to Shai for taking notes and they’re very detailed outlines of what speakers were talking about.
Next talk I think we should discuss the same to have an impact was James Kennedy’s talk. It was how to stop giving demos and build a sales factory instead. I was super into it even though I’m not giving demos. I have noticed, I ought to give demos but he just had this whole process of how he grew Rubberstamp.io and how they’ve been growing it using essentially sales demos.
What was funny is I walked out at that talk and Anna on my Drip team, she came up and she said that talk made me want to do demos again. You know it’s having an impact when it makes you miss doing demos.
Mike: Yeah, that’s funny. I really liked how he’d laid out the entire process, the follow ups, what they do, how do they get people to the demos, how do they follow up with them to make sure that, “Hey, you have this demo coming up.” The foreshadowing aspect, the letting people know, “Hey, this is going to be the next step. This is what we’re going to do next.” So that it’s not a surprise to people so people aren’t wondering, “Okay, when is this person going to call me again? Are they going to send me an email or am I going to get a reminder?” It’s all about foreshadowing what those next steps are. I really liked that aspect of it.
Rob: I rounded out the day with a modified version of the talk that I had done in Europe about selling Drip and it was called 11 Years to Overnight Success: From Beach Towels to A Life Changing Exit. I tweaked the talk quite a bit for the growth audience. I just thought through some more aspects of it. Also, I have so much more distance from the sale now. A lot of it was about the Drip acquisition, the thought process, and the mindset behind that.
I definitely enjoyed talking about it. Since it was essentially the second time I’ve given the talk, I find that my second, third, fourth times of giving talks are always better. You just have more of an idea of what resonates with people and it’s better practice and that kind of stuff. I felt like it came off pretty well.
Mike: Yeah. I think in your talk, one of the things that you pointed out, this is not a surprise to anyone but the fact that it takes a long time to get to that point, there are all these different missteps or places you go where it’s either just the learning opportunity or you feel you’re making a lot of progress, if you take it as a whole then you get to see that entire journey. It’s interesting to see that. I saw in Europe as well. I do think that you gave a better talk here in Vegas than you did in Europe. It probably is a direct result of hearing yourself give that talk on a stage, and then talking to people, finding out what resonates, then plug in those things back into it. It’s nice to get that feedback and be able to incorporate it later on.
Rob: On the second day of growth, this would have been Tuesday, we had Ezra Firestone from Smart Marketer. He talked about the exact formula they’ve used to generate $5 million in revenue from software in the past 3 years. It’s pretty obvious that Ezra does a lot of speaking because he commanded the stage and really kept people captivated.
Mike: Yeah. As you said, he obviously speaks a lot. It’s nice to be able to see somebody get up there and be able to just do things off the cuff. It’s clearly not rehearsed. Clearly, he has the ability to get up there and speak to things from the audience. Almost like a comedian when you see them perform and they’re able to either deal with the hackler or comments from the crowd and incorporate that into what it is that they’re talking about. Ezra definitely had that ability. It’s clearly a direct result of being up there in front of a lot of people and talking to a lot of people. Some of that could just be the personality in terms of being what appears to be a strong extrovert. I think that being able to incorporate those things really helps to send the right message when somebody is up there on stage like that.
I do like the fact that he went into some detail. For example, the multi-touch marketing and creating multiple touch points in your sales funnel so that people are hearing different messages along the way through that sales funnel. They might hear one message and then they hear a different one. In some cases, they’re getting reiterated to them so they are essentially strengthening the original messages.
Rob: That afternoon, Sherry Walling talked about understanding your past, current, and future self. Really kicked off with how founders view their startups as they do their children. That there is a study done that was doing brain scans of founders as they showed pictures of children they didn’t know versus their own children and it showed parts of their brain activating. It was people seeing companies that were there versus other people’s companies in that sense. It was showing that the brain activity when you see your children is very similar to when you see your own company.
She talks about the pluses and the minuses of this. She looks at how your past contributes to who you are, what to do in the present, and then looking ahead, asking yourself, “What will my future self want me to do about this decision right now?” I was pretty fascinated by it.
Mike: Yeah. I thought that when she dove into that part of the talk, that was kind of fascinating to me just because when you’re building a product, you’re working so hard on it and you’re pouring all of your energy into it. It’s not something I think that most people think about in terms of what would my future self think of me doing this or what would my future self want to be the result of this. She really dug into that and tried to portray it as a situation where you do have to think about those things and you do have to let things grow on, in some cases on their own, without too much input from you, whether it’s hiring people to take over certain pieces of it or just being cognisant in other fact that what you’re doing today is not always going to be correct but you have to make the best decisions that you have with the details you have right now.
Rob: Lars Lofgren wrapped this up. He finished off the growth speaker docket. His talk title was 2 Inbound Engines that Drive 30,000 Leads Per Month, actually more than that. I think he said they’re collecting more than 40,000 emails a month, which is just fascinating. He runs marketing for Ramit Sethi.
He really talked about the two engines are one, ramping volume and two, split testing your choke points. He talked a lot about going really deep on one thing and how they’ve spent a year just going after, they started going after SEO with the ultimate guide and then that wasn’t working so they switched it up. He said he’d rather have 49 amazing blog post and one PDF than 50 amazing PDFs because he need the blog post to drive the organic traffic, so that people will download PDF and become a lead.
He has talked a lot about how he doesn’t do any campaigns. He only puts in systems that he doesn’t want to go from marketing campaign to marketing campaign. I thought was a really interesting look attitude. It’s a very long term way to think about it but it’s also the way to think at scale in terms of really scaling up sustainable traffic.
Mike: I thought it was really interesting that even given the size of the team that Lars runs, that they really are only focused on one channel at the moment. I guess I would have thought that they would have done more or I would have thought they were been going after two or three. In the context of this talk and looking at it retrospect, it does make a lot more sense as to why they’re going so deep on one particular channel. It’s because it’s working well for them. You really want to double down on those and optimize everything you possibly can until you get to a point where it’s no longer working or you’re longer getting the gains that you could be getting.
I think you and I have talked about similar things in the past where people have said, “Oh, I want to take my app and go multilanguage with it or localize it for different places.” The reality is most people are not at a point where they’ve saturated the market. This is the same idea. It’s really going so far deep until you get to the point where the diminishing returns are so little. That’s when you would start focusing on something else. It’s amazing with 40,000 email addresses acquired every month, they’re still not there.
Rob: Tuesday night, we had the closing reception for growth and we had that opening reception for starter. That was a time for people to mingle and have S’mores, and an open bar.
Mike: You’re not kidding about the S’mores either.
Rob: I know. There were fire pits in the back and people are making S’mores. That was a lot of fun, though. I see everybody mix in together. It was a big group and that allowed the starter folks to meet some of the growth folks, and then the growth folks to do their last hurrahs before they kicked off for home.
Like I said, starter was around 165, 170 people. We did something interesting. For those who don’t know, we worked with a conference coordinator who handles a lot of the logistics. His name is Xander. He suggested that you and I not try to emcee two conferences back to back. I think his original phrase was consider getting some fresh blood on the stage. Just someone new with a fresh voice who maybe could our starter audience could really relate to.
We invited Jordan Gal to do it this year. I think our plan is that every year, we’ll either do it with ourselves or we may bring in a different guest emcee. I thought that went really well. My thought, it was nice to not have to be present and constantly thinking about what was going to happen after the next talk and what we’re going to say. I think it took definitely took a load off of me.
I’ll toss it to you in a second here if you felt the same way. I thought the feedback was generally positive. I didn’t really hear anybody who was surprised or shocked that you and I weren’t up on stage all the time. Even then, you and I, were introing some things and you were handling sponsorships so it wasn’t like we weren’t present.
Mike: Yeah. It definitely felt some of the load was taken off for the starter edition just because with the growth edition, there were so many things going on. You and I were back and forth on stage pretty much the entire time. I felt I couldn’t concentrate as much on the talks during the growth edition as I could in the starter edition. It was really nice to be able to I’ll say step back a little bit but still be pretty heavily involved in all the stuff that was going on.
I think that I agree. I’ve heard from some of the different attendees that they thought that it was interesting that we did that. I didn’t really see any negative feedback on that particular piece of it. I think there was maybe a little bit of disappointment that people, they don’t get to see you as much up there because you spoke a growth but not at starter. I think there was maybe a little bit of an expectation of that. But generally, it was pretty positive feedback.
Rob: Yeah, that’s interesting. You know about half way through starter, I started thinking to myself, “I think I should speak. I think I should have spoken this year.” I think neither you nor I knew how challenging that it would be to run these back to back conferences and so didn’t want to commit ourselves to speaking at both, which is why we divided and conquered. I spoke at growth and you spoke at starter.
Given how things went and how I felt it was fairly smooth and I wasn’t exhausted. I don’t know if I could have written two talks from scratch but certainly I might have some material that I could have pulled together for starter.
Mike: Yeah. I think for this year, I think it was definitely the right decision to have you speak at growth and have me speak at starter just because there were so many unknowns. That’s really the issue. With MicroConf, you really only get the one chance of that specific event, whether it’s MicroConf in Vegas or MicroConf in Europe. You can’t just do it over again. It’s not something that you do every week. You don’t want to go too far in a direction that is going to be difficult to manage moving forward or for the rest of that week.
I think for this year, it was definitely the right choice. Whether we change that in the future is up for debate or discussion but I don’t think that we made the wrong choice there.
Rob: Jordan Gal also kicked us off and did the first talk of starter. He talked about all the mistakes that they made along the way with his startup Carthook. You know how they’ve continued to grow during that and the learnings that came from it. When we originally talked, we talked about him doing the same talk he had done in Europe but he basically just wrote a completely new talk for the Vegas audience.
Mike: What I really liked about Jordan’s talk was the fact that he showed all those different failures along the way, at least the ones that he felt were failures but if you looked at how things were going for the business, things were still generally going up into the right. It’s interesting to note that your own personal viewpoint of how things are going, are always going to be worse than how things are actually going. Not always I guess. There are some exceptions where things are just tanking and you have no idea. I think at the back of our mind we know that things are going in that direction.
From external, you look at the business saying, “Oh things are going fantastic, things are going great.” But the founders we’re like, “Oh man, we screwed this up or we screwed that up.” It’s a very different viewpoint when you’re talking to somebody about, “Hey, we’ve made this mistake, we made that mistake.” Externally, people have a different view of what’s going on inside the business than you do as the founder.
Rob: Another notable talk from that first day was Ben Orenstein. He works for thoughtbot and he’s a co-host of the Giant Robots Podcast. He was another one who had obviously had quite a bit of speaking experience. Just really nailed the audience engagement part. I thought he did a very, very good talk. He had actually surveyed the starter audience in advance and he had rewritten his talk multiple times to try to really nail exactly what they needed.
When he surveyed the audience, he found out that about half of folks, it’s starter edition so it makes sense they seem split about, but about half of folks had basically $0 in revenue and then half had in the hundreds and on up. He actually just had two parts to his talk. It was like, “If you have $0 in revenue, do this.” It was super prescriptive and it was really good. I think it hit home with people. It gives a good message to have. If you are over that, then he had these 10 tactical wins that they had implemented over at Thoughtbot because they have a couple different SaaS apps that he runs over there. I thought it was pretty fascinating.
Mike: I think part of what resonated with his talk was that he zeroed in on those tactical pieces where it’s essentially a switch or a lever that you can use to get more out of your business and move things forward faster. Some of them are not necessarily obvious. Some of them that are obvious like for example, created an email course. Then there are other ones where integrating and partnering with other people that’s not quite as obvious but in retrospect, it makes a lot more sense that you can leverage those partnerships to grow your business because you’re essentially leveraging other people’s audiences. If you’re starting out and you don’t have a lot of discussions with other founders, that might not come to you as an obvious tactical piece of advice.
Rob: Rounding at that first day at starter, it was Sujan Patel, who many of may know as a growth marketer. He worked for When I Work and has a number of SaaS apps that he runs now.
He talked about from idea to launch your first 1,000 customers was zero marketing budget. He broke it up into three separate sections. The first was about prelaunch marketing, the second was about nailing your launch, and the third was about scalable marketing approaches.
I really like that differentiation. I think folks who are just starting out often get confused of, “How do I fill my email list?” And that’s your pre launch marketing stuff. “How do I market once I’m out and I’m trying to grow?” They are highly related but they are different. I like that he differentiated that. And then he just kept throwing out ideas that they had tried, things that had worked, things that hadn’t. Again, I took away a lot and I think the audience probably did as well.
Mike: That’s something that I saw from the survey results is that people really liked the speakers who dug into things that didn’t work because it was easy for them to look around and find examples of, “Oh, somebody did this and it worked for them. Somebody did this other thing and it worked for them.” The thing that stuck out in people’s minds was the fact that some of the speakers talked about, “Hey, I tried this and it didn’t work.” Or “I was going to go down this path and we backed off because of X, Y, and Z.”
It was interesting that that piece of it, not even just failure but the pieces that resonate with people were the ones where the speakers started to go down a particular road and pulled back because those are not the things you typically hear about on blogs. You read about the success stories but not necessarily the failures or the missteps. People really found that those aspects of the talks were really helpful to them.
Rob: On the following day, one of the notable talks was Mr. Patrick Mckenzie Patio11. He dug into basically a paint by numbers approach to productized consulting, which is a pretty good option for folks just starting out, wanting to get their first dollar. He broke down an approach of how to build that up. I think he said within 12 months you could be a $12,000 MRR in terms of a productized consulting business and then he laid out the steps to do that.
Mike: I think it was probably surprising to people that when he laid out that approach that he was talking in broad strokes numbers about, “Hey, you could charge $800 to a large business for just taking out the trash for example.” That’s not a huge amount of money to them because companies with more than 20 employees pay way more than that sometimes.
I’ve seen business plans or businesses for sale where that’s exactly right. I’ve seen literally that line item before. It can be fairly high. You don’t really think about it but there is all those business problems that larger companies have. By larger, I mean 20 employees and up that is a genuine business opportunity. You just don’t typically think about it unless you see what those line items are. That’s difficult for most of us who are developers or just not involved with any sort of budget discussions for a larger business.
Rob: Another talk that I heard positive feedback about and I thought he did a good job commanding the stage was Justin Jackson talking about the freedom ladder, financial independence through products. He talked about a lot of different ways that he had tried over the years to make a full time living. In essence, he said January 1 of 2016 is when he finally was able to make it from his own products and he didn’t have to consult anymore.
He talked about many different ideas but one that was interesting and seem to resonate with a few people that no one else has talked about was just doing workshops, like in person workshops. He says yes, it’s super scary and yes, he has given a workshop where it was just him and two other people but he said, “That’s how you’re going to learn. If you can’t get a couple people to get into a room in your local town, how are you going to get folks on the internet to pay you any money?” I thought that was cool way to think about it.
Mike: I think that’s one of the fears that people have about running those workshops, is that you only get one or two people there. I talked to somebody who had given a talk at a conference where they said they were expecting a couple of hundred people in the room and it was multitrack conference and they ended up with eight or something ridiculously small like that. One or two of them got up in the middle of the talk and left but at the same time those are the places where you learn, those are the places where you figure out what’s going to work and what’s not.
What we all want is to be able to go in and run a workshop like this. We get 30 or 40 people. The problem is at that point, you are essentially performing in and front of a group of 30 or 40 people and you’ve never really performed in front of group of 5 for example.
What you’re doing is you’re making larger mistakes in a larger environment. It’s intuitive that you want the smaller ones first. Those are the ones that help you get the experience so that when you go those larger environments, you give a larger talk or a larger workshop that is not as scary. You’ve got the butterflies out, you’ve been able to answer the exact same questions in that larger workshop that you have in smaller ones. You can refine your answers from there as well.
Rob: You mostly rounded out the day and rounded out starter. You actually interviewed John Collison, did a moderated Q&A with him. For those who don’t know, he’s a co-founder of Stripe. Xander was saying he’s the youngest billionaire, either in America or in the world. Because I think he’s what, 25? Stripe is now worth $9 billion and he owns a big chunk of it. That was cool. How did it feel to be up on stage with him?
Mike: That was interesting. I wasn’t necessarily nervous from that regard because I don’t think that Xander had mentioned that to me. It was interesting looking at the schedule and how things were going to be going for the rest of the day. I realize that I was probably going to be up on stage for a good chunk of that last day.
I think that the Q&A session went well. We took some questions from the audience and let them. There was a list of questions that we had, that we want to get out there and then ask. A lot of the audience asked questions. I thought that was a good split.
Of course, obviously, I’ll say a little bit risky because you never know what somebody is going to ask. I thought that John was very honest and upfront. He just said, “Look, if I can answer the question and help you out, I will. If there’s something I can’t talk about it, I’ll just tell you I can’t talk about it.” I thought that that was very humble of him. I really liked talking to John both before, during, and after the conference just because of how he carries himself. He’s obviously a very skilled and intelligent person. I think he makes for a good founder that is a good fit with our audience as well.
Rob: The last talk of starter was your talk. It was idea validation and customer development. It’s pretty self-explanatory what you went through. How did it feel? What feedback did you get and how did you feel on stage?
Mike: After the talk, I got some good feedback from people. It was odd because the workshop that I did was also on that. That was I’d say pretty well attended. Even during the workshop that I did, there were a lot of questions that I got. I took some of those questions and I went back to my talk and rearrange things a little bit. May or may not have been the best idea to make some of those changes in the middle of it or just before I was going up there but I also think that some of those things are really important to cover in terms of, “Hey, if you do this, this is what can happen.” Going out there and showing a specific idea, that was something else that people are pointed out to me like, “Hey, I thought that that idea had legs and it’s really interesting you showed that hey, you got these data points and were able to prove like hey, this idea is not going to work or it’s not going to work for you at least.”
Rob: Overall, I think MicroConf this year, the MicroConfs in Vegas were quite successful. I had a great time and we’ve already gotten a lot of positive feedback about it. Keep plugging along and we’re looking at doing one in Europe here in late fall.
I did want to give a shoutout to our sponsors, to the speakers that flew in, very busy people coming in to give back to the community, as well as Xander. Xander helps us run the conference. If you have an event that you need help with, even meet ups, product launches, and conferences, Xander really works a lot in the startups space and the techs space. He’s at startupeventsolutions.com.
Mike: I think that about wraps us up for this. If you have a question for us, you can call it in our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com.
Our theme music is Next for Periodic 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 335 | Lessons Learned from Unbounce’s 5 Split Tests Across 2.3M Exit Overlay Visitors
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk through an article by Unbounce about split testing their exit overlays. The guys give you a full walk through and their opinions on the findings of the article.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about lessons learned from Unbounce’s five-split test across 2.3 million exit overlay visitors.
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: Well, we are in sunny Las Vegas as people are listening to this, and right now outside it is raining.
Rob: Is it supposed to rain on Tuesday?
Mike: No, I’m still in New England. We recorded a week ago early. Come on, man! Get with the program!
Rob: We’re time warping here. Yeah, so we record just a few days early, and I take off for Vegas in a couple days, and it’s supposed to be what? 70s and 80s? Pretty sunny there?
Mike: Yeah, I think I saw like 84 or 85, something like that last week when I looked.
Rob: It’d be nice. I’m looking forward to getting out and seeing the folks, you know, seeing the speakers, meeting the new speakers, and hanging out with people we haven’t seen for six to twelve months. It’s always exciting to kind gear up for that.
Mike: Yeah, it’ll definitely be interesting this time around just trying to keep up and pace ourselves for the two conferences. I know in years past every single year without fail, my voice starts to fail at about the second or third day. So I’m going to have to be a little careful about that.
Rob: I agree. The good thing is we’re not emceeing the Starter Edition, so we should have less talking. Although, you’re doing a talk there, so you’re really going to need to keep your voice going.
Mike: Yeah, my talk is the last slot on the last day so four or five days of talking and hopefully my voice will still stay with it.
Rob: Indeed. On my end, not too much new this week. Wanted to look at a couple recent iTunes reviews, and we’re up to 517 worldwide iTunes review. This one- I love the subject- “Best podcast ever” from John Turner, and he says “best podcast for anyone looking to start selling software or a SaaS product.” And we have Ray223 who says, “The oldest and the best. Thanks Rob and Mike for all the insights. Keep up the great work.” We have another from [Ludwig?] from Denmark, and he says, “If you’re considering have a startup, listen in here.” Really appreciate these reviews. If you haven’t left us an iTunes review, it goes a long way towards helping us to reach new audiences, to grow the show, and frankly, just keeps us motivated and keeps us from crying ourselves to sleep at night. I know Mike, you often pull up the reviews and read them to feel good about yourself, right? Oh, is it just me?
Mike: I think it’s just you, yeah.
Rob: Cool, so let’s get into the topic this week. We’re going to be talking through an article that’s on Unbounce.com’s blog. And the title of the article is “Lessons Learned from 2,345,864 exit overlay visitors.” And what they did is they ran split tests and some observational tests, which we’ll talk about in a second. They ran five of them over the course of two years, and it’s about 2.3-2.4 million visitors during that time. And so they just outlined the tests they ran, and with the results you would expect, and what actually happened. And I like how detailed this post is, and I like that some of the assumptions that we will make- when I say the split test you’ll think “I know which one is going to win.” Sometimes that’s correct, and other times it’s not. And so it’s kind of a fun walkthrough of people who are doing a lot of pretty sophisticated testing.
Mike: Do you think that that’s an exact number or just kind of a ballpark estimate of the 2,345,864?
Rob: I think they went into Google Analytics, you know, and just pulled up the number from the date of the first split test until today or whatever so I imagine it’s pretty exact.
Mike: So one of the things we wanted to mention before we kind of dive into this particular episode is the fact that there is a certain kind of minimum threshold you have to kind of be at in order for split testing like this to work. And I think Rob, you said the minimum you would even consider doing these kinds of split tests is when you get to about 30,000 uniques a month, right?
Rob: Yeah. You and I were talking before the show, and I ran some loose math, and let’s say these guys have 2.4 million unique visitors to their blog over the course of this 2 year thing, which is what they’re positing. So back of the napkin, 2.4 million is about 100,000 visitors a month, and at that rate, think about if you’re using exit overlay you’re around 1% to start with in terms of converting people to subscribers. So 1% of 100,000 is about 1,000 new subscribers a month. If you split test you could very likely get to 2% and that’s 1,000 to 2,000 and that’s a big difference. That moves the needle. As you start lowering the number of visitors you’re getting, let’s think about 50,000. That number’s going to move from about 500 to 1,000 new emails a month, and that’s still for me, still moves the needle. But as you start dropping down- 30,000? It’s like well, I’m going from 300 to 600. That’s cool. That’s about as low as I would go. If I have 10,000 and I go from 100 to 200 subscribers a month, I actually think at that point you should be focusing more time on generating traffic rather than split testing the traffic you have. So my mental math is somewhere in the 30-40,000 uniques a month if you’re going to start running experiments like this to have it actually move the needle.
Mike: So with that in mind, let’s start digging into these experiments. Let’s see what they found out.
Rob: Yeah. So they say back in 2015 they launched their first ever exit overlay. So it’s an exit intent popup that only appeared when you tried to leave the site. And the idea was they just wanted to collect more email addresses. And when they first started their conversion rate with the very first one, and it says “Conversion optimization tips you’ll actually use. Subscribe to our blog.” There’s no lead magnet, there’s no mini course, it’s just subscribe to the blog. And they were at 1.25% from the start, and we should probably take a quick break here. Some people hate exit intent popups. Some people love them for how well they convert. I think Unbounce takes a pretty good approach to it, and they actually write custom code to assure that you only see one even if they have a bunch running in different categories as people hear later. They were very specific to not hose the user experience because that’s the thing that sucks with exit overlays. If they keep popping up and you’re trying to read and you’re trying to go to another tab to do something, so this is a place where you can listen to these ideas, and you don’t have to do this with exit overlays if personally you don’t want to. This could just as well be a little Drip widget in your lower right, this could be a lead box, this could be embedded form in your website- all the stuff they do could still be applied to that, but they just happen to do it using exit intent.
Mike: Yeah, that kind of applies across the board to a lot of different marketing efforts. If it’s something that you’re not particularly enthralled with when you come across it- if it’s something that you just say “Aw, I can’t stand these things,” and you just keep closing them and they keep coming back, that really turns you off from trying them to begin with. But there’s also a difference between your experience on your website and the visitor who’s coming to your website. So you have to keep in mind what your end goal with these is and whether or not it even makes sense. Obviously you’re not the one browsing your site, but at the same time you are not necessarily representative of the person browsing your site. They may not care nearly as much as you do about it.
Rob: So we’ll kick into first experiment here in a second. In the post they say there are a few testing conditions they want to lay out. Number one: all overlays were triggered on exit, which means they were launched only when abandoning visitors were detected. Number two, they say for these first three experiments they compared sequential periods to measure results rather than true A-B tests. So they do say this is less scientific, more observational because you run them for thirty days and then run them for thirty days and compare the two time periods. They say that when comparing these sequential periods testing conditions were isolated by excluding new blog posts from showing any of the overlays. Conversion is defined as either completing the form, meaning they enter their email or later on they try something where it’s just a click, and we’ll get into that later. And lastly, it’s from January 2015 and ended November 2016, so almost two years. So that’s setting the stage. The first experiment they ran was to go from their generic signups which I talked about earlier which just said “Conversion optimization tips you’ll actually use.” and “Subscribe to the Unbounce blog” button. If you compare that with actually giving away content, the hypothesis is if we give away an e-book it’s going to generate more opt-ins. Both Mike and I would agree and most listeners that you’re going to increase your conversion rate if you do that. So they gave away an e-book called “23 Principles for Visually Designing More Persuasive Landing Pages.” And what happened, Mike?
Mike: Well, it looks to me like the conversion rate doubled from 1.27% to about 2.65%. Now the interesting thing here is you kind of mentioned this upfront- this wasn’t a true split test. The duration for the test itself was about half the time of the stuff they had running. So they ran the initial one for 170 days and then the split tests or the tests that they ran was for 96 days to offer this e-book.
Rob: The variant or the challenger, if you will.
Mike: Yep. And the conversion went from 1.27% to 2.65% so almost half the time and twice the conversion rate which kind of translates to the fact that they got about the same number of conversions in half the time. That’s a phenomenal increase to be honest.
Rob: It’s really cool. Yeah, this is good. I feel like this supports a lot of stuff that we’ve talked about over the years and what you would naturally think so that’s good. Their observation on this is offering tangible resources versus non-specific promises compositively impact conversion rates.
So experiment two gets a little more complicated. So they went from their single field- meaning just getting an email address- and you think about at this point they’re at a 2.65% conversion rate, they’re giving away an e-book, they’re asking for an email. They said that data people always spoil the party and someone internal to Unbounce wanted to get more information, not just the email. So they added three other form fields, so instead of just email they asked for a first name, do you work for an agency, and your company size, and they knew this was going to tank when they knew it was going to tank conversion rates, and it’s exactly what I thought would have intuited as well. Every form field you add from 1, 2, 3, and up, you are going to almost in all cases a decrease in conversion rates. And this once again confirms that. Take us through the results.
Mike: So the results basically went in the opposite direction. Just to point this out as Rob said at the very beginning, these were all run against different people, so it’s like somebody saw one and they ended up seeing another one. It’s really different segments of their audience that were seeing these, so again, the time periods were different that they used. And it looks like they did not want to run this one for very long just because the results were so bad, but the conversion rates went from 2.65% down to 1.25%.
Rob: D’oh! Right back to where they started. They’re still giving away that resource but just adding the three fields just tanked them.
Mike: Yeah, so it’s pretty obvious that even just looking at it you probably don’t want to fill out that form. If it’s in exiting intent and you are already inclined to leave, making it more difficult to send them information is just not going to work out in your favor.
Rob: I like the quote the post author says, “I knew this was for a good reason. Building our data warehouse is important. Still, a small part of me died that day.” And then it got worse. Basically since they added all the fields to it they had to expand the size the overlay and they just made it bigger so it could hold the form fields and then they realized that they had made it so big that the size was too large for many people’s browser windows. So the overlay only fired two out of every three visits. So not only did they have a lower conversion rate, but they cut their potential audience by a third. So then they redesigned the overlay to make it smaller and fit, but internally they decided that even though it was a lower conversion rate, they needed that data. And so now their new baseline is back to 1.25% which is kind of hard as a conversion rate optimized to make that much of a gain to double and then have to go back.
Mike: It depends on your situation because this is one of those places where you really need to make a judgment call about whether you need that data or not and whether you need it now. I think it’s this case with the types of questions they’re asking, I think they could probably get away with not asking certain things. But they went from asking just an email to first name, email, do you work for an agency, and company size. And those individual things really let someone on a marketing team target down and send a highly specific content to those people. You’re not going to send something about a freelancer to somebody who’s running an agency with thirty-five people. So it allows you to target the content you’re sending them and make sure that it is speaking their language and talking directly to their pain points because they’re going to have different pains than a freelancer. And if it’s important to have that information now, awesome. But I would also question whether you need to have it on that page. So one of the things that I’ve seen is that you can do this type of thing where you ask for a very limited amount of data and then on a next page you ask for more because they’ve already bought into the premise at that point. Let’s say they give you an email address and then it flips to another page and says, “Hey, thanks for that information. Can you tell us a little bit more info so we can more specific about the things we send you?” And at that point you can ask them, and if they don’t give it to you, you can follow up later and try and get it later or there’s different ways down the road that you can get it. But the question is do you need that information right now?
Rob: Yeah, and that’s called progressive profiling, if people are curious. There’s a really good tool that actually has a tight integration with Drip that does exactly that. You can set up all these fields and you can progressively over time- the first time you visit it’ll ask you for email, and then the next time it knows it already has your email so instead of doing nothing it’ll adjust for your first name or it’ll ask for something else. It’s pretty sophisticated stuff. That tool’s called Convert Flow, if you’re interested.
Alright, onto the the third experiment. I like this one. It starts off with the quote “It seemed like such a good idea at the time…” So the third experiment is challenging one overlay like they have now, just the one overlay giving away the e-book with the four form fields versus ten different overlays. And the ten different overlays are highly targeted or hyper relevant to each of their ten blog categories. So you can imagine on a blog you might have categories and one of them is split testing, one is copyrighting, one is email, one is paper click, one is social. So creating a separate overlay for each of those with hyper relevant headline/pitch, all that stuff. And so they did this and they said it took three hours maybe to do this, and then they have a table, and the results are kind of crazy. The email category result was .45%. So remember their baseline is currently at 1.25%. So their email is at .45%, their legion and content marketing is at .85% so there’s kind of the bottom end ones. And then their copyrighting one is at 3.22%, and their landing pages and mobile optimization is at 2.46%. So huge range now, but having that more granular data is super more interesting because now you know you have some big wins and some big losers you can just focus more on the losers rather than trying to do it across the board. They only did it for ten days. They said their conversion rate was a combined 1.36%. So it is slightly higher than the 1.25%. They said it eventually crept up to 1.42% after an additional quarter million views, but it didn’t do anything as much as they had hoped. So to take a step back, if you take a look at their copyrighting category they say “How to write killer landing page copy” versus their conversion rate optimization category was “How to Get Started with A-B Testing” and then the next one is UX and so the headline was “The Seven Deadly Sins of Landing Page Usability.” And so I don’t know that these were e-books, and they don’t say that each of these was as effective as that 23 Principles of Design e-book they originally gave away, but that was the idea here. That’s how they were trying to target to the specific category.
Mike: What I find interesting about this is that they decided to just go back to the baseline and use the average of all of these because it seems like there are certain cases where the targeted headlines work a lot better. So for example the copyrighting and the campaign strategy and the mobile optimization- those things have a much higher conversion rate. But then if you look at the other ones, like the email category or the social category, the conversion rate on those is less than 1%. So it makes sense to at the very least go back to the baseline but I kind of question why they didn’t go with those specific ones in those particular categories that were overperforming 2-3x what the baseline was.
Rob: Yeah, I agree. The average was a little weird, and I think they’re doing that just to kind of give you a general idea because now that you have this data, what would you expect is the next thing to do? It’s to keep the ones that are at 2% and above and only try to optimize the low performing categories, and that’s exactly what they did. They were going to test new offers over five categories that had low conversion rates and reasonable enough traffic volume to make it worth the test. Because some of these, now that you’re getting more granular, some might only get 1,000 views in a month so it’s not really worth diving in. What they did is they were then doing resource versus resource, and so they were basically trying a different headline to give away an e-book.
Mike: One thing that comes to mind now that you mention that that kind of leads into the next experiment they did, is if they start changing that and they start running different types of ads in some categories versus others then it changes a lot of the math around and it becomes a lot harder to test that stuff.
Rob: Oh totally. Yep. And so the result of this one, they don’t really go into much detail. They just say they saw a slight improvement in one of them, in a couple of them they saw a dropoff, but in legion and content marketing there was a dramatic uptick, and the results were statistically significant. So they’re making progress. They had five low-performing ones, and they basically knocked two of them out, so really they just have three low-performing ones.
And so for their fifth and final experiment as of this writing, they wanted to test legion overlays, which is what they’ve had the whole time asking for email and first name, etc. versus click through overlays. And so they talk about have an exit intent popup that basically has a headline and then a button that says either “get the video” or “get the e-book”- they’re still giving something away, but then that takes you to a landing page. And that landing page has a lot more text and a lot more conversion-oriented stuff. And so that’s what they tested.
Mike: So to contrast this experiment versus the other ones: the other ones were tweaking the headlines, they were asking for more or less information. And in this particular experiment what they mean by “click through” is they would make an offer to them, and the person did not have to fill anything out. They could simply click on a button that would take them to a landing page that would then ask them for information. So essentially they were providing a mechanism for them to say yes, I’m interested or not, and they could quickly answer that. And when the person clicks on the button it takes them to that landing page and then they can fill out that information so it becomes a two-step process instead of a one-step process.
Rob: Right. And this is actually something Clay Collins has talked about for years, and I heard about his podcast he used to have called The Marketing Show, and then when he came on our show a couple years ago well before the first [?] thing happened, he talked a lot about not popping something up and asking for information and they go with this juiced up opt-in where you can click a button and then the next step was a form and it just feels more- it tends to have better conversion rates and tends to make people feel more welcome and like you’re not just asking for something right up front.
So for this experiment they point out for this to be successful, the conversion rate on the overlays would need to increase enough to offset the dropoff that they expect by adding that extra landing page step. Because you figure 1.25% of people might submit one with the form fields in it, and then maybe after two or three times of having to click the button but now you need to get a lot of those folks to actually fill out the form on the landing page. So not surprisingly engagement with the overlays increased amazingly the ones with the buttons. And engagement is just clicks. And so the one with the form fields was .79%, and the ones with just the button click through was 3.62% so that’s about 4 1/2 times better. So that was just getting click throughs. In the end in their CRO category, the overlay with the button where you click through to the landing page, that essentially netted them twice the leads. So they had 100% improvement in terms of the net leads they received by having someone do a two-step opt-in instead of just popping up a form field in front of them. And in their legion category (they have this category on their blog) it was about a 50% (it was from 45-56) so little under 50% increase. And so they only did it in two categories and their next step would be applying the same format to all the other categories and measuring the results. So two-step opt-in for the win.
Mike: Yeah, so if it’s confusing, to kind of consolidate that, it is a two-step process versus a one-step process, so depending on where you calculate the conversions for that you have to take those into account. And not just the percentages but also the net result of it. So it’s not just about the people who click on that link and go to the next page, it’s about who clicks on the link and goes to the next page and submits their information. And what is the net result of that versus the original. And in both the cases here they had either a 100% or a 50% increase. Both of which are pretty significant especially considering the volume. And they took the time to say okay, this makes sense for us to kind of expand this and go out through the rest of our categories and implement it across the board.
Rob: And so that’s where they leave off. They’re kind of summarizing stuff that ended three months ago, and I’m sure they’re running their next tests as we speak. The nice part about this, I like their concrete examples. There’s so much that you read about split testing that can be vague or rule-of-thumb, and these- your mileage my vary, but a lot of the stuff they intuit really comes to pass, and I think it’s always helpful to get ideas for your own split tests. You may not have time to create ten different overlays, and unless you have 100,000 uniques a month to your blog, I wouldn’t create ten overlays. But especially some of those earlier tests were pretty big wins for not a ton of effort, for writing a new headline and giving away a resource you already have on your hard drive.
Mike: You know, Quickbooks is going to love you for saying “Intuit” all the time.
Rob: Yeah, I know. For using their intuition, yeah. I’m going to come up in their Google Alerts a bunch.
Mike: Yep, their SEO guys are going to start calling you. Interesting side note here, one of the things that Unbounce talks about is that they also have a list of what they’re going to be looking at next. The first one is a charter test which is what happens when they test their on-exit trigger. I guess there’s a 15-second time delay. And then there’s a referral test, which is what happens when they show different overlays to users from different traffic sources. And then the third one they’re looking at is new versus returning visitors. Do returning blog visitors convert better than first-time blog visitors? And I think those are all going to be interesting tests. If you’re interested in taking a look at that, go over and check out Unbounce’s website, subscribe to their blog, and I’m sure they will post out the results when they get those, and we’ll be sure to check it out.
Rob: While you’re at it, go to the lead page’s blog and subscribe too. They turn out good content like this as well. Got to plug the company man.
Mike: I get it. Well, I think that about wraps us up. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt for ‘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 334 | Why some products fail and others succeed
Show Notes
In this episode of Startups For The Rest Of Us, Mike and Rob talk about why some products fail and others succeed. Based on a listener question they lists reasons for both sides while also revealing some old failed product ideas of their own.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of ‘Startups for the Rest of Us,’ Rob and I are going to be talking about why some products fail and others succeed. This is ‘Startups for the Rest of Us’ episode 334.
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 [00:26]: And I’m Rob.
Mike [00:27]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob [00:30]: Kind of the same old stuff. Just hiring a few more folks. We had two new developers start last week, and I think we have two or three open job recs right now. Doing a little bit of MicroConf prep with yourself and Zander. Kind of finalizing the schedule and some sessions. And, you know, fighting the good fight.
Mike [00:49]: It’s amazing how much the little things for MicroConf eat into your time. I mean, there’s all these little things that you think will take five minutes or something like that and they end up eating through twenty or thirty.
Rob [00:58]: Right. Yeah. There’s been a little bit of evening work and some thought and schedule crafting that’s gone on. But, overall, can’t complain given that we’re basically putting on two conferences back to back. I don’t feel like it’s anywhere near even the same amount of work that we used to put in five years ago on the conference.
Mike [01:16]: Right. It seems like it’s not twice as much work to hold the two conferences back to back either. At least not yet. I mean, we haven’t been onsite for it so that could certainly change things.
Rob [01:23]: Yeah, that’s true. And what’s nice about that is, like we’ve talked about in the past, we opened enough tickets that we just about sold out of both conferences but not quite. And I think that’s exactly where we want to be. I think we’ve sold four or five tickets in the past week across the two conferences, and that’s the ideal pace I feel like. Is that last minute folks who want to come who hear about it late I would really like for them to still be able to buy tickets and we’ve never had that really at any MicroConf in the past. So, it’s been kind of nice to see that.
How about you? What’s going on?
Mike [01:55]: Well, kind of related to MicroConf. I’ve been working on my working on my MicroConf talk a little bit. And outside of that, I’ve obviously been putting time into Bluetick and right now I’m working out some UI and workflow issues related to allowing people to self-onboard just because there’s certain parts of the setup process in onboarding that are a little bit more complicated. So, we’re reworking the UI a little bit to make it easier for them to do that and just kind of give them a wizard to walk them through it and anticipate where they’re going to run into issues. Because we’ve seen enough demos in onboarding sessions where this is obviously a problem and getting it the point where people can do that without our help and assistance is definitely going to be worthwhile.
And then kind of related to that is I’m working on recording some video walkthroughs of different parts of the application to show people how to use it so that I don’t have to walk people through those demos myself. Just based on stuff that I’ve learned that people have asked about and said, “What does this do?” Or, “How does that work?” And looking at places to key those videos in so that it’s obvious that if you need help here’s a little button just click on that and it will walk you through this particular piece.
Rob [02:55]: Yeah, that’s a really good way to go. I think that’s kind of become the blocking and tackling template. For this I know it worked really well for us in the early days of Drip. And it still does. I think the videos I recorded two years ago are still live. Or someone may have re-recorded them because we changed our top nav and we were like they get out of date.
And that’s the one bummer with videos is you have to re-record the whole thing as soon as you change one part of the app. You can’t just edit text or replace a screenshot. But recording a sixty- or ninety-second video that’s really tight can go a really long way for brand new people just getting oriented with a specific feature. And in Drip we actually embedded it right at the point they needed to consume it. They were also in the KB but there were only three or four constructs in the beginning. It was broadcasting campaigns and I don’t remember what else. But right as you got into a broadcast it’s like, “What’s a broadcast?” And then there was a sixty-second video of me talking about it. How to use it, how to set one up. Boom. Done. And we got some good feedback about that early on.
Mike [03:48]: That’s basically the approach that I’m using. It’s like right at the places where they need that information, that’s where the videos are and you’ll just be able to click on a little button that has the video embedded into it and it’ll just pop up over the page or something along those lines. We’re still kind of working that out. But, as you said, the one concern that I have is that there’s still parts of the app where the UI is changing and I know that those pieces are going to get out of date and it’s like, “Do I really need to worry too much about that?” Right now, I’m just going to say heck with it and record them and if they get out of day, they get out of date. And if we need to go back and re-record some of them then we will. Or I will.
Rob [04:23]: Yeah, that’s the way to go. One piece of advice there is I would consider only having the videos easily accessible during the blank slate phase. That’s where there’s zero data on that page and that’s when someone’s just trying to get started. They can watch the video or they can dive right in. Once they have one or two of these things set up, the odds of them needing to watch that video drop dramatically. At that point, you could potentially have a little link out to a KB or something.
I don’t know that you need to go so far as to – for the rest of the time that someone uses the app, you always have some link available for them to drop it in. Because you only need that the first one or two times tops that you’re going to set this up.
Mike [05:04]: That’s an interesting approach. I can certainly embed it on certain pages directly where if the page loads and there’s no data behind it, then show that video. And then otherwise up in the top corner or something like that, have a little help icon that they could click on.
That’s something I have to think about whether or not having that extra button there that’s kind of hidden or out of the way where people can just click on that and say, “Get help for this page,” for example. I wonder how much value that adds.
Rob [05:29]: Yeah. You could throw it in and then you could instrument it just to say, “How many clicks does this get?” Throw it into Mixpanel or Google Analytics or something. It’s just a javascript action. And then you could always remove it if people aren’t using it.
We found that the blank slate approach has worked really well. We got a lot of positive feedback about it. And then it kind of goes away once you’re past the blank slate which tends to be when you don’t need it anymore. So, that’s one way to do it that we’ve found to be quite good.
Mike [05:52]: Cool. I’ll definitely take a look at that.
Rob [05:54]: So, what are we talking about today?
Mike [05:55]: Well, today’s episode is based on a listener question from Matesh. And there was a conversation that kind of went back and forth so I’ll sort of paraphrase things here. But essentially he was asking about why some early ideas failed, specifically related to us. But I thought that it might useful to listeners for us to address that in a broader sense and talk about why different products fail and why different products succeed. And different ways that you can mitigate that and identify whether or not you’re on the right track or the wrong track.
Rob [06:23]: Sounds good. Let’s dive in.
Mike [06:25]: When you’re looking at the success and failure of different products, I think that there’s two very broad categories that things fall into. And the first one is whether you launched it or not. Clearly, if you never launched something then it’s not going to succeed. And that’s kind of a whole bucket of failures. There’s plenty of hard drives out there that are probably just littered with projects that people have started and then never finished. I think it’s pretty clear that there’s tons of reasons why those things failed. Most of it’s just people didn’t spend the time on it and follow through with it. But I think that we just kind of ignore those and move on to ones where people have launched it but, for whatever reason, it didn’t succeed.
Rob [07:00]: Okay. But before we do that, I have to tell you about at least one of my projects – it was probably circa 2005, 2006 – and I never launched it. But I still think this idea is as bad as it was the day I conceived it.
I always wanted to be able to follow artists and bands and directors and writers. Like I love Aaron Sorkin’s writing. And I wanted to go to one place to paste them all in or select them from a list and then, whenever they release something new, I would hear about it. You would think this would be fairly easy but I found myself keeping this big text document of all these band names and then these writer names and authors. And then I would periodically go through it and past them into Amazon and look and then I’d past them in here and there. And then I was just like I don’t think there’s really a good service for it. I think Bandsintown may do that now but I’m not sure it tells you about CD’s.
But anyways, I went through and I built the dot net and I hooked it up to the Amazon API and I did all this stuff. And then I realize this is an awful idea. This is something that some big venture funded company would do and try to create a big buzz around and raise a bunch of funding and then they’d go out of business and someone would come and pick up the scraps. Although I wish this existed and in a really palatable format.
Mike [08:10]: I think what you’re looking for is indieshuffle.com.
Rob [08:13]: Yeah? Does it do it for all the things I mentioned?
Mike [08:16]: I don’t know. You’d have to probably look at it and figure out whether or not. There’s probably little things that you were looking for that either are there or are not.
Rob [08:24]: Got it. So, this is cool for music?
Mike [08:27]: Yep.
Rob [08:27]: But it doesn’t have any of the other stuff. I follow authors who write fiction and nonfiction. And I follow, like I said, writers and directors so I would need film. Mine was going to be all that because you could, of course, use Amazon to look for those as new products came out. A new book or a new DVD at the time because there wasn’t streaming.
I’d imagine there’s either a service out there doing this now or there’s three different services. One for each genre.
Mike [08:52]: Yeah. Indieshuffle, I believe, is primarily aimed at music only. But there’s probably ones out there that are similar for those other spaces.
Rob [09:00]: Totally.
Mike [09:01]: Interestingly enough, I have an idea that I started back in 2005. I wrote out all the designs for it and it literally became a multibillion dollar business. It was named Lighthouse but the idea was essentially file sharing made easy so that you could just drag stuff into a folder and it would automatically share it on other machines. Sound familiar?
Rob [09:19]: Dropbox.
Mike [09:20]: Yep.
Rob [09:21]: Yeah. Now to be fair there were like 30 Dropbox competitors even when Dropbox came out. So, you could very well have been the 31st. Because obviously, the idea was one thing but Dropbox getting out ahead, raising the $10 million and execution is what took it ahead.
Mike [09:36]: Oh, totally.
Rob [09:36]: But it is fun to know. I almost acquired a business that did exactly – this was a Dropbox competitor – and the guy wanted a crazy multiple. But it was basically that. It had all the apps and all the stuff. It was kind of like a virtual thumb drive is what we were thinking of at the time.
Good thing you never launched that one because without raising a bunch of funding I’m not sure that you could have ever gotten that off the ground to the extent that they did. Because it’s the freemium model that allowed them to really get the traction, right?
Mike [10:00]: Right. It was 2005 when I wrote the design document for it and it was like an almost forty-page design document for it. But I never followed through and actually wrote it. I still wanted to tweak things out and figure out whether it was going to work or not. And at the time I was transitioning over into doing consulting because I’d left my full-time employment at the time. So, I was doing a lot of consulting and traveling and I just didn’t have the time to work on it.
Then fast forward like two or three years to 2008 is kind of when I went back to it. I started working on it and I think I probably wrote like a code for a week or two, and then I stumbled across Dropbox. And I’m like, nope, that’s it.
Rob [10:37]: Let’s say you had tried to build it in 2005. Do you remember how expensive servers were and storage and all that crap? It would have taken you literally millions of dollars to build it to any type of scale that would have paid. It was not a bootstrappable business even if you were ahead of Dropbox. Just purely for the cost of everything.
Mike [10:58]: The market that I was specifically looking to serve was magazines where they need to collect digital materials and files from graphic artists and they need to get those to their office. The problem was that most of those people had to use FTP servers and a graphic artist just does not know how to use FTP. They had problems with it. So, I was trying to make it easy for them to share their files. And there’s a general use case scenario that Dropbox came out and addressed at the consumer market. It’s interesting how that whole thing ended up playing out.
Rob [11:31]: Totally. What do you mean they don’t know how to use FTP? I think your wife takes offense at that.
Mike [11:35]: No. The thing is, she was actually the one who enlightened me to the problem because she was working with all these people who needed to send files to her. And they couldn’t figure it out. She was working at the magazine and they were trying to send her files and they just couldn’t get them or they didn’t’ get them in time. There was a lot of issues with FTP. You send the file and there’s no notifications behind it either. So, obviously, Dropbox has the notifications and stuff built into it.
There were all these ancillary things that went into that in transferring the files and making sure that people knew about them and there were deadlines and stuff like that. But, I don’t know. It’s interesting to look back on that stuff.
Rob [12:11]: For the listener wondering what we’re talking about, Mike’s wife used to be a graphic designer for a magazine. It was obviously a problem within her purview there.
Cool. So, let’s dive in. I totally sidetracked this whole episode so we could talk about these old, crappy ideas. Well actually, your idea was a good idea. Just one that would have taken a different approach.
Mike [12:30]: It kind of leads back to some of the reasons why something doesn’t get off the ground. It does relate to the episode, both of those things do. But I guess to kind of step back and go back on track, there’s a difference between launching and not launching. Once you’re past that, things also break down into a couple of different categories. And the first one is, did you get any paying customers or not? Because there’s a big difference between a product that gets zero customers and gets at least one. And there’s a lot of reasons why something might get no customers. Obviously, the most prevalent one is probably you didn’t do any marketing or you weren’t able to talk to people.
There’s also the quality problem issue. Your product has to be good enough for people to want to pay for it. Has to have the features that they need. Had to be solving a problem for them. And if it’s not doing any of those things then you’re not going to get any customers.
Rob [13:15]: Yep. Isn’t this startup founding 101 these days? Product building. The first step is figuring out what the problem is to be solved. So, there should be some conversations. And this only became popular really around 2007, 2008. Before that we just went off and everybody just built stuff and hoped people would use it. And then Steve Blank really bringing his customer development approach to the forefront. And that was the first time I heard about asking your customers in advance. And it was like, “Whoa, you can do that? What does that even look like?” And then there were several books written for our work group because one of them where Tim Ferriss did the ad words in advance of offering the product for sale. But there were six or seven books that had talked about that before that came out. And that was when it was like this really makes a lot of sense to try to do as much validation as possible up front to ensure that you are in fact solving a problem.
Mike [14:08]: That’s the first bucket of potential failures. The next one is: if you’ve achieved paying customers but the product is still losing money. Essentially you’ve got negative margins. And there’s a bunch of different reasons for products that fall into this category. They could range from your infrastructure or your hosting costs being too high. Your cost of acquisition is too high compared to your lifetime value. That means that your cost to acquire a customer is more than they are worth. It may cost you $50 to acquire a customer but if they’re only going to give you $25 over the course of the lifetime of that customer, it’s really not worth being in that business. You can’t sell at a loss and make it up on volume.
There are other situations where if it’s a product high service, for example, you might be selling something for $100 and then you’re farming out the work, but it costs $150 in labor to deliver whatever that is to the customer. And, again, you’re in the situation where’s you’re trying to deliver something, and you’re just simply not charging enough. And even in those situations, you can’t necessarily just raise prices and expect the problem to be solved. There’s certain types of problems or situations where the customer is simply not going to be willing to pay more money for something. They have this in their head that they can afford “X” and if you go to “X+5” or “+10” they look at that and say it’s not worth it to pay to have that problem solved at that price point.
Rob [15:27]: This is where I would guess if you had actually launched that Dropbox competitor, this is what you would have found if you tried to bootstrap it. You would have had to charge enough that you wouldn’t have been able to get – well, if you’d gone after magazines that’d be fine. That’s a whole other issue. But let’s just say you had gone after the consumer market like Dropbox did, you would have probably wanted to charge $5 a month or whatever. $40 or $50 a year and you wouldn’t have had the organic growth and the big exponential growth curve that Dropbox did have because they were doing that freemium model up front.
So, one thing to think about here is if you do raise a big bucket of money and you decide that you want to grow this thing super-fast and get the volume, it’s a lot more of a riskier bet because you’re not getting your money up front. But that’s how these companies get to the $100 million and eventually the billion dollar valuations.
With that said, I’m doubting – if you’re listening to this – that that’s where you want to go. So, you really do need to pay attention to unit economics. I heard someone at one point say that they wanted to start a competitor to Kissmetrics and Mixpanel. And I told them, “Do you realize they spend” – I forget what the amount was. It was like a quarter of a million dollars. It was more than a quarter of a million bucks a year and this was in the early days. This was before they scaled up. It was a quarter million a year just kind of table stakes just for all the hardware. Or even the EC2 credits. Or whatever it was they were doing because it’s just such a resource intensive business. So, diving into these analytics platforms or something with a lot of queues where you’re sending email – as I know all too well from having worked on Drip all these years – there can be real infrastructure costs. There’s a difference between a crud app like Basecamp or invoicing software or something and switching over to something that really gets a lot of requests per second, 1,000, 2,000, 3,000 request per second. There’s a true marginal cost per customer that you add.
It’s not something you’re going to be able to predict exactly. But it is something to keep in mind and do a sanity check of like, “Is there anything here that’s really going to scale up exponentially in terms of server load or in terms of support costs as I grow this app?”
Mike [17:25]: And sometimes those aren’t very easy or straight forward to calculate. I remember some offhand comment about it was either Kissmetrics or Mixpanel where one of the early versions of the app, they had 25 servers running in order to support nine customers. Which is more than one server per customer. And if you look at the price points that they’re charging you really can’t afford to have two to three servers per customer at the price points that they currently had. It’s just simply not possible. So, if you’re trying to develop a competitor to it, your hosting costs alone are going to kill you. There’s no way that you’re going to be able to make that work.
That said, they did get funding, and they’re able to scale it based on the fact that they’re able to drive those prices down. It’s a starting point. But, again, not everybody’s going to be able to be in a position where they can get that money and invest it to be able to drive those costs down as far as they need to go in order to make the business work long term.
Rob [18:16]: So, you’ve talked about the first step was never launching. The second one was zero customers versus one or more customers. This third one is getting paying customers but realize that it’s losing money. I think we have two others that we want to cover in terms of the ways that products can fail. What’s the next one?
Mike [18:32]: The next one is you have what I would call a mediocre success. It has paying customers but it’s got a marginal profit. And by marginal, I mean it’s almost not worth your time to do. The product is at least break even and it is making money but maybe it’s only making a couple thousand dollars a month. Maybe it’s $2,000 or $3,000 but, again, even if it’s making $3,000, if you’re spending thirty hours on it, is that worth your time? I think that’s an individual question you have to answer but if it’s paying you $10 an hour for your time then it’s probably not. If it’s paying you $50 or $100 or $200 an hour for your time then I would consider that probably more than a mediocre success. But there’s also overhead associated with running more than one product at a time and having each of them be a mid-range success that is simply not meeting your needs full-time. And the context which in it’s going to be harmful.
But, going back to the products that are a mediocre success, there’s problem solution fit. If it’s not a problem that people really need solved or it’s a nonexistent problem, chances are good that you can get some people to pay for it. But you’re not going to get large scale numbers of people. You’re going to get those people who it’s a really painful problem for and they’re willing to pay for it. But that could just be because they don’t know what some of the alternatives are out there or they haven’t done their research. And you can very quickly fall into a situation where people are using your product for something it simply wasn’t designed to do.
Rob [19:54]: Another thing that could be wrong when you have some paying customers but essentially a marginal profit and you’re not growing is you don’t have product market fit. So, you’ve built a product but you’re offering it to the wrong market or audience or there is not market or audience for this. And a related piece of that is market positioning where it might be related to your pricing or how you’ve portrayed it against competition but you really need to dig into why is your product better and for whom. And it might not be differentiated enough against the competitors and new products really need that.
People need to be able when they hit your website to think, “What bucket does this fit it? Is this invoicing software or proposal software or email marketing software?” And if you have just a description that is what the product does, everybody’s trying to figure out what bucket you fit into. As we’ve talked about in the past, creating a new bucket or creating a new product category is very expensive. HubSpot kind of did that and I think they might have said it took them $5 million before they were able to – he said they had to raise millions and millions of dollars before they were able to really define that product category. And I think that it’s a common mistake people make and one that I made with Drip in the early days was not wanting to position this against other competitors. Or just put it into a specific space like this is email marketing software but here’s why it’s better. Or this is marketing automation but here’s why it’s better.
I kind of wanted to be this new unique thing and all the headlines were just so vague and nondescript that people were having a tough time understanding. So as soon as we went with the, “This is marketing automation but it doesn’t suck,” That was the headline for so long. That really put us in a good position because people then realized, “Okay. So, you’re not going to own this entire market but you are going to own this portion of people who hate the other providers that are there.” So, that was a big product positioning fit for us. And I’ve seen other products be able to do that as well.
Mike [21:44]: The other thing that what you just talked about does is that it allows people to mentally identify who your competitors are because if they can’t do that then it’s going to be difficult for them to compare and contrast what you offer versus what some of the other ones offer. And sometimes you want to be able to specifically define who your competitors are and you can use market positioning to do that. But you can also take a particular market and either go upscale with it or down scale with it.
With Drip, for example, it was essentially pitched as Mail Chimp but more advanced. It was not quite advanced to the level of Infusionsoft or Marketo or things like that. It was more for a small business scenario then for a large enterprise or for somebody who’s just working out of their home office. And, obviously, that has changed over time but that was the position that you started in and that served Drip, obviously, very well.
Some other reasons you might be having some mediocre success is that you have poor design, which if your UI is not very good, it can affect some of your adoption rates. If somebody hits your website and they look at the screenshots of the product and it doesn’t look very good, then they are probably less inclined to purchase it. Even if you’ve gotten a base of customers who used it and the reason they used it is because they were experiencing the pain so much that they just had to have a solution. And they didn’t really care what it looked like. But, as you start to expand your customer base, people are going to care. They’re going to start taking those things into account. If you have misspellings in your UI, for example, that’s going to reflect on them. They’re going to say, “If you can’t get even just these basic things right on the surface, if it’s a complicated product in any way, shape or form, what sorts of problems are going to be underneath the covers?” So, you have to keep those types of considerations in mind.
Poor design decisions can lead to essentially a high churn rate which high churn is simply a symptom of something else. It could be support, it could be onboarding, it could be poor design, it could be quality, it could be downtime issues. There’s lots of different things associated with that. But at its core, high churn rates are associated with some other problem. And it could just not be even a technical problem. It could be that you are marketing to the wrong people and those are not the type of people that are going to stick around. It could be a symptom of a market targeting problem.
Rob [23:54]: Right. Back to poor design. You can point to apps that are successful that have poor design, and I will tell you, yeah, they were early. They were the only choice at the time. Or they really did a lot of heavy outbound sales, and the people who they talked to didn’t know any better. So, a lot of the email marketing or marking automation or big sales like sales force CRM stuff, yeah, the UI’s aren’t great. But you’re not them. You didn’t start ten years ago. You’re starting today. And today UI is a huge deal unless you’re in a very tight niche where you’re kind of the only player. So, this is something that you definitely need to pay attention to.
And in regards to churn, you’re right. It is a symptom of something. It’s often a symptom of crummy support or no product market fit or there’s a bunch of reasons that can happen. But all of this stuff is going to keep your grown flat. And that’s exactly a good way to have paying customers but essentially marginal profit assuming you are working on this a lot.
If you think about the micro-businesses I used to run – like DotNetInvoice or beach towels or apprentice line jobs – those had paying customers but they were highly profitable in the sense that the money that came in, I spent almost no time maintaining things. It was really all work done up front, and the money that came in was mostly profit. Maybe it was only a couple grand a month like you said but I wasn’t spending thirty hours a month on it. So, if you cobble a few of those together, you can actually kind of nice little lifestyle making $10,000 a month with a handful of these small apps not investing the time.
But that’s not really what we’re talking about here. We are talking about you having the intent of growing a SaaS app and working on it most of your free time and getting it to ten, twenty or thirty thousand because we’re guessing that, probably if you’re listening to this, that’s the goal that you have.
Mike [25:31]: The last one we’re going to talk about in this particular category is the high cost of acquisition but also a corresponding high lifetime value. Let’s say that your cost of acquisition is $1,500 and your lifetime value is $2,000 but you’re getting $100 a month from each person. Well, it’s going to take you fifteen months to get back the money that you’ve paid to acquire that customer which means that you have to spend a lot of money up front to get a return that is going to put you $500 in the black but it’s not going to start until another fifteen months after you acquire them. And that’s a very difficult position to be in. That’s why some companies go out and they raise funding to be able to start putting money into that funnel to help them figure out how to move that up, how to lower their costs of acquisition. And they’ve proven that it’s a profitable business model. They really just need to make the numbers work.
And if you’re in a position like this, it’s very difficult to do that because it’s going to stunt your growth. It’s going to make it a long slow slog in order to make that into a profitable product which defines this as a mediocre success.
Rob [26:32]: There are a lot of hurdles that you have to get through if you look at this list that we’ve just talked through. Just getting something launched is a pretty big deal. I know that we used to always talk about on the podcast how that’s not the finish line like most people think. That’s maybe the 40% marker and these days, the further things get and the more competitive they get, I think that may be even earlier. It’s so much easier to get to launch today than it was five years ago just given the tools that we have and all the resources and things like Heroku the platforms as a service. I used to have to spend a lot more time doing that stuff even the marketing tools as well. And then just getting zero versus one customer is a big hurdle. And then getting to the point where you’re marginally profitable. I think we’ve seen a lot of folks get there these days. It’s a hard place to be in because it feels like by that time you’ve worked so hard on the app and you’ve spent so much time building and launching and promoting and then you get to the point where it’s making $1,000 a month top line and it’s $500 a month in hosting costs and you’re still spending twenty hours a week developing on it. It can be tough. It can be a long slow ramp of death, if you will.
I think there are a bunch of other potential reasons that an app can fail but once you make it past this point where you have customers and marginal growth, if you can make it past that, those are the apps that we hear about. Those are the apps that we talk about. Those are the folks that do the attendee talks or the main stage talks at MicroConf. Or that you hear interviewed on podcasts. That’s kind of that final hurdle. I shouldn’t say final because, obviously, there’s so much more beyond that. But it is a point where you just feel like you’ve done something that so few people have done. It’s a big bridge to cross to get past that product market fit or get to that point where growth really does start coming easy. And it’s almost magical when that happens and you see that growth curve go up. And you think to yourself, “Oh my goodness. How did we get here?” Suddenly you go from scrambling from customer to customer to the point where 7K MRR growth per month. You look at that and you say, “Yeah, that was an okay month.” Or you can be disappointed with that. It sounds insane when you say that out loud but you do get to the point where that is the norm or less.
I just want to encourage you. If you’re listening to this, it does sound like a long road, but there is hope. There is a point where you get there and it just feels like everything’s hitting on all cylinders. You’re always going to have stress; you’re always going to have the next feature you need to get out or the competitor that’s ripping you off. But there does hit a point where you’re going to feel proud of yourself. You’re going to feel like you’re kicking ass and that’s where you want to get to. That’s the goal.
Mike [29:01]: That sounds like a pretty perfect place to stop for today’s episode.
Rob [29:04]: Thanks again to Matesh for writing in. And if you have a question and you’d be interested in hearing us discuss it on the show and maybe even turn it into an entire episode, call our voicemail number at 888-801-9690. You can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Outta Control’ by MoOt. It’s used under creative comments. 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 333 | The Ultimate Guide to Email Sequences
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike give their thoughts on the ultimate guide to email sequences. Based on an article they define an email sequence, discuss why you should create one, and list the different types of sequences and their purpose.
Items mentioned in this episode:
- The Ultimate Guide to Email Sequences Article
- Drip
-
What Got You Here Won’t Get You There: How Successful People Become Even More Successful
- Bluetick
- CartHook
Transcript
Rob [00:00]: In the episode of Startups for the Rest of Us you are about to experience, Mike and I give our thoughts, feelings, inspiration. What else Mike? Our perspiration on an article called ‘The Ultimate Guide to Email Sequences.’ This is Startups for the Rest of Us, Episode 333. Welcome to Startups for the Rest of Us, a 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 [00:35]: I’m Mike
Rob [00:36]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What do you think about that new intro?
Mike [00:40]: I don’t know. I don’t think I’ve ever heard you read the intro that fast before.
Rob [00:45]: Yeah, I know. I kind of zipped through it. What’s going on with you?
Mike [00:48]: Still working on doing demos and stuff for Blue Tick. It’s interesting. I’m talking to more and more people who want to add teams and so far the apps are only geared towards single users just because of all the other things that need to go into it in terms of privacy and data sharing between different people, even within the same account. Right now, we’re working on trying to figure out how to extend the system to support people who are working in more of a team environment and figuring out how to essential overlay permissions within a subscription over the top of what we’ve got and without breaking things, obviously because that’s kind of important. It’s been a challenge so far so it’s more about [?]. Things are going well.
Rob [01:25]: All right. But you do have customers that are coming on board that don’t need team stuff, right? That’s got to be your short-term play while you architect, build or whatever you’re going to do with the team stuff. It doesn’t seem like teams should stop you from launching, right? Or at least it doesn’t seem like it should stop you from getting to that 25 customer mark.
Mike [01:43]: No. I’m definitely not stopping it but it’s like we have to figure out how it’s going to work and think about all the different places where we need to make changes and that’s really what we’re doing is we’re planning it and trying to identify where the challenging spots are and if there’s any other things that are going to need a change under the covers because of it and then again the privacy issues just because we’ve got access to people’s mailboxes. A quick example, like let’s say that somebody throws a-when you throw a new email address into the system, up until that point, we don’t download any of the contents of the emails associated with it. As soon as you do, then we go back and we say, “Okay, well, these were all the emails that were sent and received to that email address. Now we’re going to download the contents of them so that they can be then displayed inside the app.” Let’s say that you and I are in the same account and you’ve emailed your wife, for example, and I throw your wife’s email address in as a contact, well, it’s going to trigger that. Should things be shared? Should they not? It’s just a very difficult problem to work through and think about the implications of everything. That’s where we’re focused on. You’re right. It doesn’t stop us from moving forward on all the other stuff and I’m certainly not. My work around [?] at this point is, “Hey, let’s sign you up for multiple subscriptions and then we’ll figure it out.”
Rob [02:57]: Yeah, that’s nice. Having a work around is huge. That’s what we’ve realized over the years. Someone always wants something that you don’t have yet. If you can figure out a way to get them set up in a way that is at least reasonable and they can continue to use it until you get that feature built. It’s pretty nice. That’s the way to get a lot of customers. That’s why I found with the best sales folks are the ones who don’t just listen to the customer say, “I want permissions,” and so it says, they come to tack and say, “All right,” the product team and they say, “All right, you need to build permissions.” But it’s like, “No, there’s probably a work around and like you’re saying, being able to have multiple accounts is one way to do that.
Mike [03:34]: I had somebody who wanted to do something and I said, “Hey, let’s get out a call. I just want to talk for a minute or two,” because he was already a customer. He’s like, “Hey, can I add somebody else in?” We just got in a call and talked it out. All he wanted to do was be able to send the emails from another account as well. I was like, “You can do that today. You don’t need a full blown account or anything.” We basically just bypassed the issue entirely, which was nice because I added another user and it didn’t take any real extra work on my part in terms of engineering or anything like that. It was just a quick call to say, “What is it you’re looking for?” As soon as I found it out, he’s just, “Okay, yeah, let’s just do this.” Made it easy.
Rob [04:09]: Cool. On my end, I only had one thing this week. I am about a quarter of the way through a book called ‘What Got You Here won’t Get You There: How Successful People Become Even More Successful.’ The reason I’m pretty intrigued by it, it’s written by Marshall Goldsmith and Mark Reiter and one of them is a masterful consultant for successful people and what he’s seen in his patterns over the years as he’s worked with these folks is that a lot of successful people still have a major flaw in their personality that is holding them back. He basically goes through the 10 or 12 that he’s seen. One of them is you give too much feedback or you always feel like you need to chime in [?] on your team or you’re too negative and you always poke up the holes or you’re too casual. There’s just a bunch of different things. What I like about it is A, its from his experience with hundreds and hundreds of clients, perhaps thousands of clients and he basically says when you tell this to a successful person, that they have this issue, they almost always say yeah. They either deny it or they say, “Yeah, but that’s why I am successful. I’m successful because I see the negative in everything.” He’s starting to build a case against taking these flaws and not trying to fix them. That’s what a lot of folks will try to do because they say, “No, that will make me not who I am. I won’t be as successful.” It’s a fascinating topic of conversation. As he read through a bunch of the behaviors, most of them I was like, “Yeah, I don’t do that, I don’t do that.” And then there’s a few it’s like, “Ha, I may need to ask some people like am I on the border on some of these?”
Mike [05:44]: It’s interesting. It reminds me a little bit in some ways of Gabriel Weinberg had a blog post about how the things you do in terms of your marketing, they will work to a certain extent and then you get to a certain point and beyond that, those things just don’t work for you anymore. I can see the same thing in terms of personal development, growth and being able to lead the business. Some people have that ability to create a company and build it as a startup and then build it to 105, 100 or 1000 employees. There’s other people, they can get to a certain point and then after that a lot of them end up getting forced out of the business or taking a back seat to somebody else just because they really don’t have the skill set, the personality or the capabilities to take business to the next level. I can definitely see myself falling into some of those categories along the way. I think being able to recognize your faults, your inexperience or inflexibility in certain situations is probably a benefit more than a hindrance. Being able to say, “Yeah, I understand that and I will try to avoid that situation,” is a little different than denying it.
Rob [06:47]: Here’s what I like about this book. Again, I’m only a quarter the way through it but already it’s just surfaced a bunch of anti-patterns in terms of behavior and personality. It isn’t necessarily for successful people. Even if you feel like, “I’m not very successful,” it’s still going to bring up a bunch of patterns that you should think through yourself. That’s basically what I’m doing. It doesn’t come off as super, self-help or personal development book but that’s exactly what it is and it’s doing a really good job of it because it’s making me think quite a bit as I’m listening how can I improve in these areas. Those are the kinds of books I enjoy, the ones that make me think about my own behaviors or my own motivations and get me to improve on those.
Mike [07:27]: Awesome. Anything else going on this week?
Rob [07:29]: No. I think we’re just talking about this article here. I ran across it at webprofits.agency and its own their blog. We’ll obviously link it up in the show notes. The article is called ‘The Ultimate Guide to Email Sequences.’ What’s funny is I read through the article and I was like, “This is pretty, you know, this is a nice guy.” I figured we can touch on some points here because it’s a nice overview of all the different types of all email sequences. If you’re not using some of them, you probably should be. These are all handy things to improve conversions, improve attention and that kind of thing. Once we got on the call beforehand, you were saying this is actually webprofits.agency is Sujan Patel’s company. [?] like a growth consultancy agency. Sujan Patel is a speaker at MicroConf starter edition. He’s been a long time colleague of mine. He’s interviewed me several times, a really good guy. It’s kind of funny how small this world is of startups and marketing.
Mike [08:23]: Yes, so let’s dive right in.
Rob [08:25]: All right. The article starts off talking about what is an email sequence. It says, “Let’s define it. An email sequence is a series of emails sent based on pre-set time intervals or trigger based automations or both.” You can either be time-based, where it’s like you’re going to get this email and the next one is three days later and then the next one is five days late or it’s going to be based on an action like not logging into your software for a week or clicking a link in an email or clicking links in the last three emails, etc. The next question is so why create a sequence? The beauty of it is, this is from the article, email sequences are automated, right? When you use both timed and trigger-based emails, messages go out when they are most likely to have an impact. Speaking from my experience, the reason I like email sequences and email mini-courses and I’ve been using these in most of my businesses for going on-it’s more than a decade now, is because they are set it and forget it. Aside from updating content when it gets stale, putting one of these email sequences lifts whatever conversion rate you’re going for. If it lifts it, it just lifts it forever. For every new person that signs up, it’s an evergreen sequence, as opposed to-the alternative is broadcast emails, which are sent out to your whole list all at once. They go out once and then you have to create new content the following week.
Mike [09:44]: One of the pieces of that, that I like the most is the fact that it calls out the fact that you can send out these emails when they’re most likely to have that impact. Lately when I’ve been doing on my Blue Tick demos, one of the things that I like to call out is that there’s a specific email in the sequence that goes out at 7.12 a.m. which I am almost never up at that point. I am up but I’m not sitting down at my desk working. That email goes out at 7.12 and so far that’s the one that converts the most. There’s lots of people that get that particular email and then they come through and they sign up for a demo. It’s just interesting you can use those as different touch points when it’s going to be the most impactful. There’s other situations as well. It’s not just like the broadcast emails. It’s, let’s say, somebody goes to fill out a form and you know that they went there but then they didn’t fill it out or they abandoned their shopping cart. There’s a bunch of products out there that will identify who those people are and then allow you to communicate with them “Hey, you didn’t finish this. Did you forget? Did you get distracted?” There’s lots of reasons why somebody didn’t follow through with something and most of the time it just because they got distracted. It’s not because they went to the page and then decided, “Oh, I actively do not want to do this,” or they see something that makes them turn away from it. It’s more that something else came up that they needed to deal with and it took priority. Being able to nudge them in that direction and essentially bring them back to the table is super helpful.
Rob [11:04]: So now we’re going to take a quick look at the eight different types of sequences that they call out in this post. We’ll go through them fairly quickly due to time constraints but obviously you can refer to the link we’ll have in the show notes if you want to dig in any one of these. They have examples with screenshots and that kind of stuff. What I like about this list is it made me think are we doing all of these with Drip? Are all of them relevant? If not, how do I get that into somebody’s cue to implement this? To dive into the first one is to nurture sequences. This, again coming from the article, it says what it is, “An email message or series of messages designed to help introduce subscriber to your company. These messages may be used to deliver any promised opt-in bonuses, like a coupon code or a lead magnet and they should set subscriber expectations on the frequency and content of the messages they will receive in the future”. I like to think of these as lead nurturing. It’s trying to get someone a little more familiar, to go from straight cold to perhaps a warm or an interested prospect.
Mike [12:01]: The other thing this does is it keeps you top of mind. There’s plenty of newsletters that I’m sure you’ve signed up for as well as I have that you sign up for them and you hear from them once or twice and then you don’t hear from them for like a year or two years. Even if it’s just six months, your expectation was that you were going to be getting content on a more regular basis. When you don’t, the person is essentially restarting a relationship every single time they send an email. Yes, they are going to get some conversions but at the same time, they are not really maintaining those contacts as warm contacts. If you get an email every single week from a particular company, when you run across that particular problem in your business, you’re more likely to turn to them for assistance than somebody who drops in once every three to six months and that’s it.
Rob [12:44]: The second type of sequence is an engagement sequence. Reading from the article, “An engagement sequence aims to deepen the relationship with your subscriber. Once the subscribers have absorbed your nurture messages, engagement sequences can help nudge them to take smaller scale actions that will prime them for future conversion opportunities.” One example is an app called Pocket that attempts to engage its most active users with messages sent annually to the top 1% and 5% readers. Pocket is an app that allows you to read offline annually. I would almost want to do that more often like every month or every quarter or something. Maybe monthly is too much but every quarter. It’s like you’re in top 1% of readers. This is like engagement. It’s a little more personalized than nurturing and it’s people who may already be using your app or you have some type of knowledge of the actions they’re taking. Another example of this is Netflix which offers personalized recommendations with easy calls to action. I get an email every week or two and it’s like, “We just added a show to the Netflix catalogue that you’ll probably like.” There’s always a play button ‘add to my list’. I add a lot of those. They tend to be stuff along the lines of what I’m watching or what the kids are watching and that’s a way that it keeps our cue full thus engaging us further into using their service.
Mike [14:06]: I think the example Pocket, it seems to me a little misleading because that’s probably not-I don’t think that’s the best example that could be used here. That’s solely because it’s only targeting the top 1% or 5% of your subscribers. It feels to me like there’s probably engagement that you could do for all 100% of the people who are on your list. You could make it look more personalized and say, “Hey, we’ve got this for you just as a special gift for our reader. Here’s something you might be interested in,” and you can base that-you can split up your list in three or four different categories and based on things you’ve either tagged them with in the past or they’ve explicitly expressed interest in, you could use those things to engage them but the reality is you’re trying to get them to click on something to make sure they’re still active as a user. I think that’s just really a matter of making sure that you’re delivering stuff to them that they want and that they’re going to be interested in because if they’re not interested in anything you have to offer, you’d really want them off your list.
Rob [15:02]: The next type of sequence is a conversion sequence. Reading from the article, “Conversion sequences are your big guns. You’ve nurtured your subscribers and advanced your relationship with smaller scale engagement suggestions, now you’re ready to ask them to take action usually to purchase something. They give an example here, we did this earlier on with Drip. Earlier on it was a failed experiment. I think our actual sequence wasn’t great but we called it our ready to buy sequence or RTB. We looked at our most engaged users and prospects and we started talking to them about more direct comparisons like us versus MailChimp and here’s what we can actually do with Drip. It was less like high level, topic funnel educational stuff. We started digging into calls to action like, “You should sign up for a Drip trial and here’s why.” Conversion sequence is definitely something you’re going to want in the mix because if you don’t ask for the sale, you’re just so much less likely to get it.
Mike [15:52]: I think a conversion sequence is one of those places where you want to have a little bit more than the fine grain approach in terms of who it is that you’re targeting with this so that you can take those measurements effectively because if, let’s say you target your entire list and 20% of them aren’t well qualifies, it skews your statistics and most of us are driven by those statistics but if you look at that and say, “Oh, well, only 1% of my list converted,” it’s a little different if you look at that and say, “Let me cut off this bottom 80% because most of those people, I know that they’re not going to convert because they’re just not in the right spot, they’re not far enough along. These are the people we should be focused on,” and then pitching it to that 20% and saying, “Okay, what’s our conversion rate here? Do we have this correct,” and trying to figure out is the definition of your target prospects correct in your systems or is it not. That’s where you start looking at those conversion rates. It’s not so that you can’t look at both across the entire spectrum versus who you think are well qualified but I think going after directly those well qualified people is a better approach just because you can get more fine grain and you can identify who those people are and use that to extrapolate where you should channel your future marketing efforts.
Rob [16:58]: The fourth type of sequence is an on-boarding sequence, my favorite, I love these. The first time I launched one with [?]. Forget what it did, I think it tripled, maybe like 5x the trial conversion. It was some insane number but reading from the article, “You’ve got the customer, now don’t leave them hanging. On-boarding messages ensure your new customers understand how to use the product they’ve just purchased so they can get full use and enjoyment out of it right away.” They have a little info-graphic about seven different emails you can send. It’s like the, “Hello, welcome to our app. We can solve your problem. Hey, have you tried. Here’s a copy of an e-book and we do all these stuff.” If you haven’t gone through Drips on-boarding emails in a while, I would recommend signing up and checking it out because we’ve really honed and added a ton of stuff too. I’m pretty sure-I think we even have a video course in it that’s really a well produced video course. There’s just a lot to it. Tons to be set on on-boarding emails but just know of all these sequences, I actually think on-boarding emails may be the first one I dig into when I think about a new app. It’s like how are you going to get people to actually use your software now that they’ve signed up.
Mike [18:02]: What are your thoughts on in terms of the on-boarding process itself, the emails that you’re sending, customizing those specifically based on where the person is at and what sorts of things they’re doing in the app. When you look at an on-boarding sequence like this and you say, “Oh, here’s a general layout of what that looks like,” and then you still go to sign up for an app and they send you through an on-boarding sequence and I just did this recently with a CRM that I signed up for. I was getting emails saying, “Hey, by now you should have done this,” and it was like four or five emails into the trial for it and I’m like, “Yeah, I still haven’t done stuff too so why are you sending me stuff for like step four and five? It does not make sense here.” I did notice it. It stuck out in my mind that they’re sending me on-boarding emails and that’s great but I’m not even there. You really need to be pushing me towards getting step two done.
Rob [18:50]: It sounds like they just had theirs in some basic auto responder. It didn’t have any status of what you were up to. That’s one of the early things we build into Drip is since we have liquid templeting, there are on-boarding emails basically say, “If you have completed this step,” and I think we do it by tag, “If your tags include X, then display this messages otherwise display this other one.” We never get ahead of the steps. If you’ve done a step, you won’t get an email asking you to do that step again. There’re different ways to handle that, like I said, we use tags and liquid but with workflows, now you could do it probably even more clearly than that because you could just have the [?] stands right in the workflows. If you don’t have some type of intelligence, you need to be really vague. If you’re going to use a MailChimp auto responder for this, then you have to waffle around the issue. You can’t say you have or have not done this. You just need to be more broad with it or think about moving to a platform that has some type of automation so that you can be hat specific because you’re definitely going to engage people more and get better results if you are really specific with what they have and have not done yet. The fifth type of sequence is an abandoned cart recovery sequence and reading from the article, “A would-be buyer has left something in your shopping cart but left without purchasing. An abandoned cart recovery sequence may help bring them back.” They have an example from Shopify and of course I think of [?] when I read this because that’s what they started as, was abandoned cart recovery. There’re several apps out there that do it or you could do it. There’s people that use Drip or use MailChimp or whatever to do it. I guess you need some automation in order to do this well. I got abandoned cart sequence within the last week from a website that sells watches. I put something in there and I was thinking about it and I got distracted and it sent me a 10% coupon in like a day or two later and a couple of days later sent me a 15% off and I was like, “You know, I’m going to see if they send me 20%.” They never did but then I went back and used the 15% and it actually brought me back. I was on the fence about buying the watch but at 15% cheaper, it totally made sense. These things, not just anecdotally, these things really do a pretty good job. These are going to be emails that over time are going to make you a lot of money.
Mike [20:52]: Another thing you can do with these types of things, even though it’s not like an abandoned cart recover sequence, you can also use it for things like when somebody goes to click on a link inside of an email and you know that they’ve done that, maybe you have automation in place where if they click on the link then it tags them. I set this up in Drip for when people are going to the Blue Tick website and it’s asking for an invite. When they put in their email address, it flips them over to another page and if they do not fill out that form within 10 minutes, it starts them into a Drip sequence that sends them emails to get them back and fill out that form. You don’t have to limit this just to abandoned carts. You can do it for other key pieces of your sales process to get people to take that next step because obviously if they don’t take that next step, then they’re not going to advance in your sales process. You can use these types of automations to get them to that, whether it’s actually going through and putting their credit card information or even just filling out a survey request or form or giving you more information that you need to help advance them.
Rob [21:50]: This isn’t just for carts. Imagine you have a two step signing process for your SaaS App where the first step is your email and your password and the second step is credit card. This is what we do with Drip. If you make it through the first step, you essentially are abandoning a cart. If you leave and we have a sequence tied to that and made us have had good results, not just for selling physical goods. Our sixth type of sequence is a renewal sequence and reading from the article, “Email list subscribers become disengaged for any number of reasons no matter how many nurturing and engagement sequences you have in place. Maybe their inboxes are flooded or maybe they’re no longer interested in what you’re selling. In any case, a renewal sequence, also known as a re-engagement sequence, is your last effort to bring them back into the fold.” You could see this working if you’re selling physical goods but even with a SaaS App, if someone hasn’t logged in, in 10, 20 or 30 days depending on how often they should be logging in based on your knowledge of successful customers, this is a good way to do it. It doesn’t just have to be a ‘hey come back’, it can be when you start. Think about making it more valuable to them like a weekly summary of stats or a weekly summary of all the benefits that they’ve gotten out of your app that people could unsubscribe from of course. But if they get that kind of a default when they sign up, not only are you reinforcing in their mind all the value they’re getting out of it but this can keep them engaged if they would be normally apt to wonder off.
Mike [23:13]: This reminds me of analytics applications where you’re connected to some of your accounts and they give you daily or weekly stats on how some of your different tools are doing or how some of your different lead automations are going. For example I think KickoffLabs does this. When a new lead comes in, you can have them send you an email that gives you a summary of all the leads that came in the previous day. It helps them to say, “Hey, look, we’re still providing value to you, even though you haven’t logged in, like here’s the value that you’ve gotten out of this product.” That’s a good way to help remind people that not only do they have that tool around but it’s doing things for them and working for them and it’s a good reason for them to not cancel. You can also use them, as you said, to help bring people back if you notice that they haven’t logged in for a while or they haven’t taken certain activities and if those activities are directly tied to the value that they would get out of the product and they’re not doing them, then you can use those to re-engage those people, bring them back in to help get them moving. It’s a secondary step, if they don’t do those, then you can send them other things to help bring them back and recover them as a customer because they’re probably on their way out at that point especially if they’re not doing those key things they need to be doing to get value.
Rob [24:22]: Seventh type of sequence is an event sequence. Reading from the article it says, “Like a conversion sequence, an event sequence aims to encourage subscriber action. In this case, however, that action is attendance at an event for example a live in-person meet up or an online webinar. Events sequences rely on both timed messages and trigger-based emails for example people who register to attend the event but didn’t show up.”
Mike [24:48]: Some of the things that come to mind for this is if you have somebody who signs up for a meeting with you or you’ve register for a meeting with them, sending those follow-up emails, whether it’s 10 minutes before and then like a several hours before, this is a friendly reminder to them that, “Hey, we’ve got this call scheduled.” It helps cut down on the cancellations and no-shows but you can also use this in events or situations where you’ve got a sale going on where it’s going to end at Thursday at midnight, for example. You can time those emails to be sent out two days or one day in advance and then a couple of hours before things. We do this for MicroConf. We’ve done this for years that lead up to the deadline for those things where once that deadline passes, the price will go up, for example. That’s very effective. You can get people who are on the fence or just dropped off the radar, they’ll say, “Oh, I’ll get to it later,” and they forget all about it and it’s 3 O’clock in the afternoon and they get a reminder email about it, “Oh shoot, I’ve got to go do that because otherwise this will go away.” There’s that time sensitivity to it that can help drive the traffic in the sales.
Rob [25:50]: Our eighth and final type of sequence is called a follow-up sequence. Reading from the article, “Follow-up sequences are similar to the on-boarding sequence described above but where on-boarding messages are intended for new product users, follow-up sequences should be used whenever customers complete an action such as finishing an online course or purchasing a product. The goal of this sequence can include things that re-enforcing information learned, to keep of top mind awareness, driving referral or affiliate sales, reiterating sales messages, sharing details on the next event, etc.”
Mike [26:20]: These are kind of those transactional emails that you get for accomplishing certain tasks within different pieces of software. One thing I wondered about is the logistics of managing some of these because some of the things that people might do are so desperate. Maybe you have some insight on this. If you have, let’s say five different things that you want somebody to do in their app, if you have these things in place, do you send those five after every single one or should you wait a little while to potentially put yourself in a position where you can aggregate them and say, “Hey, you did this, this and this,” and you put it all in one email as opposed to five separate ones.
Rob [26:53]: I think it depends on how close together those things might happen because sending someone five emails in a day or two days is going to be irritating. I would definitely aggregate there. If these things are going to happen once a week or in most cases they’re going to be a week apart, then having more touch points is probably good. Those are the eight types of email sequences. The funny part is the latter half of this article is about what to look for in an email provider and I had already chosen this article and linked to it where we were going to go through it and then I read this section and I was thinking, “Oh-Oh, what if they like, totally talk about a competitor, they don’t mention Drip or something,” but as it turns out, they have MailChimp, Drip and Vero and the author actually speaks really highly of Drip and says it’s the one that they use. When I see screenshots later on, it actually shows all the Drip screens of doing automation, tags, short codes and that kind of stuff. It’s an article that’s supporting Drip but that has nothing to do with what we’re talking about in the podcast. I just found the content in this article super helpful. I wanted to share it with you, our listener.
Mike [27:57]: To recap the different types of sequences are: nurture sequences, engagement sequences, conversion sequences, on-boarding sequences-I’m saying sequences way too much here-abandoned carts, renewals, events and follow-up sequences. If you have a question for us, you can call it into our voicemail at 1-888-801-9690 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.
Episode 332 | A Prioritization Framework to Deal With Task Overload
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about a prioritization framework to deal with task overload. Based on a blog post by Anthony Eden, they discuss business problems and the purpose of creating a framework.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of ‘Startups for the Rest of Us’ Rob and I are going to be talking about a prioritization framework to deal with task overload. This is ‘Startups for the Rest of Us’ episode 332.
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve build your first product or you’re just thinking about it. I’m Mike.
Rob [00:25]: And I’m Rob.
Mike [00:26]: And we’re here to share experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [00:30]: You know you reminded me that I haven’t mentioned the conference that Drip is putting on. You know, it’s via Leadpages but it’s called Automated. And it’s the first marketing automation conference that we know about. So, we have Automatedconference.com and it’s virtual marketing automation conference April 12th through 13th. So, it’s during, I think is that MicroConf starter addition?
Mike [00:52]: Yes. It’s during MicroConf Starter Addition.
Rob [00:53]: Right. So, obviously, I will be prerecording my thing since it’s virtual. It’s nice to be able to do that. But if you’re interested at all it’s free and there’s a recording available after but I think that actually costs money. If you watch it live it’s free. And a really good speaker line up – Ezra Firestone, Laura Rotter, obviously, Clay Collins and Brennan Dunn, Anna from my team. There’s a lot of folks that are going to be dropping some mad knowledge on email marketing, marketing automation and that kind of stuff. So, check it out if you haven’t. It’s automatedconference.com.
Mike [01:23]: I almost feel bad because I think I feel like I have to correct you here. But the website says that the recordings are free if you register by the 13th.
Rob [01:30]: Oh, sorry. Thank you. I misread it. Yeah, it’s funny you know. It’s a trip – I mean I’m not putting it on myself, right. We have a conference organizer so I haven’t even been heavily involved in the planning of it. But that’s good. That’s a good way to do it. Is to give it away.
I know. Thank you for correcting that Mike. I appreciate it.
Mike [01:46]: It almost feels awkward.
Rob [01:49]: I know. Don’t worry about it. I’m glad you did so that everyone listening doesn’t feel like they have pay for the recordings.
So, how about you? What’s going on?
Mike [01:56]: Well, I did want to say congratulations over to the guys over at Snappa. They wrote in to us and said, “Hey, Mike and Rob. Huge fans and longtime listener. A lot of the strategies discussed in your show helped us grow our startup to $25,000 in monthly recurring revenue in 16 months without raising any funding. Just wanted to say thanks and looking forward to MicroConf next month in Vegas.”
Rob [02:14]: It’s pretty cool. Snappa.io and their value prop is to create marketing graphics in a snap to whip up graphics for social media ads, blogs and more without photoshop or graphic design skills. So, it’s kind of like an in-browser editor but completely designed to manipulate images and make them kind of marketing and ad worthy.
Mike [02:35]: Yeah. I mean the interesting thing about that – and saw this several months ago – was that they’ve kind of aimed it at the people who are doing advertising on Twitter and Facebook. Because all those things have image requirements that are slightly different from one another and they make it easy to kind of do all the things that you need to do to make the images social media ready or ad ready. And it’s really nice to just have a tool like that that you can just log in and – boom – you just make all those little tweaks and edits and now you’ve got your images. As opposed to having to send them out to a designer and say, “Hey, I need 10 different variations of this.” And figure out what the variations are that you need. It’s like they kind of have it built in.
Rob [03:10]: Seriously. I totally could have used this when I was running Facebook ads. I used to spend so much time in Pixelmator which is what I use on Mac to edit. And it was just redundant work over and over and over. And then I eventually outsourced it but it was always hard to keep a designer.
All the designers I find who are good, they’ll end up taking jobs. They don’t stay freelance. They either get really expensive or they take jobs. So, I was always either trying to find someone for this tiny project or doing it myself. And I really could have used a tool like this. So, congrats to Christopher Gimmer and the folks over at Snappa.io.
So, in terms of Drip updates, we’ve hit our stride. We hired, frankly he’s a UX/designer and he also slices stuff in HTML and he started like – it was several months ago now. Probably four or five months ago – but he’s really hitting stride with just cranking out front end stuff and we’ve always had like a really deep pool of rails developers on our team. And so, kind of our limiting bottleneck has often been for new features has been like front end work. And now that both Derek and – I say he’s the new guy, but he’s been with us like four or five months now – but now that he’s really hitting his stride it just feels like we’re shipping something. I think we’ve shipped like two or three fairly substantial features just last week. And, while we can’t maintain that pace all the time, I do think that we’re really hitting that stride of getting something meaningful out. And by meaningful I don’t just mean like a check box or a little tweak to this, a little tweak to that. But like an entire sequence of screens that does an entirely new flow. Like we added merge subscribers where you can merge Drip subscribers into one. We added global UTM settings so it’s several tabs of doing something that then defaults to all your links any time you put them in an email. Self-serve SPF decam which is the way you can verify your own sending domain and that’s like six or seven screens deep. And deals with the sendgrid api. So, there’s a ton of stuff that we’ve been tripping.
So, that feels good. I mean I realize Derek long ago looked me in the eye and said, “We are product people. Like the dopamine rush is from shipping features.” If you don’t ship features for a while, I start to forget that. And then having feature go out after feature, it reminds me of that’s really why I’m in this. You know? Is to get cool stuff out the door that customers are clamoring for. And then to hand that off to the marketing department and have them market and talk to support about it and have them say, “Oh this is so cool. It’s going to help our customers.” It’s a really good feeling. So, I’m kind of feeling – especially the last few weeks – just feeling up and optimistic about things.
Mike [05:31]: That’s cool. I stumbled across the merge and the UTM thing on my own when I was in there. Because I was automating my inbound lead fall for Bluetick and found those settings. I was like, “Oh, awesome.” And then I just sort of used them already. I haven’t seen the other one in terms of the DKIM stuff but I did use the other ones when I stumbled across them.
Speaking of that. I started automating my inbound lead funnel for Bluetick so I changed my homepage to have this ‘Request an Invite’ right on the homepage. That’s kind of the main call-to-action. And once you submit that, it sends the email address over into Drip and then there’s a workflow there that will wait for about 10 minutes or so because the next page after they do that is it takes them to a survey. And if they don’t fill out the survey, then Drip will start sending them a couple of reminders to say, “Hey, you haven’t filled this out. It would really help us out.” And, really, that’s essentially a prequalification mechanism for me. So, I look at that and, when the submit it, the form will remove them from that campaign in Drip and kind of put them into this sort of a holding area where when the form gets submitted it goes to a Google spreadsheet and I look at it and I can just mark it as either qualified or unqualified. And if it’s qualified then it sends it over into Bluetick and Bluetick invites them to a demo and then it creates a task and I can modify the text of the email that it gets sent to them based on what it is that they said to me inside of that survey.
I’ve started using this a couple of weeks ago and, so far, it’s working really, well because I can show people who’ve gone through that and they get to a demo exactly how they got there. And it’s just dog fooding it like a second level where I get to not only dog food it and use the product in a way that my customers would but I show them how I use it and I can show them their contact information and all the different touch points that they hit and why certain things happened.
There was one guy who replied to an email and he signed up for a demo. It was like from an email that was sent at like 7:00 in the morning. And I surely did not send that email. But he saw it and said, “Oh, yeah. I signed up for this and I filled out the survey and I didn’t respond to that first email. I should do this because you, basically, reminded me.” But it wasn’t me that sent it. It was Bluetick.
Rob [07:37]: That’s super cool, man. I mean, the dog fooding stuff we talked about a few weeks ago. But it’s a big deal. A: to get this automated to save you time. But B: to be using your own product and to be able to demo it during that process. So, you kind of have the luxury of having a product that is demo able during the sales process to the people who’ll be using it. Congratulations. It sounds cool.
Mike [07:58]: Yeah. It’s nice to be able to do that. And it’s just interesting to see the different reactions. Somebody had asked me about whether people frown upon seeing how the automation behind it is working and the fact that I’m not actually sending the emails. So far I haven’t gotten any push back. In fact, a lot of the people I’ve talked to have said, “I like that you do this because it shows me what my customers are going to see and, even though I have in the back of my mind, I know that it is probably automated. It doesn’t matter because it solves my problem.”
Rob [08:27]: Oh, I totally agree. If you were showing me that and I was your prospect, I would think that’s genius. Like the moment it pulled the curtain back and showed the ‘Wizard of Oz’ scene back there, I’d be like, “Dang, that’s it. I’m sold.” I think it’s a cool way to demo it.
So, before we dive into our main topic for the day. I wanted to revisit our goals. Kind of do a quick status update on the goals that we set back in December of 2016 because we’re almost through the first quarter of 2017. We haven’t in the past revisited them until a complete year later. And so, this time I figured we’d just take like a couple of minutes and quickly go through the goals and see how we’re making progress on those.
So, your first goal for 2017 was to log at least 100 days of exercise this coming year. And if you’re on track to do that then you would be approaching 25 days of exercise.
Mike [09:23]: Approaching 25. Yeah.
Rob [09:24]: Right.
Mike [09:24]: I’m probably at 15. Something like that. So, I’m definitely behind. It’s just not something I’ve been able to get to every single week. But there’s definitely those times where it’s not too hard to get to at least two or three a week. But then there’s other times where stuff comes up and I have to deal with it and I just kind of fall off the rails for like a week or so at a time. But I’m a little behind. It’s not outside of the realm of possibility for me to get it back up there though. So, I’m hoping to kind of play catch up a little bit.
How about you? I think you had a similar goal of two days of exercise a week. How are you doing?
Rob [09:55]: Yep. I would say I am exactly on pace. There were weeks like when we went to Cancun in late January for seven days. And I exercised every day. So, I had seven straight days because you just have a lot more time and it was gorgeous there so it was easy to get out and run. And then I’ve had a few weeks where I don’t do anything – which is a bummer. I wanted to be more consistent like two days a week. But recently, when we moved here we have an elliptical. I ran track for nine years. I ran the hurdles and my right knee is a little messed up. So, when I run on asphalt it’s actually kind of hard. I can do it but I kind of pay the price for it. So, we have an elliptical which is like a glider so you don’t have the impact. And that was busted for a while. And then I finally figured out how to fix it within the last month. And since then I’ve been at least two days a week. Between two and three. I am currently feeling quite good about that. And, frankly, I kind of need it to work off the old winter weight. And just walking around and riding my bike to work and all that. I can tell it’s starting to take a toll on me. So, I want to definitely keep up the two days a week. And, hopefully, it should be warm here in the next month or so to be able to start riding to work again.
How about you on your next one?
Mike [11:07]: So, my second one was blogging publicly at least every two weeks. And that’s a complete fail at this point. I’ve blogged once and I should be at least four I think. Is that about right?
Rob [11:17]: No. Six.
Mike [11:17]: No. Six. I should be at six by the end of this month.
Rob [11:21]: So, to me this feels like a distraction. To me your number one goal should be Bluetick getting 25 customers, getting to launch, all that stuff.
Mike [11:30]: It is.
Rob [11:30]: I know that this is a nice to have but even when you said it in December, if you go listen to the episode, I was kind of like, “Why do you want to do this?” I get why but do you really want to do this? Is this something that you think you’re actually going to do or is this kind of a punt and it’s basically replaced with your third goal that you’re about to go into?
Mike [11:50]: I think you’re right. I think it should just kind of be replaced and – If I’m going to do any sort of blogging, it would be more content articles and things like that for Bluetick. It wouldn’t really be on my personal blog. So, there’s really not much point to me doing that stuff. Maybe it could lead to book sales or something like that but that’s really not like a major priority for me at this point. Really it’s the third thing on the list which was making Bluetick profitable and that’s sucking up almost all of my time at this point.
Rob [12:15]: Cool. And we might as well just do your last one now. What’s your third goal that’s probably going to take precedent over this one?
Mike [12:20]: Well that is that. It’s making Bluetick profitable. And I think that’s going in the right direction. If people are signing on and demos are going well, I’ve got to start putting together my launch sequences and going out to my email list. But one of the things that I’ve been much more focused on lately is getting the product to the point where people can kind of self-onboard and without having me to sit there and say this is what you need to do or walk them through it.
I had a meeting yesterday with somebody who I kind of brought on on a temporary basis as a UI and UX consultant. I walked him through an onboarding process and he looked at it and he said, “There’s very obvious ways for you to improve this.” So, he’s going to sit down and work out what the priorities of those things are because it’s kind of difficult for me to understand what those priorities are because I’ve been so close to it for too long so I really want that external opinion to say, “This is what doesn’t make sense. This is what is easy to understand without any additional explanation. And here’s how we can go about approaching and tackling those problems. And this is the order that they should be done in.”
Rob [13:19]: Very cool. So, my second goal was to have one to three new angel investments. I have done zero so far. But there is one company that is doing kind of follow on round and I think I’m going to put more money into them. Given the pace that I’m likely going to do these and that it is such a sidebar for me, I would kind of include that under the umbrella. If I do follow on rounds, I know there’s less due diligence and less work to be done. But I think putting more money to work in startups is my intent here. I would say I’m on track to do one here in the next month or so and then we’ll see what the rest of the year brings.
And then my third goal was to not start any new projects. Just to run the three MicroConfs we’re running; the two podcasts; continue driving Drip forward; and take a break from kind of the chaos of always starting new stuff. One exception to that was if Sherry decides to write a Zenfounder book that I would be second author on that. And so far, this year due to health issues in her extended family, she has not begun that. But I have hopes that in the latter half of the year that might get going. So, so far, on track for that as well. I mean, it’s kind of a nongoal. We discussed in December it’s to not take on any new ambitious stuff and just kind of let things settle.
So, I think that’s about it. Do you want to dive into what we’re chatting about today?
Mike [14:33]: Sure. So, today’s episode what we’re going to be doing is we’re going to go through, essentially, a prioritization framework to help deal with task overload. I’ve started using this framework. This is based on Anthony Eden’s blog post called ‘Aligning Projects with Business Goals.” We’ll link that up in the show notes.
Anthony is from DNSimple. He had sketched this out inside of our private founder café community a couple of months ago. But he’s refined it since then and he put out a blog post on it. In this blog post he talks about the fact that he’s running this large team and it’s got a bunch of different people and they were able to kind of keep track of all the different things that needed to happen and what they’re priorities were. But as the team grew and as different people’s responsibilities changed it became more difficult to prioritize things across the entire business. So, he essentially developed this framework to figure out, “What should we be working on? What’s the most important? What’s really going to drive the bottom line for the business and help it stay in business and make them grown?”
Some of the basic problems that you’re trying to really solve with a framework like this is the fact that there’s always more to do. If you look in any given bug tracker, for example, or any task management system. It feels to me like anything I’ve ever used, the number of tasks that are in there go up over time rather than down. You think about these burndown charts and those are great if you have a sprint where the number of task is defined for a particular time frame. And it’s going to go down. But in the background, there’s always new things that are being added. So, those things are just being added faster than you can clear them out. And it almost doesn’t matter the size of your team because as you add people there’s more that you want to accomplish and there’s bigger things. But some of those things are not worth doing. And this helps you prioritize those things and really help clearly see what is and isn’t worth doing.
Rob [16:12]: Yeah. I agree with you on the to do list. That’s there’s always more work to do. That’s where I think sprints can be helpful because they do give you a sense of actually accomplishing something. You kind of limit the scope; you go for two weeks or a week – however long your sprints are – and then when you’re done, you do cross this big thing off the list. And then you’re able to reprioritize and attack new ones.
I think the other thing that I do with both my to do lists and with our issue tracker in terms of Drip is we are pretty guarded. I guess me personally I am very guarded about what actually goes on that to do list. I don’t just throw everything I think of on there. If I’m just brainstorming and thinking of notes of like, “Yeah, maybe I should do that.” I put it in a notebook. Or I put it in a separate Trello board. Typically, it’s in a notebook, to be honest. Because unless, I revisit it – unless it comes up again – unless I stumble upon it when I kind of flip through my notebook every now and again. And if I see it again and I’m like, “That’s genius. I have to do it.” Then that goes on the to do list.
But I see peoples to do lists sometimes and I’ll ask them, “Why is that on there?” And it’s like, “Well, it was an idea I had.” And it’s like, “Well, then it’s not a ‘to do.’ It’s just an idea. Figure out a different place to put it.” And the same thing with feature requests. You don’t want customer feature requests. You’re getting five of them a day. You do not go into your issue tracker. That’s not the place for them unless they’re completely cordoned off. Because otherwise it just fills it up with all this noise and you’re just going to have hundreds and hundreds and then thousands of feature requests or ideas or whatever. And you really want to have them in their own repo. What should be in your issue tracker is stuff that is actually at least in the realm of possibility that it’s going to be built.
Mike [17:44]: It’s interesting you say that because I put customer requests in there and then I put the customer’s name as a tag on it and then, once it gets to what I look at as kind of a critical mass – like if I see enough people are asking for that particular thing – then I reprioritize it to say to, “Hey, this is something that we’re actually going to look at.” But there’s a lot of things in there that one person asked for. There was a question that came up it and it just kind of gets into this – I think we categorized it with a special category that just basically says that it’s a customer request that we’re probably not going to do anytime in the near future unless we get a lot more people asking for it.
Rob [18:15]: Yeah. That makes sense. Here’s where that may start to break down. As an example, Drip gets more than 100 feature requests a month from external people. And we get about 25 requests per month from internal. So, we literally get – no joke – 125, at least, feature requests per month. And how many of those can you build. Five, maybe. So, after six months you’re going to have 720 things and you don’t want those in your main issue tracker. You want them off. They can still be in the same repository but they should be off on a separate view that you’d never have to look through if you’re actually trying to – I shouldn’t say never have to look through. You don’t have to look through every time you’re trying to pull stuff up in the development queue. You do want to review this queue, obviously, every month or every three months and kind of look through because certain ones are just going to come up over and over.
I found that trying to keep absolute exact count of these things is not helpful. The ones that bubble up to the top are the ones that you just know it. Like gut feeling you hear the requests over and over or you know that it’s a really good idea and it’s something that a lot of people will use.
Mike [19:15]: Yeah. At my scale, I don’t have that problem yet.
Rob [19:19]: Totally. Yeah.
Mike [19:20]: Kind of more to the point here is like there’s never enough resources to do everything. And even as you add resources, it almost doesn’t matter because the things that you want to do, you’re still just not going to have enough resources to do them. And there’s always these little things that get added which somebodies got to look at it and evaluate it and, even if you decide to do it, it just gets added onto the list. So, you need a way to prioritize these things. That can be really challenging to identify what is the most important thing when there are so many things to get done. And even if you have this shorter list, it almost doesn’t matter if you split it up into these are the critical things and these are the noncritical things.
I remember seeing a Dilbert cartoon about that. It’s like here’s how to get everything done. Create two lists, put all your critical stuff on one list, create all your noncritical stuff on the other list. Do them both and if you don’t, you’re a loser. It’s not possible to do everything. So, having this framework allows you to establish some objectivity and remove your personal, mental perceptions of the situation about what is important and what’s really not because it removes your own biases towards certain things. Let’s say you just talked to a customer and they say, “Well this is a problem.” Your natural inclination is to weight that more importantly because of the fact that you literally just talked to that customer versus using a framework that allows you to create it as – to take a step back from that and objectively evaluate it.
Rob [20:38]: Yeah. This is hard. Especially as, basically, a product owner or a product manager. Even if you don’t call yourself that, if you’re the founder for the first while – definitely through product market fit and probably after – you’re going to be a point person, a key player involved in deciding what gets done. And there’s always 10 times more or 20 times more that needs to get done or that could get done then you can actually get done. It’s like the 100 feature requests but you can build five. So, that’s always going to be there. So, then you have to figure out what is it that actually needs to get done. And there’s a bunch of different approaches to this and what we’re talking about today, of course, is the framework that Anthony Eden laid out in his posts.
Mike [21:19]: So, let’s start digging into this framework a little bit. The idea of this framework is that you classify the different things that you’re doing based on different criteria. What this does is it gives you a basis for measurement that can be applied uniformly across all of the different tasks. There’s some things that he recommends – it’s really just a spreadsheet and you have the title and description of the things that you’re working on. Then you put in different factors.
The first one is effort. Effort is essentially a broad measurement of how difficult or how time consuming it’s going to be to implement that. With this framework, you can use it either on a feature by feature basis or on a project by project basis. You can have, basically, subtasks in there and add them up and say this project this project is more important than that one. Maybe you’d do some averages in there. I think that might be a little bit more difficult just because there’s 50 tasks for one project and only 10 tasks for another. It might be difficult to add them up as raw numbers but you can see between those two projects if one comes up with a score of 25 and the other one the highest task comes out with a score of 10, the one that’s 25 is clearly more important to do.
Again, going back to that first one, effort is something you would put in as a column. And this rated one through three. It’s small, medium or large. The thing I really like about this is that it removes timings and time estimates associated with it. Small, medium and large – you can look at that and ballpark any particular task. You don’t have to be good it either. That’s the best part. Because we’re terrible at doing really good estimates. If you say something’s going to take you two hours, it might take three, it might take four. Is that considered small, medium or large? I would probably say small because it’s not a lot of effort. Medium, to me, would be like a couple of days. Maybe a day or two. And then larger would be at least a week if not two or three.
What about you? How would you kind of classify small, medium and large?
Rob [23:07]: I really like his approach here. I think in the old days as a consultant we had to give quotes that were basically down to the hour. We would have to say, “This is going to take six hours to build that feature.” And you just don’t need to do that when you’re building a product like this. So, I like the idea of effort; one, two and three; and whether you make your small, medium and large match exactly what Anthony’s saying in this post. Or whether, given your time frames, those are different durations of time. I think it’s really nice to keep it simple so that you’re not – you don’t want to put in so much time in analysis that this becomes cumbersome. You’re taking your best guess at it and having a one, two or a three, it’s a five second decision. With almost all features you’re going to be able to slam it in the bucket pretty easily.
Mike [23:50]: The next one Anthony lays out is urgency. And this is essentially a raw estimate of the time sensitivity for something. This is rated between zero and two. Zero is no deadline; one is a deadline within the next six months; and, then, two is a deadline within the next three months. What I found a little bit odd about this was that the deadline within the next three months, there’s nothing there that says, “This needs to be done right now.” I think that that’s both helpful and not helpful at that same time. Because if you’re trying to onboard a customer and they need it right this second, then it kind of puts a cap on how much the urgency impacts the total score. And we’ll get through the other three factors here but, once you go through these, there’s a calculation that you put on these based on the numbers that you assign and that comes out to a score for this particular task. It makes it easy to relate it to the other tasks.
Do you think it’s important to have a score in there for urgency with a deadline that’s less than three months?
Rob [24:43]: I do. So, here’s the thing. It depends on what time horizons you look out at. I think in your early days like where Bluetick is, I think you should probably have no deadline, two months and one month. Or no deadline, one month and two weeks. Because your timelines are so much more critical. Because you need to move way faster right now to try to get to product market fit as soon as possible. I think as a product matures and the team grows this could feasibly get longer. Even now with Drip, I’m thinking and looking ahead six months, nine months, but I’m not actually planning. I just have ideas of what we’re going to build. So, to me the zero, three and six month is a little too broad for us. I would probably, for us, have zero, one and two or zero, one and three months.
We typically plan fairly tight. We plan about 60 to 90 days out because I find that so much changes by the time you get there. New priorities come up, new feature ideas come up, competitors do things. And you have performance issues that suddenly you need to turn your head and try to scale. So, there’s a lot that can change in 90 days in the life of a startup so I would just compress this. But the gestalt of what he’s saying here is still the same.
Mike [25:54]: Yeah. And that’s something else to kind of point to as a side note. Even though some of these things are written down in such a way that there are those raw numbers of like six months and three months, feel free to change those things. Make whatever the framework you use fit into what it is that you’re actually doing because Anthony’s business is much further along than Bluetick, for example. Not everything that he has in here is going to directly apply to what I’m doing. That doesn’t mean that you can’t make some changes or modifications that will help if fit your situation better. So, if you look at it and it doesn’t quite fit what you’re doing, feel free to make those changes. Especially if it’s going to fit what you’re doing.
The third criteria in here is the impact. And what the impact is that it’s a value that indicates the potential impact on profitability. And this is rated anywhere from negative two to positive two. And negative two is a significant negative impact; zero is little to no impact; and, then, two is a significant impact. I really like this because there are some things that you are going to do which will probably have a negative impact on your profitability. They may make things worse for you. And then there’s other things where, if you do that – let’s say you make a pricing change and you increase prices – that could have a huge impact. And it’s just when you start adding those things, it allows this to adjust the priority up or down based on what those numbers come out to.
Rob [27:07]: Yeah. You know what I like about this? Often times when we’re talking about what features to build, I will ask whoever we’re talking to – typically it’s Derek or someone else on the team – and I’ll say, “Will this help us retain more customers,” – meaning keep them from cancelling – “Or will this get us new customers?” In essence, is it a marketable thing that new people will sign up for? And that’s what Anthony’s encapsulating with this impact score. And I like how simple it is and I like that it combines all of that into a single number.
Mike [27:36]: The fourth one is a risk factor. This is an indication of what is going to happen if this is not implemented. This is a very simple rating: zero to two which zero is little to no risk; one is some risk; and two is a significant risk. This risk factor could be a bunch of different things. For example, if there’s paperwork that you need to file with the government, then if you don’t do it then you could go out of business. Especially if it’s like a lawsuit that you have to respond to. And then there’s other things where it’s a feature that somebody had asked for. Is it really going to make a huge a difference to you if you don’t put hover text over a button, for example? Probably not. Does it help the application? Does it make the user experience better? Yes, but is it risky to not do it. And the answer, in that case, is obviously no.
Rob [28:21]: Yeah. I also think of stuff like scaling. There’s a risk factor of, “Do we need to upgrade the database server? Do we need to optimize the piece of code to make it five times faster?” And it’s like maybe all the other ones before are like the impact will be really kind of zero. Like it’s no impact to customers. The urgency, well, it could be the next three months but as soon as you introduce a risk factor of, “If we don’t do this, we risk slowing down. We risk performance issues. We risk upsetting people.” I think that’s a nice piece that this captures.
Mike [28:53]: Or you risk some sort of security setting. It’s like, “Hey. We need to make some sort of a structural change in the database and if we don’t do this, then there’s a risk that customer data could leak from one customer into another.” So, that’s another way that risk can kind of fall into it.
The last one that he has here is innovation. This is an indicator of what type of influence that the task has on your long-term growth. This is rated from zero to two. Zero is little to none; one is ahead of the curve; and, then, a two is groundbreaking. I’ll be honest. I wasn’t real fond of the term innovation, so – I forget what put it on my spreadsheet – but I had changed that to say how is this going to impact long term growth. I think that’s actually what I called it was long term growth opportunity. This is very nice to be able to relate that back and say, “This is not going to make any difference or it’s going to make a huge difference.” And I think you can also consider this in relation to what your competitors are doing and what your long-term vision for the product looks like. If this is going to open up new doors for you to go into a completely new market, then that would be either a one or two. But if it doesn’t do any of that, then it’s probably a zero.
Rob [30:02]: Yeah. I think a lot of things would be a zero. Kind of day to day of I need to add these settings. I need to add this screen. You think about merging subscribers in Drip, like we talked about earlier. Is that really innovative? To be honest, it is one. It’s ahead of the curve because most apps don’t have it. But it’s not groundbreaking. Like when workflows or something like that really jumped us ahead. So, I can see where this applies.
I don’t necessarily think of it in terms of innovation. I typically think of it in terms of impact. Once we get down and see the multipliers, I want to see how innovation plays against impact because I could see removing innovation altogether because most of the time I don’t want to innovate unless it has a major impact. Does that make sense?
Mike [30:42]: It does. But remember, the third one on this list was impact. So, that’s why I went through and started changing some of these names.
Rob [30:48]: Right. I was going to say; I’m only going to build an innovative thing if the impact is high. So, I’m not sure why I also need to say it’s innovative. Because the impact is going to be high and the innovation is going to be high. It’s almost like, to me, innovation tracks with impact. If all these go together in the same direction, they’re correlated, then there’s no reason to have them. You should just have one number. The only reason that you should have all five of these is if they go in different directions based on what you’re building. That’s what I’m still trying to get my head around is how impact and innovation, I think, are different.
Mike [31:16]: And that’s why I said that I played around with the terms when I put them in my spreadsheet because the difference between impact and innovation was not very clear. I changed impact to say short term profitability impact. And then innovation was long term growth impact.
Rob [31:32]: Oh, nice. Okay. That’s cool. I like that actually.
Mike [31:35]: Yeah. It separates out, “Hey. You need to do this.” And it’s more of the profitability impact is like, “What’s the direct result that’s going to be short term for us in terms of financials?” And then the long-term growth, “What is this going to look like for us six months, 12 months down the road?” We may do something that doesn’t really change anything now but what would be the impact of that in 12 months? And it it’s something small in the UI, very little innovation associated with it. But something like with Drip – workflows – it’s probably going to have a small impact now but 12 months down the road, 18 months down the road, it’s huge because it gives you so many more things to do.
Rob [32:14]: So now that we have a spreadsheet, you put down all of your scores for all of your different feature ideas or even if they’re not features. It’s just development ticket ideas basically. How do we score these things?
Mike [32:26]: The calculation that he has is you take each of these things and you multiply them by different numbers and you add or subtract them based on what they are. So, the impact and urgency you multiply each of them by three and add it to get the score. The risk factor you multiply by four. And then the innovation you multiply by two. You add those numbers together and then you subtract the effort times three. The larger something is – and remember that effort can either be one, two or three so you’re going to be subtracting either three, six or nine from your final score.
So, something might be very risky if you don’t do it now and it could have a huge impact. But if the effort is large, it could really reduce the score associated with that. I went through this a couple of months ago when Anthony had first posted this in Founder Café was that there were things that I felt were much more important and then looking at the score that came out of it – which he calls priority but I like to call it score just because it’s a numerical calculation – it’s very easy to look at those scores and just sort by that score and see relative to each thing what is really important to the business and what’s not. And I found there were things that rated up there as like 15 or 17 and then there were things that I thought were more important and they only rated like nine or 10.
I feel like there was a dividing line between things that were less than a score of 10 and things that were more. Those things that were more than 10 really felt like they were truly important.
Rob [33:48]: Yeah. I think this can be a really nice kind of guide to help you not just make gut feeling decisions and – I don’t know that I would go directly down these in priority order and build in that order – but I think it can give you a really nice framework or guide as the best way. Maybe if something was a five, I might make it more than a seven or a higher priority than a seven because I know of somethings maybe not captured in just these numbers or in the multipliers or whatever. But, that aside, as you look through these it seems like all the bases are covered and, if you put accurate numbers in each of these and you multiply out the score, I think there’s a lot of value in doing that.
Mike [34:25]: Yeah. I actually thought about that because I was looking at the things that scored lower than I thought they should. And I really tried to go back through the different columns and say, “Is this score justified? Should this be more urgent? Should it have a larger impact?” And I could make some variances here and there. But realistically, when I started looking at everything together and scoring them in the same way, I really couldn’t forcibly take that score any higher. And it’s not to say that you can’t prioritize starting something in advance because, obviously, if something is a large-scale project that’s going to take you three or four months to complete, you have to remember it’s going to take three or four months to complete and you may have to start it now in parallel to you doing other things. But you’re not going to be able to start it today and be finished with it tomorrow. That’s just not going to happen. So, you do have to take that into account when planning. But I think that it does help you in terms of deciding objectively what you should start planning to do versus the things that fall much lower on the list that just aren’t as important as you thought they were and maybe you put them on the list and assign them to somebody and they actually don’t need to be done.
Rob [35:30]: Yeah. I think this could be helpful definitely for when you’re getting started as kind of product owner. If you just have so much stuff on your plate that it’s hard to decide and you kind of need a guide. I really think that there’s some value here.
So, if you want to dig into that a little more, we will link that up in that show notes. It’s on blog.dnsimple.com. And thanks to Anthony Eden for sharing that with the Founder Café community and now the Startups for the Rest of Us community.
If you have a question for us, call our voicemail number 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt. It’s used under creative comments. 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 331 | Transitioning from Productized Services to SaaS with Brian Casel
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Brian Casel, Founder of AudienceOps, about transitioning from productized services to SaaS. Brian discusses what AudienceOps was like 6 months into development, he touches on team management and how he handles developing a new product while supporting an existing one.
Items mentioned in this episode:
- Audience Ops
- Ops Calendar
- Brian on Twitter
- Brian’s website & newsletter
- Brian’s Productize course
- Boostrapped Web Podcast
- Big Snow Tiny Conf
Transcript
Mike [00:00]: In this episode of ‘Startups for The Rest of Us,’ I’m going to be talking to Brian Casel about transitioning from productized services to SaaS. This is ‘Startups for The Rest of Us’ episode 331.
Mike [00:17]: 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.
Brian [00:25]: And I’m Brian.
Mike [00:26]: And we’re here to share experience to help you avoid the same mistakes we’ve made. How are you doing this week, Brian?
Brian [00:30]: Doing good, Mike. Thanks for having me on.
Mike [00:31]: Yeah, no problem. So, for the audience here, in case they’re not familiar with who you are, Brian Casel was the founder of Restaurant Engine which he sold a couple of years ago. He’s also been a speaker at MicroConf and he is the current founder and CEO of Audience Ops. And then he’s also the co-host of Big Snow Tiny Conf which I attended a few weeks ago, and he’s also the co-host of the Bootstrapped Web Podcast with Jordan Gal. Did I leave anything out?
Brian [00:57]: Yup. That’s about everything I’m focused on right now. I also write about productized services and things on personal blog. But yeah, these days I’m really pretty much all in on the audience apps business, that’s what I’ve been doing.
Mike [01:10]: Yup, and we’ll link a bunch of those things up in the show notes. But one of the things I want to talk to you today about was the fact that you’re essentially running a business that is a productized service called Audience Ops. And for the listeners who aren’t familiar with it, can you give a brief description of what Audience Ops is and what it does?
Brian [01:26]: Yeah. So, Audience Ops is a content marketing company. And we’re going on almost two years now since I started it. And so basically, we make it easy for businesses to do content and do it well. And now, as we’re going into 2017 here, we’ve kind of expanded our line of different products to help accomplish that goal. So we’ve had our service side of the business and basically, there are two versions of the service now. There’s the content service where we write the content.
We basically write your blog content for you and manage the whole process from start to finish. And now we have Audience Ops Express where if you’re doing content, you can send us your drafts and we will handle all of the legwork to get it published like proofreading the images, the formatting setup, transcribing your audio or video, whatever it is that you can basically send on limited content pieces to us and we’ll handle all the legwork from there.
So that’s the service side of it. And then this year, we’re now in the process of launching our software called Ops Calendar. And that’s essentially a content calendar tool that streamlines and automates a lot of the parts of the production process for doing content. So it’s got like smart checklist which automate recurring tasks and delegating those based on one year content as publishing. You can track analytics to see traffic and conversion numbers on a post by post basis right there in your calendar.
You can manage a list of content ideas and have those going to your calendar and into production schedule social media. So it kind of pulls all the disjointed pieces of doing content marketing all together in one place. And so that tool has been in development for the last six months. And right now in March 2017, we’re just now rolling it out to – so we’ve had some beta costumers in it and now we’re starting to roll it out to customers on our early access list.
Mike [03:11]: So before Audience Ops, you had run Restaurant Engine. Now, would you have classified that as a productized service?
Brian [03:18]: Yeah. So I think Restaurant Engine evolved into a productized service. It started like purely as a SaaS. It was a website builder for restaurants. And what I learned in the first year or two was that those customers really valued the done-for-you aspect. I was doing concierge onboarding just to get people onboard. Like, we will set up your website for you, started doing that for free just to get them onboard. And then I started charging for it and then we started requiring that service for all customers. And eventually, it became kind of that software plus service productized service model, if you will.
I mean, that’s where I really started to learn the value of combining software with service. So not only providing the tool but providing the done-for-you aspect. But then when I started Audience Ops, having really sunk my teeth into that productized service model, I decided to start that business with the productized service model first as a way to launch it, establish it, grow revenue really quickly and also just grow its, like its brand if you will and our credibility in the content marketing space which now two years into it are what we started this process about 18 months into it, we’re able to expand into other products for this same space doing content marketing.
Mike [04:32]: I think what I find interesting about the journey is that you started out with Restaurant Engine trying to build it into a SaaS product and realized that that was not going to work and you transitioned it into a productized service. And then when you started Audience Ops, you kind of made the deliberate choice of, “Hey, I’m going to create this as a productized service because I know how to sell that.” And then now two years into it, you’re looking at creating a SaaS based on that productized service.
Brian [04:56]: Yeah, essentially. I identified a few specific pain points through the process of delivering our service and doing content on a regular weekly basis, and we’ve used a variety of different tools and we still do. But having identified those pains through the process of doing content, that’s what led to the initial concept for Ops Calendar and then that also led to validating that other people have those pain points too which eventually led to investing and building it and getting it out there.
Mike [05:28]: From I guess a boarder perspective, you seem to have done the gamut of all the different types of products. You’ve had your productized course which is especially an info product. And then you’ve also had a productized service and now you’re working on a SaaS product, and previously as I said before, Restaurant Engine was intended to be a SaaS product and it didn’t turn out that way.
But I guess, could you contrast a little bit the differences between starting in a productized service versus starting a SaaS? Because obviously, I think that there’s timeline differences and there’s experience differences and there’s all these things that go into one versus the other. For the listeners, can you contrast those things a little bit which one’s easier? What are some of the pros and cons of doing a productized service, for example, versus a SaaS application or just kind of the classic SaaS?
Brian [06:13]: Yeah, sure. So, in my view, just from like a viability standpoint, the idea of building and launching a SaaS product requires a pretty heavy investment of time and money. Whether you’re a developer or not, and I consider myself a non-technical founder. I mean, I do the design and the frontend stuff but I don’t code the backend. So in my case to build a SaaS software, I knew going into it, that would require investing quite a bit of money into hiring other developers but also a lot of my time. And I knew from experience of running Restaurant Engine that it takes several months to, maybe longer, to even build the initial version that users can actually use and then a year or longer to even make it a viable recurring revenue business that could potentially replace part or all of your income.
And so, that was the math that I was looking at in 2015, when I was looking to get into my next business. I was considering various ideas. Coming out of Restaurant Engine, I was looking at different ideas of what I should kind of sink my teeth into as my next business. And I look at making it a productized service first because I knew that that’s something that I can actually launch to paying customers very, very quickly, even charge a higher price point for it and have a recurring revenue model with that.
And literally within the first 30 days, we had our first clients onboard for Audience Ops for our done-for-you content service. And that grew pretty quickly over the first 18 months to a point where it enabled me to build a team around it, build a process and a system, and then ultimately, well, really early on, really, I was able to remove myself from the day-to-day process of delivering that service because I had the team and the systems in place.
So that freed me up to focus on growing into other products. I wouldn’t have really been able to make the math work on building a software from the very beginning and that’s why I went with the productized service. But secondly I wouldn’t have identified the pain points associated with doing content in terms of how it would relate to a software tool until a year or two into it. So I think both kind of led to that.
Mike [08:24]: Right. So it’s partially a function of the runway, so to speak, and the time that it takes to get up and running. And then there’s the other side of it is the learning component about how do I actually solve this problem in a way that makes sense for the customers of the product.
Brian [08:38]: Yeah, absolutely. I mean, this is a fully self-funded business. That’s how I’ve always handled it throughout all of my businesses up until now and still going forward. And so, we’re very cash flow sensitive kind of profit first type of mentality from start to finish. And that’s ultimately what made it possible for me to even consider investing thousands of dollars a month to just hire developers, not to mention the cost of marketing a new SaaS product. So yeah, lie this business has been working off of the profits from the productized service and then that continues to fund the development going forward.
Mike [09:13]: One of the things I wanted you to help kind of contrast for the list of terms is the difference in financial and starting that service based or productized service business versus starting a SaaS. So, you’re about six months in on the SaaS application. You said you’re spending a couple of thousand dollars a month for developers. So, ballpark are we talking somewhere between $12,000 and $20,000 that you’ve put into building the SaaS so far?
Brian [09:37]: Yeah. I’d say that’s about accurate probably closer to 20 so far.
Mike [09:41]: Okay. So, about negative 20 and this is after 6 months. And for the Audience Ops service, in six months, roughly what was the revenue?
Brian [09:50]: Well, six months in, it’s probably somewhere around maybe 10k to 15k a month MRR. And so early on in like the first three to six months, I actually took it deliberately very slow. We took on a few clients early on and then we kind of paused the service to get our process as in team employees, and then started to ramp up against starting from six months, probably around the 12-month mark. I think we were up to somewhere around 30k MRR. And I think it was probably around that point, around 10 to 12 months into the business.
I mean, I basically had my own salary kind of covered. I’ve always just kind of paid myself the base amount of what I need to live and support my family. And so, again, as the productized service, I’ve been able to cover that from pretty early on in the business. But then by around 10 to 12 months in is when I started to put aside whatever extra profit that was left over after all expenses were paid from the business and after I was covered. And I’ve put it aside maybe roughly 2,000 to 3,000 a month in profit. And that grew and that deviated from month to month.
So, I started doing that around 10 to 12 months in. And then by around 18 months is when I had a bit of a savings, like a business savings account saved up, and then I invested that to start. That basically jumpstarted the investment into hiring developers, but still through this day, the services continue to fund the development going forward.
Mike [11:19]: Yeah. And I kind of want to make that distinction very clear because just in terms of finances loan, SaaS scene is kind of a holy grail on the software world because it’s recurring revenue. But at the same time, if you’re looking at a productized service, you said to yourself that Audience Ops was making around $15,000 a month and you just literally said, you were taking it slow. You could’ve probably pushed on the gas harder if you wanted to. But six months in, you’re pointing $15,000 a month from it. Whereas six months in on the development of the SaaS, you’re still technically a zero because you’re not charging customers yet. You’ve spent closer to $20,000 on it so you’re at the negative.
And just kind of do the math on those and you’re probably at – if I had a guess, we’re probably at $60,000 in revenue from the productized service versus zero and plus you’re also running the deficit because you’ve spent $20,000 on it. And it’s just a very start contrast between those two things. And I think it begs the question, if you’re doing well with that productized service or it’s easy to build something like that and get it up and running and make it profitable, why would somebody even ever want to do a SaaS?
Brian [12:22]: Yeah, that’s a good question. So, we see this a lot, right? You look at those top-line MRR revenue numbers and they seem so dreamy. I refer it to many and they would seem very dreamy to me looking at it just a couple of years ago. The reality of the productized service model is that there are a lot of cost associated with it. Obviously, there’s more people involved. Like, we have a pretty large team. Our team is fully remove all over the world but all of our writers and all of our project managers are in the U.S.
So as the revenue goes up and as we bring on clients, our costs go up and our team grows. And that’s what led me to the decision that, “Okay, this year in 2017, I need to look at diversifying our product line and growing into more scalable products such as software and even our Audience Ops Express services is a little bit more scalable than our content service.” That’s not other say that the content service is not able grow and scale. It’s just not as scalable as something like a software service.
The tradeoff of course is that the productized service can grow much quicker. It can remain profitable the whole way through. Whereas the SaaS, even if you’re charging somewhere around $99 a month or more for a B2B software which may seem like a relatively higher, I don’t know, these days it’s all relative price points, right, but it just takes a long time to get enough customers to make that viable. And I realized that going in. And so that’s why I continued to work both sides of it basically the service side and the software side.
And with the service especially a recurring productized service, we deal with a lot of the same issues that a typical SaaS would turn and optimizing our onboarding process and retention and that sort of stuff. So yeah, it all kind of plays into it.
Mike [14:14]: Yeah. I mean, I think that there’s that confusion when you start looking at those numbers and saying, “Oh, well, the business is making $15,000 a month and it’s a service business.” But you don’t realize that there’s got to be probably five or six different people involved and they’re all working part-time in a business like that. And it’s the manual labor or just in general the labor cost associated with running any productized service are all around providing those services because it’s not like the software side where whether you’re running something once or 50 million times, it almost doesn’t matter to you. The cost is almost the same versus if you have to pay somebody to do something once, maybe it’s $50. You have to pay them 100 time to do it, it’s 5,000.
Brian [14:54]: Well, yeah. I mean, the way that I was looking at it especially going into this year was as the service keeps growing. Like, if the service were to double or triple in size in terms of clients and revenue, that would mean that our team would close to double at least. And then I started to look at like, “Well, what does that picture look like?” And then that’s just a very large team with lots of people and I wanted to get into. I still want to keep the team relatively small.
The other side of this is people think about productized service is like, “Well, that’s just kind of consulting or that’s like freelancing or building an agency,” and yes, it is manual services. There’s no doubt about that. But the way that I approach it is it’s a very focused, systematic, process driven service where we really do one thing and we have a very defined production line, and I’ve got people in place who handle very specific pieces of the process.
So unlike an agency which might take on anything and everything. If you’re a marketing agency or a design, development agency, like you take on so many different projects and different types of clients, for us, we bring on a client. They go through our standard onboarding process then they go into our standard delivery model for content and production and publishing and it works pretty well. We’ve got a fantastic team of talented people but they all really rely on our processes. And that’s what enables me to not be involved in the day-to-day service stuff.
I do coach the team a bit and I work on our processes and things but my role is really to make sure that the operation runs efficiently and then to free up most of my time to work with the developers and design the SaaS and then think about marketing and all that kind of stuff.
Mike [16:33]: Right. I guess the underlying point there is that when you start a business or anybody starts a business, the person who is the founder generally can do most things. And it’s very easy to, I think, fall onto a trap where you look at something whether it’s a specific problem or a service that somebody’s offering and say, “Well, I can do that faster and cheaper and offer it at even a better price or maybe a higher price,” because you’re offering higher quality. And then you almost trick yourself into thinking that, “Oh, well, if I scale this up, let me just multiply myself by 10 and I’ll have 10 times revenue, 10 times the profit margin.”
And I think what inevitably happens is your profit margins tend to go down because there’s management overhead that you don’t take into account as you build out the team. And I imagine at this point, your Audience Ops is at a point where you’ve got middle management, so to speak, that are managing teams of different people whether writers or the people who are posting the content. I mean, there’s a lot of stuff that goes into it and people don’t take into account that there’s that management overhead that will eat into the profit margins.
Brian[17:32]: Yeah, exactly. I mean, we pay the writers and we also have like client managers who are client facing. So I’ve kind of delegated the client facing communication stuff even like calls and emails and stuff. And then we have a team manager and her job is kind of more internally and she kind of keeps track of the people on the team and keeping them updated. And then I’m looped in like I have every two weeks to do a call with the managers and I’m in touch with everybody on the team pretty regularly.
So, I would say there’s one more piece to this on how the productized service relates to the SaaS. It’s not just about a funding source to invest in the SaaS. It’s also, I built it as Audience Ops the company. We’re a content marketing company and like I said, we wouldn’t have identified the pain points that would led to the SaaS product unless we have done the service. But also, I think it gives us a lot of credibility in terms of building software tools or even our training stuff if we hadn’t done content marketing at this level of scale and we continue to do it and I use content marketing heavily in my previous company.
So I think those kinds, like establishing the service and the company as a content marketing focused company with that sort of credibility leads in nicely to – it’s almost like an obvious next step for us to release software tools for doing content market.
Mike [18:54]: Now, I guess kind of playing off for that a little bit. Because there’s overlap in terms of what the service does and what the Ops Calendar does, what sort of team over lap did you have with the new product, with the calendar itself. Because obviously, you’ve got all the writers and the managers in place to essentially optimize the entire process around publishing content for your customers. How much of that were you able to reuse when building the Ops Calendar?
Brian [19:19]: Yeah, it’s a good question. Really largely, the people working on the Ops Calendar and the service are mostly separate. I mean, we’re all in the same slack room together but I did have to go out and hire. So we have two developers who I brought on specifically to work on Ops Calendar, just given the technology that that’s built with, we didn’t have that type of developer in house. We did have a WordPress developer who I’ve been working on with.
So Audience Ops also sells a couple of small WordPress plug-ins like our content upgrades plug-in and we built and launched that over a year ago at a really great WordPress developer who builds that and he continues to maintain that plug-in. So I did loop him in on Ops Calendar. So we have just released the WordPress integration between our calendar tool and your WordPress site. And so, since he’s the WordPress expert and I had been working with him before, I brought him in just for that piece. But beyond that, really from day to day in terms of developing the product, I’ve been working with the developers and then the team is a bit separate.
I am of course looping the team in on the progress of Ops Calendar and right now as the tool has kind of matured a little bit, now we’re starting to actually work it into our process for delivering content for our clients and for ourselves. And I’m starting to use it for my own content on my own blog. And so the team on Audience Ops is essentially a customer, if you will, of Ops Calendar, obviously we got paying for it but it’s working through a process and clients of Audience Ops service were using Ops Calendar to serve them as well so they could access to it as well.
Mike [21:00]: Right. The underlying challenge I think is that you had to essentially bring on new team members in order to develop this product just because you didn’t have that talent or the focus that you could divide off from what they were currently doing into building this new product. It was really, you bring in a couple of extra people and put an umbrella around them or kind of a small divider that says, “Hey, you guys are going to work over here on this other thing and we’re not going to merge things together or have you guys work together on stuff until you reach a certain point where the product is essentially usable by the team,” and that could take several months between four and six months. You said that you’re at about right now, correct?
Brian [21:38]: Yeah, exactly. Yup.
Mike [21:40]: So, I guess what are the challenges associated with running those two different things side by side, because you’ve obviously got to keep the Audience Ops system up and running and making sure everybody is doing what they’re supposed to do, what your customers are getting service so you’re bringing on new customers. And at the same time, you’re also building this second product that has – I mean, you obviously got like the beta customers who signed up for it and agreed to pay for it early on. But what are the challenges associated with managing those two desperate teams? Because I think that there’s very big differences between them and the goals that they have and the responsibilities?
Brian [22:14]: Yeah. I’d say just the challenge for me personally is managing multiple things at the same time. So I do jump back and forth between working with the team on the service, coaching the managers, or improving our processes and systems there to these days really spending most of my time working with the developers and I handle kind of like the design and the user experience and the product, kind of managing the product on the SaaS side. That’s really where I spend most of my energy. I’d say a third thing that I do is just overall marketing for the business, working at our marketing funnels and making plans there.
Yeah. So I mean, it’s kind of tough to jump back and forth between those things but at the same time, I do think that that’s part of the role of the founder in a way. Obviously, I’m not doing everything myself. A lot of it is kind of managing and giving input on things. So a lot of the technical time-consuming work of coding software or writing content, that stuff is not necessarily on my plate. I’m taking more of a strategic level giving input, giving direction, and that sort of stuff. And that’s what I spend most of my time doing. That’s where I think where I add the most value to the team.
I think that, again, the services and the software are so connected. It’s not like what I did years ago when I was launching Restaurant Engine where I – like on the side I was doing web design consulting work, and then in my nights and weekends or early mornings or whatever, I would plug away at my little SaaS, bootstrapped SaaS startup where they’re completely separate worlds, and I don’t feel like that today. Like today, I’m really just building this Audience Ops business that has a line of different products but they all really serve the same mission which is to make doing content easy and effective for businesses, and yes, just kind of pushing on that in different areas of the business.
Mike [24:07]: So, I guess now that you have built this productized service and then in addition, you went in and started the SaaS application o the side and it’s obviously all in to the same umbrella, I think that there’s definitely a lot of advantages to what you have done versus I think that somebody have talked to MicroConf several years ago about having products that were very, very different from one another and not related. So you couldn’t leverage the same audiences and obviously in this case, you have created things in such a way that those audiences do overlap. They do kind of lead into each other in the same ecosystem. And I’m curious to know what is it that in building the SaaS app kind of under that umbrella, what would you have done differently next time that you maybe saw as mistakes or things that held you back this time going through that process?
Brian [24:52]: I think probably the classic thing that most especially non-technical founders face is just the pace of development. I think I had a bit of a learning curve early on there. And I’m not totally new to developing software. I had worked on Restaurant Engine and other things in the past. But I think on the one hand, we made a pretty good pace. Like, we’re actually launching it to paying customers now six months in, but at the same time, just having an understanding of like, “All right. We’re going to have all these features built out and ready to launch by certain dates.” I had probably two or three months into the development process. I had a wakeup call to see, “Okay. This is actually how long it takes to build even just the baseline architecture and the core parts of the app.”
And then what ends up happening was about four months into development, I decided to hire a second developer. So I have one full-time developer and now the second developer is on part-time just for the sake of increasing speed and being able to have two people work on different features simultaneously. And so that’s helped to speed things up a bit but yeah, that was one of the challenges I think.
Mike [25:56]: It’s interesting that you bring that up because I think you and I had talked a while back about the pace of development and I kind of – I actually warned you at the time because I ran into the exact same thing where I underestimated things and how long they would take and even after that, you kind of experienced the same thing. And I don’t think this is unique. I think that everyone does this to some extent. They look at something and say, “Oh, well, this is how long I think it’s going to take.” And then, things go sideways or there’s other things you just miss and don’t take into account. And it takes so much longer than you ever think that it’s going to. And I’m curious to know what your thoughts on why that is. I have my own thoughts and I kind of want to get your take on it though.
Brian [26:34]: Well, yeah, I mean, I’m sure you’re in tuned with the technical aspects of what takes so long. But for my perspective as, I don’t know, I kind of consider myself a semi-technical person. So –
Mike [26:45]: But I don’t think that that’s the problem. So like I’m a technical person and I still get it wrong. So I’m curious to know like as a non-technical person, what do you see is the problems and then maybe we can kind of collaborate to figure out, “Okay. Why is it that everybody gets this wrong, not just technical or non-technical people?”
Brian [26:59]: Well, I think one reason why we’re actually now able to get it out the door to customers like only 6 months in and not 12 months in is because I’ve started to make more decisions about, what are the features that we actually need and what are the features that can come later. And I think early on, I had a much longer list of features that I wanted to launch with. But now, as we get to this point, I’m a little bit more ruthless about speed and get it out the door. We have a very high bar for quality. So every feature that we do build has to meet a certain level of quality in terms of user experience and functionality and lack of bugs and all that.
But the decision to do that other big feature later instead of now, pushing those things off, definitely helps. And the way that I’ve been able to do that is by really being in constant contact with our customers especially that we have a group of 14 beta customers who prepaid and they were the first users to start using it a couple of months ago. I mean, regular communication with them as well as people on the early access list. And what I’ve been able to find out is there are few features that people just keep upvoting or keep asking about and keep hammering that these are the ones that they really care about. And then are few other features that I think are nice to have that we will certainly use. Other people may find nice to use but they don’t necessarily have to be in this version that we’re sending out to customers today. And so I think there’s that decision process.
I think the other thing is one thing again as like a semi-technical founder in the fact that I had to hire those developers that are new. So that we were just getting to know each other in the first month or two of working together. And part of the reason why it went so slowly early on was because they were not necessarily aware of how technical I could be for them to explain some of the technical challenges.
And so what would happen a couple of times early on was they’d hit some walls, some technical challenges with one of the requirements that I put in. And then they would kind of go and try to work on it and troubleshoot it for three, four, or five days at a time and I’m not aware of what that technical challenge is. But if they brought it to my attention earlier, then I could tell you, “Oh. Well, okay, I understand what the challenge is. We could just tweak the design in this way and just eliminate days of development from a user experience that’s not a big deal.”
So it took about a month or two for me and my developer to really get on the same page in terms of how we can communicate technical challenges. And once we got that kind of squared away, we’re able to move much faster because we actually are able to collaborate on those technical hurdles even though I can’t do the coding myself, I can help think through, “Okay, for a design standpoint, we can re-architect it at this way or, okay, this is what’s really important that that piece is not as important,” and we can communicate that much clear and that helps us move a lot faster.
Mike [29:55]: Yeah. Being able to prioritize those things is kind of critical and so incredibly important to the entire process that it’s hard to underemphasize how much that plays a factor into the speed of the development, how quickly you get things out the door. And one thing that you had said, the one word that jumped out while you’re talking was the word “ruthless” and being ruthless in terms of saying, “We are not going to do that right now because that’s not important.”
And one thing that kind of jumps to mind, Brian, as an example of when I was working on Bluetick was there was a password reset feature that you could literally see on the front page. You go there and you enter in your email address. And you would expect that it would email you and say, “Hey. Here is your new password or here’s a mechanism for using that.” And over the course of nine months, I had literally three people use it and it didn’t work any of those three times because it was never wired up. It was like we never implemented that feature. It was there, you could see it but then I would get emails from people saying, “Hey, I tried the password reset. It didn’t work. How do I get my password reset?” And I would manually do it.
But it would’ve taken a while to get that done. It doesn’t sound hard and it really isn’t but it takes a couple of days to get it right. And that was something, I kind of made the conscious decision to say, “This actually isn’t that important.” It was on the designs so it ended up in the UI. But that’s one of those things where I made the conscious decision that I’m not going to do this. And I’m sure you have your own examples of things where you’re like, “Let’s just remove that.”
Brian [31:20]: Yeah, absolutely. I mean, again, I’m constantly in contact with people who come through the early access list or the beta users and I’m always asking them, “Why are you asking about that? What are you trying to accomplish? Or what was it about the other tools that fell short for you?” And I’m always trying to get their underlying goal or their frustration, and then I’m trying to figure out like, “Well, can our app already do that or what is the feature that they’ll be waiting for?”
Just the other thing that I see just a lot in this community is I think a lack of a sense of urgency. And this comes back to the whole self-funding aspect. I mean, and also from a marketing standpoint and rolling out and launching a new product. I feel the sense of urgency because, A, we can’t just develop this thing forever and not have revenue, that we’ll run out of money too quickly. But B, people are joining this early access list and they’ve been joining it for six months or more and every day that ticks by that I’m not contacting them or inviting them to start using the app, I feel like ticks away at like the chance that they actually will still need the app when I do send them that email invite.
So, I’m trying to minimize that length of time as much as possible and I think right now we’re at the – I think that the app is beyond an MVP stage at this point but it’s like the minimum viable level of development that I can start to have customers use the thing, and even start to give me feedback and objections about, “Okay. Some users may use it but some users still may have objections.” And I’ve been getting that kind of feedback from beta customers but I think now is that next step to get it out the door.
Mike [33:02]: Yeah. I totally agree with what you just said about waiting too long for getting those people in there and having them use it. I mean, I literally run into that with Bluetick where because some of the development cycles took so long and the tech stack just took too long to get pieces in there. It got to the point where some people who were on that early access list, they kind of looked at and said, “Look, it’s been so long that either this just doesn’t turn out to be a need for me right now or it’s not a good fit, or let’s revisit this in a few months because right now it’s not a good time.” It’s disappointing but at the same time I also kind of expected that not every single one of those early access customers would eventually become a paying customer and you have to expect that. But at the same time, because it’s been so long on my side, some of those people are just not going to convert because they’ve either found other solutions or they’ve realized, “Hey, this isn’t actually a dire pressing need that I have.”
Brian [33:53]: Yeah. One thing that I’ve been doing. And so everybody who joins the early access list on the next page, they see a survey. And they’ve answered a bunch of questions that goes to my email inbox. I read and I reply to just about every single one of those. And what I do is, I just place a star on those responses to that survey that I think are just really engaged. And so, the ones who just send like a one-word answer to the questions, I probably won’t star them. But the ones who send three, four, five paragraphs and then they reply to my email and we have a whole email exchange, I give them a star.
And so those are going to be the prioritized people who I invite first and the first batch and the second batch. And so, yeah, I want to make sure that those people who clearly have this pain and they’re actively seeking a solution and they’re willing to give me all this feedback before even seeing the thing, I want to make sure that they get in there first.
Mike [34:45]: Awesome. Well, I guess any parting words of wisdom for somebody who is potentially thinking about transitioning from a productized service into building a SaaS.
Brian [34:55]: Yeah. I mean, again, I think I see it really as that bridge to build the company first and then expand into doing something like a SaaS. And I think the key is to get the productized service running to a point where it doesn’t require you to be in there in the day to day, so that you can free up all that extra time and mental energy to think about, “Okay, where does this thing go next and where are those opportunities for the next product that would make sense in this line of products from this business?” At least that’s how I’ve been thinking about it. And so I think the key is to put those systems in process and in place to free yourself up.
Mike [35:32]: Awesome. Well, Brian, I just want to say thanks a lot for coming on and talking to people about how to transition from a productized service into a SaaS. What are the best places where people can find you if they want to look up more information or get in touch with you about this?
Brian [35:43]: Sure. So, the site is audienceops.com, that’s where the services are and Ops Calendar is over at opscalendar.com. And my personal site is CasJm.com and that’s where I write a lot about productized services and my personal newsletter. And then I co-host the podcast with Jordan Gal, Bootstrapped Web.
Mike [36:03]: And then people can also get in touch with you on Twitter at CasJam, right?
Brian [36:06]: Yes. Yeah. I still use Twitter.
Mike [36:10]: Yes, that’s an iffy question these days. We’ll see what happens with Twitter.
Brian [36:13]: Right.
Mike [36:14]: Well, Brian, again, thanks so much for coming on. I really appreciate it. 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 comments. 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.
